Brett Raymond Gooley as executor of the Estate of the late Melville Gooley v Gooley

The one thing about which the parties in this matter can agree is that the summons filed on 20 December 2022 should be dismissed. They cannot agree on costs. Without disrespect, I shall refer to the parties by their given names.

The plaintiff, Brett, and his sister Aleta, the defendant, have been in dispute in this Court in several hard fought proceedings for a number of years concerning the affairs of their late father.

Brett seeks an order that Aleta pay his costs of the summons on a gross sum basis of $42,000. Aleta submits that Brett should pay her costs pursuant to Uniform Civil Procedure Rules 2005 Part 42 Rule 42.20(1):

For the reasons that follow, being in summary that the proceedings were reasonably commenced and Aleta then capitulated, the Court will order that Aleta should pay Brett’s costs. The gross sum order will be made because it will avoid the disproportionate and inevitable prospect of future disputation were the question of what a relatively small claim for costs is to go to assessment.

Mr J P Knackstredt of Counsel appeared for Brett. Mr R Size of Counsel appeared for Aleta.

The facts were not in dispute, being established by the correspondence between the parties’ solicitors: Mr C Frawley or Mr T Reid for Brett, and Mr D Leamey for Aleta.

On 6 June 2022, to resolve a substantial dispute between them, Brett and Aleta entered into a document entitled “Binding Heads of Agreement” (HOA), which included:

On 24 June 2022 at 4:42am, Mr Leamey wrote to Mr Reid:

Mr Reid replied several hours later on 24 June 2022, including:

On 27 June 2022, Mr Leamey wrote to Mr Reid:

On 19 July 2022, Mr Reid wrote to Mr Leamey enclosing a copy of the proposed draft deed saying:

A month later, on 18 August 2022, Mr Reid sent further draft documents to Mr Leamey:

On 27 September 2022, Mr Leamey emailed Mr Reid:

In the course of submissions, Mr Size placed some emphasis on what he submitted should be understood from that email as an offer to have a conference. I do not accept that the language of the email goes that far, but in the end nothing turns on whether it should be read as an offer or not. It certainly may be understood as an expression of willingness to confer if Brett’s legal advisers also thought it was necessary.

On 21 October 2022, Mr Frawley responded to Mr Leamey in a letter marked “without prejudice” (although read without objection before me), which included:

That letter included 13 sub-paragraphs (not reproduced here) setting out areas of agreement, disagreement and proposed amendment.

On 2 November 2022, Mr Leamey wrote to Mr Reid:

The attached list contained 13 points of comment.

On 14 November 2022, Mr Frawley wrote a lengthy letter to Mr Reid, which included (emphases in original):

On 23 November 2022, Mr Leamey wrote to Mr Reid:

Later that day, Mr Reid replied to Mr Leamey, including (italics and emphasis in original):

Brett’s summons for orders to enforce the HOA was filed on 20 December 2022 and was returnable for directions on 8 February 2023.

On 30 January 2023, Mr Leamey wrote to Mr Reid:

The various signed transaction documents were emailed on 5 February 2023. Additional director resignations signed by Aleta were sent on 10 February 2023. On 15 February 2023, Mr Reid emailed Mr Leamey requesting that Aleta deliver up all books, records and other corporate property (including electronic records) in respect of the various corporate entities in which she no longer had an interest. On 27 February 2023, Aleta delivered a small box of documents to Mr Reid’s office.

The parties then exchanged correspondence in an attempt to resolve the question of the costs of the summons. As will be apparent, that attempt was unsuccessful.

The relevant legal principles as to costs were not in dispute. The issue before me was whether the Court should “order otherwise” under r 42.20(1).

Mr Knackstredt's submissions as to why Brett was entitled to his costs of his summons may be summarised as follows. Aleta had acted so unreasonably that it had forced Brett to commence the litigation. Furthermore, Brett was certain to have succeeded had it continued through to a conclusion. These two propositions depend on the well-known decision of McHugh J in Re Minister for Immigration & Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6.

Furthermore, it was put that there had been a complete capitulation by Aleta insofar as only a few days before the first return date of the summons she had accepted that she should execute and provide all the relevant formal transaction documents that had been demanded in the earlier correspondence. This meant that Brett had achieved practical success in the proceedings: Eastmark Holdings Pty Ltd v Owners Strata Plan 74602 [2009] NSWSC 1483 at [4] per Brereton J (as his Honour then was).

Insofar as the application for a gross sum costs order was concerned, Mr Knackstredt submitted that this was a classic example of a case in which the Court should make such an order for three reasons:

Mr Size submitted that there had been no relevant unreasonableness on the part of Aleta in her conduct. On the contrary, he submitted that Brett had been unreasonable in filing the summons when he did.

Two matters underpinned these submissions. The first was that Aleta had not in fact breached the HOA because a reasonable time had not yet run within which she was to comply with all her various obligations.

Second, and in any event, through her solicitors, a conference had been offered to resolve the outstanding issues as to the drafting of the deed contemplated by the HOA. I have dealt with this submission in [14] above. Mr Size submitted that the Court should take the view that Brett had been peremptory in his commencement of the proceedings and that the parties would have been able to bridge whatever remaining gaps there were if only they had kept negotiating.

Turning to the application for a gross sum costs order, Mr Size submitted that this was not a case in which the Court could be satisfied that a proper basis was available in the evidence for the Court to determine what those costs should be. In particular, he drew attention to a number of matters which were being claimed that he submitted were not matters properly referable to either the conduct of the proceedings or the resolution of the present costs dispute.

In relation to this submission, I should immediately record that Mr Knackstredt in his written submissions in reply dealt with the specific items which Mr Size had identified as not being properly recoverable. Mr Knackstredt conceded that to be the case, but made the point, which I accept, that the amount involved was approximately $1,700 (ex GST) and for present purposes was immaterial, especially in the light of the inevitable discounting process that would occur. Mr Size was unable to identify any additional items which he could submit were otherwise not recoverable if a costs order was made.

I am satisfied that an order should be made that Aleta should pay Brett's costs and that a gross sum costs order should be made for the following reasons.

Having regard to the nature of the evidence (being what appears from the correspondence only) and the amount in question, it is neither appropriate nor practical for the Court to go into the reasonableness of the negotiating stances taken by the parties. The proper approach is for the Court to take something of a helicopter view of what occurred.

Looking at what transpired between the parties in that way, the fact is that the HOA were executed on 6 June 2022 and the parties were still negotiating in November 2022 to achieve what the HOA contemplated. While there was reference in the submissions to the complexity of the issues involved, that description is inapt on the evidence to which the Court has been referred. There were a number of practical measures that had to be taken in relation to the various companies and trusts involved, but as events demonstrated, at their heart they involved the execution by Aleta of various formal company and trust documents to bring about transfers and similar changes to corporate roles and responsibilities.

The only other substantive issue between the parties was the negotiation of the terms of a further and better agreement as contemplated by the HOA. But as the course of negotiations demonstrated, the matter really came down to the execution of a large series of formal corporate documents.

So understood, it was not at all unreasonable given the delay and the nature of the essential tasks involved for Brett to bring matters to a head by filing the summons when he did. In reaching this conclusion, I accept Mr Knackstedt’s submission that the Court can be fortified in its view by Mr Leamey’s assertions in June 2022 that a reasonable time to provide the draft deed contemplated by the HOA would have been a month (see [8] and [10] above).

Another way of looking at the reasonableness of the timing of the commencement of the proceedings is to compare the time that in fact was allowed between the final letter of demand and the filing of the proceedings with what in fact occurred.

A demand was made on behalf of Brett for execution of relevant documents by Aleta on 14 November 2022 and allowing seven days for that to occur (see [19] above). However, as a matter of fact the proceedings did not commence until the 20 December 2022, being some five weeks from the date of demand to the commencement of proceedings.

It is also of significance in assessing the reasonableness of what was done and what was demanded that the period from when Aleta conceded through her solicitors that she would execute the relevant corporate and related documents to when in fact that task (including the provision of records) was completed was the period between 30 January 2023 and 27 February 2023.

In other words, what actually happened bears out the reasonableness of the period of time between the letter of demand and when in fact the proceedings were commenced. It also supports the conclusion that a reasonable time had passed from when the HOA were entered into and the letter of demand on 14 November 2022 (see [19] above).

Next, the Court accepts Mr Knackstredt's submission that Brett achieved practical success through Aleta's immediate capitulation by agreeing to execute the relevant corporate and other documents. Looking at the events to which the Court has been referred as a whole, the Court concludes that Brett does not appear to have had any alternative but to bring the proceedings to bring matters to a head and achieve the result he in fact did.

I accept that the evidence that has been provided on behalf of Brett by Mr Frawley provides a sufficient basis for the Court to have confidence as to an amount that should than awarded.

Furthermore, the history of litigation between these parties, and the history of this particular episode in the litigation, puts beyond doubt that all possible future opportunities for disputation between these parties should be avoided whenever possible. It is clear that if these costs go to assessment, the prospects of there being further expense and disputation between the parties are very high. This is exactly the kind of case in which gross sum costs orders should be made, if they otherwise can be made, to avoid further argument between the parties.

That is particularly so in a case such as the present where the amount involved is not very large by the standards of litigation in this Court. It would be contrary to the overriding purpose to allow the question of costs to go off to assessment, not least because of the disproportion involved between the amount at stake and the costs that would be incurred in the assessment process.

Brett seeks two components of costs. The first is the costs that he has incurred of and incidental to the summons itself. The second relates to the costs of the present application. The latter is based on an estimate of the costs likely to be incurred rather than those which have in fact been incurred. No point was taken, (correctly, in my respectful view) by Mr Size that the Court could not make an order on a gross sum costs basis where what has in fact been provided to the Court is an estimate of costs that will be incurred. As a matter of practical reality, a party is entitled when bringing a gross sum costs order to seek to have its costs of that application on a gross sum costs basis.

It would be impractical to commit parties to a never-ending cycle of making applications for gross sum costs orders in relation to the costs of applying for the order itself. However, as I will shortly come to, where the application is based upon estimates of costs to be incurred for the application itself, a higher discount is warranted to ensure that no injustice is visited on the respondent to the order by reason of an over-estimation of what the costs might be.

Turning to the figures themselves, the evidence is that the costs which have been incurred on a solicitor/client basis by Brett total $33,654.58. The figures which follow up to and including [57] below are all ex GST.

Mr Frawley opines that in relation to the summons Brett would be entitled to recover on a party/party basis approximately $22,779 (ex GST) on the basis that the professional fees incurred would be reduced on assessment by 30 percent, but that the disbursements such as counsel’s fees would be allowed as to 100 percent.

The Court accepts that evidence. However, in such applications the Court often makes a further discount to reflect the time and costs saved by the making of a gross sum costs order and to provide some additional assurance to the defendant that the relatively informal assessment which the Court makes does not result in an injustice.

In the circumstances, I propose to discount the figure of $22,779 by a further 20 percent, which gives $18,223. I will round that down to $18,000.

Applying similar principles of deduction as to the likely outcome on assessment, Mr Frawley’s evidence is that the estimated party/party costs recoverable by Brett in relation to this application itself is $20,673.

As I have already said above, while there is no objection in principle to the Court making a gross sum costs order based on an estimate of the costs for the application itself, the very fact that it is an estimate requires, in my respectful opinion, a higher rate of discount than might otherwise apply. That is done without disrespect to the skill and diligence of the solicitor who has made the estimate.

In the present case, I am satisfied that there ought to be a further one third reduction in the amount claimed in respect of the costs of this application, which gives a figure of $13,644 that I will round down to $13,500.

Therefore, the total figure is $31,500. However, the order I will make will be inclusive of GST.

The orders of the Court are: