Odelli v Gabrielle (No 2)

[2024] NSWSC 768

Supreme Court

New South Wales

Medium Neutral Citation:

Odelli v Gabrielle (No 2) [2024] NSWSC 768

Hearing dates:

19 June 2024

Date of orders:

21 June 2024

Decision date:

21 June 2024

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

[15]

Catchwords:

COSTS — party/party — costs follow the event — multiple claims — plaintiff claims orders appointing trustee for sale of co-owned property — defendant cross-claims for declaration that plaintiff held her portion of property on trust for him — cross-claim rejected – property sold by mortgagee and appointment of trustee rendered unnecessary — costs of cross-claim to be paid by unsuccessful defendant – costs of plaintiff’s claim to be borne by the parties — whether common costs to follow the claim or the cross-claim

Legislation Cited:

Conveyancing Act 1919 (NSW)

Uniform Civil Procedure Rules 2005 (NSW)

Cases Cited:

Kardos v Sarbutt(No. 2) [2006] NSWCA 206

Medway Oil & Storage Co Ltd v Continental Contractors Ltd [1929] AC 88

Odelli v Gabrielle [2024] NSWSC 468

Smith v Madden (1946) 73 CLR 129

Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd(No 2) [2021] NSWSC 336

Spathis v Nanos (No 2) [2008] NSWSC 470

Texts Cited:

Nil

Category:

Procedural rulings

Parties:

Edda Odelli (Plaintiff/Cross-Defendant)
Chakib Carlo Gabrielle (Defendant/Cross-Claimant)

Representation:

Counsel:
N Kulkarni (Plaintiff/Cross-Defendant)
S Baron Levi (Defendant/Cross-Claimant)

Solicitors:
Lane & O’Rourke (Plaintiff/Cross-Defendant)
Avon Lawyers (Defendant/Cross-Claimant)

File Number(s):

2023/43730

Publication restriction:

Nil

JUDGMENT

1. Following a trial in February this year, I delivered judgment in this matter in April: Odelli v Gabrielle [2024] NSWSC 468 (“J1”). The present judgment concerns the costs of the proceedings.

2. The background to the proceedings is summarised at J1 [1]-[6]. The procedural history and the claims that were to be determined are identified at J1 [7]-[20]. For the purposes of the costs argument, the relevant background may be summarised as follows.

3. The plaintiff, Mrs Odelli, and the defendant, Mr Gabrielle (“Carlo”), were the registered proprietors, as tenants in common in equal shares, of a residential property at Belmore in south-western Sydney. The proceedings began when a summons was filed on behalf of Mrs Odelli seeking orders for the appointment of a trustee for sale of the property pursuant to s 66G of the Conveyancing Act 1919. Carlo later cross-claimed for a declaration that Mrs Odelli held her share in the property as trustee for him.

4. In my April judgment, I found that Carlo’s cross-claim failed, and I ordered that it be dismissed. The property was subject to a mortgage from the National Australia Bank which, by the time the trial took place, was in default. At that stage, however, the Bank had not been proposing to take any action to sell the property (J1 [20]). It had therefore been common ground that, as a result of my decision to dismiss the cross-claim, Mrs Odelli was entitled to orders under s 66G (J1 [122]).

5. But I did not proceed in my April judgment to make orders appointing a trustee immediately. This was because counsel for Carlo, in the course of final argument, had foreshadowed a possible application for adjustments between the parties on account of contributions to the property and payment of expenses. I considered that the s 66G orders should, if possible, make provision for these claims to be quantified if they were pressed (J1 [126]-[128]).

6. I therefore adjourned the s 66G proceedings to give counsel for Carlo an opportunity to formulate any claims for adjustments. I also reserved all questions of costs until the proceedings as a whole had come to an end.

7. When the proceedings returned to Court on 10 May, I was informed by counsel for Mrs Odelli that the Bank had moved to exercise its power of sale. Orders under s 66G were therefore unnecessary and counsel invited me to dismiss the summons. Carlo’s legal representative, however, had not reached any final conclusion about whether they wished to pursue any claim for adjustments or contributions. I adjourned the proceedings to allow that to happen.

8. When the matter finally came back before me on 18 June, counsel for Carlo informed me that no such claim was to be pursued in these proceedings. It was therefore agreed that Mrs Odelli’s claim for s 66G orders should be dismissed. This left costs as the only outstanding issue.

Costs

9. Several points were agreed between the parties:

1. The starting point was that, as a general rule, costs follow the event (r 42.1 Uniform Civil Procedure Rules 2005).

2. For this purpose, Mrs Odelli’s claim and Carlo’s cross-claim had to be considered separately.

3. As to Mrs Odelli’s claim, there was to be no order for the sale of the property by a trustee, and therefore there was no room for the application of the usual rule that the costs of both parties be paid out of the proceeds of sale (see Kardos v Sarbutt (No. 2) [2006] NSWCA 206 at [28]). Nor was there any argument that, by reason of the conduct of one or other of the parties, there should be some departure from that general rule (cf Spathis v Nanos (No 2) [2008] NSWSC 470). Therefore, each party should bear his or her own costs of the claim.

4. Carlo’s cross-claim had failed. Therefore, he should pay Mrs Odelli’s costs of the cross-claim proceedings.

10. The only question in dispute was how the costs which were common to both claims (see Smith v Madden (1946) 73 CLR 129 at 132-137) were to be allocated. Counsel for Mrs Odelli contended that common costs should follow the cross-claim, leaving only costs solely referable to her s 66G claim to be borne by the parties. Counsel for Carlo contended for the contrary position, namely that the common costs should follow the s 66G claim, leaving Carlo to pay only Mrs Odelli’s costs solely referable to the cross-claim.

11. In support of his contention, counsel for Carlo referred me to the decision of the House of Lords in Medway Oil & Storage Co Ltd v Continental Contractors Ltd [1929] AC 88. I summarised the facts and the decision in Southern Oil Refining Pty Ltd v Hydrodec Australia Pty Ltd (No 2) [2021] NSWSC 336 at [30]-[33] and will not repeat them. The case concerned proceedings which involved a claim and a cross-claim. Both the claim and the cross-claim failed, and both were dismissed with costs. The House held that the effect of those orders was that the common costs followed the claim, leaving the successful defendant to pay only the costs referable solely to the cross-claim.

12. Counsel submitted that the outcome in Medway Oil reflected the “general rule”, which should be applied in the present case. The question in Medway Oil was one of interpreting the costs order which had been made at first instance. The House made it clear (see at 95, 98) that it would have been open to the trial judge, as a matter of discretion, to make an order apportioning the common costs between the claim and the cross-claim (or, presumably, to allocate all of them to the cross-claim).

13. When I put this view to counsel, he accepted that I could, as a matter of discretion, allocate the common costs to the claim or to the cross-claim. But he maintained that, in the ordinary course, they should be allocated to the claim. I do not find it necessary to determine whether there is any such “general” or “ordinary” rule. Apart from the trust claims made in Carlo’s cross-claim, there was no real defence to Mrs Odelli’s s 66G claim. If those trust claims had not been raised, the proceedings would have been resolved in a matter of weeks.

14. For practical purposes, the cross-claim was the principal claim. Counsel for Carlo did submit that a substantial amount of the evidence at the trial concerned accounting matters relevant to allowances which might be made in the event of a s 66G claim succeeding. But I do not find this submission persuasive. As already noted, no claim for allowances had actually been made by either party prior to the trial. And any such claim was always likely to be dealt with by way of some sort of later accounting procedure rather than at the trial. It may be that some of the costs of preparing the affidavits should be treated as solely referable to the s 66G claim, but this is a matter for the costs assessor. It does not, in my view, affect the conclusion that the common costs, as a matter of principle, should follow the cross-claim.

Orders

15. For these reasons, the orders of the Court are:

1. Order that the plaintiff’s claim be dismissed.

2. Order that the defendant pay the plaintiff’s costs of the proceedings, except costs solely referable to the plaintiff’s claim.

3. No order as to the costs of the parties solely referable to the plaintiff’s claim.

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Decision last updated: 21 June 2024