Ciaglia v Ciaglia

[2010] NSWSC 723

CITATION:	Ciaglia v Ciaglia [2010] NSWSC 723
HEARING DATE(S):	Written submissions received 13/5/10 and 18/5/10
JUDGMENT DATE :	2 July 2010
JURISDICTION:	Equity
JUDGMENT OF:	White J
DECISION:	1. Declare that the late Pamela Josephine Ciaglia held the property comprised in Folio Identifier 3/15212 and known as [xxx] Goodchap Road, Chatswood NSW (the “Chatswood property”) on trust for the plaintiff as to a one half share. 2. Order that Joseph Ciaglia be appointed as representative of the estate of Pamela Josephine Ciaglia for the purposes of these proceedings. 3. Within 28 days of probate being granted in respect to the estate of the defendant, order that Joseph Ciaglia deliver to the plaintiff or his solicitor a signed transfer in respect to one half interest in the Chatswood property. 4. Order that Joseph Ciaglia take all necessary steps to obtain the consent of any mortgagee to the transfer and its registration. 5. Order that the plaintiff pay the reasonable legal costs of Joseph Ciaglia in relation to the transfer of the half interest in the property to the plaintiff and pay any duty, registration fees or other expenses payable for the registration of the transfer. 6. Grant liberty to the parties to apply on reasonable notice for any consequential orders relating to the execution of these orders. 7. Order that all other claims for relief in the summons and amended statement of claim be dismissed. 8. Order that there be no order as to costs of the proceedings with the intention that each party bear his and her own costs. 9. The exhibits may be returned after 28 days. 10. Order that within seven days the plaintiff’s solicitors provide a copy of these orders to the solicitors for the plaintiff’s former wife and, unless they have already done so, within the same time provide a copy of my reasons for judgment (Ciaglia v Ciaglia [2010] NSWSC 341) to the solicitors for the plaintiff’s former wife.
CATCHWORDS:	PRACTICE AND PROCEDURE – appointment of representative of defendant’s estate under UCPR 7.10 – form of final orders for relief - COSTS – whether general rule that costs follow event should be displaced – where case on which plaintiff succeeded not pleaded until late amendments to pleadings allowed – where defendant made offer of compromise in previous proceedings and rejected by plaintiff – where additional claims for relief in previous proceedings not brought in present proceedings – no order as to costs
LEGISLATION CITED:	Probate and Administration Act 1898 (NSW) Conveyancing Act 1919 (NSW) Civil Procedure Act 2005 (NSW) Corporations Act 2001 (Cth) Income Tax Assessment Act 1997 (Cth)
CATEGORY:	Consequential orders
CASES CITED:	Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137; [1994] 4 All ER 464 Ciaglia v Ciaglia [2010] NSWSC 341
PARTIES:	Plaintiff: Robert Andrew Ciaglia Defendant: Pamela Josephine Ciaglia
FILE NUMBER(S):	SC 2008/282990
COUNSEL:	Plaintiff: T J Morahan Defendant: S Klotz (sol'r)
SOLICITORS:	Plaintiff: Bryden's Law Office Defendant: Norton Rose

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

White J

Friday, 2 July 2010

2008/282990 Robert Andrew Ciaglia v Pamela Josephine Ciaglia

JUDGMENT

1 HIS HONOUR: On 28 April 2010, I gave judgment in these proceedings. I held that the court should declare that the defendant holds the property located in Chatswood, NSW on trust for the plaintiff as to a one-half share and the plaintiff is entitled to an order that the defendant transfer a half interest in the land to him so that the land is held equally by them as tenants-in-common.

2 There are three outstanding matters for determination in these proceedings. First, as the defendant has died since the proceedings were heard, the appointment of a representative of the defendant’s estate under r 7.10 of the Uniform Civil Procedure Rules. Secondly, the appropriate orders for costs in these proceedings. Thirdly, the form of the final orders for relief in these proceedings.

Appointment of representative

3 Rule 7.10 of the Uniform Civil Procedure Rules provides:

“7.10 Interests of deceased person
(cf SCR Part 8, rule 16; DCR Part 7, rule 13; LCR Part 6, rule 14)

(1) This rule applies to any proceedings in which it appears to the court:
(a) that a deceased person’s estate has an interest in the proceedings, but is not represented in the proceedings, or
(b) that the executors or administrators of a deceased person’s estate have an interest in the proceedings that is adverse to the interests of the estate.

(2) The court:
(a) may order that the proceedings continue in the absence of a representative of the deceased person’s estate, or
(b) may appoint a representative of the deceased person’s estate for the purposes of the proceedings, but only with the consent of the person to be appointed.

(3) Any order under this rule, and any judgment or order subsequently entered or made in the proceedings, binds the deceased person’s estate to the same extent as the estate would have been bound had a personal representative of the deceased person been a party to the proceedings.

(4) Before making an order under this rule, the court may order that notice of the application be given to such of the persons having an interest in the estate as it thinks fit.”

4 It is appropriate that a representative of the defendant’s be appointed pursuant to rule 7.10(2)(b). By her will, the defendant appointed her son and daughter, Joseph and Christina Ciaglia, as joint executors. Susanna Taylor, the solicitor for the defendant, deposes that she has been informed that Christina Ciaglia will renounce her role as executor. She also deposes that Joseph Ciaglia consents to his appointment as his late mother’s representative in these proceedings. I agree with the submission made by defendant’s solicitors that it is appropriate that the court appoint Joseph Ciaglia under r 7.10.

5 Probate of the late Pamela Ciaglia’s will has not yet been granted. The Probate and Administration Act 1898 (NSW) provides that the real and personal property of a person who has died testate or intestate is deemed to vest in the NSW Trustee and Guardian until probate or administration (as the case may be) is granted (s 61). Section 44 provides that upon the grant of probate, a deceased’s property passes to and vests in the executor to whom probate has been granted. Prima facie Joseph Ciaglia would not be able to transfer the half-interest in land to the plaintiff until probate has been granted of the defendant’s will. Counsel for the plaintiff made no submission to the contrary.

6 The defendant’s solicitor submits that the property is subject to a mortgage and the consent of the mortgagee will be required in respect of the transfer and its registration, but does not consider that any orders in relation to the mortgage are required. The transfer will not affect the rights of the prior registered mortgagee. That is, the transfer will be subject to the existing registered mortgage. I think it preferable for the court to order that Joseph Ciaglia do all things necessary to transfer the half interest to the plaintiff, including obtaining the mortgagee’s consent to the transfer and its registration.

7 The defendant also submits that it is likely the parties will sell the property following registration of the transfer and envisages doing so with the agreement of both parties. The defendant seeks liberty to apply to enable either party to seek orders under s 66G of the Conveyancing Act 1919 (NSW) to appoint a trustee to effect the sale of the property in the event that agreement is not reached. Such an application would not arise from the execution or working out of the orders and would be beyond the proper scope of a grant of liberty to apply. Any such application by either party (which may attract a claim for contribution for repairs and improvements) should be brought by a fresh substantive application. There will be liberty to apply in relation to the execution of the orders, but not the wider liberty sought.

8 The plaintiff must pay the defendant’s reasonable costs of the transfer and must pay the duty on and other reasonable expenses of the transfer. Such expenses are usually borne by a mortgagor, and there was no evidence of an agreement to the contrary.

Costs of the proceedings

9 Rule 42.1 of the Uniform Civil Procedure Rules provides that costs are to follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs. The plaintiff was successful and therefore prima facie is entitled to his costs. There are two reasons for departing from that prima facie position. The first is that the case upon which the plaintiff succeeded was not pleaded until I allowed an amendment during the hearing. Whilst the plaintiff maintained a claim that the half-share of the property was held on trust for him, the legal basis on which the plaintiff succeeded on that claim was not articulated in the statement of claim or the opening submissions of counsel for the plaintiff. The case was extended by late amendments to the pleading. The plaintiff failed on the pleaded claim of estoppel and on his claim to a half-share of all “mesne profits [sic]”. In Beoco Ltd v Alfa Laval Co Ltd [1995] QB 137; [1994] 4 All ER 464, Stuart-Smith LJ, with whom the other members of the Court of Appeal agreed, said (at 154):

“ As a general rule, where a plaintiff makes a late amendment as here, which substantially alters the case the defendant has to meet and without which the action will fail, the defendant is entitled to the costs of the action down to the date of the amendment. There may, of course, be special reasons why this general rule should not be applied. An example of this is to be found in Kaines (UK) Ltd v Osterreichische Warrenhandelsgessellschaft mbH, (formerly CGL Handelgesellschaft mbH) [1993] 2 Lloyd's Rep 1, 9, where the judge was satisfied that, even if the amendment had been made earlier, the action would have been vigorously resisted. ”

10 That approach may require some modification having regard to s 56 of the Civil Procedure Act 2005 (NSW). Notwithstanding the failure of the plaintiff’s legal representative to articulate the proper legal basis for the plaintiff’s claim, that legal basis should have been appreciated by the legal representatives of the defendant, and I have no reason to doubt that it was. This is confirmed by the offer of compromise referred to below. The amendment to the pleading did not substantially alter the case the defendant had to meet as it pleaded a fact that was common ground. But for the offer of compromise referred to below, I do not consider that the deficiencies in the presentation of the plaintiff’s case would warrant depriving the plaintiff of his costs altogether, although they would warrant a reduction of costs to reflect the additional expense to which the defendant was put.

11 As noted at para [34] of the principal judgment, the current proceedings were brought following the dismissal of proceedings commenced in 2006 which substantially raised the same claim. The 2006 proceedings were dismissed by Windeyer J by reason of difficulties with the pleadings, but without prejudice to the plaintiff’s right to commence again. In the 2006 proceeding, Lajido Pty Ltd was joined as a second defendant. As well as seeking a declaration that the present defendant held a half interest in the Chatswood land on trust for the plaintiff, the plaintiff sought a declaration that the current defendant pay moneys said to be owed by her to Lajido Pty Ltd, an order that she account for profits of Lajido Pty Ltd and an order that he be paid dividends by that company. The plaintiff did not seek an order under s 237 of the Corporations Act 2001 (Cth) for leave to bring proceedings on behalf of the company against the current defendant.

12 By an offer of compromise dated 19 October 2007 the defendant offered to transfer to the plaintiff a half share in the Chatswood property. This was the relief that the plaintiff has now obtained. The offer was made on the basis that:

“ (1) the plaintiff agree to pay any costs associated with the transfer including any stamp duty, legal and registration costs;

(2) the plaintiff agree to indemnify the first defendant in respect of any capital gains tax payable pursuant to the Income Tax Assessment Act 1997 (Cth) which she may incur as a result of the transfer contemplated in paragraph (1) above (such capital gains tax currently estimated to be $163,912.50);

(3) the plaintiff consents to an order removing the caveat on the land ...

(4) these proceedings are otherwise discontinued. ”

13 Lajido Pty Ltd was subsequently wound up. Counsel for the plaintiff submitted that the 2006 proceedings were wider than the present proceedings. I infer that by this observation counsel intended to say that one could not assess the reasonableness of the rejection of the offer only by reference to the plaintiff’s success in the present proceedings. However, the derivative claims purportedly made on behalf of the company in the 2006 proceedings were manifestly hopeless. The fact that such claims might have been resolved by the acceptance of the offer of compromise, in addition to the claim that the plaintiff reinstituted in the present proceedings, is not a ground for saying that the plaintiff acted reasonably in not accepting the offer of compromise.

14 Counsel for the plaintiff also submitted that the plaintiff has achieved a better result than the offer of compromise of 19 October 2007 because under the terms of that offer he was required to pay any costs associated with the transfer and to indemnify the defendant in any respect of liability for capital gains tax. Counsel for the plaintiff made no submission that any capital gains tax would be exigible on the transfer. The defendant’s solicitor submitted that pursuant to s 104-10(7) of the Income Tax Assessment Act 1997 (Cth), there is no capital gains tax event as the disposal of the asset would be done to redeem a security. Hence the defendant does not seek any such indemnity to be included in the orders to be made in the present proceedings. The plaintiff has not shown that the requirement of an indemnity in the offer of compromise materially diminished the value of the offer. So far as the costs of effecting the transfer are concerned, the plaintiff will have to pay these as he is in the position of a mortgagor redeeming the security.

15 I assume that the offer of compromise was not repeated in the current proceeding. The defendant is therefore not in the prima facie position of being entitled to her costs of the proceeding arising from the non-acceptance of the offer of compromise. Nonetheless, the fact that the offer was made in the 2006 proceedings but not accepted, is a material factor.

16 In all the circumstances I think the appropriate order is that there be no order as to costs in the proceedings. The plaintiff should not have his costs because he could have avoided the 2008 proceedings by accepting the offer of compromise in the 2006 proceedings, and because of the deficiencies in the presentation of the plaintiff’s case that added to the expense of the defendant. The defendant should not have her costs of the current proceedings because she failed. She did not renew the offer when new proceedings were commenced. I infer that she took the chance that the deficiencies in the way in which the plaintiff’s legal representatives presented his case might mean the plaintiff would fail. In those circumstances I do not think the defendant is entitled to her costs.

Orders

17 For these reasons, I make the following declaration and orders:

1. Declare that the late Pamela Josephine Ciaglia held the property comprised in Folio Identifier 3/15212 and known as [xxx] Goodchap Road, Chatswood NSW (the “Chatswood property”) on trust for the plaintiff as to a one half share.

2. Order that Joseph Ciaglia be appointed as representative of the estate of Pamela Josephine Ciaglia for the purposes of these proceedings.

3. Within 28 days of probate being granted in respect to the estate of the defendant, order that Joseph Ciaglia deliver to the plaintiff or his solicitor a signed transfer in respect to one half interest in the Chatswood property.

4. Order that Joseph Ciaglia take all necessary steps to obtain the consent of any mortgagee to the transfer and its registration.

5. Order that the plaintiff pay the reasonable legal costs of Joseph Ciaglia in relation to the transfer of the half interest in the property to the plaintiff and pay any duty, registration fees or other expenses payable for the registration of the transfer.

6. Grant liberty to the parties to apply on reasonable notice for any consequential orders relating to the execution of these orders.

7. Order that all other claims for relief in the summons and amended statement of claim be dismissed.

8. Order that there be no order as to costs of the proceedings with the intention that each party bear his and her own costs.

9. The exhibits may be returned after 28 days.

10. Order that within seven days the plaintiff’s solicitors provide a copy of these orders to the solicitors for the plaintiff’s former wife and, unless they have already done so, within the same time provide a copy of my reasons for judgment ( Ciaglia v Ciaglia [2010] NSWSC 341) to the solicitors for the plaintiff’s former wife.

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