McKenzie v Storer
[2007] ACTSC 90
•15 November 2007
McKenzie v Storer [2007] ACTSC 90
COSTS – whether unsuccessful defendant acted unreasonably in rejecting pre-trial offer of settlement – costs increased by special needs of plaintiff – arrangement entered into with goodwill on both sides but broke down without attributable fault
Federal Court of Australia Act 1976 (Cth) s 43
Property (Relationships) Act 1984 (NSW)
Court Procedures Rules 2006 (ACT) r 1721
DSE (Holdings) Pty Ltd v InterTAN Inc (2003) 135 FCR 151 followed
Kardos v Sarbutt (No 2) [2006] NSWCA 206 considered
McKenzie v Storer [2007] ACTSC 88 discussed
No. SC 937 of 2005
Judge: Stone J
Supreme Court of the ACT
Date: 15 November 2007
IN THE SUPREME COURT OF THE )
) No. SC 937 of 2005
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:ROBYN JOYCELYN MCKENZIE
Plaintiff
AND:HELEN MARGARET STORER
Defendant
ORDER
Judge: Stone J
Date: 15 November 2007
Place: Sydney
THE COURT DECLARES THAT:
At all times the Defendant has held her interest in Block 17 Section 471 Division of Canberra, being the land in Volume 770 Folio 50 Edition 2, known as 12 Cumbrae Place Kambah (the Property) in trust for the benefit of the Plaintiff.
THE COURT ORDERS THAT:
Subject to order 6 of these orders, the Defendant is to provide the solicitors for the Plaintiff with an executed transfer of her interest in the Property in registrable form (except for duty stamping) within 14 days of the date of this order.
The solicitors for the Plaintiff are to hold the executed transfer in escrow until the Plaintiff has:
(a)fully repaid the loan advanced by the ANZ Bank to the Plaintiff and the Defendant jointly;
(b)obtained a discharge of the mortgage securing the loan advanced by the ANZ Bank; and
(c)paid to the Defendant the sum of $7,570.
The Defendant is to do all things reasonably necessary to cooperate in the execution of the documents required by the Plaintiff to comply with order 3 of these orders.
If the Defendant defaults in complying with order 2 or order 4 of these orders, the Court directs the Registrar of the Supreme Court to execute on behalf of the Defendant any document necessary to give effect to these orders.
The Plaintiff must indemnify the Defendant in relation to any costs, expenses or payments arising from the date of this order under the obligations imposed by the loan advanced by the ANZ Bank, such indemnity is to be secured by a charge in favour of the Defendant over the Property.
The parties are to bear their own costs of and incidental to these proceedings.
On 26 October 2007 I gave reasons for judgment in this proceeding (the “earlier reasons”) and directed the parties to bring in agreed short minutes of order giving effect to the reasons of the Court or, in default of agreement, to provide short minutes of the orders for which they respectively contended; [2007] ACTSC 88. Whilst there were some minor differences between the orders contended for by each party, the only disagreement of any substance was in relation to their proposed orders for costs. On 13 November 2007 the parties, by their respective counsel, made oral submissions on this point.
As I made clear in my earlier reasons, the predicament in which the parties find themselves stems from an arrangement that was entered into with goodwill on both sides but which disintegrated without attributable blame on either side. The arrangement was poorly conceived and executed and no provision was made for the contingencies which arose. In my earlier judgment I found that, from the time at which the parties acquired the property which is the subject of their dispute, the defendant held her registered 25% interest as tenant in common with the plaintiff on trust for the plaintiff.
Mr Blank, who appeared for the plaintiff submitted that, as the plaintiff has substantially succeeded in her application, costs should follow the event. Mr Blank submitted that realistic offers to settle the dispute had been made to the defendant on the plaintiff’s behalf, and had been refused. In particular he referred to a letter to the defendant dated 24 November 2005 from the plaintiff’s solicitors containing an offer that their client pay the defendant $10,000, repay the loan and discharge the mortgage over the property in exchange for the defendant providing a registrable transfer of her interest within 14 days. Similar offers were made in the period leading up to the hearing of the matter. These offers were expressly made “without prejudice save as to costs” and although not strictly complying with the principles laid down for Calderbank letters, Mr Blank submitted that they should be taken into account in the exercise of my discretion as to costs.
In my view it is not at all clear that the defendant acted unreasonably in rejecting these offers. While ultimately she was unsuccessful, the lack of clarity in the arrangement left open a real question for determination in the proceedings. While it was tolerably clear from the outset that the defendant held her interest in the land in trust for the defendant, there was a real issue as to the defendant’s right to compensation for what she had contributed to the relationship and to the acquisition of the property. Given the informality of the arrangements and the parties’ failure to provide for what eventuated, the defendant’s actions are not unreasonable.
A major factor in the proceedings has been the costs and delays occasioned by the plaintiff’s particular needs which, inter alia, were substantial enough to require the appointment of a litigation guardian and which led to difficulties in the management of the case and more than the usual level of difficulty in the presentation and evaluation of evidence. I discussed these issues in my earlier reasons especially at [3]-[8] and it is not necessary to repeat that discussion here, however it is relevant to note that those difficulties were partly responsible for the hearing, which had originally been scheduled for two days, extending over five days. Indeed, the first two days were almost completely taken up by the plaintiff’s evidence.
There were other issues in the management of the case that are relevant to the present question and which may also have been the result of the plaintiff’s difficulties. These include the generally chaotic state of the pleadings which, among other things, resulted in a major amendment to the statement of claim after the commencement of the hearing. While this does not raise any question of fault, it is also not appropriate that the defendant should bear the burden of these problems.
The issues considered by Brereton J in Kardos v Sarbutt (No 2) [2006] NSWCA 206 are relevant here. The case concerned an application for a property adjustment under the Property (Relationships) Act 1984 (NSW) in the context of a failed de facto relationship. Brereton J, with whom Basten JA and Hunt AJA agreed, commented, at [25], that whether or not a costs order was made would be “influenced by a number of considerations, that do not typically affect ordinary money claims”. Among the considerations mentioned by his Honour was the nature of the proceedings consequent on the failure of a domestic relationship without attributable fault.
Rule 1721(1) of the Court Procedures Rules 2006 (ACT) provides that the costs of a proceeding are in the discretion of the Court. In DSE Holdings Pty Limited v InterTAN Inc (2004) 51 ACSR 555 Allsop J considered the similar provision in s 43 of the Federal Court of Australia Act 1976 (Cth) and commented at [14] that the section provides:
a broad and ample power not to be read down otherwise than by judicial principle conformable with the amplitude of the power.
Ultimately it is for the Court, in its discretion, to do justice in all the circumstances. While I accept the plaintiff’s submission that this does not mean the strong precedent to the effect that costs follow the event should be ignored, those precedents exist because, in the general run of cases, that result will best serve the interests of justice. In my view the interests of justice in this matter are best served by an order that the plaintiff and the defendant bear their own costs.
| I certify that the preceding nine (9) numbered paragraphs are a true copy of the Reasons for Judgment herein of her Honour Justice Stone Associate: |
Counsel for the plaintiff: G Blank
Solicitor for the plaintiff: Capon & Hubert
Counsel for the defendant: S Hausfeld (appearing pro bono)
Solicitor for the defendant: Bradley Allen (pro bono)
Date of hearing: 13 November 2007
Date of judgment: 15 November 2007
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