This judgment concerns a Notice of Motion dated 2 February 2022 whereby the plaintiff seeks an order that a sum of $12,882.54 be paid out of Court. The plaintiff also seeks an order for the payment of his costs of the proceedings, with the proceedings to be dismissed thereafter. In order to understand the circumstances in which the motion has been brought, it is necessary to refer to the history of the proceedings, and also to aspects of related proceedings that involve the same parties.
These proceedings were commenced by Summons filed on 1 August 2016. The plaintiff, Mr Fordyce, sought an order under s 74K of the Real Property Act 1900 (NSW) for the extension of the operation of a caveat (AK577556) he had lodged in July 2016 against the title to a property in Davistown owned by the first defendant, Mrs Slattery. Mrs Slattery was at that time the only defendant.
The interest claimed in the caveat was a charge. The claimed charge was based upon the provisions of an Engagement Letter (dated 22 February 2010) that had been signed by Mrs Slattery for herself and also on behalf of companies associated with her known as Dee-Tech Pty Ltd ("Dee-Tech") and Bright Star Laundry Pty Ltd ("Bright Star"). The Engagement Letter concerned the provision of legal services by Mr Fordyce, who was then practising as a solicitor.
On 12 October 2015, Mr Fordyce had obtained a judgment in the Local Court to the effect that Mrs Slattery (although not the companies) was liable to him under the Engagement Letter in an amount to be determined.
In these proceedings, orders were made on 3 August 2016, and on no fewer than five subsequent occasions, extending the operation of the caveat for specific periods. However, on 28 July 2017, after a judgment had been given in the Local Court on 10 July 2017 in favour of Mr Fordyce against Mrs Slattery in the sum of $63,389.40, this Court made an order extending the operation of the caveat until further order.
Mrs Slattery appealed against the Local Court judgment given on 10 July 2017, and Mr Fordyce cross-appealed. Those appellate proceedings were heard and determined in this Court by Walton J, who gave judgment on 28 February 2019 (see Slattery v Fordyce; Fordyce v Slattery [2019] NSWSC 173). In short, Walton J refused Mrs Slattery's appeal, and upheld Mr Fordyce's cross-appeal against Dee-Tech and Bright Star. Those companies, along with Mrs Slattery, were thus held liable to Mr Fordyce under the Engagement Letter in the sum of $63,389.40.
On 21 February 2020, Mr Fordyce obtained an order for the joinder of Dee-Tech as the second defendant in these proceedings, and obtained leave pursuant to s 74O of the Real Property Act to lodge a further caveat against the title to a property in Saratoga owned by Dee-Tech, to claim a charge based on the provisions of the Engagement Letter dated 22 February 2010. A caveat (AP922902) was thereafter lodged by Mr Fordyce against the title to the Saratoga property on the basis of the order granting leave.
Thereafter, both caveats remained in operation, and the Local Court judgment in favour of Mr Fordyce remained unsatisfied. Little else occurred in these proceedings until 27 November 2020, when the matter was set down for a final hearing to occur on 24 March 2021. However, on that day, the hearing was vacated. This occurred in circumstances where garnishee proceedings had been commenced in the District Court by a creditor of Mr Fordyce (Ms Leung). An order was made in those proceedings requiring Mrs Slattery to pay the amount of the Local Court judgment debt to Ms Leung instead of Mr Fordyce.
On about 1 April 2021, Mrs Slattery paid the amount of the Local Court judgment debt ($63,389.40) into the District Court. The competing claims in respect of that amount were later determined by J Smith SC DCJ, who gave judgment on 8 October 2021 (see Leung in her capacity as Executrix of the Estate of the late Robert Ho v Fordyce [2021] NSWDC 522). An order was made by his Honour for the $63,389.40 to be paid to Mrs Louise Fordyce, as the assignee of the judgment debt from Mr Fordyce.
In the meantime, Mrs Slattery sought to have the two caveats removed. On 22 April 2021, Slattery J made orders that provided for the removal of the caveats upon the undertaking of Mrs Slattery (for herself and on behalf of Dee-Tech) to pay $16,192.26 into this Court. It seems that that figure was regarded as the amount of interest that had accrued on the judgment debt. However, some contention about the figure arose, and the figure was re-calculated. On 3 June 2021 Slattery J noted that a different amount, namely $12,882.54, had been paid into Court. The Court records indicate that he payment was made by Mrs Slattery. The Notice of Motion presently before the Court is concerned with the fate of those funds.
Mr Fordyce no longer seeks the final relief claimed, being orders for the enforcement of the charge claimed pursuant to the Engagement Letter dated 22 February 2010. He merely seeks an order (presumably pursuant to Uniform Civil Procedure Rules 2005 (NSW) ("UCPR") rr 41.3 and 41.11) for the $12,882.54 to be paid to Mrs Fordyce and an order in his favour for his costs of the proceedings, with the proceedings to be dismissed thereafter.
The Notice of Motion is supported by affidavits of Mr Fordyce and Mrs Fordyce, each sworn on 2 February 2022. In opposition to the motion, the defendants rely upon affidavits of Mrs Slattery sworn on 12 May 2021 and 12 May 2022. Both sides have filed written submissions in accordance with directions made by the Court with a view to determining the matter on the papers.
In relation to the sum of $12,882.54 that has been paid into Court, Mr Fordyce submitted that it is an agreed amount of interest on the Local Court judgment. He submitted that as such judgment and interest has been assigned to Mrs Fordyce, an order should be made for the money to be paid to her.
The defendants oppose the making of such an order. They contend that they have four offsetting claims, in a greater amount, that have priority over any claim Mrs Fordyce may have.
The first offsetting claim is a challenge to the correctness of the amount of the Local Court judgement itself. This claim (for $29,092.35) cannot be maintained as the matter has already been determined in the Local Court proceedings, and Mrs Slattery's appeal against that determination was dismissed by Walton J. I note that an attempt by Mrs Slattery to raise this, or at least a similar, offsetting claim was similarly rejected in the District Court proceedings.
The second offsetting claim is based on an alleged failure by Mr Fordyce to take steps to recover certain costs of Court of Appeal proceedings for Dee-Tech. However, even if a claim of that character is available to Dee-Tech, the claim has not been established, and the present application, involving the fate of a small sum paid into Court, is not an appropriate vehicle for its determination.
The third offsetting claim is a potential claim for damages sustained by the defendants as a result of what is said to be the unlawful lodgement of caveats by Mr Fordyce. It seems that these caveats were the subject of other proceedings, in which the defendants defeated applications for the operation of the caveats to be extended. Again, even if claims of that character are available to the defendants, they have not been established, and this application is not an appropriate vehicle for their determination.
The fourth offsetting claim is based upon a fixed sum costs order (for $3,100) made in the Federal Circuit and Family Court of Australia (Division 2) in favour of Mrs Slattery against Mrs Fordyce. I think that this debt can be raised as an offset against an order that the $12,882.54 be paid to Mrs Fordyce. The order sought in favour of Mrs Fordyce is based upon the existence of a judgment debt that has been assigned to her. It seems that the judgment sum of $63,389.40 has now been paid to Mrs Fordyce, but not the interest that accrued on the judgment. It is thus said that Mrs Fordyce is entitled to the $12,882.54 that was paid into Court by Mrs Slattery on account of accrued interest. However, if Mrs Fordyce is a creditor of Mrs Slattery in that amount, it is also the case that Mrs Slattery is a creditor of Mrs Fordyce in the amount of $3,100. The existence of these mutual debts would give rise to rights of set-off under statute (for example, Civil Procedure Act 2005 (NSW), s 21) and those rights would be recognised in equity. These rights of set-off must be considered when determining the respective entitlements of Mrs Slattery and Mrs Fordyce to the fund of $12,882.54. It therefore seems to me that Mrs Fordyce is not entitled to claim the entire fund. Mrs Slattery is entitled to set-off against Mrs Fordyce's debt her own debt of $3,100. In these circumstances, I think that Mrs Slattery is entitled to recover $3,100 out of the fund, with Mrs Fordyce entitled to the balance of $9,782.54.
I note that UCPR r 41.11 speaks of an order that funds in court be paid out to the "party entitled". Whilst Mrs Fordyce is clearly aware of the proceedings, she is not a party thereto. In order to avoid any argument that an order under UCPR r 41.11 cannot be made in her favour, I think that Mrs Fordyce should be joined as a party to the proceedings pursuant to UCPR r 6.24. For convenience, I will order that she be added as the third defendant.
I turn now to the question of costs. Mr Fordyce seeks an order that Mrs Slattery and Dee-Tech pay his costs of the proceedings. In essence, he submits that a costs order in his favour is appropriate because, had the judgment debt been paid earlier, he would have withdrawn the two caveats and the proceedings would not have been necessary.
Mrs Slattery and Dee-Tech resist a costs order against them. They refer to the fact that the Local Court judgment was assigned to Mrs Fordyce on 15 March 2019, yet notice of the assignment was not given until about 15 July 2021 in the course of the District Court proceedings. Mrs Slattery and Dee-Tech submitted that the continuation of these proceedings by Mr Fordyce after the assignment on 15 March 2019 amounted to an abuse of process as he no longer had standing.
I do not accept that submission. Entry into the Deed of Assignment on 15 March 2019 did not effect an assignment at law pursuant to s 12 of the Conveyancing Act 1919 (NSW). Unless and until notice of the assignment was given to the debtor in accordance with that section, the assignment operated only in equity. That is to say, Mr Fordyce remained, at law, the creditor in respect of the debt, and he had standing to continue the proceedings seeking the enforcement of security in respect of the debt.
In circumstances where:
1. the judgments given in the Local Court on 12 October 2015 and 10 July 2017 established that Mrs Slattery was liable to Mr Fordyce under the Engagement Letter dated 22 February 2010;
2. the judgment given in this Court on 28 February 2019 established that Dee-Tech was also liable to Mr Fordyce under the Engagement Letter dated 22 February 2010;
3. cl 12 of the Engagement Letter clearly contains an agreement by Mrs Slattery and Dee-Tech to charge any real property to secure amounts owed pursuant to the Engagement Letter, and permits the lodgment of caveats in that regard; and
4. it was not until 3 June 2021 that the amount of the Local Court judgment debt and an amount for interest accrued on the debt had been paid into Court,
I consider it appropriate, in the exercise of the Court's discretion as to costs, to order that Mrs Slattery, and Dee-Tech (in respect of the costs after it became a party) pay Mr Fordyce's costs of the proceedings up to and including 3 June 2021.
This was a case involving caveats where the underlying dispute was, in substance, the subject of determination in other proceedings. That determination was favourable to Mr Fordyce. He was plainly entitled to maintain caveats, at least until the payment into Court on 3 June 2021. Shortly thereafter, Mr Fordyce indicated to the Court that he was no longer pursuing substantive relief. From that point, there was no longer a need for the proceedings to continue, other than to deal with the funds in Court.
That matter now having been determined, it is appropriate for the proceedings to be dismissed, as sought in the Notice of Motion. Whilst that order engages UCPR r 42.20(1) which provides, as a starting point, for the plaintiff to pay the defendant's costs, for reasons including those set out above, the Court should order otherwise in this case. The proceedings were commenced following the service by Mrs Slattery of a lapsing notice in respect of caveat AK577556. Mr Fordyce was justified in seeking to maintain that caveat, and justified in later seeking to lodge and maintain a caveat on the title to Dee-Tech's Saratoga property. In so doing, Mr Fordyce was exercising rights clearly conferred by the Engagement Letter that had been held to be binding on both Mrs Slattery and Dee-Tech. In my opinion, the burden of Mr Fordyce's costs (up to and including 3 June 2021) should be borne by those defendants. I will not make any order for costs of the Notice of Motion in circumstances where no party was entirely successful.
Accordingly, the Court will make the following orders:
1. Order pursuant to UCPR r 6.24 that Louise Aileen Fordyce be added as the third defendant to the proceedings;
2. Order pursuant to UCPR rr 41.3 and 41.11 that the $12,882.54, paid into Court on 3 June 2021 be paid out of Court as follows:
1. $9,782.54 to the third defendant, Louise Aileen Fordyce; and
2. $3,100 to the first defendant, Rhonda Slattery.
1. Order that the proceedings be dismissed;
2. Order that the plaintiff's costs of the proceedings, up to and including 3 June 2021, be paid by the first defendant, and that such costs be also paid by the second defendant but only in respect of costs incurred from the date the second defendant became a party, namely, 21 February 2020;
3. Note that the above costs order is not intended to displace any of the costs orders made earlier in the proceedings.
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Decision last updated: 01 June 2022