Leidreiter v Rae [2006] NSWSC 1043

New South Wales Supreme Court

CITATION : Leidreiter v Rae [2006] NSWSC 1043

HEARING DATE(S) : 16/08/06 and written submissions 07/9/06 and 21/09/06

JUDGMENT DATE : 9 October 2006

JUDGMENT OF : McDougall J at [1]

DECISION : See para [39] of judgment

CATCHWORDS : COSTS - where plaintiff failed to withdraw caveat after her undertaking to the Court to do so was enlivened - where defendant seeks indemnity costs - whether plaintiff's inaction unreasonable - whether events establish "relevant delinquency" - where defendant seeks to vary earlier costs order - whether subsequent events establish "relevant delinquency" - no question of principle

LEGISLATION CITED : Real Property Act 1900 UCPR Pt 36 Div 4

Hutchinson v Nominal Defendant [1972] 1 NSWLR 443 CASES CITED : Oshlack v Richmond River Council (1998) 193 CLR 72 Re The Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622

PARTIES : Joanne Fay Leidreiter (Plaintiff) Vincent Samuel Rae (Defendant)

FILE NUMBER(S) : SC 2404/04

SOLICITORS : Mr A Cohen (Plaintiff) Ms M Gordon, Pearson Family Lawyers (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

McDOUGALL J

Monday 9 October 2006

2404/04 JOANNE FAY LEIDREITER v VINCENT SAMUEL RAE JUDGMENT – on costs 1 HIS HONOUR: The nature of these proceedings, and specifically of the interlocutory application that has given rise to the costs dispute with which these reasons deal, is set out in paras [1] to [3] of my judgment given on 22 August 2005. For convenience, I repeat those paragraphs: "The plaintiff claims that she and the defendant lived together as husband and wife in a bona fide domestic relationship, although not married to each other, from about May 1995 until 18 September 2002. In these proceedings, she claims relief pursuant to s 20 of the Property (Relationships) Act 1984, including an order that the defendant pay her the sum of $5 million or alternatively transfer to her unencumbered one half of the property 6-8 Marine Parade, Watego's Beach at Byron Bay.

The defendant is the proprietor of the Marine Parade property. The plaintiff has lodged caveat AB 485193 against the title to that property. The defendant has caused the plaintiff to be given a lapsing notice. By notice of motion filed on 3 August 2005, the plaintiff sought an order extending the operation of the caveat pursuant to s 74K of the Real Property Act 1900.

The plaintiff claimed further by that notice of motion a "Mareva" or asset preservation order. It appeared in submissions that the latter claim was put in the alternative and would be pressed only if the operation of the caveat were not to be extended (as was the plaintiff's primary case)." Background 2 The plaintiff's notice of motion to which I referred came before Nicholas J as duty judge on 8 August 2005. His Honour, by consent but without admissions, ordered that the caveat be extended until the further order of the Court. He did so upon the basis of the plaintiff by counsel giving the following undertakings: "(a) … the usual undertaking as to damages, and (b) an undertaking to withdraw the caveat in the event that the Court determines upon the hearing of the plaintiff's notice of motion filed 3/8/05 that the caveat should not be extended". 3 I heard the notice of motion on 22 August 2005. On that day, I set aside order 1 made by Nicholas J (which was the order extending the operation of the caveat) and ordered that the notice of motion be dismissed with costs. I noted that the plaintiff by counsel "consents in accordance with her undertaking to the Court to withdraw the caveat within the next few days" and reserved liberty to the defendant to apply if that were not done. 4 For reasons that I will recount, the caveat was not withdrawn within a reasonable time after 22 August 2005, although it is apparent that the plaintiff took steps to withdraw it. Accordingly, after correspondence had passed between the parties' respective solicitors, the defendant filed in Court on 22 June 2006 a notice of motion seeking, among other things, the following relief: "4. An order pursuant to sub-section 74MA(2) of the Real Property Act, 1900 ("the Act") that the plaintiff withdraw caveat no. AB 485193 registered in respect of the real property described in Folio Identifier 2/593408 on or before 10.15 am 22 June 2006. 5. An order that order number 3 made by McDougall J on 22 August 2005 be vacated and in lieu thereof an order that the Plaintiff pay the Defendant's costs of the notice of motion filed 3 August 2005 including costs reserved on 8 August 2005 forthwith on an indemnity basis. 6. An order that the plaintiff pay the Defendant's costs of this notice motion [sic] forthwith on an indemnity basis". 5 The caveat had been withdrawn the day before, 21 June 2006. However, the defendant pressed for the costs orders claimed by his notice of motion. I fixed that for hearing on 16 August 2006. I had thought that the question of costs was to be resolved on that day. The parties had a different understanding. In any event, substantially by consent, and for the brief reasons I gave on 16 August 2006, I directed the parties to set out their arguments on costs in writing, so that (as the parties agreed) I would decide the question of costs on the basis of those written submissions and the (admissible) affidavit evidence filed in relation to the defendant's notice of motion. That evidence comprises the affidavit of the defendant's solicitor, Ms Merridy Gordon, sworn 21 June 2006, and the affidavit of the plaintiff's solicitor, Mr Andrew Cohen, sworn 29 June 2006. 6 Ms Gordon did not trouble to observe the requirements of UCPR r 35.6(3). That, together with an inexplicable decision to affix some annexures to the affidavit upside down, makes her affidavit a little difficult to follow. 7 Mr Cohen observed the requirements of r 35.6(3). He did not, however, observe the rule against repetition: much of what he says is both internally repetitive and repetitive of what he had earlier said (and repeatedly) in correspondence. 8 In substance, the matters advanced by Mr Cohen in relation to his client's failure to withdraw her caveat promptly after 22 August 2005 are as follows:

(1) He prepared a withdrawal of caveat on 29 August 2005 and procured the plaintiff to sign it that day.

(2) He instructed law stationers to lodge the withdrawal of caveat, and gave them the cheque for the fee. He says (affidavit para 7) that "lodgement occurred on 31 August, 2006": I assume, from the annexure referred to in support of this paragraph, that the date should be read as 31 August 2005.

(3) On 7 September 2005, he received a "requisition" from the Registrar- General. That requisition noted that this Court's order extending the caveat until further order had been registered and said: "Thus to remove the Court order evidence should be provided that the Court has removed this order or that the proceedings have been finalised or discontinued".

(4) Mr Cohen says that he "was surprised by this letter, and was of the view that the Withdrawal of Caveat should have been registered and the letter … represented an error." He does not say that he sought to persuade the Registrar-General of this error.

(5) Because this Court's orders made on 8 August 2006 "had issued … without any request of which [he] was aware", Mr Cohen "held out hope that the Orders … made on 22 August, 2005 might also issue". Mr Cohen says that it was his intention, when the orders did "issue", to send them to the Registrar-General.

(6) Mr Cohen says that he was aware of a procedure "requiring one to attend in person at the Supreme Court and join the queue to meet with a Registrar in Chambers, who recovers the Court file, sometimes, but not always the same day, and which Registrar then compares the draft Orders typed up in the solicitor's office, with court notes, and if they match, seals the draft Orders and issues copies, so sealed." Mr Cohen says that it was his experience that this process "required five attendances and about five hours' time expenditure" and that he "did not relish going through that procedure again." In written submissions, the time said to have been taken by this exercise was expanded from "about 5 hours" to "about 8 hours". There is no explanation of this apparent discrepancy.

(7) I interpose to observe that, in substance, Mr Cohen appeared to prefer his convenience to the tedium of ensuring that his client complied with the obligations flowing from her undertaking to the Court.

(8) The next event, according to Mr Cohen, was that on 7 December 2005 he received notice from the Registrar-General rejecting the caveat, presumably because of non compliance with the Registrar-General's requisition.

(9) Mr Cohen accepts that "it was upon [him] to correct this matter, but [he] failed to do so, at that time or until June of this year."

(10) On 5 June 2006, Ms Gordon sent a letter to Mr Cohen by facsimile transmission, noting the events of 22 August 2005, noting that the caveat had not been withdrawn, and stating that if it were not withdrawn within 48 hours, "the matter will be relisted … and an Order for costs and damages sought against your client."

(11) Mr Cohen replied the same day, stating that the withdrawal of caveat had been lodged, but was rejected because of the registered order of this Court. He said that he would prepare the order, but enquired whether, to "short circuit this problem", Ms Gordon could provide him with a copy of any order that she might have.

(12) On 8 June 2006, Mr Cohen wrote to "The Orders Clerk" in the Equity Division of this Court. The letter attached a draft order, referred to some matters of history, and asked "is it possible for me to obtain a sealed Order of 22nd August … ?". Mr Cohen took this step, having been advised by telephone by "a court officer" that this was an available procedure: a discovery that he says "elated" him.

(13) Further, correspondence (including by e-mail) passed between Ms Gordon and Mr Cohen. It is apparent that Ms Gordon thought that Mr Cohen was procrastinating, and that Mr Cohen thought that Ms Gordon was being unreasonable; otherwise, the correspondence adds nothing but heat and volume.

(14) In the meantime, on 14 June 2006, Mr Cohen made a telephone enquiry of this Court and was informed that the orders, if correct, would be sealed and returned within "a few days".

(15) On 20 June 2006, Ms Gordon prepared a draft order and arranged for her clerk to attend a Registrar to have the orders entered. This was done on that day. A copy of the sealed order was sent to Mr Cohen the following day. Mr Cohen thereupon prepared, had signed and lodged (together with a copy of the order) a withdrawal of caveat, and the caveat was withdrawn on 21 June 2006. 9 There is a dispute between Ms Gordon and Mr Cohen as to whether Ms Gordon informed Mr Cohen that the withdrawal of caveat was urgent because the defendant was seeking to refinance a mortgage over the Marine Parade property. Certainly, it appears, a letter from Ms Gordon to Mr Cohen informing Mr Cohen of this was not sent on the day it was prepared. Ms Gordon says that in any event she informed Mr Cohen of this in a telephone call. Mr Cohen denies this. Neither has been cross-examined (and I do not suggest that they should have been, on an application in relation to costs). I cannot resolve the dispute between two inconsistent and untested assertions. 10 Against that background, I turn to consider the orders that remain in contention. Prayer 5 11 The defendant asks that order 3 made by me on 22 August 2005 be set aside, and that the plaintiff be ordered to pay the defendant's costs of the plaintiff's notice of motion filed 3 August 2005 on an indemnity basis. 12 The general power of the Court to set aside or vary judgments or orders is set out in UCPR Pt 36 Div 4. 13 Rule 36.15 provides for orders to be set aside where they were made irregularly, illegally, or against good faith, or where the parties consent. That rule is inapplicable in this case. 14 Rule 36.16(1) provides for judgments or orders to be set aside or varied if a notice of motion for that relief is filed before entry of the judgment or order. That sub rule is inapplicable in this case. 15 Sub rule (2) provides for judgments or orders to be set aside or varied where they were entered under Pt 16 (default judgment) or in the absence of a party or (where what is claimed is possession of land) in the absence of a person ordered to be added as a defendant. That sub rule is inapplicable in this case. 16 Sub rule (3) empowers the Court to set aside or vary what, loosely (and to an extent inaccurately), may be called interlocutory orders. It is consistent with the general power of this Court to set aside or vary its interlocutory orders in appropriate circumstances: Hutchinson v Nominal Defendant [1972] 1 NSWLR 443. 17 It is unnecessary to say a great deal about this prayer for relief. There is no basis shown why the events following the Court's orders - including, as they did, what might most kindly be called lack of effort to comply with the consequences of those orders – should have any effect on, or be taken into consideration as relevant to, those orders. The costs order that was made on 22 August 2005 was an appropriate order at that time in respect of the plaintiff's notice of motion. It did not become inappropriate because the plaintiff failed thereafter to comply with obligations that became binding upon her because of the dismissal of her notice of motion. 18 Nothing that has occurred since 22 August 2006 can be regarded as relevant to the basis upon which costs payable up until and including 22 August 2006 should be assessed. Subsequent events are incapable of establishing any "relevant delinquency" (to adapt the words of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72 at 89) for the purpose of determining the basis upon which those costs should be paid. 19 The claim for relief made by prayer 5 of the defendant's notice of motion must fail. Prayer 6 20 For the plaintiff, Mr Cohen submitted the following (extracted from otherwise substantially irrelevant musings in his written submissions) apparently as reasons why no order for costs should be made: "If the orders sought in prayers 5 and 6 in the Notice of Motion first served at 9:33 pm [sic] on Thursday, 22 June, 2006, momentarily [sic] before this matter came before this Honourable Court, and how the defendant well knows that the plaintiff will not be positioned to pay them, without substantial further borrowings, which may not be available to her, she may be prejudiced. … It is evidence in this Court that the plaintiff is an intern psychologist, undergoing post graduate practical training, in order to achieve the professional status necessary, to practise on her own account as a clinical psychologist. Such internship, requires the plaintiff to undertake years of low paid an [sic] unpaid work under the supervision of her seniors. It is submitted that the making of these orders sought by the defendant, would be harsh and unconscionable, in the circumstances. The proposed variation (prayer 5) of the orders of August 22, 2005 would be harsh and unconscionable and liable to affect the plaintiff's ability to continue these proceedings, generally, to their conclusion, as it is likely that she would not be able to meet any judgment, which might be entered pursuant to an assessment of costs sought to be made payable by her, instanter. The plaintiff makes similar submissions with respect to prayer 6, as appears in the previous paragraph. The cost sought by the Defendant pursuant to present [sic] 5 & 6 to [sic] amount to $20,835.78. … " 21 At the outset, I should say that I do not regard these propositions as having any relevance to the question of costs. The plaintiff's caveat was misconceived. The application for an order extending it was misconceived. The plaintiff's failure to remove the caveat, pursuant to her undertaking to do so in the event that in fact occurred on 22 August 2005, although due to Mr Cohen's inaction and forgetfulness, was the proximate cause of the defendant's moving by way of his notice of motion filed on 22 June 2006. Although the defendant did not obtain the relief sought by that notice of motion, this was only because the plaintiff, belatedly but otherwise appropriately, rendered a decision by this Court unnecessary. Had the matter gone to hearing, it is inevitable that the Court would have made an order for withdrawal of the caveat. 22 It is implicit in these submissions, that it is the plaintiff personally who will bear the costs consequences of what were Mr Cohen's omissions (the failure to comply with the requisition; the failure to act appropriately promptly after the first withdrawal of caveat was rejected). Nothing that I have said should be taken to imply acceptance of that implicit proposition. In fairness, however, I note that elsewhere in the written submissions Mr Cohen accepted that he was responsible for the plaintiff's failure to comply with her undertaking; although his acceptance of responsibility fell short of any costs liability. 23 In any event, to the extent that Mr Cohen's submissions suggest that a present assessment of costs would in effect stifle the litigation, I note that the defendant's notice of motion did not seek an order pursuant to UCPR r 42.7(2), although the written submissions in support of prayers 5 and 6 of the notice of motion did suggest that costs should be ordered to be payable forthwith. In circumstances where this relief was not claimed by the notice of motion, so that the plaintiff's response to that notice of motion was uninformed by the threat of a relatively immediate liability for costs, I do not think that I should "order otherwise" pursuant to r 42.7(2). 24 I have some doubt that the question of "stifling the litigation" is properly raised on such evidence as the parties have seen to propound; and I have some doubt that, even if it were open to me to conclude on the evidence that the litigation would be stifled by an order for immediate payment of costs, that is a relevant consideration to anything other than the precise discretion conferred by r 42.7(2). But it is unnecessary to pursue those questions, because I do not think that it is appropriate to burden the plaintiff with an immediate liability when the prospect that this might occur was not conveyed by the relevant notice of motion. 25 As I have said, on 20 June 2006 the defendant sought to have the matter relisted, pursuant to the liberty reserved on 22 August 2005. In my view, the defendant's action in arranging for the matter to be relisted was reasonable, given the delays that had occurred, both from 22 August 2005 to 5 June 2006, and from 5 to 20 June 2006. A reasonable – indeed, in my view, the better – view of the correspondence that emanated from Mr Cohen after 5 June 2006 is that he proposed to arrange for the orders made on 22 August 2005 to be entered, and for the caveat then to be withdrawn, when it suited him to do so. Much of that correspondence was occupied in dissertations upon matters irrelevant to the plaintiff's obligation to comply with her undertaking to the Court, once that undertaking had been activated by the orders made on 22 August 2005. 26 In my view, it was inappropriate for Mr Cohen to act (or fail to act) as he did once the defendant's solicitors, on 5 June 2005, drew attention to the fact that the withdrawal of caveat had not been registered, and requested that this be done. In this context, I note that Ms Gordon submitted that "[i]t is irrelevant to the Plaintiff's obligation to remove the caveat that he was not aware of any urgency for the removal of the caveat" and that "[t]he Defendant is under no obligation to inform the Plaintiff of any urgency requiring the removal of the caveat."; and that Mr Cohen explicitly agreed with this submission. 27 Somewhat inconsistently, Mr Cohen submitted that the defendant's notice of motion "would not have been prolonged, or even necessary" had he been informed of the reasons why the withdrawal of caveat was required urgently. He submitted that, had he been told this, he "would have undertaken the alternative procedure, no doubt, of approaching the Duty Registrar". I do not accept that submission. In the third of many letters that Mr Cohen sent to Ms Gordon on 20 June 2006, he said, among other things: "In any event, if I were on actual notice, of this matter of refinancing before today, I would have queried it, without a doubt, because there is information in it, which I would have recalled, given that I had received it and/or read it and I would have instantly communicated to you by way of response, as I do hereunder." 28 The clear inference from this statement – an inference confirmed by numerous other statements in Mr Cohen's correspondence of that and other days – is that he was more concerned with investigating the defendant's refinancing than he was with ensuring that his client complied, although grievously late, with her undertaking to the Court to withdraw the caveat. 29 It was bad enough that Mr Cohen, through what appears to have been a combination of indolence and oversight, failed to take any appropriate action in response to the Registrar-General's requisition that he received on 7 September 2005, and in response to the Registrar-General's notification of rejection of the withdrawal of caveat received on 7 December 2005. Even if the period of delay from June to December could be rationalised or explained, it was incumbent on Mr Cohen to act promptly after 7 December 2005 to rectify, so far as possible, his client's default to that date. His failure to do so appears to reflect the circumstance that he "was unhappy with the decision to refuse to register [the withdrawal of caveat] and glum on 7 December, when [he] realised that [he] had wasted money, as a result of [his] procrastination and reluctance to endure the procedure to cause sealed copies of the Orders of August 22, 2005 to be issued." (affidavit sworn 29 June 2006, para 11). That is an entirely inappropriate reason for failing to take appropriate steps in relation to his client's breach of her undertaking to this Court. The inappropriate character of that reason is magnified by the circumstance that the responsibility for the plaintiff's breach of her undertaking is attributable solely to Mr Cohen's failure to take any appropriate action in relation to the Registrar-General's requisition. 30 Mr Cohen has submitted that the requisition was inappropriate, and that it finds no justification in s 74M of the Real Property Act 1900. It is unnecessary for me to express a view on this. When Mr Cohen received the requisition he had two choices. One was to seek to dissuade the Registrar-General from insisting on it. The other was to comply with it. He took neither. That too was entirely inappropriate. 31 Between the time when the matter was relisted (20 June 2006) and the date on which it was relisted (22 June 2006) the caveat was withdrawn. This appears to have been due in part – if not substantially – to the efforts of Ms Gordon and her clerk, in causing the orders made on 22 August 2005 to be entered. Thus, on 22 June 2006, it was not necessary for the substantive relief sought by the notice of motion to be pressed. Nonetheless, had the caveat not been withdrawn, it is inevitable that an order for its withdrawal would have been made. In any event, as I have said, I am satisfied that the defendant acted reasonably on 20 June 2006 in relisting the matter for 22 June 2006; and I am satisfied that the plaintiff's failure from 22 August 2005 to 21 June 2006 to comply with her obligation to remove her caveat was unreasonable. Thus, I think, it is appropriate that the defendant should have his costs of the notice of motion: at least up until 22 June 2006: see Re the Minister for Immigration and Ethnic Affairs; ex parte Lai Qin (1997) 186 CLR 622, 624-625. 32 Further, I am satisfied that the plaintiff's inaction was so unreasonable (and I do not distinguish between her and Mr Cohen, in so characterising her inaction) as to amount to a "relevant delinquency" empowering the Court to order indemnity costs: to repeat the phrase used by Gaudron and Gummow JJ in Oshlack, cited in para [18] above. It is difficult to think of a clearer case for costs to be assessed and paid on the indemnity basis. 33 The dispute did not come to an end on 22 June 2006. The defendant – in my view reasonably – sought an order for his costs. The plaintiff – in my view unreasonably – opposed this order. At least one of the grounds of opposition (based on the plaintiff's alleged impecuniosity, and the alleged stifling effect of an order) lacks both a basis in the evidence and persuasive force. 34 In my view, the appropriate course was for the plaintiff to consent to an order that she pay the costs; and, if the basis of assessment could not be agreed, to restrict the dispute to that. But instead, she opposed any order for costs; and she did so relying on an affidavit which contained substantial irrelevancies, and submissions that failed to address the appropriate issues. 35 As against that, it must be borne in mind that the defendant sought to reopen the costs order made on 22 August 2005, in a way that in my view was misconceived. Thus, I think, it would be inappropriate to give the defendant all the costs of and incidental to his notice of motion, let alone a complete indemnity for all those costs. Conclusion and orders 36 Weighing the competing considerations, and recognising that any exercise of the Court's discretions in relation to costs necessarily involves something of a broad brush approach, I think that the appropriate order is that the plaintiff pay the defendant's costs of and incidental to the defendant's notice of motion filed in Court on 22 June 2006 on the indemnity basis up until and including 22 June 2006, and two thirds of those costs on the ordinary basis thereafter. 37 Since the orders made on 22 June and 16 August 2006 do not finally dispose of the defendant's notice of motion, and since the primary relief sought by that notice of motion was not pursued on 22 June 2006 (for the reasons set out above), it is appropriate that the notice of motion be dismissed. 38 As I have already said, I do not think that this is an appropriate case to "order otherwise" in terms of UCPR r 42.7(2); that being so, the costs that I am about to order will be payable at the conclusion of the proceedings. It is however unnecessary to make an order to that effect, since that follows from the application of the rule. 39 I therefore make the following further orders:

(1) I order that the defendant's notice of motion filed in Court on 22 June 2006 be dismissed.

(2) I order the plaintiff to pay the defendant's costs of and incidental to that notice of motion up until and including 22 June 2006 on the indemnity basis.

(3) I order the plaintiff to pay two thirds of the defendant's costs of that notice of motion thereafter on the ordinary basis. ******

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