Rees v Rees (No 2)
[2016] VSC 579
•27 September 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2015 01163
| SHANE CAMERON REES | Plaintiff |
| v | |
| DEBRA LYNNE REES | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers, plaintiff’s written submissions dated August 2016 and 9 September 2016 and defendant’s written submissions dated 1 September 2016 |
DATE OF RULING: | 27 September 2016 |
CASE MAY BE CITED AS: | Rees v Rees (No 2) |
MEDIUM NEUTRAL CITATION: | [2016] VSC 579 |
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COSTS — Where plaintiff successful at trial — Where defendant’s evidence at trial contradicted pleadings — Whether plaintiff entitled to indemnity costs — Whether defendant’s conduct was in wilful disregard of known facts and delinquent — Where plaintiff did not obtain all relief sought — Whether plaintiff’s costs should be reduced — Oshlack v Richmond River Council (1998) 193 CLR 72
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | — | Cinque Oakley Senior Lawyers |
| For the Defendant | — | Septimus Jones & Lee |
HER HONOUR:
Introduction
On 5 August 2016, reasons for judgment were delivered concerning the plaintiff’s claims seeking rectification of a settlement deed entered into with the defendant, or, alternatively, an order setting aside the deed, or a permanent injunction restraining the defendant from enforcing the deed. The Court ordered that the deed be set aside.[1]
[1]Rees v Rees [2016] VSC 452 (5 August 2016).
The parties have now filed written submissions on the question of the costs of the proceeding.
The plaintiff seeks his costs of the proceeding on an indemnity basis in the inherent jurisdiction of the Court and under s 29 of the Civil Procedure Act 2010.
The defendant seeks that there be no orders as to costs. Alternatively, if the plaintiff is entitled to an order for costs against the defendant, such costs should be assessed on the standard basis only and also be reduced by half a day’s costs as a result of the plaintiff not succeeding on his claim for rectification of the deed.
General costs principles
The jurisdiction of the Court as to costs is conferred by s 24(1) of the Supreme Court Act 1986. This general discretion must be exercised in accordance with Order 63 of the Supreme Court (General Civil Procedure) Rules 2015.[2] The ‘usual order as to costs’ is that a successful party in litigation is entitled to an award of costs in its favour. The unsuccessful party bears the liability for the costs of the unsuccessful litigation.[3]
[2]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 (14 September 2012) [11] (Croft J). See also Coombes v Ward (No 2) [2002] VSC 84 (27 March 2002).
[3]Oshlack v Richmond River Council (1998) 193 CLR 72, 97 (McHugh J).
The prima facie position in respect of costs in litigation is for standard costs to be ordered by the court, with the court having the discretion to award costs other than on the standard basis. A special costs order will only be made where the proceeding exhibits a special or unusual feature or special circumstances. Each proceeding must be considered on its own facts to ascertain whether those facts support the making of a special order for costs.
The authorities concerning the principles to be applied when a court, in the proper exercise of its discretion, may depart from the making the usual order for costs on a standard basis are well known and conveniently set out in cases such as Colgate-Palmolive Co v Cussons Pty Ltd,[4] Ugly Tribe Co Pty Ltd v Sikola[5] and Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3).[6] The categories of circumstances that warrant a special costs order are not closed but examples of circumstances where a special costs order has been made include:
[4]Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225.
[5]Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (14 June 2001).
[6]Sunland Waterfront (BVI) Ltd v Prudentia Investments Pty Ltd (No 3) [2012] VSC 399 (14 September 2012).
(a) the making of an allegation, known to be false, that the opposite party is guilty of fraud;
(b) the making of an irrelevant allegation of fraud;
(c) conduct which causes loss of time to the court and to other parties;
(d) the commencement or continuation of proceedings for an ulterior motive;
(e) conduct which amounts to a contempt of court;
(f) the commencement or continuation of proceedings in wilful disregard of known facts or clearly established law; and
(g) the failure until after the commencement of the trial, and without explanation, to discover documents the timely discovery of which would have considerably shortened, and very possibly avoided, the trial.[7]
[7]Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189 (14 June 2001) [7]–[8] (Harper J).
Although the fact of a proceeding being commenced or continued in wilful disregard of known facts refers to the commencement or continuation of proceedings, indemnity costs may be ordered generally in ‘… a case involving some relevant delinquency on the part of the unsuccessful party’.[8]
[8] Oshlack v Richmond River Council (1998) 193 CLR 72, 89 [44] (Gaudron and Gummow JJ).
Although costs are always in the discretion of the court, the court does not ordinarily reduce costs ordered in favour of a successful party for aspects of the claim that did not ultimately succeed unless those aspects are discrete and substantial,[9] or where there is misconduct by the successful party so as to significantly and unnecessarily lengthen the proceeding or waste time.[10]
[9]McFadzean v CFMEU (2007) 20 VR 250, 289–90 [152]–[153] (Warren CJ, Nettle and Redlich JJA).
[10] Apostolidis v Kalenik (No 2) (2011) 35 VR 563, 611 [53]–[55] (Nettle, Ashley and Tate JJA).
A contravention of an overarching obligation under the Civil Procedure Act 2010 (‘the CP Act’) may also affect a court’s exercise of discretion in relation to the costs of a proceeding. A contravention of an overarching obligation under the CP Act activates s 28, which provides, without limiting the Court’s inherent discretion as to costs, that the Court may take any contravention of the overarching obligations into account in exercising its powers.
Consideration
The plaintiff’s claim was brought on the basis that the deed had been entered into on a mistaken basis: in substance, that the plaintiff thought Allotment 29 was Allotment 28, and that there was no such land as Allotment 29. The plaintiff pleaded that, but for the mistaken belief, he would not have entered into the deed.
The defendant denied the allegation of the mistaken belief in her original defence and her amended defence filed on the second day of the trial. However, in her cross-examination, her evidence was that when she signed the deed she thought she was getting the Spotlighting Paddock and Min’s paddocks, being Crown Allotment 29 and Crown Allotments 14A and 15 respectively, and the blocks devised to her in the deceased’s will.
The Court found that in executing the deed ‘both parties understood that by providing for the plaintiff to transfer Allotments 14A, 15 and 28 to the defendant, the deed was providing for the defendant to receive Min’s paddocks and the Spotlighting Paddock’; the defendant had ‘a belief at the mediation as to which paddocks she was meant to receive under the will and which paddocks she was receiving under the deed: the Spotlighting Paddock and Min’s paddocks’ and ‘both parties believed that one of those parcels [the defendant was to receive] was properly described as Allotment 28’.[11]
[11]Rees v Rees [2016] VSC 452 (5 August 2016) [70]–[72] (McMillan J).
In my view, the defendant’s evidence at trial establishes that her denial in her pleadings should never have been made. As a result of that evidence, the defendant’s submission that the question of mistake was not immediately apparent cannot be sustained. The defendant’s evidence altered the structure of the plaintiff’s case as, up until that evidence was given, the defendant’s pleaded denial meant that the plaintiff had to maintain his alternative claim for unilateral mistake. If the pleaded denial had not been made and the defendant had admitted the fact, the plaintiff could have abandoned his alternative claim at an early stage. Alternatively, the proceeding could have been disposed of earlier and more cheaply by way of summary judgment or may not have proceeded at all. If it did proceed, once the fact of the defendant’s mistake was established, the other points raised in her defence such as agency and the right to rely on the mistake would have been easily and quickly resolved. The costs incurred would probably not have gone beyond a likely successful summary judgment application that could have been brought at an early stage. It was the defendant’s choice to defend the proceeding and she has caused costs to be incurred all the way to judgment.
I reject the defendant’s submission that the conduct of Mr Brack and his firm was properly the subject of inquiry and investigation in the trial. The original mistake was that of Mr Brack but any liability that he may have to either the plaintiff or the defendant was not established in the proceeding and he was not a party in the proceeding. The issue of the conduct of Mr Brack is irrelevant to the question of the costs of this proceeding as between the plaintiff and defendant.
I also reject the defendant’s submission that despite the denial of the defendant in her pleadings, the trial was always necessary and the defendant successfully resisted the plaintiff’s claim to rectify the deed. The claim for rectification of the deed did not add to the length of the trial. The factual basis of the claim for rectification was a further basis for setting aside the deed and was sought in the alternative. The setting aside of the deed was the remedy that the plaintiff sought throughout the proceeding until the second day of the trial, when it became the alternative form of relief sought by the plaintiff.
There is no basis to reduce the costs by half a day as the claim for rectification was ultimately not substantial, and there has been no misconduct by the plaintiff that lengthened the proceeding or wasted time.
In my view, the defendant’s evidence in cross-examination shows that the defendant did not have a proper basis to deny paragraph 17 of the plaintiff’s statement of claim.[12] I am satisfied that the denial was in wilful disregard of known facts and was delinquent and this conduct warrants an order for indemnity costs.
[12]The plaintiff’s submission is not directed at the defendant’s legal representatives, with it not being known what instructions were given by the defendant to her lawyers and it not being proper to enquire on that point.
Accordingly, in respect of the findings in the judgment and on costs, I make the following orders:
(a) The Deed of Settlement and Release dated 17 July 2014 between the plaintiff and the defendant be set aside.
(b) The defendant pay the plaintiff’s costs of the proceeding, including reserved costs, on an indemnity basis to be taxed in default of agreement.
(c) The plaintiff pay the costs of the subpoenaed witness, Mr John Brack, fixed in the sum of $4,490.
(d) Mr Brack’s application for costs be otherwise dismissed.
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