Mulder v Bormac

[2007] NSWSC 569

CITATION:	Mulder v Bormac [2007] NSWSC 569
HEARING DATE(S):	Wednesday, 2 May
JUDGMENT DATE :	2 May 2007
JURISDICTION:	Equity Division
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	2 May 2007
DECISION:	Hearing vacated. Costs of application for and thrown away by vacation to be defendant’s costs in proceedings
CATCHWORDS:	PROCEDURE – Adjournment – where plaintiff affected by psychosis makes statements to his lawyers shortly before final hearing which raise doubt as to their ability to continue to act – where plaintiff admitted to institution – costs
LEGISLATION CITED:	(NSW) Contracts Review Act 1980 (NSW) Revised Professional Conduct & Practice Rules 1995 rr 5.1.3, 17.1.2
PARTIES:	Regnerus Aloysuis Mulder Bormac Industries Pty Limited
FILE NUMBER(S):	SC 4351/03
COUNSEL:	Mr F Lever SC w Mr F P Hicks (plaintiff) Mr P M Strain (defendant)
SOLICITORS:	Cunningham & Adam (plaintiff) Patrick McHugh & Co (defendant)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRERETON J

Wednesday, 2 May 2007

4351/03 Regnerus Aloysuis Mulder v Bormac Industries Pty Ltd

JUDGMENT (ex tempore)

1 HIS HONOUR: These proceedings are listed for hearing for two days commencing tomorrow, 3 May 2007. In them the plaintiff Regnerus Aloysuis Mulder claims that the defendant Bormac Industries Pty Limited, of which Mr Borta is the principal, engaged in unconscionable conduct, in contracting for the purchase from Mr Mulder of certain land owned by him at Tomago in the State of New South Wales. Alternatively, Mr Mulder alleges undue influence, and invokes the (NSW) Contracts Review Act 1980. Ultimately, he seeks to have the contract, which has not been carried to completion, declared void. A fundamental issue in the case is Mr Mulder’s psychiatric condition at the time of the contract. It is not in dispute that he is afflicted by a psychosis, although there is some dispute as to the precise classification of his illness, and there is serious dispute as to whether or not it impacted on his ability to make a proper judgment in his own interests at the time of the contract.

2 Yesterday, at a telephone conference between counsel briefed to appear for Mr Mulder at the trial, an instructing solicitor (not the solicitor who has had the primary charge of the matter, who is presently absent on leave) and Mr Mulder, the plaintiff made statements, the details of which are properly not before the Court, but which have caused the solicitor and counsel concern as to their ability to continue in the matter, having regard to (NSW) Revised Professional Conduct & Practice Rules 1995, r 17.1.2. However, given the circumstances in which the statements were made and the possibility that they were themselves a manifestation of Mr Mulder’s psychosis, his lawyers are concerned that, having regard to r 5.1.3, they may not be in a position to terminate the retainer. Their concerns are to some extent reinforced by the circumstance that Mr Mulder has this morning apparently been taken independently by his wife, who is a general practitioner, to a mental health institution for psychiatric examination; the outcome of that examination is not yet known. There is, however, some evidence, recently obtained from a psychologist who is to give evidence in Mr Mulder’s case at the hearing, that his neuropsychological problems appear to have been exacerbated in recent times.

3 Even if Mr Mulder’s lawyers were entitled to terminate their retainer, if they were to do so today – which is the first practical opportunity – a vacation of the hearing would be practically inevitable, in order to enable Mr Mulder to obtain alternative advice; but it may well turn out that so drastic a course of action on the lawyers’ part is unnecessary.

4 Pragmatically and responsibly, Bormac does not oppose the vacation of the hearing, but seeks an order that Mr Mulder pay its costs of the application for and thrown away by the vacation of the hearing, which potentially includes costs associated with the next two days.

5 It is sometimes misleadingly simplistic to address such costs issues by asking why should one party – in this case, Bormac – be out of pocket due to something that has occurred in the other’s camp. There are many vicissitudes of litigation which occasion costs and which may be seen at first sight to be the responsibility of one party rather than the other, but which, of course, would not have arisen at all if the litigation had not been necessary in the first place. In this case, if ultimately Mr Mulder succeeds, then it can be said that the costs associated with the present application and thrown away by the vacation of the hearing ought never have been incurred by any party at all, because the litigation ought never have been necessary or, if brought, ought to have been settled at an early date. If, on the other hand, Mr Mulder fails, Bormac would presumably recover its costs of the application today and thrown away by it in any event.

6 On balance, it seems to me that Bormac ought not to have to bear the additional costs which Mr Mulder has incurred by reason of this application, but I am not persuaded that if Mr Mulder ultimately succeeds, Bormac should be indemnified in respect of its costs of this application. The appropriate resolution of this issue in those circumstances is that costs of this application and thrown away by the vacation of the hearing be the defendant’s costs in the proceedings. That is, if Bormac ultimately succeeds, the costs it will recover will include the costs of today’s application and thrown away as a result of it; whereas if Mr Mulder succeeds, his recoverable costs will not include those of this application, but he will not be liable to pay Bormac’s costs of this application.

7 I order that the hearing appointed to commence before me on 3 May 2007 be vacated. I stand over the proceedings to Friday 25 May 2007 at 9.45am before me for further mention. I order that costs of today and costs thrown away by the vacation of the hearing limited to one day on a refresher basis, be the defendant’s costs in the proceedings.

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