Krajovska v Krajovska

[2011] NSWSC 1026

Supreme Court

New South Wales

Medium Neutral Citation:	Krajovska v Krajovska & Ors [2011] NSWSC 1026
Hearing dates:	26 - 29 July, 31 August 2011
Decision date:	05 September 2011
Jurisdiction:	Equity Division
Before:	Black J
Decision:	Judgment for Plaintiff against each of Defendants for equitable compensation - interest to run from date on which family relationship broke down - costs awarded against First, Second and Third Defendants jointly and severally.
Catchwords:	INTEREST - interest to run from date on which family relationship broke down - delay in giving notice of claims - no evidence of prejudice to Defendants from absence of earlier notice of claim. COSTS - order for costs against Defendants advancing joint defence to be joint and several.
Legislation Cited:	- Civil Procedure Act 2005
Cases Cited:	- Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 - Falkner v Bourke (1990) 19 NSWLR 575 - Kalls Enterprises Pty Ltd (in liq) v Baloglow (No 3) [2007] NSWCA 298 - Latoudis v Casey (1990) 170 CLR 534 - Rushcutters Bay Smash Repairs Pty Ltd v Netmakers Pty Ltd [2005] NSWSC 670 - Scripture Union v Prime Industrial Pty Ltd [2006] NSWSC 38 - Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 - Tasevska v Tasevski [2001] NSWSC 174 - Taylor v Streicher [2007] NSWSC
Category:	Costs
Parties:	Stojanka Krajovska (Plaintiff/First Cross Defendant) Cveta Krajovska (First Defendant/First Cross Claimant) Biljana Todorovic (Second Defendant/ Second Cross Claimant) Slobodan Krajovski (Third Defendant/Third Cross Claimant) Daniel Krajovski (Fourth Defendant/Second Cross Defendant)
Representation:	Counsel: G.M. McGrath (Plaintiff/First Cross Defendant) Ms D.G. Reid (First, Second and Third Defendants/First, Second and Third Cross Claimants) Solicitors: Stojanovic Solicitors (Plaintiff/First Cross Defendant) Isho & Associates (First, Second and Third Defendants/First, Second and Third Cross Claimants)
File Number(s):	2010/285460

Judgment

1. These proceedings were listed before me on 26-29 July 2011 and I delivered judgment on 18 August 2011. I held that the Plaintiff, Stojanka Krajovska, was entitled to an order for equitable compensation against the First Defendant in respect of the value of 22% of a property situated at Newbolt Street, Wetherill Park, rounded to $45,000, and against each of the Defendants in respect of the interest transferred to them from her notional half-share in a farm situated at Buxton in the amount of $51,000 in respect of each Defendant.

1. I invited the parties to make submissions as to the period for which interest should be allowed, although I expressed the preliminary view that interest in respect of the Buxton farm should be allowed from the date when the sale proceeds for that property were received. I should note that, in the course of submissions before me in respect of interest and costs, Mr McGrath who appears for the Plaintiff has pointed out that the sale date for the Buxton farm was in fact 28 November 2008, not October 2008 as I had indicated in my earlier judgment. I also indicated that I proposed to order that the First, Second and Third Defendants pay the Plaintiff's costs of the proceedings.

Interest

1. The Plaintiff claims simple interest under s 100(1) of the Civil Procedure Act 2005 which relevantly provides that the Court may include interest in the amount for which judgment is given, the interest to be calculated at such rate as the Court thinks fit on the whole or any part of the money and for the whole or any part of the period from the time the cause of action arose until the time the judgment takes effect. The Plaintiff submitted that orders should be made on the basis of simple interest from 3 November 2006, being the date when the family relationship broke down and the Plaintiff left the Buxton farm, including in respect of the proceeds of the sale of the Newbolt Street property. The Plaintiff submits that this date is appropriate because it is the date from which she was deprived of the benefit of pooled assets within the family relationship. The position for which the Plaintiff contends has been adopted in some earlier cases of this character: Tasevska v Tasevski [2001] NSWSC 174; Taylor v Streicher [2007] NSWSC 1006.

1. I accept the submissions on behalf of the Plaintiff that the date of breakdown of the family relationship is more relevant than the date of the sale of the Buxton farm, particularly where simple rather than compound interest is claimed so the claim to interest does not depend on the Defendants' ability to reinvest the proceeds of the sale. Accordingly, I would order interest from the date of the breakdown of that relationship unless I am satisfied that other matters warrant a different approach.

1. The Defendants submit that interest should only be allowed from, at the earliest, 9 August 2010, the date on which the Plaintiff's solicitor sent a letter of demand to the Defendants. The Defendants rely on the fact that there was a delay of nearly four years from the date on which the family relationship, on my findings, broke down until the Defendants where given notice of a claim against them. Counsel for the Defendants refers to Simonius Vischer & Co v Holt & Thompson [1979] 2 NSWLR 322 at 338 (where a claim was not brought until 12 or 13 years after the cause of action accrued) and Anderson's (Pacific) Trading Co Pty Ltd v Karlander New Guinea Line Ltd [1980] 2 NSWLR 870 at 876 (where the delay in commencement of the proceedings in a commercial context was seven years and interest was allowed from the date of the Writ) which recognise that delay between when the cause of action arose and judgment may be productive of unfairness to the defendant, and more so if it had no notice or no early notice of the claim.

1. Counsel for the Plaintiffs responded that the circumstances in which interest will not be allowed from the date the cause of action arose are rare and that "judicial sympathy" for one party is not a proper ground on which to exercise the statutory discretion: Falkner v Bourke (1990) 19 NSWLR 575. Counsel for the Plaintiff also drew my attention to the decision in Kalls Enterprises Pty Ltd (in liq) v Baloglow (No 3) [2007] NSWCA 298 where the Court of Appeal observed that:

"Delay is ordinarily not a reason for refusing or reducing the inclusion of interest. The Defendant has had the use of the money and the Plaintiff has been out of its use and should be compensated accordingly. The purpose is to compensate the Plaintiff for being kept out of its money. ... Interest should be included unless good cause be shown, in order to fulfil the purpose." [Citations omitted]

However, the Court of Appeal also observed that:

"Delay can nonetheless be relevant to the exercise of the discretion. For example, unreasonable delay and a high interest rate may mean that the Defendant is unjustly left as the source of the Plaintiff's investment income. The question is one of injustice to the Defendant. If the interest rates used by the Plaintiff exceed commercial interest rates (although commercial interest rates are an imprecise criterion, see below), the Plaintiff's self-inflicted loss of use of money may be unfairly made a burden on the Defendant."

In that case, the Court did not consider there was unreasonable delay warranting reduction in interest in circumstances that the liquidator had a difficult task in piecing together what had occurred, determining what action to take and presenting the evidence necessary for prosecution of his claim.

1. In this case, there exist matters supporting alternatively an order for interest from the date of the breakdown of the family relationship or from the date on which the Plaintiff's solicitor placed the Defendants on notice of a claim. On the one hand, the usual rule is that interest is allowed from the date the cause of action arose and there are cases such as Taylor v Streicher and Tasevska v Tasevski where interest has been allowed from the date of breakdown of the family relationship in matters of this kind. On the other hand, the authorities indicate that I can and should have regard to injustice to the Defendants arising from delay in their being placed on notice of the claim against them.

1. In my view, a delay of nearly four years from the date on which the cause of action arose to the date on which the Defendants were put on notice of a possible claim is not insignificant. The Plaintiff responds that the delay in this case is explicable by the fact that she does not speak English and required assistance from others to consider the position in which she found herself. However, the evidence before me at the hearing indicated that the Plaintiff had the assistance of one of her English-speaking grandsons from the point at which she vacated the Buxton farm and inquiries had also been made on her behalf concerning the circumstances of the transfer of her interest in that farm after the family relationship broke down. The facts which were material to establishing the cause of action on which the Plaintiff succeeded were also largely if not entirely matters within her personal knowledge and her success was substantially based on her own evidence.

1. I have given careful consideration to whether an order for interest from the date on which the cause of action arose, when the family relationship broke down, would give rise to injustice to the Defendants. However, the Defendants led no evidence that, for example, they had incurred expenditures or applied monies in a way which they would not have done had they had earlier notice of the claim against them and had therefore been disadvantaged by the delay in the Plaintiff's giving notice of the claim against them. I have concluded that I could not properly reach a finding that that delay would give rise to injustice to the Defendants, if interest were awarded from the date the cause of action arose, in the absence of evidence of such prejudice.

1. Accordingly, interest should be allowed from the date the cause of action arose on the breakdown of the family relationship rather than from the later date on which a demand was made by the Plaintiff's solicitors.

1. A calculation of the amount of interest on that basis is set out below:

First Defendant

Principal: $96000

Interest:

03/11/06-31/12/06	9.75%	57	1461.70
01/01/07-30/06/07	10.25%	181	4879.56
01/07/07-31/12/07	10.25%	184	4960.44
01/01/08-30/06/08	10.75%	181	5117.59
01/07/08-31/12/08	11.25%	184	5444.38
01/01/09-30/06/09	8.25%	181	3927.45
01/07/09-31/12/09	7.00%	184	3387.62
01/01/10-30/06/10	7.75%	181	3689.42
01/07/10-31/12/10	8.50%	184	4113.53
01/01/11-30/06/11	8.75%	181	4165.48
01/07/11-05/09/11	8.75%	67	1541.92
Total Interest	42689.09
Total	138689.09

Second, Third and Fourth Defendants

Principal: $51000

Interest:

03/11/06-31/12/06	9.75%	57	776.53
01/01/07-30/06/07	10.25%	181	2592.27
01/07/07-31/12/07	10.25%	184	2635.23
01/01/08-30/06/08	10.75%	181	2718.72
01/07/08-31/12/08	11.25%	184	2892.33
01/01/09-30/06/09	8.25%	181	2086.46
01/07/09-31/12/09	7.00%	184	1799.67
01/01/10-30/06/10	7.75%	181	1960.01
01/07/10-31/12/10	8.50%	184	2185.32
01/01/11-30/06/11	8.75%	181	2212.91
01/07/11-05/09/11	8.75%	67	819.14
Total Interest	22678.59
Total	73678.59

Costs

1. The Plaintiff submits that costs should follow the event and should be awarded against each of the First, Second and Third Defendants who actively opposed the orders sought by the Plaintiff. The Plaintiff also submits that costs should be ordered against the Defendants jointly and severally, as this is the usual position where a plaintiff succeeds against multiple defendants: Rushcutters Bay Smash Repairs Pty Ltd v Netmakers Pty Ltd [2005] NSWSC 670; Scripture Union v Prime Industrial Pty Ltd [2006] NSWSC 38 at [28]-[29].

1. The Defendants submit that they should only be required to pay half of the Plaintiff's costs on an ordinary basis as agreed or assessed and that each of the First, Second and Third Defendants should be personally and separately liable for one-third of the costs awarded. The Defendants support this position on the basis that the Plaintiff had originally advanced allegations of undue influence which the Defendants contend had "loomed large" until they were withdrawn in the course of the hearing. I do not accept that submission. The general rule that costs follow the event is reflected in Uniform Civil Procedure Rules r 42.1 which provides that the Court is to order that costs 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. In my view, the affidavit evidence and cross-examination was substantially if not entirely relevant to the cause of action on which the Plaintiff ultimately succeeded and the general rule should be applied.

1. I also do not consider it appropriate to award specified portions of costs as against particular defendants. The First, Second and Third Defendants instructed common legal representatives and presented a common defence and there was no difference in respect of any individual Defendants' defence which would take the matter out of the ordinary rule that an order for costs against multiple defendants should be joint and several. The order for which the First, Second and Third Defendants contend would also expose to an inappropriate risk that the Plaintiff would be unable to recover the costs awarded to her if any one of the Defendants is unable to meet their respective share of the costs.

1. Accordingly, I will make the orders set out below but stay those orders until 4pm on Wednesday 7 September 2011 to allow the parties to check my interest calculations, and I grant liberty to restore on 24 hours notice if the parties consider there is any error in those calculations:

1. Judgment for the Plaintiff against the First Defendant for equitable compensation in the sum of $138,689.10 including interest to 5 September 2011 of $42,689.09.

2. Judgment for the Plaintiff against the Second Defendant for equitable compensation in the sum of $73,678.59 including interest to 5 September 2011 of $22,678.59.

3. Judgment of the Plaintiff against the Third Defendant for equitable compensation in the sum of $73,678.59 including interest to 5 September 2011 of $22,678.59.

4. Judgment for the Plaintiff against the Fourth Defendant for equitable compensation in the sum of $73,678.59 including interest to 5 September 2011 of $22,678.59.

5. The First, Second and Third Defendants pay the Plaintiff's costs on an ordinary basis as agreed or as assessed.

6. The liability of the First, Second and Third Defendants for the Plaintiff's costs be joint and several.

7. The operation of these orders be stayed until 4pm on Wednesday 7 September 2011.

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Decision last updated: 09 September 2011