Angus Property v Foukkare; Angreb Pty Ltd v Foukkare

[2006] NSWSC 101

CITATION:	Angus Property v Foukkare; Angreb Pty Ltd v Foukkare [2006] NSWSC 101
HEARING DATE(S):	27/02/06
JUDGMENT DATE :	1 March 2006
JUDGMENT OF:	Gzell J
DECISION:	Husband ordered to pay costs of cross claims and costs of proceedings from date of offer that proceedings be terminated with no order save for the argument on costs.
CATCHWORDS:	PROCEDURE - Costs - Husband's claim to division of shares and interests in trusts held by either or both of his wife and himself - Wife held one share in each of two companies with trust interests - Proceedings commenced in Supreme Court for declarations that wife held no beneficial interest in shares or trusts - Intervention in Family Court proceedings seeking similar relief - Husband consented to declaration in Family Court that wife had no beneficial interest in the shares or trusts - Offers to terminate Supreme Court proceedings including no orders except consequent upon an argument on costs rejected by husband - Cross claim filed by him alleging proceedings an abuse of process - Consent orders subsequently made granting leave to discontinue, dismissing the cross claims and standing over the question of costs - No principles involved
LEGISLATION CITED:	Uniform Civil Procedure Rules 2005
CASES CITED:	Reynolds v Reynolds (1977) 2 NSWLR 295
PARTIES:	In Matter No. 5341/03 Angus Property and Development Pty Ltd - First Plaintiff Mistysurf Pty Ltd - Second Plaintiff Mistytime Pty Ltd - Third Plaintiff Prodromos Anastasi Foukkare - First Defendant Kary Foukkare - Second Defendant In Matter No. 5342/03 Angreb Pty Ltd - First Plaintiff Sentra Investments Pty Ltd - Second Plaintiff Theodore Gregory Onisforou - Third Plaintiff Prodromos Anastasi Foukkare - First Defendant Kary Foukkare - Second Defendant
FILE NUMBER(S):	SC 5341/03; 5342/03
COUNSEL:	Mr M Henry - Plaintiffs Mr D M Flaherty
SOLICITORS:	Peter Bouzanis & Associates D C Chambers & Associates

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

GZELL J

WEDNESDAY 1 MARCH 2006

5341/03 ANGUS PROPERTY AND DEVELOPMENT PTY LTD & ORS v PRODROMOS ANASTASI FOUKKARE & ANOR
5342/03 ANGREB PTY LTD & ORS v PRODROMOS ANASTASI FOUKKARE & ANOR

JUDGMENT

1 On 14 November 2005, I directed that these matters be heard at the same time and that evidence in one be evidence in the other. In each matter I granted leave to discontinue the proceedings, ordered that the cross-claims be dismissed, noted that these orders were made in consequence of leave to discontinue and stood over the question of costs.

2 Mr Henry appeared for the plaintiffs. In matter numbered 5341 of 2003 they were Angus Property and Development Pty Ltd, Mistysurf Pty Ltd and Mistytime Pty Ltd. In matter numbered 5342 of 2003 they were Angreb Pty Ltd, Sentra Investments Pty Ltd and Theodore Gregory Onisforou. Mr Henry submitted that the first defendant in each matter, Prodromos Anastasi Foukkare, should be ordered to pay the plaintiffs’ costs of each of the proceedings from 30 March 2005 onwards. In oral argument, that submission was varied to add the submission that Mr Foukkare should pay his clients’ costs of each of the cross-claims.

3 Mr Flaherty, who appeared for Mr Foukkare, resisted these orders. The second defendant, Kary Foukkare, is the former wife of Mr Foukkare. She played no part in the argument on costs.

4 Mr Foukkare commenced property settlement proceeding in the Family Court in March 2002. One order he sought was that all shares and all beneficial interests in any trusts held in the names of the parties, jointly or severally, or for the benefit of either party, be sold or quantified and the net proceeds of such sale or value be divided or apportioned equally between he and his wife. A response was filed in May 2002 and conciliation conferences were held in November and December 2002.

5 Mr Onisforou is Mrs Foukkare’s brother. In March 2003, he and Mr Foukkare’s son commenced proceedings against Mr Foukkare. They were dismissed with costs in March 2005. In August 2003, the parents of Mr Onisforou commenced proceedings against Mr Foukkare. They were dismissed with costs in October 2004.

6 Mrs Foukkare held one share in each of Angus and Angreb. Angreb develops and rents real property and has assets of $4.5 million to $5 million. There were four shares in Angreb all of which were beneficially owned by Sentra. Mrs Foukkare’s share was transferred to Sentra in March 2004. Mr Onisforou holds all the shares in Sentra.

7 Angus is trustee of the Flinders Street Unit Trust. It has net assets in excess of $40 million. Mistysurf Unit Trust and Mistytime Unit Trust are the two unit holders in the Flinders Trust. Mistymill Pty Ltd is the beneficiary of the Mistysurf Trust and the sole shareholder in Mistymill is Mr Onisforou. Mrs Foukkare held her share in Angus for the benefit of James Packer.

8 In October 2003, the proceedings in this Court were instituted seeking declarations that Mrs Foukkare had no beneficial interest in the shares or in the trusts. A request for particulars was made by Mr Foukkare in October 2003 which went unanswered until July 2004.

9 In April 2004, Mr Onisforou filed an application to intervene in the Family Court proceedings. That he discontinued in May 2004. In June 2004, Mr Onisforou was told that the proceedings in the Family Court were likely to be set down. Angus, Angreb and Sentra thereupon sought leave to intervene in the Family Court proceedings to seek similar orders to those in the Supreme Court proceedings and an application was made for the Family Court proceedings to be adjourned pending a decision in these proceedings.

10 Mr Foukkare opposed the intervention but leave was granted to intervene in August 2004. In October 2004, Mr Foukkare was asked to admit facts in the Family Court proceedings. He did so in November 2004 including the fact that Mrs Foukkare had no beneficial interest in shares in the three interveners or in the trusts. In February 2005, consent orders were made in the Family Court including a declaration by Mr Foukkare that Mrs Foukkare had no beneficial interests. The issue of costs was stood over and in September 2005, Mr Foukkare’s claim to costs against the interveners was dismissed as was the interveners’ claim to costs against him.

11 The first directions hearing in these proceedings in March 2005 was adjourned. On 30 March 2005, the day before the adjourned directions hearing, the following offer was made to Mr Foukkare:

“1 Consistent with the consent judgment in our client’s favour on the identical issue in the Family Court of Australia, we presume you will now also consent to judgment in our client’s favour in these proceedings.
2 As to costs we will be seeking an order for costs. Presuming you do not agree with our costs application, we suggest, the following orders by consent be made on Thursday 31 March, 2005:
a. Judgment by consent in favour of the Plaintiff.
b. Plaintiff file its evidence in support of an application for costs within 28 days.
c. Defendant file its evidence in reply 28 days thereafter.
d. Set the costs matter for hearing before the Registrar 60 days hence (or a date suitable to the Court).”

12 It was upon this letter that Mr Henry based his application that costs thereafter should be paid by Mr Foukkare. I am not prepared to make such an order. The offer was more onerous on Mr Foukkare than the orders finally made by consent.

13 Mr Foukkare did not accept the offer and on the following day directions were given for the filing of a defence and affidavits. In April 2005, Mr Foukkare served a defence and cross claim alleging that the proceedings were commenced for an improper purpose and the commencement and continuation of the proceedings constituted an abuse of the court’s process. Particulars alleged that the proceedings commenced after the proceedings in the Family Court had been commenced. Certain of the plaintiffs sought and were granted leave to intervene in those proceedings and Mr Foukkare had not made any assertion in the Family Court proceedings or elsewhere that Mrs Foukkare had an equitable interest in the interveners. The cross-defendants moved to strike out the cross-claim but that application was dismissed by McLaughlin AsJ. His Honour’s reasons were not before me.

14 On 21 April 2005, in repeating particulars that had been provided of the statement of claim, the following offer was made to Mr Foukkare:

“From a purely practical point of view, we make the following observations:
1 The Family Court proceedings have been resolved in our clients favour in that Orders were made (with your consent) in accordance with the Claim sought by our client in those proceedings, which is almost identical to the Claim made in the within Supreme Court proceedings;
2 In that circumstance, we agree with the suggestion that, strictly speaking, our client does not additionally need the Orders of the Supreme Court;
3 In that circumstance, we had previously sought your consent to the Orders sought in the two Supreme Court Proceedings in accordance with the Consent Orders in the Family Court;
4 Curiously you have now refused to give us such Consent Orders and are now seeking to strike out the Statements of Claim as an abuse of process;
5 The ultimate outcome in the Family Court justifies retrospectively the commencement of the within proceedings;
6 If Costs is the matter that is predominantly of concern to your client, we suggest:
a. You agree to an Order in accordance with the Orders sought together with an Order for costs: or
b. You agree to an Order in accordance with the Orders sought, with costs to be argued: or
c. Not agree to such Orders but agree to litigate the issue of Costs in the Supreme Court proceedings only without other order being additionally made.”

15 From a practical point of view this offer would have created the same result as the final orders of November 2005. Those orders simply terminated the proceedings including the cross-claims and left open the question of costs.

16 The offer of 21 April 2005 was not accepted by Mr Foukkare who demanded that a defence to the cross-claim be served.

17 On 27 April 2005, in requesting particulars of the cross-claim, reference was made to point 6(c) in the letter of 21 April 2005 and Mr Foukkare was asked whether he agreed that the letter contained an offer to not continue with the Supreme Court proceedings other than as to the issue of costs.

18 A deal of expense was incurred. A notice to admit facts, answers to interrogatories, the motion to strike out the cross-claim and some 14 affidavits were served on Mr Foukkare.

19 In May 2005, a request for admission that Mrs Foukkare had no beneficial interest in the shares or assets of the trust was served as was a notice to admit those facts. The notice disputing facts did not challenge the assertion.

20 On 8 August 2005, Mr Foukkare was made the following offer:

“Irrespective of whether we are correct or otherwise, in any of the above, we ask that you simply consider either of the following proposals:
a. We by agreement dismiss the whole proceedings subject to an argument as to costs or
b. You consent to the orders sought by us in the Statement of Claim, without prejudice to your application for costs or
c. Any other proposal you can suggest that will have the effect of minimizing legal costs wastage.”

21 The proposal was rejected. Ultimately, however, the orders of November 2005 were made by consent.

22 It was submitted that leave to discontinue was ultimately sought and that course was open at any stage. The Uniform Civil Procedure Rules 2005, r 12.1 allow a plaintiff to file a notice of discontinuance with the consent of each active party in the proceedings or with the leave of the court. Rule 42.19 provides that unless the court otherwise orders, or the notice otherwise provides, the plaintiff must pay the defendant’s costs. It was not unreasonable for Mr Foukkare to be asked to consent to a formula that allowed costs to be argued before a notice of discontinuance was filed. But Mr Foukkare rejected those proposals.

23 It was argued that Mr Foukkare had never asserted that Mrs Foukkare held a beneficial interest in the companies or trusts, yet that allegation was pleaded. But that element was not a necessary aspect of the relief sought by the interveners in the Family Court. Nor did it constitute part of the declaration ultimately made by consent that Mrs Foukkare had no beneficial interest in the shares or the trusts.

24 It was submitted that there was a futility in the companies that owned the shares and interests in the trusts claiming declarations to that effect when Mrs Foukkare did not claim that she held those interests. But Mr Foukkare had sought orders with respect to any shares or interests in trusts beneficially held by Mrs Foukkare. The purpose of the proceedings in this court and the intervention in the Family Court was to secure the result, ultimately achieved by consent, that it be declared that Mrs Foukkare held no beneficial interests.

25 It was submitted that the proceedings in this court were an abuse of its process. Reliance was placed upon Reynolds v Reynolds (1977) 2 NSWLR 295 at 306 where Waddell J said:

“Secondly, it might be said of the proceedings in this Court that, even though commenced before the institution of proceedings for principal relief in the Family Court, their continuance would be an abuse of the process of this Court. It is well established that the maintenance of proceedings in two courts, in each of which the relief sought may be granted, may be an abuse of process. The general principle in relation to proceedings in two courts in the one country is stated by the Court of Appeal in McHenry v Lewis (1882) 22 Ch D 397 and in relation to proceedings in each of two divisions of the one court in Williams v Hunt [1905] 1 KB 512 again a decision of the Court of Appeal. In such cases the existence of two proceedings is considered prima facie vexatious, and the court will generally, as of course, put the plaintiff to his election, and stay one of the proceedings; or it may, as in the latter case, stay the proceedings which it considers to be inappropriate.”

26 His Honour was referring to proceedings in two courts between the same parties. Here the proceedings in this court were by different plaintiffs, the parties to the Family Court proceedings being defendants in both. In my view, Reynolds is not authority for the proposition raised in the cross-claim. Furthermore, no attempt was made by Mr Foukkare to strike out the proceedings in this court as an abuse of process.

27 It was submitted that not all the plaintiffs in the Supreme Court proceedings intervened in the Family Court. It was unnecessary for all of them to do so. There were sufficient interveners to obtain the declarations sought.

28 In the circumstances, I am of the view that the cross-claim initiated by Mr Foukkare was futile. What were sought in the proceedings in this court were essentially the declarations made by consent in the Family Court. That being so, there was no point in Mr Foukkare continuing his opposition to the Supreme Court proceedings. But if he did, there was no point in his putting on a cross-claim alleging an abuse of a process. His proper course was to seek to strike out the statements of claim. In my view, it is appropriate that Mr Foukkare pay the cross-defendants’ costs of the cross-claims.

29 While it was not unreasonable for Mr Foukkare to reject the offer made in the letter of 30 March 2005 it was, in my view, unreasonable for him to reject point 6(c) of the letter of 21 April 2005 and its repetitions in later correspondence.

30 Mr Henry conceded that the plaintiffs had not acted with dispatch in these proceedings. The particulars sought by Mr Foukkare in October 2003 were not answered until July 2004. Mr Henry did not seek any order for costs prior to the letter of 30 March 2005. I do not propose to make any order as to costs prior to the letter of 21 April 2005.

31 I order Mr Foukkare to pay the cross-defendants’ costs of the cross-claims in each proceedings. I order Mr Foukkare to pay the plaintiffs’ costs of the proceedings from 21 April 2005 onwards in each matter.

**********