New Start Property Group Pty Ltd v Norman Stanley Hayde

The only issue remaining in these proceedings is costs. By Summons filed on 2 November 2016 and Statement of Claim filed on 9 February 2017 the plaintiff sought declarations that on 3 December 2015 it had validly terminated a contract for the sale of land in Port Macquarie. The plaintiff also sought orders that the deposit of $29,976.00 paid by the first defendant purchaser pursuant to the contract be forfeited and released to the plaintiff by the second defendant, which held the deposit as stakeholder. There was also a claim for damages.

By Cross-Claim filed 10 April 2017 the first defendant sought a declaration that it had validly rescinded the contract for sale on 15 June 2015, and an order that the deposit be returned.

The second defendant filed a Submitting Appearance on 4 November 2016.

On 7 September 2017 the plaintiff made an Offer of Compromise to the first defendant in the following terms:

On 15 September 2017 the first defendant’s solicitors replied by email in the following terms:

On 21 September 2017 the first defendant’s solicitors sent a letter to the plaintiff which stated:

The annexed medical certificate, dated 15 August 2017, provides:

The proceedings came before the Court for directions on 22 September 2017. As had been foreshadowed in the letter of 21 September, Ms Buncle (who had formerly been retained as counsel for the first defendant) appeared to assist the Court. Ms Buncle stated that it was her understanding that the first defendant had been “quite unwell for a considerable time” and that “the majority of communications have been with his wife”. Ms Buncle said that the first defendant had been “in and out of consciousness for some time” and had been undergoing surgery. Ms Buncle also indicated that she understood there to be a dispute about the form of the offer, in that it had been accepted on the basis of no order as to costs, whereas the plaintiff was now seeking costs. She also stated that there was an issue as to whether the offer amounted to a judgment for the plaintiff.

Orders were entered which provided that the first defendant consented to the release of the deposit to the plaintiff, and required the second defendant to release the deposit forthwith. As she had no instructions, Ms Buncle neither consented to nor opposed that course. A direction was also made for the question of costs to be dealt with on the papers unless any party considered that an oral hearing was necessary. Submissions were received from the plaintiff. No submissions were received from the first defendant within the period provided (by 3 October 2017), and on 13 October 2017 his solicitors filed a Notice of Ceasing to Act. As no party has indicated that an oral hearing is necessary, the Court will proceed to determine the question of costs on the papers.

The plaintiff submitted that its Offer of Compromise complied with Uniform Civil Procedure Rules 2005 (NSW)(“UCPR”), r 20.26 and was accepted within the time specified in the offer. It submitted that in those circumstances UCPR, r 42.13A(2) entitles the plaintiff to an order that the first defendant pay its costs up to the time when the offer was made. It also contended that, notwithstanding the letter from the first defendant’s solicitors of 21 September 2017, they “clearly acted for the first defendant as at the date of accepting the offer.” The plaintiff did not press for any costs order in relation to the first defendant’s Cross-Claim and stated that, subject to the first defendant’s wishes, the Cross-Claim could be discontinued or dismissed with no order as to costs.

UCPR, r 42.13A provides:

The offer in the present case expressly provided for judgment for the plaintiff in the form of an order whereby the plaintiff would be paid the whole amount of the deposit claimed in the Statement of Claim. That was a “judgment in favour of the plaintiff” in both substance and form, as the primary relief sought in the Statement of Claim and Cross-Claim related to the deposit. The fact that the funds are to be released by the second defendant, rather than paid directly to the plaintiff by the first defendant, is of no significance in that regard.

The Offer of Compromise complies with UCPR, r 20.26 and was accepted within the time specified in the offer. I accept the plaintiff’s submission that r 42.13A(2) applies, entitling the plaintiff to an order that the first defendant pay its costs in relation to the plaintiff’s claim up to the date on which the offer was made. It may be that the first defendant, or his solicitors, misunderstood the effect of paragraph 2 of the offer, which stated that it did not include an amount for costs. However, that is (subject to limited exceptions) required by r 20.26, and the costs consequences of acceptance are governed by r 42.13A.

In my opinion, the evidence is insufficient to support the conclusion that the first defendant was a person under legal incapacity within the meaning of s 3 of the Civil Procedure Act 2005 (NSW) and UCPR, r 7.13. The only evidence relevant to the matter is the letter from the first defendant’s solicitors of 21 September 2017 and the annexed medical certificate. The first defendant’s solicitors asserted in the letter that the first defendant had no capability to manage his affairs, including these proceedings, yet stated in the next paragraph that they had not spoken to him. The latter statement rather undermines the force of the assertion of incapacity, and I am unable to afford it any significant weight. The statements in the medical certificate that the first defendant is “confused” and “completely bed ridden” do not satisfy me that the first defendant could not receive communications or express his will in relation to whether the plaintiff’s offer should be accepted. Statements from the bar table do not take the matter any further. Only six days prior to the letter, the first defendant’s solicitors had unequivocally accepted the plaintiff’s offer. That acceptance contained no indication at all that the first defendant might be under a legal incapacity. The first defendant’s solicitors made no application for the appointment of a tutor during the course of the proceedings, which were commenced in November 2016.

In those circumstances, the very scant evidence before the Court does not persuade me that the first defendant was under a legal incapacity in relation to the conduct of the proceedings (see Rappard v Williams [2013] NSWSC 1279 at [62]-[81]; Stokes v McCourt [2014] NSWSC 61 at [22]-[32]). I am not satisfied that the first defendant was incapable of dealing with the issue of whether to accept the plaintiff’s offer.

The plaintiff submitted that it was content for the first defendant’s Cross-Claim to be dismissed with no order as to costs. As no submissions have been received from the first defendant in opposition to that course, and his solicitors have now ceased to act, the Court will make that order. The Court will also order that the first defendant pay the plaintiff’s costs in relation to the plaintiff’s claim on the ordinary basis up to 7 September 2017.