Geron v Geron (No 2)

[2018] VSC 710

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE
COMMON LAW DIVISION
PROPERTY LIST

S CI 2018 01291

AVIEL GERON	Plaintiff
v
CHAIM GERON	First Defendant
and
LB GERON ENTERPRISES PTY LTD (ACN 619 424 289)	Second Defendant
and
ELIZABETH RUTH ANDREWS	Third Defendant
and
REGISTRAR OF TITLES	Fourth Defendant

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JUDGE:	MOORE J
WHERE HELD:	Melbourne
DATE OF HEARING:	Decision made ‘on the papers’
DATE OF JUDGMENT:	19 November 2018
CASE MAY BE CITED AS:	Geron v Geron (No 2)
MEDIUM NEUTRAL CITATION:	[2018] VSC 710

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COSTS – Application dismissed against third defendant – Indemnity costs sought by plaintiff and first and second defendant – Calderbank offer – Offers of compromise – Offer to capitulate or genuine offer – Whether applicant had an arguable claim – Whether costs to follow the event – Preserve the status quo – Costs reserved – United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2) [2018] VSC 501 – Supreme Court Act 1986 (Vic), s 21 – Supreme Court (General Civil Procedure) Rules 2015 (Vic), rr 63.02, 63.28.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr D Triaca	Waterson Legal
For the First and Second Defendants	Mr Chaim Geron, in person	Chaim Geron Lawyers
For the Third Defendant	Mr C F E Dawlings	Taussig Cherrie Fildes Lawyers

HIS HONOUR:

1. On 3 May 2018, the third defendant filed a summons seeking an order that this proceeding be transferred to the Family Court of Australia pursuant to s 5(1) of the Jurisdiction of Courts (Cross-vesting) Act 1987.

1. In reasons for judgment delivered on 9 October 2018,[1] I decided that the third defendant’s application to transfer the proceeding should be dismissed. I directed the parties to submit any proposed orders as to costs and, in the absence of agreement, any short submissions on costs.

   [1][2018] VSC 582.

1. Submissions as to costs were received from the plaintiff on 17 October 2018, from the first and second defendants on 17 October 2018 and from the third defendant on 23 October 2018. The parties did not object to the Court determining the question of costs on the basis of written submissions without a further hearing.

1. The plaintiff seeks the costs of the third defendant’s application on an indemnity basis from 2 July 2018 and otherwise on a standard basis. In the alternative, he seeks the costs of the third defendant’s application on a standard basis. The first and second defendants seek payment of their costs on an indemnity basis.

1. The third defendant’s primary position is that the costs of her application to transfer the proceeding should be reserved. Alternatively, if the plaintiff and the first and second defendants were to be awarded the costs of the summons, that those costs be assessed on a standard basis.

1. The Court has full power to determine the extent of costs to be paid.[2] Any costs in the proceeding which are to be taxed may be taxed on a standard basis, an indemnity basis or such other basis as the Court may direct.[3]

   [2]Supreme Court Act 1986 s 24; Supreme Court (General Civil Procedure) Rules 2015 r 63.02.

   [3]Supreme Court (General Civil Procedure) Rules 2015 r 63.28.

1. The plaintiff relied on two grounds in support of his submission that he should receive the costs of the third defendant’s application on an indemnity basis from 2 July 2018. Firstly, on that date the plaintiff made a written offer to the third defendant. The offer set out why the transfer application was hopeless and bound to fail. The plaintiff offered to consent to orders dismissing the third defendant’s transfer application with no order as to costs on that application. The offer was said to be open for acceptance for 14 days and was explicitly characterised as a Calderbank offer with the consequence that, if it was not accepted, the plaintiff would seek costs against the third defendant on an indemnity basis.

1. The plaintiff relied upon the recent consideration by Elliott J of the legal principles relating to the award of indemnity costs in United Petroleum Australia Pty Ltd v Herbert Smith Freehills (No 2).[4] It was submitted that the offer made to the third defendant was an offer to compromise the transfer application on a ‘walk away’ basis. He submitted that it was unreasonable for the third defendant to reject the offer in circumstances where it was received following the filing of the affidavits thus enabling a proper assessment of the respective positions of the parties and where it was open for a reasonable period of 14 days. The plaintiff also relied on the fact that the offer indicated that its refusal would result in an application for indemnity costs and set out why the third defendant’s position was weak (in terms largely restating the same reasoning set out by the Court in Jane v Jane[5] which was adopted by the Court in its judgment in the present matter).

   [4][2018] VSC 501 (‘United Petroleum (No 2)’).

   [5][2008] VSC 341.

1. In United Petroleum (No 2), Elliott J stated:[6]

It is well established that, in some circumstances, a “walk away” offer or an offer by a party to “bear a very small portion of its own costs” may constitute a sufficient offer of compromise to make a rejection of the offer unreasonable.  There have also been cases where such offers have been treated as offers to capitulate as opposed to genuine offers.

[6][2018] VSC 501 [22] (omitting citations).

1. In my assessment, the plaintiff’s offer to the third defendant is properly characterised as an offer to capitulate on her transfer application. Although the arguments to transfer the proceeding ultimately did not find favour with the Court, they were not devoid of merit or unarguable. In particular, the decisions in Valceski v Valceski[7] and Kosmopoulos v Kosmopoulos[8] provided an arguable basis to transfer the proceeding. The offer made to the third defendant to walk away from her proceeding treated the third defendant’s application as being unarguable. I acknowledge, however that the nature of the third defendant’s transfer application would not appear to make it amenable to a compromise on anything other than an all or nothing basis.

   [7](2007) 70 NSWLR 36.

   [8][2008] VSC 402.

1. The second basis upon which the plaintiff sought payment of his costs on an indemnity basis was that none of the matters relied upon by the third defendant in her transfer application were likely to support a finding that a transfer was in the interests of justice. For the reasons I have noted above, I do not accept that the third defendant’s application lacked a proper basis so as to be unarguable.

1. The above considerations have equal application in respect of the first and second defendants’ application for indemnity costs. The first and second defendants’ application for indemnity costs also suffers from a further difficulty in that it appears to rely upon a different written offer made to the third defendant on 18 July 2018. I accept the third defendant’s submissions that that letter was an attempt to ‘piggy back’ on the plaintiff’s earlier offer after that earlier offer had expired. I also accept the submission that the contents of the later offer is such that it does not clearly indicate that the first and second defendants would seek their costs against the third defendant. For these reasons and the other reasons noted above, I do not accept that the first and second defendants’ correspondence of 18 July 2018 can be regarded as a genuine offer to settle the transfer application. I otherwise do not consider that the additional matters relied upon by the first and second defendants provide a basis for the Court to award them payment of their costs on an indemnity basis.

1. As to the alternative position adopted by the plaintiff, it is submitted that there is no reason for the Court to depart from the usual practice of ordering costs to follow the event and the third defendant should therefore pay his costs of and incidental to the application on a standard basis.

1. I do not accept the plaintiff’s alternative submission. The provision made by r 63.20 of the Rules specifies that the default position in respect of interlocutory applications is that the costs of such applications are the parties’ costs in the proceeding, unless the Court otherwise orders.

1. Furthermore, even if the relevant ‘event’ which costs are to follow might be taken to be the interlocutory application, in the circumstances of this case, there are good reasons for reserving costs. In particular, there are a number of important issues of fact which remain for determination at the final hearing of the proceeding which were not the subject of any determination in the interlocutory application. This includes the enforceability of the partnership agreement and whether or not the relevant properties are in the pool of matrimonial assets. If the claims made by the third defendant in respect of the matters are upheld at trial, then it is foreseeable that the third defendant may be awarded all of her costs of the proceeding. Likewise, as to the risk of collusion between the plaintiff and the first defendant, if this risk is realised at trial, it may also result in a costs award in the proceeding for the benefit of the third defendant.

1. The above matters lead me to conclude that it would be inappropriate to award costs in respect of the third defendant’s transfer application. The preferable course is that costs on the third defendant’s application to transfer the proceeding should be reserved. In adopting that course, the position of the parties will not be prejudiced and the determination of the question of costs in respect of the third defendant’s unsuccessful transfer application can be considered in the context of the disposition of the underlying proceeding. The Court will so order.

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