Woodhouse v Woodhouse (No 2)

[2022] NSWSC 338

Supreme Court

New South Wales

Medium Neutral Citation:

Woodhouse v Woodhouse (No 2) [2022] NSWSC 338

Hearing dates:

On the papers

Decision date:

25 March 2022

Jurisdiction:

Equity

Before:

Ward CJ in Eq

Decision:

1.   Order that the plaintiff pay the defendant’s costs of the statement of claim on the ordinary basis.

2.   Order that the first cross-defendant pay the cross-claimant’s costs of the cross-claim against her on the ordinary basis.

3.   Order that the second cross-defendants pay the cross-claimant’s costs of the cross-claim against the estate of the late Catherine Woodhouse.

Catchwords:

COSTS – Party/Party – General rule that costs follow the event – Application of the rule and discretion

Legislation Cited:

Civil Procedure Act 2005 (NSW) ss 56, 98(1)

Uniform Civil Procedure Rules 2005 (NSW) r 42.1

Cases Cited:

Bonic v Pacific General Securities Limited [2009] NSWSC 1221

Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423

Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373

Harrington v Greenwood Grove Estate Pty Limited (No.2) [2011] NSWSC 1598

Oshlack v Richmond River Council (1998) 193 CLR 72

Short v Crawley (No 40) [2008] NSWSC 1302

Stena Rederi Aktiblag v Austal Ships Sales Pty Ltd [2007] FCA 1141

Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201; (1979) 42 FLR 213; (1979) ATPR 40-141

Waters v PC Henderson (Aust) Pty Ltd [1994] NSWCA 338

Woodhouse v Woodhouse [2022] NSWSC 204

Category:

Costs

Parties:

Nicolas Mary Woodhouse (Plaintiff/First Cross-Defendant)
Philip George Woodhouse (Defendant/Cross-Claimant)
Lincoln James Kennedy and David Andrew Woodhouse as Executors of the estate of the late Catherine Woodhouse (Second Cross-Defendant)

Representation:

Counsel:
J Mack (Plaintiff)
A Crossland and A Djukanovic (Defendant/Cross-Claimant)
SV Shepherd (2nd Cross-Defendant)

Solicitors:
Walsh & Blair Lawyers (Plaintiff)
JDC Lawyers (Defendant/Cross-Claimant)
Pikes & Verekers Lawyers (2nd Cross-Defendant)

File Number(s):

2018/00268002

Publication restriction:

Nil

Judgment

1. HER HONOUR: On 4 March 2022, I published my reasons for judgment in this matter (Woodhouse v Woodhouse [2022] NSWSC 204). In these reasons (as to costs) I adopt the same terms used in the principal judgment. When determining the claims in the proceeding, I made orders dismissing Nicola’s statement of claim; for judgment on Philip’s cross claim against Nicola in the sum of $119,737.13 plus interest; for judgment on Philip’s cross-claim against the executors of the estate of the late Catherine Woodhouse (the estate) for the sum that had been paid by Philip paid pursuant to the agreement for transfer of the land in question (the 215 Acres) plus interest; and I dismissed Philip’s claim for specific performance of that agreement. I made directions for brief written submissions on costs with a view to determining the costs on the papers. Those submissions (commendably brief) have been filed and I now publish my reasons for the costs orders I make to dispose of the proceeding.

2. The position of the respective parties as to costs, in summary is as follows.

3. As between Philip and Nicola, Philip seeks orders that Nicola pay his costs of the statement of claim and his cross-claim against her; and Nicola does not cavil with those orders other than to contend for a carve-out in respect of the costs relating to Philip’s case concerning the cheques drawn by Nicola. Nicola contends that in respect of that issue there should be an order that Nicola and Philip bear her or his own costs.

4. As between Philip and the estate, Philip seeks an order that the estate pay Philip’s costs of his claim to recover the money paid by him pursuant to the agreement for the transfer of the 215 Acres but otherwise that each pay its own costs of Philip’s claim for specific performance. The estate, on the other hand, seeks an order that Philip pay half of the estate’s costs as agreed or assessed.

5. It is not disputed that there is a broad discretion as to costs pursuant to s 98(1) of the Civil Procedure Act 2005 (NSW) albeit that the discretion is one that must be exercised judicially and having regard to the overriding statutory mandate in s 56 of that Act. Nor is it disputed that the usual rule is that costs follow the event unless it appears that some other order should be made as to part or all of the costs (see r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR).

Costs as between Philip and Nicola

6. As noted, Nicola does not resist an order that she pay Philips costs of the statement of claim (or of part of his cross-claim against her) on the ordinary basis (accepting the usual rule to which I have referred above). The basis on which Nicola argues that she and Philip should each bear her or his own costs of the claim concerning the “cheques” claim is that she says that Philip succeeded on this aspect of the case on an unpleaded basis and did not prove an essential aspect of his case against her (namely, the allegation of deceit) (see at [188]). Philip, on the other hand, submits that there is no reason to depart from the usual rule in relation to those proposed orders.

7. As to Nicola’s argument for a carve-out of the costs order in respect of Philip’s cross-claim, I accept that Philip did not make out his case in deceit. He did, however, make out a case of equitable fraud (which I considered to be sufficiently encompassed within the pleaded claim) and there is no warrant in my opinion to treat his success on that issue as diminished by the fact that deliberate dishonesty was not established. The practical outcome was the same. Philip established his claim for recovery of the bulk of the cheques that had been drawn by Nicola (those being the cheques drawn for her or a third party’s benefit and not for Philip’s benefit). Costs should follow that event.

Costs as between Philip and the estate

8. Philip argues that, although he was unsuccessful in his claim for specific performance of the land contract, the circumstances are such that this case falls within that class of case where, in the exercise of the broad costs discretion, a successful defendant may be deprived of some or all of its costs if the grounds of the defence upon which the defendant succeeds are raised late (Philip citing Bonic v Pacific General Securities Limited [2009] NSWSC 1221 (Bonic) at [14] per White J, as his Honour then was; and referring also to Harrington v Greenwood Grove Estate Pty Limited (No.2) [2011] NSWSC 1598 (Harrington) per Slattery J at [9]-[17]).

9. Philip says that, in the present case, he won the time-consuming argument over whether a contract between Philip and Catherine for sale of the land had come into existence ([266]-[268]) and that the statute of frauds defence was rejected ([269]-[270]) as was the claim that Philip had repudiated the agreement and that Catherine had therefore validly terminated it ([271]-[273]). Philip notes that the reason his claim for specific performance failed was because it was held that he had terminated the contract himself ([274]). It is said that (as raised in the course of the hearing at T 413.42) the estate had not pleaded that Philip had terminated the contract; rather, the amendment made in the afternoon of the second day of the hearing pleaded for the first time (see at [4AE](g)) that “in the further alternative, Philip and Catherine mutually abandoned the agreement”.

10. Philip submits that the estate’s success in defending Philip’s specific performance claim was thus the product of an argument that was not raised until the second day of the hearing, and on which the estate did not make submissions (either orally or in writing) until the end of the fifth day of the hearing (T 406.40). Philip says that this is a paradigm example of an instance where, following the reasoning in Bonic and Harrington, an unsuccessful plaintiff should not have to pay the defendant’s costs. It is submitted that an entitlement (in appropriate circumstances) for leave to amend a defence very late in the proceeding does not bring with it an entitlement for the costs incurred up to that point, at least where the plaintiff was successful on all the arguments raised between the parties up to that point.

11. Philip further argues that the making of a very late application to amend is conduct of the type identified by McHugh J in Oshlack v Richmond River Council (1998) 193 CLR 72 at [69]. It is submitted that the case might have been litigated differently, or settled, had the successful argument been raised at an earlier time than it was. (Pausing here, I note that, for conduct to amount to the type of misconduct identified by McHugh J, it is not enough that the case might have been litigated differently – what is required is that the successful party by its conduct invited the litigation or unnecessarily protracted the proceedings.)

12. For the estate, it is said that Philip’s alternative claims for specific performance and restitution occupied approximately half a day of five hearing days and were, substantively, confined to legal argument regarding the characterisation of facts which were established by correspondence tendered by the parties. It is said that, of the two claims, the dominant issue between the estate and Philip was the latter’s unsuccessful claim for specific performance; and that the issue on which Philip succeeded was very much the lesser alternative in value and substance.

13. The estate argues that the restitutionary claim (on which Philip succeeded against the estate) was a separable claim (citing Waters v PC Henderson (Aust) Pty Ltd [1994] NSWCA 338 (Waters)). Further, emphasis is placed on the fact that I considered that there was “no doubt” that Philip’s solicitors formally terminated the contract and called for the return of the moneys that had been paid and that it was “abundantly clear” that Philip, through his lawyers, was terminating the contract and demanding the money back. It is said that there could never be any serious argument that Philip had not terminated the agreement on which he relied (noting that he had pleaded the termination in a former iteration of the pleading, referring to the first amended cross-claim filed on 20 June 2019, at [7B]). (That, of course, begs the question as to there being no pleading by the estate itself as to termination by Philip as a defence until the mutual abandonment defence pleaded in the final iteration of the defence.)

14. It is said that, of necessity, the estate bore a disproportionate burden of costs by having to attend the entire trial but had a confined legal point to argue which took approximately half a day. (Pausing here, I do not recall any suggestion at the trial that the estate might be excused from attendance during parts of the hearing that did not directly affect the estate. Had such a suggestion been raised I would have done my best to accommodate it.)

15. As noted above, the costs order for which the estate contends is that Philip pay half of the estate’s costs of the proceedings, as agreed or assessed.

16. As to the position of the cross-claim against the estate, while there was mixed success in relation to the alleged agreement in relation to the 215 Acres, it should be noted that the position adopted by the estate was that it had refused to refund (or to cause the solicitors who had acted both for the estate and for Nicola to refund) to Philip the amount paid by him pursuant to the agreement in relation to the land (despite having denied that there was a binding agreement) and had contended that the amount paid by Philip was held in trust as a repayment of the loan that Philip denied had been made to him by Nicola. Thus, for Philip to obtain any relief in relation to this aspect of the matter, it was necessary for him (as he ultimately did) to establish an enforceable agreement for the sale of the 215 Acres (something that the estate had denied) and that the moneys paid to the solicitors’ trust account were not paid in repayment of the alleged loan. Philip succeeded in both those contentions.

17. In those circumstances I do not consider that the issues the subject of the cross-claim against the estate were sufficiently discrete to warrant an apportionment of the costs as between the claim for specific performance of the agreement (on which Philip was unsuccessful) and the claim for restitution of the amount paid under the agreement (on which Philip was successful). I bear in mind the caution that is expressed in the authorities as to the apportionment of costs between issues on which a party succeeds and those on which a party does not succeed (see for example Trade Practices Commission v Nicholas Enterprises Pty Ltd (No 3) (1979) 28 ALR 201, 206-207 (Fisher J); (1979) 42 FLR 213; (1979) ATPR 40-141; Stena Rederi Aktiblag v Austal Ships Sales Pty Ltd [2007] FCA 1141 at [12] (Tamberlin J)); see also the principles distilled in Corbett Court Pty Ltd v Quasar Constructions (NSW) Pty Ltd [2008] NSWSC 1423 by Hammerschlag J, as his Honour then was, at [30]-[32] by reference to the relevant authorities collated by White J in Short v Crawley (No 40) [2008] NSWSC 1302 at [25]-[32]).

18. It does not seem to me that, here, the issues raised by the specific performance claim were clearly dominant or separable (see Mahoney JA at 331 in Waters; see also Elite Protective Personnel Pty Ltd v Salmon (No 2) [2007] NSWCA 373 at [6] (Beazley JA, as Her Excellency then was, McColl and Basten JJA)) from those in relation to the claim for recovery of the moneys paid under the very agreement of which specific performance was sought. I also bear in mind that, however obvious the point might now be said to be, the estate did not (until the second day of the hearing) amend to raise the issue of mutual abandonment of the agreement (albeit that I do not consider that this amounts to conduct that would warrant some special costs order).

19. Ultimately, the position is that Philip succeeded in his claim against the estate albeit that he did not obtain the primary relief he had sought. I do not consider that this warrants an order that Philip pay half of the estate’s costs. (The position would have been very different had the estate taken a different stance – say, of tendering the amount that had been paid by Philip under the agreement that the estate denied and then contended had, if established, been mutually abandoned).

Conclusion

20. For the above reasons, I make the following costs orders:

1. Order that the plaintiff pay the defendant’s costs of the statement of claim on the ordinary basis.

2. Order that the first cross-defendant pay the cross-claimant’s costs of the cross-claim against her on the ordinary basis.

3. Order that the second cross-defendants pay the cross-claimant’s costs of the cross-claim against the estate of the late Catherine Woodhouse.

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Decision last updated: 25 March 2022