Vasilias and Vasilias (Costs)(No. 2)

[2008] FamCA 422

FAMILY COURT OF AUSTRALIA

VASILIAS & VASILIAS (COSTS) (NO. 2) [2008] FamCA 422

FAMILY LAW – COSTS

Family Law Act 1975 (Cth)
Transfer of Land Act 1958 (Vic)

Dharmalingham v Registrar of Titles [2005] VSC 415
J and H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546
Knight v FP Special Assets Limited (1992) 174 CLR 178
McAlpin & McAlpin (1993) 16 Fam LR 888

APPLICANT: MRS VASILIAS

RESPONDENT: MR VASILIAS

RESPONDENT PATERNAL

GRANDPARENTS

MR AND MRS VASILIAS (SNR)

THIRD RESPONDENT: MR RW

FILE NUMBER: MLF 3158 of 2005

DATE DELIVERED: 12 JUNE 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: BY WAY OF WRITTEN SUBMISSIONS

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: BY WAY OF WRITTEN SUBMISSIONS

SUBMISSIONS RECEIVED FROM

SOLICITOR FOR THE APPLICANT: HOGG & REID

SOLICITOR FOR THE RESPONDENT

PATERNAL GRANDPARENTS:

S KOURKOULIS & ASSOCIATES

SOLICITOR FOR THE THIRD RESPONDENT: ROCKMAN & ROCKMAN

Orders

1. That the orders made on 6 June 2008 be discharged.

2. That Mr RW contribute towards the wife’s costs of the proceedings set out in the amended application filed on 28 February 2008 the sum of $400 such sum to be offset against any payment by the wife to Mr RW pursuant to the orders made on 12 March 2008.

3. That the paternal grandparents contribute towards the wife’s costs of the proceedings set out in the amended application filed on 28 February 2008 in the sum of $2354 such sum to be offset against any payment by the wife to the husband’s parents pursuant to the orders made on 12 March 2008.

4. That all outstanding applications be otherwise dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Vasilias & Vasilias (Costs) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3158  of 2005

MRS VASILIAS

Applicant

And

MR VASILIAS

Respondent

And

MR AND MRS VASILIAS (SNR)

Respondent Paternal Grandparents

And

MR RW

Third Respondent

REASONS FOR COSTS JUDGMENT (NO 2)

1. On 6 June 2008, I made orders relating to costs and gave reasons for judgment. 

2. Subsequent to the publication of the reasons, a facsimile letter was received by my associate setting out with understandable concern that the submissions of Mr RW had not been considered.  That was correct.  It appears that Mr RW through his solicitors, filed written submissions on 22 May 2008.  I have been provided with a copy of those written submissions.  They are attached to the facsimile letter to which I have just referred.  The Court’s stamp bears the date 22 May 2008.

3. It is most unfortunate that the submissions were not brought to my attention and to that extent, Mr RW was not provided with natural justice.  I regret that the fault lies with the court.

4. I now propose however to reconsider the whole matter in the light of those submissions.  To assist, I have incorporated some of the paragraphs of my reasons for judgment from 6 June.

5. By written submission, the wife seeks costs against her parents-in-law on the one part and Mr RW on the other part.

6. Each of these persons lodged a caveat against the former matrimonial home.  The costs claim arises out of proceedings brought by the wife to have the caveats removed.

7. On 22 February 2008, the wife filed an application in a case seeking relief in relation to the caveat lodged by the husband’s parents.  Apparently at that time, she was not aware of the caveat of Mr RW.

8. On 28 February 2008, the wife filed an amended application in a case seeking similar relief against Mr RW.

9. Rule 6.01 of the Family Law Rules 2004 says that a party includes a respondent to an application. To that extent, the filing of the application by the wife made the husband’s parents and Mr RW parties to the proceedings notwithstanding the substantive property proceedings between the husband and the wife had been completed.

10. In the submissions on behalf of the husband’s parents to which I shall turn below, no issue was taken about whether or not the parents were appropriately parties to any proceedings. 

11. In respect of an application for costs, s 117(1) of the Family Law Act 1975 (Cth) (“the Act”) provides that subject to sub-s (2), each party to proceedings under the Act shall bear his or her own costs. Sub-section (2) provides that if the Court is of opinion that there are circumstances that justify it in doing so, the Court may, subject to sub-s (2A) make such order as to costs as it considers just. In other words, to depart from the principle that each party pay their own costs, the Court has to be satisfied that there is a circumstance that justifies that.

12. In case there is any argument about whether the husband’s parents and Mr RW are parties to a proceeding under the Act, there is in my view, no longer any doubt that costs orders can be made against persons who are not parties to proceedings.

13. In McAlpin (1993) 16 Fam LR 888 the Full Court referred to a statement by the High Court of Australia in Knight v FP Special Assets Limited (1992) 174 CLR 178. Both the wife and the husband’s parents made reference to the decision of the High Court.

14. In Knight, the High Court said that it was appropriate to recognise a general category of case in which an order for costs should be made against a non-party.  Special mention was made where the non-party had played an active part in the conduct of the litigation or where that person had an interest in the subject of the litigation.  The High Court said that where the circumstances of the case fell within one of those categories, an order for costs could be made against a non-party “if the interests of justice require that it be made”.

15. The reference to the interests of justice is consistent with the clear principle set out in s 117 of the Act.

16. In McAlpin, the Full Court said that the discretion about making an order for costs against a non-party should be exercised sparingly.  Again however as an example, the Full Court referred to the non-party who played an active role in the proceeding and had an interest in the outcome.

17. In my previous reasons, I indicated that I thought that both caveators had not only taken an active role in the proceedings in the sense that they had potentially thwarted the carrying out of the intention of the final orders but they also had a significant interest in getting paid where no application had been made for the redirection of the funds.  That now has to be seen in the light of the submission of Mr RW.

18. As I pointed out in the previous reasons, the law in my view is clear that an order for costs can be made against persons such as the husband’s parents and Mr RW.

19. In this case, I made final orders for property settlement on 31 January 2008. 

20. The husband’s parents lodged a caveat over the former matrimonial home on 14 November 2007 claiming that the husband held the property as trustee pursuant to a constructive trust between the husband and his parents.  It was said that that trust arose out of two loans but particularly one loan that gave rise to the husband acquiring the former matrimonial home prior to the marriage between the husband and the wife. 

21. It was obvious that the monies so provided to the husband had never been pursued by the parents during the relationship between the husband and wife.  It was hard not to be cynical about the suggestion of a desire to reclaim the money after the breakdown of the relationship.

22. Two days after lodging the caveat on 14 November 2007, the husband’s father swore an affidavit which was filed on behalf of the husband for the purposes of the final hearing.  There can be no question therefore that the issue of the caveat was inextricably bound up with the parent’s evidence. 

23. The combination of that affidavit and the subsequent oral evidence by the husband’s father in court showed three particular things.  They were:

    (a)      no caveat was disclosed in the affidavit or the oral evidence;

    (b)no claim for an interest in the property was made in the affidavit or the oral evidence; and

    (c)there was no serious claim for repayment being made as a result of the oral evidence given.

24. The wife did not become aware of the caveat by the parents until four days after the judgment was delivered in January.  In case it might be argued that she should have searched the title, one might equally ask why the husband did not disclose it let alone the parents raise it in the material filed on behalf of the husband. 

25. As a result of the caveat being brought to the wife’s attention, a request was made for its removal.

26. The evidence of the solicitor for the wife showed that in the weeks that followed the discovery of the lodgement of the caveat, attempts were made to negotiate a resolution but they failed.  That precipitated the wife’s application seeking the relief to which I have referred. 

27. I heard from the parties on 26 February 2008 and later on 12 March 2008. 

28. An agreement was reached between the parties that effectively amounted to a garnishment order under which the wife is to pay the parents rather than the husband as I had ordered. 

29. I then turn to the question of the caveat of Mr RW.

30. Mr RW had been a witness for the husband in the property proceedings.  He had filed an affidavit.

31. Mr RW lodged a caveat on 14 February 2008, that is, well after the judgment was released. 

32. To some extent, I am hampered by the fact that I do not have any evidence from Mr RW, he having not filed any documents in response to the application served upon him by the wife.  However, I do intend to presume for the purposes of the exercise of my discretion that the factual statements in the submissions are correct and could if necessary, be supported by affidavit material.

33. The submission of Mr RW is that the application of the wife related to matters “that emanate from actions of the husband”.  He complained that no order for costs was sought against the husband only.  I disagree with that on the basis that whilst the husband may have borrowed or obtained funds from the wife’s parents and Mr RW, it was their actions in lodging caveats that may have thwarted the settlement pursuant to the orders that I made.  Mr RW concluded in the first paragraph of his submission saying that it would be inequitable and unjust for an order for costs to be made against him rather than against the husband.

34. Mr RW justified his position to lodge a caveat on the basis that it was to protect his entitlement to monies due by him by the husband. He pointed out that the Land Titles Office had accepted the registration of the caveat. Nothing turns on that. Section 89 of the Transfer of Land Act 1958(Vic) provides for the caveator to seek to register a caveat based upon a claim to an interest or estate in the land. There is no provision in the Transfer of Land Act at first instance requiring that the interest be established.  From the perspective of the Land Titles Office, registration of the caveat occurs by reference to claimed nature and ground of the interest.  There is nothing of which I am aware in the Transfer of Land Act that imposes upon the Registrar of Titles a duty to check the validity of the caveator’s interest.

35. It must be remembered that the purpose of the caveat is not to give notice to the world or to persons who may consider dealing with the registered proprietor although the notice may have that effect.[1].  The most obvious purpose of the caveat provisions in the Transfer of Land Act are to enable any person claiming an interest in the land to protect that estate or interest pending an entry in the Register recording that interest.[2]

    [1]          See J and H Just (Holdings) Pty Ltd v Bank of New South Wales (1971) 125 CLR 546.

    [2]          Dharmalingham v Registrar of Titles [2005] VSC 415 (21 October 2005) per Hargreave J.

36. Mr RW had been a witness for the husband in the property proceedings.  He had filed an affidavit.

37. Mr RW lodged a caveat on 14 February 2008, that is, well after the judgment was released. 

38. Mr RW claimed to have lent the husband money prior to the commencement of the final hearing but certainly after the proceedings between the husband and wife were well underway. 

39. The husband led no evidence during the hearing about any of this and certainly did not disclose what appeared to be a document creating a personal debt of the husband to Mr RW. 

40. As I have previously said, there could not have been any basis upon which Mr RW could have sustained a claim for an interest in the land. 

41. Importantly in respect of Mr RW, paragraph 6 of the amended application in a case filed by the wife on 28 February 2008 sought as against him that of the monies due to be paid to the husband by the wife, $22,318.10 be paid to Mr RW and that contemporaneously with that payment, Mr RW withdraw his caveat.  Mr RW submitted as follows:

    On 11 March 2008 Raymond Rockman of Rockman and Rockman Solicitor for the Third Respondent spoke to the wife’s solicitor Melissa Cantwell advising her that his client was agreeable to the proposed Orders in paragraph 6 of the Amended Application

42. On the following day, 12 March 2008 at a hearing at which Mr Rockman appeared on behalf of Mr RW, agreement was reached in respect of the garnishment of the funds payable by the wife to the husband and Mr RW consented to an order that he receive $18,500.33.  It is significant therefore that he received less than the sum that the wife had in fact originally sought in the order.  That is significant also because of the statement to which I have just referred in which Mr Rockman has agreed to the order being made.

43. The basis upon which the reduced sum was calculated arose because of the fact that I expressed concern about whether or not there would be sufficient funds after the satisfaction of various matters that I had ordered to be paid in the substantive orders in January.

44. Mr RW in his submission, points to the fact that he had accepted less than his entitlement to allow the payment of monies relating to child support and school fee entitlements. Mr RW said he had compromised his entitlements but in reality, in my view, he faced the fact that that was all of the funds that would have been available. Had he not done so, there would have been a dispute over the caveat and he would not in my view have been successful in respect of upholding the caveat. It must also be remembered that the application by the wife was for me to exercise the power set out in s 90(3) of the Transfer of Land Act and that the wife had obtained confirmation from the Registrar of Titles that she would comply with any order that I had made.

45. The wife’s position in relation to costs was set out in a very comprehensive submission.  It included the history of the proceedings. 

46. The wife submitted in respect of the parents that they had been wholly unsuccessful notwithstanding that on 12 March 2008, orders were made that reflected a pragmatic approach.  That approach should have occurred, according to the wife, in communications prior to the caveat proceedings occurring.  She further submitted that the transactions did not involve her and that the parents could have resolved the matter with their son.

47. In respect of Mr RW, the wife submitted that the transaction did not involve her at all and that Mr RW had no standing whatsoever to lodge a caveat against the property nor had he made any reference to any of the claim in the evidence that he gave on behalf of the husband in the proceedings. 

48. The husband’s parents submitted that the Court had to consider the hardship that would be experienced by them having been brought into the litigation between the husband and the wife.  It was submitted that if there was to be any order for costs favouring the wife, those costs should be met by the husband. 

49. The parents’ submission pointed to the fact that they had had a very limited role in the proceedings and as a result, relying on what was said in Knight’s case, any order against them should be approached with caution. 

50. The parents further submitted that if there was any justification for departing from the principle that each party pays their own costs, then the provisions of s 117(2A) had to be contemplated. According to the submission, the parents are elderly and in receipt of an aged pension having no other source of income. They pointed to the fact that their financial circumstances were unlikely to change and were in fact deteriorating as a result of the financial strain placed on them as a result of not only health but also these particular proceedings. They are apparently not in receipt of legal aid. The wife is not in receipt of legal aid either.

51. The husband’s parents pointed to the fact that the matter had been resolved by a common sense and practical solution on 12 March as between the second and third respondents but that as a result of that, they had accepted a reduced amount so that the children’s school fees could be paid as I had determined under the orders that I delivered in January 2008.

52. Importantly, the following statement appeared in the submission:

    At no time have the Second Respondents refused to remove the caveats.  The removal of caveats has in (sic) been conditional upon payment of the moneys owed.  The wife was not required to run the proceedings to completion with the Court making a finding but rather with the assistance of the Second and Third Respondents a workable compromise was obtained.

53. In this case, the circumstances justify a departure from the principle that the wife should pay her own costs.  The parents adopted a position forcing the wife to go to court.  They pointed to the fact that she did not have to litigate as against them and ultimately there was a compromise as between the second and third respondents.  Ironically however, it was nothing to do with the wife because it was simply a redirection of funds that the wife had to pay to the husband.  The only inference I could draw is that the parents did not accept the judgment.  They were quite content to put the wife to the trouble rather than obtaining the funds as they should have, from the husband.  The best evidence of that is the pragmatic or common sense outcome.  All of that could have been done without the wife having to resort to court.  In so far as it might be said by the parents that the husband would not have paid them, they had remedies that they did not pursue.

54. The issue of Mr RW is different.  In my earlier reasons for making the order for costs, I was critical of the fact that Mr RW lodged his caveat without consulting the wife in circumstances where he knew of the existence of the proceedings.  Importantly, he did not seek the ultimate solution that he obtained by reference to the husband.  There is no evidence before me to suggest why that was so nor what attitude the husband might have adopted to the approach of Mr RW had it been made.  Accordingly, the wife was justified in being concerned about the caveat and having regard to the urgency of the situation, filing the application in its amended form on 28 February 2008.  Against that however is the fact that having received the application, Mr RW was “agreeable” to the proposed orders and in fact consented to an order in a pragmatic settlement on the following day.  In those circumstances, Mr RW has ameliorated the problem that he in fact may have created by lodging the caveat in the first place.

55. In relation to the question of the husband being ordered to pay the costs, having regard to what I have just said about the relationship as between the husband and his parents, I see no reason to involve the husband and place any further responsibility on him.  In so far as there is any fault on the husband’s part, the parents could have taken action as against him.  What they did however was to involve the wife in my view unnecessarily.

56. Before contemplating whether an order should be made however, I am obliged to consider the matters set out in s 117(2A) of the Act.

1. The provisions in sub-s (2A) apply to not only the applicant for the costs but also the persons against whom orders are sought.

2. In respect of the wife, I am satisfied that her financial circumstances are dire.  I was informed that her entitlement to legal aid had ceased.  Her endeavours to resolve the matter had been thwarted and she had incurred further costs.  It was not a pleasant picture.  I understand from the submission that the parents are not in a strong financial position but they do have the benefit of money being paid to them by the wife pursuant to the pragmatic agreement to which I have referred in circumstances where I was quite satisfied that they were never going to seek a refund of the money from their son.  In those circumstances, they are in a much stronger position than is the wife.  As for Mr RW, I know little about his financial circumstances other than what he told me when he was a witness in the proceedings.  He said that he was running a business similar to that of the husband and there were significant sums of money changing hands each day.  At the time that these proceedings for removal of the caveats commenced, he was overseas in Greece.  Accordingly, I conclude that he is not in financially difficult circumstances. 

3. I have already mentioned the issue about legal aid and I am informed by the submission on behalf of the parents that they are not the recipient of any grant. 

4. A fundamental principle in relation to the determination of what, if any, costs should be ordered relates to the conduct of the parties to the proceedings.  That is a very wide-reaching provision but it seems to me in this case that the action taken by the parents after being requested to remove the caveat indicate that they had not properly considered that a more appropriate approach was to deal with the husband.  In my view, they have considerably contributed to the dilemma.  It is important to point out that an order for costs is not intended to punish someone but rather to alleviate or ameliorate the position of the person who has had to participate in the proceedings unnecessarily.  That is exactly what has occurred here. 

5. In relation to the conduct of Mr RW, critical as I have been of his approach in lodging the caveat, quickly ameliorated that position.  He has however caused the wife to take some steps and to that extent, he should contribute to the point at which he assisted in the resolution of the dilemma.

6. I am satisfied that notwithstanding the pragmatic outcome, the parents have been wholly unsuccessful in the sense that they have taken a course of action involving the wife which was unnecessary and in my view, inappropriate.

7. I am also concerned that the parents had adopted a stubborn approach fully knowing that the issue was more appropriately determined with their son.  Even had that meant further proceedings with them as applicants against the husband, it would have meant that the wife would not have had to have been involved other than indirectly. 

8. In the circumstances therefore, it is appropriate that the husband’s parents and Mr RW contribute towards the wife’s costs.

9. As part of any order for costs, the exercise of discretion requires a court to look at what is an appropriate amount in the circumstances. If the discretion cannot be exercised because of any uncertainty about what is the appropriate amount, an appropriate order should be made for the parties to reach agreement on the quantum based upon the scale set out in the schedule to the Family Law Rules.

10. The costs sought relate to the whole of the proceedings and they total $4708.  The wife initially sought to divide that sum equally between the husband’s parents and Mr RW.  Having regard to the findings that I have made, that would be inappropriate.  In addition, the wife sought $880 for the preparation of her costs submissions which related to Mr RW and the parents.  Counsel’s fees for 12 March included Mr RW and would have been the same whether or not he had been involved.  It seems to me that the costs associated with Mr RW are those referred to in the preparation for the hearing on 12 March 2008.  But they in turn included some of the costs associated with the husband’s parents.  In the circumstances, I propose to order that Mr RW contribute $400 towards the wife’s costs and that the husband’s parents contribute $2354 notwithstanding that the bulk of the costs of $4708 seem to really relate to them.  In my view, that is the sum sought as against the parents and it is just and equitable having regard to all of the circumstances that they make that contribution sought rather than much more towards the $4708 being the total costs claimed.  Accordingly, I propose to make orders.

I certify that the preceding Sixty Six (66) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  12 June 2008