Junxing Ge v Jinjin Sun

[2020] NSWSC 333

Supreme Court

New South Wales

Medium Neutral Citation:	Junxing Ge v Jinjin Sun [2020] NSWSC 333
Hearing dates:	20 March 2020
Date of orders:	01 April 2020
Decision date:	20 March 2020
Jurisdiction:	Equity - Duty List
Before:	Robb J
Decision:	Court makes no order as to costs, with the intent that each party will bear their own costs of the proceedings.
Catchwords:	COSTS — Party/Party — Court’s discretion — where each party to bear own costs
Legislation Cited:	Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84
Category:	Costs
Parties:	Junxing Ge (plaintiff) Jinjin Sun (defendant)
Representation:	Counsel: RW Tregenza (plaintiff) K M Francis (defendant)   Solicitors: Sunfield Chambers Solicitors & Associates (plaintiff) Juris Cor Legal (defendant)
File Number(s):	2020/85952

Judgment

1. On 18 March 2020, the plaintiff was given leave to file in court in the Duty List a summons in which the principal relief claimed was a declaration that the defendant does not have an equitable interest in a property at Concord, of which the plaintiff is registered proprietor, as well as an order that the defendant withdraw a caveat lodged by her against the title to the Concord property.

2. The plaintiff in his summons effectively acknowledged that an amount of $2,365.80, of the $2,500,000 purchase price of the Concord property, was the defendant’s money, and sought alternative relief based upon that assumption.

3. The plaintiff’s summons was made returnable before the duty judge on 20 March 2020.

4. On the return date, the parties consented to the Court noting their agreement that the plaintiff would pay to the defendant the sum of $2,365.80, declaring that, save for the agreement referred to, the defendant has no equitable interest in the Concord property, and orderinig the defendant to withdraw the caveat.

5. The making of those orders would dispose of the proceedings, save that the parties have disagreed concerning the costs order that should be made. The plaintiff seeks an order that the defendant pay his costs on the ordinary basis. The defendant submits that the Court should not make any order as to costs.

6. These reasons deal with the costs dispute between the parties.

7. The caveat lodged by the defendant against the title to the Concord property claimed the following interest:

Estate in fee simple

By virtue of: Beneficial Interest In Trust

Details Supporting The Claim: Pursuant to implied, resulting or constructive trust to the extent that the said caveator made financial and non-financial contributions to the acquisition or maintenance and improvement of the said land

8. The caveat was lodged by the defendant’s solicitors on or about 24 January 2020.

9. The plaintiff is the father-in-law of the defendant, who was for some time the wife of the plaintiff’s son. The defendant and the son are estranged.

10. On 19 December 2019, the defendant filed an initiating application in the Federal Circuit Court of Australia, seeking various matrimonial property orders against the son. The plaintiff was not initially a party to the matrimonial proceedings.

11. However, by order 4 of the statement of interim orders sought, the defendant sought an order that the plaintiff be joined as a respondent to the proceedings, and that he be restrained from disposing of his properties, including the Concord property, pending further determination by the Court.

12. The defendant’s solicitors in the family law matter are the same solicitors as those who lodged the caveat, and who act for the defendant in these proceedings.

13. In his affidavit made on 17 March 2020, the plaintiff gave detailed evidence about the history of the purchases of properties by the plaintiff and his wife, and the arrangements made from time to time for the defendant and the son to live in some of those properties.

14. The plaintiff explained the sources of the purchase price for the Concord property, which included funds of his own and his wife’s, certain borrowings, and a bank loan of $1,979,553.77. The plaintiff acknowledged that he could not identify the source of $16,000 which formed part of the purchase price of the Concord property. It appears from the orders to which the plaintiff consented that he accepts that $2,365.80 of the purchase price can be traced to funds provided by the defendant.

15. However, in pars 72 to 74 of his affidavit, the plaintiff acknowledged that he learned, on 2 June 2016, that his son, in connection with arranging for the payment of the purchase price for the Concord property, withdrew $150,000 from a bank account of the plaintiff and transferred it into an account in the name of the defendant, before withdrawing that money and applying it towards the purchase price for the Concord property. The precise amount withdrawn from the defendant’s account on 3 June 2016 was $152,365.80. Of that amount, $150,000 was the plaintiff’s money, and the balance of $2,365.80 was money to which the defendant was entitled.

16. The plaintiff said that the defendant has relied upon the fact that the $152,365.80 was drawn from her account to claim an interest in the Concord property.

17. In November 2019, the plaintiff entered into a contract to purchase a property at Dural to be used as a residence for the plaintiff and his wife for a price of $2,300,000.

18. On 8 January 2020, the plaintiff entered into a contract to sell the Concord property for $2,700,000. The plaintiff said that the contract is due to be completed on 30 March 2020.

19. In the meantime, the caveat dated 24 January 2020 was lodged. The caveat came to the plaintiff’s attention on 4 February 2020.

20. The plaintiff gave evidence that he instructed his solicitor to issue a lapsing notice in respect of the caveat on about 11 March 2020. There was no direct evidence that the lapsing notice was issued or that the defendant had received the lapsing notice. In any event, the plaintiff waited for over a month after he learned of the caveat to give instructions to serve the lapsing notice.

21. The plaintiff’s solicitor wrote to the defendant’s solicitor on 12 March 2020, to request that the defendant remove the caveat. The letter advised that the caveat prevented the completion of the sale of the Concord property scheduled for 30 March 2020. It is likely that the plaintiff’s solicitor wrote this letter instead of serving a lapsing notice, because the 21 day period provided for in s 74J(1) of the Real Property Act 1900 (NSW) for the defendant to obtain an order extending the caveat from this Court would have expired after the 30 March 2020 date fixed for completion of the contract for the sale of the Concord property.

22. The defendant’s solicitor replied on 13 March 2020. The solicitor stated that he was previously unaware of the contract for the sale of the Concord property, or that completion was to take place on 30 March 2020.

23. The solicitor asserted that the plaintiff’s solicitor was aware that the defendant was seeking to join the plaintiff as a respondent to the family law proceedings. It is not clear whether the plaintiff’s solicitor had that knowledge. The defendant’s solicitor said: “the respondent husband, used matrimonial funds in purchasing the properties, including the [Concord property], under [the plaintiff’s] name”. The solicitor asserted that the defendant had paid bills for the Concord property during the course of the marriage, and the Concord property was one of the former matrimonial homes.

24. I interpolate that the plaintiff gave evidence that, although the defendant paid bills for services used at the Concord property, that was only so that she could use the invoices to establish the appearance of having a residence in Concord, for the purpose of arranging for one of her children to be accepted by a local public school, and that she was repaid all amounts. The plaintiff said that the defendant had only lived in the Concord property for short periods, although he accepted that she had lived with the son and their children in a number of properties in the plaintiff’s name.

25. The defendant’s solicitor said that the defendant would press, at the next hearing of the matrimonial proceedings on 25 March 2020, for the plaintiff to be joined to those proceedings, and invited the plaintiff to consent to that course, in which event “we will consent to take immediate action to remove the caveat”. The solicitor added:

In the alternative, we would like to request a written undertaking from [the plaintiff] that the sale proceeds would be held in a Controlled Money Account of your firm or the conveyancer’s account pending further determination from the Court. If your client is agreeable, we will also be willing with alacrity to forthwith withdraw the said caveat.

In the case that [the plaintiff] does not accept our proposal(s) and an injunction and/or joinder is subsequently successfully obtained, we will apply for costs.

26. It was in these circumstances, and apparently without any response by the plaintiff’s solicitor to this letter, that the plaintiff commenced these proceedings on 18 March 2020.

27. At 1:41 PM on Thursday 19 March 2020, the plaintiff’s solicitor sent an email to the defendant’s solicitor, which noted that the proceedings were before the duty judge at 10 AM on 20 March 2020. The email attached a letter from the plaintiff’s solicitor to the solicitor for the defendant that was marked “Without Prejudice save as to cost”. The letter was expressed to be a Calderbank offer.

28. The terms of settlement offered were the three orders that the Court has made by consent of the parties, plus a fourth order that the defendant pays the plaintiff’s costs to date as agreed or assessed on a party and party basis. The letter gave the defendant until 4:30 PM on 19 March 2020 accept the offer.

29. The defendant’s solicitor responded by email on 19 March 2020 at 2:47 PM. The email advised that the plaintiff had been added as a party to the family law proceedings on 17 March 2020, and the defendant expected his attendance on the next return date. The email added:

We consider your client’s summons filed 18 March 2020 (sic) misuse of the process and intend to have tomorrow’s matter transferred to the Federal Circuit Court and be determined week at the family law court.

We propose the parties reach consent order as we suggested previously for us to withdraw the caveat with [the plaintiff’s] undertaking.

Once we receive your undertaking we will forthwith withdraw the caveat.

30. The position thus reached is that it can be inferred that, between 2:47 PM on 19 March 2020 and the morning of 20 March 2020, when the plaintiff’s application was before the Court, the defendant was advised to think better about trying to insist that the net proceeds of sale of the Concord property be held on trust pending the determination of the family law dispute, and agreed to the first three orders made by the Court by consent.

31. The Court is not privy to the reasons why the defendant changed her position at the last minute, although it is possible that she was influenced by the evidence given by the plaintiff that he needed the net proceeds of the sale of the Concord property to be able to complete the purchase of the Dural property. There may, of course, have been other considerations, which may include the possibility that the Federal Circuit Court will be able to make orders against the plaintiff, even if, in the meantime, the Concord property has been sold and the net proceeds of sale applied by the plaintiff for other purposes.

32. It is in these circumstances that the Court is required to determine the dispute concerning the costs order that should be made.

33. I am bound by observations made by the Court of Appeal in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84.

34. I refer in particular to the statement by Payne JA (with whom Meagher JA agreed) at [30]: “If both parties to a proceeding which has been settled without a hearing on the merits have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the cost discretion will usually mean that the Court will make no order as to the cost of the proceedings”.

35. At [2], Basten JA stated the relevant principle in similar terms. As his Honour then noted, where there has been a settlement without a trial, it is not usually possible to say that one party has been successful and the other unsuccessful. There is no “event” for costs to follow, applying the usual rule in rule 42.1 of the Uniform Civil Procedure Rules 2005 (NSW). The orders made by consent may or may not demonstrate capitulation by the “unsuccessful” party. Where it is submitted that one party has been unreasonable in commencing or defending the litigation, the judgment as to unreasonableness should only be made where the conclusion “is manifest by reference to known circumstances, not in dispute between the parties”: see [8]. The Court cannot review large swathes of evidence to resolve, on a tentative basis, disputed questions of fact.

36. In the present case, the defendant apparently lodged the caveat on the advice of her solicitor.

37. This was done in the context of the commencement of the family law proceedings, which on the face of the evidence are genuine proceedings to resolve the family law property dispute between the defendant and the plaintiff’s son.

38. As noted above, an aspect of the interim relief sought was an order preventing the plaintiff from disposing of the Concord property. There is no reason for the Court to think that this interim claim was not genuine.

39. The plaintiff conceded that an amount of the plaintiff’s money in the sum of $150,000 was paid from his account by his son into the defendant’s account, and then paid out towards the purchase price of the Concord property. While the Court is not called upon to resolve the issue, that fact could well have caused the defendant to believe that some matrimonial funds had been applied towards the purchase of the Concord property.

40. The Court has no reason to disbelieve the statement made by the solicitor for the defendant on 13 March 2020 to the effect that, before that time, he had been unaware of the fact that the plaintiff had entered into a contract to sell the Concord property. Consequently, this is not a case where the Court would conclude that the defendant had lodged the caveat to put improper pressure on the plaintiff.

41. On 13 March 2020, the defendant offered to withdraw the caveat if the plaintiff agreed that the net proceeds of sale would be held in trust pending the determination of the family law proceedings. That was a relatively orthodox offer for the defendant’s solicitor to make. It may now appear reasonably clearly, on the basis of the evidence served by the plaintiff in these proceedings on 18 March 2020, that the defendant could only have had a minuscule equitable interest in the Concord property. It does not follow that the defendant’s solicitor ought to have known that fact on 13 March 2020.

42. The plaintiff commenced these proceedings without responding to the defendant’s solicitor’s 13 March 2020 letter. There is at least a possibility that, if the plaintiff had provided to the defendant the substance of his evidence concerning the source of funds for the purchase of the Concord property before commencing proceedings, then their commencement would not have been necessary. Whether or not that is true, the defendant’s response does not appear to have been unreasonable.

43. It also has to be said that the defendant has acted reasonably in agreeing to withdraw the caveat, in order to avoid protracted proceedings and the risk of jeopardising the contracts for the sale of the Concord property and the purchase of the Dural property between.

44. Finally, the evidence does not justify a finding that the fact of the defendant’s consent to the orders sought by the plaintiff demonstrates an abject failure on the part of the defendant. There have been no relevant findings of fact, notwithstanding the plaintiff’s assertions concerning the sources of the funds used to purchase the Concord property. It has not been determined that no matrimonial funds of the defendant and the plaintiff’s son were used. The defendant could well have been advised that the risks of giving the usual undertaking as to damages as the price for an order continuing the caveat ought not to be taken.

45. In these circumstances, in my view, the present is a case where the proper approach is for the Court to make no order as to costs, with the intent that each party will bear their own costs of the proceedings. That is the order that I make.

**********

Decision last updated: 01 April 2020