Pearson v Williams
[2002] VSC 30
•26 February 2002
f
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
COMMON LAW DIVISION
No. 4842 of 2001
| DONALD ROSS PEARSON and | Plaintiffs |
| TIMOTHY ROBERT PEARSON | |
| v | |
| FRANCES RAE WILLIAMS and | |
| MARJORIE ISABEL PEARSON | Defendants |
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JUDGE: | Ashley J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 12 February 2002 | |
DATE OF JUDGMENT: | 26 February 2002 | |
CASE MAY BE CITED AS: | Pearson and Anor v Williams and Anor | |
MEDIUM NEUTRAL CITATION: | [2002] VSC 30 | |
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Costs – Calderbank letter of offer – whether outcome after trial more favourable to offerors and less favourable to offeree than that which had been offered – principles concerning the effect of a Calderbank letter.
Costs – whether order should be made against an unsuccessful defendant in favour of another defendant – whether the other defendant was a proper and necessary party.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A. Southall, QC with | Oakleys McKenzie-McHarg |
| For the First Defendant For the Second Defendant | Mr D. Collins, SC with Mr G. Nash, QC | Arnold Bloch Leibler Cornwall Stodart |
HIS HONOUR:
In proceeding 4842 of 2001 the plaintiffs and the second defendant have sought orders for costs against the first defendant. It is not in dispute that the plaintiffs are entitled to an order for party and party costs against the first defendant. They have sought, however, an order for solicitor and client costs as from 5 July 2001. The first defendant has resisted the making of such an order. She has resisted the second defendant’s application in its entirety.
The plaintiffs rest their claims for solicitor and client costs on two bases. First, they rely upon a so-called Calderbank letter dated 4 July 2001 sent by their solicitors to the first defendant’s solicitors. It was baldly rejected by letter in reply dated 5 July. Second, they rely upon conduct of the first defendant, partly before but mostly after the commencement of litigation, which they argue constituted – I put it shortly and perhaps not quite accurately, but it suffices for the moment – as the unmeritorious pursuit of an evidently unmeritorious position with respect to the claim by the second plaintiff.
The second defendant rests her claim for costs on the footing that she was a necessary and proper party to the litigation, against whom no substantive order was made, the litigation having been made necessary by the conduct and attitude of the first defendant. At the outset of argument her counsel asserted that she should have costs on a solicitor and client basis from 3 August 2001. He relied upon a Calderbank letter bearing that date. On analysis, however, he really conceded that my judgment had not produced an outcome which was more favourable to his client and less favourable to the first defendant than that proposed by the letter of 3 August. The concession was rightly made.
I turn to consider the plaintiffs' claim for solicitor and client costs. I begin with the question whether the consequences of my judgment were more favourable to the plaintiffs – or, conversely, less favourable to the first defendant - than the outcome proposed by the letter of 4 July 2001. The letter read as follows:
"We refer to your letter dated 31st May, 2001.
We are instructed to reject the offer put forward on behalf of your client. We are further instructed to make a counter offer to settle the proceeding on the following terms:
a)That each of the partners of the Cashin/Pearson Pastoral Partnership transfer their respective interests as tenants-in-common of the parcels of land collectively known as 'the Bush' to Ross Pearson for life and thereafter to Tim Pearson in remainder.
b)That your client pay the party party costs of Ross Pearson and Tim Pearson incurred up to the date of acceptance of this offer, such costs to be taxed if they cannot be agreed.
c) That your client pay her own costs of the proceeding.
This proposal is conditional upon your client and Marjorie Pearson achieving an outcome whereby Marjorie would transfer all her right, title and interest in 'Macs', the 'Home Farm' and 'Days' in consideration of your client transferring all her right, title and interest in 'Dunlops' to Marjorie Pearson.
We have informed the solicitors acting for Mrs. Pearson of the terms of this offer and are informed that, should these proposals be acceptable to Mrs. Williams, Mrs. Pearson is willing to transfer her interest as tenant-in-common in respect of 'the Bush' to Ross Pearson and, in remainder, to Tim in order to give effect to the above settlement.
The offer contained herein will remain open for acceptance for a period of 14 days from the date of receipt of this letter. We reserve our clients' rights to rely upon this letter on the question of costs in the event that the counter offer is not accepted."
As must be clear from my Reasons, the parties to the proceeding divided into two factions: the Pearson faction – constituted by Ross, Marjorie and Tim; and the Williams faction – constituted by Frances only. It would be unrealistic to consider the outcome contemplated by the plaintiffs’ letter of offer by reference only to whether Tim would thereby have obtained the immediate benefit of so much of Frances’ interest in partnership assets as it was proposed she should give up; although there is certainly a difference between present acquisition of an interest and the prospect, however strong, of obtaining an interest in the future. Nor is it of much moment, I think, that as I resolved the matter Tim succeeded but Ross did not. All in all, I consider that the most reliable way of comparing the outcome produced by my Reasons and the outcome proposed by the letter of 4 July 2001 is to consider Frances’ end position in each case. In making that comparison it is, again, unrealistic not to take into account the property or moneys that she was likely to have obtained in consequence of settlement of the partnership proceeding[1]; and, conversely, the property or moneys that was likely to have flowed to the Pearson faction in consequence of that settlement.
[1]No. 5934 of 2000. Counsel for the second defendant at all times contended that the partnership proceeding had been settled as at 4 July 2001. I accept the correctness of that contention for present purposes.
Had the first defendant accepted the offer, subject as it was to Marjorie agreeing to transfer her interest in each of Macs, Home Farm and Days to Frances in return for Frances agreeing to transfer (? or transferring) her interest in Dunlops to Marjorie, then Frances would have acquired full title to each of Home Farm, Macs and Days. She would further have been entitled, in the dissolution of the partnership, to 50% of the stock, plant and equipment, shares and other assets as at 30 June 2000, net of any partnership liabilities. In addition, she would have been entitled to repayment of her loan(s) to the partnership, interest thereon at 17% to date of payment, and 7% interest on the net value of her interest in the partnership business from 1 July 2000.
In consequence of my judgment the first defendant will receive $1.2M in this proceeding. In addition, she must be paid interest at 7% on the $1.2M until it is (progressively) paid to her. That is in lieu of the 7% interest to which she would otherwise have been entitled according to the form of settlement of the partnership dispute. Again, she will be entitled to repayment of her outstanding loan(s) to the partnership, and interest thereon. That entitlement stands apart from my judgment in this proceeding.
It was agreed at trial that the value of Home Farm, Macs and Days as at 30 June 2000 was $960,000. There was evidence, uncontroverted, that the market value of the stock at that date was $839,506. According to the partnership tax return for the year ended 30 June 2000 the written down value of plant and equipment was $99,195, whilst the worth of the partnership shareholding was about $50,000. Current liabilities of the partnership as at 30 June 2000 were $306,051.
Had the offer of 4 July 2001 been accepted and the condition fulfilled, then looking simply to the figures just mentioned the first defendant would have obtained – partly from the resolution of this proceeding, and partly from settlement of the partnership proceeding:
¨ property to an aggregate value of $960,000;
¨ 50% of the nett assets otherwise of the partnership as at 30 June 2000 – that is, $419,753 + $49,597.50 + (approx) $25,000 - $153,025 = $340,325.
¨ repayment of loan(s) to the partnership plus interest;
¨ interest at 7% on the nett value of her interest in the partnership as at 30 June 2000, payable by the business as constituted after 1 July 2000.
No counsel calculated the money amount payable as 7% interest on the above scenario, whether to 4 July 2001 or to any other date.
As a matter of bare arithmetic, had the offer been accepted and the condition fulfilled, Frances would probably have received, whether in real property or otherwise, something in excess of $1.2M plus repayment of loan(s) and interest, plus the 7% interest to which I have referred. Other things being equal, or not much different, the difference would lie in the comparison between $1,300,325 ($960,000 plus $340,325) and $1.2M.
My analysis thus far suggests that all in all the outcome of the litigation was not more favourable to the plaintiffs and less favourable to Frances than that proposed by the offer of 4 July. But there are other pertinent matters: first, the plaintiffs’ proposal required the defendants at least to reach an agreement for the transfer of their respective interests in Dunlops, Home Farm, Macs and Days; and probably transfer in fact. They must have agreed at the outset that the value of Dunlops was the same as the aggregate value of the other three properties. They must also have agreed how the costs of transfer should be borne. They may have needed to agree how any capital gains tax was to be met in the likely event that Frances onsold the three properties; likewise the incidence of selling costs. Whether the condition would have been fulfilled is in my view uncertain.
Second, had the plaintiffs’ proposal been accepted, and had the condition been fulfilled, the money claims which the plaintiffs then made in the present proceeding would have been brought to an end. As at 4 July 2001 those claims were particularly specified in paragraphs 30, 30A, 31, 32 of the amended statement of claim filed 23 April 2001. Each of Ross and Tim claimed equitable damages founded upon Frances' allegedly unconscionable conduct – in the case of Ross, pertaining to provision for long service leave, unused annual leave, salary shortfall, property damage, personal expenses, motor vehicle expenses and lost opportunity; and in the case of Tim, pertaining to provision for pro rata long service leave, unused annual leave, salary shortfall and provision of equipment for use by the partnership. It was not until trial that the statement of claim was further amended to bring a claim in contract against the partnership. That claim was confined in the case of each plaintiff to a claim for long service leave provision and for unused annual leave. Had Frances accepted the plaintiffs’ offer of 4 July 2001, and had the condition been fulfilled, questions could have arisen whether the plaintiffs were nonetheless entitled to raise their contract claims against the partnership; and, if they were, then as to the worth of those claims. There may have been an impact upon the value of Frances' interest in the partnership depending upon the answers to those questions. Note, concerning the first question, recital (b) in the draft orders[2] which according to Frances' solicitors reflected terms upon which the partnership proceeding had been settled before 4 July 2001.
[2]DRP 4 to Ross Pearson's affidavit sworn 7 February 2002
Third, the amount of $340,325, see paragraph 9 of these reasons, not only excludes the possible impact of any claims that the plaintiffs might still have been free to make against the partnership, it takes no account of the fact that Frances would have received her share of partnership assets partly in the form of cattle, or perhaps in an amount representing her interest in the cattle at market value on 30 June 2000. Either way, there might have been taxation implications. This matter was not argued on the costs application, but I am not confident that there would have been no such implications.
Whilst I accept that the Pearson faction can point to circumstances which would tend to show that the overall outcome after trial was to their benefit and Frances’ disadvantage by contrast with what would have been the situation had their offer been accepted and the condition fulfilled, all in all I am not satisfied that this was the case. Too many factors intrude for me to have any confidence upon the matter.
For that reason alone I consider that the plaintiffs’ claim to solicitor and client costs founded on the letter of 4 July 2001 ought be rejected upon the facts. But there are other reasons why that should be so. This was not, obviously enough, an offer of compromise made by the plaintiffs under Rule 26.02(2)(b) of Chapter 1. The law is clear that an offer under the rules must not only be unambiguous, it must be one that is certain, whose acceptance will give rise to a binding contract between the parties. I think there is good reason why those requirements ought apply in the case of an offer made by a Calderbank letter. At the very least they must be relevant when the effect of such a letter is being considered.
In the present case I do not think it can be said that the letter of offer met the requirements just identified. Various pertinent matters were left unstated. Moreover, the offer was at least conditional upon agreement being reached between the first and second defendants concerning certain matters; and perhaps conditional upon an agreement being performed. In this connection the letter was not certain.
There is another matter. The proposal made by the plaintiffs bore upon the partnership, which was itself the subject of litigation. Whether that litigation had been settled was in dispute at the time. Whilst Frances by her solicitors was asserting that settlement had been reached, the situation was scarcely such as would encourage her to believe that an offer of settlement in closely related proceedings could safely be accepted.
Suppose that it was clearly evident that the overall outcome for the first defendant in consequence of the trial was less favourable than that which she could have achieved by acceptance of the 4 July 2001 offer and from resolution of the partnership dispute. Questions of principle would then arise. First, is a Calderbank letter to be given effect if the offer which it communicates could have been made by offer of compromise under r. 26.02? Second, was the offer in any event one that was susceptible of an offer of compromise under the rule? Third, if the result at trial is less favourable to the offeree than that which could have been obtained by acceptance of the offer, does the law adopt as a starting point a position that the offeror should be entitled to solicitor and client costs unless the offeree can show good cause to the contrary? Fourth, if the answer to question three be no, or in any event if good cause may be shown, what will constitute good cause?
Strictly, it is unnecessary to give answers to those questions. In deference to counsel’s argument, and in case my factual conclusions should be wrong, I will, however, proffer short answers. They are as follows:
To the first question, yes. I respectfully agree with what Gillard J said in MT Associates Pty Ltd v Aqua Max Pty Ltd & Anor[3] just as I agreed with what his Honour there said in Clarke and Anor v Australian Broadcasting Corporation and Anor[4].
[3][2000] VSC 163 at [65]-[68], [74] and [76]
[4][2001] VSC 274 at [16].
As to the second question, I think that the answer is no. Order 26 is intended to be flexible in its application. But it is difficult to see how r. 26.07(1) could have useful application in the case of an offer subject to a condition requiring the offeree and another person to reach agreement upon extraneous though related matters. Perhaps the excepting words of r. 26.07(1) could be given application in such a case. But I think the better view is that a conditional offer falls outside the boundaries of Order 26. Nothing in r. 26.02(2) is, in my view, opposed to that conclusion. Further, and speaking more generally, I think that the nature of the proceeding, and the existence of the related proceeding, must have made formulation of an offer of compromise under Order 26 pretty well impossible.
Upon the third question there is a difference of judicial opinion. Compare MT Associates[5] with The Sanko Steamship Co Ltd and Anor v Sumitomo Australia Ltd[6], MGICA (1992) Pty Ltd v Kenny & Good Pty Ltd and Anor (No. 2)[7], Nobrega v The Trustees of the Roman Catholic Church for the Archdiocese of Sydney (No. 2)[8], and NMFM Property Pty. Ltd. v. Citibank Ltd.[9]. Relevantly for present purposes, the last four of those cases propose that the mere writing of a Calderbank letter does not generate the same presumptive entitlement to solicitor and client costs as is provided for by Rules of Court. Contrast the conclusion of Gillard J in Aqua Max that there should be a predisposition to make a special costs order if an offeror does better as a result of the judgment than he would have done had the offer been accepted, a conclusion reflecting the approach of Rolfe J in Multicon Engineering Pty Ltd v Federal Airports Corporation[10].
[5]At [69]-[71] and [79]-[80].
[6][Sheppard J, Federal Court of Australia, unreported, judgment 7 February 1996 at [6].
[7](1996) 70 FCR 236 at 238G – 239C and 239G – 240F.
[8][1999] NSWLR 133 at [21].
[9][2001] FCA 480 at [82]]
[10](1996) 138 ALR 425 at 440 and 446.
The effect of s. 24(1) of the Supreme Court Act 1986, and rr. 63.31 and 63.32 is that the court’s general discretion with respect to costs’ orders will ordinarily be exercised by the making of an order for party and party costs, but that it may in specified and other appropriate cases made a special order for costs.
The circumstances in which the court may take the latter course, specified cases apart, have been the subject of a great deal of judicial writing. See, for example, Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd[11], Colgate Palmolive Pty Ltd v Cussons Pty Ltd[12], Australian Guarantee Corporation Ltd v de Jager[13], Shepherd v National Mutual Life Association of Australasia Ltd[14], MGICA (1992)[15], Spencer v Dowling and Anor[16], Aqua Max[17] and Ugly Tribe Co Pty Ltd v Sikola[18].
[11](1988) 81 ALR 397.
[12](1993) 46 FCR 225 at 233.
[13][1984] VR 483 at 502.
[14]Hedigan J, 15 November 1994, unreported.
[15]supra, at 239C-G.
[16][1997] 2 VR 127 at 147.
[17]supra, at [43]-[49].
[18][2001] VSC 189 at [7].
Apart from circumstances such as arose in or were discussed by the authorities just cited, the rules specify certain circumstances in which an order for solicitor and client costs may be made[19] or must be made unless the court otherwise orders. The latter situation obtains where a plaintiff makes successful use of the offer of compromise procedure established by Order 26[20]. That rule establishes a strong predisposition in favour of an order for solicitor and client costs in the particular situation.
[19]R. 63.32(2).
[20]See r. 26.08(2)(b).
Against that background one comes back to the Calderbank letter situation. An offer of that kind may in fact be made in two types of case: first, where the r. 26.02 procedure could have been adopted; second, where that procedure was unavailable. What is the impact of an offer in either case vis-à-vis solicitor and client costs? That is the question where there has been the difference of judicial opinion to which I earlier referred.
I should, of course, regard the decision in Nobrega as highly persuasive. It followed upon and was relevantly consistent with Sanko and MGICA (1992).[21] On the other hand, I consider that there is substantial merit to the approach taken by Rolfe J in Multicon and by Gillard J in Aqua Max.
[21]NMFM Property is a later decision of Lindgren, J. His Honour relevantly referred only to his earlier judgment in MGICA (1992)
Emphasising that this case is not one in which I need express a concluded view, my opinion is as follows: first, in every case where an offer has been made by a Calderbank letter and the offeror at trial does better than he would have done had the offer been accepted, at the least the making of the offer is a relevant fact in determining whether a special costs order should be made.[22]
[22]Compare what was said by Lindgren J in MGICA (1992), supra, at 238G-239A.
Second, in cases where the Order 26 procedure is for some reason unavailable, then providing the offer made is clear and certain in its terms, it is appropriate to start with a predisposition that an order for solicitor and client costs should be made in the event that the offeror obtains a more beneficial result at trial; but there is less reason to adopt such a position if the Order 26 procedure is available but is not adopted.
Third – and this deals also with the fourth question which I framed earlier – whether or not consideration of the costs issue begins with a certain predisposition, the type of circumstances which will be relevant to whether a special costs order should be made will be – in addition to the fact of the making of the offer – the types of circumstances which are relevant in the general case where a successful party seeks such an order. It will be necessary to consider the facts of the particular case to see whether any such circumstances are present. Unreasonableness of an offeree’s conduct, which counsel for Frances submitted was the touchstone, relying upon dicta in Santo, MGICA (1992) and Nobrega, should be considered as no more than a shorthand for the varied circumstances which it will be legitimate for the court to consider. It seems improbable that the courts in those matters intended to set up some new and different criteria by which to assess liability for a special order for costs in one particular class of case.[23]
[23]Whether NMFM Property suggests the contrary is not, I think, clear.
Fourth, the whole question of the approach which should be applied should not be permitted – despite what I have just said – to become over-conceptualised. In the end, the exercise of a judicial discretion is what is involved, and there are definite warnings against the exquisite refinement of judicial guides to the exercise of such a discretion. Cases of high authority are to that effect; and then judges – myself included, witness what I have just said – do something different.
I go to the second basis upon which counsel for the plaintiffs pressed their application for a special costs order. The circumstances relied upon were specified as follows:
"h As with her final will, Frances refused to recognise, properly or at all, the plaintiffs' powerful claim over the partnership assets.
·She conducted the partnership proceeding without regard, particularly, to Timothy's claim arising from her longstanding conduct and representation.
·Even in her evidence, she appeared to consider his claim of little worth, despite her own knowledge as to what she had said and done over many years, giving rise to a finding of unconscionable conduct.
·She was unable to answer the plaintiffs' claims, particularly those of Timothy in her evidence: the plaintiffs' evidence was accepted in total and remained uncontradicted by Frances.
·Importantly, Frances and her lawyers persisted with their attempts to appoint a receiver without regard to Timothy's claim on partnership assets."
Even assuming that the plaintiffs could frame their argument in a way that would permit consideration of Frances’ conduct antecedent or external to this proceeding,[24] I am not persuaded that the conduct upon which they rely in total justifies the order sought.
[24]Compare NMFM Property at [56]-[63] and NAB v Petit-Breuilh (No 3) [2000] VSC 291.
In my Reasons for judgment I concluded that Frances had made a large number of representations over the years concerning her intention that on her death Tim would inherit all her interests in the partnership, including her interest in the land. It is the fact that in her evidence she accepted that she had made many, but not all of those representations. It is further the case that Frances substantially altered her position as from August 1999; and particularly from January 2000, when she made a new will. It is also the case that I formed an unfavourable impression of Frances as a witness. Those things said, there were significant live issues at trial. Had the plaintiffs relied upon the representations to their detriment? If so, had Frances been aware of such reliance? In any event, had Frances intended that the plaintiffs act in reliance on her representations; and, if not, was that pertinent? If the plaintiffs had made out a basis for relief, what was the minimum equity required to avoid injustice?
Ultimately, the plaintiffs persuaded me that Frances should not be permitted to resile from the expectation which she had created, and that a constructive trust should be impressed over her interest in the partnership in favour to Tim, she receiving a money sum. But it is not the case that the particular outcome was perfectly predictable before the trial. Frances’ counsel advanced arguments that required careful consideration, even though on close analysis I was of the clear opinion that they must be rejected. Further, the plaintiffs’ money claims – which represented an alternative possible remedy if the plaintiffs made out an entitlement to relief – expanded over time; and only at trial was a contractual basis for some of the money claims raised by amendment of the statement of claim.
There was a gulf between the parties in their evaluation of the strengths and weaknesses of the plaintiffs’ claims. Compare Frances’ offer of 31 May 2001[25] and the plaintiffs' offer of 4 July[26]. But the mere fact that the plaintiffs got much closer to the mark than did Frances does not show that Frances put her head in the sand and declined to face the reality of the litigation. Neither, in the end, do I conclude that the abrupt rejection of the plaintiffs’ offer of 4 July constituted conduct on Frances’ part which, put together with other conduct, should attract a special costs order.
[25]Exhibit DRPI to Ross Pearson’s affidavit sworn 7 February 2002.
[26]Exhibit DRP 2 to Mr Pearson’s affidavit.
One of the matters relied upon by the plaintiffs in the present connexion was, as I earlier noted, the allegedly persistent attempts by Frances and her lawyers to have a receiver appointed to the partnership without regard to Tim’s claim on the partnership assets. Assuming that such matter could be pertinent,[27] I do not consider that the plaintiffs’ position is advanced. Certainly Frances by her solicitors pressed for the appointment of a receiver as a step in effecting the partnership dissolution. Frances’ solicitors certainly contemplated the possibility that the receiver would commence to work before this proceeding was heard and determined. That would inevitably have been a significant cost to the partnership. On the other hand, the draft form of order in the partnership proceeding which was enclosed with the letter from Frances’ solicitors to Marjorie’s solicitors of 24 July 2001[28], a form of order allegedly agreed by Frances and Marjorie, included an acknowledgment by each of them that the partnership assets were subject to claims by the plaintiffs, and that the partnership assets could not be realised nor the partnership wound up until the present proceeding was determined. That acknowledgment did not sit altogether smoothly with the second sentence of the third paragraph of the solicitors’ letter of 24 July; but I think it is fairly clear that preservation of partnership assets pending determination of this proceeding was intended.
[27]It arose in the partnership proceeding, which was closely related to this proceeding.
[28]Exhibit DRP4 to Ross Pearson’s affidavit sworn 7 February 2002.
All in all, as I said a few moments ago, I do not consider that Frances’ conduct in pressing for the appointment of a receiver advances the plaintiffs’ case in the present connection. The most that was likely to have happened, had a receiver been appointed, is that some cost would have been incurred which might have proved unnecessary; “might” because the outcome of this proceeding could have left a receiver with work to do.
It is next necessary to consider Marjorie’s claim for costs against Frances. It was founded, as I noted earlier, on the proposition that Marjorie was a necessary and proper party to litigation made necessary by her sister's conduct, the litigation not resulting in a substantive order being made against her. Marjorie, it was argued, had to engage solicitors for herself in the proceeding. She had incurred some cost in doing so, notwithstanding that her main participation was a deponent and witness for the plaintiffs.
Counsel for Frances disputed the proposition that Marjorie had been a necessary and proper party to the litigation. He did not argue that, if she had been such a party, she should not have an order for costs.
Counsel for Frances submitted that when the proceeding was commenced, by writ filed 9 March 2001, although Marjorie was named as a defendant, no substantive allegations were raised against her. The only hint that the partnership as distinct from Frances might bear responsibility for the plaintiffs’ claims was in the allegation made by paragraph 32 of the statement of claim – which arguably did not fit in with what had been earlier alleged.
Counsel next drew attention to the amended statement of claim filed 23 April 2001. He pointed out that whilst it was there alleged that both Frances and Marjorie had made pertinent representations[29] and whilst equitable relief was sought against both of them[30] it was a nonsense claim against Marjorie, for she had not sought to resile from any relevant agreement or representation, but rather supported the plaintiffs’ claims against Frances to the hilt, and remained determined that her interest in the partnership go to Tim on her death.
[29]See paragraph 26.
[30]See paragraphs 29, 30 and 32.
Counsel for Marjorie submitted that his client at least became a necessary and proper party because a claim in contract was raised against his client and Frances as partners. Counsel for Frances responded that this was perfectly true, but that the claim was only raised by amendment at trial.
In my opinion Marjorie should not have an order against Frances for what must on any view be modest costs. Not until trial, and after Marjorie’s counsel had been excused from further attendance, was the contract claim raised against the partners. It was only raised so that the court could entertain all matters which might conceivably arise between the parties[31].
[31]The proposed amended statement of claim was placed before the Court on 29 August 2001, the eighth day of the trial. Leave to amend was granted on 30 August. The amended defence in large part admitted the contract claims. It understandably denied Tim's claim to pro rata long service leave. The question of a contract claim had been raised on 23 August and had been the subject of further discussion on 27 August.
True it is that, had the plaintiffs' contract claim alone succeeded, there must have been an order against Marjorie. But I do not consider, in all the circumstances which I have described, that this consideration should enable Marjorie to have a costs order against Frances. That conclusion does not depend upon the circumstance that no order was made in fact against Marjorie on the contract claim.
In all, the plaintiffs (not simply Tim) should have an order for costs on the ordinary basis against Frances, such costs to include reserved costs. On balance, I consider that the costs should extend to the costs, if any, of Marjorie being a defendant to the proceeding. There should be no order for costs as between the plaintiffs and Marjorie, or as between Marjorie and Frances.
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