Baumanis bht Baumanis v Brennan (No 2)

1. [1]

   I delivered my principal reasons for judgment and made substantive orders in this matter on 5 June 2024: Baumanis bht Baumanis v Brennan [2024] NSWSC 681. These reasons should be read with that earlier judgment.

2. [2]

   The gist of my judgment was to award the plaintiffs, the children of the late William John Baumanis, a total of $1,100,000 in provision from his notional estate, plus their costs of the proceedings. I designated two properties legally owned by the defendant as notional estate to the extent required to satisfy an amount of $1,000,000, plus costs. I further designated $100,000 in the defendant’s bank account as notional estate for the purpose of satisfying the balance of the orders for provision. I made consequential orders to provide for the nomination of an administrator to realise the notional estate.

Costs

1. [3]

   As contemplated by those orders, the plaintiffs have sought a variation of the costs order, which is resisted by the defendant. Before addressing this, it is necessary to note that in my judgment I made two related findings, both of which have some importance on this application. First, I held at [122] that the defendant “knew about the proceedings at some point during late 2023 but chose not to take any action to participate until immediately prior to the date of the first hearing”. Second, I held at [124] that the defendant had sworn an affidavit which was false about matters that went to the heart of the issues in dispute and which was provided to the plaintiffs at the hearing on 25 March 2024.

2. [4]

   The plaintiffs rely on those findings, together with my general findings as to the defendant’s conduct in the carriage of the case, to submit that:

3. [5]

   The plaintiffs also point out that I found the defendant to be an entirely unreliable witness and that I would not accept anything the defendant said to be true unless corroborated by other evidence: at [137].

4. [6]

   The plaintiffs make a further submission that I would make an indemnity costs order for the following reasons:

5. [7]

   The defendant provided submissions to the Court which were signed by her personally, despite her solicitors from the hearing remaining on the record. I will return to aspects of this below. However, insofar as costs are concerned, the defendant submitted that costs should be shared equally, or that each party should pay their own costs, seemingly on the bases that she would have to pay CGT on the sales of the properties (one of which is said to be her “residential home”), that she had incurred further costs due to her first solicitor ceasing to act, that she had acted with expedition to list the properties for sale and that she had generally suffered through her relationship with the deceased.

6. [8]

   The defendant further submitted as follows:

7. [9]

   While the parties are free to settle the costs aspect of the dispute, the Court will, in default of agreement, determine the costs payable in the usual way. I am not prepared to have any regard to this submission and do not consider it further.

8. [10]

   Section 98 of the Civil Procedure Act 2005 (NSW) relevantly provides:

9. [11]

   In family provision cases, as was explained by Beazley P in Salmon v Osmond [2015] NSWCA 42 at [170]-[174], the “overall justice of the case” is the key consideration, although that is not too far removed from the usual rule that costs follow the event. See also Haertsch v Whiteway (No 2) [2020] NSWCA 287 at [4]-[8].

10. [12]

    The usual rule, I should note, is that costs follow the event “unless it appears to the court that some other order should be made as to the whole or any part of the costs”: r 42.1 of the Uniform Civil Procedure Rules 2005 (NSW).

11. [13]

    I can deal with the defendant’s submissions as to costs in short order. She provides no good reason why costs should not follow the event. To the extent she will incur CGT liability, that is, at least to some degree, a problem of her own making. It is not a matter that bears on the exercise of my discretion to award costs in any material way. There is also no evidence to suggest that her decision to change solicitors was in any way referable to the plaintiffs.

12. [14]

    In fact, there is every good reason, as will be clear from my judgment, why costs should follow the event, given the conclusions I reached as to the manner in which the defendant conducted her case and the administration, such as it was, of her and the deceased’s affairs.

13. [15]

    I note two additional matters before addressing the plaintiffs’ submissions as to costs. In Bassett v Cameron (No 2) [2021] NSWSC 419 at [26], Ward CJ in Eq (as her Honour then was) said:

14. [16]

    Her Honour’s reference to reasons of Gaudron and Gummow JJ in Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [44] has particular relevance here:

15. [17]

    In my view, there is a relevant delinquency in this case, being the defendant’s choice “not to take any action to participate until immediately prior to the date of the first hearing”, which I found was a deliberate act on her part: see [122]. That caused needless cost to the plaintiffs who turned up on 25 March 2024, when the hearing was scheduled to commence with an estimate of three days, only to be met by a defendant, by this stage represented (but utterly unprepared to engage in the hearing) and to be provided with the false affidavit to which I have already referred. The “just, quick and cheap” resolution of the real issues in dispute demanded much more than that: s 56(1) of the Civil Procedure Act 2005 (NSW).

16. [18]

    The plaintiffs should be compensated for the defendant’s imposition on them in this respect. That does not quite, however, sound in a costs order of the kind sought by the plaintiffs. There was always going to need to be a hearing. I am also mindful that costs orders are not punitive: see, e.g., Oshlack at [1], [44], [67] and [134(6)]. As such, I do not think it is appropriate that the plaintiffs obtain their costs of the hearing – an expense which was always very likely to be incurred, regardless of the defendant’s delinquency – on an indemnity basis.

17. [19]

    For these reasons, I will not order the defendant to pay the plaintiffs costs on an indemnity basis after 25 March 2024, as they have sought. However, I will order the defendant to pay the costs of the 25 March 2024 hearing on an indemnity basis.

18. [20]

    I will also not make the order sought by the plaintiffs to the effect that the defendant would be personally liable for the costs I have ordered. The costs should come from the notional estate, the practical effect of which is that the surplus funds available for the defendant will be less than otherwise.

Other matters

1. [21]

   There was a further directions hearing in this matter on 2 July 2024. The reason for that further hearing was that in her submissions provided to the Court on 28 June 2024 to which I have already referred, the defendant stated that she had already placed both the Ashtonfield property and the Lee St property on the market for sale. A public auction of the Lee St property was scheduled for 3 July 2024. The defendant therefore asked the Court not to appoint an administrator despite Order (8) made in my principal judgment.

2. [22]

   This state of affairs was somewhat alarming given the terms of the orders I had made. This course of conduct by the defendant, whatever its intentions, was inappropriate. It had the evident effect of frustrating an order of the Court for an independent administrator to bring in and realise the notional estate.

3. [23]

   Nonetheless, having been presented with this fait accompli, counsel for the plaintiffs agreed that the more practical course in the circumstances was simply to let the defendant sell the properties on condition that any proceeds be paid into the trust account of the defendant’s solicitor. She recognised that there was some risk in allowing the sales to occur in this way but that, ultimately, the risk of the properties not bringing their highest value at auction was borne by the defendant, not the plaintiffs.

4. [24]

   It was for these reasons that I made the following orders, which it is appropriate to note here:

5. [25]

   As Allsop J said in White v Overland [2001] FCA 1333 at [4], “Litigation is not a game. It is a costly and stressful, though necessary, evil”. Bearing this in mind, I further directed that a penal notice be attached to those orders to make it clear to the defendant that, whatever her intentions, the Court would not tolerate any attempt to frustrate the payment of the legacies owing to the plaintiffs.

6. [26]

   When I made substantive orders on 3 June, I granted liberty to apply in view of the fact that the getting in of the notional estate was a matter that may yet require some level of supervision by the Court. That remains the case and, as these orders are final orders, I will grant the parties liberty to restore the matter if required.

7. [27]

   Accordingly, the orders of the Court will be:

   1. (1)

      Vary order 9 made on 5 June 2024 to read:

   2. (2)

      Note that no administrator will be appointed to realise the notional estate with the intent that the plaintiffs receive their legacies from funds to be paid into the trust account of Glass Goodwin pursuant to the orders made on 2 July 2024; and

   3. (3)

      Grant liberty to restore the matter on 24 hours’ notice via email to my Associate.