Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin (No 3)

[2021] NSWSC 859

Supreme Court

New South Wales

Medium Neutral Citation:

Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin (No 3) [2021] NSWSC 859

Hearing dates:

On the papers

Date of orders:

15 July 2021

Decision date:

15 July 2021

Jurisdiction:

Equity

Before:

Robb J

Decision:

The Court assesses the plaintiff’s costs in accordance with order 3 made by the Court on 16 February 2021 in the amount of $24,200 on a gross sum basis.

Catchwords:

COSTS — Costs assessment — Determination of a gross sum costs order — Where second defendant acted entirely unreasonably — Where Court assessed costs on a gross sum basis discounted by 30%

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Cases Cited:

Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin [2021] NSWSC 94

Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin (No 2) [2021] NSWSC 436

Category:

Costs

Parties:

Franjo Strumfin by his Litigation Guardian Peter Chodat (plaintiff)
Anka Strumfin (first defendant)
Elizabeth Strumfin (second defendant)

Representation:

Counsel:
K M Francis (plaintiff)

Solicitors:
Kovacevic Lawyers (plaintiff)
Self-represented (second defendant)

File Number(s):

2020 / 324369

Judgment

1. This is the third judgment in a series arising out of an application by the plaintiff in the duty list for orders necessary to ensure that the plaintiff, who sues by his litigation guardian, received his share of the sale price of a property in Wollongong to give effect to orders made by the Federal Circuit Court of Australia.

2. In the first judgment, Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin [2021] NSWSC 94, delivered on 16 February 2021, I explained the steps taken to permit the plaintiff’s solicitor to participate in the PEXA workspace relevant to the sale of the property, in order to ensure that the plaintiff’s interests were protected on completion of the contract of sale. At [32] of the judgment, I made orders that authorised the plaintiff’s solicitor to apply the funds that were received on completion in an appropriate manner. Order 3 was in the following terms:

Order the second defendant to pay the plaintiff’s costs of the proceedings on the indemnity basis.

3. The plaintiff made an application for an order under s 98(4)(c) of the Civil Procedure Act 2005 (NSW) that the costs be assessed on a gross sum basis specified by the Court.

4. As determined in the second judgment published on 28 April 2021, the plaintiff is entitled to an order that his costs be paid on a gross sum basis, subject to the plaintiff providing additional evidence to identify more specifically the costs and disbursements that were incurred in respect of the legal work to which the costs order relates, and also providing an explanation of a number of matters that appeared to me from the evidence to be doubtful: Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin (No 2) [2021] NSWSC 436.

5. The plaintiff responded to the Court’s request for additional information by means of an affidavit of the plaintiff’s solicitor dated 7 May 2021, and further submissions by the plaintiff’s counsel dated 7 May 2021.

6. The effect of the additional information is that the plaintiff now presses a claim for total legal fees and disbursements of $34,514.50. I accept that the additional information is sufficient to explain the queries that the Court raised in its second judgment. Having regard to comments made by the Court concerning the usual approach whereby gross sum costs orders are discounted by reason of a number of factors, including that the party in whose favour the order is made is spared the cost and delay involved in an assessment, the plaintiff submitted that the appropriate discount should lie in the range of 20% to 30%.

7. Having regard to what I consider to be the relatively simple issues raised in the proceedings, and notwithstanding that it appeared that the second defendant’s conduct in interfering with the plaintiff’s solicitor’s participation in the PEXA workspace was entirely unnecessary and unreasonable, I consider that in this case a 30% reduction is warranted. Accordingly, and rounding the arithmetic result, the appropriate amount of the gross sum costs to be awarded in favour of the plaintiff against the second defendant is $24,200.

8. The second defendant responded to the additional affidavit and submissions served by the plaintiff by serving a further affidavit made on 12 May 2021 and written submissions dated 17 May 2021. These additional materials do not actually address the question of the proper quantification of the gross sum costs that should be awarded in favour of the plaintiff. Instead, they appear to revisit arguments that the second defendant put before the Court earlier in the dispute, and although I find the additional information hard to understand, it appeared to me that the second defendant was trying to persuade the Court that it had proceeded in error when it accepted submissions made on behalf of the plaintiff, and outlined in the first judgment, that the plaintiff’s attempts to gain a share of the proceeds of sale of the Wollongong property involved no more than the performance of a judgment that had already been made in his favour by the Federal Circuit Court.

9. Notwithstanding that this additional information was strictly irrelevant, having regard to the matters already determined by the first two judgments, as the second defendant is unrepresented, it appeared to me that in the interests of justice the proper course was for the Court to review the history of the proceedings to satisfy itself that there had been no serious miscarriage of justice, by reason of the second defendant not having been able to explain the position clearly.

10. It appears from my review of the orders made by the Federal Circuit Court that the second defendant has misunderstood the effect of those orders, and that has had the result that she has interfered in the plaintiff’s attempts to gain the benefit of those orders in a way that has been ineffective and subjected her to the otherwise unnecessary burden of having to pay the costs order that the Court will make in favour of the plaintiff.

11. The Federal Circuit Court made orders by consent on 21 November 2019 in family law proceedings between the plaintiff husband and the first defendant wife, to which the second defendant in these proceedings was also a party. All three parties had legal representation. The effect of those orders was that it was declared that the wife holds the Wollongong property on trust for the two children of the second defendant. Because the first defendant was unfit to act as trustee, an order was made that the property vests in the second defendant as trustee for the children. Consequential orders were then made to give effect to these declarations and orders.

12. Order 8 was to the effect that the second defendant was required, as trustee for the children, to pay the sum of $105,000, within four months of the date of the orders, to the solicitor for the plaintiff. It would appear that the structure of the consent orders was essentially that the Wollongong property would become held on trust by the second defendant for her children, but she was required as trustee to raise the amount of $105,000 to pay to the plaintiff in lieu of his share in the property.

13. By order 9, if the second defendant failed to make the payment in accordance with order 8, or decided to sell the Wollongong property within the four months thereafter, the second defendant was ordered to take a series of steps designed to lead to the sale of the Wollongong property. Order 9(e)(vi) required that $105,000 of the proceeds of sale be paid to the plaintiff.

14. By this arrangement, the plaintiff became entitled to receive $105,000, either by means of the second defendant raising that money to pay to the plaintiff in exchange for being entitled to retain the Wollongong property, or that property was to be sold and $105,000 paid to the plaintiff instead.

15. The second defendant’s argument that this regime was altered depends upon the terms of further orders made by consent by the Federal Circuit Court on 14 August 2020. The three parties were also represented by lawyers when these orders were made.

16. Order 1 made on 14 August 2020 varied order 9 made on 21 November 2019. The variations concerned refinements to the earlier order 9 to make the sale of the Wollongong property more efficient. The varied order provided that, if the Wollongong property was not sold by private treaty or if contracts were not exchanged by 1 September 2020, then the property would be sold by auction by 13 September 2020 on various terms. In practical terms, the varied order left control of the sale in the hands of the second defendant, provided contracts were exchanged by 13 September 2020.

17. As varied, order 9(e) included the following, in relation to payments that had to be made out of the net sale price:

(v)   Payment of a sum of $11,559.13 to the Trust Account of [the plaintiff’s lawyers] for the credit of the [plaintiff] in relation to his legal fees of these proceedings;

(vii) Payment of $105,000 to the Trust Account of [the plaintiff’s lawyers] for the credit of the [plaintiff] together with interest from the date of default (21 March 2020) calculated in accordance with the Federal Circuit Court Rules 2001;

…

18. The variation to order 9 made the second defendant’s position worse, not better, and it occurred because the second defendant had not complied in a timely manner with the earlier orders. I am satisfied that the clear intent of the varied orders was that the plaintiff would be entitled to receive the $105,000 out of the net sale price of the Wollongong property.

19. The immediate cause for this dispute is that, notwithstanding that the earlier orders of the Federal Circuit Court authorised the plaintiff to lodge a caveat against the title to the Wollongong property to protect his interest under the orders, the second defendant instructed a solicitor, Mr Warren Saunders, to serve a lapsing notice in respect of the caveat, and the second defendant interfered with the plaintiff’s attempt to participate in the PEXA workspace.

20. The outcome was unnecessary and expensive to the second defendant, but she has been the author of her own misfortune.

21. The Court’s order is:

1. The Court assesses the plaintiff’s costs in accordance with order 3 made by the Court on 16 February 2021 in the amount of $24,200 on a gross sum basis pursuant to s 98(4)(c) of the Civil Procedure Act 2005 (NSW).

Decision last updated: 20 July 2021