Spathis v Nanos (No 2)
[2008] NSWSC 470
•13 May 2008
CITATION: Spathis v Nanos (No 2) [2008] NSWSC 470 HEARING DATE(S): 13 May 2008 JURISDICTION: Equity JUDGMENT OF: Jagot AJ EX TEMPORE JUDGMENT DATE: 13 May 2008 CATCHWORDS: COSTS - s 66G application - whether circumstances displaced usual approach to costs of both parties out of proceeds of sale - plaintiff sought order that defendant pay plaintiff's costs on indemnity or party-party basis - order made for plaintiff's costs only to be paid out of the proceeds of sale LEGISLATION CITED: Conveyancing Act 1919 CASES CITED: Kardos v Sarbutt (No 2) [2006] NSWCA 2006
Mckay v Mckay (Costs) [2008] NSWSC 256
Vollmer v Hauber Davidson (2007) DFC 95-400PARTIES: PLAINTIFF
DEFENDANT
Gerasimos Spathis
Amalia Nanos
FILE NUMBER(S): SC 4498 of 2007 COUNSEL: Mr I E Davidson - plaintiff
Mr S W Climpson - defendantSOLICITORS: JSM Lawyers - plaintiff
James Lawyers - defendant
IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
Jagot AJ
13 May 2008
4498 of 2007 GERASIMOS SPATHIS v AMALIA NANOS
JUDGMENT
1 HER HONOUR: This is an issue of costs arising from the making of orders under s 66G of the Conveyancing Act 1919. In the summons as originally filed by the plaintiff, the plaintiff sought an order that the plaintiff’s, but explicitly not the defendant’s costs, be paid out of the proceeds of sale.
2 There is no disagreement between the parties with respect to principle. They have taken me to the decision of Kardos v Sarbutt (No 2) [2006] NSWCA 206, in particular, [28] to [31]. In [28] the Court observed that in proceedings under the Conveyancing Act, s 66G, costs were usually paid out of the proceeds of sale, the rationale being that the costs of such an application are incidental to ownership. And in [31] the Court observed that the substantial success of proceedings was “not to be judged merely by the circumstance that a plaintiff obtains an adjustment in his or her favour. It involves an evaluation of the outcome, in the light of the forensic and negotiating positions of the parties, such that it can be said that one party has been clearly more successful than the other…”.
3 To similar effect in Mckay v Mckay (Costs) [2008] NSWSC 256 at [7], Brereton J observed that in “straightforward s 66G applications, the prima facie rule is that the costs come out of the proceeds of sale, although that is not necessarily so where the matter is contested and issues of equitable entitlement fall to be decided.” In that matter his Honour drew an analogy between s 66G and partnership arrangements. To similar effect is the observation in Vollmer v Hauber Davidson (2007) DFC 95-400, specifically at [21] through to [23].
4 The plaintiff submits that there should be an order for costs in these proceedings, either on an indemnity basis or on the usual order as to costs basis or, at least, the original costs order sought in paragraph 4(f) of the summons. The plaintiff says this was a fully contested hearing where the defendant strenuously opposed the making of any orders at all under s 66G, in effect thereby strenuously opposing the possibility of any person purchasing the plaintiff’s share, other than the defendant herself. Further, the various offers and counter-offers and the history of the matter, in addition to the very serious allegations that the defendant made against the plaintiff’s wife about a “dummy bid”, all supported the indemnity order or the usual order as to costs or, at least, a departure from the position that both parties’ costs should be paid out of the proceeds of sale.
5 For the defendant’s part the submission is that there should be the usual order in s 66G proceedings that the costs of both parties should come out of the proceeds of sale, or otherwise that each party should pay their own costs. The defendant relies on four matters to support this position.
6 First, the nature of the jurisdiction under s 66G. That is: - (i) it is not an ordinary money claim, (ii) costs are usually regarded as an incident of joint ownership, and (iii) it is necessary where a relationship breaks down, including a joint ownership relationship, for parties to come to court in order to resolve their dispute one way or another.
7 Secondly, the inability in this case for the Court really to determine who has been successful and who has not, because the various offers and counter-offers arise in a context where we do not know the final sale price.
8 Thirdly, the reasonableness of the defendant’s offers and suggested undertakings.
9 Fourthly, the fact that the defendant did not hear the plaintiff’s substantive response to the offer contained in the 31 October 2007 letter about the form of any orders that should be made under s 66G until, effectively, the hearing itself.
10 I accept what the defendant has said in relation to the issue of offers and counter-offers and think that I can give those matters limited weight in terms of the amounts actually contained therein, but nevertheless, the course of the correspondence is relevant to the resolution of this question of costs.
11 It is true that the defendant made various offers and suggested undertakings relating to independent valuations, at least from 31 October 2007 onwards, although, of course, there was a long history of the matter well before that date.
12 With respect to the issue or suggestion that the defendant somehow did not know the plaintiff’s position about alternative orders, it seems to me that on a fair reading of the material the defendant could not have been in any doubt about the plaintiff’s position, including that the plaintiff had no objection at any time to the defendant making a bid for the property if it were sold at auction by trustees.
13 The fact is in this matter the defendant did strenuously oppose any orders being made at all under s 66G on grounds which, in my reasons, I found not to be cogent or persuasive. The defendant did make a serious allegation against the plaintiff’s wife, thereby necessitating some cross-examination of the defendant when, if the facts were viewed reasonably and as a whole, that allegation really had only the most tenuous connection with what could reasonably have been perceived as any real issue in the case, and that does suggest some element of unreasonableness in the defendant’s conduct.
14 As I said, I accept that I do not know whether ultimately the plaintiff will obtain more money from the sale than any of the various valuations, but the inescapable reality is that the plaintiff needed his interest in the property to be sold and the defendant opposed any steps that, in effect, would authorise a sale, other than to the defendant herself. This opposition is the real genesis of the proceedings. In that sense it was not a mere chance event that the plaintiff was the plaintiff and the defendant the defendant. The defendant’s steadfast refusal to contemplate a sale other than to herself was the cause of the proceedings. Even the alternative orders under s 66G presented as a third alternative in the defendant’s letter of 31 October 2007, when properly analysed, was another method of ultimately securing a sale to herself.
15 In these circumstances it does seem to me there should be some variation of the usual position in s 66G cases, although I am not satisfied that there is any basis for the suggestion that there should be either an order for costs against the defendant on an indemnity basis or indeed the usual order as to costs.
16 Instead, I think that the original summons, paragraph 4(f), as filed by the plaintiff, providing for the payment of the plaintiff’s costs out of the proceeds of sale, but otherwise leaving the defendant’s costs to the defendant, is a fair and reasonable reflection of the matters to which I have already referred. Accordingly, the order I propose to make is to vary the order I have already made by adding in to order (5) in paragraph 30, an order in terms as set out in paragraph 4(f) of the summons, namely, “(f) In payment of the costs in these proceedings of the plaintiff”. The previous paragraph (5)(f) is amended to become (5)(g). I make those orders.
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