Sorbara v Prochilo (No 2)
[2022] VSC 225
•5 May 2022 (delivered orally)
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST
S CI 2018 00778
| JOSEPH SORBARA AND GAIL SORBARA | Plaintiffs |
| v | |
| VICKI MAREE PROCHILO AND ROSINA MARRA (IN THEIR PERSONAL CAPACITY OF THE ESTATE OF TERESA PROCHILO, DECEASED) | Defendants |
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JUDGE: | Gorton J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 5 May 2022 |
DATE OF RULING: | 5 May 2022 (delivered orally) |
| DATE OF PUBLICATION OF WRITTEN REASONS: | 6 May 2022 |
CASE MAY BE CITED AS: | Sorbara v Prochilo (No 2) |
MEDIUM NEUTRAL CITATION: | [2022] VSC 225 |
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PRACTICE AND PROCEDURE – Death of party – Court notified of death after judgment delivered – Appointment of a person to represent the estate of the deceased party prior to probate – Where undertaking made that there is no notice of probate challenge – Supreme Court (General Civil Procedure) Rules r 16.03(1)(b).
COSTS – Whether costs on indemnity or standard basis – Whether rejection of a Calderbank offer was unreasonable – Where plaintiff ultimately unsuccessful but established many issues in dispute – Costs ordered on standard basis – Whether costs of scanning by hand rather than making documents available for inspection should be recoverable – Relevance of documents being scanned rather than being made available for physical inspection – Where discovery relevant – Where how discovery was made was within the parties discretion – Application for discovery costs unsuccessful.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr A Berger | Kim Bainbridge Legal Service Pty Ltd |
| For the Defendants | Mr S Gannon | Embleton & Associates |
HIS HONOUR:
The Sorbaras are fruit and vegetable farmers in Woorinen, near Swan Hill. The Prochilos are their neighbours. On 9 September 2017, the Prochilos erected a fence along part of the title boundary between the two properties. The Sorbaras commenced a proceeding against the Prochilos in which they sought, inter alia, declarations that they had valid easements over parts of the Prochilos’ land on the basis of the doctrine known as the ‘lost modern grant’. On 25 March 2022 I published reasons in which I indicated that I proposed to dismiss the Sorbaras claim.[1] I use the same terms in this ruling as I used in those reasons for judgment.
[1]Sorbara v Prochilo [2022] VSC 146.
A. The death of Mrs Teresa Prochilo.
When the proceeding was commenced, the defendant was Giuseppe Prochilo. Before the hearing commenced, Giuseppe Prochilo died. Mrs Teresa Prochilo, his widow and the executrix of his estate, was substituted as the named defendant. She, as a beneficiary under his will, became the registered proprietor of the relevant property. That was the situation that existed throughout the trial in the proceeding.
On 16 March 2022, which was after the trial had been completed but before I had delivered judgement, Teresa Prochilo died. Her daughter, Vicki Maree Prochilo, has produced a will dated 6 August 2021 in which Vicki Prochilo and her sister Rosina Marra (who is also one of Teresa Prochilo’s daughters) are appointed executors. Probate has not yet been granted. The land the subject of the proceeding remains, I assume, registered in Teresa Prochilo’s name. Vicki Prochilo and Rosina Marra have indicated their willingness to be substituted as defendants to the proceeding.
I have determined to make an order, pursuant to r 16.03(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015, appointing Vicki Prochilo and Rosina Marra to represent the estate of Teresa Prochilo for the purposes of this proceeding. Making such an order entails a risk of complications subsequently arising in the event that probate is not granted. However, I do so for the following reasons:
(a) an order finally disposing of the proceeding cannot be made until such time as the proceeding is regularised by substituting someone as a representative of Teresa Prochilo’s estate;
(b) the plaintiffs have not opposed the appointment of Vicki Prochilo and Rosina Marra to represent the estate of Teresa Prochilo;
(c) the Prochilos were successful in the proceeding. Accordingly, the proceeding will be dismissed, and any orders I make in the proceeding will not have the effect of imposing any liability on the estate or of transferring any assets to the named representatives. There will be an order that the plaintiffs pay the defendant’s costs, which I consider below. Out of an abundance of caution, I will stay the actual payment of any costs payable by the plaintiffs to the defendants until such time as probate has been granted; and finally
(d) I have been informed by counsel who acted for the defendants in the hearing, and who appeared before me today to prosecute this application, that his instructors had communicated with Joseph Prochilo (the defendants’ brother, a key witness in the case and someone who farmed the land but is not a beneficiary under the will) and that he was aware of and agreed to the appointment of Vicki Prochilo and Rosina Marra, that he was aware of the will and accepts its terms, and that, as far as his instructors were aware, there were presently no challenges to the will. His instructors also undertook, through counsel, to prepare and to file an affidavit stating as such.
B. The costs of the proceeding
By letter dated 22 March 2019, the Prochilos offered to resolve the proceeding on terms including that the fence remain (and that they be entitled to fence the entire boundary of their land), they pay the Sorbaras $10,000 towards the cost of any necessary adjustments to their farming practices or infrastructure, and each party bear their own costs of the proceeding. The offer was expressed to be open for acceptance for a period of 14 days, and indicated that should the offer not be accepted and the Sorbaras failed to obtain a judgment more favourable to them than the offer, then the offer would be relied upon in support of an application for indemnity costs from the date of the offer.
The Prochilos seek their costs of the proceeding on the standard basis up until 22 March 2019, and thereafter on the indemnity basis. They contend, correctly, that the Sorbaras failed to obtain a judgment more favourable to them than the offer, that the offer was made at a time when pleadings had been closed, that the Sorbaras’ claim did not substantially alter after the offer, and that no reasons were given for its rejection.
The Sorbaras accept (subject to one qualification considered below) that the general rule that costs follow the event should apply, but contend that costs ought be assessed on the standard basis only.
My discretion as to costs is unfettered, save that it must be exercised judicially rather than capriciously. The most important consideration is whether it was unreasonable in all the circumstances for the Sorbaras not to accept the 22 March 2019 offer that was put by the Prochilos.[2] It must be remembered that there is a public interest in settling litigation, now reflected in the terms of the Civil Procedure Act 2010, that parties should be encouraged to do so, and that if they act unreasonably in not doing so it will ordinarily be appropriate to elevate the costs payable, not as a punishment, but to reduce the solicitor-client costs burden that remains on the successful party.
[2]Hazeldene’s Chicken Farm Pty Ltd v Victorian Workcover Authority (No 2) (2005) 13 VR 435, 441 [23] (Warren CJ, Maxwell P and Harper AJA).
Nonetheless, I accept the Sorbaras’ submission that, in the circumstances of this case, costs ought to be ordered on the standard basis only. I do not consider that it was unreasonable in the relevant sense for the Sorbaras not to have accepted the Prochilos’ offer, for the following reasons:
(a) The offer made, although significant, represented, I am prepared to assume, a significant discount on what the Sorbaras stood to achieve were their claim to succeed.
(b) The offer did not identify the factual matters upon which the Prochilos ultimately succeeded in their defence of the action. I accepted, contrary to the position put by the Prochilos, that the Sorbaras had used part of the Prochilos’ land as of right for the relevant 20 year period ending on September 2017. However, I was not satisfied that the Prochilos had been on sufficient notice of that use prior to the commencement of that relevant 20 year period, that is, prior to September 1997. This ‘winning argument’ was not put forward in the offer as a reason for which the offer ought to have been accepted; the offer did not set out any reasons for which, according to the Prochilos, the Sorbaras’ claim was likely to fail. Even if the offer is read with the Prochilos’ earlier rejection of the Sorbaras’ earlier offer, the reasons put for that rejection were not legal reasons for which it was said the case would fail. The point was not made that even if the Sorbaras had used the land for 20 years or so, it could not be shown that the Prochilos were on notice of that use before that 20 year period commenced. Indeed, this argument, as a discrete reason for which the claim might fail, essentially emerged only during the course of the trial. I accept that there is no general rule that an offer must set out with any particular level of specificity, or at all, the basis for the offeror’s contention that the offer should be accepted.[3] But in the circumstances of this case, the absence of any reference by the Prochilos in their offer to the argument upon which they ultimately succeeded is a factor against a finding that it was unreasonable for the Sobaras not to accept the offer. In my view, the loss by the Sorbaras on this discrete basis was not, in the context of the myriad issues then alive in the case, most of which the Sorbaras succeeded on, sufficiently anticipatable such that in my view it was unreasonable for the Sorbaras not to accept the offer when it was made.
[3]Ibid 442 [27] (Warren CJ, Maxwell P and Harper AJA).
Also, it is separately significant, in the exercise of my discretion, that the Sorbaras succeeded in most of the disputed issues joined between the parties. This is a further, and independently sufficient, reason for which, in my view, ordering the Sorbaras to pay costs from the date of the offer on the indemnity basis, which would extend to requiring the Sorbaras to pay indemnity costs in respect of those issues in respect of which they succeeded, would not be doing ‘substantial justice‘ between the parties.[4]
[4]See, eg, Chen v Chan [2009] VSCA 233, [10] (Maxwell P, Redlich JA and Forrest AJA).
Accordingly, subject to the matters considered below, I will order that the Sorbaras pay the Prochilos’ costs of the proceeding to be taxed in default of agreement on the standard basis.
C. The costs of the Sorbaras’ supplementary court book dated 16 November 2021
The Prochilos asked the Sorbaras to discover ‘books and records recording the growth, harvesting, yields and sales of any alleged cash crops (including capsicums) in the areas adjoining the asserted easement.’ They noted that the Sorbaras contended that they had grown capsicums in the relevant area ‘in each year since 1995’. In response, the Sorbaras discovered and produced docket books dating from February 1996 to February 2018. These were completed by hand and not digitised. The docket books referred to various crops that were sold and thus presumably grown and harvested which showed that the farm was farmed. But the books did not show where on the Sorbaras’ properties the crops were grown. The Sorbaras manually scanned these documents, produced them to the Prochilos and put them in a supplementary court book. The supplementary court book amounted to 2299 pages. The Sorbaras sought an order that the Prochilos pay their costs of discovering and producing those documents.
The Prochilos submitted that discovery and production of these documents was an ordinary incident of the litigation and so no special order ought be made in respect of them. To the extent necessary, they defend their request of the Sorbaras that they discover those documents particularly because the Sorbaras had alleged that they were growing capsicums on the relevant land since 1995, and that the nature of the crop grown on the relevant land informed the question of how that land, and those parts of the Prochilos’ land over which the easement was claimed, were used. It was the Prochilos’ case that for so long as the only crop grown above the CB boundary was plum trees, there was ample room on which the Sorbaras could turn their machinery on their own land. On that basis, the date upon which capsicums started to be farmed on that land was of some potential relevance. The Prochilos also contended that if the documents were not discoverable, then they should not have been discovered; the Sorbaras cannot discover documents, by which they concede discoverability, and then claim the costs of doing so on the basis that the documents were not properly discoverable.
It is true, as the Sorbaras pointed out, that they resisted providing the discovery. In the course of doing so, they advised that there were no records that indicated ‘the specific location of where particular crops were planted’, and that it would be ‘enough’ to give oral evidence ‘that crops are where they have been pleaded to be’. When the Sorbaras did provide the discovery, they referred to the Civil Procedure Act 2010, which, as I read it, was an indication that they were providing the discovery of the docket books under protest as it were, and reserved their right to raise its need at a later date, as they now have.
But, they did not refuse to provide it. Oftentimes, of course, it may be easier and cheaper to provide discovery sought than to argue about whether it is legally required. But here, where the Sorbaras were mounting a claim that alleged more than 20 years of continuous use of the Prochilos’ land to tend crops, I am not prepared to conclude that historic documents relating to their harvesting of crops over that time and which identified what crops were grown when were not relevant in the sense required to make them discoverable. There is force in the Prochilos’ submission that until the documents were reviewed, it could not be known what significance they would bear.
Seen in that light, focus is drawn to the fact that the real concern is that the Sorbaras incurred the expense of scanning, by hand, each page that formed the supplementary court book. But this should not be seen as a necessary cost of making the discovery. In my view the Sorbaras would have been entitled to locate, review, discover, and then make available for inspection, the relevant docket books. The Prochilos could then have inspected them, and determined for themselves which pages, if any, needed to be scanned and produced. I appreciate that this ‘traditional’ approach is often not today followed, but in the circumstances of this case it was an option that could have been. I am not critical of the Sorbaras for engaging in the process of scanning each page, but in the circumstances I do not consider that the cost of doing so ought to be borne by the Prochilos, rather than by the Sorbaras.
For the above reasons, I will not make an order that the Prochilos pay the Sorbaras costs of discovering and scanning the documents that formed the supplementary court book.
I do not forget that the docket books also, almost incidentally, indicated the change in the operator of the farm from the Sorbaras as individuals to Sorbara’s Pty Ltd. They were, along with other financial records that were also discovered, in this way a cause of the Prochilos amending their defence to allege that the farming operator changed during the 20 year period. But this fact has not influenced me in reaching my decision, because this was not the reason behind the discovery of the docket books and, ultimately, the Prochilos failed in establishing that the change of farming operator mattered.
D. The Costs of Friday 3 December 2021
The hearing did not proceed on 3 December 2021 due to witness unavailability. The Sorbara were in evidence at that time. I reserved the costs of that day. The Prochilos seek an order that the Sorbaras pay the costs of that day on an indemnity basis.
In my view, it would not do justice between the parties to order the Sorbaras to pay costs of this day on an indemnity basis or indeed to make any particular order relating to the costs of that day.
This was a complicated case with several witnesses. The Prochilos cross-examined the Sorbaras’ witnesses extensively and at length. I am prepared to accept that there can be difficulty in a case such as this in ensuring continuity of witnesses. The duration of each witness could not easily be anticipated. I have no reason to doubt that the Sorbaras were doing their best to avoid unnecessary delays. I consider that the loss of court time on this day was, in that sense, an acceptable incident of a properly presented case.
That is not to say, of course, that the Prochilos cannot recover costs incurred for work done by their lawyers on this day. Their lawyers, or some of them, may have used the time available to work on their case. It seems likely that any work done on that day would have reduced the amount of work that would have had to have been done on other days in preparing the case generally including for the calling evidence and indeed even final addresses. If the day was used to work on the case, then, depending on the attitude of the costs court as to the reasonableness of the work done and the fees charged, such costs would likely be part of the costs of the proceeding and be recoverable on the standard basis. To my mind, that is a fairer position for the parties to be in than would be the case if I were to make a separate order requiring the Sorbaras to pay the costs of this day (regardless of whether or not work was done on that day) or to pay the costs of this day on an indemnity basis.
E. The Costs of the Application for Costs and of the Deaths of the Defendants
The Sorbaras were prepared to pay costs on a standard basis. The Prochilos sought, but have failed to obtain, costs on the indemnity basis since the date of the offer. The Sorbaras sought, late, but failed to obtain, a costs order relating to the discovery of the documents that formed the supplementary court book.
The Sorbaras sought an order that the Prochilos pay the costs of their application for indemnity costs. However, if I were to make such an ‘issues-based’ order, I would, to be fair, have to order that the Sorbaras pay the Prochilos’ costs of their application for costs of the discovery of the documents contained in the supplementary court book. The Sorbaras ought not to be at an advantage in this respect because they raised that argument late (they filed an affidavit that they relied on shortly before the hearing and did not address the issue in their written submissions but developed the argument orally). Have orders going each way would likely lead to taxation of a complexity which is not warranted. In the circumstances, I propose to make an order that each party bear their own non-common costs of the applications in respect of costs.
It may be that the Prochilos have incurred significant legal costs associated with accommodating the proceeding to the deaths of Giuseppe and then Teresa Prochilo. In my view, it would not be fair to impose those costs on the Sorbaras. Accordingly, I propose to make an order that each party bear their own costs occasioned by reason of the deaths of Giuseppe Prochilo and Teresa Prochilo.
F. Final Orders
I will record in Other Matters the circumstances that have given rise to the appointment of Vicki Maree Prochilo and Rosina Marra. I will also record in other matters that when the order uses the word ‘defendant’, it refers to the defendant or defendants from time to time. I will reserve liberty to apply in the event that that creates any difficulties with any taxation process, or in the event that probate of Teresa Prochilo’s will is not granted. The latter reservation of liberty to apply will also extend to liberty to apply for a variation of the order as to costs, in the event that probate is not granted or persons other than Vicki Maree Prochilo and Rosina Marra are appointed executors.
I propose to make the following orders:
(a) Pursuant to Rule 16.03(1)(b) of the Supreme Court (General Civil Procedure) Rules 2015, Vicki Maree Prochilo and Rosina Marra be appointed to represent the estate of Teresa Prochilo, deceased, and be substituted as defendants to this proceeding, nunc pro tunc, from 16 March 2022, and the proceeding heading be amended accordingly.
(b) There be dispensation from the requirement of filing and service of an amended Writ.
(c) The proceeding be dismissed.
(d) Subject to the paragraph immediately below, the plaintiffs pay the defendants costs including any reserved costs to be taxed in default of agreement on the standard basis.
(e) The parties bear their own non-common costs of the applications for costs, and their own costs incurred by reason of the deaths of Giuseppe and Teresa Prochilo.
(f) The payment of any costs, but not the taxation of any costs, be stayed pending a grant of probate of Teresa Prochilo’s will or further order.
(g) There be liberty to apply, including liberty to apply:
(i) in the event that the use of the word ‘the defendant’ in this order complicates any taxation, having regard to the change in identity of the named defendant from time to time; and
(ii) for a variation of the order in relation to costs in the event that probate of Ms Teresa Prochilo’s will dated 6 August 2021 is not granted or persons other than Vicki Maree Prochilo and Rosina Marra are appointed as executors of her estate.
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