Grant v Grant; Grant v Grant (No. 3)

This is the Court’s third judgment in these two related proceedings. It deals with the successful party’s claim for indemnity costs. The Court’s second judgment contains the Court’s principal findings and conclusions disposing of both proceedings: Grant v Grant; Grant v Grant (No 2) [2020] NSWSC 1288. This judgment should be read with the Court’s second judgment. Events, matters, persons and the proceedings are referred to in both judgments in the same way.

In the Court’s second judgment, Dr Seth Grant, as representative of the estate of the late Dr Alan Grant, was a successful plaintiff in the estate recovery proceedings against the defendants, Ms Nerez Grant and Ms Kashaya Williams. And on behalf of his mother’s estate, he successfully defended the family provision proceedings.

He now applies for indemnity costs on behalf of the estates in both proceedings based on Nerez Grant’s and Kashaya Williams’ misconduct in both proceedings.

Nerez Grant and Kashaya Williams have lost their respective proceedings for the reasons set out in the Court’s second judgment. For this reason, the Court will make an order for costs of the proceedings against Nerez in respect of the family provision proceedings, and against Nerez and Kashaya in respect of the estate recovery proceedings.

The next question for determination is whether that order for costs should be made on the indemnity basis.

In the second judgment, the Court made serious findings against Nerez, and strongly adverse findings against Kashaya. But as authority stands in New South Wales, not all findings of misconduct will automatically attract an indemnity costs order. In Harrison v Schipp [2001] NSWCA 13, the Court of Appeal overturned an order made by a trial judge for indemnity costs on the following basis (at [132] - [139]):

Harrison v Schipp has been applied to deny litigants indemnity costs even where they have proved unconscionable conduct or breaches of fiduciary duty. In Medsara Pty Ltd v Sande [2005] NSWCA 40, (at [121] and [122]) the Court of Appeal denied indemnity costs to a party found guilty of unconscionable conduct and said that the relevant principle was that expressed by Giles JA in Harrison v Schipp (at [136]). It was stated once more that unconscionable conduct or breach of fiduciary duty ordinarily leads to compensatory or other relief and costs on the ordinary basis, and more must be established for a special costs order.

Even where fraud or other deplorable conduct is established in litigation it will ordinarily lead to an order for costs on the ordinary basis, unless something more is established. Fraud will often involve the fraudulent party falsely denying the fraud in court and lengthening the proceedings, which may attract an order for indemnity costs. The presence of fraud or dishonesty can attract the application of other principles. For example, as Harrison v Schipp states (at [138]), an order for indemnity costs may be justified where a party, properly advised, should have known that they would be found liable (Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397 at 401; [1988] FCA 202), or where the Court’s time and the innocent party’s money were wasted on “totally frivolous and thoroughly unjustified defences”: Baillieu Knight Frank (NSW) Pty Ltd v Ted Manny Real Estate Pty Ltd (1992) 30 NSWLR 359 at 362; (1992) 10 ACSR 537. Where a party is propounding a defence which they must have known to be false, an indemnity costs order may be made against them: Westpac Banking Corporation v Ollis [2007] NSWSC 1008 at [7] and [11].

Seth Grant resists the conclusion that making a costs order on the ordinary basis is appropriate here. He seeks to distinguish Harrison v Schipp, submitting that this case is like Degmam Pty Ltd (in liq) v Wright (No. 2) [1983] 2 NSWLR 354 (“Degmam”). He submits that the relevant delinquency in this case was equivalent to that adjudged by Holland J in Degmam as warranting an indemnity costs order.

It is worthwhile to examine what it was in Degmam that Holland J regarded as warranting condemnation by an indemnity costs order. Holland J set this out (at 358) in the following passage:

In my view, a proper application of principle justifies an order for indemnity costs against Nerez Grant in both proceedings, and Kashaya Williams in the estate recovery proceedings, the only proceedings to which she was a party.

The estate recovery proceedings were principally concerned with setting aside the transfer of the Killcare property. Nerez Grant had implemented the transfer by the purported use of her power of attorney from Dr Grant to give effect to what were being claimed were Dr Grant’s wishes, as expressed in a letter of 10 April 2016 purportedly signed by him. Both these aspects of the estate recovery proceedings involve the defendants propounding at costly length what they must have known were false documents and a transaction that they must have well known could never be justified.

Nerez purported to use her power of attorney from Dr Grant to transfer the Killcare property. As the Court found in the principal judgment (at [328] and [329]), there was never any proper basis for the use of the power of attorney in this way and she did not conduct herself as an honest person would in the circumstances:

The centrepiece of Nerez Grant’s and Kashaya Williams’ defence case was the fabricated letter of 10 April 2016. They continuously said that this letter was direct evidence supporting their contention that Dr Grant wanted to transfer the property to Kashaya Williams, so Nerez Grant would have somewhere to live. When Nerez Grant’s and Kashaya Williams’ defence first advanced this letter, Dr Grant’s estate was put to the expense of seeking to adjourn the proceedings specifically to obtain expert handwriting evidence to show this document was a forgery. That evidence was obtained and the Court found it justified the conclusion that the letter was a forgery.

One or other of Nerez Grant or Kashaya Williams must have been responsible for the 10 April 2016 forgery. There is no evidence that anyone other than them had control of this fabricated copy document. But the Court has not found which of them was its fabricator. They both joined in propounding to the Court what they must have known was a forgery. When confronted with expert evidence, neither of them sought to defend the 10 April 2016 document with any expert evidence of their own. Nor, despite many demands, could they ever produce the original 10 April 2016 document, nor could they satisfactorily explain the absence of the original or the provenance of the copy. They adhered to a convenient fantasy as to the integrity of this document. Yet reason pointed to it being a primitively wrought artefact of fraud.

But the Court’s findings in the principal judgment go even further. They justify the conclusion that the whole timing of, and the secrecy surrounding, the transfer of the Killcare property show they were well aware the transaction could never be justified, if subjected to open scrutiny. The Court said (at [323] and [324]):

This transaction dominated the Court’s consideration and consumed the bulk of its time and resources in the estate recovery proceedings. Properly advised, the defendants in the estate recovery proceedings must have known that they had no chance of success. They were propounding a defence which they must have known to be false. An indemnity costs order should be made against them.

Nerez Grant’s essential contention in the family provision proceedings was that she had a good relationship with her mother and that as a result she was worthy of inclusion within her mother’s testamentary bounty. But the outcome here is not just a case of a plaintiff losing a claim for provision out of an estate. The whole premise of the claim – a good mother-daughter relationship – was false and must have been known to Nerez Grant to be false.

As the Court found in its principal judgment (at [299]), so profound was the aggression by this daughter to her mother that “this case is in a category of its own”. Properly advised, Nerez Grant must have known that she had no chance of success. This is evident from the Court’s findings in the principal judgment (at [297] to [299]) about the claimed mother-daughter relationship:

Nerez Grant’s false allegations about the quality of her relationship with her mother did not just represent debatable propositions. They bore no resemblance to the true relationship of fear and domination by this daughter of her mother. Nerez Grant’s false allegations about her relationship with her mother permeated many aspects of the family provision proceedings and lengthened them considerably. For example, it markedly expanded the cross-examination of Seth and Tansin Grant, Warwick Miller and Marguerite Grant. And it required Mrs Grant’s estate to call evidence from witnesses such as Caroline Nolan, Sally Saxby, Jill Shaw and Theresa Sienkiewicz. Properly advised, Nerez Grant’s conduct towards her mother was so gross that she must have known that she had no chance of success in this action.

Nerez Grant’s prosecution of her family provision proceedings are a good example of Holland J’s words in Degmam: “[She] so conducted [herself] in the proceedings, multiplying allegation upon allegation, and by prevaricating in the witness box, as grossly to prolong the litigation, thereby to cause the other parties to incur liability for solicitor and client costs far beyond what they could reasonably have expected to incur in litigation of genuine issues”. There should be an order for indemnity costs against Nerez Grant, the unsuccessful plaintiff in the family provision proceedings.

This deals with the principal outstanding issue between these parties in these proceedings. But at the directions hearing on 11 November 2020 Mr Avery Williams foreshadowed that there may be other residual issues to be dealt with by the Court. Principal among these are issues of financial compensation consequent upon the transfer of the Killcare property to Dr Grant’s estate, such as the payment of stamp duty. But the transfer of the Killcare property has been stayed pending the outcome of the present appeal. Subject to any orders of the Court of Appeal, all these residual issues can be dealt with after the appeal proceedings are concluded. Liberty to apply will be granted for the parties to raise these issues later. If the appeal is successful, they may never arise.

For these reasons the Court makes the following orders and directions: