McIntyre v Pettit

[2020] NSWSC 498

Supreme Court

New South Wales

Medium Neutral Citation:

McIntyre v Pettit [2020] NSWSC 498

Hearing dates:

10 September 2019

Date of orders:

06 May 2020

Decision date:

06 May 2020

Jurisdiction:

Common Law

Before:

Lonergan J

Decision:

(1)   The notice of motion filed 6 June 2019 is dismissed.

 

(2)   The applicants are to pay the respondent’s costs.

 

(3) Pursuant to UCPR 41.3 and 41.8, the deposited funds paid into court on 14 May 1993 by Price Brent Solicitors in the sum of $20,500, together with interest accrued up to the date of this order is to be paid to Itala Belinda McIntyre.

 (4) Within 14 days, Raymond Perkes is to file an affidavit explaining the facts, matters and circumstances that led him to assert in writing to the Registrar of the Supreme Court on 13 May 2019 that he and Mr Gye had been ordered to provide security for costs, and that the funds referred to in the letter of the Registrar dated 6 May 2019, paid into court by Price Brent Solicitors, were funds provided by Mr Gye.

Catchwords:

COSTS — procedure and discretion — funds paid into court as security for costs — significant interest accrued — application pursuant to the UCPR for funds to be paid out — no entitlement to the funds paid into court — application dismissed.

Legislation Cited:

Uniform Civil Procedure Rules 2005 (NSW)
Supreme Court Rules 2007 (NSW)

Category:

Procedural and other rulings

Parties:

Clement Anthony Gye (Applicant)
Raymond David Perkes (Applicant)
Itala Belinda McIntyre (Respondent)

Representation:

Counsel:
D F Elliott (Applicant)
S F Hughes (Respondent)

  Solicitors:
Gillis Delaney Lawyers (Applicant)
Boyd House & Partners (Respondent)

File Number(s):

1982/765

Publication restriction:

Nil

Judgment

1. Whilst sitting as Duty Judge, a notice of motion filed by Clement Anthony Gye (“Mr Gye”) and Raymond David Perkes (“Mr Perkes”) came before me for determination. Some preliminary matters had already been dealt with by Button J. The question I was asked to consider was whether pursuant to r 41.3 and r 41.8 of the Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), payment out of certain deposited funds could be made to Mr Gye and Mr Perkes.

2. This application was understandably, and persuasively, opposed by Itala Belinda McIntyre (“Mrs McIntyre”), because the funds in issue were hers, deposited in response to an order made by Levine J in December 1992 that she make that payment as security for costs in litigation then before the Court.

3. For the reasons that follow I have determined that the order sought by Mr Gye and Mr Perkes should not to be made and that the funds in question should be paid out to Mrs McIntyre.

Background

4. There is some complexity to the background litigation involving these parties. I will limit my stating of it to the matters I consider relevant to the determination I have to make.

5. In June 1982 Mrs McIntyre obtained a judgement against Mr Gye, Mr Perkes and others in the sum of about $224,000 arising out of what seems to have been vendor finance for a hotel business that failed.

6. In December 1982 Mr Gye and Mr Perkes sought a stay of that judgment pending determination of their cross-claim. Their cross-claim alleged, amongst other things, that Mrs McIntyre and others had deceived them about the viability of the business. This was heard by Brownie J and in November 1987 judgment was reserved, and ultimately determined in favour of Mr Gye and Mr Perkes.

7. Because of an apprehension by Mr Gye and Mr Perkes that Mrs McIntyre was trying to divest herself of assets, they filed proceedings dealt with in February and March 1998 securing Mareva Injunctions preventing Mrs McIntyre, her husband Neville and son Auro, and an associated company Nevitoro Investments Pty Limited from dealing with various properties and assets they owned.

8. There was also a debate that went via the Federal Court to the High Court as to whether set off should be allowed between the judgment that Mrs McIntyre had obtained and orders that had been later made in favour of Mr Gye and Mr Perkes.

9. On 27 March 1992, Mrs McIntyre, Neville, Auro, George McIntyre and Nevitoro Investments Pty Limited filed a notice of motion seeking orders that the orders made by Brownie J on 10 February 1988, 18 February 1988 and Rogers J on 11 March 1988 granting various Mareva Injunctions be dissolved and that the matter be listed before the Master in Equity to fix a date for hearing of the inquiry for damages. Mr Gye and Mr Perkes also filed an application seeking dissolution of those same injunctive orders, but sought particular terms be imposed on the dissolution.

10. On 15 December 1992 Levine J discharged the various injunctions, conditional upon certain payments being made. One of those was “payment by or on behalf of Itala Belinda McIntyre to the Prothonotary of the Court, of the sum of $20,500 by way of security for costs of the first cross claimants.”

11. On 17 December 1992 there was some adjustment under the slip rule to other orders made by Levine J on 15 December, but that adjustment did not affect the order in respect of the payment into court of $20,500.

12. There is no dispute that Levine J’s judgment in December 1992 dealt with the parties’ mutual position that the injunctions were to be dissolved. It was in this context that issue was taken by Mr Gye and Mr Perkes, as Levine J noted, [1] as to the McIntyres’ ability to pay costs, should the next phase of litigation be decided against them, because “the only assets of Itala and Neville McIntyre amounted to $7000 in cash.”

    1. McIntyre v Pettit & Ors (Supreme Court (NSW)), Levine J, 15 December 1992, unrep), at p.5 to p.6.

13. As set out in the affidavit of Kim Garling, solicitor, sworn 8 August 2019 and tendered by Mrs McIntyre on the application before me, there was debate before Levine J regarding how much potential costs would be.

14. Levine J observed:

“In the light of the evidence in Mr Gye’s affidavit that the assertion of costs would be in the order of $50,000, if when the time comes the Court orders Mrs McIntyre to pay costs, the evidence is to the effect that she would be unable to do so, in which case the circumstances would be such that there was a danger that the cross claimants if they obtain judgment would not be able to get it satisfied.” [2] (Emphasis added).

2. Ibid, at p.5.

15. His Honour concluded:

“Thus the position is that both parties accede to the proposition that the foundation for the continuance of the injunctions no longer exist. The arguments advanced by Mr Garling against the imposition of a condition in relation to costs based upon, first, an asserted entitlement in Mrs McIntyre for costs in relation to the injunction proceedings, second, the lapse of time, and third, the background matter of the s 37A applications, are attractive. They nonetheless involve what can only be speculation as to the outcome of whatever the substantive issues will be between whomsoever the parties will be. On the other hand the matter of principle to which Mr Gray referred in the course of submissions in the context of the purpose of Mareva Injunctions makes sense and provides a basis for accommodation for the particular relief his clients seek.

As to quantum of costs, Mr Garling has submitted that on the Affidavit of Mr Gye, approximately $20,500 is attributable to the relevant proceedings and that that amount should be the subject of the condition to be imposed, upon the dissolution of the Mareva Injunctions… I am of the view that that submission is meritorious and proposed to limit to $20,500 the quantum of costs which are to be paid or secured as the condition for the dissolution of the injunctions.” [3]

3. McIntyre v Pettit & Ors (Supreme Court (NSW)), Levine J, 15 December 1992, unrep), at p.8 to p.9.

16. On 14 May 1993 the sum of $20,500 was paid into court by Mrs McIntyre via her solicitors Price Brent. Mr Garling confirmed this in his affidavit. He was not required for cross-examination and there was no challenge made to this fact on the affidavit material tendered by Mr Gye and Mr Perkes.

17. That sum has remained in Court earning interest since that time. The total Fund is now in excess of $60,000.

This application: Evidence

18. On 6 May 2019 a letter was sent to the parties on behalf of the Principal Registrar, referring to the fact that the Registrar had conducted a review of monies held by the Supreme Court for a period of greater than six years where no orders had yet been made to pay out the funds. The letter referred to the $20,500 paid into court on 14 May 1993 and that the capital fund had earned a significant amount of interest, ($39,644.94), as at 30 June 2018.

19. In an affidavit of Nicholas Dale, solicitor, sworn 5 June 2019 and filed in support of the notice of motion, is a letter that Mr Perkes wrote to the Registrar dated 13 May 2019 on Gillis Delaney Solicitor’s letterhead, requesting the funds be paid out to him and Mr Gye without the need for any notice of motion or formal application. The reasons for this approach were stated to be, amongst other things, to “seek to avoid unnecessary costs associated with any application” and that “Neville McIntyre is certainly deceased and as far as we know Mrs Itala McIntyre is also deceased” and “on the basis that Mr Gye and the writer were successful in the proceedings…”.

20. Somewhat concerningly an assertion is also made in the letter that the funds were placed in the Court’s hands by Mr Gye and Mr Perkes. Mr Perkes stated that he and Mr Gye “at some relevant stage had to provide security for costs being the capital funds referred to in your letter. Those funds were provided by Mr Gye”. Those assertions are incorrect, and it is surprising the assertions were made given the solicitor that paid the money into Court, Price Brent, acted for Mrs McIntyre.

21. Although five affidavits were filed on behalf of the applicants in support of their motion, only two were pressed and tendered at the hearing.

22. An affidavit of Mr Gye sworn 5 June 2019 contained an assertion that he had paid the money into Court but that he had not previously sought “return” of the deposited funds for “fear of reprisal against him and his family” and that he and Mr Perkes had been “successful in the proceedings”. The word “return” is used three times in this affidavit. This affidavit was not tendered. An affidavit of Mr Gye of 19 August 2019 was tendered, deposing to his recollection that there was a “costs order” by Levine J in December 1992.

23. One affidavit of Mr Perkes sworn 17 June 2019 was tendered. That affidavit stated that he and Mr Gye were “successful in suing” Mrs McIntyre, Mr McIntyre and another named person “for fraud” in proceedings that were heard before Rogers J and Brownie J and that the “decision in their favour was upheld by the Court of Appeal”. He did not repeat the assertion he had made in the letter to the Court that Mr Gye had paid the money into Court.

24. An affidavit of Kim Garling, solicitor, sworn 8 August 2019 was tendered on behalf of Mrs McIntyre and helpfully annexed the relevant judgments of Levine J and others.

25. Mr Garling stated that he was the solicitor acting for Mrs McIntyre and Nevitoro Investments Pty Limited between 1988 and 1994. He gave the following unchallenged account:

“[2] On receiving instructions I became aware that on 29 June 1982 Judgment had been entered in favour of Itala against the Defendants in the proceedings, including Clement Anthony Gye ("Gye") and Raymond David Perkes ("Perkes"). I also became aware that in December 1982 there had been a stay of that Judgment and a Cross-Claim filed by the Defendants, including Gye and Perkes, against Itala.

[3] I also became aware that the Cross-Claim was heard by Brownie J on 16 November 1987 and Judgment was reserved.

[4] On 10 February 1988, a Notice of Motion seeking various injunctions was heard by Brownie J and Orders were made against Itala. I was instructed to act for Itala and Nevitoro shortly after the hearing on 10 February 1988 and appeared for Itala before Brownie J on 18 February 1988 when an Order was made injuncting Nevitoro.

[5] A further hearing took place before Brownie J on 24 February 1988. His Honour delivered Judgment on 3 March 1988. A copy of that Judgment is annexed and marked "A". His Honour made no Order in relation to costs.

[6] A hearing of further issues in the matter took place before Rogers CJ Commercial Division. His Honour delivered Judgment on 11 March 1988. A copy of the Judgment is annexed and marked "B". His Honour made no Order in relation to costs.

[7] Brownie J delivered a substantive Judgment on 13 April 1988. A copy of that Judgment is annexed and marked "C". His Honour indicated that he would make Orders for costs in favour of the claimants (including Gye and Perkes).

[8] On 17 June 1988, Brownie J delivered a further Judgment dealing with issues arising from the substantive Judgment. A copy of that Judgment is annexed and marked "D".

[9] Following the completion of those proceedings costs were assessed and paid by Itala.

[10] There were then multiple proceedings in various Courts which involved questions of whether there should be a set-off between the Judgment in favour of Itala and the Orders against her in favour of the claimants (including Gye and Perkes). On 1 March 1991, the High Court found that there should be a set-off.

[11] The issues relating to the injunctions was next considered by Levine J who delivered Judgment on 15 December 1992. A copy of that Judgment is annexed and marked "E". Inter alia, His Honour made an Order that payment of costs in the sum of $20,500.00 should be made or secured by Itala.

[12] On or about 14 May 1993, I caused the sum of $20,500.00 to be paid into Court in accordance with the Judgment of Levine J.

[13] I ceased to act for Itala and Nevitoro on 30 June 1994.

[14] I am aware that issues regarding the injunctions were further considered by Grove J who delivered Judgment on 2 September 1994. A copy of that Judgment is annexed and marked "F".

[15] During the time when I acted for Itala and Nevitoro no application for costs of the proceedings seeking injunctions was made by any party. I crave leave to refer to the Order for costs made by Grove J on 2 September 1994. I am informed and verily believe that Nevitoro did not assess costs pursuant to that Order.”

Submissions

26. Mr Elliott, counsel for the applicants, submitted that the order made by Levine J regarding the sum of $20,500 should be read as a determination that the security was to be posted in order to secure an extant costs order and not a potential future costs order. [4] He did not however identify any then extant unsatisfied costs order.

    4. Applicant’s written submissions, 28 August 2019, at [14].

27. Mr Elliott noted that the balance of the notice of motion that Levine J had been dealing with was heard by Grove J and judgment delivered on 2 September 1994. Relevantly Grove J ordered referral to a Master in Equity for fixing a date for hearing of an inquiry as to damages sustained by a company associated with Mrs McIntyre as a result of the granting of the injunctions in 1988, and that Mr Gye and Mr Perkes pay the costs that the company incurred in dealing with that part of the notice of motion.

28. The company did not pursue its damages inquiry. Proceedings were then successively adjourned and on 22 February 2001, due to a lack of dispatch, the court dismissed the proceedings.

29. Mr Elliott did not explain how this history supported the orders his clients sought, other than a suggestion that by operation of Part 52A, r 16 of the Supreme Court Rules 1970 (NSW) (“SCR”) where there is no costs order on an interlocutory application, the costs associated with it should abide or be consistent with the “general costs of the proceedings.”

30. In the oral and supplementary written submissions, Mr Elliott pursued his argument that there was justification for the payment out to Mr Gye and Mr Perkes by virtue of Part 52A, r 16 of the SCR. He argued that if the order made by Levine J on 15 December 1992 was truly a security for a costs order and there are no express costs orders made in respect of the Mareva Injunctions obtained by them (in 1988), by virtue of Part 52A, r 16 of the SCR, the costs of those Mareva Injunctions should be paid in accordance with the “general costs order that was made in the proceedings.” He did not however identify what the “general costs order” was or when it was made.

31. Part 52A, r 16 provided at the relevant time:

Interlocutory application

Subject to this Part the costs of any application or other step in any proceedings shall, unless the Court otherwise orders, be paid and otherwise dealt with in accordance with the provisions of this Part or the provisions of any order relating to the general costs of the proceedings.

32. The current parallel provision is contained within r 42.7 of the UCPR:

Interlocutory applications and reserved costs

(1)  Unless the court orders otherwise, the costs of any application or other step in any proceedings, including—

(a)  costs that are reserved, and

(b)  costs in respect of any such application or step in respect of which no order as to costs is made,

are to be paid and otherwise dealt with in the same way as the general costs of the proceedings.

(2)  Unless the court orders otherwise, costs referred to in subrule (1) do not become payable until the conclusion of the proceedings.

33. Mr Elliott argued that this meant that where costs are reserved or no costs order is made, the effect of the relevant rule is that costs are to be paid in the same way as “the general costs in the proceedings”.

34. Mr Hughes, counsel for Mrs McIntyre, submitted that there was no costs order ever made in that part of the proceedings and accordingly the sum should be returned to Mrs McIntyre. The form of the order made by Levine J is unambiguous. The order in relation to the payment of the $20,500 is clearly for security for costs. There was no costs order later made in favour of Mr Gye and/or Mr Perkes and therefore they cannot succeed on their motion.

35. Further, Mr Hughes submitted that it was a common and long-standing practice of the judges of the Court when deciding questions of security for costs to refer to a sum that is to be “paid” into court, or “secured” by some means satisfactory to the recipient of the order. That explains why Levine J used the particular language he did. Levine J made it clear that he accepted Mr Garling’s proposal as to an appropriate quantum for the security. It is in no way a determination as to costs to be actually paid to Mr Gye and Mr Perkes by Mrs McIntyre.

Decision

36. Neither in the written nor the oral submissions provided by Mr Elliott did he identify to what extant costs order it is asserted the $20,500 was to be “posted”. If it was truly an order for payment of a costs liability already ordered or incurred, there would be no need to pay money into Court at all.

37. There is no suggestion that a request was made by Mr Gye or Mr Perkes for that sum to be diverted to them in payment of some supposed extant costs order. It is evident that the litigation between the parties was vigorous and sustained. If there was in fact a costs order favourable to Mr Gye and Mr Perkes that had been made, one would have thought that they would have enforced it with vigour and immediacy.

38. The proper interpretation of what was said by Levine J is the one argued for by Mr Hughes. It is supported by what subsequently in fact occurred - that is, the payment into Court on behalf of Mrs McIntyre, via her solicitors, of the identified sum of money. It appears that the parties never reached the stage where the costs security was needed to be accessed to pay any costs order, because there simply was no other costs order made against Mrs McIntyre or the McIntyre parties.

39. I accept Mr Hughes’ submission that particularly read in the context of the issues then before his Honour, Levine J’s order is unambiguous. He expressly reserved the question of costs of the applications decided by him. Grove J then dealt with the question of referral to the Master in Equity for assessment of any damages due to the McIntyres pursuant to the undertaking as to damages that comprised a necessary part of the Mareva Injunctions granted to Mr Gye and Mr Perkes in 1988. Grove J ordered Mr Gye and Mr Perkes pay Nevitoro’s costs incurred in respect of the hearing of that part of the motion. The fact that such a referral was not pursued by the Nevitoro company does not matter.

36. The dismissal of proceedings 8 years later was apparently of the Court’s own motion and was not associated with any order for costs.

37. There are a number of problems with Mr Elliott’s clients’ position.

38. The first is that the only evidence addressing the question of payment of costs for “the Mareva Injunctions” is in Mr Garling’s affidavit. He asserted Mrs McIntyre earlier paid those costs pursuant to assessment. He was not cross-examined and no evidence to the contrary was placed before me.

39. In the context of the March 1992 motion filed by the McIntyre parties and the conditional release of the Mareva Injunctions argued for by Mr Gye and Mr Perkes that was heard by Levine J in December 1992, no costs order was made in favour of one side or another. Levine J reserved costs. It is evident from the judgment of Levine J that both parties wanted the Mareva Injunctions dissolved. Both parties were successful and both had some success on their arguments regarding conditions.

40. Grove J for his part in September 1993 made a costs order in favour of Nevitoro Investments Pty Limited against Mr Gye and Mr Perkes. The proceedings went quiet and 8 years later were dismissed by the court of its own motion. There was no other costs order for or against Mrs McIntyre or the McIntyre parties. There is no identified “general costs order” in the proceedings to which Part 52A, r 16 could be applied.

41. I reject Mr Elliott’s argument that the order Levine J made in December 1992 that led to the payment into Court by Mrs McIntyre is a reference to any extant costs order. It is clear that the order was a payment in the nature of security for costs that had not yet been the subject of any costs order.

42. No entitlement to the fund has been established by the applicants. Entitlement to the fund has in fact been established by Mrs McIntyre and accordingly I order payment of the fund to her, together with any interest that has accrued.

ORDERS

47. I make the following orders:

(1)   The notice of motion filed 6 June 2019 is dismissed.

(2)   The applicants are to pay the respondent’s costs.

(3) Pursuant to UCPR 41.3 and 41.8, the deposited funds paid into court on 14 May 1993 by Price Brent Solicitors in the sum of $20,500, together with interest accrued up to the date of this order is to be paid to Itala Belinda McIntyre.

An additional matter

48. On 13 May 2019, one of the applicants on the notice of motion, Mr Raymond Perkes, who is also a legal practitioner, wrote directly to the Court in relation to the deposited fund, stating, amongst other things, that he and Mr Gye “at some relevant stage had to provide security for costs being the capital funds referred to in your letter. Those funds were provided by Mr Gye”.

49. Mr Perkes sought that the funds be distributed between himself and Mr Gye without the Court proceeding to hear any formal application.

50. I have already explained that the funds were provided to the Court by Mrs McIntyre and the context in which they were provided.

51. Given his status as a legal practitioner, it is appropriate that Mr Perkes be given the opportunity to state how and why he made the assertion that he did. Accordingly the Court further orders that:

(4)   Within 14 days, Raymond Perkes is to file an affidavit explaining the facts, matters and circumstances that led him to assert in writing to the Registrar of the Supreme Court on 13 May 2019 that he and Mr Gye had been ordered to provide security for costs, and that the funds referred to in the letter of the Registrar dated 6 May 2019, paid into court by Price Brent Solicitors, were funds provided by Mr Gye.

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Endnotes

Decision last updated: 06 May 2020