Court Denies Costs to Vendor Who Forged Wife’s Signature in Property Contract Dispute

In a cautionary costs judgment following an earlier contract dispute, the Supreme Court of New South Wales has held that although the plaintiffs’ claim to enforce a $4.5 million property sale failed, they should not bear the legal costs of the vendor who misled them into thinking a binding contract existed. The plaintiffs in Jarjo v Patterson (No 2) [2022] NSWSC 1311 alleged they had validly exchanged contracts for a Burwood property with co-owners Mr and Ms Patterson. While both parties’ signatures appeared on the contract and a section 66W certificate had been provided, the Court later found that Ms Patterson’s signature had been forged by Mr Patterson, who lacked authority to bind her. The Court accordingly held that no binding contract had been formed. In this follow-up decision, Justice Darke declined to follow the usual rule that costs follow the event. While the plaintiffs were ordered to pay Ms Patterson’s costs, given her lack of involvement and innocence in the transaction, no such order was made in favour of Mr Patterson. His conduct in forging the signature and allowing contracts to be exchanged without authority was described as “plainly unreasonable” and a “significant contributor” to the ensuing litigation. Although ultimately unsuccessful, the plaintiffs were not found to have pursued an unarguable case or acted unreasonably during proceedings. This shows that a successful party may be denied costs where their own misconduct gave rise to the litigation in the first place.