Nick Houvardas v George Zaravinos

[2003] NSWSC 1028

CITATION:	Nick Houvardas v George Zaravinos and Anor [2003] NSWSC 1028
HEARING DATE(S):	5 November 2003
JUDGMENT DATE:	11 November 2003
JURISDICTION:	Equity Division
JUDGMENT OF:	Bergin J
DECISION:	See par [15].
CATCHWORDS:	[COSTS] - No matter of principle
LEGISLATION CITED:	Conveyancing Act 1919 (NSW)
PARTIES :	Nick Houvardas (Plaintiff) George Zaravinos (First Defendant) Ourania Zaravinos (Second Defendant)
FILE NUMBER(S):	SC 4177/99
COUNSEL:	R. McCrudden and F. Stevens (Plaintiff) M.R. Aldridge SC (Second Defendant)
SOLICITORS:	Mercuri & Co (Plaintiff) Horowitz & Bilinsky (Second Defendant) Ms S Nash on 4 and 5 November 2003 for the Official Trustee in Bankruptcy

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BERGIN J

11 November 2003

4177/99 NICK HOUVARDAS v GEORGE ZARAVINOS & ANOR

JUDGMENT

1 This is an application for costs consequent upon my judgment of 21 October 2003 and orders made on 5 November 2003. The plaintiff seeks an order that the defendants pay the plaintiff’s costs of the proceedings on an indemnity basis. It is submitted that the defendants pursued a course of conduct which had no hope of succeeding on the facts and that the second defendant engaged in a dogged resistance to the claims of the plaintiff by continually claiming that this Court lacked jurisdiction because of the matters decided in other jurisdictions.

2 The first defendant took no part in the proceedings as a party but gave evidence in the second defendant’s case. The first defendant, as recorded in my judgment of 21 October 2003, is a bankrupt. The Official Trustee took no part in the proceedings until 4 and 5 November 2003 when argument occurred in relation to the entry of final orders.

3 As the pleadings were originally constituted the plaintiff sought damages but did not persist with that claim, contenting himself with the application pursuant to s 37A of the Conveyancing Act 1919 (NSW) in which he was successful. The pleading also referred to allegations that the defendants’ divorce was a “sham”, a case not seriously propounded at the trial.

4 The second defendant submitted that any order against her should be on a party/party basis up to 16 October 2002, excluding costs incurred in preparation of the defence to the claims of “sham” divorce and damages. It was submitted that the plaintiff should pay the second defendant’s costs of those matters and her costs from 16 October 2002.

5 On 16 October 2002 the second defendant made an open offer in the following terms:

Without admissions and without prejudice to any of the defences Mrs Zaravinos is running in these proceedings, she is prepared to consent to an order that she repay to Mr Houvardas $53,000 plus interest from the time demand was first made upon her until the time of Mr George Zaravinos’ bankruptcy together with costs on a one counsel basis, excluding costs that have been ordered to be paid by the plaintiffs or have been reserved, and subject to that order being stayed for an appropriate time to enable her to sell a property to comply with it.

(Ex 10)

6 As recorded in my judgment of 17 October 2002 the plaintiff attempted to accept that offer but at the same time continue his proceedings against the first defendant. I took the view that the offer that was made was not an offer that accommodated such an approach and that it was intended to settle the whole of the proceedings. Accordingly, the trial proceeded.

7 Mr Aldridge SC for the second defendant submitted that the plaintiff in this case was suing as a creditor prejudiced by the alienations and that all that was ultimately sought and achieved in these proceedings was the order pursuant to s 37A whereby the first defendant’s interest in the three properties became available against which the plaintiff may prove the District Court judgment debt, interest and costs in the bankruptcy. It was submitted that the offer made by the second defendant, if accepted, would have removed the plaintiff’s prejudice caused by the alienations in that he would have been paid the outstanding monies in full.

8 The plaintiff submitted that it was not unreasonable for him not to accept the offer because it was an offer that was not a payment in full of the amounts for which he was a creditor. It was submitted that those amounts included not only the judgment debt and interest but also an amount for the indemnity costs as ordered by Cooper DCJ. In those circumstances it is submitted that it was quite reasonable for the plaintiff to pursue the action notwithstanding the offer of settlement.

9 I am satisfied that the submission made by the plaintiff is correct and that it was not unreasonable for him to proceed with the action. I am also satisfied that the second defendant’s claims were false claims and that she must have known that there was no proper basis in making the claims that she did in respect of her lack of knowledge of the first defendant’s intention at the time of the transfer of the properties and the Consent Orders filed in the Local Court in January 1998.

10 Apart from this defence, which failed, the second defendant raised the further defences that I have referred to in paragraphs 85 to 129 of my judgment of 21 October 2003 under the headings Bankruptcy Act, Res Judicata/Anshun and Inconsistent Orders. The latter two of those defences are in my view intrinsically linked to the claims, that I found to be false, that the second defendant had no notice of the first defendant’s fraudulent intention in respect of the alienations. In those circumstances, I am satisfied that the award of indemnity costs should be made in respect of the plaintiff’s costs in meeting those defences.

11 The defence under the heading Bankruptcy Act is, in my view, in a different category. It is not linked to the false claims in the same way as the other defences. It was a matter of importance and in my view required determination after s 78B Notices issued. The plaintiff’s costs of meeting this defence should therefore be paid on a party/party basis.

12 In the circumstances of the plaintiff’s virtual abandonment of these aspects of the case, the second defendant’s costs of preparation to defend that part of the case relating to sham divorce and damages should be paid by the plaintiff.

13 Although the first defendant did not appear as a party, his evidence in the second defendant’s case supported the false claims made by the second defendant. The first defendant, in my view, knew those claims and the claims he made in his evidence were false. The plaintiff’s application for costs against the first defendant appears to be prevented by the leave granted by Gyles J on 28 August 2001. It was:

Leave is restricted to the proceeding for recovery of property as identified in the Proceeding and is not to include any claims for damages or other monetary relief against the bankrupt, George Zaravinos.

14 The term “other monetary relief” may include costs being awarded to the plaintiff. But for that restriction I am minded to make an order for costs in the same terms as that to be made against the second defendant but subject such order to leave being obtained from Gyles J or a Judge of the Federal Court.

15 The orders are:

(1) The second defendant is to pay the plaintiff’s costs of the proceedings on an indemnity basis except for:
(a) the plaintiff’s costs of preparation of the claims of sham divorce and damages; and

(b) the plaintiff’s costs of meeting the Bankruptcy Act defence;

(2) The second defendant is to pay the plaintiff’s costs of meeting the Bankruptcy Act defence on a party/party basis;
(3) Subject to leave being obtained from Gyles J or a Judge of the Federal Court the first defendant is to pay the plaintiff’s costs of the proceedings brought against the first defendant on an indemnity basis;

(4) The plaintiff is to pay the second defendant’s costs of meeting the

claims of “sham” divorce and damages.

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Last Modified: 11/11/2003