Litigation and Dispute Resolution

Leave small businesses “a loan”: Federal Court declares unfair terms in Bank of Queensland finance contracts with small businesses

8 November, 2021

Litigation involving deceased estates can take many forms – applications for provision, notional estate orders, challenges to grants based on undue influence or lack of testamentary capacity, and so on.

A common element across each of those disputes is the role of the parties’ legal costs and quite often those costs take a prominent role in the conduct of and the resolution of disputes.

Of particular note is that the usual rule that “costs follow the event” will often not be applied by the Court, and instead the deceased’s estate will often bear all parties’ costs of litigation.  This will particularly be the case if – by reason of some conduct of the deceased – there is a public interest in determining the question(s) the subject of litigation.  For instance, where a bona fide issue has been raised by a party which requires investigation, such as suspicious circumstances surrounding the drafting or execution of a Will, it is often unlikely that that party will bare adverse cost consequences even if that issue is considered and ultimately disregarded.

Due to the nature of estate litigation, the person whose estate is at issue is deceased, and cannot play any role in the dispute.  This means that decisions about how litigation is conducted or the extent of costs incurred are made without their input.  Furthermore, litigation concerning deceased estates deal with a limited pool of assets.  Lengthy and adversarial disputes can significantly drain the pool of funds available for the beneficiaries.

It is in that context that the Court takes an active role in case managing proceeding and specifically monitoring or making directions concerning the parties’ costs.  In some jurisdictions, such as in respect of claims for provision under the Succession Act, the Court requires the parties’ solicitors to swear affidavits at an early stage in the proceedings providing estimates of the parties’ costs of the proceedings (see Supreme Court Practice Note SC Eq 7).


Section 60 of the Civil Procedure Act 2005 (NSW) requires that the practice and procedure of the court should be implemented with the object of resolving the issues between the parties in such a way that the costs are “proportionate to the importance and complexity of the subject matter”.

We have recently published an article which deals with the issue of ‘proportionality’ in the context of remuneration of liquidators.  ‘Proportionality’ is a hot topic in that jurisdiction and one which is receiving increasing attention from the bench.

There will often be the risk that disproportionate legal costs will ravage a limited pool of resources, particular where, as we have said above, costs do not always follow the event.

It is this risk that has seen the issue of proportionality receive attention from the Courts in recent time in the context of external administrations – they are custodians of a limited pool of resources which are to be administered for the benefit of others.

Capped costs orders: ‘proportionality’ in the context of deceased estate litigation

It is clear from the authorities that Courts, in the context of deceased estates, are alive to and are guided by the principle of proportionality.  This is primarily because executors/administrators utilise estate resources to conduct litigation which are designated for the benefit of beneficiaries.  In Baychek v Baychek [2010] NSWSC 987 (Baycheck), Ball J described proportionality as set out in section 60 as an “important principle which is relevant to the exercise of the court’s discretion in relation to costs”.

In Sherborne Estate (No 2): Vanvalen v Neaves (2005) 65 NSWLR 268 (Sherborne), Palmer J was required to consider the making of orders concerning costs in the context of proceedings relating to a claim for provision.  Two out of three of the plaintiffs were successful in their applications, with the total additional provision out of the estate for the two of them totalling approximately $360,000.  However, the plaintiffs incurred costs of approximately $450,000, and the defendant’s costs were in the order of $200,000.

Palmer J colourfully stated that:

While this litigation is of great importance to the parties themselves, it must nevertheless be borne in mind that this is not a commercial dispute … it is a family dispute between people of quite modest means: the amounts which all three of the plaintiffs might reasonably have hoped to obtain by further provision from the deceased’s estate could never have come anywhere near the sum of $600,000 which has been expended in this litigation.  What has happened in this case is a dark stain on the administration of justice.  One might wonder if anything has changed since Dickens’ Bleak House.

Palmer J considered rule 42.4 of the Uniform Civil Procedure Rules (UCPR), which empowers a Court to, of its own motion or on application from a party, “specify the maximum costs that may be recovered by one party from another”.  Palmer J stated that the rule exists to “curb the tendency of one or all parties to engage in disproportionate expenditure on legal costs”.  His Honour further noted that family provision claims are often “fuelled by personal animosity” where “parties sometimes get carried away by the desire to vindicate their positions”.  Rule 42.4 grants the Court a “brake” to put on this kind of conduct that the Court “should not be reluctant to use”.

His Honour interpreted rule 42.4 as being restricted so that it could only be used prior to a hearing and that it therefore could not be used in the present case.  Accordingly, no capped costs order was made.

This interpretation of rule 42.4 is no longer the law in NSW, and orders capping costs can be made prior to or after a hearing.  In Nudd v Mannix [2009] NSWCA 327 (Nudd) the Court of Appeal unanimously upheld a capped cost order made by the trial judge upon determination of a family provision application.  In his reasons for judgment, the trial judge regarded costs of $82,200 as “grossly excessive” where the estate was valued at $415,182 and the matter was a “straightforward claim under the Family Provision Act”.  The trial judge capped costs on a party/party basis at $60,000.  Whilst the decision in Nudd does not expressly refer to Sherborne, it was described by Ball J in Baychek as “authority for the proposition that the court does have power to cap costs at the end of the hearing.

Rule 42.4 of the UCPR is also supported by Practice Note No SC Eq 7, which states that an order may be made capping the costs recoverable in proceedings involving relief for provision including, but not limited to, matters where the value of the estate is less than $500,000.

In Baychek, Ball J had to consider whether to grant a capped costs order after a successful family provision application.  The plaintiff was granted an order for provision of $183,000, but had incurred costs of $111,000.  Ball J set out three characteristics of family provision claims that are relevant consideration in costs orders:

  1. Family provision proceedings are concerned with the proper distribution of a fixed pool of assets between people with a moral claim over that pool. The court is to therefore consider the overall justice of the case.
  2. The amount a plaintiff can expect to recover may be small, either due to the size of the estate or the quality of their claim. Therefore, it is reasonable to expect costs to be proportionate to the amount claimed and the nature of the issues in the case.
  3. Family provision claims can involve considerable personal animosity between the parties, which may make it more appropriate to cap costs.

In Baychek, Ball J ultimately found that:

  • because of the plaintiff’s comfortable means, the plaintiff could not have expected more than a modest provision in her favour;
  • much of the plaintiff’s evidence appeared to be attempting to re-litigate issues that were the subject of court proceedings 20 years prior;
  • the defendant’s costs estimate was $63,000 (compared to the plaintiff’s costs of $111,000) and, in the circumstances of the case, there should not have been a considerable amount of difference between the work to be done by each side;
  • it is necessary to be conscious of the needs of the defendant.

Ball J held that, in light of the above, an order capping costs should be granted.  The effect of Ball J’s orders was that the plaintiff was only able to recover $65,000 for their legal costs, less than 60% of the costs sought.

Practical tips

Solicitors typically charge their time on a time-based method.  Doing so is justified primarily on the basis that a client is only charged for work which is actually undertaken and is charged in a manner which best reflects the complexity of the tasks and matters undertaken.

However, a time-based costing method runs the risk of ignoring the proportionality of that legal work relative to, for example, the size of the estate.

Litigation concerning deceased estates generally involve the same variables, complexities and uncertainties of conventional inter party litigated disputes which affect the ability or willingness of firms to be engaged on a fixed fee basis, without building into that fixed fee contingencies for complexities and additional costs which may ultimately be unnecessary.

We provide the following practice tips for individuals and solicitors involved in disputes concerning deceased estates:

  • Discuss any concerns regarding costs at an early stage of the proceedings. Seek the intervention of the Court at an early stage of the proceedings;
  • Do not necessarily wait for the Court to refer the parties to mediation or other forms of alternative dispute resolution to participate in ADR where appropriate;
  • For plaintiffs:

– do not include weak or speculative aspects of your claim.
– limit your evidence to matters which are relevant to the facts in issue.
– seek concessions from the defendant in relation to particular facts which can be agreed.

  • For defendants:

– Concede questions of law or fact which cannot sensibly be disputed.
– Conduct litigation consistently with your duties and do not blindly follow suggestions from competing beneficiaries.
– Obtain competent legal advice at an early stage.

  • For solicitors:

– Provide detailed cost estimates upon receiving instructions.
– Do more than identify variables which could affect the estimates of costs which might be incurred: explain to clients the likelihood of those variables, the extent to which they can be managed or controlled.
– Solicitors can also assist the parties by providing comprehensive cost estimates at the start or at early stages of matters which include components for possible contingencies or variables. Solicitors are regularly criticised (and penalised on assessment) for failing to provide proper disclosure and estimates of costs.  This often arises because solicitors provide an initial estimate upon receiving instructions which only deals with the first stage of the work required or only deals with the tasks which are known at that time to be required.

The main recommendation we have is for costs to be given appropriate and conscious consideration at an early stage and not deferring it until the proceedings have been resolved.  Whilst a court may make an order limiting costs following the determination of the proceedings, an order capping costs is best made early in case management.  As noted above in Sherborne, Palmer J made it clear an order capping costs enables the court to:

curb the tendency of the [parties] to engage in disproportionate expenditure on legal costs by making it clear, at an early state of the proceedings, that beyond a certain limit the parties will have to bear their own costs … [t]he time for its use is early in case management, whenever it appears that the parties’ litigious fervour may be leading them to excessive expenditure of costs”.

We anticipate that the Courts will continue to consider ways to streamline and efficiently case management litigation in this jurisdiction, which may well involve prescriptive and transparent disclosure of parties’ costs.

If you have any questions concerning the matters discussed above, or for any comments or queries, please contact us.

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Canadian Court elevates thumbs-up emoji to signature status

In June 2023, a Canadian Court in South-West Terminal Ltd v Achter Land and Cattle Ltd, 2023 SKKB 116, held that the "thumbs-up" emoji carried enough weight to constitute acceptance of contractual terms, analogous to that of a "signature", to establish a legally binding contract.   Facts This case involved a contractual dispute between two parties namely South-West Terminal ("SWT"), a grain and crop inputs company; and Achter Land & Cattle Ltd ("ALC"), a farming corporation. SWT sought to purchase several tonnes of flax at a price of $17 per bushel, and in March 2021, Mr Mickleborough, SWT's Farm Marketing Representative, sent a "blast" text message to several sellers indicating this intention. Following this text message, Mr Mickleborough spoke with Mr Achter, owner of ALC, whereby both parties verbally agreed by phone that ALC would supply 86 metric tonnes of flax to SWT at a price of $17 per bushel, in November 2021. After the phone call, Mr Mickleborough applied his ink signature to the contract, took a photo of it on his mobile phone and texted it to Mr Archter with the text message, "please confirm flax contract". Mr Archter responded by texting back a "thumbs-up" emoji, but ultimately did not deliver the 87 metric tonnes of flax as agreed.   Issues The parties did not dispute the facts, but rather, "disagreed as to whether there was a formal meeting of the minds" and intention to enter into a legally binding agreement. The primary issue that the Court was tasked with deciding was whether Mr Achter's use of the thumbs-up emoji carried the same weight as a signature to signify acceptance of the terms of the alleged contract. Mr Mickleborough put forward the argument that the emoji sent by Mr Achter conveyed acceptance of the terms of the agreement, however Mr Achter disagreed arguing that his use of the emoji was his way of confirming receipt of the text message. By way of affidavit, Mr Achter stated "I deny that he accepted the thumbs-up emoji as a digital signature of the incomplete contract"; and "I did not have time to review the Flax agreement and merely wanted to indicate that I did receive his text message." Consensus Ad Idem In deciding this issue, the Court needed to determine whether there had been a "formal meeting of the minds". At paragraph [18], Justice Keene considered the reasonable bystander test: " The court is to look at “how each party’s conduct would appear to a reasonable person in the position of the other party” (Aga at para 35). The test for agreement to a contract for legal purposes is whether the parties have indicated to the outside world, in the form of the objective reasonable bystander, their intention to contract and the terms of such contract (Aga at para 36). The question is not what the parties subjectively had in mind, but rather whether their conduct was such that a reasonable person would conclude that they had intended to be bound (Aga at para 37)."   Justice Keene considered several factors including: The nature of the business relationship, notably that Mr Achter had a long-standing business relationship with SWT going back to at least 2015 when Mr Mickleborough started with SWT; and   The consistency in the manner by which the parties conducted their business by way of verbal conversation either in person or over the phone to come to an agreement on price and volume of grain, which would be followed by Mr Mickleborough drafting a contract and sending it to Mr Achter. Mr Mickleborough stated, "I have done approximately fifteen to twenty contracts with Achter"; and   The fact that the parties had both clearly understood responses by Mr Achter such as "looks good", "ok" or "yup" to mean confirmation of the contract and "not a mere acknowledgment of the receipt of the contract" by Mr Achter.   Judgment At paragraph [36], Keene J said: "I am satisfied on the balance of probabilities that Chris okayed or approved the contract just like he had done before except this time he used a thumbs-up emoji. In my opinion, when considering all of the circumstances that meant approval of the flax contract and not simply that he had received the contract and was going to think about it. In my view a reasonable bystander knowing all of the background would come to the objective understanding that the parties had reached consensus ad item – a meeting of the minds – just like they had done on numerous other occasions." The court satisfied that the use of the thumbs-up emoji paralleled the prior abbreviated texts that the parties had used to confirm agreement ("looks good", "yup" and "ok"). This approach had become the established way the parties conducted their business relationship.   Significance of the Thumbs-Up Emoji Justice Keene acknowledged the significance of a thumbs-up emoji as something analogous to a signature at paragraph [63]: "This court readily acknowledges that a thumbs-up emoji is a non-traditional means to "sign" a document but nevertheless under these circumstances this was a valid way to convey the two purposes of a "signature" – to identify the signator… and… to convey Achter's acceptance of the flax contract." In support of this, Justice Keene cited the definition of the thumbs-up emoji: "used to express assent, approval or encouragement in digital communications, especially in western cultures", confirming that the thumbs-up emoji is an "action in an electronic form" that can be used to allow express acceptance as contemplated under the Canadian Electronic Information and Documents Act 2000. Justice Keene dismissed the concerns raised by the defence that accepting the thumbs up emoji as a sign of agreement would "open the flood gates" to new interpretations of other emojis, such as the 'fist bump' and 'handshake'. Significantly, the Court held, "I agree this case is novel (at least in Skatchewan), but nevertheless this Court cannot (nor should it) attempt to stem the tide of technology and common usage." Ultimately the Court found in favour of SWT, holding that there was a valid contract between the parties and that the defendant breached by failing to deliver the flax. Keene J made a judgment against ALC for damages in the amount of $82,200.21 payable to SWT plus interest.   What does this mean for Australia? This is a Canadian decision meaning that it is not precedent in Australia. However, an Australian court is well within its rights to consider this judgment when dealing with matters that come before it with similar circumstances. This judgment is a reminder that the common law of contract has and will continue to evolve to meet the everchanging realities and challenges of our day-to-day lives. As time has progressed, we have seen the courts transition from sole acceptance of the traditional "wet ink" signature, to electronic signatures. Electronic signatures are legally recognised in Australia and are provided for by the Electronic Transactions Act 1999 and the Electronic Transactions Regulations 2020. Companies are also now able to execute certain documents via electronic means under s 127 of the Corporations Act. We have also seen the rise of electronic platforms such as "DocuSign" used in commercial relationships to facilitate the efficient signing of contracts. Furthermore, this case highlights how courts will interpret the element of "intention" when determining whether a valid contract has been formed, confirming the long-standing principle that it is to be assessed objectively from the perspective of a reasonable and objective bystander who is aware of all the relevant facts. Overall, this is an interesting development for parties engaging in commerce via electronic means and an important reminder to all to be conscious of the fact that contracts have the potential to be agreed to by use of an emoji in today's digital age.

Published by Foez Dewan
29 August, 2023

Venues NSW ats Kerri Kane: Venues NSW successful in overturning a District Court decision

The McCabes Government team are pleased to have assisted Venues NSW in successfully overturning a District Court decision holding it liable in negligence for injuries sustained by a patron who slipped and fell down a set of steps at a sports stadium; Venues NSW v Kane [2023] NSWCA 192 Principles The NSW Court of Appeal has reaffirmed the principles regarding the interpretation of the matters to be considered under sections5B of the Civil Liability Act 2002 (NSW). There is no obligation in negligence for an occupier to ensure that handrails are applied to all sets of steps in its premises. An occupier will not automatically be liable in negligence if its premises are not compliant with the Building Code of Australia (BCA). Background The plaintiff commenced proceedings in the District Court of NSW against Venues NSW (VNSW) alleging she suffered injuries when she fell down a set of steps at McDonald Jones Stadium in Newcastle on 6 July 2019. The plaintiff attended the Stadium with her husband and friend to watch an NRL rugby league match. It was raining heavily on the day. The plaintiff alleged she slipped and fell while descending a stepped aisle which comprised of concrete steps between rows of seating. The plaintiff sued VNSW in negligence alleging the stepped aisle constituted a "stairwell" under the BCA and therefore ought to have had a handrail. The plaintiff also alleged that the chamfered edge of the steps exceeded the allowed tolerance of 5mm. The Decision at Trial In finding in favour of the plaintiff, Norton DCJ found that: the steps constituted a "stairwell" and therefore were in breach of the BCA due to the absence of a handrail and the presence of a chamfered edge exceeding 5mm in length. even if handrails were not required, the use of them would have been good and reasonable practice given the stadium was open during periods of darkness, inclement weather, and used by a persons of varying levels of physical agility. VNSW ought to have arranged a risk assessment of the entire stadium, particularly the areas which provided access along stepped surfaces. installation of a handrail (or building stairs with the required chamfered edge) would not impose a serious burden on VNSW, even if required on other similar steps. Issues on Appeal VNSW appealed the decision of Norton DCJ. The primary challenge was to the trial judge's finding that VNSW was in breach of its duty of care in failing to install a handrail. In addition, VNSW challenged the findings that the steps met the definition of a 'stairwell' under the BCA as well as the trial judge's assessment of damages. Decision on Appeal The Court of Appeal found that primary judge's finding of breach of duty on the part of VNSW could not stand for multiple reasons, including that it proceeded on an erroneous construction of s5B of the Civil Liability Act 2002 and the obvious nature of the danger presented by the steps. As to the determination of breach of duty, the Court stressed that the trial judge was wrong to proceed on the basis that the Court simply has regard to each of the seven matters raised in ss 5B and 5C of the CLA and then express a conclusion as to breach. Instead, the Court emphasised that s 5B(1)(c) is a gateway, such that a plaintiff who fails to satisfy that provision cannot succeed, with the matters raised in s 5B(2) being mandatory considerations to be borne in mind when determining s 5B(1)(c). Ultimately, regarding the primary question of breach of duty, the Court found that: The stadium contained hazards which were utterly familiar and obvious to any spectator, namely, steps which needed to be navigated to get to and to leave from the tiered seating. While the trial judge considered the mandatory requirements required by s5B(2) of the CLA, those matters are not exhaustive and the trial judge failed to pay proper to attention to the fact that: the stadium had been certified as BCA compliant eight years before the incident; there was no evidence of previous falls resulting in injury despite the stairs being used by millions of spectators over the previous eight years; and the horizontal surfaces of the steps were highly slip resistant when wet. In light of the above, the Court of Appeal did not accept a reasonable person in the position of VNSW would not have installed a handrail along the stepped aisle. The burden of taking the complained of precautions includes to address similar risks of harm throughout the stadium, i.e. installing handrails on the other stepped aisles. This was a mandatory consideration under s5C(a) which was not properly taken into account. As to the question of BCA compliance, the Court of Appeal did not consider it necessary to make a firm conclusion of this issue given it did not find a breach of duty.  The Court did however indicated it did not consider the stepped aisle would constitute a "stairway" under the BCA. The Court of Appeal also found that there was nothing in the trial judge's reasons explicitly connecting the risk assessment she considered VNSW ought to have carried out, with the installation of handrails on any of the aisles in the stadium and therefore could not lead to any findings regarding breach or causation. As to quantum, the Court of Appeal accepted that the trial judge erred in awarding the plaintiff a "buffer" of $10,000 for past economic loss in circumstances where there was no evidence of any loss of income. The Court of Appeal set aside the orders of the District Court and entered judgment for VNSW with costs. Why this case is important? The case confirms there is no obligation in negligence for owners and operators of public or private venues in NSW to have a handrail on every set of steps. It is also a welcome affirmation of the principles surrounding the assessment of breach of duty under s 5B and s 5C of the CLA, particularly in assessing whether precautions are required to be taken in response to hazards which are familiar and obvious to a reasonable person.

Published by Leighton Hawkes
18 August, 2023
Litigation and Dispute Resolution

Expert evidence – The letter of instruction and involvement of lawyers

The recent decision in New Aim Pty Ltd v Leung [2023] FCAFC 67 (New Aim) has provided some useful guidance in relation to briefing experts in litigation.

Published by Justin Pennay
10 August, 2023