Westpac v Gibbons (No 4)

[2012] SASC 80

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

WESTPAC  v  GIBBONS (No 4)

[2012] SASC 80

Reasons of Judge Lunn a Master of the Supreme Court

21 May 2012

PROCEDURE

Money paid into Court under s 47 Trustee Act as surplus on mortgagee's sale - money paid into Court in action in which mortgagee had previously obtained a possession order for the property against the mortgagor - two non-party claimants to the money allowed to intervene under 6R 89 - contest between them as to their respective entitlements - previously held claim of one intervener succeeded and order for payment out to him - cross-application on costs - nature of intervention under 6R 89 - held general rule that no costs should be ordered to or against interveners not applicable in circumstances of the case - costs to be dealt with under general discretion of the Court on costs - held costs should follow the event of the contest between the two interveners - application for costs on solicitor and client scale refused.

WESTPAC  v  GIBBONS (No 4)
[2012] SASC 80

JUDGE LUNN:

Reasons on applications for costs

1. This action was commenced by the plaintiff as the mortgagee of the subject property against the defendant as the mortgagor of that property seeking an order for possession under Part 17 of the Real Property Act 1886 (“Part 17”) which was preliminary to the mortgagee exercising its power of sale under the mortgage. On 28 October 2009 I made an order for possession. This disposed of the principal relief sought by the plaintiff in the action.

2. The plaintiff exercised its power of sale and on 23 February 2011 paid a surplus on that sale of $128,114.35 into this Court pursuant to s 47 of the Trustee Act.  Under that section it was authorised to pay that money into Court, as it was uncertain who was beneficially entitled to it.  In accordance with the general practice of the Court the notice of payment in was filed in this action.

3. By an interlocutory application of 4 March 2011 (FDN15) Dorian Pozzan applied for an order that the monies in Court be paid out to him. By a further application of 29 March 2011 (FDN17) Mr Pozzan applied for leave to intervene in the action. On 1 April 2011 another Master gave permission to Mr Pozzan to intervene. This was in accordance with a general practice of the Court to give applicants for the payment out of monies paid into Court as the surplus on mortgagees’ sales the status of interveners in actions which had been previously commenced by the mortgagees under Part 17. Permission was also given to another claimant to the monies in Court, Findon Developments Pty Ltd, to intervene, but its claim was subsequently dismissed and it is not relevant to what I now have to decide.

4. On 29 September 2011 Suzan Gibbons issued an interlocutory application (FDN33) seeking permission to intervene and for payment out to her of the monies in Court.  I cannot find where I expressly had made an order giving her permission to intervene, but in subsequent proceedings she was named, and treated, as an intervener.  Mr Pozzan did not contest that she should be an intervener.  I accept that I implicitly gave her permission to intervene as from 30 September 2011.  The only live issue in the proceedings has become what rights Mr Pozzan and Mrs Gibbons each have to the monies in Court and, insofar as they have such rights, whose right has priority, as there is not enough money in Court to satisfy all claims.

5. Both Mr Pozzan and Mrs Gibbons sought summary determinations on their respective applications for payment out of the monies that orders should be made in their favour.  Both applications were heard at the same time.  On 25 October 2011 I ruled that the contest between them was such that it was not appropriate to determine the issues summarily.[1]

   [1] See my Reasons, FDN40, [2011] SASC 186.

6. I subsequently made orders by consent that the issues raised by the two applications for payment out of the monies in Court should be determined by a Master on affidavit evidence with liberty to cross-examine deponents on their affidavits.  On 8 March 2012 I made a further order by consent limiting the hearing to specified issues.  This was on the understanding that if Mrs Gibbons failed on those issues her claim would be dismissed and payment out would be ordered to Mr Pozzan, but, if she succeeded on those issues, there would then need to be a further hearing about other issues relating to the claim of Mr Pozzan.  On 3 April 2012 I published reasons[2] finding that Mrs Gibbons had no interest in the subject property and on 26 April I ordered that FDN33 be dismissed and there be an order for payment out to Mr Pozzan.  At the request of counsel for Mrs Gibbons I adjourned the argument on costs to a subsequent date.  I then heard that argument and reserved my decision.

   [2]    FDN54.

7. On the argument about costs I had an application by Mr Pozzan that Mrs Gibbons should pay his costs of FDNs 15 and 33 as between solicitor and client and a cross-application by Mrs Gibbons that there should be no order as to the costs of FDNs 15 and 33. 

8. The submissions of counsel focussed on a line of authorities[3] that costs would generally neither be ordered to, or against, interveners other than in exceptional circumstances.[4]  I cannot agree that this is the proper approach to be adopted in this case.

   [3]    See Dal Pont Law of Costs 2^nd Edition, [11.40-41].

   [4]    City of Burnside v Attorney-General of South Australia (1994) 63 SASR 65.

9. The term “intervener” is not defined in the Supreme Court Civil Rules 2006.[5]   6R 89 gives the Court a discretion to permit a person who seeks to be an intervener permission to intervene.  The criteria for the permission are not laid down by the Rule.  Intervention will be allowed as a matter of judicial discretion where it is likely to assist the Court.[6]  The concept of intervention had been initiated in various specialist jurisdictions such as probate, admiralty and matrimonial, and various practices were adopted in those jurisdictions about who would be permitted to intervene and what roles they could play in the proceedings.[7]  6R 89 has broadened the application of the concept of intervention developed in these specialist jurisdictions to allow it to apply in any type of action.[8]

   [5]    It is possible that at least some interveners may be within the definition of “defendant” in 6R 4, but that is not relevant to the present issues.

   [6]    Jeavons v Chapman, Gray J, 19 September 2008, [2008] SASC 249.

   [7]    See the historical survey by Debelle J in City of Burnside v Attorney-General of South Australia, above.

   [8]    There are also some statutory rights of intervention for government bodies and agencies.  See the notes to 6R 89 in Civil Procedure South Australia.

10. Intervention is an intermediate status between that of a party to an action and that of an amicus curiae.  Permission to intervene does not give interveners any particular rights, but only allows them to be heard on such matters in the action where the Court considers it may be assisted by them.  What role the intervener will play in the action will depend upon the circumstances of the case and the discretion of the Court.  The status and roles of interveners will vary tremendously depending upon the circumstances of a particular case.  Hence, any rulings about costs ordered to be payable to, or by, interveners cannot apply to interveners generally, but only to interveners in cases similar to those where the orders were made.  The cases which have held that costs are not payable to, or by, interveners are those where interveners have only played a subsidiary role to the parties in the determination of the dispute.  That is not the case here.  None of the cases referred to by Mrs Gibbons dealt with costs orders as between multiple interveners, but on whether a party should either pay costs to, or receive costs from, an intervener.  Again, that is not the situation here. 

11. This case is not the usual case of intervention under 6R 89 where interveners seek to be heard on the effect which the issues being litigated between the parties might have on them. Here the issues between the plaintiff and the defendant were finally disposed of by the possession order. As a matter of administrative convenience and practice, the Registrar allowed the Notice of Payment Into Court under s 47 of the Trustee Act to be filed by the plaintiff in this action.[9]  Mr Pozzan and Mrs Gibbons are not parties to the action and did not qualify to be joined as parties under 6R 74.  However, it was a proper exercise of the Court’s discretion to allow them to be interveners under 6R 89, although the nature of their interventions did not directly relate to the determination of the issues in the action as between the plaintiff and the defendant.[10]  The authorities about the payment of costs to, and by, interveners in different situations of intervention do not govern how the cross-applications for costs between these particular interveners should be dealt with.

    [9]    The old Chancery practice was that such a payment into Court by a trustee was not treated as an action or given an action number, but any applicants for payment out of the monies had to issue their own originating summons or the like which was the vehicle within which the Court then determined the entitlement to payment out.  See Daniells Chancery Practice 8th Edition, Vol 2, pp 1536 et seq.

    [10]   Neither Mr Pozzan nor Mrs Gibbons had any direct interest in whether the plaintiff as the first mortgagee should gain a possession order over the subject property.

12. Payment into Court under s 47 of the Trustee Act is a procedure which does not necessarily involve applicants for payment out being given the status of interveners. There are some instances of payment into Court by mortgagees of surpluses flowing from the exercise of their powers of sale where there have been no prior proceedings under Part 17 relating to the subject property. In those cases the notice of payment into Court is treated as the institution of a new action. Payments into Court under s 47 are also not limited to surpluses on mortgagees’ sales, but include many other types of cases where trustees are uncertain how to distribute trust monies. The statutory provision reflects an old Chancery practice.[11] The practice of the Court under s 47, and its equivalents, and under the former Chancery practice, has been to exercise its general discretion on costs and, where appropriate, either to order that the costs be paid out of the fund in Court or, where unsuccessful claims have been made, to order that the claimant pay the costs of its unsuccessful claim.[12] Thus, I consider that these applications for costs should be dealt with under the Court’s general costs discretion based on s 40 of the Supreme Court Act 1935 and 6RR 263 and 264.

    [11]   Daniell Op cit at Volume 2, p 1537.

    [12]   Daniell Op cit at Volume 2, pp 1788-9; Re Armston’s Trust (1864) 46 ER 994.

13. Much of the argument before me dealt with the applicability of what Debelle J had said in City of Burnside v Attorney-General of South Australia, above, about what costs could be ordered against an intervener.  That was very a very different case, in that the intervener there was the lessee of land which the plaintiff was seeking authority to sell.  The sale was opposed by the defendant and the intervener was permitted to supplement the case of the defendant in opposition.  The plaintiff ultimately succeeded on appeal.  The plaintiff sought an order that the intervener pay its costs insofar as its intervention had prolonged the hearing of the appeal.  Debelle J accepted that there was an exception to any general rule that costs should not be awarded against an intervener where it had unsuccessfully prolonged the hearing.  Nothing which Debelle J said about orders for costs against interveners is contrary to what I have stated above.

14. I exercise the discretion on costs here without having regard to what has been said in the authorities referred to about the payment of costs by interveners.

15. In any event, Mr Pozzan would have incurred his costs of the application for payment out and his initial evidence in support of it.  Therefore, those costs are not to be awarded against Mrs Gibbons.

16. Each party made an unsuccessful summary application for payment out.  They should each bear their own costs of those applications.

17. This means that there should be no order for the costs of either intervener up to, but not including, the directions hearing on 8 November 2011.  There is no good reason why 6R 273(1) should not apply to the costs on and after that date and those costs follow the event, ie that Mr Pozzan established his right to payment out of all of the monies in Court and Mrs Gibbons failed in her application for payment out.

18. Mrs Gibbons argued that, as her claim had been found to fail on the first issue of whether she had an equitable interest in the Cape Jervis property, Mr Pozzan should not be entitled to his costs of the other issues which were argued.  I do not accept this.  The pleadings, and the agreed Statement of Issues, defined what was to be dealt with on the hearing of 19 March 2012.  There is no proper basis for an order about the costs of any particular issues.

19. Mrs Gibbons argued that the amount which was ordered to be paid out of Court to Mr Pozzan was sufficient to include his costs of obtaining the order.  As I understand the argument, it was based on an issue relating to the quantum of Mr Pozzan’s entitlement for interest.  Under the agreed Statement of Issues it was only necessary to determine that question if Mrs Gibbons succeeded in establishing some equitable interest in the Wirrina property.  As she failed to do that, it was not necessary to determine this issue, and I did not do so.  After the publication of my reasons, Mrs Gibbons did not object to an order then being made for payment out of the whole amount in Court to Mr Pozzan.  I do not intend to decide this issue merely on the question of costs.[13]

    [13]   See Civil Procedure South Australia [6R 263.10].

20. I do not consider that Mrs Gibbons’ claim to payment out was so hopeless that the costs ordered against her should be as between solicitor and client.  My refusal to grant summary judgment on either claim indicated that they were not hopeless.  If I had accepted the whole of the evidence of Mr and Mrs Gibbons, her claim may well have succeeded.

21. On 12 October 2011 the solicitors for Mr Pozzan sent a letter to the solicitors for Mrs Gibbons enclosing a copy of the letter of 19 November 2007 from Westpac, which is referred to in my Reasons (No 3), and inviting her to withdraw her claim.  I do not consider that the contents of that letter were so inconsistent with the claim of Mrs Gibbons that it was hopeless for her to pursue her claim in the light of it.  Mr Gibbons gave evidence contrary to the contents of the letter, although I did not accept that evidence.  I refuse the claim for solicitor and client costs.

22. I have today made the following orders:

    1The intervener Suzan Gibbons is to pay to the intervener Dorian Pozzan his costs as agreed or adjudicated of FDNs 15 and 33 incurred as and from 8 November 2011.

    2That there be no order as to the other costs of FDNs 15 and 33 and for Mr Pozzan to give effect to my order of 26 April 2012 for payment out.

    3Except as is provided in paragraphs 1 and 2, the application of Suzan Gibbons that there be no order as to the costs of FDNs 15 and 33 is refused.

    4Application of Dorian Pozzan that the costs awarded to him should be as between solicitor and client is refused.

    5Fit for counsel.