Adams v de Mello [2010] NSWSC 126 (26 February 2010)

Last Updated: 9 March 2010

NEW SOUTH WALES SUPREME COURT

CITATION:
Adams v de Mello [2010] NSWSC 126


JURISDICTION:


FILE NUMBER(S):
2009/00289288

HEARING DATE(S):
23 September 2009, 21 December 2009 and 19 February 2010

JUDGMENT DATE:
26 February 2010

PARTIES:
Sidney Barton Adams (Plaintiff)(Transfer proceedings)
Rosemeire F Toledo de Mello and Flavio de Mello (2nd & 3rd Cross Defendants to SFASCC)
Ivan Johnny Gonda (Cross Claimant - SFASCC)

JUDGMENT OF:
Smart AJ

LOWER COURT JURISDICTION:
Not Applicable

LOWER COURT FILE NUMBER(S):
Not Applicable

LOWER COURT JUDICIAL OFFICER:
Not Applicable



COUNSEL:
MS Willmott SC / E Elbourne (Plaintiff)(Transfer Proceedings)
DKL Raphael (2nd & 3rd Cross Defendants - SFASCC - Applicants on Motion of 2 February 2010)
DA Smallbone (Cross Claimant - SFASCC - Respondent on Motion of 2 February 2010)

SOLICITORS:
SB Adams (Plaintiff)
GN Penhall (2nd & 3rd Cross Defendants - SFASCC)
Pearson Family Lawyers (Cross Claimant - SFASCC)


CATCHWORDS:
Second Further Amended Statement of Cross Claim
strike out application
adequacy of particulars
transfer of equity proceedings to Family Court
Executor not attacking gifts but husband of deceased doing so
Executor in compromising position
effect of s 106B(1) of Family Law Act
costs of parties of transfer proceedings and costs of sundry applications

LEGISLATION CITED:
Family Law Act 1975 (Cth)
Family Provision Act 1982 (NSW)
Uniform Civil Procedure Rules

CATEGORY:
Principal judgment

CASES CITED:
Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362
Bridgewater v Leahy [1998] HCA 66; (1988) 194 CLR 457
Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447
Hart v O’Connor [1985] UKPC 1; 1985 AC 1000
Ramage v Waclow (1988) 12 NSWLR 84
Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44; 2002 2 AC 773

TEXTS CITED:
Jacob's Law of Trusts in Australia (4th Ed)

DECISION:
Order for transfer of Equity proceedings to Family Court; Third Further Amended Statement of Cross Claim and Defence thereto to be filed.
Motion of 2 February 2010 seeking strike-out of certain paragraphs of Second Further Amended Statement of Cross Claim (SFASCC) dismissed.
Orders made as to costs of parties to transfer proceedings and various applications.
For detailed Orders see paragraph 60.



JUDGMENT:

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION



Smart AJ

Friday 26 February 2010


2009/00289288 (formerly numbered 3254/2009)
Sidney Barton Adams v Rosemeire F Toledo de Mello & Ors

JUDGMENT

1 In my judgment of 23 September 2009 I summarised broadly the position which had arisen and some of the difficulties. From an early stage Ivan Gonda has attacked the various gifts made by his wife shortly before her death. Mr SB Adams, the Executor of the will of the deceased, did not wish to attack the gifts made to the first and second defendants of $1,300,000.00 and $50,000.00 respectively because of his relationship with the first and second defendants as well as the deceased and the difficulties he would experience in advancing the attacks Mr Gonda wished to make when Mr Adams was appointed to represent the wife’s estate in the Family Court proceedings.

2 I thought it was essential that there be an active cross claimant and active cross defendants as to the gifts. I directed Ivan Gonda to file and serve a cross claim setting out the facts, matters and circumstances on which he relied to set aside the alleged gifts or dispositions to the first and second defendants by the deceased and covered by the Summons of the Executor of 10 June 2009. At that point no question was raised that Mr Gonda was not a proper party and was not entitled to seek relief setting aside the alleged gifts or transactions. That point was raised in a letter of 12 February 2010 from the solicitor for the first and second defendants to Mr Gonda’s solicitor. I expressed the view, referring to the passage adopted by Powell J in Ramage v Waclow (1988) 12 NSWLR 84 at 91 from Jacob’s Law of Trusts in Australia (4^th Ed), that, in view of the claim Mr Gonda could make under the Family Provision Act against the deceased wife’s estate, he should be permitted to attack the gifts. I also thought that there were exceptional circumstances which permitted Mr Gonda to sue in equity in his own name. Those exceptional circumstances included that the Executor did not wish to sue the first and second defendants. He doubted whether it would be proper in view of his relationship with them and his role as representative of the estate of Anna Gonda. There were also the proceedings under the Family Law Act and the application under s 106B of that Act. In view of that section and the proposed transfer of these proceedings to the Family Court, the point lost its force and became mainly one of academic interest. On my indication of my view, counsel for the first and second defendants withdrew his submission that Mr Gonda was not a proper cross claimant.

3 Mr and Mrs de Mello relied on their motion of 2 February 2010 by which they sought that paragraphs 14V, 14W, 14Y, 14Z.2, 14Z.3, 16, 17C, 17D, 17E, 17F and 17G of the Second Further Amended Statement of Cross Claim (SFASCC), filed 5 January 2010, be struck out in whole or part, pursuant to UCPR 14. 28. Their counsel referred to the ambit of this provision in some detail.

4 I direct attention to paragraph 4(h) of my judgment of 23 September 2009 as to Mr and Mrs Kollias and the Notice of Discontinuance filed 21 January 2010.

5 This means that the paragraphs in the SFASCC relating to Mr and Mrs Kollias should be struck out, namely paragraphs 1.4, 1.8 and 1.14 of the Claims for Relief and paragraphs 14B, 14C and 14J – 14O of the Pleadings and Particulars. Their names as parties to the cross claim should be deleted. Mr and Mrs Kollias have relinquished any claim to the monies given to them. They are no longer parties and have been excused in an attempt to avoid unnecessary legal costs.

6 The SFASCC relies on facts common to a number of claims for relief, namely, money received based on a want of capacity (not authorised by deceased), a declaration of trust (resulting), undue influence and unconscionable conduct.

7 After setting out the background facts, most of which seem to be common ground, Mr Gonda alleges that, in relation to each of the challenged dispositions, the deceased did not have the capacity to comprehend the making or the effect of the provision of the monies. In paragraphs 14.1 to 14.6 particulars are supplied.

8 Paragraphs 14F – 14H deal with the absence of consideration for each of the disputed payments.

9 Paragraphs 14P – 14S deal with the alternative claim in respect of the money paid to Mr Adams.

10 Paragraphs 14T.1 - 14T.19 and 14W contain a series of allegations against Mrs de Mello in support of Mr Gonda’s allegation of undue influence on Mrs de Mello.

11 Paragraphs 14V – 14X deal with the claim against Mr de Mello.

12 Paragraph 14V alleges that the payment of $50,000.00 from a bank account operated by the deceased “that the third cross defendant received was manifestly disadvantageous to the deceased”.

13 The letter of 22 January 2010 from the solicitors for Mr and Mrs de Mello states:

“Clause 14V – Please provide particulars of the ‘manifest disadvantage’ suffered by the [deceased] having regard to the size of her estate and the fact that she was, at the time of the making of each of the gifts, aware of her likely decease in the very near future.”

The reply was:

“Paragraph 14V

... this is a matter for submissions and not a proper request for particulars. The size of the gifts is beyond what may be attributable and proportionate to normal human motivations, particularly on an acquaintance so slight as that which Mr de Mello had with Mrs Gonda.”

14 Counsel for Mr and Mrs de Mello explained that paragraph 14V and the particulars supplied were based on the statements in paragraph 21 of the speech of Lord Nicholls in Royal Bank of Scotland v Etridge (No 2) [2001] UKHL 44; 2002 2 AC 773, especially the second requirement. Paragraph 21 deals with the evidential shift in the burden of proof. See also paragraphs 22 – 29. Paragraph 14V and the particulars furnished are sufficient. Mr and Mrs de Mello have been alerted to what Mr Gonda is alleging.

15 Paragraph 14W reads:

“The third cross defendant did not give consideration for the said payment he received.”

This is straight-forward, means what it says and no amendment or particularisation is required.

16 Mr Gonda did not press his complaint and request.

17 Paragraph 14Y reads:

“In the premises, it is presumed that the said payments received by [Mrs de Mello] and the said payment received by [Mr de Mello], and each of them, resulted from the undue influence of [Mrs de Mello] over the deceased.”

The complaint reads:

“Clause 14Y – a presumption is not a pleading of fact but a state of mind of the party pleading. This pleading is embarrassing and should either be deleted or repleaded with appropriate particulars.”

The reply reads:

“This appropriately notifies your clients of a case of presumed undue influence. We do not agree with your observations. The presumption is not a ‘state of mind’. It is a presumption of law. Paragraph 14Y will not be withdrawn.”

18 Counsel for Mr Gonda submitted that paragraph 14Y gives notice that the case being made was one of presumed undue influence, not actual undue influence. Mr and Mrs de Mello may wish, if so advised, to deny that it is presumed that the payments received resulted from the undue influence of Mrs de Mello over the deceased.

19 As to the alternative allegation of unconscionable conduct, paragraph 14Z.1 of the SFASCC reads:

“... at the time of making each of the said payments to [Mrs de Mello] and ... to [Mr de Mello] the deceased was acting under a special disability or special disabilities.”

20 For particulars reference is made in clause 14Z.2 to items 14.1, 14.2, 14.3 and 14.4 of the particulars to paragraph 14. There was also clause 14Z.3.

21 I did not regard these particulars as inadequate. The St Vincent’s Hospice is well-known in Sydney as a place where those who are dying are taken and cared for. What the particulars are saying is that the deceased was very sick with symptoms of many illnesses, dying and distressed and heavily medicated.

22 14Z.2 should be read with 14Z.3 that the deceased was very lonely and was dying and regarded Mrs de Mello as her only friend and as a daughter.

23 Mr Gonda is able to rely on all the facts, if established, in the particulars supplied in combination and this is what he intends to do. It is alleged that with the deceased, in the condition alleged, including dying, and being very lonely, regarding Mrs de Mello as her only friend and as a daughter she (the deceased) was very dependent upon her (Mrs de Mello) and acting under special disabilities.

24 In Blomley v Ryan [1956] HCA 81; (1956) 99 CLR 362, at 405, Fullagar J said:

“The circumstances adversely affecting a party, which may induce a court of equity either to refuse its aid or to set a transaction aside, are of great variety and can hardly be satisfactorily classified. Among them are poverty or need of any kind, sickness, age, sex, infirmity of body or mind, drunkenness, illiteracy or lack of education, lack of assistance or explanation where assistance or explanation is necessary. The common characteristic seems to be that they have the effect of placing one party at a serious disadvantage vis-a-vis the other.”

25 In Commercial Bank of Australia Ltd v Amadio [1983] HCA 14; (1983) 151 CLR 447 at 462 Mason J commented that the situations mentioned by Fullagar J:

“...are no more than particular exemplifications of an underlying general principle which may be invoked whenever one party by reason of some condition of circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious advantage is then taken of the opportunity thereby created.”

The disabling condition or circumstance must be one which:

“seriously affects the ability of the innocent party to make a judgment as to his own best interests, when the other party knows or ought to know of the existence of that condition or circumstance and of its effect on the innocent party”.

26 In Blomley v Ryan at 392 McTiernan J said that the essence of the weakness which attracts the jurisdiction “is that the party is unable to judge for himself” (or herself).

27 Mr Gonda relied on the statements of principle in the majority judgment in Bridgewater v Leahy [1998] HCA 66; (1988) 194 CLR 457, at 478 – 479:

“In Australia, it has been recognised that unconscionable conduct is a ground of relief which will be available `whenever one party by reason of some condition or circumstance is placed at a special disadvantage vis-a-vis another and unfair or unconscientious

advantage is taken of the opportunity thereby created. (Amadio at 462).

In ... Amadio, Deane J spoke of unconscionable conduct as occurring where, in the circumstances, it is unconscientious to ‘procure, or accept, the weaker party's assent to the impugned transaction’.”

Reference was also made at 479 of Bridgewater to the remark of the Privy Council in Hart v O’Connor [1985] UKPC 1; 1985 AC 1000 at 1024, which described unconscionable conduct which provided a basis for equitable relief as:

“... victimisation which can consist either of the active extortion of a benefit or the passive acceptance of a benefit in unconscionable circumstances.”

28 Counsel for Mr Gonda emphasised the words “passive acceptance” and indicated that this was not a case where there could be passive acceptance of the gifts made.

29 Serious illness with death approaching is a circumstance of special disadvantage or at least capable of being one. Mr Gonda contends that the gifts should not have been accepted in such circumstances, the deceased being in a position of weakness.

30 In Bridgewater v Leahy at [115] the majority judgment pointed out that the position of disadvantage may stem from a strong emotional dependence or attachment.

31 When the full extent of the principle of unconscionable conduct is appreciated as expounded in Bridgewater v Leahy, Blomley v Ryan and Amadio, I do not think, as mentioned, that the complaint of inadequate particulars can be upheld.

32 Clause 16 of the SFASCC reads:

“As at the date of each of the dispositions ... [Mrs de Mello] knew or ought to have known that the deceased was affected by and was acting under a special disability or special disabilities.”

Particulars were given in paragraphs 16.1 – 16.3A and 16.8. They read:

“16.1 During the period of the deceased’s admission to and residence at Montefiores Nursing Home and the Sacred Heart Hospice, the second cross defendant was in regular contact with the deceased and the deceased’s treating medical practitioners and health care providers.

16.2 The second cross defendant was aware of the deceased’s terminal medical condition and the treatment she was receiving.

16.3 The second cross defendant visited the deceased at the Montefiores Nursing Home and the Sacred Heart Hospice, visiting frequently and for long periods of time.

16.3A By reason of the frequency and duration of those visits and by reason of the close relationship between the second cross defendant and the deceased, the second cross defendant knew of the matters and conditions referred to in paragraphs 14.1 to 14.4, or, alternatively, knew so much of the circumstances of the deceased’s symptoms, suffering, hospitalisation, care and journey, that a reasonable person in the position of the second cross defendant would have known or enquired and learned of all or most of the matters and conditions referred to in paragraphs 14.1 to 14.4

16.8 The second cross defendant knew or ought to have known of the matters referred to in paragraph 14Z.3 because the deceased told her and because they were obvious to any reasonable person in the circumstances.”

The complaint reads:

“Clause 16 – What is or are the ‘special disabilities’ upon which the cross claimant relies for the purpose of this clause? The pleading states that the second cross defendant was aware of the deceased’s symptoms. This is undoubtedly true but one might rhetorically say ‘so what’. The paragraph simply repeats that the deceased was, at the time of the gifts, under a special disability, but does not state, as it must, the nature of the special disability and why that particular disability makes the making of the gift and/or the acceptance thereof unconscionable. The pleading as it stands is embarrassing and should be struck out.”

33 In their letter of 27 January 2010 Mr Gonda’s solicitors write: “The special disability or disabilities are those alleged by paragraph 14Z.1” of the FASCC. That paragraph has to be read with the particulars supplied in clause 14Z.2 which incorporates clauses 14.1, 14.2, 14.3 and 14.4 and the particulars supplied in clause 14Z.3.

34 By referring to clause 14Z.1, 14Z.2 and 14Z.3 and the incorporated particulars, it appears that Mr Gonda is relying upon the serious ill-health of the deceased, the symptoms of major illnesses, the approaching death of the deceased, her distress, heavy medication and the matters referred to in clause 14Z.3 (loneliness, and regarding Mrs de Mello as her only friend and as a daughter). I think that the pleading sufficiently states the special disability. As I understand the statements of principle in Bridgewater v Leahy at [75], unconscionable conduct as a ground of relief will be available whenever one party, by reason of some condition or circumstance, is placed at a special disadvantage vis-à-vis another and unfair or unconscientious advantage is taken of the opportunity thereby created. It is true that the unfair or unconscientious advantage has not been specified in clause 16 of the SFASCC, but I would infer from the letter of Mr Gonda’s solicitor of 27 January 2010 that he is contending that the size of the gifts was beyond what may be attributable and proportionate to normal human motivations. He attacks both the making of the gifts and the acceptance of them having regard to the extent of the deceased’s illness and her approaching death. See also clause 17C of the SFASCC.

35 Mr and Mrs de Mello seek to strike out clause 17C of the SFASCC. Clause 17C reads:

“17C. The second defendant, with the said knowledge of the said special disabilities, by assisting in the making of the said dispositions and by retaining the proceeds, has taken advantage of the inequality in power and capacity between the deceased and the second defendant.”

The complaint is:

“Clause 17C – this paragraph yet again asserts a ‘special disability’ but without particularising that same. Further it asserts ‘... has taken advantage of the inequality in power and capacity between the deceased and the second cross defendant. Further the paragraph refers to the second defendant when it is believed the correct description is ‘second cross defendant’. If this be correct, the paragraph, quite apart form anything else, must be repleaded. However, and much more critically, the cross claimant asserts ‘inequality in power and capacity’ between the partes. The paragraph does not describe what is meant by this nor the consequence thereof and the rationale for that consequence and also no particulars are provided. As it stands the entire paragraph is embarrassing and should be struck out.”

The solicitor for Mr Gonda replied:

“A special disability is pleaded by paragraph 14Z.1. We agree that ‘second defendant’ should read ‘second cross defendant’. You are invited and entitled to act accordingly. Subject to that correction we press paragraph 17C. We do not agree with your observations.”

36 Counsel for Mr Gonda told the Court that the words “has taken advantage of the inequality in power and capacity” between the deceased and Mrs de Mello encompassed the special disability. In any event the reply of 27 January 2010 of his solicitor sufficiently specified the “special” disability /(ies).

37 In my opinion, the “special disability” had been sufficiently specified and I would not strike out this paragraph.

38 Paragraphs 17D, 17E and 17G of the SFASCC read:

“17D. In the premises, the dispositions referred to in paragraphs 6, 7, 9 and 11 hereof were produced by the unconscionable conduct of the second cross defendant.

17E. Further or in the alternative to paragraph 17D it would, in the premises, be unconscionable for the second cross defendant to retain the proceeds of the dispositions referred to in paragraphs 6, 7 and 11 hereof.

17G. It would, in the premises, be unconscionable for the third cross defendant to retain the proceeds of the disposition referred to in paragraph 9 hereof.”

The complaint is:

“No particulars are provided. Each of the paragraphs is embarrassing and should be struck out.”

The reply of Mr Gonda’s solicitor reads:

“We disagree.”

39 Clauses 17D and 17G represent conclusions and depend upon the earlier paragraphs of the SFASCC in which the special disabilities are specified. Clause 17E represents an allegation that in the light of the special disabilities mentioned it would be unconscionable for Mrs de Mello to retain the dispositions referred to in paragraphs 6, 7 and 11 of the FASCC. That is designed to cover the case of passive acceptance and the comments of the majority in Bridgewater v Leahy at [76], [115] and 122].

40 I would not strike out clauses 17D 17E and 17G.

41 Clause 17H of the SFASCC reads:

“17H. In the premises the said payments to the second cross defendant and the third cross defendant and each of them ought to be set aside and the trust money referred to by paragraphs 5D.2 and 5D.3 hereof is or ought to be held by the first cross defendant upon trust for the estate of the deceased and as an asset of that estate and ought to be administered as part of that estate.”

The complaint was:

“Clause 17H – There is no description of what is intended to be meant by the term ‘in the premises’. At least the pleading should be amended to refer to the specific earlier paragraphs upon which the cross claimant relies. If some one or more of those earlier paragraphs are sought to be struck out then this pleading should likewise be struck out.”

The solicitor for Mr Gonda replied:

“’In the premises’ here refers, obviously to paragraphs 14Z.1 to 17G.”

No further comment is required.

42 When I suggested that Mr Gonda should file a cross claim I did not imagine that four versions would be produced. I was concerned that this Court should transfer proceedings in which the issues in this Court had been sufficiently defined.

43 There is one telling practical consideration. I doubt if there will be any need to resolve the issues thrown up by the SFASCC because of the terms of s.106B(1) of the Family Law Act and the application made under that section. That section covers not only the case where there is a disposition (gift) with intention to defeat an anticipated order but also where that is the effect of what is done, irrespective of intention.

44 In such circumstances it is desirable that the costs of proceedings in this Court be contained. The course which I propose to follow is to make an order at this stage transferring proceedings 3254/09 (renumbered 2009/00289288) in this Court to the Family Court of Australia and leave the latter to direct and control the future course of proceedings.

Copy letter of Mrs de Mello to Adams & Co of 2 March 2009

45 This was attached to Ms Gordon’s affidavit of 9 February 2010. Counsel for Mr and Mrs de Mello claimed that this letter was privileged on the basis that, at the date it was written, Mrs de Mello believed that Mr Adams was acting as her solicitor. Mr Adams did not share that belief. He was the executor of the deceased’s will to whom Probate was granted about one month later (8 April 2009).

46 I have recorded, on the hearing of the transfer motion on 23 September 2009, that Mr Willmott on behalf of the plaintiff read the affidavits of SB Adams of 16 June 2009, 14 August 2009 and 18 September 20009. A copy of the letter in question was an annexure to the affidavit of Mr Adams of 16 June 2009. I read the affidavits including the annexures. I did not require them to be read aloud. There was no objection.

47 In the absence of evidence supporting the claim of privilege and having regard to the course of events which suggested waiver of any privilege, I admitted the letter of 2 March 2009 on the motion of 2 February 2010 of Mr and Mrs de Mello.

History of Cross Claims

Statement of Cross Claim filed 14 October 2009

Amended Statement of Cross Claim filed 19 October 2009

Paragraphs 15 to 23 of the Amended Statement of Cross Claim were struck out on 3 December 2009. Leave was granted to Mr Gonda to file an amended Statement of Cross Claim.

There was an order that the costs of the motion of Mr and Mrs de Mello to strike out the statement of cross claim (including the amended statement of cross claim) and of 3 December 2009 be paid by Mr Gonda.

Further Amended Cross Claim filed 9 December 2009

When the matter was before the Court on 21 December 2009 this was withdrawn and leave was sought and given to file a Further Amended Statement of Cross Claim. (I was told that Mr Gonda’s legal representative indicated about 16 or 17 December 2009 to the legal representatives of Mr and Mrs de Mello that Mr Gonda would replead.) All questions of costs were reserved.

Second Further Amended Statement of Cross Claim filed 5 January 2010.

48 It was, and is, desirable that the transfer of the proceedings in this Court to the Family Court should take place. There had been a claim on 18 September 2009 under s 106B(1) of the Family Law Act. The requirement that Mr Gonda formulate his claim became necessary because of the understandable approach of the executor in the circumstances of the present case.

Costs

49 As to the costs of the application of Mr and Mrs de Mello (filed 15 December 2009) to strike out the Further Amended Cross Claim filed 9 December 2009 and the brief hearing on 21 December 2009, Mr Gonda must pay the costs of Mr and Mrs de Mello on an ordinary basis. In view of the notification of the legal representatives of Mr Gonda a few days before the hearing on 21 December 2009 that he was prepared to replead, the fee allowed should be midway between the fees allowed on the hearing of a motion (or application) and a directions hearing.

50 As to the costs of the application of Mr and Mrs de Mello of 2 February 2010 and the hearing on 19 February 2010, that motion sought the striking out of some 11 paragraphs of the SFASCC The argument centred mostly on the inadequacy of the particulars supplied. The strike out request followed a number of deficient cross claims and was based on UCPR 14.28. I did not accede to the submissions of Mr and Mrs de Mello but I did find the explanations of counsel for Mr Gonda helpful.

51 If the executor had formulated sustainable claims on behalf of the estate against Mr and Mrs de Mello many of the arguments between Mr Gonda and them might have been avoided. One additional factor is that the executor was appointed to represent the deceased wife in the Family Law proceedings brought by Mr Gonda. Conferring with Mr Gonda in the equity proceedings to maintain the claims in equity against Mr and Mrs de Mello and then having to resist (or perhaps settle) Mr Gonda’s claims in the Family Law proceedings would have produced an unworkable situation both for Mr Gonda and the executor.

52 Mr and Mrs de Mello were placed in the position where they had to assume the burden of dealing with the cross claim of Mr Gonda. In different circumstances they would be dealing with a claim by the executor. I would not assume that the executor’s claim would have been insufficiently and incorrectly pleaded.

53 In more usual circumstances Mr Gonda would not have been caught up in having to formulate a cross claim and deal with the objections and challenges of Mr and Mrs de Mello. Mr Gonda would probably not have been under a costs liability in the circumstances of the present case if the executor had formulated a claim. However, it was Mr Gonda who wished to attack the gifts. Mr and Mrs de Mello are entitled to their costs of dealing with the Cross Claim, the Amended Cross Claim and the Further Amended Cross Claim (Versions 1 to 3). These were defective. This was surprising when Mr Gonda was pressing for an early transfer so as to obtain an early hearing date in the Family Court. On 3 December 2009 an order was made that Mr Gonda pay the costs of Mr and Mrs de Mello of the application to strike out the cross claim. That included the costs of the Amended Cross Claim. Mr Gonda should also pay the costs of Mr and Mrs de Mello of the application to strike out the Further Amended Statement of Claim, but in view of the fact that, about 16 or 17 December 2009, the legal representatives of Mr Gonda advised the legal representatives of the Mr and Mrs de Mello that he would replead, and that the hearing on 21 December 2009 lasted no more than 15 minutes (if that), the fee that should be allowed as to 21 December 2009 should be midway between the fees allowed on the hearing of a motion (or application) and a directions hearing. Costs should be on an ordinary basis. There was no sufficient justification for awarding costs on an indemnity basis.

54 In my opinion the challenges of Mr and Mrs de Mello to the Second Further Amended Statement of Cross Claim filed 5 January 2010 in the light of the letter of 27 January 2010 of Mr Gonda’s solicitors should not be upheld.

55 This was a matter of some complexity and the pleading exercise was not an easy one. In the long run, because of s 106B(1) of the Family Law Act, the issues raised in the SFASCC may not have to be considered and determined.

56 The hearing on 19 February 2010 lasted from about 9.30 am to noon and about two-thirds of the hearing time was spent dealing with the motion of Mr and Mrs de Mello of 2 February 2010 to strike out various paragraphs of the SFASCC. I have not overlooked that the principal complaint was as to the lack of adequate particulars. Other matters were dealt with. They included the removal of Mr and Mrs Kollias as parties to the SFASCC, the costs of the application of Mr and Mrs de Mello to strike out the Further Amended Statement of Claim (including the costs of the hearing on 21 December 2009), the transfer of the proceedings to the Family Court and the costs of the parties to the transfer application.

Costs of Transfer Application

57 The presence of the plaintiff and his counsel on 19 February 2010 were necessary to finalise the transfer of the equity proceedings to the Family Court and the costs of that application. Counsel for the plaintiff pointed out that Mr and Mrs Kollias should not be parties to the SFASCC and that the letter of 2 March 2009 from Mrs de Mello was annexed to the plaintiff’s affidavit of 16 June 2009, which had been read without objection. The plaintiff took no part in the pleading argument.

58 On 23 September 2009 Mr and Mrs de Mello opposed a transfer of the equity proceedings primarily on the ground that they would be involved in additional expense. That was a legitimate but unsuccessful ground. At the stage the application was made the equity proceedings were not in a state to be transferred. The issues in the equity proceedings had not been sufficiently crystallised in that the bases of Mr Gonda’s claims had not been formulated. I declined to make an order for transfer on 23 September 2009, but I expressed the view that ultimately there should be a transfer. The presence of Mr Gonda and Mr and Mrs de Mello at the hearing on 23 September 2009 by their legal representatives was necessary. Mr and Mrs de Mello were correct in contending that a transfer was not then appropriate, but incorrect in their approach to the overall question of a transfer. The institution of equity proceedings to resolve the issues raised was appropriate.

59 On 23 September 2009 the Court reserved all questions of costs as to the transfer application. In my opinion the costs of all the parties to the transfer application should be paid out of the estate of Anna Gonda deceased, those of the plaintiff on an indemnity basis. The costs of the transfer will include that portion of the costs on 19 February 2010 that related to the transfer application.

60 I give the following directions and make the following orders and notations:

1. Direct that Mr Gonda within seven days file and serve a Third Further Amended Statement of Cross Claim omitting the claims for relief and the allegations against Mr and Mrs Kollias. They should not be parties to the proceedings. The clerical correction in 17C of the SFASCC should be made.

2. Direct that Mr and Mrs de Mello file their defence to the Third Further Amended Statement of Cross Claim within fourteen days of being served with that document.

3. Order that these equity proceedings (Equity 3254/2009 – renumbered 2009/289288) be transferred to the Family Court of Australia.

4. Direct that the further supervision and control of these proceedings rest with the Family Court of Australia. This will be in conjunction with the Family Court proceedings between Mr Gonda and the late Anna Gonda (by her duly appointed representative).

5. (a) Order that the costs on an ordinary basis of all defendants to the transfer application and transfer proceedings to the Family Court of these equity proceedings be paid out of the estate of the late Anna Gonda.

(b) Order that the costs of the plaintiff on an indemnity basis of the transfer application and transfer proceedings of these equity proceedings to the Family Court be paid out of the estate of the late Anna Gonda.

(c) Order that the further costs of the plaintiff of these equity proceedings to date be paid on an indemnity basis out of the estate of the late Anna Gonda.

(d) It is noted that any further order as to the costs of the equity proceedings of any party will be made by the Family Court.

6. Order that Mr Gonda pay the costs of Mr and Mrs de Mello on an ordinary basis of their application of 15 December 2009 to strike out the Further Amended Statement of Cross Claim, the costs of the hearing fees allowed as to 21 December 2009 to be midway between the fees and costs allowed on the hearing of a motion (application) and a directions hearing.

7. Dismiss the motion of 2 February 2010 of Mr and Mrs de Mello.

8. Order that the costs of Mr Gonda of the motion of 2 February 2010 of Mr and Mrs de Mello be paid by Mr and Mrs de Mello. It is noted that about two-thirds of the hearing time on 19 February 2010 related to the motion.

9. All costs hereby ordered are payable within 42 days of being agreed or a completed costs assessment which may take place forthwith.

10. It is noted that the costs of all parties of the transfer proceedings include those incurred on 19 February 2010.

11. The orders as to costs made on 3 December 2009 remain in force.

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LAST UPDATED:
8 March 2010