Ross v Gordon (No 2)
[2023] ACTCA 40
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
COURT OF APPEAL
Case Title: | Ross v Gordon (No 2) |
Citation: | [2023] ACTCA 40 |
Hearing Date: | 24 August 2023 |
Decision Date: | 18 October 2023 |
Before: | McCallum CJ, Baker and McWilliam JJ |
Decision: | (1) The appeal is allowed in part. (2) Order 2 made by the primary judge on 20 October 2022 in Ross v Gordon (No 3) [2022] ACTSC 289 is set aside. (3) In lieu of the costs order set aside, the following orders are made: (a) Each party is to pay their own costs of the proceeding SC 80 of 2019. (b) Each party is to pay their own costs of the appeal proceedings CA 19 of 2021 and CA 63 of 2022. |
Catchwords: | APPEAL – CIVIL LAW – jurisdiction of Supreme Court following remittal of matter by Court of Appeal pursuant to s 37O(1)(c) of the Supreme Court Act 1933 (ACT) – remittal limited by reasons for judgment. APPEAL – PRACTICE AND PROCEDURE – grant of declaratory relief – whether declaration should have been granted to give effect to reasons for judgment – where declaration was not sought – where respondent agreed to abide by reasons – no practical utility of issuing a declaration – declaratory relief not granted. APPEAL – COSTS – where costs of appeal were ordered to form part of the costs of the proceedings in the Supreme Court – whether costs to follow the event – costs intended to be in the cause – where each party had mixed success – parties to pay their own costs. |
Legislation Cited: | Cheques Act 1986 (Cth) Court Procedures Rules 2006 (ACT) r 1721 Family Provision Act 1969 (ACT) s 8 Supreme Court Act 1933 (ACT) s 37O(1)(c) |
Cases Cited: | Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 Clarkson Williams Partners Pty Ltd v Vaughan (No 2) [2016] ACTCA 8 Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421 GJ v AS (No 4) [2017] ACTCA 7 House v The King [1936] HCA 40; 55 CLR 499 Hulanicki v Walton (No 2) [2015] ACTCA 45 Kaluza v Repatriation Commission [2011] FCAFC 97; 280 ALR 621 Lim v Comcare [2019] FCAFC 104 Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 Peacock v Repatriation Commission [2007] FCAFC 156; 161 FCR 256 Plaintiff M61/2010E v Commonwealth [2010] HCA 41; 243 CLR 319 Priestley v Priestley (No 2) [2016] NSWSC 1259 Repatriation Commission v Nation [1995] FCA 1277; 57 FCR 25 Ross v Gordon (No 3) [2022] ACTSC 289 Ross v Gordon [2021] ACTSC 41 Ross v Gordon [2022] ACTCA 21; 18 ACTLR 89 Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178; 168 LGERA 1 Wyzenbeek v Australasian Marine Imports Pty Ltd (No 3) [2019] FCA 439 |
Parties: | James Young Ross ( Appellant) Donna Maree Gordon ( First Respondent) Donna Maree Gordon as Trustee of The Olga Hart Trust ( Second Respondent) Donna Maree Gordon as Executor of the Estate of the late Olga Hart ( Third Respondent) |
Representation: | Counsel Timothy Crispin ( Appellant) Wayne Sharwood ( First, Second and Third Respondents) |
| Solicitors Ray Swift Moutrage and Associates ( Appellant) Tim Sharman Solicitors ( First, Second and Third Respondents) | |
File Number: | ACTCA 63 of 2022 |
Decision under appeal: | Court/Tribunal: ACT Supreme Court Before: Loukas-Karlsson J Date of Decision: 20 October 2022 Case Title: Ross v Gordon (No 3) Citation: [2022] ACTSC 289 |
THE COURT:
Introduction
1․The appellant appeals from a decision of Loukas-Karlsson J (“the primary judge”) in Ross v Gordon (No 3) [2022] ACTSC 289 (“Ross v Gordon (No 3)”), in which her Honour dismissed proceedings brought by the appellant and ordered that he should pay the costs of the proceedings. Those orders followed earlier Court of Appeal proceedings which had upheld a ground of the appellant’s appeal and remitted the matter to the primary judge: see Ross v Gordon [2022] ACTCA 21; 18 ACTLR 89 (“Ross v Gordon (CA)").
2․The dispute concerns the distribution of an estate following the death of Ms Olga Hart (“the deceased”). The appellant is the former de facto partner of the deceased. The respondent is the daughter of the deceased and executor of the deceased’s estate (“the Estate”).
3․The appellant makes two complaints in the present appeal. The first is that the primary judge erred in construing the scope of the remittal by the Court of Appeal too narrowly, by finding that the remittal order of the Court did not extend to the appellant’s claim for declaratory relief. The second is that her Honour’s discretion miscarried with respect to costs.
4․The appellant argues that the primary judge should have found that the scope of the remittal extended to a claim for declaratory relief, and that her Honour should have granted the declaration he sought – in essence, that certain cheques issued by the deceased did not create a debt owed by the Estate. This was the determinative issue in the earlier Court of Appeal proceeding. The appellant further argues that he is entitled to the costs of the proceedings, including the costs of the previous appeal and of this appeal.
5․For the reasons outlined below, the primary judge did not err in finding that the remittal order did not extend to a claim for declaratory relief. That relief had not been claimed by the appellant in the Court of Appeal and was not within scope of the remittal order.
6․However, the appellant has demonstrated that her Honour erred in her approach to the determination of the appropriate costs orders to be made. The appropriate order is that each party should pay their own costs of the whole of the litigation, including the costs of the previous first instance proceedings, the previous appeal, and the present appeal.
The litigation history
7․The facts of this matter have been extensively outlined in the first instance judgment of the primary judge in Ross v Gordon [2021] ACTSC 41 (“Ross v Gordon (No 1)”) and in the Court of Appeal’s judgment in Ross v Gordon (CA). However, as the nature of this appeal requires an assessment of which issues were remitted and what orders should have been made upon remittal, it is necessary to set out the key aspects of the history of this litigation.
Facts giving rise to the litigation
8․The appellant and the deceased were in a long-term de facto relationship, which ended in around 2003 or 2004. From 2006, the deceased and the appellant resumed contact but did not have a romantic relationship.
9․The deceased made wills in 1996, 2009, 2015, 2016 and 2017, each of which made provision for the appellant. In December 2017, the deceased suffered a heart attack. She was subsequently diagnosed with stage four lung cancer in 2018. The appellant cared for the deceased while she was ill, but they did not resume a relationship.
10․On 5 September 2018, the deceased made a final will. In this will, the deceased made some provision for the appellant. However, she wished to ensure that the appellant could not make any additional claim on her estate, in particular under the Family Provision Act 1969 (ACT).
11․Specifically, in August 2018, prior to making this final will, the deceased had obtained legal advice from Mr Dwyer, a solicitor. Mr Dwyer advised the deceased that a ‘no contest’ clause in the will would be unenforceable, but that she could burden her estate with liability to ensure that it contained no net value upon her death. This was intended to prevent further claims being made on the Estate. This course apparently required the deceased to rely on the respondent, Ms Gordon (who she appointed as executor of her will and, after her death, trustee of the Trust), to pay the appellant the $200,000 which the deceased wished to bequeath to him, provided he did not contest the will.
12․After receiving this advice, the deceased:
(a)Established the Olga Hart Trust (“the Trust”) by deed on 29 August 2018. The Trust named the deceased as settlor, appointor and trustee, and Ms Gordon to succeed her as trustee upon her death.
(b)Signed three cheques totalling $1,200,500 in favour of the Trust, in the amounts of $500,000, $700,000 and $500. The $500 cheque was presented and used to establish a bank account in the Trust’s name. The remaining two cheques were not presented. The purpose of these cheques was to create the liability on the Estate that would exceed the assets held by the Estate, thus precluding the appellant from successfully receiving any further provision under the Family Provision Act.
(c)Executed a new will on 5 September 2018, which included a bequest of $200,000 in favour of the appellant and stated that the appellant should not otherwise inherit property from the deceased’s estate. Ms Gordon was named as the executor of the Estate.
(d)Instructed Ms Gordon that if the appellant challenged the will, he should receive nothing.
13․The appellant was not aware of the action that the deceased had taken.
14․The deceased died on 30 September 2018.
15․On 16 October 2018, the appellant filed a caveat in respect of the grant of probate to Ms Gordon.
16․On 25 October 2018, Ms Gordon sent the appellant correspondence informing him that the Estate would not make the bequests in the will because the Estate had insufficient assets to pay the two remaining cheques issued by the deceased to the Trust. However, Ms Gordon offered to pay the appellant the $200,000 bequest from her own funds, on the condition that he abandoned any rights against the Estate. Similar subsequent offers were made on 30 October 2018 and 23 September 2019, neither of which were accepted by the appellant.
17․On 26 February 2019, the appellant initiated the subject proceedings against Ms Gordon in her personal capacity (the first respondent), her capacity as trustee of the Trust (the second respondent) and in her capacity as executor of the Estate (the third respondent). In those proceedings, the appellant contended that the cheques did not create a liability on the Estate because they had not been given for value. In the alternative, the appellant contended that by presenting the cheques, the third respondent breached her fiduciary duty to the appellant as a beneficiary under the will, and/or committed the tort of devastavit, or alternatively, fraud on the power.
The relief originally sought in the proceedings
18․In an Amended Statement of Claim filed on 14 June 2019, the appellant sought:
(1)a declaration that the cheques issued by the deceased did not create a debt owed by the Estate to the Trust;
(2)in the alternative to order 1, a declaration that any debt, action or funds owing to the Trust from the Estate are subject to a constructive trust in favour of the Estate;
(3)in the alternative to orders 1 and 2, that the first respondent pay equitable compensation to the Estate equal to any debt created in favour of the Trust;
(4)Further provision for the appellant be made pursuant to s 8 of the Family Provision Act;
(5)In the alternative to order 4, that the first respondent pay equitable compensation to the appellant equal to $200,000;
(6)Further to order 5, that the first respondent pay equitable compensation to the appellant equal to such amount as the Court considers would have been awarded as further provision under s 8 of the Family Provision Act.
19․The appellant also sought costs from the first respondent, or, in the alternative, costs from the Estate.
20․On 25 March 2019, the third respondent was granted probate of the will. As trustee of the Trust, the second respondent presented the two remaining cheques for $1.2 million in late April 2019 and they were dishonoured on 26 April 2019.
21․The proceedings came before the primary judge on 20 and 22 April 2020 and 29 July 2020. On 24 March 2021, the primary judge found in favour of the first, second and third respondents: Ross v Gordon (No 1). Specifically, her Honour held:
(1)The appellant’s filing of a caveat on 16 October 2018 was a challenge to the will, which enlivened the deceased’s instructions that the appellant should receive nothing if he challenged the will: Ross v Gordon (No 1) at [96].
(2)Under the Cheques Act 1986 (Cth), the Estate was liable to the trust for $1,200,000 when the cheques were drawn. As this liability exceeded the Estate’s assets, no provision could be made pursuant to the will or the Family Provision Act: Ross v Gordon (No 1) at [170].
(3)By presenting the cheques, the third respondent did not breach her fiduciary duty as executor to the beneficiaries of the will: at [158]. Presenting the cheques also did not amount to committing the tort of devastavit or a fraud on the power: Ross v Gordon (No 1) at [159]-[166].
(4)As the cheques validly imposed a liability on the Estate that exceeded the assets in the Estate, no claim for additional provision could be made under the Family Provision Act. However, her Honour considered the appellant’s claim under the Family Provision Act on a contingent basis, in case the matter proceeded to appeal. Her Honour was not satisfied that the will did not adequately provide for the appellant’s maintenance, education or advancement in life, and accordingly dismissed the family provision claim: Ross v Gordon (No 1) at [203].
22․Her Honour also ordered that the appellant pay the respondents’ costs. The appellant subsequently applied for variation of the costs order, such that the parties should bear their own costs. The primary judge rejected that application and confirmed her original order for costs: Ross v Gordon (No 2) [2021] ATCSC 136.
The first appeal proceeding (Ross v Gordon (CA))
On 20 April 2021, the appellant appealed the orders made in Ross v Gordon (No 1), on the grounds that the primary judge fell into error by:
(ii)Misapprehending the conflict of interest between the three respondents;
(iii)Failing to prioritise the instructions in the deceased’s will over those given orally prior to execution; and
(iv)Ruling that the Estate’s liabilities exceeded its assets.
The orders sought in the Notice of Appeal were:
(1)Leave to appeal be granted;
(2)The appeal be upheld;
(3)Judgment be granted to the appellant;
(4)That any chose in action in favour of the Trust from the Estate be subject to a constructive trust;
(5)In the alternative to (4), that the first respondent pay equitable compensation to the appellant;
(6)The matter be remitted to the Supreme Court for determination of quantum;
(7)Costs; and
(8)Any other order the Court considers appropriate.
In oral submissions, the appellant sought orders that “in light of the likely increase in the value of … the Estate since the hearing …, the matter should be remitted to the primary judge in order that she reconsider her contingent conclusion on the family provision claim”.
23․The appeal was allowed on 10 May 2022: Ross v Gordon (CA) at [76]. In a unanimous decision, the Court dismissed Ground 1, finding that no conflict of interest arose because the scope of the third respondent’s fiduciary duties to the beneficiaries of the will was expressly qualified by clause 9 of the will, which permitted the respondent to act simultaneously as trustee of the Trust and executor of the will: Ross v Gordon (CA) at [38] – [41]. The Court also dismissed Ground 2, finding that there was no evidence that the instructions in the deceased’s will reflected a change of intention from those given orally prior to execution: Ross v Gordon (CA) at [43].
24․The Court upheld Ground 3, that the learned trial judge erred in ruling that the Estate’s liabilities exceeded its assets. In so holding, the Court focussed (at [57]) on the fact that as a cheque was a simple contract between parties, it necessarily required consideration in exchange for the payment before it constituted an enforceable liability. The Court found at [73]:
Because of the absence of consideration, there was no enforceable liability arising from the holding of the cheques and no liability arising under the Cheques Act from the dishonour of the cheques. The Estate was therefore to be administered on the basis that there was no liability to the Trust.
25․The Court noted that the appellant sought orders for remittal of the matter to the primary judge for reconsideration of his claim for further provision under the Family Provision Act, on the basis that the Estate had recently increased in value. The Court considered such an order appropriate in view of the need for further evidence to be adduced on this question.
The Court accordingly set aside the decision of 24 March 2021 and remitted the matter to the primary judge for redetermination in accordance with the Court’s reasons. The Court of Appeal also ordered that the costs of appeal were to form part of the costs of those proceedings in the Supreme Court. The remittal
26․In the remitted proceedings, however, the appellant abandoned his claim for reconsideration of his entitlement under the Family Provision Act: Ross v Gordon (No 3) at [10]. Rather, he sought either “an appropriately crafted declaration [which] would deprive the Estate of the capacity to deal with the Cheques as giving rise to an enforceable liability in favour of the Trust”; or the imposition of a constructive trust over the estate’s assets in favour of the appellant, to the sum of $200,000 plus interest and costs; or a constructive trust depriving the Trust of beneficial ownership of the chose in action created by the cheques, thus allowing the estate to distribute the bequests under the will and satisfy any award for further provision. He submitted that these declarations were necessary to give effect to paragraph [73] of the Court of Appeal’s decision.
27․The respondents submitted that the remittal to the Supreme Court was limited to determination of the family provision claim. As this claim was no longer pressed, the respondents contended that the Supreme Court had no jurisdiction to grant the relief sought by the appellant.
28․The primary judge found that it was “tolerably clear from the reasons (especially paragraphs [74]-[75]) that the remittal was being made for further consideration of the family provision claim only.” Her Honour considered that the finding that the cheques did not create a liability to the Trust did not “lead to any change in the legal position of the plaintiff’s entitlement under the deceased’s will given my unchallenged findings in relation to the family provision claim”: Ross v Gordon (No 3) at [46]-[47].
29․As a result, her Honour found that she did not have jurisdiction to grant the relief sought by the appellant. Her Honour entered judgment for the respondents and ordered that the appellant pay the respondent’s costs of that proceeding and of the previous appeal.
The present appeal
The parties’ contentions
30․The appellant contends that the primary judge fell into error by finding that her jurisdiction to hear the remitted matter was limited to consideration of the appellant’s family provision claim. The appellant submits that her Honour should have awarded declaratory relief in favour of the appellant, as the basis for that relief had been made out in full. The appellant sought a declaration from this Court that “the Cheques issued by the late Olga Hart to the Olga Hart Trust have not created a liability owed by the Estate to the Trust”.
31․The appellant further contends that her Honour erred in failing to award the appellant costs, including of the first instance proceedings, the Court of Appeal proceedings and the remitted proceedings.
32․In response, the respondents submit that:
(i)The primary judge correctly concluded that the remittal was limited to the further consideration of the family provision claim;
(ii)There is no utility in granting a declaration, as there is no longer an active controversy between the parties;
(iii)The appellant has not demonstrated that there was any error in the primary judge’s discretionary costs determination.
Issues arising on appeal
33․The present appeal raises three issues for determination:
(i)What was the scope of the Court of Appeal’s remittal order?
(ii)Should declaratory relief have been ordered?
(iii)Did the primary judge err in her discretion when determining the appropriate costs order?
34․These issues are addressed below.
The scope of the Court of Appeal’s remittal order
35․Section 37O(1)(c) of the Supreme Court Act provides that the Court of Appeal has power:
(c) to set aside the order [appealed from] (completely or in part) and remit the proceeding to the court constituted by a single judge for further hearing and decision, subject to any directions the Court of Appeal considers appropriate;
36․It is clear from the terms of the above provision that the Court has power to confine the scope of an order remitting the proceedings. Whether a particular remittal order is in fact so confined is a matter of interpretation of the remittal order.
37․Ordinarily, “orders made by a court will be taken at their face value rather than being construed in context having regard to their purpose and object”: Kaluza v Repatriation Commission [2011] FCAFC 97; 280 ALR 621 at [37]. However, at least where there is ambiguity (and arguably even where there is no ambiguity), a court charged with construing orders “may have regard to the reasons to which the orders are intended to give effect”: Lim v Comcare [2019] FCAFC 104 (“Lim”) at [40]; Walker Corporation Pty Ltd v Sydney Harbour Foreshore Authority [2009] NSWCA 178; 168 LGERA 1 at [37], citing Repatriation Commission v Nation [1995] FCA 1277; 57 FCR 25; Peacock v Repatriation Commission [2007] FCAFC 156; 161 FCR 256 at [19]. Further, a material consideration in construing an order will be the nature of the dispute: Walker Corporation at [38].
38․It is necessary to have regard to the reasons in the present case as they were incorporated by reference in the remittal order made by the Court of Appeal. As already noted, that order was in the following terms:
The orders of the Supreme Court on 24 March 2021 are set aside and the proceedings are remitted to the Supreme Court for determination in accordance with the reasons of the Court of Appeal.
39․At [74] of its reasons, the Court of Appeal provided the following reasons for its decision to remit the proceedings to the primary judge:
As pointed out at [27] above, if the appeal was allowed, amongst the orders sought was an order remitting the matter to the trial judge for further consideration of the family provision claim because of the potential for the principal asset of the Estate, the deceased’s former residence, to have increased in value. The respondents contended that there was no evidence of such an increase in value and as a consequence no remittal should be made. Given the passage of time since the matter was heard by the primary judge, whether or not further evidence of value is permitted and what consequences flow from the admission of any further evidence are matters best resolved by the primary judge before whom all of the evidence was led and who saw and heard the witnesses.
40․At paragraph [27] of the judgment, the Court of Appeal had previously noted that:
The orders sought on the appeal are that any chose in action in favour of the Trust from the Estate be subject to a constructive trust and that the matter be remitted to the Supreme Court for determination of quantum. In oral submissions, counsel for the appellant submitted that in light of the likely increase in the value of the real property forming part of the Estate since the hearing of the proceedings, the matter should be remitted to the primary judge in order that she reconsider her contingent conclusion on the family provision claim.
41․In short, [27] of the Court of Appeal’s judgment recorded that the appellant had sought remittal on two distinct bases:
(i)First, in the Notice of Appeal, the appellant sought remittal to determine quantum in the event that the Court accepted his contention that any chose in action in favour of the Trust was subject to a constructive trust.
(ii)Second, in oral submissions, the appellant also sought remittal to enable further consideration of his family provision claim.
42․The issues for remittal were defined by what the appellant sought. At no stage did the appellant seek remittal of the proceedings for any other purpose.
43․As the Court found that the cheques failed to impose a liability on the Estate, the first issue did not arise. That left the second issue for further hearing on remittal, which is what the primary judge determined was before her. This issue was not pursued by the appellant.
44․The appellant’s counsel contended that the seeking of an order that “judgment be granted to the plaintiff” should be read as a reference to all of the relief sought in the Amended Statement of Claim (which, as set out at paragraph [18] above, included a declaration that the cheques issued by the deceased to the Trust “have not created a debt owed by the Estate to the Trust”). However, he also frankly acknowledged that no express reference was made to the appellant seeking this declaration in the appellant’s written or oral submissions to the Court of Appeal.
45․It is incumbent on parties to clearly articulate the orders which they seek, both at first instance and on appeal, particularly in adversarial litigation. A claim that “judgment be granted to the plaintiff” does not incorporate a reference to all orders sought in a Statement of Claim. If the appellant intended to maintain any claim for declaratory relief consequent upon his success on Ground 3, such a declaration should have been specifically sought in the Notice of Appeal. There is express provision for the appellant to list the orders sought in the prescribed form for a notice of appeal (Form 5.4), so that there is no doubt about what relief is sought from the Court on appeal. None of the orders listed by the appellant as the relief sought (set out at [24] above) referred to a declaration of any kind.
46․As the appellant’s counsel properly acknowledged, each of the findings that were relevant to the making of a declaration had been made by the Court of Appeal. In these circumstances, there would have been no purpose in the Court of Appeal remitting the consideration of whether a declaration should have been made to the primary judge. If the appellant had sought a declaration in the Court of Appeal, that application could, and would, have been determined by the Court of Appeal. The issue did not arise for determination because the appellant did not seek declaratory relief consequent on the success of Ground 3 in the Court of Appeal proceedings.
47․Having regard to the reasons of the Court of Appeal, and the issues as defined by the parties, the remittal did not extend to consideration of the appellant’s claim for a declaration concerning the existence of a constructive trust. Her Honour was therefore correct to find that the family provision claim was the only claim for relief which remained outstanding following the Court of Appeal’s determination.
48․Accordingly, the first ground of appeal must be dismissed.
Whether declaratory relief should have been ordered
49․Even if error had been established, we do not consider that the appellant has made out his claim for declaratory relief.
50․At the time of the hearing of the remitted proceedings, the appellant had the benefit of a judgment of the Court of Appeal which held that “the Estate was … to be administered on the basis that there was no liability to the Trust”: Ross v Gordon (CA) at [73].
51․The respondents did not indicate any intention not to comply with this judgment. Rather, in the proceedings before the primary judge, the respondents noted that there was “no remaining controversy between the parties as the Court of Appeal has already resolved the matter”: Ross v Gordon (No 3) at [40]. In oral submissions in this Court, counsel for the respondents confirmed that the respondents “absolutely accept” the reasoning of the Court of Appeal, in particular that “the Estate does not owe the Trust anything”.
52․Declaratory relief is a discretionary remedy. The practical relevance or utility of a declaration is a significant consideration in determining whether to grant relief of this nature: Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 581-2; [38]; Plaintiff M61/2010E v Commonwealth [2010] HCA 41; 243 CLR 319 at 359 [102]-[103] and Forster v Jododex Australia Pty Ltd [1972] HCA 61; 127 CLR 421 at 437-438 [9].
53․In his written and oral submissions to this Court, the appellant noted that the Court of Appeal’s finding that the Estate should “be administered on the basis that there was no liability to the Trust” was “an essential prerequisite for the granting of any relief”. The appellant submitted that the respondent could not “avoid the consequences of its intransigence by claiming obedience only when remedies are about to be imposed”. The difficulty with this submission is that, as outlined above, the appellant did not seek a declaration in the proceedings in the Court of Appeal. Having not sought such a declaration in that jurisdiction, the question as to whether a declaration should now be granted must turn on whether it has practical relevance or utility at the time at which it is sought.
54․In this case, given the respondents have agreed to administer the Estate and distribute any bequests (including the appellant’s bequest) “on the basis that there was no liability [created by the cheques] to the Trust”, the grant of declaratory relief in almost identical terms would not have any practical utility or consequence for the parties. Accordingly, even if the primary judge had erred in her construction of the remittal order, we would not now consider it appropriate to grant the declaratory relief sought by the appellant.
55․During oral argument, the appellant’s counsel explained that the appellant’s renewed application for a declaration related to his application for the costs of the proceedings. Specifically, it appeared to have been assumed if the appellant obtained the declaration, he would be entitled to his costs for the whole of the proceedings, and that if a declaration was not obtained, no costs would be payable.
56․If this assumption was the motivation behind the appellant’s renewed application for a declaration in the remitted proceedings, it was misconceived. As outlined below, it was not necessary for the appellant to obtain a declaration in order for a costs order to be made in his favour in respect of the first appeal, or the remitted proceedings.
57․It is to this issue of costs that we now turn.
Costs
58․The Court of Appeal ordered that “the costs of the appeal are to form part of the costs of the proceedings in the Supreme Court”. The basis for this costs order is explained in [75] of the Court of Appeal judgment:
Although the appeal has been successful, given that it was brought in the face of a conclusion by the primary judge that the appellant had not established that adequate provision for his proper maintenance, education or advancement was not made in the deceased’s will, it is appropriate that the costs of the appeal form part of the costs of the proceedings in the Supreme Court.
59․In the remitted proceedings, the primary judge ordered that the appellant pay the respondents’ costs of the proceeding as assessed or as agreed. Her Honour’s reasoning in support of this order was as follows (Ross v Gordon (No 3) at [57] and [58]):
In relation to costs, the costs will follow the event. Accordingly, there will be an order that the plaintiff pay the [defendants’] costs of the proceeding as assessed or agreed.
The effect of that costs order would mean that the defendants are also entitled to their costs of the appeal as a result of order 3 of the orders of the Court of Appeal.
60․In so concluding, her Honour appears to have assumed that the costs of the Court of Appeal proceedings necessarily followed the outcome of the remitted proceedings.
61․Costs are in the discretion of the Court: r 1721(1) of the Court Procedures Rules 2006(ACT). The discretion is very wide, although it must be exercised judicially, in accordance with established principle and the statutory context: Oshlack v Richmond River Council [1998] HCA 11; 193 CLR 72 at 86; [35], 96; [65]. Before an appellate court may interfere with the exercise of a discretionary decision such as an order concerning costs, there must be an error of the kind identified in House v The King [1936] HCA 40; 55 CLR 499 at 504 – 505.
62․In the present case, the starting point for her Honour’s determination that the appellant pay the respondents’ costs may have been unremarkable. In the absence of special features warranting a different order, costs ordinarily follow the event: Oshlack at 97; [67]; GJ v AS (No 4) [2017] ACTCA 7 at [25]-[27]; Hulanicki v Walton (No 2) [2015] ACTCA 45 at [11].
63․However, it is important to understand what the phrase “costs follow the event” means. The history of the law and practice in relation to the meaning of that phrase has been detailed in other judgments dealing with costs: see, for example, Priestley v Priestley (No 2) [2016] NSWSC 1259 at [10]-[49], Wyzenbeek v Australasian Marine Imports Pty Ltd (No 3) [2019] FCA 439 at [39]. In litigation such as the present dispute, there may be some doubt as to whether “the event” refers to the overall result of the litigation or the outcome of particular issues.
64․The order in the Court of Appeal that the “costs of the appeal form part of the costs of the proceedings in the Supreme Court” is tantamount to an order that the costs be costs in the cause. That is, the Court of Appeal intended that the primary judge make an assessment as to liability for costs of the appeal, as well as the remitted proceedings, once the final outcome of the litigation was known.
65․If the family provision claim was ultimately successful, the appellant may have been seen as ultimately successful, in substance, in all issues on which he claimed. A costs order in his favour for the whole of the appeal proceedings and the remitted proceedings may well have been appropriate.
66․This was not, of course, the case. Equally however, the appellant’s withdrawal of the family provision claim and his failure to establish that he was entitled to declaratory relief in the remitted proceedings did not mean that overall, he was entirely unsuccessful in the litigation such as to warrant the costs order that was made by the primary judge.
67․The outcome of the Court of Appeal proceedings is that the Estate is not burdened by the liability occasioned by the cheques to satisfy a debt to the Trust. That was a measure of substantive success on appeal. In light of the Court of Appeal’s order that costs should be costs in the cause, once the family provision claim was abandoned, this success should then have been considered by the primary judge in determining the appropriate costs orders to be made.
68․The primary judge’s reasoning does not take account of the fact that there was a mixed outcome in the proceeding as a whole. It does not automatically follow from a finding that costs followed the event in the remitted proceeding below that the appellant also became liable to pay the costs of the first appeal, or indeed, of the entire proceeding. It is apparent from the primary judge’s reasoning that the misapprehension was one of misconstruing or misunderstanding the order made by the Court of Appeal. That is an error of law. It falls within the established grounds of error for appellate intervention in respect of a discretionary decision. Accordingly, Ground 3 should be allowed.
69․As we are satisfied that there was error in the primary judge’s costs decision, it now falls to this Court to determine the appropriate costs orders to be made. The Court is required to determine the appropriate order in the interests of justice: Clarkson Williams Partners Pty Ltd v Vaughan (No 2) [2016] ACTCA 8 at [12]. Fairness dictates how the discretion as to costs should be exercised: Bowen Investments Pty Ltd v Tabcorp Holdings Ltd (No 2) [2008] FCAFC 107 at [5]. Consideration of the proceedings to date demonstrates that both parties have been successful on some issues, and unsuccessful on others. In particular:
(i)The respondents were unsuccessful in their claim that the cheques operated to impose a liability on the Estate. Although the appellant was unsuccessful at first instance in relation to this issue, his contentions on this issue were ultimately accepted in the Court of Appeal.
(ii)The appellant was unsuccessful both at first instance and on appeal in respect of his contentions concerning breaches of fiduciary duties. However, these claims were made in the alternative to his primary contention, which was that the cheques did not operate to impose a liability on the Estate (in respect of which he was successful).
(iii)The appellant was unsuccessful at first instance on his claim under the Family Provision Act. On appeal, he applied for and was granted a remittal for the primary judge to reconsider this claim, which he did not pursue.
(iv)The appellant was unsuccessful in the remitted proceedings and in these proceedings in his application for a declaration.
(v)The appellant was successful in the present appeal in demonstrating that the primary judge erred in her approach to the determination of the appropriate costs order.
70․We do not consider that it would be appropriate to frame orders intended to compensate each party for their respective successes. Each of the above issues are interrelated, and it would be extremely difficult, if not impossible, to differentiate between the costs of each. The assessment of any such costs orders would generate further unnecessary expense.
71․Rather, as each party has had a substantial measure of success in the present proceeding and in each of the previous proceedings, the just order is for each party to pay their own costs of the proceedings (including the present appeal, the remitted proceeding, the first Court of Appeal proceeding, and the proceeding at first instance).
Orders
72․For the above reasons, the following orders are made:
(1)The appeal is allowed in part.
(2)Order 2 made by the primary judge on 20 October 2022 in Ross v Gordon (No 3) [2022] ACTSC 289 is set aside.
(3)In lieu of the costs order set aside, the following orders are made:
(c)Each party is to pay their own costs of the proceeding SC 80 of 2019.
(d)Each party is to pay their own costs of the appeal proceedings CA 19 of 2021 and CA 63 of 2022.
| I certify that the preceding seventy-two [72] numbered paragraphs are a true copy of the Reasons for Judgment of the Court Associate: A McCook Date: 18 October 2023 |
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