Yangoyan v Borg

[2017] NSWSC 42

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:	Yangoyan v Borg [2017] NSWSC 42
Hearing dates:	On the papers
Date of orders:	07 February 2017
Decision date:	07 February 2017
Jurisdiction:	Equity
Before:	Darke J
Decision:	Order that the defendant pay the plaintiff’s costs of the proceedings
Catchwords:	COSTS – plaintiff lodges caveat claiming interest under a constructive trust – lapsing notice served in respect of caveat – plaintiff commences proceedings seeking extension of caveat – plaintiff subsequently commences proceedings in Federal Circuit Court – orders made for extension of caveat – whether unreasonable of plaintiff to commence proceedings in Supreme Court
Legislation Cited:	Family Law Act 1975 (Cth) Real Property Act 1900 (NSW) Uniform Civil Procedure Rules 2005 (NSW)
Cases Cited:	Song v Shi [2011] NSWSC 1207
Category:	Costs
Parties:	Garo Yangoyan (Plaintiff) Joeanne Borg (Defendant)
Representation:	Counsel: P J Livingstone (Plaintiff) L J Ellison SC (Defendant)   Solicitors: Etheringtons Solicitors (Plaintiff) Mills Oakley Lawyers (Defendant)
File Number(s):	2016/320819
Publication restriction:	None

Judgment

1. The only remaining issue in these proceedings is costs. The proceedings, which are between former spouses, were commenced by Summons filed on 27 October 2016. The plaintiff sought an order for the extension of the operation of a caveat he had lodged over a property in Pemulwuy, together with a declaration that the defendant held half of her interest in the property on trust for the plaintiff.

2. The caveat was lodged in December 2015 after the couple had separated. The interest claimed in the caveat was described as an equitable beneficial interest in the property. The interest was said to be in the nature of a constructive trust, arising from the making of various financial advances by the plaintiff.

3. In August 2016 the defendant’s solicitors, apparently taking the erroneous view that the caveat claimed an interest pursuant to s 79 of the Family Law Act 1975 (Cth), requested that the caveat be withdrawn. The plaintiff’s solicitors maintained that the plaintiff had a caveatable interest. Those solicitors suggested that the caveat ought remain whilst the parties attempted to reach an agreement. The defendant was not prepared to allow the caveat to remain. The serving of a lapsing notice was foreshadowed, even though it was stated that the defendant had no present intention of selling the property.

4. The defendant proceeded to serve a lapsing notice on about 17 October 2016. As noted earlier, the proceedings were commenced on 27 October 2016.

5. On 4 November 2016 an order was made, by consent and without admission, extending the operation of the caveat to 14 December 2016. The proceedings were adjourned to 9 December 2016.

6. In the meantime, on 18 November 2016, the plaintiff commenced proceedings against the defendant in the Federal Circuit Court seeking orders for alteration of property interests.

7. When the present proceedings returned on 9 December 2016 an order was made extending the operation of the caveat until further order. Directions were also made for brief written submissions on costs. The Summons was otherwise dismissed.

8. The plaintiff seeks an order that the defendant pay his costs. He submits that the defendant should pay his costs because the proceedings were brought about by the defendant serving an unnecessary lapsing notice in respect of the caveat. The plaintiff contends that the defendant is the party responsible for the incurring of the costs of the proceedings.

9. The defendant seeks an order that the costs of each party be the costs of that party in the Federal Circuit Court proceedings. She submits that proceedings should never have been initiated in this Court, and that all proceedings between the parties should have been conducted “in the Federal family law jurisdiction”. The defendant pointed to prayer 5 of the Summons (which referred to a stay of proceedings pending the determination of proceedings under the Family Law Act) as a recognition of that position. The defendant contends that there was no rational reason why the plaintiff did not proceed immediately to the Federal jurisdiction and seek interlocutory relief. She submits that the plaintiff should not be able to avoid the operation of the different costs regime which applies in family law proceedings. The defendant further contends that the proceedings should not have been commenced by Summons, and that Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”) r 15.3 was contravened.

10. I am unable to accept the defendant’s submissions. The plaintiff had 21 days from receipt of the lapsing notice to obtain an order from the Court extending the operation of the caveat, otherwise the caveat was liable to lapse in accordance with s 74J of the Real Property Act 1900 (NSW) (“the Act”). It may have been possible for the plaintiff to commence proceedings in the Family Court (or the Federal Circuit Court) seeking an interlocutory injunction to protect his interest in the property, rather than commence the proceedings in this Court. However, I do not think that it was at all inappropriate for the plaintiff to come to this Court in the face of the lapsing notice which, in accordance with s 74J(1) of the Act, contains a statement that the caveat will lapse unless an order extending the operation of the caveat “is obtained from the Supreme Court of New South Wales”.

11. I do not accept that there was no rational reason why the plaintiff did not immediately proceed “to the Federal jurisdiction”. The plaintiff was concerned that proceedings in the Federal Circuit Court could not commence until certain requirements were met (including disclosure of financial position), and that in the usual course an application in that court was not allocated a first return date for several months. (In fact, the application made in that court by the plaintiff on 18 November 2016 was allocated a first return date of 8 February 2017.) In the circumstances, in the face of a need to obtain an order within 21 days, the plaintiff was well justified in filing the Summons in this Court, particularly as there were no existing proceedings in the Family Court or Federal Circuit Court (compare Song v Shi [2011] NSWSC 1207 at [8]-[9]). I do not think that the plaintiff’s conduct in that regard can fairly be described as an attempt to avoid the operation of the costs regime which applies in family law proceedings. Finally, there is no substance in the point concerning UCPR r 15.3. That rule has no application to a case which merely involves the assertion of the existence (as opposed to a breach) of a trust. The proceedings were not defective by reason of their commencement by Summons (see UCPR r 6.6(1)).

12. Service of the lapsing notice was presumably intended to serve the purpose of removing an impediment to dealings with the property. The defendant gave no undertaking not to deal with her interest in the property, stating only that she had no present intention to sell the property. In my opinion, it was reasonable for the plaintiff to thereupon commence these proceedings and obtain orders extending the operation of the caveat. The plaintiff was successful in obtaining such orders. In my view, the appropriate order for costs is that the defendant pay the plaintiff’s costs of the proceedings. The Court will so order.

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Amendments

08 February 2017 - Counsel's name spelt incorrectly.

Decision last updated: 08 February 2017