Pacific Blue Australia Pty Ltd v Somalis - [2008] NSWSC 75

CITATION: Pacific Blue Australia Pty Ltd v Somalis [2008] NSWSC 75

HEARING DATE(S): 8 February 2008

JUDGMENT DATE :
8 February 2008

JURISDICTION: Equity Division

JUDGMENT OF: Palmer J

EX TEMPORE JUDGMENT DATE: 8 February 2008

DECISION: Defendant to pay Plaintiff’s costs on indemnity basis.

CATCHWORDS: INDEMNITY COSTS – CAVEAT – Caveat incurably bad in form – settlement of contracts imminent – caveator offers to withdraw caveat when proceedings threatened – order for removal made – whether costs reasonably incurred – whether costs should be ordered on indemnity basis.

CATEGORY: Consequential orders

CASES CITED: - Downie v Kenny & Kenny Pty Ltd, unrep., 16 September 1985; BC8500545
- Pacific Blue Australia Pty Ltd v Somalis [2008] NSWSC 16

PARTIES: Pacific Blue Australia Pty Ltd (Plaintiff)
John Somalis (Defendant)

FILE NUMBER(S): SC 1192/08

COUNSEL: D. Macfarlane (Plaintiff)
T. Hall (Sol) (Defendant)

SOLICITORS: John Edmunds Solicitor (Plaintiff)
Hall Partners Pty Ltd (Defendant)

1192/08 Pacific Blue Australia Pty Ltd v Somalis

JUDGMENT – Ex tempore
8 February, 2008

1 On 22 January 2008 Campbell JA, sitting as Vacation Duty Judge, made an order for the removal of certain caveats which had been lodged by the Defendant against the Plaintiff's land: see Pacific Blue Australia Pty Ltd v Somalis [2008] NSWSC 16. His Honour reserved the question of costs. The question of costs has now come before me in the Duty Judge List in circumstances which I need not recount. It is sufficient to say that both parties have now agreed that it is appropriate that I deal with the matter and, as there is no other pressing matter in the Duty Judge's List, I will do so in order to avoid the parties incurring any further unnecessary expense. The circumstances giving rise to the question may be narrated very shortly.

2 The Defendant lodged certain caveats against the Plaintiff's land on about 11 January 2008. The caveats showed that the address for service of notices on the caveator was the address of the Defendant's present solicitor. I assume from that circumstance and from the manner of drafting of the caveat forms that the caveats were indeed prepared by the Defendant's solicitor.

3 The Plaintiff protested that the caveats disclosed no caveatable interest. There having been no undertaking to withdraw the caveats prior to 22 January 2008, the Plaintiff approached the Duty Judge for orders seeking the removal of the caveats. However, there had been correspondence between the parties' solicitors prior to that time. That correspondence, however, had produced no unequivocal undertaking on the part of the Defendant to remove the caveats.

4 On 22 January, the Defendant's solicitor sent to the Plaintiff's solicitor an e-mail at about 9.20am which gave an unequivocal assurance that the caveats would be removed that day and that the Defendant would commence the appropriate proceedings to enforce his claim. That e-mail was followed by a further e-mail at 9.58am repeating the assurance.

5 Those circumstances were drawn to the attention of his Honour when the Plaintiff approached…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2008] NSWSC 75
Decision Date: 8 February 2008

CaseChat Overview and Summary

The case of Pacific Blue Australia Pty Ltd v Somalis involved the property owners, Pacific Blue Australia Pty Ltd, and the caveator, Somalis. The dispute arose when Somalis lodged a caveat against the property in question, which Pacific Blue sought to remove. The matter was heard in the Supreme Court of New South Wales. The primary issue before the court was whether the costs incurred by Pacific Blue in removing the caveat should be awarded on an indemnity basis, given that Somalis had offered to withdraw the caveat when proceedings were threatened.

The court considered the circumstances surrounding the lodging and withdrawal of the caveat. It noted that the caveat was incurably bad in form and that Somalis' offer to withdraw came only when legal proceedings were initiated. The court found that the circumstances justified awarding indemnity costs, as Somalis' actions were unreasonable and had caused unnecessary expense to Pacific Blue. The court reasoned that Somalis' delay in withdrawing the caveat, coupled with the imminent settlement of contracts, warranted such an order.

In light of the findings, the court ordered that the costs incurred by Pacific Blue in removing the caveat be paid on an indemnity basis by Somalis. The court emphasised the importance of the form and timing of caveats, highlighting the need for property owners to be able to rely on the certainty of their property interests. This decision reinforces the principle that parties must act reasonably in their dealings and that unreasonable conduct may result in indemnity costs.

Orders