Smith & Dinci

[2011] FamCA 466

FAMILY COURT OF AUSTRALIA

SMITH & DINCI AND ORS [2011] FamCA 466

FAMILY LAW – PROPERTY SETTLEMENT – Caveats – Where the husband has previously lodged unmeritorious caveats – Where all previously lodged caveats have been ordered to be removed – Whether the husband should be restrained from lodging further caveats over the wife’s property or over property in which her companies hold an interest.

FAMILY LAW – COSTS – Where the husband has lodged caveats without cause over every property owned by the wife either personally or through a business interest – Wife seeks costs on an indemnity basis – Husband to pay the wife’s costs on a party-party basis – Costs payable by the husband to be deferred until property settlement proceedings have been finalised.

FAMILY LAW – COSTS – Where two companies in which in the wife had business interests were joined as second and third respondents – Where caveats were lodged by the husband over property of the companies without cause – Companies seek the husband pay their costs on an indemnity basis – Where the companies’ solicitors have filed large amount of material of marginal relevance – Husband to pay the companies costs – Costs of the second respondent company fixed at $5,000 – Costs of the third respondent company fixed at $5,000 – Costs payable by the husband within 60 days of these orders.

APPLICANT: Ms Smith

RESPONDENT: Mr Dinci

SECOND RESPONDENT: D Pty Ltd

THIRD RESPONDENT: B Pty Ltd

FILE NUMBER: BRC 10762 of 2008

DATE DELIVERED: 15 June 2011

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Barry J

HEARING DATE: 15 June 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms McMillan of Senior Counsel appearing for the Applicant Wife

SOLICITORS FOR THE APPLICANT: Murdochs Lawyers

SOLICITOR FOR THE RESPONDENT: Mr Yianoulatos, solicitor of James Harris Lawyers appearing by telephone for the Respondent Husband

SOLICITOR FOR THE SECOND AND

THIRD RESPONDENTS:

Mr Jenkinson, solicitor of Warlow Scott Lawyers appearing for the Second and Third Respondents

No orders to issue today.  -Orders to issue from Chambers on 16 June 2011.

IT IS NOTED that publication of this judgment under the pseudonym Smith and Dinci and Ors is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 10762 of 2008

Ms Smith

Applicant

And

Mr Dinci

Respondent

And

D Pty Ltd
Second Respondent

And

B Pty Ltd

Third Respondent

REASONS FOR JUDGMENT

EX TEMPORAE

1.I delivered reasons for judgment this morning in which I made it clear that the court would be ordering the removal of caveats lodged over the various parcels of land, the subject of these proceedings.  As I set out in those reasons, a number of issues still remain to be resolved, including:

·who should bear the costs of removal of the caveats;

• whether there should be any further restraint on the husband from lodging further caveats; and

  ·costs of the parties in litigating this matter.

  2.There were three applications filed, all in somewhat similar terms.  The first application was filed on 7 June 2011 by the wife’s solicitors seeking the removal of the caveats specified in that application and various consequential orders.  On 8 June 2011, two further applications, one on behalf of D Pty Ltd and the other on behalf of B Pty Ltd were filed seeking the removal of caveats in which those companies were registered proprietors, either in whole or in part.

  3.An additional issue which arose in the hearing before me earlier this week was the form of undertakings to be provided.  In the reasons for judgment, I proposed that the wife provide an undertaking in terms of paragraph 43.  She has now done that and I have marked that as an exhibit in these proceedings and that undertaking will remain on the court file.  A handwritten document has been prepared by Senior Counsel for the wife, for the husband to sign.  I have read that undertaking into the record.  It has now been marked as exhibit 3 in these proceedings.  It is an undertaking by the husband not to disseminate in any manner any commercially sensitive information which may come into his possession as a result of the undertaking by the wife to provide costs and the details of sale and how she intends to disburse the proceeds.  The issue of the undertakings has been resolved.

  4.Draft orders have been produced which mirror the orders sought in the three applications to which I have made reference.  Paragraphs 1 to 4 of the draft orders are no longer of any relevance.  There will be a new paragraph 1, requiring the husband to file an undertaking in terms of exhibit 3 within seven days, and in the event of his failing to provide an undertaking, then an order will issue automatically at that time specifying the husband is not to disclose any information which is commercially sensitive that may come into his possession as a result of the wife’s undertaking.  The next order will be in terms of paragraph 5 of the draft orders produced to the court.  The critical words in that draft order are that the respondent remove the caveats at his expense within seven days.

  5.For the husband, it was argued that he was entitled to lodge the caveats as the wife was about to sell a third property out of the property pool.  I do not accept that that is an accurate submission as the first property involved a property in a subdivision at Town R, and that was a normal commercial transaction completing a subdivisional exercise.  It is accepted she has had two properties in her name, one at Property E which has been sold and the other at Property W was under contract.  Unless the husband or his solicitors had made some inquiry, even the most perfunctory of inquiries, of the wife’s solicitors enquiring why the property was being sold and how the proceeds were to be disbursed, then I do not accept it was reasonable to simply lodge the caveats en masse, particularly so where two of the properties involved large-scale subdivisions which were no where near completion.  They were obviously commercial developments involving third parties.  The most basic of inquiries would have revealed that, if it was not already known.

  6.The second submission made was that it is common practice for the husband’s solicitors to lodge caveats in this fashion.  I do not accept it is common practice in this jurisdiction in any state of this country for this to be done.  Lodging caveats en masse smacks of an “in terrorem” tactic to create maximum inconvenience to the other party.  Civilised procedure requires the making of appropriate inquiry along the lines that I have indicated.  That should have been done.  If the appropriate inquiry does not elicit a satisfactory response, then there are various other measures to follow up, ultimately, approaching the Court to seek an injunction or directions for the disclosure of relevant information.

  7.The third submission relates to the husband’s solicitor’s letter of 1 June 2011.  Reference is made to that in paragraph 16 of the reasons I published this morning.  I accept the submissions by Senior Counsel for the wife that the undertakings sought in that letter bear no resemblance to the undertakings that were argued about in proceedings before me.  The penultimate paragraph of that letter says:

  Our instructions are that unless an undertaking is made that the net sale proceeds are retained in your solicitor’s trust account until the matter is finalised, by mutual agreement or otherwise, our client has reasonable cause to refuse to release the caveat.

  8.The only undertaking that is now sought is that there be disclosure of an intention to sell and disclosure of how the proceeds are to be disbursed - a materially different outcome.

  9.In the course of his submissions, the legal representative for the husband proposed a compromise on the issue as to who should bear the costs of removing the caveats.  He proposed that his firm would prepare the documentation and the wife’s legal representatives would lodge the caveats and, presumably, pay the Titles Office fees.  I do not accept that that is a satisfactory outcome.

  10.I do not accept the submissions made on behalf of the husband generally, fulsome though they were.

  11.I will order the husband to be responsible for all costs in removing the caveats within seven days.  If that is not done, there is to be Registrar’s Clause, and the Registrar’s Clause is in standard form, and that is in paragraph 6 of the draft, which will be renumbered as paragraph 3.  No submissions were addressed as to the terms of that Registrar’s Clause, nor do I believe any submissions could be made.  It’s in virtually standard form.

  12.Paragraph 7 is of interest, in that it provides that in the event that the wife is required, or the second and third respondents are required, to lodge the necessary documents so as to withdraw the caveats listed in orders 2 and 3, then the respondent shall reimburse all lodgement and registration fees to the applicant within seven days of being provided with a receipt for payment of such fees.  I am not entirely happy with that, in the sense that, in effect, he is being ordered to pay all of the costs with no overriding jurisdiction of the Court.  I am perfectly familiar with the wife’s legal representatives, and I do not intend in any way to be in any way critical of the firm, but it is open slather to present the respondent with any lodgement and registration fees.  The registration fees are clearly delineated, but I gather the lodgement fees are legal fees.

  RECORDED  :  NOT TRANSCRIBED

  13.All right.  I will reword that:  that the respondents shall reimburse all Titles Office fees to the applicant within seven days of being provided with the receipt for payment of such fees and shall further pay any legal fees incurred by the applicant’s solicitors as agreed or as may be further ordered by this Court.

  14.Paragraph 8 of the draft orders seeks an injunction against the respondent restraining the lodging of any further caveats.  I do not accept that there is any basis for ordering same.  The premise seemed to be he has done it once, he might do it again.  The wife’s financial circumstances may be in the balance at the present time, but after this costly and bruising encounter, I would be staggered if the husband instructed his current solicitors or any further solicitors to lodge caveats on any interest in the land without at least making appropriate inquiry and allowing room for discussion between the parties.  As I have stressed, in my experience, the appropriate course always is to seek an explanation for what is happening.  If necessary to seek a consequential undertaking and ultimately if that is not forthcoming, to seek orders from the court requiring disclosure or indeed if necessary an injunction restraining the disposition of property.

  15.The only outstanding issue then is the issue of costs.  The wife seeks payment of her costs on an indemnity basis with payment to be deferred until the issue of property settlement is resolved by agreement or by court determination.

  16.I accept there is some slight merit in the proposition put forward by the husband’s legal representative that when litigants are locked in property settlement dispute which has been ongoing for two and a half years and the wife has property in her own name and has sold one property and is in the course of selling another, if she elects to do that, as a matter of ordinary litigation behaviour, it would have been appropriate to let the husband know.  I understand the situation in relation to the W Property sale the husband did not have any legal representation on the record, I am presuming at the very least she knew how he could be contacted. 

  RECORDED  :  NOT TRANSCRIBED

  17.All right.  All she was required to do was send it to the address for service.

  18.I accept without having to make a determination on the issue that there could have been a greater effort to resolve the caveat issue by both sides without recourse to litigation.  I note, for the most part, it was the husband’s legal representatives who were playing hard ball lodging the caveats and then insisting on fairly stringent terms prior to the litigation actually being in train before softening the stance.

  19.I am familiar with the case law as I have had numerous applications in recent times for indemnity costs, some of which I have granted, some not.  This matter at this stage in relation to these interim proceedings does not fall into the category of special cases, exceptional circumstances, to justify indemnity costs.  However I will order the husband to pay the wife’s party and party costs with payment of such costs to be deferred until the issue of property settlement is resolved by agreement or court determination.

  20.I turn to consider the costs application made by the legal representative of the second and third respondents.

  RECORDED  :  NOT TRANSCRIBED

  21.I have made some comment during the course of submissions on the number of annexures to the two affidavits filed by the second and third respondents’ lawyers.  I certainly made them in relation to the annexures to the wife’s affidavit.  I note that in relation to Mr L’s affidavit similarly there are documents of quite marginal relevance.  For example, a 43 page document prepared by Cranston McEachern which is standard terms document for mortgages.  If reliance is placed on one paragraph of one mortgage, all we need is for that paragraph to be annexed.  It could even be in the body of the affidavit.  We do not require 44 pages of legal bumf.  Similarly the valuation report is of the most marginal relevance.  It does not matter what the financial position is it is the legitimacy of the lodgement of the caveat and that’s what should have been focused on.  I have made my comments.  I do not propose to elaborate any further. 

  22.I note that the total costs sought including outlays are $16,822.  I understand there were further costs foregone, a fairly expensive trip down to the Gold Coast for the execution of an affidavit.  The best outcome is that commercial entities not be back in this court whether for assessment of their costs as against the respondent or otherwise.  It is better that as the Judge I exercise my discretion on the issue of costs and the view that I take, notwithstanding that the individual costs of the second and third respondent may technically be different because of the size of the affidavits and the annexures, it’s better to make an order in global terms.  I will fix the costs for the second respondent at $5000.  I will fix the costs for the third respondent similarly at $5000.  I will give the husband 60 days to pay those amounts.  Orders will issue accordingly. 

  I certify that the preceding twenty-two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry delivered on 10 June 2011.

  Associate:  

  Date:  15 June 2011