Sivritas v Sivritas (No. 2) - [2008] VSC 580

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMERCIAL AND EQUITY DIVISION

No. 7788 of 2006

MUHARREM (“HARRY”) SIVRITAS	Plaintiff
v
ALI SIVRITAS	First Defendant
and
MUZEYYEN SIVRITAS	Second Defendant
and
BULLER MCLEOD PTY (ACN 073 207 137)	Third Defendant

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JUDGE:	Kyrou J
WHERE HELD:	Melbourne
DATE OF HEARING:	27 November 2008; written submissions filed on 5 and 12 December 2008
DATE OF JUDGMENT:	19 December 2008
CASE MAY BE CITED AS:	Sivritas v Sivritas (No 2)
MEDIUM NEUTRAL CITATION:	[2008] VSC 580

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Set-off of a party’s entitlement to costs against another party’s entitlement to the proceeds of sale of a property in which the parties have been held to have equitable interests pursuant to a constructive trust.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff (and Defendant by Counterclaim)	Mr P Cawthorn SC with Mr T Sedal	FLA Partners
For the First and Second Defendants (and Plaintiffs by Counterclaim)	Mr P Barton	Buller McLeod Pty
For the Third Defendant	Mr R H Miller	Buller McLeod Pty

HIS HONOUR:

Introduction and summary

In Sivritas v Sivritas,[1] I made a declaration that the first and second defendants hold the land located at 25 Glencairn Drive, Greenvale and more particularly described in Certificate of Title Volume 9536 Folio 890 (“Land”) on a constructive trust pursuant to which their son, the plaintiff, is a tenant in common with a 73.61 percent equitable interest and the first and second defendants are tenants in common with a 26.39 percent joint equitable interest.
[1][2008] VSC 374.

On 10 October 2008, I ordered that the first and second defendants pay two-thirds of the plaintiff’s costs of the proceeding. On 27 November 2008, I ordered that the Land be sold by auction pursuant to Part IV of the Property Law Act 1958 (Vic) and that, subject to further order, the net proceeds of sale be distributed to the plaintiff and the first and second defendants in accordance with their equitable interests in the Land. The auction is scheduled to take place no later than 28 February 2009.

The plaintiff has applied for an order that his costs of the proceeding be set off against any funds flowing to the first and second defendants from the sale of the Land. The solicitor for the first and second defendants, Buller McLeod Pty, applied to be added as a defendant in order to oppose the plaintiff’s application. It did so because it took a charge from the first and second defendants on 24 October 2006 and registered a caveat on the Land to support that charge. On 27 November 2008, I made an order adding Buller McLeod Pty as the third defendant.

It is common ground between the parties that the first and second defendants’ share of the net proceeds of sale of the Land will be insufficient to pay the fees of Buller McLeod Pty and two-thirds of the plaintiff’s costs. Buller McLeod Pty has estimated that its costs are approximately $120,000–$140,000. The plaintiff’s…

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] VSC 580
Decision Date: 19 December 2008

CaseChat Overview and Summary

The case of Sivritas v Sivritas (No. 2) involved a dispute between the parties regarding the set-off of a party's entitlement to costs against another party's entitlement to the proceeds of sale of a property. The property in question was held to be subject to a constructive trust, with both parties holding equitable interests. The case was heard in the Supreme Court of New South Wales.

The central legal issue before the court was whether the party entitled to costs could set those costs off against the other party's entitlement to the proceeds of sale of the property. The court had to consider whether the equitable interests of the parties in the property were sufficiently distinct to allow for such a set-off. Additionally, the court had to determine the appropriate division of the proceeds of sale between the parties.

The court found that the equitable interests of the parties were distinct enough to permit the set-off of the party's entitlement to costs against the other party's entitlement to the proceeds of sale. The court reasoned that the constructive trust did not preclude the set-off, as the interests of the parties were separate and could be quantified independently. The court further held that the proceeds of sale should be divided between the parties in proportion to their respective equitable interests. The court ordered that the party's entitlement to costs be set off against the other party's entitlement to the proceeds of sale, with the remaining proceeds to be divided in accordance with the court's determination of the parties' equitable interests.

Orders