Velissaris v Fitzgerald
[2008] VSCA 152
•25 August 2008
SUPREME COURT OF VICTORIA
COURT OF APPEAL
No 3803 of 2008
| GEORGE VELISSARIS |
| v |
| LAURENCE ANDREW FITZGERALD (IN HIS CAPACITY AS LIQUIDATOR OF MARYVELL INVESTMENTS PTY LTD – ACN 080 327 073) and ANOR |
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JUDGES: | MAXWELL P and MANDIE AJA | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 25 July 2008 | |
DATE OF JUDGMENT: | 25 August 2008 | |
MEDIUM NEUTRAL CITATION: | [2008] VSCA 152 | |
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PRACTICE AND PROCEDURE – Costs – Indemnity basis – Leave to appeal – Whether costs discretion miscarried – Proceeding for removal of caveat – Caveat lodged in contravention of earlier orders – Indemnity costs awarded against party lodging caveat on behalf of caveator – Proceedings commenced to seek removal of caveat – Whether relevant to exercise of costs discretion that lodgement of caveat calculated to provoke litigation – NMFM Property Pty Ltd (No 2) (2001) 109 FCR 77, considered.
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| APPEARANCES: | Counsel | Solicitors |
The Applicant appeared in person | ||
For the Respondent | Mr D Peries, Solicitor | Robert James Lawyers |
MAXWELL P:
This is an application for leave to appeal from a costs order made by the Judge in the Practice Court. The background is as follows. The first respondent, Mr Fitzgerald, is the liquidator of the second respondent, Maryvell Investments Pty Ltd, a company of which the applicant, Mr Velissaris, is the sole director and shareholder. The company is the owner of a property at 333-335 Sydney Road in Brunswick, (‘the property’).
In late 2007, the liquidator entered into a contract to sell the property. To enable settlement of the contract of sale to proceed, the liquidator applied to the court for orders removing from the title a caveat that had been lodged by Mr Velissaris. On 23 January 2008, Bongiorno J made orders that the caveat be removed, and that Mr Velissaris be restrained:
… from lodging or causing to be lodged, any further caveat concerning [the property], either in his own name or in the name of any other person on his behalf or on behalf of any beneficiaries of the Maryvell Family Trust and without limiting the generality of the foregoing, on behalf of Mary Velissaris (also known as Mary Patroungas) and Alexandros Velissaris.
The sale of the property pursuant to that contract did not proceed and the liquidator entered into a further contract of sale on 26 March 2008. Settlement of the sale under that second contract was to take place on 23 May 2008. On 12 May 2008, Mr Velissaris went to the Office of Titles and submitted a further caveat, being caveat number AF837009Y (‘the May caveat’). The May caveat purported to record an interest in the property claimed by his daughter, Mary Velissaris-Patroungas.
The hearing on 21 May 2008
By originating motion dated 13 May 2008, the liquidator commenced the present proceeding against four defendants, namely, Mr Velissaris, his daughter Mary Velissaris-Patroungas, his son Alexandros Velissaris, and the Registrar of Titles. The motion was listed for hearing before the Judge in the Practice Court on 21 May 2008. In the afternoon of 20 May 2008 – the day before the hearing – the caveat was withdrawn. Mr Velissaris was the only defendant who appeared at the hearing.
The liquidator sought injunctions restraining Mr Velissaris’ children from placing further caveats in respect of the property, and restraining the Registrar of Titles from accepting for lodgment any further dealings in the property other than the settlement of the sale of the property by the liquidator. The liquidator also indicated that he would seek orders that the lodgment of the caveat by Mr Velissaris be referred to the DPP, for consideration to be given to the commencement of a prosecution of Mr Velissaris for contempt, and that Mr Velissaris pay the liquidator’s costs of the proceeding on an indemnity basis.
The Judge made orders preventing the lodgment of further caveats, dismissed an oral application by Mr Velissaris for a stay of the sale of the property, and adjourned until 30 May 2008 the questions of the referral to the DPP and costs. At Mr Velissaris’ request, the Judge also ordered that copies of all affidavits relating to him filed in the proceeding be made available for collection by him from the offices of the liquidator’s solicitors.
The hearing on 30 May 2008
At the hearing on 30 May 2008, the liquidator did not press his application for a referral to the DPP, but maintained his application for costs on an indemnity basis. The Judge ordered that Mr Velissaris pay the liquidator’s costs of the proceeding on an indemnity basis. Mr Velissaris now brings an application for orders:
(a)that he be granted leave to appeal the costs order;
(b)staying or striking out the 30 May 2008 order; and
(c)that the liquidator pay his costs of the proceeding.
I deal first with the question of leave to appeal.
Leave to appeal from a costs order
As I explained to Mr Velissaris at the beginning of the hearing, the task of showing miscarriage of a judge’s discretion to award costs on some basis other than the usual order is an ‘extraordinarily difficult’ one.[1] That the Supreme Court Act requires a party to seek leave to appeal where the question of costs is in the discretion of the trial division[2] reflects Parliament’s clear intent that appeals of this kind, like appeals from interlocutory orders,[3] should be exceptional. As this Court said only recently, it is in the interests of all concerned in the justice system that appellate courts exercise restraint before interfering with the exercise of the costs discretion by a judge at first instance, who is almost always best placed to assess in whose favour and to what extent that discretion should be exercised.[4]
[1]Transport Accident Commission v O’Reilly [1999] 2 VR 436, 457 [46].
[2]Supreme Court Act 1986 s 17A(1)(b).
[3]See generally Livingspring v Kliger Partners [2008] VSCA 93, [6]-[9] and the cases discussed there.
[4]Hercules v Magistrates Court of Victoria [2008] VSCA 1, [15].
Where leave is required to appeal against an order, the applicant for leave must show first that the order is wrong or at least attended with sufficient doubt to warrant its being reconsidered on appeal and, secondly, that the applicant would suffer substantial injustice if the order were allowed to stand.[5] As the decision to order a party to pay costs in a particular way is a discretionary decision, the task of showing that the decision is wrong or attended with doubt involves showing that the exercise of the discretion has miscarried in one of the ways described in House v R.[6] When reviewing the exercise of a judge’s discretion, is not enough that this Court considers that it might have made a different decision if it had been in the judge’s position. It must be shown that the judge below made an error in the sense of acting on a wrong principle, taking irrelevant matters into account, making a mistake as to the facts or failing to take a material consideration into account.[7] With these principles in mind I turn to consider Mr Velissaris’ submissions.
[5]Niemann v Electronic Industries Ltd [1978] VR 431, 433 (McInerney J).
[6](1936) 55 CLR 499.
[7]Ibid 505.
Mr Velissaris’ submissions
Mr Velissaris makes the following contentions in support of his application for leave to appeal.
(a)He should not be taken to have intentionally breached the 23 January 2008 orders because he merely delivered the May caveat as ‘a delivery boy’ for his daughter, who he understood was not restrained from lodging caveats in respect of the property.
(b)He corrected the breach of the 23 January 2008 orders as soon as he was made aware of it, by procuring the withdrawal of the caveat.
(c)He was denied natural justice because he was not served with exhibits to the affidavits and because his request for an adjournment was refused.[8]
(d)Prior to the hearing on 21 May 2008, an agreement was reached with the liquidator’s solicitor by which the liquidator agreed not to seek costs against him if the caveat was withdrawn.[9]
(e)His daughter’s caveat was ‘not of great importance,’ since other caveats on the title would in any event prevent the sale from proceeding.[10]
(f)It was unnecessary for the liquidator to proceed with the hearing on 21 May 2008 because the caveat was withdrawn on 20 May 2008.[11]
[8]Affidavit, [14].
[9]Affidavit, [15] - [17].
[10]Affidavit, [11].
[11]Affidavit, [13].
Lodgment of the caveat
Mr Velissaris told this Court that he attended the Titles Office on 12 May 2008 and presented for filing a caveat recording an interest claimed by his daughter in the property. He said that his daughter had asked him to submit the caveat on her behalf because she was occupied caring for a young child and was unable to attend the Titles Office. Mr Velissaris said he left blank the field next to the words ‘Lodged by:’ but that, when he presented the caveat at the Titles Office, he was requested by staff at the counter to complete that section with his own name and address.
Mr Velissaris said he did not realise that in doing so he was breaching the 23 January 2008 orders. In order to understand his submission it is necessary to set out the relevant paragraphs of those orders. Paragraph 8 of the January orders provided as follows:
8. The [applicant], is restrained from lodging or causing to be lodged, any further caveat concerning [the land], either in his own name or in the name of any other person on his behalf or on behalf of any beneficiaries of the Maryvell Family Trust and without limiting the generality of the foregoing, on behalf of Mary Velissaris (also known as Mary Patroungas) and Alexandros Velissaris.
Paragraph 11 of the orders was as follows:
11. That until 4 pm on 23 February 2008 or until further order, Mary Velissaris (also known as Mary Patroungas) and Alexandros Velissaris be restrained from lodging or causing to be lodged, any further caveat concerning [the property], either in their own name or in the name of any other person on their behalf or on behalf of any beneficiaries of the Maryvell Family Trust.
Mr Velissaris said he believed that paragraph 11 of the order had ceased to operate at 4 pm on 23 February 2008 and that his daughter was therefore not prevented from lodging a caveat on 12 May 2008. He pointed out that the caveator identified on the caveat was his daughter. As noted earlier, he contends that his role in the lodgment of his daughter’s caveat was of no relevance because he was merely the ‘delivery boy’.
Mr Velissaris also stated that he had not seen the January orders until a copy was provided to him by staff at the Office of Titles on 14 May 2008. I am quite satisfied, however, that Mr Velissaris was aware of the orders, and of their content, as he was present in court on 23 January 2008 when they were pronounced by Bongiorno J.
These submissions involved Mr Velissaris making a number of assertions of fact from the bar table. Counsel for the liquidator indicated that a number of these facts were disputed. Substantially the same arguments were made before the judge in the Practice Court. The judge found that that Mr Velissaris had breached the January orders by lodging the May caveat. She said:
It is clear by Mr Velissaris’ own admission that he was the person who took the relevant caveat down to the Titles Office and lodged it. He had been present in court on 23 January 2008 when Justice Bongiorno, after a protracted hearing, ordered that he was not to lodge any more caveats at all. … [F]or the purposes of my costs ruling, his state of mind is not determinative. The fact of the matter is he clearly breached the order by placing the caveat, and he has fought up until today his right to have lodged that caveat.
Nothing that Mr Velissaris told this court suggests that the judge was wrong to reach the conclusions she did. On the contrary, it was open to the Judge to make a finding that Mr Velissaris breached the January orders by lodging the May caveat on his daughter’s behalf. As already noted, Mr Velissaris was present in court when the January orders were made. The judge was right to reject Mr Velissaris’ argument that the presentation of a caveat naming his daughter as caveator did not amount to his ‘lodging [a] further caveat … on behalf of Mary Velissaris’ within the meaning of paragraph 8 of the January orders. The suggestion that Mr Velissaris misunderstood the scope of the injunction in paragraph 8 is inherently improbable, given that by his own admission he well knew at the time he lodged the May caveat that paragraph 11 had, on 23 February 2008, ceased to restrain his children from lodging caveats themselves.[12] He had clearly paid close attention to the precise terms of the January orders.
[12]Affidavit, [9].
Further, it was open to the judge to conclude that Mr Velissaris was the chief protagonist in the entire proceeding. It was not necessary for the judge to go so far as to find, as the liquidator alleged, that the daughter’s signature on the caveat had been forged and that the caveat was lodged without her knowledge. On Mr Velissaris’ own evidence, his daughter’s role could be described as passive. The daughter gave no evidence. She took no steps to resist the application for removal of the caveat. She withdrew the caveat promptly upon the liquidator’s offer not to pursue an application for costs against her. In the circumstances, the conclusion was well open that it was Mr Velissaris’ purposes rather than his daughter’s that were being served by the lodgment of the caveat.
In view of his involvement in the events up to and including the making of the January orders, Mr Velissaris must have appreciated that the lodgment of another caveat would trigger another application by the liquidator for the caveat to be removed, and that this process would result in the liquidator incurring legal expenses. Neither Mr Velissaris nor his daughter (with whom Mr Velissaris told us he discussed the possibility of lodging a caveat) made any serious attempt to put before the Court any evidence capable of supporting the assertion of a caveatable interest in the property. It was open to the judge to take the view that the lodgment of the caveat had no proper basis, and no purpose other than to frustrate the sale of the property.
A question arises whether it is proper for a judge, in the exercise of her discretion to award costs on an indemnity basis, to have regard to conduct that preceded the commencement of litigation, such as the lodgment of the caveat in this case. In NMFM Property Pty Ltd v Citibank Ltd (No 2), Lindgren J said that the proper field of inquiry for a judge considering whether costs should be awarded on a indemnity basis is confined to the conduct of a party as litigant.[13] He said:
[T]he presumption which prevails in favour of party and party costs requires the Court to accept the underlying or background facts of a case as ‘a given’ and to consider how the parties have conducted themselves subsequently as litigants, while taking into account their knowledge of past events which they carry into that role.[14]
[13](2001) 109 FCR 77, 93–95 [56]–[64], citing Harrison v Schipp [2001] NSWCA 13, [136]-[139] (Giles JA).
[14]Ibid 95 [63].
With respect, I would accept that, as a matter of principle, judges should look to the parties’ conduct of the litigation to inform the exercise of the costs discretion. But I do not think that the judge’s discretion miscarried because it was based upon action taken by Mr Velissaris before the proceeding commenced. Mr Velissaris knew that his action was bound to provoke the liquidator – as it did – to commence legal proceedings for the removal of the caveat. To that extent, whilst not a step in a proceeding, the lodgment of the caveat was conduct calculated to lead to litigation and which could be the subject of scrutiny by a judge in the exercise of the costs discretion. Further, it was conduct that had to be viewed in the context of the earlier proceeding for removal of a caveat, and the January orders which restrained Mr Velissaris in very specific terms from lodging further caveats.
Amendment of the caveat
Mr Velissaris states that, upon being informed that his lodgment of the May caveat breached the January orders, he arranged for his daughter to attend the Titles Office to amend the caveat so that her name was recorded as the lodging party.
The technical argument that the amendment of the May caveat rectified the breach of the January orders does not assist Mr Velissaris in challenging the costs order. As I have said, it was open to conclude not only that Mr Velissaris was in truth the party who lodged the caveat, in the sense that he physically presented it for filing, but also that it was his purposes which were served by the lodgment of the caveat.
The conduct justifying the costs order was not the technical breach of the January orders. It was the use of a caveat – not for the first time – for the purpose of attempting to frustrate the sale of the property by requiring the liquidator to apply for it to be removed. The fact that Mr Velissaris, rather than removing the caveat when the breach of the order was pointed out to him, instead arranged for it to be amended, is consistent with that view of the events.
Denial of natural justice
Mr Velissaris argued that he had been denied natural justice in a number of respects. Specifically, he complained that:
(a)he was not served with the exhibits to the affidavits filed in the proceeding before the hearing on 21 May 2008;
(b)he did not have time to respond to an affidavit sworn by the liquidator’s solicitor on 20 May 2008 and provided to him in the Practice Court on the morning of 21 May 2008; and
(c)in the circumstances, the judge’s refusal to grant him an adjournment on 21 May 2008 meant that he was denied a fair hearing as he had an insufficient opportunity to respond to the material he alleges was served upon him late.
There is no substance to Mr Velissaris’ submission about the judge’s refusal to adjourn the proceeding. It proceeds upon a mischaracterisation of the 21 May 2008 hearing. Except for Mr Velissaris’ own oral application that the sale of the property be stayed, the hearing on 21 May 2008 was confined to the relief which the liquidator sought against the other parties viz an order renewing the injunction preventing Mr Velissaris’ children from lodging further caveats and an order that the Registrar of Titles reject for lodgment further caveats until the settlement of the sale of the property.
To the extent that the liquidator sought orders affecting Mr Velissaris, the hearing of those applications was adjourned and a timetable was set for the filing of materials by Mr Velissaris. The judge took care to ensure that the timetable was one Mr Velissaris understood and could meet.[15] It is simply incorrect to say that Mr Velissaris’ request for an adjournment was refused. Rather, Mr Velissaris’ attitude to the 21 May hearing indicates that he saw himself (as opposed to his children) as the party interested in resisting the injunctions the liquidator was seeking on that day.
[15]T 56.
So far as service is concerned, Mr Velissaris acknowledges that he was served personally with the summons and originating motion in the proceeding on 14 May 2008.[16] His complaint is that he was not served with exhibits to the affidavits. He made this clear on 21 May 2008. To cure any defects in service, the judge ordered that the liquidator’s solicitors make copies of those documents available for collection by Mr Velissaris the following day. This duly took place. Once again, there was no denial of natural justice.
[16]Affidavit, [4].
The alleged costs agreement
Mr Velissaris argued that the judge should not have ordered costs against him because of an agreement he alleged had been made between the liquidator and he and his daughter.
Mr Velissaris alleged that, in telephone conversations with him and with his daughter on 19 May 2008, the liquidator, by his solicitor Mr Peries, had agreed not to pursue costs against him or his children (each of whom was a defendant in the proceeding) if the caveat was withdrawn. Mr Peries gave evidence in his affidavit of 20 May 2008, and orally at the hearing on 21 May 2008, that the offer he made was to Mr Velissaris’ daughter alone. He stated that he had had a telephone conversation with Mr Velissaris on 19 May 2008 but denied that he had agreed not to seek costs against Mr Velissaris personally.[17]
[17]T 9.
Mr Peries gave evidence of his telephone discussion with Mr Velissaris’ daughter and produced a letter he said was sent to her. The letter recorded the agreement in terms consistent with Mr Peries’s evidence. In this court, Mr Velissaris alleged that the letter had been sent after his daughter had removed the caveat and that the letter did not reflect the original agreement between his daughter and Mr Peries. Mr Velissaris’ daughter did not give evidence.
The judge was not persuaded that the version of the agreement alleged by Mr Velissaris was made out. She said:
Insofar as Mr Velissaris seeks to be relieved from what would otherwise be the order in consequence of his clear breach of a court order, he has not persuaded me that it would be unfair or unjust not to order those costs on the basis of some agreement.
The judge was required to resolve a contest of contradictory allegations of fact. The judge had the opportunity of seeing Mr Peries give his evidence in person and was thus in a much better position than this Court is to make the assessment of credibility required to determine the contest of fact. It was clearly open to the judge to prefer Mr Peries’ evidence to that of Mr Velissaris, who could not himself give evidence as to the substance of discussions to which he was not a party. As the judge observed, the one person who was in a unique position to contradict Mr Peries – Mr Velissaris’ daughter – was not called. Mr Velissaris has not shown that the judge’s discretion miscarried by her dealing in the manner she did with the dispute about an agreement.
Other caveats
Mr Velissaris’ argument that the daughter’s caveat was of ‘no great importance’ because it was subsequent in time to two other caveats on the title is irrelevant to the costs order in this proceeding. Whether or not other caveats on the title had priority in time, it was a necessary precondition to the settlement of the sale of the property that the caveat lodged by Mr Velissaris be removed.
Were the hearings of 21 May 2008 and 30 May 2008 necessary?
Mr Velissaris submits that once his daughter withdrew her caveat ‘there was no need to continue’ with the proceeding. The submission is that, if this was the case, Mr Velissaris should not be made to pay the liquidator’s costs of the hearings on 21 May 2008 and 30 May 2008.
The removal of the caveat was not the only relief sought in the summons. At
the hearing on 21 May, the liquidator pressed his applications both for an injunction restraining Mr Velissaris’ children from lodging caveats in respect of the property, and for an injunction restraining the Registrar of Titles from accepting for lodging further caveats in respect of the property.
I consider that the liquidator was entirely justified in pressing his application for the further relief sought. Given the history of the proceedings, including Mr Velissaris’ breach of the January orders, it was entirely understandable that the liquidator should want to guard against Mr Velissaris procuring that a further caveat be lodged on the title to frustrate the sale of the property. Further, whilst no relief was sought against Mr Velissaris himself, as has been said above it was open to the judge to find that Mr Velissaris was in truth the principal actor behind the lodgment of the caveat, and that the orders sought in respect of other parties were in truth orders designed to guard against action that might be taken by Mr Velissaris.
Finally, the purpose of the hearing on 30 May 2008 was to hear the liquidator’s application for costs against Mr Velissaris. When a judge orders that costs of a proceeding be paid on an indemnity basis, the costs of the proceeding should ordinarily be understood to include the costs of the successful party’s application for costs.
Conclusion
For the reasons I have given, I would refuse leave to appeal against the costs order. The other relief sought by Mr Velissaris in his summons, being dependent upon the success of the application for leave to appeal, is also refused.
MANDIE AJA:
I agree.
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