Christodoulou v Stragan & Co Pty Ltd

[2003] VSC 109

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION

PRACTICE COURT

No. 7520 of 2001

JOHN CHRISTODOULOU AND ANOTHER	Plaintiffs
v
STRAGAN & CO. PTY LTD AND ANOTHER	Defendants

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JUDGE:	HARPER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	25 MARCH 2003
DATE OF JUDGMENT:	25 MARCH 2003
CASE MAY BE CITED AS:	CHRISTODOULOU v STRAGAN & CO PTY LTD & ANOR
MEDIUM NEUTRAL CITATION:	[2003] VSC 109

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Costs – Application for costs following resolution of proceeding – Removal of caveats – Whether caveats could have been maintained – Effect of failure to pay stamp duty on guarantee.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr C. Sievers	Hermann Partners
For the Defendants	Mr P. Riordan	Dellios West & Co.

HIS HONOUR:

1. This is an application for costs following the resolution of an application by the Plaintiffs to remove two caveats lodged upon the title to land in which the plaintiffs were at the material times, and perhaps still are, interested.

1. The result of the litigation and negotiations which accompanied it was that the plaintiffs accepted that the first defendant had an interest as chargee in the relevant property or properties by reason of a guarantee given to the first defendant by the first plaintiff.  That guarantee created a charge, and the caveats were, as I understand it, lodged to protect the interest thus created in the first defendant as chargee.

1. The matter came before a number of judges of this court, and in other manifestations the dispute between the plaintiffs and the first defendant found its way into the Magistrates' Court and, I think I was told by Mr Riordan, into the County Court as well.

1. I am concerned with the outcome of the application, or applications, in this court in relation to the caveats.

1. A rough chronology of the matter can be taken from an affidavit sworn by Tony Siever, a solicitor acting on behalf of the first defendant, sworn on 19 September 2001.  In that affidavit the deponent deposes to the fact that a bankruptcy notice on behalf of the first defendant was issued against the first plaintiff on 31 August 2001.  It claimed that the first plaintiff was indebted to the first defendant in the sum of just over $34,000.

1. The order upon which the bankruptcy notice was founded was an order made by the Magistrates' Court at Heidelberg on 3 December 1999.  That, as I understand it, was an order creating a judgment debt in the first defendant against the first plaintiff. 

1. An application was made to re-hear the litigation that resulted in that judgment debt, but it was dismissed on 6 June 2001.  On 10 September that year, the plaintiffs issued these proceedings seeking to remove the caveat.

1. The matter first came before Justice Eames on 17 September, and later that month, but after the plaintiff had made yet another application for a re-hearing in the Magistrates' Court, the matter came before Justice Balmford.  It appears that Her Honour, on that occasion, and when the matter was again before her two days later, on 28 September, declined to rule that the caveats were properly lodged and that the first defendant had a relevant interest, because, as Her Honour had then been told, the further application for a re-hearing in the Magistrates' Court had not yet been dealt with by that court.  Accordingly, the basis upon which the caveats were founded was under some question sufficient to persuade Her Honour that she should not finally determine the issue of the caveatable interest in favour of the first defendant, but rather leave that question to await the outcome of the application for a re-hearing.

1. The application did come before the Magistrates' Court on 22 October 2001 and was successful; but on 26 March 2002, Mr Justice Beach in this court set aside the orders made by the Magistrates' Court on 22 October, and accordingly, the original order of the Magistrates' Court remained.  It followed that the judgment debt upon which the caveat was at least in part based also remained.

1. Nevertheless, the plaintiffs have directed my attention to two problems in relation to the caveats, or at least to one of them. First, it is now, I think, accepted that at least when the matter came before Justice Eames on 17 September 2001, stamp duty had not been paid on the guarantee which gave rise to the relevant charge. Accordingly, it was submitted on behalf of the plaintiffs, the charge and therefore the caveats could not have been sustained because they depended upon a guarantee which was not capable of being tendered before the court given the relevant provisions of the Stamps Act as they relate to unstamped documents. The plaintiffs also submitted that as at 17 September the first defendant was not in a position to maintain both caveats, because one of them related to land in which not just the first plaintiff, the chargor, but also another person having no liability under the charge had an interest. It was therefore necessary, the plaintiffs submit, for the caveat to be removed, amended and, if this could be lawfully done, replaced. But, the plaintiffs submit, it could not lawfully be done, and in giving judgment - or in remarking in the course of the proceedings before her that she accepted Mr Riordan's arguments on this point - Justice Balmford was incorrect; and, in any event, did not accompany her acceptance of Mr Riordan's submissions with any reasons that might illuminate the present argument about the disposition of costs.

1. In my opinion, neither of the arguments put by the plaintiffs, albeit that they were well put by Mr Sievers on their behalf, can sustain the proposition that the first defendant should be disentitled to any part of his costs. In my opinion, the first defendant has demonstrated that it had an interest which was sufficient to support the caveats, albeit that one of the caveats was inappropriately drawn. The fact that it was inappropriately drawn does not, in my opinion, affect the substantive right of the first defendant as chargee to maintain the caveat. I am further of the opinion that the fact, if it be so, that the relevant guarantee was not stamped, does not affect the relevant substantive right, albeit it might have affected the first defendant's ability to prove its substantive right. The principal point, it seems to me, is that the substantive right existed whether or not the guarantee was stamped. As I understand the effect of the relevant provisions of the Stamps Act, they go only to the admissibility of a document and not to its substantive validity. If I am right about that, then it seems to me that the first defendant was entitled to prosecute its claim that it had a substantive interest sufficient to sustain the caveats which it had lodged; and the ultimate outcome of the litigation is consistent with that claim. Accordingly, in my opinion, the first defendant is entitled to its costs of the proceeding subject to any particular argument about particular costs which I have not covered in my oral reason for judgment.

1. Now, are there any other matters which would inhibit me making an order that the costs generally be paid by the plaintiffs?

(Discussion ensued re costs.)

1. Accordingly, I will order that the first defendant's costs of the proceeding be taxed and, when taxed, be paid by the first plaintiff.

1. Thank you, gentlemen.  I think, unless you have any problem with it, I should have the copy affidavit filed as the affidavit, since I relied upon it in my judgment.

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