ACN 131 110 220 Pty Ltd v Lakic (No. 2)

[2016] VCC 1672

IN THE COUNTY COURT OF VICTORIA Revised
Not Restricted
Suitable for publication

AT MELBOURNE

COMMERCIAL DIVISION
EXPEDITED CASES LIST

Case No. CI-15-00344

ACN 131 110 220 PTY LTD	Plaintiff
v.
BOGDANKA LAKIC & ORS	Defendants

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JUDGE:	His Honour Judge Anderson
WHERE HELD:	Melbourne
DATE OF HEARING:	11 November 2016
DATE OF JUDGMENT:	14 November 2016 (revised 16 November 2016)
CASE MAY BE CITED AS:	ACN 131 110 220 Pty Ltd v. Lakic & Ors (No. 2)
MEDIUM NEUTRAL CITATION:	[2016] VCC 1672

REASONS FOR DECISION

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Catchwords:              Practice and procedure – Multitude of proceedings and applications arising from orders and judgments – Summary of events to date and likely steps necessary before all issues are concluded.    

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr S. McGregor of Counsel	Wisewould Mahony
For the First Defendant	Mrs B. Lakic (in person)
For the  Second, Third & Fourth Defendants	Mr V. Ryan	Vincent Ryan

HIS HONOUR:

1Mrs Bogdanka Lakic is embroiled in litigation. She wants to put it behind her and return to her native country Bosnia where she hopes her health will improve. On 11 November 2016, she urged me to conclude her cases as soon as possible. These reasons for decision are an attempt to set out the outstanding matters that require resolution.

2Mrs Lakic was injured in motor vehicle accidents on 15 May 2000, 26 January 2002 and 12 September 2006. In about 2005, she consulted solicitors Prior & Prior. On 1 April 2009, Mrs Lakic engaged Victorian Compensation Lawyers Pty Ltd, now ACN 131 110 220 Pty Ltd (“VCL”).

3VCL were successful in obtaining the following orders:

a.on 13 February 2012, His Honour Judge Saccardo granted leave for Mrs Lakic to bring common law proceedings in respect of the accident on 15 May 2000;

b.on 22 October 2012, Her Honour Judge Kings extended the time for Mrs Lakic to bring the common law action.

VCL subsequently in December 2012 issued a writ in the Supreme Court (SCI-2012-60464).

4VCL ceased to act on behalf of Mrs Lakic on 24 October 2013. Mrs Lakic represented herself at the trial of the Supreme Court proceeding. On 20 June 2014, the Honourable Justice Rush delivered judgment in her favour for damages of $838,802. On 1 August 2014, Mrs Lakic received $689,824.83 from the Transport Accident Commission (“TAC”).

5After the trial, Mrs Lakic was involved in two further proceedings:

a.action CI-15-00433 in the County Court in which VCL is the plaintiff and sued Mrs Lakic to recover the costs and disbursements of the applications determined by Judge Saccardo ($158,905.78) and Judge Kings ($51,093.45). Mrs Lakic counterclaimed for damages alleging negligence;

b.action SCI-2015-00118 in the Supreme Court brought by Mrs Lakic against Prior & Prior alleging negligence. Prior & Prior had obtained a judgment in the Magistrates’ Court on 11 February 2011 against Mrs Lakic for unpaid costs.

Supreme Court action SCI-2015-00118

6The action SCI-2015-0018 was heard by the Honourable Justice Macaulay. He delivered judgment on 30 May 2016. Mrs Lakic recovered the costs of the application determined by Judge Kings together with interest, totalling $57,919.75. This sum was set off against Prior & Prior’s Magistrates’ Court judgment which, together with interest, totalled $73,504.33.

7Justice Macaulay ordered that Mrs Lakic pay the costs of Prior & Prior. The sum of $190,000 has been claimed by their solicitors from Mrs Lakic. This costs liability has led to further proceedings in the Supreme Court as Prior & Prior sought orders to prevent Mrs Lakic dissipating assets to avoid Prior & Prior executing on an order for costs, once the costs of action SCI-2015-0018 are assessed by the Costs Court.

8Mrs Lakic was registered as the joint proprietor with her husband, Zdravko Lakic of two properties:

a.22 Lucerne Road, Ferntree Gully, being the whole of the land contained in Certificate of Title Volume 9395 Folio 417 (“the Ferntree Gully property”);

b.27 Maplewood Court, Cranbourne, being the whole of the land contained in Certificate of Title Volume 11225 Folio 478 (“the Cranbourne property”).

9A transfer of Mrs Lakic’s interest in the Cranbourne property to Mr Lakic was lodged sometime between 24 September and 7 October 2016. An interlocutory injunction preventing the registration of the transfer was granted by Justice Riordan on 13 October 2016 and continues until further order. There will be a further hearing of this matter in the Supreme Court on 17 November 2016.

County Court action CI-15-00344

10On 18 July 2016, I delivered judgment in action CI-15-00344. The effect of the decision was as follows:

a.VCL was to pursue the order for costs made by Judge Saccardo with the TAC, as it claimed in a bill of costs dated 16 July 2014 in the sum of $158,905.78. If resolution could not be reached with the TAC, there would need to be an assessment by the Costs Court;

b.Justice Macaulay’s judgment included that Mrs Lakic was entitled to recover from Prior & Prior  the costs of the extension of time application determined by Judge Kings. The amount of $51,093.45 was set off against Mrs Lakic’s obligation to Prior & Prior pursuant to the Magistrates’ Court judgment. Therefore, it was foreshadowed that Mrs Lakic would have to pay the sum of $51,093.45 to VCL;

c.Mrs Lakic was successful on her counterclaim, for damages of $25,222.52.

11When I delivered judgment, I anticipated that the final flow of money from one party to another would need to await the resolution with TAC (or the assessment by the Costs Court) of the bill of costs seeking $158,905.78. The primary reason was that the bill of costs includes some costs and disbursements incurred whilst Prior & Prior were acting for Mrs Lakic and some costs and disbursements incurred whilst VCL was acting.

12Mrs Lakic has apparently paid the balance of the Magistrates’ Court judgment owing to Prior & Prior, after the set-off of the sum of $51,903.45. She would therefore be entitled to the Prior & Prior portion of the bill of costs seeking $158,905.78 from TAC, subject to her obligation to pay Prior & Prior’s costs of proceeding SCI-2015-00118.

13In these circumstances, the costs of County Court proceeding CI-15-00344 have not been determined. However, VCL believes that it will be successful in obtaining an order for the costs of the proceeding. Those costs are likely to be substantial as the trial lasted for 12 sitting days and there have been numerous interlocutory hearings both before and after the trial.

14Any determination of the issue of costs with involve consideration of the following matters:

a.VCL was successful on its claim. However, the issue of whether “costs should follow the decision” is complicated by, at least two matters:

i.VCL sought to amend its statement of claim at the end of the trial. An assessment will need to be made as to whether it was required to amend its claim in order to succeed. Ordinarily, the costs of Mrs Lakic, thrown away be reason of the amendment, would need to be taken account of;

ii.VCL has put before me correspondence between the parties which apparently includes an offer by VCL to compromise the proceeding, or perhaps Mrs Lakic’s counterclaim. I have not looked at the correspondence, and consider I should continue not to do so until the resolution of the TAC costs, either by agreement or assessment by the Costs Court, is completed. However, because VCL has an expectation that it will be paid the costs of the proceeding, it may be necessary for me, or another judge, to attempt to assess the likelihood of VCL recovering costs in the proceeding, and the ultimate flow of money.

15Since the delivery of the judgment on 18 July 2016, the following matters have been considered in a number of hearings before the Court:

a.putting in place a process for VCL’s bill of costs for the serious injury application to be considered by the TAC and hopefully resolved. Alternatively, the matter will be determined by an assessment by the Costs Court. Regardless of how the matter is concluded, it will need to return to me for approval of any compromise with the TAC or to consider the assessment made by the Costs Court and for me to make final orders in the proceeding;

b.a freezing order application by VCL, which I shall refer to in greater detail below;

c.an application by VCL for preliminary discovery;

d.a foreshadowed action pursuant to section 172 of the Property Law Act 1958 to set aside a transfer dated 4 October 2016 of Mrs Lakic’s interest in the Ferntree Gully property to Mr Zdravko Lakic.

16The latter three applications were to some extent precipitated by a further application in Supreme Court proceeding SCI-2015-118. On 13 October 2016, Riordan J made an interlocutory order upon the application of Prior & Prior restraining Mrs Lakic from transferring her interest in the Cranbourne property to her husband Mr Zdravko Lakic. Mr Lakic was joined to that proceeding. The order was sought by Prior & Prior, as persons to whom Mrs Lakic was obliged to pay the costs of the trial before Justice Macaulay.

17In relation to the Ferntree Gully property:

a.a transfer of Mrs Lakic’s interest in the property was registered on about 6 October 2016. The transfer records the consideration as being “pursuant to a breakdown of marriage and declaration dated 4 September 2016”;

b.Mrs Lakic’s sons, Boris and Njegos Lakic, on 8 September 2016 lodged a caveat claiming an interest in the property pursuant to “an agreement with the registered proprietors… dated 4 September 2016”.

18There have been three hearings before me on 21 October, 28 October and 11 November 2016. On 21 October 2016, Mrs Lakic attended but was unwell. She produced medical certificates which stated that it would be many weeks before she could participate in a court hearing.

19Mrs Lakic was excused from further attendance that day. However, I proceeded to hear ex parte applications on behalf of VCL. VCL had foreshadowed an application for preliminary discovery of documents relating to the transfer from Mrs Lakic of her interest in the Ferntree Gully property to her husband, and the caveatable interest claimed by her sons pursuant to an agreement with their parents. Discovery of relevant documents was sought so that VCL could decide whether there was a proper basis to bring a proceeding seeking orders pursuant to section 172 of the Property Law Act 1958 setting aside the transfer to Mr Zdravko Lakic, and any agreement with the two sons.

20On the basis that the foreshadowed application for preliminary discovery would be issued, I granted on interim injunction restraining Mr Zdravko Lakic from dealing with the Ferntree Gully property, and made ancillary orders.

21On 28 October 2016, Mrs Lakic appeared and the other members of her family, her husband and two sons, were represented by a solicitor, Mr Ryan. Both Mrs Lakic and her husband produced bundles of documents which they believed sufficiently answered the request for preliminary discovery sought by VCL.

22Mrs Lakic was well enough on that day to fully take part in the hearing with the assistance of an interpreter, and occasional conferences with Mr Ryan. The hearing was adjourned for two weeks with a continuation of the injunction restraining Mr Zdravko Lakic dealing with the Ferntree Gully property. In the meantime the following was to happen:

a.in relation to the preliminary discovery application, Mr and Mrs Lakic and their sons would consider whether further documents should be made available to VCL, to enable a final determination of the application on the adjourned hearing date;

b.the costs application against the TAC was to proceed with VCL having the responsibility to pursue the items in the bill of costs dated 16 July 2014 which related to the time it acted for Mrs Lakic, and for Mrs Lakic to pursue the items which related to the time during which Prior & Prior were acting for her;

c.Mrs Lakic asserted that certain further items should have been included in the bill of costs. I gave directions that she submit a list of those further items with supporting documentation and indicated I would decide, hopefully, “on the papers”, whether any further items should be submitted to the TAC.

23On 11 November 2016, Mrs Lakic produced a substantial number of further documents to the Court. VCL’s counsel indicated that it would not pursue any further preliminary discovery. Mrs Lakic then hoped that the issue relating to the interest of her husband and sons in the Ferntree Gully property might be resolved. Mrs Lakic, Mr Zdravko Lakic and Boris Lakic had all sworn affidavits referring to the documents they had produced and deposing to the facts which had given rise to the transfer of Mrs Lakic’s interest in the Ferntree Gully property.

24In very brief summary of the material in the affidavits, it is asserted that:

a.the Ferntree Gully property was purchased jointly in 1999 for $130,000;

b.Mrs Lakic contributed $16,000 and Mr Zdravko Lakic $21,842;

c.after the accident in May 2000, their marriage broke down and they decided to separate;

d.in 2003, Mr Lakic, instead of selling the property as his wife had requested, paid Mrs Lakic $18,000 so that she could travel to Bosnia;

e.at that stage, they agreed that Mrs Lakic would “remove her interest” from the property;

f.following the third accident in 2006, Mr and Mrs Lakic continued to live separately at the property;

g.in 2013 they moved to live with their son Boris at Narre Warren South, and continued to live separately;

h.the mortgage over the Ferntree Gully property and all outgoings were solely paid by her husband or sons from their earnings;

i.Mr Zdravko Lakic was the primary homemaker and carer of their sons and, after 2002, of Mrs Lakic;

j.when Mrs Lakic received her damages claim of about $668,000 in June 2014, she paid $307,000 to her husband for caring for her;

k.in March 2015, Mr Zdravko Lakic solely purchased the property at Cranbourne for $339,000;

l.at settlement, Mrs Lakic contributed $16,022 as a loan. Her name was added to the title to reflect that she had contributed 5% of the purchase price.

25As a consequence of these matters, Mrs Lakic submits that:

a.Mr Zdravko Lakic and their two sons “are entitled to the whole interest of the Ferntree Gully property”;

b.the Cranbourne property is owned as to 5% by Mrs Lakic and her husband’s interest is 95%.

26Mr Zdravko Lakic states in his affidavit that he “would like to be able to build on the Cranbourne land, to either record ownership of it in the true proportions or pay out Bogdanka … Because the boys had put so much into Ferntree Gully they are entitled to a share in the proceeds of any trial. This year, they registered a caveat over Ferntree Gully with my agreement”.

27The supporting documents are extensive, including bank statements and other records, correspondence with Centrelink and translations of written agreements recording their arrangements, both in 2003 and in 2016.

28VCL’s counsel, Mr McGregor, highlighted the inconsistency between these statements and material filed in earlier proceedings, including affidavits by Mrs Lakic and her husband and medical reports by Mrs Lakic’s treating and other examining doctors who referred to the marriage between them, without any qualifications about the nature of their relationship.

29Mr McGregor also produced a copy of an affidavit sworn by Mrs Lakic on 25 August 2016 in Supreme Court proceeding SCI-2015-00118 and apparently read during a hearing before Garde J. The affidavit includes the following statements:

a.paragraph 4 - “My assets and liabilities are as follows: a) ½ half interest in Cranbourne that is worth $225,000 (50% of $450,000); b) ½ half interest in … Ferntree Gully that is worth $265,000 (50% of $530,000)”;

b.paragraph 3(c) - “… there are no mortgages upon either property, and I have no plans to sell either property, and each property is worth in excess of $200,000”;

c.paragraph 4 - “d) my sole liability is to pay the costs of the defendant in this proceeding; e) I have minimal amount of money in the bank; f) there may or may not be an asset or liability arising from the County Court proceeding; g) There are no other assets or liabilities of significant value”;

30During the course of Mrs Lakic’s submissions to me on 11 November 2016, she informed me that:

a.she did not want her husband or sons brought into her litigation and they should be free to deal with the properties as they wish;

b.she wanted to go to Bosnia to live although she later said that she anticipated returning to Australia to visit her sons in the future;

c.she wished to have the court proceedings in which she was involved determined as soon as possible;

d.she could perhaps attend court for this purpose on one or two further occasions.

31On 11 November 20116, I adjourned the proceeding until today, continuing the injunction in respect of the Ferntree Gully property and broadening the “freezing order” to include “any of [Mrs Lakic’s] assets, which are in Australia”. I also required Mrs Lakic to file and serve an affidavit by 17 November 2016 setting out her assets and how she had dealt with the damages she received as a result of the judgment of Rush J in June 2014.

32The outstanding issues, at present, are as follows:

a.for Mrs Lakic and VCL to pursue the claim against TAC for the costs of the serious injury application granted by Judge Saccardo. This is complicated by the following matters:

i.the bill of costs includes items relating to the work done firstly by Prior & Prior and later by VCL. This work has been separately identified by item numbers. A difficulty will also arise because some items may involve a duplication of work by both firms for which the TAC would not be responsible;

ii.Mrs Lakic says that not all the work completed while Prior & Prior were acting has been included in the bill. She will file a document setting our the further items tomorrow;

iii.VCL will be entitled to recover in respect of the separate items relating to the period during which it acted (subject to possible adjustment because of the duplication of work). Mrs Lakic, having had her liability to Prior & Prior for costs dealt with by the set-off ordered by Macaulay J, is entitled to recover for the items relating to the earlier work performed by Prior & Prior, subject to any adjustment for duplicated work. The costs, when paid by the TAC, may be a source of funds for the recovery by Prior & Prior or VCL for any money owing by Mrs Lakic to either of them;

iv.if the bill of costs cannot be settled with the TAC, VCL and Mrs Lakic may need to pursue the assessment of the bill through the Costs Court;

b.when the issue of the TAC costs has been sorted out, by resolution with the TAC or by assessment by the Costs Court, there will need to be a determination of the following further issues in the County Court proceeding:

i.interest;

ii.setting off the sums recovered by each party;

iii.the costs of the proceeding;

c.any application in the County Court proceeding to freeze assets of Mrs Lakic, in anticipation that she will be required to pay VCL:

i.the costs of the extension of time application determined by Judge Kings, which Mrs Lakic was successful in recovering from Prior & Prior pursuant to the judgment of Macaulay J;

ii.any interest which might be payable;

iii.any adjustment which might arise as a result of the determination of the bill of costs for the application decided by Judge Saccardo;

iv.any order for the costs of the proceeding;

d.any further proceeding issued by VCL (for an order setting aside the transfer to Mr Zdravko Lakic and/or the caveat lodged by the two sons). It is possible that Mrs Lakic could herself (with her husband and sons) seek to have that issue litigated by commencing a proceeding seeking appropriate declarations;

e.the Supreme Court proceeding (SCI-2015-00118) by Prior & Prior seeking to ensure that the Cranbourne property remains an asset of Mrs Lakic so that they may execute against it when they have had their costs of the proceeding assessed. I was informed that there would be a further hearing before a judge in the Supreme Court on 17 November 2016.

33I have comprehensively set out these matters for the assistance of any Court or judge who might need to know the background of Mrs Lakic’s proceedings and for VCL, Mrs Lakic and Mr Ryan (and his clients) to understand my present view of the litigation and its likely course, and the reasons for the orders I propose to make.

34The orders I propose to make are as follows:

1.It is noted that the plaintiff’s counsel, for and behalf of the plaintiff, undertook to the Court that the plaintiff shall abide by any order the Court may make as to damages in case the Court should hereafter be of the opinion that the Defendant shall have sustained any loss by reason of this order which the plaintiff ought to pay.

2.Subject to the order in paragraph 8, the plaintiff’s summons in proceeding CI-16-04755 is dismissed without adjudication on its merits.

3.Mr Zdravko Lakic is added as a defendant to action CI-15-00344.

4.Until 5pm on 14 December 2016:

a.Mr Zdravko Lakic and Mrs Bogdanka Lakic are restrained, whether by themselves, their servants or agents or howsoever otherwise, from selling or offering for sale, further encumbering or in any way dealing with the property at 22 Lucerne Road, Ferntree Gully 3156, being the whole of the land contained in Certificate of Title Volume 9395 Folio 417;

b.Mrs Bogdanka Lakic, whether by herself, her servants or agents or howsoever otherwise, must not remove from Australia, or in anyway dispose of, deal with or diminish the value of any of her assets, which are in Australia, other than by the expenditure of not more than $2,000 each fortnight for her ordinary living expenses and not more than $10,000 for future legal expenses.

5.By 4pm on 17 November 2016, Mrs Bogdanka Lakic must file and serve an affidavit setting out:

a.all her assets, giving their value, location and details (including any mortgages, charges or other encumbrances to which they are subject) and the extent of her interest in the assets;

b.how Mrs Lakic has disposed of or otherwise dealt with the damages she received as a result of the judgment of the Honourable Justice Rush delivered 20 June 2014.

6.The orders in paragraph 4(a), insofar as they relate to Mr Zdravko Lakic will be dissolved if the plaintiff does not before 4pm on 9 December 2016 issue a proceeding seeking to set aside the transfer from Mrs Bogdanka Lakic to Mr Zdravko Lakic of her interest in the Ferntree Gully property.

7.Reserve liberty to apply including any application to set aside or vary the orders made in paragraph 4.

8.Reserve the issue of the costs of the proceeding CI-16-04755 for determination with the proceeding foreshadowed in paragraph 6, or if no proceeding is issued, for further order.

9.Reserve costs in relation to the plaintiff’s application for a freezing order and for directions in proceeding CI-15-00344.

10.Otherwise adjourn the plaintiff’s application for a freezing order and the directions hearing in proceeding CI-15-00344 to 14 December 2016 at 9.30am.

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Certificate

I certify that these 11 pages are a true copy of the reasons for decision of His Honour Judge Anderson delivered on 14 November 2016 and revised on 16 November 2016.

Dated:       14 November 2016

Mi-Lin Chen Yi Mei   

Associate to His Honour Judge Anderson