Lambourne and Ors v Marrable and Ors (No 2)

The applicants had been largely unsuccessful in seeking relief under Powers of Attorney Act 1998, in relation to an enduring power of attorney and its revocation. The parties agreed upon some costs and consequential orders following the trial, but not upon certain other matters including the appropriate order for costs and whether some interlocutory orders should be effectively reversed. His Honour addressed how the determination of costs is to be approached in matters under Powers of Attorney Act 1998, the extent of the duty of a party applying for ex parte orders, and whether the orders which had previously issued ex parte should have been framed as being made “until further order” (i.e. in the form of interlocutory orders).

Martin SJA

10 November 2023

The applicants sought an order that the first respondent pay their costs of and incidental to the proceeding (including reserved costs) on the indemnity basis. [3]. On the other hand, the first respondent submitted that it would be appropriate that either:

(a)each of the first, second and third applicants pay its costs of a hearing during which he had obtained orders vacating ex parte orders which had previously been made in favour of the applicants, on the indemnity basis; and

(b)each of the first, second and third applicants pay its costs of the balance of the proceeding on the standard basis. [4].

The legislation

Section 125 Powers of Attorney Act 1998 (the Act) provides:

Costs

(1)The costs of a proceeding are within the court’s discretion.

(2)However, unless the court otherwise orders, costs follow the event.

That provision is not dissimilar from r 681 Uniform Civil Procedure Rules.

How the determination of costs is to be approached in matters under the Powers of Attorney Act 1998

The applicants contended that the general principle contained in s 125(2) does not necessarily apply to proceedings in the court’s “protective jurisdiction”, which instead require the making of an order which is, in all the circumstances, proper (see FC v SC (No 2) [2023] NSWSC 376, CAC v Secretary, Dept of Family and Community Services [2014] NSWSC 1855, [130] and CAC v Secretary, Dept of Family and Community Services (No 2) [2015] NSWSC 344.) [8]. The first respondent submitted that the issue of costs should be considered in conformity with s 125 [14] and that even if the principles expressed in the New South Wales cases had application, the current matter had been conducted in an entirely adversarial way, which should be recognised in any costs order. [15].

In considering the respective arguments, his Honour noted that s 125 is contained within Ch 6 of the Act, which deals with the powers of the Supreme Court. In his view, the inclusion in that chapter of s 125, in circumstances where similar wording was already contained in UCPR, indicates that the intention of the legislature was that the general rule should apply in matters under the Act. [18].

The parties’ starkly different financial circumstances were cited by the applicants as being significant to determining costs. The unsuccessful applicants were not wealthy, by comparison to the successful first respondent (their father). His Honour did not share the view that the disparity in financial resources was relevant, particularly having regard to his determination about s 125, observing that it is not the case that sympathy ought affect whether a successful party obtains his or her costs: see Oshlack v Richmond River Council (1998) 193 CLR 72, [90].

Overall, it was apparent that the applicants had been largely unsuccessful in the litigation. However, it was not the case that they had been wholly unsuccessful, having regard to his Honour’s finding that the first respondent had temporarily lost capacity at one time. [30]. Accordingly, his Honour ordered that costs followed the event with the applicants to pay 70% of the first respondent’s costs of the application (save an ex parte application dealt with separately), on the standard basis. [30]–[31].

The matter of whether the costs to set aside the ex parte orders in favour of the applicants should be on the indemnity basis

At an early stage in the proceedings, the applicants urgently applied, ex parte, for various interlocutory orders on the basis that there was “an immediate risk that Harvey’s assets may be dissipated by his own poor judgement or due to the risk of influence of others”. [32]. The orders obtained at that juncture included an order authorizing the first respondent’s removal as director and declarations as to his capacity. [33]. The first respondent successfully applied to have most of the orders set aside. [34].

The issue arose as to whether the applicants had in fact made all appropriate enquiries and brought all adverse matters to the attention of the court at the time of the application. It emerged that the applicants had not complied with the duty of disclosure. Their breaches of the duty included failing to make comprehensive enquiries of doctors as to their diagnoses and the basis for the opinions contained in the hospital records. [39]. Importantly:

“one of the most important pieces of evidence relevant to the whole issue of Harvey being effectively restrained on all financial matters was that Dr Khateeb had expressed no opinion as to his financial capacity. That should have been made obvious at the ex parte hearing and it should have been made obvious that, when Dr Jones expressed his view, he was agreeing with Dr Khateeb. This was a matter upon which the applicants bore the onus and they failed to make the ‘proper enquiries’ so that they could properly inform the judge of those matters which would have been brought up by Harvey had he been given notice of the application”. [50].

That not only justified an order for indemnity costs, but his Honour noted that the applicants’ non-compliance with their obligations pertaining to such a critical issue meant that the ex parte orders concerning financial matters might not have been granted had the judge hearing the application been fully informed. [51].

The form of the ex parte orders as being made “until further order”

The way the orders were drafted was fundamentally flawed. The applicants neglected to draw the Court’s attention to the authorities which establish that orders which issue ex parte should not be framed as interlocutory orders: see Ross v Internet Wines Pty Ltd (2004) 60 NSWLR 436 and Minister for Local Government v Blue Mountains City Council (2018) 97 NSWLR 1132. The preferable practice is for orders to be expressed as an interim order, applying until a specific time. Furthermore, the party subject to ex parte relief should not have to apply to discharge it. [41].

Here, the orders which were made were deleterious and restrictive to the first respondent in that they prevented him from accessing his personal funds. He was not even in a position to pay for lawyers, rendering it very difficult for him to contest the orders. [44].

Finally, one of the orders purported to be an “interlocutory declaration” – a thing unknown to law [45]: see Graham Barklay Oysters Pty Ltd v Ryan (2002) 211 CLR 540, [128].

Disposition

It was ordered that, inter alia:

1.Each of the first applicant, second applicant and third applicant pay the first respondent’s costs of the hearing during which the first respondent had obtained orders vacating ex parte orders which had previously been made in the applicants’ favour.

2.Each of the first applicant, second applicant and third applicant pay 70% of the first respondent’s costs of the balance of the proceeding on the standard basis.

3.The orders which had been made which caused the first respondent to be removed as a director and secretary of his companies and the associated orders, ceased to have effect.

A Jarro