Leventis and Leventis (No 2)

[2021] FamCA 256

FAMILY COURT OF AUSTRALIA

LEVENTIS & LEVENTIS (NO. 2) [2021] FamCA 256

FAMILY LAW – COSTS – respondent seeking costs – application refused.

Family Law Act 1975 (Cth) s 117

Fitzgerald v Fish (2005) 33 Fam LR 123

APPLICANT: Ms Leventis

FIRST RESPONDENT: Mr Leventis

SECOND RESPONDENT: Mr B Leventis

THIRD RESPONDENT: Ms C Leventis

FOURTH RESPONDENT: Ms Krol

FIFTH RESPONDENT: Mr Krol

FILE NUMBER: MLC 7710 of 2018

DATE DELIVERED: 3 May 2021

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Wilson J

HEARING DATE: On the papers

DATE OF FINAL SUBMISSION: 18 December 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Dr E. Kelly

SOLICITOR FOR THE APPLICANT: Nicholes Family Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Not applicable

SOLICITOR FOR THE FIRST RESPONDENT: Vadarlis & Associates

COUNSEL FOR THE SECOND RESPONDENT: Mr A. Schlicht

SOLICITOR FOR THE SECOND RESPONDENT: Pauline Madden Conveyancing & Legal

COUNSEL FOR THE THIRD RESPONDENT: Mr A. Schlicht

SOLICITOR FOR THE THIRD RESPONDENT: Pauline Madden Conveyancing & Legal

COUNSEL FOR THE FOURTH RESPONDENT: Mr A. Schlicht

SOLICITOR FOR THE FOURTH RESPONDENT: Pauline Madden Conveyancing & Legal

COUNSEL FOR THE FIFTH RESPONDENT: Mr A. Schlicht

SOLICITOR FOR THE FIFTH RESPONDENT: Pauline Madden Conveyancing & Legal

Orders

1. I dismiss the application for costs made by the fourth and fifth respondents.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Leventis & Leventis has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 7710 of 2018

Ms Leventis

Applicant

And

Mr Leventis

First Respondent

And

Mr B Leventis

Second Respondent

And

Ms C Leventis

Third Respondent

And

Ms Krol

Fourth Respondent

And

Mr Krol

Fifth Respondent

REASONS FOR JUDGMENT

1. Pursuant to orders made by me on 28 September 2020 the proceeding against the fourth and fifth respondents was discontinued and the question of the fourth and fifth respondents’ costs was reserved to 20 November 2020.

2. Prior to the return of the proceeding on 20 November 2020, the parties provided a minute of consent orders indicating that they wished the further hearing of this proceeding adjourned to a date after 25 November 2020 to permit the parties to attend a subpoena hearing before a registrar so I adjourned the further hearing of the proceeding to 4 December 2020.  On 4 December 2020 I ordered by consent that the application for costs by the fourth and fifth respondents would be determined on the papers without the need for appearances by those respondents.  They agreed to provide submissions on costs by 11 December 2020 and the applicant was ordered to file submissions in reply by 18 December 2020.

3. Submissions in support of the costs application for costs were made, not by the fourth and fifth respondents but by the second and third respondents.  The orders for filing of submissions in support of the costs application did not permit other respondents to make submissions on behalf of the fourth and fifth respondents.  So far as it is possible to tell from the second and third respondents’ submissions (and not from submissions filed by the fourth and fifth respondents themselves) the reasons urged in support of a costs order in favour of the fourth and fifth respondents were as follows –

   a)the fourth and fifth respondents were involved in this litigation in the context of an injunction application for orders freezing the assets of the Leventis Family Trust and the joint purchase of the Suburb F property;

   b)it was unnecessary to issue subpoenae against the fifth respondent;

   c)the fourth and fifth respondents were not necessary parties;

   d)they were involved in an excessive number of hearings; and

   e)the fourth and fifth respondents’ legal costs were 50% of the legal costs of the second and third respondents.

4. No affidavit had been filed on behalf of the fourth or fifth respondents to verify any of the assertions in the immediately preceding paragraph.  It was remarkable that those contentions were advanced by persons other than the fourth and fifth respondents.  The absence of their evidence on those issues weighed heavily in my assessment of the factual support they could have, but failed to, advance in support of what should have been their costs application.  In the end, I was not persuaded that the fourth and fifth respondents adduced any evidence of facts supportive of their contentions for a costs order.

5. On behalf of the applicant, affidavit evidence and written submissions were filed.  Turning first to the affidavit material, it was in the form of an affidavit of the applicant’s solicitor made 18 December 2020.  Relevantly distilled, the following matters emerged –

   a)on 14 August 2018 orders in the nature of injunctive relief were made by her Honour Judge Mercuri when the proceeding was in the Federal Circuit Court of Australia;

   b)the fourth and fifth respondents, through their solicitor, sought the consent of the applicant’s solicitor to be added as respondents to this proceeding;

   c)the solicitor acting for the fourth and fifth respondents proposed that the fourth and fifth respondents be joined as parties to the litigation;

   d)the fourth and fifth respondents asserted a beneficial interest in the assets held by the trustee of the Leventis Family Trust on behalf of the beneficiaries of that trust; and

   e)consent orders were made on 22 November 2018 joining the fourth and fifth respondents as parties to the litigation.

6. That recital of the chronological evolution of the facts of this case in relation to the joinder of the fourth and fifth respondents revealed that their joinder was consensual.  That tended to address the contentions of the second and third respondents who purportedly submitted on behalf of the fourth and fifth respondents to the effect that the joinder of the fourth and fifth respondents was unnecessary.  On the version of events given by the applicant’s solicitor, the fourth and fifth respondents themselves sought their own joinder and consent orders for their joinder were ultimately made.  The suggestion that they were joined over their protests was erroneous. 

7. In written submissions prepared by Dr Kelly of counsel, the applicant contended that the phenomenon of the second and third respondents preparing costs submissions on behalf of the fourth and fifth respondents reflected how the fourth and fifth respondent –

   a)had no proper basis for bringing any claim in this litigation; and

   b)their joinder was purely to support the claims brought by their parents-in-law, the second and third respondents.

8. Very helpfully, Dr Kelly prepared written submissions about the circumstances of the joinder of the fourth and fifth respondents in relation to the Suburb F property.  Relevantly distilled those submissions amounted to the following –

   a)the real property known and described as D Street, Suburb F was owned at all relevant times as to a half share by the fourth and fifth respondents; and

   b)the other half interest was at all relevant times owned by the respondent as trustee of the Leventis Family Trust and is held on behalf of the trust on a constructive trust in favour either of the applicant and respondent or in favour of the second and third respondents. 

9. Dr Kelly posed the central question in this costs issue as being why the fourth and fifth respondents were joined as parties in the first place. 

10. Dr Kelly pointed out that at no stage has the applicant sought property orders against the fourth and fifth respondents.  Rather –

    a)the applicant contended that the fourth and fifth respondents are beneficiaries under a trust the trustee of which (the respondent) is already separately represented;

    b)any involvement of the fourth and fifth respondents should have been confined to their rights and interests in D Street, Suburb F and their half interest in the ownership of that parcel of land;

    c)the fourth and fifth respondents, through their solicitors, asked for the applicant’s consent to their joinder on the basis that their rights were directly affected and that their participation in the proceeding was necessary so that all issues in the proceeding could be determined;

    d)on the urging of the fourth and fifth respondents, on 21 November 2018 the applicant agreed to the joinder;

    e)orders were made by consent for the joinder of the fourth and fifth respondents;

    f)at no stage in any document akin to a pleading have the fourth and fifth respondents disclosed an interest capable of separate agitation and at best they were only ever witnesses; and

    g)they were not necessary parties.

11. There is considerable force in the applicant’s contentions that –

    a)the fourth and fifth respondents were joined as parties at their own instigation;

    b)they were, in reality, mere witnesses of fact rather than parties with a separate interest to be agitated in this litigation; and

    c)at no stage have they asserted a separate interest that warranted their separate status as separate respondents in this litigation.

12. It seemed tolerably clear that a high degree of confusion surrounded the propriety of the joinder of the fourth and fifth respondents as parties to this litigation who sought to advance a separate interest in the case.

13. It seemed to me that the real reason for the consent orders for the joinder of the fourth and fifth respondents was tenuous, at best.  It is equally plain that those respondents themselves sought their joinder.  They then participated in this litigation until it became unmistakable that they were not proper parties. 

14. Against that background, they sought their costs.

15. They failed to adduce any evidence in support of their own costs application.  At its highest, the second and third respondents filed submissions in support of the costs application of the fourth and fifth respondents.  No evidence on behalf of the fourth and fifth respondents was adduced.

16. In order for a costs order to be made that deviates from an order under s 117(1), the circumstances of one of the subsections of s 117(2A) of the Family Law Act must be enlivened. Power exists under s 117(2) to make a costs order other than one under s 117(1) but only if one of the circumstances under s 117(2A) exists (Fitzgerald v Fish[1]) and the making of such an order is just.

    [1] (2005) 33 Fam LR 123.

17. In my view none of the elements of s 117(2A) of the Family Law Act apply.  Further, the making of a costs order under s 117(2) is not just.  In my view the fourth and fifth respondents were never properly more than witnesses of fact.  They had no separate interest to advance.  The first respondent was the proper party to advance arguments as trustee of the trust.  The order for the removal as the fourth and fifth respondents as parties was appropriate.  But it is another matter altogether to say that the applicant should pay the costs of the fourth and fifth respondents.  In my view it is appropriate to dismiss the application for costs brought by the fourth and fifth respondents.  I wholeheartedly agree with the contentions of the applicant where she submitted as follows –

    There is no reason why the applicant wife should be the subject of an adverse costs order in circumstances in which she did not seek their joinder, raised no claim and sought no orders affecting their interests, and brought the lack of utility in their ongoing participation to the Court’s attention.

18. I dismiss the application for costs made by the fourth and fifth respondents.  Their costs must be borne by themselves.

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 3 May 2021.

Associate: 

Date:  3 May 2021