Bean v Horrocks [2001] QSC 462

, ~Q eosc 4-b:i. State • Queensland Government ~ Ae po rt mg Bu rea u ~ ''"'""""""''re,,' .._,,.,••, Transcript of Proceedings Copyright in this transcript is vested in the Crown. Copies thereof must not be made or sold without the written authority of the Director, State Reporting Bureau. SUPREME COURT OF QUEENSLAND CIV~L JURISDICTION WHITE J No 11308 of 2000 ANITA ANN BEAN and BEVERLEY HORROCKS BRISBANE .. DATE 22/11/2001 JUDGMENT Floor, The Law Courts, George Street, Brisbane, a. 4000 1 REVISED COPIES ISSUED State Reporting Bureau Datee-11 /III O I Plaintiff Defendant Telephone: (07) 3247 4360 Fax: (07) 3247 5532 -- 1 of 10 -- 22112001 sdh (White J) HER HONOUR: I will deal with the issue of costs. be necessary to make some reference to the facts. It will The parties, who are mother and daughter, have reached agreement about the principal matter in issue between them. There remains, in effect, one matter outstanding, although, at the time when I stood the matter down for further consideration by the parties, there were two. The question 1 10 20 of the adjustment of payments made on behalf of the property against income received from it by the mother, who is the defendant, was an outstanding matter in the intervening period. The parties have agreed on the total expenditure and receipts in respect of the property and have reached a figure which is payable by the plaintiff to the defendant, representing one half of the deficit between expenditure and receipts. The other remaining question is that of the costs of the action. The litigation concerns the daughter's entitlement to a half share in property situated at Brisbane Corso in the suburb of Fairfield. She and her mother were the beneficiaries of her grandmother's estate, of which this property was part. The grandmother, who was the defendant's mother, died in March 1992. Transmission of the property to the mother and daughter occurred in July 1992 and they held that property as tenants in common in equal shares. On the same day, they chose to become joint tenants. 30 40 - 50 On the 9 April 1993, the daughter transferred her interest 60 JUDGMENT 2 -- 2 of 10 -- 22112001 tkm (White J) in the land to her mother and the consideration recorded in the Titles Office documents is because of the natural love and affection of the daughter for her mother. The mother 1 was then registered as the sole proprietor of the land. 10 What was alleged by the daughter in her claim was that since she was a young graduate about to travel and work extensively overseas she was persuaded by her mother to transfer her, that is the daughter's, half interest in the land to her mother for ease of dealing with the property. The mother would hold her share of the land on trust, care for the property and on her daughter's return to Australia would reconvey the daughter's half interest to her. When the daughter finally returned to Australia with her husband in late 1999 she began living at the property. She paid her mother a sum of money which the mother maintained was for rent. She asked to have her interest in the land reconveyed to her and the mother refused. In the middle of 2000 the mother's solicitors served a notice to quit on the daughter. In response the daughter's solicitors asserted her entitlement, set out the background to the transfer of the land to the mother and proposed mediation. The response which came from the mother's solicitors was brief and was to deny any claim and maintain the tenancy which was a fortnightly tenancy. Thereafter the mother's solicitor sent a notice to quit. 3 JUDGMENT 20 30 40 . 50 60 -- 3 of 10 -- 22112001 tkm (White J) The matters which I am about to refer to were no longer an issue between the parties after the pleadings were issued, but I mention them for completeness. It appears that the mother's solicitor filed a complaint in the Magistrates Court at Gatton and obtained an order of eviction from the Magistrate in Gatton in respect of the subject property. It is quite clear that irrespective of the issues between the mother and the daughter the Magistrates Court in Gatton had no jurisdiction to make such an order. See section 143 of the Property Law Act. In any event, when the daughter was served with the notice of warrant that she remove herself, her husband and, by now, her baby son from the property she sought an extension of time (this occurring in the middle of December last year) until 6 January so that something could be worked out between them, but the mother refused. The daughter filed a caveat over the property claiming an equitable interest in the land. In early January she issued proceedings and obtained an interlocutory injunction from the Court maintaining the status quo. The defence filed by the mother, inter alia, denied the daughter's entitlement to any interest in the land. Attempts were made to resolve matters between them with the assistance of their solicitors. The mother's new solicitors, who are now her present solicitors, and were not the solicitors who appeared for her in the Gatton 4 JUDGMENT 1 10 20 30 40 . 50 60 -- 4 of 10 -- 22112001 tkm (White J) The response by the daughter's solicitors was to agree to everything except the question of reconciliation. The daughter's solicitors wrote that she was prepared to forego any surplus which may have been earned with respect to the property but, by inference, was not prepared to make any contribution from her share of the value of the property to any deficit. It was noted that $12,000 towards her costs would be a sacrifice on her part. It was a great pity that the parties were so close to agreement which is very much the agreement that they have come to before today and did not settle. There is no doubt that the parties recognised, with the assistance of their legal advisers, that the taking of accounts would be far too costly because of the small amount of money that was involved. In my view the proposal made in paragraph 3 of the mother's solicitor's letter was a sensible one. It is quite clear that co-tenants should share both the costs of running a property and any profits that are made subject to any other agreement between them. The plaintiff seeks indemnity costs of the action because of the unconscionable conduct by the mother in denying her her rights. 6 JUDGMENT 1 10 20 30 40 . 50 60 -- 5 of 10 -- 22112001 tkm (White J) Rule 679 of the UCPR makes clear that the assessment of costs should be on the standard basis, which was formerly party and party costs, unless the Court makes some other order. Rule 704 provides that the Court may order costs to be assessed on the indemnity basis which, as is well recognised, was the former solicitor and client basis. Various tests have been enunciated as to the circumstances in which indemnity costs might be ordered to be paid by one party to another, more fully to compensate that party for the costs of the litigation. In Colgate Palmolive Co v. Cussons Pty Ltd, a decision of the Federal Court of Australia, 118 ALR 248 Sheppard Jin a detailed judgment set out the history and authorities relating to the circumstances in which indemnity costs might be ordered to be paid. As he makes clear, the categories are not closed but nonetheless the authorities suggest that there must be some special circumstances which would justify departing from the usual order as to costs, particularly at pages 9 and 10 of his judgment where he sets out some principles or guidelines. He said in paragraph 4 of those guidelines: 11 The circumstances of the case must be such as to warrant the Court in departing from the usual course ... 'as and when the justice of the case might so require' Woodward Jin Fountain Selected Meats. 11 It seems clear, however, that the best guidance can be had from looking at the categories of cases in which indemnity 1 10 20 30 40 . 50 7 JUDGMENT 60 -- 6 of 10 -- 1 22112001 tkm (White J) Magistrates Court, proposed a number of matters by correspondence dated 4 October 2001. They proposed that the parties mutually agree on a valuer to conduct a valuation of the property the cost to be shared equally by the parties, 10 that the plaintiff have an option to purchase the defendant's interest in the property for an amount equal to half the valuation figure subject to some adjustments which I will mention in a moment. Failure to exercise that option would lead to an auction of the property with the valuation figure being the reserve. The solicitors proposed that there should be a reconciliation of the moneys earned by the property and the moneys expended by either of the parties on the property from the date of the death of the grandmother. It was proposed that that reconciliation be carried out by an independent firm of chartered accountants in Toowoomba. If the reconciliation produced a surplus the surplus was to be divided between the parties. If there was a deficit then the deficit would constitute a first charge on the proceeds of sale and be payable to the defendant. It was also proposed that certain furniture and memorabilia belonging to the grandmother should be returned to the mother. As to costs, it was proposed that the plaintiff should be paid the sum of $12,000 on account of her costs and thereafter each party should bear her own costs and that that 12,000 should come out of the defendant's share of the property. 5 JUDGMENT 20 30 40 . 50 60 -- 7 of 10 -- 22112001 tkm (White J) costs have been awarded. His Honour refers to the making of irrelevant allegations of fraud; evidence of particular misconduct that causes loss of time to the Court and other parties; the fact that proceedings were commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law; and the undue prolongation of a case by groundless contentions. The Court of Appeal has also had occasion to consider the question of indemnity costs in Cosgrove v. Johns 2000 QCA 157, a decision of 6 June 2000. Thomas JA refers to Justice Sheppard's judgment in Colgate Palmolive and says of the relevant principles at paragraph 9 of his judgment: "The ordinary consequence for the unsuccessful party is an order to pay party and party costs. Some unusual circumstance is required to warrant the Court departing from that course. The categories in which the discretion may be exercised are however not closed. Sheppard J noted particular instances where the discretion had been exercised, including the making of allegations of fraud against the other 1 10 20 30 party, knowing them to be false; where there is 40 evidence of particular misconduct that causes loss of time to the Court and to other parties; where proceedings are commenced for an ulterior motive (ie abuse of process) or in wilful disregard of known facts; and where a case is unduly prolonged by groundless contentions." It is interesting to note that in Cosgrove v. Johns fraud by· 50 the plaintiff such as to have brought him success in the first trial was the occasion for an order for a retrial. Nonetheless, the Court was not disposed to grant indemnity costs. 8 JUDGMENT 60 -- 8 of 10 -- 22112001 tkm (White J) It is not the nature of the cause of action which is likely to give rise to an order for indemnity costs, rather the conduct of the parties and the conduct of the trial. There is provision in the rules for dealing with offers to compromise. In my view, unhappy as the facts of this case are, there is no basis for departing from the standard basis for ordering costs. There is something further to consider on the question of costs, however. The exchange of correspondence to which I have referred in some detail made it clear that the parties could have reached agreement with respect to the matters in issue between them at least a month ago. It was not a formal offer to settle within the terms of the Uniform Civil Procedure Rules and so those consequences will not necessarily follow. However, the fact that that offer was made is something which can be taken into account when considering the issue of costs. It seems to me that the appropriate order as to costs is that the defendant pay the plaintiff's costs of and incidental to the claim up until 20 October 2001 and thereafter that there should be no order as to costs. The formal orders which will be made and which will be prepared by counsel will be to the effect that a declaration that the defendant holds one half of her interest in the subject land as trustee of herself and the plaintiff will be 9 JUDGMENT 1 10 20 30 40 . 50 60 -- 9 of 10 -- 22112001 tkm (White J) made and that John Evans Cairncross Thynne be appointed as the statutory trustee for sale pursuant to the Property Law Act. I should note that the parties have agreed as to Mr Thynne and he has filed his consent in the Court; that the parties be at liberty to bid at any auction held of the said land and that the any party holding the successful bid be entitled to offset her share in the land against the purchase price of the land; that the amount of $2,519.31 be paid out of the plaintiff's share in the proceeds of sale to the defendant; that there otherwise be no order for accounts, inquiries or directions between the parties in respect of any matter arising out of the transactions the subject of the litigation. I further order that the plaintiff permit the defendant to collect at the defendant's expense all or any of the chattels identified in the document marked Exhibit 2, being the two-page handwritten document dated 4 December 1999, when settlement of the proposed transfer to any purchaser occurs. 10 JUDGMENT l 10 20 30 40 . 50 60 -- 10 of 10 --