Wakeford Holdings v Spagnolo - [2019] WASC 60

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION:   WAKEFORD HOLDINGS -v- SPAGNOLO [2019] WASC 60
CORAM:   LE MIERE J
HEARD:   14 NOVEMBER 2017, DECEMBER 2017 & ON THE PAPERS
DELIVERED          :   6 MARCH 2019
FILE NO/S:   CIV 2599 of 2017
BETWEEN:   WAKEFORD HOLDINGS
First Plaintiff
HILL PADUA PTY LTD
Second Plaintiff
AND
FRANCESCO ANTONIO SPAGNOLO
LUCIA SPAGNOLO
First Defendants
REGISTRAR OF TITLES
Second Defendant

Catchwords:

Practice and procedure - Costs - Whether defendant should pay the plaintiff's costs - Turns on own facts

Legislation:

Family Law Act 1975 (Cth), s 106B
Transfer of Land Act 1893 (WA), s 138B(2)(a) and (b)

Result:

First named first defendant pay plaintiffs' costs

Category: B

Representation:

Counsel:

First Plaintiff	:	No appearance
Second Plaintiff	:	No appearance
First Defendants	:	No appearance
Second Defendant	:	No appearance

Solicitors:

First Plaintiff	:	Williams + Hughes
Second Plaintiff	:	Williams + Hughes
First Defendants	:	Slater & Gordon - Perth & Bowen Buchbinder Vilensky
Second Defendant	:	No appearance

Case(s) referred to in decision(s):

Nil

LE MIERE J:

The plaintiff companies commenced this proceeding by originating summons on 20 September 2017. The plaintiffs sought orders extending the operation of caveats N701426 and N701427 lodged over Wellington location 1 which is part of the land on Diagram 685 and the whole of the land in Certificate of Title 2075 Folio 513 which is located at Campbell Road, Benger, known as Benger Farm. The plaintiffs claim that they have a caveatable interest in the land in the form of security interests. The security interests are said to arise from acknowledgements of debt executed by the first defendant, Mr Spagnolo, which charge Mr Spagnolo's interest in the land in favour of the plaintiffs to secure debts owed by Mr Spagnolo to the plaintiffs in the sums of $66,980 and $54,248 respectively.
The defendants applied to the Registrar of Titles to remove the caveats. The Registrar gave notice to the plaintiffs that the caveats would lapse unless they obtained a Supreme Court order pursuant to s 138B(2)(a) and (b) of the Transfer of Land Act 1893 (WA).
The plaintiffs applied by originating summons of 20 September 2017 for an order extending the operation of the caveats.
On 22 September 2017 Mr Spagnolo filed an affidavit in opposition to orders extending the operation of the caveats for the following reasons. Mr Spagnolo and Mrs Spagnolo were engaged in proceedings in the Family Court of Western Australia. They had accepted an offer to purchase Benger Farm. Settlement was scheduled for 20 September 2017, was due on 26 September 2017 and thereafter penalty interest would be incurred. It was proposed to the plaintiffs that from the proceeds of sale of Benger Farm the sum of $400,000 would be held in a creditor's trust account.
On 26 September 2017 Mrs Spagnolo filed submissions in opposition to the plaintiff's application to extend the operation of the caveats. The acknowledgement of debts signed by Mr Spagnolo were executed on 18 August 2017. At that time Mr and Mrs Spagnolo were involved in proceedings in the Family Court. During the course of those proceedings Mr Spagnolo had executed affidavits which purported to disclose his financial position. The debts claimed by the plaintiffs were not deposed to or mentioned in any affidavits filed by Mr Spagnolo. On or about 27 July 2017, Mr and Mrs Spagnolo had entered into a contract of sale to sell Benger Farm and settlement was due to take place on 20 September 2017. Mrs Spagnolo had requested that the plaintiffs provide evidence of the underlying debts allegedly owed by Mr Spagnolo to the plaintiffs. The plaintiffs had not provided evidence of the underlying debts. If the limitation period for the underlying debts had expired before the acknowledgement of debts was signed, then the debts were extinguished prior to Mr Spagnolo signing the acknowledgements and the plaintiffs have no caveatable interest in the land.
The plaintiffs' application to extend the operation of the caveats came before me on 26 September 2017. I adjourned the matter to 29 September 2017. On 29 September 2017 I made the following orders by consent:
1.The operation of caveats No N701426 and N701427 be extended until the settlement of the sale of the [Benger Farm].
2.The plaintiffs deliver a W1 Withdrawal of Caveats in registerable form upon settlement of the sale of [Benger Farm].
3.The defendants deal with the proceeds of the settlement of the sale of Benger Farm in accordance with the terms of the signed written instructions annexed for the matter be adjourned to 31 October 2017.
The annexed instructions are as follows:
Instructions by Mr and Mrs Frank and Lucy Spagnolo to Spirit Settlements in relation to settlement of the sale of the Benger farm
In respect to the settlement of Benger farm Wellington Location 1 and being the whole of the land contained in Certificate of Title 2075 folio 513:
We Francesco Antonio Spagnolo and Lucia Spagnolo direct you to deal with the proceeds of settlement of the sale of the property as follows after adjustment and payment of rates and taxes and the costs of settlement to divide the proceeds of sale equally and
1.to pay the sum on account of Mr Spagnolo's half share into a controlled monies trust account (Controlled Monies Trust Ac) in the names of:
(a)the lawyers for Francesco Spagnolo Crossing Family Lawyers;
(b)Williams + Hughes, lawyers for the Plaintiff in proceeding number CIV 2599 of 2017;
(c)Mendelawitz Morton lawyers for the Plaintiff in proceeding number CIV 2593 of 2017 Salvatore Condo; and
(d)Gaetano Benedito Spagnolo, the Plaintiff in proceeding number CIV 2613 of 2017.
on account of:
(e)the claim of Salvatore Condo in the above proceedings;
(f)the claim of Wakeford Holdings Pty Ltd and Hill Padua Pty Ltd Plaintiffs and Francesco Spagnolo and Lucia Spagnolo in Proceedings CIV 2599 of 2017; and
(g)the claim of Gaetano Benedito Spagnolo Plaintiff in proceeding CIV 2613 of 2017;
such sums to be held upon determination as to validity and priority until further order of the court.
2.To hold the balance pending the further instructions from Mr and Mrs Spagnolo given separately.
3.The direction in 1 above may not be revoked without the written consent of the parties interested in the Controlled Monies Trust Account.
The matter came before the court on 14 November 2017 when it was adjourned to 28 November 2017. The matter was listed for 5 December 2017. On that date I made orders vacating the directions hearing listed for that day, directed the parties to file and serve submissions and authorities on the question of costs of the action and directed that I would determine the costs of the action on the papers.
The plaintiffs submit that the court should order the defendants jointly and severally to pay the plaintiffs' costs of the action. In support of their claim they make the following points. Mr Spagnolo granted the Security Interests in his undivided half share of Benger Farm which were created by the deeds of charge executed on 18 August 2017 (Security Interest). Mr Spagnolo granted the Security Interest and has acknowledged the underlying debts. Mr Spagnolo has agreed to pay the costs of the action. Mrs Spagnolo has refused to pay the costs of the action. There was no warning before Mr and Mrs Spagnolo lodged the applications to remove the caveats. After conferral between the parties' solicitors the agreement was made which resulted in the orders I made on 29 September 2017. The Security Interest 'had substance'. Orders were made upholding the caveats until the settlement of the sale of Benger Farm. Therefore, the plaintiffs were successful in having the Security Interests upheld, even though it was not necessary for the court to finally determine the outcome of the application to uphold the caveats.
Mrs Spagnolo says that there should be no order as to costs or alternatively, an order should be made for the payment of the plaintiffs' costs by Mr Spagnolo. Mrs Spagnolo advances the following reasons for those orders. Mr Spagnolo signed the acknowledgement of debt giving rise to the claimed Security Interest after Mr and Mrs Spagnolo had entered into a contract to sell Benger Farm and after they were involved in property proceedings in the Family Court. The application for the issue of the 21 day notice pursuant to s 138B of the Transfer of Land Act was prepared and lodged by Mr Spagnolo's solicitors. Mrs Spagnolo was required to sign the application form notwithstanding that the acknowledgements of debt were executed by and the charges created were as to the interests of Mr Spagnolo alone. On 29 September 2017 agreement was reached between the parties and orders were made to facilitate the sale of Benger Farm and the holding of one half of the proceeds of sale in an account pending further order of the court. The claims of Mrs Spagnolo in the Family Court proceedings for an adjustment of property interests as between herself and Mr Spagnolo, and pursuant to s 106B of the Family Law Act 1975 (Cth) to set aside the acknowledgements of debt signed by Mr Spagnolo and the creation of any interests in Benger Farm by such steps are the subject matter of the Family Court proceedings and are yet to be determined.
There should be no order as to costs on the basis that the caveat proceedings were resolved by agreement not a determination by the court, substantive proceedings to resolve the underlying dispute have been commenced and the customary practice that the costs of caveat proceedings follow the outcome in the cause of the substantive determination. Alternatively, any order providing for payment of the plaintiffs' costs should be made against Mr Spagnolo.
The appropriate order is that Mr Spagnolo pay the plaintiffs' costs. It is the plaintiffs' claims to Mr Spagnolo's interest in the property that are to be, but have not yet been, determined. It would not be just to order Mrs Spagnolo to pay the plaintiffs' costs prior to the determination of the substantive dispute concerning the debt allegedly owing by Mr Spagnolo to the plaintiffs. I would have ordered that the costs be reserved pending the outcome of the substantive dispute but Mr Spagnolo has agreed to pay the costs of the action. That is the appropriate order.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MS
Associate to the Honourable Justice Le Miere
6 MARCH 2019