DGF Property Holdings Pty Limited v Di Federico; DGF Property Holdings Pty Limited v Butros

Supreme Court of NSW|2018-06-21

In Matter No 2016/246532 G Sirtes SC with PM Barham (Plaintiff) J C Giles SC with H Mann (First to Eighth; Tenth to Fifteenth Defendants) D Allen (Ninth Defendant) M A Ashhurst SC with D S Weinberger (Sixteenth and Seventeenth Defendants)

Solicitors: In Matter No 2015/105403 Simone Legal (Plaintiff) Mills Oakley (First and Second Defendants)

In Matter No 2016/246532 Simone Legal (Plaintiff) Dentons (First to Eighth; Tenth to Fifteenth Defendants) Russo & Partners (Ninth Defendant) Mills Oakley (Sixteenth and Seventeenth Defendants) File Number(s): 2015/105403; 2016/246532

Judgment

On 23 March 2018, I published my reasons (the Principal Reasons) for the conclusions that I had reached in two proceedings that were heard together [1] . In these reasons, I shall use terms as they were defined in the Principal Reasons.
Following the publication of the Principal reasons, several questions remained. One question left for further submissions was the adjustment of the purchase price payable by the Purchasers, if the Purchasers wished to accept an offer to buy the respective lots in the proposed subdivision. A second question reserved for further submissions concerned the assessment of damages that DGF is entitled to recover from the Di Federicos. The third question concerned costs.

Purchase Price

In the Principal Reasons, I concluded that DGF should be permitted to rescind if it proffered an undertaking, along the lines that I proposed, to enter into a new contract for sale with each of the Purchasers for an increased price determined by reference to the notional saving on the part of the Purchasers in interest that would have been payable had settlement taken place at the time of the notice of rescission given by DGF. Following further directions and discussions between the parties, consensus was reached and orders were made on 27 June 2018 as indicated in the Appendix to these reasons.

Damages

The formulation of the claim by DGF has not been entirely clear. The basis upon which it is entitled to damages is that breaches by the Di Federicos of their contractual obligations to DGF have occasioned loss to DGF. The loss consists of holding charges that would not have been incurred had there been no breach. DGF has now moved to reopen to adduce further evidence as to the quantification of the loss alleged as a consequence of the breaches that I have found. It is therefore inappropriate to say anything further on that question at this stage.

Costs

Two questions concerning costs of the rescission Proceedings now remain for resolution. The first concerns the Di Federicos. The second concerns Mrs Panuccio, one of the Purchasers.

The Di Federicos

At the directions hearing on 22 June 2017, the question was raised of whether the Rescission Proceedings and the Specific Performance Proceedings should be heard separately or should be heard together. Subsequently, an order was made, without opposition, that both proceedings should be heard together on the basis that the evidence in one would be evidence in the other.
In the Rescission Proceedings, the Di Federicos have been successful, in that no order has been made against them that they pay the Purchasers' costs of the Rescission Proceedings. In the ordinary course, costs would follow the event and the Di Federicos contend that, since they were successful in the Rescission Proceedings, they are entitled to their costs as against DGF. DGF does not dispute that contention. On the other hand, in the Specific Performance Proceedings, DGF has been successful and is entitled to its costs of those proceedings.
It would certainly be a complicated task for a costs assessor to distinguish between costs incurred by the Di Federicos in resisting the Rescission Proceedings, on the one hand, and the costs incurred by DGF in prosecuting the Specific Performance Proceedings, on the other. A preferable course is to apportion the costs between the two proceedings. The Di Federicos contend that approximately half of the costs incurred in the joint hearing was attributable to each of the proceedings and that the appropriate course would be to make no order as to costs as between DGF and the Di Federicos.
I consider that a fair apportionment would be to require the Di Federicos to pay a fixed proportion of DGF's overall costs of the two proceedings. The fixed proportion should be determined by a consideration of:

the costs incurred up to the time when an order was made for a joint hearing;
a broad assessment of the issues raised in each of the two proceedings; and
the time taken to deal with each of those issues. However, since the assessment of damages has not yet been completed, it is premature to fix a percentage at this stage.

Mrs Panuccio

Agreement has been reached between DGF, on the one hand and the Purchasers, other than Mrs Panuccio, as to the order for costs that should be made. However, Mrs Panuccio was separately represented and seeks an order that her individual costs be paid by DGF. DGF contends that there should be a cap on the costs orders in her favour, because, it says, there was no justifiable reason for her being separately represented in circumstances where all of the other Purchasers were represented by the same solicitors and counsel.
Mrs Panuccio advances a number of matters in support of her contention that a costs order be made in her favour in the sum of $147,000. First, it has not been suggested that costs were wasted or improperly incurred. Mrs Panuccio engaged her legal representation before the commencement of the Rescission Proceedings. She contends that her case was different from the others and there may be a prospect that some contracts would be rescinded and others might not be. While there was a possibility of a conflict, no such conflict appears to have emerged.
When the matter came before me for directions on 22 June 2017, the possibility was raised that, since all of the Purchasers had the same interest, it was logical that they should be represented by one set of lawyers. However, it was intimated that Mrs Panuccio's position was different from the other Purchasers because of a dispute as to the purchase price payable by Mrs Panuccio and whether a loan had been made by Mr and Mrs Panuccio of $200,000 that was to be set off against the purchase price.
The parties accepted that it was not appropriate at that time to deal with the question of separate representation but that the matter should be considered in some detail prior to the hearing. I afforded the parties the opportunity to speak to each other about those questions and suggested that the matter be considered at a further directions hearing. I provisionally fixed 31 July 2017 as a time to consider the question of separate representation. However, in the events that happened, the question of separate representation was not subsequently raised by the parties or by the Court and Mrs Panuccio continued to be represented separately.
In the principal Reasons, I indicated there was no basis for depriving each of the Purchasers of their costs of the proceedings. That is the presumption of the legislation. Nevertheless, DGF contends that it was unreasonable for Mrs Panuccio to be separately represented and suggests that she should be given no more than half of her costs.
One might expect that, in the ordinary course in a case such as this, where there are multiple purchasers having much the same interests in resisting an order permitting rescission of contracts for sale made off the same plans, there may be no need for separate representation of each purchaser. On the other hand, DGF was seeking separate and distinct relief against each of the Purchasers and each of the Purchasers was entitled to have his or her case adequately advanced. As a matter of convenience, all of DGF's claims against all of the Purchasers were made in one set of proceedings, in the expectation that certain identical issues would be thrown up in the separate claims for relief by DGF against each of the Purchasers. It is perhaps unfortunate that the matter raised on 22 June 2017 was not taken up thereafter. Had the matter been taken up, some arrangement may have been made for Mrs Panuccio to be represented separately on some limited basis. However, neither DGF nor Mrs Panuccio pursued the matter.
The orders for costs made against DGF in favour of the other Purchasers range from $40,286.98 to $40,980.25. DGF contends that Mrs Panuccio should receive costs in a sum no more than $40,980.25. DGF does not contend, as I understand the position, that the costs incurred by Mrs Panuccio were unreasonable or excessive, had Mrs Panuccio been the only defendant in proceedings brought under s 66ZL [2] for permission to rescind the contract for sale between DGF and Mrs Panuccio. However, it contends that it would be unfair for it to be ordered to pay all of the costs incurred by Mrs Panuccio in circumstances where, under s 66ZL, the vendor is liable for a purchaser's costs irrespective of the outcome, unless it is established that the purchaser acted unreasonably in refusing to consent to rescission.
It has not been suggested that there was any conflict between Mrs Panuccio, on the one hand, and the other Purchasers, on the other, by reason of the separate issue concerning the alleged loan of $200,000. That is to say, there is no reason why the same solicitors and counsel could not have represented Mrs Panuccio as well as the other Purchasers. There has been no suggestion that those solicitors and counsel would not have been prepared to act and appear for Mrs Panuccio.
True it is that each of the Purchasers would, in ordinary circumstances, be entitled to have his or her own legal representation. However, the restrictions of the exercise of contractual rights imposed by s 66ZL require that a different approach be taken. The legislation would apply in circumstances where multiple claims have to be considered, as in the present case. Where there are multiple purchasers in similar or identical interests, it may well be unreasonable for there to be separate representation in relation to each claim for permission to rescind made by one vendor in relation to the same subdivision or strata plan. To the extent that there was a conflict, clearly separate representation could be required. However, as I have said, that proposition has not been advanced in the present case.
There is nothing in s 66ZL that requires purchasers having a similar interest to join in having the same representation and nothing disentitles a particular purchaser to the benefit of s 66ZL(8) simply because that purchaser has his or her own representation. Further, as I have indicated, s 66ZL(7)(f) required the Court to consider the effect of rescission on each Purchaser.
In the circumstances, I consider that the appropriate order would be for Mrs Panuccio to have her costs up to 22 June 2017 but that her costs from that time be limited to the proportion of the costs payable to the other Purchasers attributable to the Rescission Proceedings in respect of the period after that time, together with an allowance for the additional costs that would be attributable to the issue as to the alleged loan of $200,000. I am mindful of the difficulties that might be occasioned by an attempt to assess those costs formally. I therefore propose to direct DGF and Mrs Panuccio to endeavour to reach a consensus as to the assessment of costs on that basis. The Specific Performance Proceedings are presently listed for further hearing on 23 August 2018 and I will stand the Rescission Proceedings over to that date for finalisation of the question of costs unless the parties reach a consensus in the interim.

THE COURT ORDERS THAT: Upon the plaintiff having given to the Court the written undertakings set out below (Undertaking): 1. Pursuant to s 66ZL(6) of the Conveyancing Act 1919 (NSW) the plaintiff is permitted to rescind by notice in writing given within 14 days from the date of these orders each of the sale of land contracts listed in Appendix A to the judgment of the Court in these proceedings dated 23 March 2018. Each notice is to be served together with the offer in writing referred to in the Undertaking. 2. The plaintiff is to pay the first to eighth and tenth to fifteenth defendants' costs in a specified gross sum as follows: 1. First and second defendants: $40,980.25; 2. Third and fourth defendants: $40,644.72; 3. Fifth and sixth defendants: $40,644.72; 4. Seventh and eighth defendants: $40,286.98; 5. Tenth and eleventh defendants: $40,644.70; 6. Twelfth and thirteenth defendants: $40,644.72; and 7. Fourteenth and fifteenth defendants: $40,644.72. 1. Liberty to apply is reserved for the plaintiff on 24 hour notice in relation to any issues which the plaintiff may encounter in relation to access to the land owned by the fifteenth and sixteenth defendants to the extent that such access is required to perform the works required under the Undertaking.

UNDERTAKING 1. DGF Holdings Pty Ltd (DGF) will, as soon as is reasonably possible, and in any event no later than 27 August 2018, do all such acts and things, execute all such documents and pay all such fees as may be necessary to procure the registration of the proposed plan of subdivision by NSW Land Registry Services including, but not limited to: 1. causing such of the works required by the Fairfield City Council (Council) by its email dated 13 October 2015 as may still be required by Council to be undertaken to the standard required by the Council; 2. lodging any necessary application to the Council for variation of Development Consent Nos 1171.1 of 2009 and 1171.3 of 2009 in order to accommodate the fill currently on proposed lots 11 and 12; 3. lodging any necessary application to the Council for consent to the proposed subdivision; 4. lodging the s 88B instrument necessary for registration of the proposed plan of subdivision by NSW Land Registry Services; 5. meeting any requisitions raised by the Council or by NSW Land Registry Services in relation to any of the above. 1. DGF will at the same time as giving any notice of rescission to any one or more of the First to Fifteenth Defendants in proceedings number 2016/246532 (Purchasers) in respect of any of the Contracts for Sale, make an offer in writing to such Purchaser or Purchasers to enter into a new contract for the sale and purchase of the proposed lot that is the subject of the rescinded Contract for Sale on the same terms as the rescinded Contract for Sale except that: 1. The price to be paid under any such new contract will be the price payable under the rescinded Contract for Sale together with a sum calculated on the balance of the purchase price payable under the rescinded Contract for Sale from 10 June 2016 until the date of acceptance of the offer (and the making of a new contract for sale) at the rate of 4.75% per annum less, in relation to each Purchaser, the costs that DGF was ordered to pay to each Purchaser; 2. Any provision relating to rescission of the Contract for Sale by reason of the proposed plan of subdivision not being registered will be deleted; 3. The amount of the deposit payable under any new contract will be the amount of the deposit paid under the rescinded Contract for Sale. 1. DGF will not withdraw any such offer prior to the expiration of 28 days after the making of the offer. 2. DGF will apply the deposit paid under any rescinded Contract of Sale as the deposit payable under any Contract for Sale entered into as a consequence of acceptance of such an offer.

Endnotes

See DGF Property Holding Limited v Di Federico; DGF Property Holdings Pty Ltd v Butos [2018] NSWSC 344
Conveyancing Act 1919 (NSW). DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 24 July 2018

Conveyancing Act 1999(NSW)

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Judgment (12 paragraphs)

Legislation Cited (2)

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Cited By (4)