Airta Petavrakis v Hirst & Co., & Anor SC 3999 [2001] QSC 224

Andrew Burrows & Associates for the respondent/second defendant

[1] There are three applications before the court. On 28 May 2001 the third defendant filed an application that the plaintiff's proceedings against him be struck out with costs. On 4 June 2001 the second defendant sought a similar order in respect of the proceedings against him. On 8 June 2001 the plaintiff sought an order giving her leave to discontinue her proceedings against the first, second and third defendants.

[2] An order was made by consent on 14 June 2001 that the plaintiff have leave to discontinue against the first defendant, a firm of solicitors, with no order as to costs.

[3] There is agreement that one way or another the proceedings should cease. The question of who should pay the costs of the proceedings and these applications is in issue.

[4] The plaintiff had, prior to the filing of the applications, proposed to the defendants that each party should pay its own costs. That offer was not accepted and now that the question of costs has had to be litigated, the plaintiff seeks the costs of the proceedings and the applications. In the alternative she seeks an order that there be no order as to the costs of the proceedings and that each defendant should pay the costs of the applications.

[5] The second and third defendants each seek their costs of the proceedings and the applications on an indemnity basis.

[6] The plaintiff was the wife of the second defendant whose solicitors are the first defendant and whose father is the third defendant. It will be convenient to refer to the parties as "the wife", "the husband", "the husband's solicitors" and "the father".

[7] This has been a matrimonial dispute. Final orders have been made in the Family Court about matters in issue between the husband and wife which also encompass the matters which concern the father in these proceedings. The wife has, by the extensive material which she has filed in support of her application to discontinue, ventilated issues going to the merits of her proceedings in this court and in the Family Court under the guise of dealing with issues of costs. Of course, some particulars of the action and how it came to be brought and some correspondence is necessary to dispose of the question.

[8] The husband and father have not responded to much of the wife's material for two reasons: they do not consider it appropriate to do so and the wife's affidavit was said to have been served with insufficient time to allow them to be responsive to it.

[9] It is neither appropriate nor possible to decide contested factual issues in an application of this kind and the costs of attempting to do so in a trial would be a scandalous waste of resources which, at least the husband and wife, do not have. However, a number of the cases make clear that it is appropriate for a court when deciding what should happen to the costs when it is unnecessary to make any other orders to determine whether an applicant acted reasonably in commencing and thereafter maintaining proceedings which the applicant no longer wishes to progress, R v Gold Coast City Council; ex parte Raysun Pty Ltd [1971] QWN 13; J T Stratford & Son Ltd v Lindley (No 2) [1969] 1 WLR 1547; Australian Securities Commission v Aust-Home Investments Ltd [1993] FCA 585; (1993) 11 ACSR 136 at 143.

[10] The wife and husband separated on 2 February 1999. The former matrimonial home was registered in the names of the husband and wife as joint tenants. The wife asserts, and there does not appear to be any disagreement in the contemporaneous correspondence between their solicitors, that by agreement between the husband wife he left the matrimonial home where she was to remain in residence with the two young children of the marriage pending its sale.

[11] The wife changed the locks and security code on the house which, it would appear, the husband knew about. The parties made attempts through their solicitors to reach agreement in respect of the children, property and financial matters. The wife's jewellery had been kept in a safe in the father's home during the course of the marriage. In a letter dated 29 March 1999 from her solicitors to the husband's solicitors the wife sought its return.

[12] From at least 15 March 1999 the husband through his solicitors sought some items of furniture from the former matrimonial home and personal possessions.

[13] The parties engaged in extensive correspondence through their solicitors attempting to reach some mutually satisfactory arrangements for the collection of the chattels sought by the husband as well as with respect to a range of issues relating to the children and financial matters. The tone of the letters became increasingly acrimonious. Eventually the wife sought the return of her jewellery as a quid pro quo for the husband's access to the former matrimonial home to remove property.

[14] On 22 April 1999 the wife commenced Family Court proceedings, inter alia, for property orders including seeking that her jewellery "presently in possession or control of the husband, his servants or agents forthwith be returned to her".

[15] It would appear that by 23 April the husband had decided to take things into his own hands and attended at the former matrimonial home on 24 April during his wife's absence accompanied by a number of persons who may have included three security guards, a locksmith and two other men. The wife's mother was present at the house on this occasion and, it might be inferred, neighbours and police became involved. The husband had in his possession a letter dated 23 April 1999 written by his solicitors addressed to the police which represented that the husband was entitled in law to enter the former matrimonial home and remove his possessions.

[16] The wife's solicitors depose to a conversation with the husband's solicitors at about 5.00 p.m. on 23 April during which the husband's solicitor said that he was unaware of his client's intentions with respect to collecting the chattels and personal possessions from the home. In the letter dated 23 April which the husband had in his possession on 24 April, the solicitor had written "Our client instructed us on 23 April 1999 that he intended to collect his personal possessions from the property on 24 April 1999".

[17] The husband effected entry by having the locks broken and the security system disarmed and removed certain property.

[18] It is unnecessary to refer to the content of the ensuing correspondence between the solicitors but the wife continued to seek the return of her property and denied any entitlement to the husband to enter the former matrimonial home and remove property in the way in which he had done.

[19] On 30 April orders were made in the Wynnum Magistrates Court preventing the husband from attending at the former matrimonial home.

[20] The wife issued the writ in the present proceedings on 30 April 1999 against the husband's solicitors, the husband the father. In it she sought as against the husband's solicitors, declarations, inter alia, that the solicitors had engaged in conduct in contravention of s 52 of the Trade Practices Act relating to communication with the plaintiff's solicitors about the jointly held matrimonial property on 23 April 1999; the provision of the letter of 23 April 1999; aiding and abetting the husband in trespass to goods and chattels; damages pursuant to s 82 of the Trade Practices Act, including aggravated and exemplary damages and damages for conversion or detention of chattels.

[21] The relief sought against the husband was for damages for trespass to land, trespass to chattels and damages for breach of s 52 of the Trade Practices Act including aggravated and exemplary damages.

[22] The wife sought against the father damages for detention or conversion of her jewellery.

[23] The father was served with the writ on 1 May 1999. His solicitors wrote to the wife's solicitors on 4 May that he did not have any of the wife's personal property and required the wife to file a notice of discontinuance otherwise an appearance would be entered and costs sought against her. The solicitors wrote again on 18 May seeking discontinuance of the proceedings or the delivery of a statement of claim. The statement of claim was delivered on 28 May.

[24] On 31 May 1999 numerous interim orders were made by consent in the Family Court between the husband and the wife including order number 26:

"That the Husband cause to be returned forthwith [to] the Wife the items of jewellery set out in the list annexed hereto and marked with the letter `A'".

[25] The husband's solicitors wrote on 8 June 1999 to the wife's solicitors, inter alia, seeking the withdrawal of the Supreme Court writ.

"Our client is of the view that your client's Supreme Court proceedings is baseless, vexatious and obstructive to the early resolution of Family Court issues."

[26] Meanwhile the issue of delivery of the jewellery continued to be ventilated between the solicitors and on 18 June 1999 the wife accompanied by her solicitor attended at the office of the husband's solicitors and took possession of what appears to have been the bulk of her items of jewellery. Further items of jewellery were made available about a week later.

[27] Other correspondence took place between the parties. The husband briefed different solicitors in respect of the Supreme Court proceedings, no doubt because the solicitors whom he retained for his Family Court matters were parties to the Supreme Court proceedings.

[28] On 21 July 1999 the father's solicitors again requested the wife to withdraw the Supreme Court proceedings and to pay him his reasonable costs. In default the solicitors indicated that they were instructed to file and deliver a defence and apply to the court that the proceedings be struck out with costs. The wife's solicitors responded on 23 August 1999

"We have now had an opportunity of discussing this matter with our client and with Counsel.

We are instructed to make it clear that our client intends to prosecute the claim against your client ...

Our client has no intention at all of withdrawing the proceedings or paying your client's reasonable costs.

Our client now intends to prosecute the claim against your client to recover her costs on a solicitor/client basis. The further prosecution of the action, save for costs, having become largely unnecessary by reason of our client retaking possession of the bulk of her jewellery.

In the event that a defence is not filed within the next fourteen (14) days a judgment will be sought against your client by default. In the event that any defence that is delivered does not comply with the new rules (and in particular are responsive to all the allegations of our clients property in the jewellery and your clients possession of it and in the manner in which the items left your clients possession) an application will be made to strike that pleading out without further reference to you."

A defence was filed denying wrong doing with respect to the jewellery and further alleging that the wife and the husband had unlimited gratuitous access to and use of the safe in the father's premises.

[29] The wife's solicitors wrote again on 17 December 1999 to the father's solicitors indicating that matters in the Family Court between the husband and wife had reached the stage of drafting a deed of settlement. The wife's solicitors indicated that all proceedings in the Family Court and the Supreme Court could be settled on the basis that all parties bear their own costs. If this was not agreed then the wife's solicitors foreshadowed an application to the Supreme Court for indemnity costs against the father.

[30] Final orders were made in the Family Court with respect to property matters between the husband and the wife on 23 May 2000.

[31] Further correspondence ensued between the parties' solicitors attempting to resolve these proceedings. The positions were entrenched. The wife wanted to discontinue without paying any costs to any defendants and the defendants wanted their reasonable costs in respect of these proceedings which were said by them to be misconceived. Despite threatening to do so for a very long time it was not until after the defendants filed their applications to strike out the proceedings either for want of prosecution or as an abuse of process that the wife brought her application for leave to discontinue.

[32] It seems more appropriate to resolve the issue of who should pay the costs of these proceedings by making orders in the wife's application to discontinue. It is apparent that leave should be given for the wife to discontinue her proceedings against the husband and the father recalling that orders by consent were made on 14 June 2001 in respect of the husband's solicitors.

[33] There are two principal rules which relate to the orders which might be made in these proceedings as to costs. Rule 307(2) of the Uniform Civil Procedure Rules provides

"If a party discontinues or withdraws with the court's leave, the court may make the order for costs it considers appropriate."

"(1) If, for any reason, it becomes unnecessary to continue a proceeding other than for deciding who is to pay the costs of the proceeding, any party to the proceeding may apply to the court for an order for the costs.

(2) The court may make the order the court considers to be just."

[34] I do not discern any difference in effect by the use of the expressions "appropriate" and "just" in the two rules.

[35] The Family Court proceedings were commenced before these proceedings. The allegations against the husband concerned matters within the jurisdiction of that court. The jewellery, even though asserted and agreed to be the wife's personal property, was nonetheless "matrimonial property" for the purposes of the Family Law Act. Section 4 of that Act defines "matrimonial cause" to include in "(ca)" "proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them ...".

[36] The conduct of the husband complained of on 24 April 1999 of forced entry into the former matrimonial home could have been dealt with by way of injunctive relief to restrain further such conduct and to order the return of the property taken pursuant to s 114 of the Family Law Act. This conduct was clearly within the definition of "matrimonial cause". Further, under s 79 of the Family Law Act the court may alter property interests "as it considers appropriate" and this might include any losses occasioned by the conduct of the other party to the marriage.

[37] It is conceded that the wife could not have made the husband's solicitors or the father parties to the Family Court proceedings. Nonetheless the power to grant injunctions which must ground its jurisdiction in a "matrimonial cause" is wide enough to have allowed the Family Court to have made orders directed at the father or the husband's solicitors (suggested at one stage to have possession of the jewellery) for the return of the wife's jewellery, the right to possession of which was never disputed by any of the defendants, see Ascot Investments Pty Ltd v Harper [1981] HCA 1; (1981) 148 CLR 337 at 354 and R v Ross-Jones; ex parte Green (1994) 156 CLR 185 at 200-1.

[38] The Family Court can punish for contempt to the same extent as the High Court, see s 35. The alleged improper conduct by the husband's solicitors in writing the letter of 23 April 1999 could have been drawn to the Family Court's attention. Alternatively, a complaint could have been made to the Law Society. The conduct did not call, on its own, for Supreme Court proceedings, or indeed, any kind of proceedings.

[39] The wife deposes that it was always her intention to cross-vest the Supreme Court proceedings to the Family Court to be dealt with within the proceedings extant in that court. That position is maintained by Mr Savage in his submissions. The case of Re Wakim; ex parte McNally was argued before the High Court on 1 and 2 December 1998. The prospect of the High Court declaring the Jurisdiction of Courts (Cross-vesting) Act 1987 (Cth) invalid was likely. The Court handed down its judgment in that case on 17 June 1999 holding that the cross-vesting legislation could not confer State jurisdiction on Federal courts. I have referred to the wife's solicitors' letter of 23 August 1999 wherein the solicitors wrote that the wife intended to continue to prosecute the Supreme Court proceedings after it was plain that there was no prospect of being able to cross-vest them to the Family Court.

[40] The wife persisted in maintaining separate proceedings in this court even though the subject matter of these proceedings, with minor exceptions, had ceased to be an issue between the parties, that is, the return of the jewellery, or were covered by the matrimonial property proceedings on foot in the Family Court. It is clear that the wife, from at least 22 April 1999 when she filed her application for interim orders in the Family Court, did not regard the father as controlling the jewellery. Orders were made by consent on 31 May 1999 that the husband arrange for the return of the jewellery.

[41] It was not reasonable for the wife to have brought the Supreme Court proceedings and having done so it was unreasonable of her to continue to maintain them. She has caused the husband and the father to incur costs in defending those proceedings which through her solicitors she insisted be defended after Wakim. An order which is both appropriate and just is that she pay their costs of and incidental to the proceedings.

[42] It is also clear that she ought to pay the costs of the applications because there was no prospect of success and, in any event, it was necessary for the defendants to bring their applications because the wife did not seem to be prepared to dispose of the matter. The wife could have settled with the defendants without the expense of these applications. Indeed she could have done so two years before the significant costs of extensive correspondence and finally the applications were incurred for a payment of a modest sum of costs.

[43] The final question is whether the costs ought to be assessed on the standard basis or on an indemnity basis. Rule 704(2) of the UCPR without limiting the power of the court to order indemnity costs includes circumstances, not here relevant, in which indemnity costs may be ordered if the court orders the payment of costs. In the ordinary case the court orders the costs of one party to litigation to be paid by another on the standard (previously party and party) basis. In Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Pty Ltd [1988] FCA 202; (1988) 81 ALR 397, Woodward J said at 401:

"I believe that it is appropriate to consider awarding `solicitor and client' or `indemnity' costs, whenever it appears that an action has been commenced or continued in circumstances where the applicant, properly advised, should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive, or because of some wilful disregard of the known facts or the clearly established law. Such cases are, fortunately, rare. But when they occur, the court will need to consider how it should exercise its unfettered discretion."

Those remarks have been cited with approval in a number of cases including by French J in Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (unreported decision of 3 May 1991) and Sheppard J in Colgate Palmolive v Cussons Pty Ltd [1993] FCA 536; (1993) 118 ALR 248.

[44] In J-Corp Pty Ltd v Australian Builders Labourers Federation Union of Workers - Western Australian Branch (unreported decision of 19 February 1993) French J referred at p 5 to Fountain Meats and his earlier decision in Tetijo and said

"Although there is said to be a presumption in such cases [Fountain] that the action was commenced or continued for some ulterior motive or in wilful disregard of known facts or clearly established law, it is not a necessary condition of the power to award such costs that a collateral purpose or some species of fraud be established. It is sufficient, in my opinion, to enliven the discretion to award such costs that, for whatever reason, a party persists in what should on proper consideration be seen to be a hopeless case."

[45] In my view it was vexatious of the wife to commence proceedings in this court in respect of relief which she could obtain in the Family Court, wherein she had already commenced proceedings. All of the issues ventilated in the pleadings in this court are matrimonial issues which should have been, and indeed were, in due course, dealt with in the Family Court save the allegations against the solicitors. It became clear in the course of the correspondence that the wife did not wish to continue her action against that firm. I am of the view that this is a proper case for the award of indemnity costs.

[46] It is important to make clear that this decision in no way deals with the merits of any allegations between the parties of a substantive kind. The decision is based on matters of procedure and reference to facts not in dispute.

(1) The plaintiff have leave to discontinue the proceedings against the second and third defendants.

(2) The plaintiff pay the second and third defendants' costs in defending the proceedings.

(3) The applicant/plaintiff pay the respondents'/second and third defendants' costs of and incidental to each of the applications before the court, namely the applications filed on 28 May 2001 by the third defendant, 4 June 2001 by the second defendant, 8 June 2001by the plaintiff.

(4) All costs to be assessed on the indemnity basis.