Maria Saravinovksa v Krste

Supreme Court of NSW|2016-09-07|Before: Kunc J

Judgment

I delivered the principal judgment in these proceedings on 12 July 2016: Maria Saravinovksa v Krste (Chris) Saravinovski; Chris Saravinovski v George Saravinovski (No 6) [2016] NSWSC 964 (the "Principal Judgment"). Defined terms in the Principal Judgment have the same meaning in these reasons. Furthermore, unless the context requires otherwise, in these reasons a reference to Maria includes George, as she is now the executrix and sole beneficiary of his estate.
At the conclusion of a further hearing on 7 September 2016 I made the orders as to costs and related matters which are set out in paragraph [75] below, subject to a subsequent amendment under the slip rule (the "Orders"). These are the reasons for the Orders. The circumstances necessitating the application of the slip rule are described in paragraphs [41] to [45] below.

Background

The background is sufficiently explained by these passages from the Principal Judgment: 8. The origin of these proceedings is Maria's allegation that while in Macedonia, in the days before she married George, Chris made certain representations to her about property she would receive in Australia if she married George and looked after Chris and Rada. Maria says she relied on those representations and acted accordingly. Chris, and those members of the family allied with him, deny her allegations in their entirety. … 11. The family was, and remains, split into two. On the one side is Chris, supported by Bill and Louie. On the other side are Maria and George, supported by their children. The implacable hostility of each alliance towards the other was made clear by the evidence and by what I was able to observe in the court room. Maria and George (but not Chris) called third parties such as old family friends to provide what was submitted the Court should accept as credible, independent evidence in support of their cases. 12. By statement of claim filed on 11 November 2011 Maria commenced proceedings which, in their final form, sought orders against Chris under the Property (Relationships) Act 1984 (NSW) (the "PRA") that he pay a just and equitable amount to her and, under the PRA or by reference to principles of estoppel, that he transfer to her what might be described, at least until December 2009, as having been the Saravinovski family home ("Maria's Case"). 13. By summons filed on 17 February 2012 and statement of claim filed on 5 April 2012, Chris sues George for the repayment of $800,000 that Chris alleges is owing and secured over one of the properties. He also seeks interest on that sum calculated from 2003 ("Chris' Case"). 14. By cross-claim filed in Chris' Case on 29 June 2012 as subsequently amended, George cross-claims against Chris seeking an account of the money which George says he paid to Chris between 1972 and 2009, a declaration that Chris holds certain property on trust for him and, among other things, equitable damages for detrimentally relying on representations made by Chris ("George's Case"). … 20. These further general observations should be made. The hearing was originally fixed for 10 days. It ultimately occupied 34 hearing days. As a result of case management hearings before me it was eventually fixed for 15 days commencing on 14 October 2014. It began on the appointed day and continued until 7 November 2014, when it was apparent that it would still not finish. The hearing then continued between 10 February 2015 and 2 April 2015. The evidence just concluded in the allotted time. The Court was informed that George and Maria had exhausted their available finances to fund the litigation. Directions were made for the filing of extensive written submissions and the hearing concluded with addresses limited to one day on 5 June 2015. 21. A number of witnesses, including Maria, gave their evidence (including, by the Court's direction, viva voce in chief) through an interpreter. Maria was cross-examined for 8 days (the length being attributable in large part to the need for an interpreter) and George for 3 days. Because of his incapacity, Chris could not be cross-examined. 17 witnesses gave evidence with nearly all cross-examined. The trial bundle was 1309 pages long, of which 434 pages comprised affidavit evidence. There were 133 additional individual exhibits. The transcript numbers 2326 pages. The parties' final written submissions were 432 pages long and covered 44 issues which were raised on the pleadings. Every aspect of the history of the Saravinovski family over nearly fifty years that anyone thought might be of any relevance was thoroughly explored. .. 26. Credit is the most important issue for the resolution of each of the proceedings. In the case of each member of the Saravinovski family (Chris, Maria, George, Bill, Louie, Bobby and Belinda), the Court is not satisfied that he or she is a reliable witness. Their evidence on any controversial matter is only accepted if it is inherently credible, independently corroborated by contemporaneous records or independent testimony or is otherwise against interest. In contrast to the members of the Saravinovski family, the Court accepts each of the independent (non-family) witnesses as having done the best they can to give truthful evidence to the best of their recollection. 27. In Maria's Case, the Court has determined that Maria is entitled under the PRA to an order adjusting Chris' property interests so that Maria obtains a 30% interest as tenant in common in what was the Saravinovski family home at No 5, Kogarah Bay ("No 5"). (In these reasons properties are identified only by their street number). 28. Chris' Case fails. The Court has found that the mortgage on which Chris sues George has no legal effect. It is therefore unnecessary to consider the various special defences pleaded by George. 29. George's Case also fails. The Court is not satisfied that George gave all his income to Chris or that Chris used funds from George to acquire any of the properties referred to in the proceedings.

The Issues

Consequent upon the Principal Judgment, the parties presented three issues for the Court's determination.
First was the question of costs. This had three aspects: costs generally, a special order in relation to the hearing fees and an application for a variation of the interest rate on costs.
Second, each party sought additional orders to give effect to the Court's decision that Maria had a 30% interest in No 5. By notice of motion Maria sought orders pursuant to s 66G of the Conveyancing Act 1919 (NSW) (the "CA") for the appointment of trustees for sale of No 5. For his part, Chris filed a notice of motion seeking to interpose before any sale of No 5 a process for the independent valuation of No 5 and an opportunity for him to buy out Maria's interest in accordance with that valuation.
Third, Chris' notice of motion also sought a stay of the Principal Judgment pending appeal.

Costs generally - the parties' submissions

Maria submitted that a just order for costs was that a global order should be made in respect of the whole of the proceedings such that Chris should pay 75% of Maria and George's costs (on the ordinary basis), together with interest on those costs.
Chris submitted that costs should follow the event so that there should be an order for costs against Chris in favour of George (or, now, George' estate), for Chris' Case and an order for costs in favour of Chris against George for George's Case. Further, while accepting that Maria should have an order for costs against Chris in respect of Maria's Case, it was submitted that those costs should be substantially discounted to reflect the failure of Maria on her estoppel claim.
Each party accepted that the starting point was UCPR Part 42 r 42.1 that "subject to this part, if the court makes any order as to costs, the court is to order that the costs follow the event unless it appears to the court some other order should be made as to the whole or any part of the costs". They also recognised that the power to award costs, subject to being required to be exercised judicially, was in the discretion of the Court (see Civil Procedure Act 2005 (NSW) (the "CP Act"), s 98).
Maria submitted that the proceedings involved multiple issues and that the evidence she adduced was relevant to all of those matters upon which she and George enjoyed success. In particular, while George had failed in George's Case, the evidence which he called in support of it overlapped, almost entirely, with matters raised in the pleaded defence to Chris' Case and matters alleged in Maria's Case. Maria submitted the Court should apply a broad brush which did not seek to differentiate issues by reference to those on which Maria and George had respectively succeeded or failed.
Maria drew attention to the decision of the Court of Appeal in Hawkesbury District Health Service Ltd v Chaker (No 2) [2011] NSWCA 30: 10. The respondent's reliance upon UCPR 42.1 is misconceived. The rule does not envisage a trial or an appeal being divided into a series of discrete "events" in respect of which one party may be successful as to some and another party successful as to others. What the rule envisages is the substance and reality of the outcome of a proceeding. 11. That proposition was explained by Ward J in Quest Rosehill Pty Ltd v White [2010] NSWSC 1190 at [67]: "I have previously had occasion to refer to what was said in the English Court of Appeal in Roache v News Group Newspapers [1992] TLR 551 (as cited by the Queensland Court of Appeal in Timms v Clift [1997] QCA 61; [1998] 2 Qd R 100) where the question as to who was to be seen as the successful party "in the event" was posed as being a question as to "[w]ho, as a matter of substance and reality, had won? ..." 12. What the respondent was really submitting was that the damages part of the appeal was readily separable from the liability issues and that since she had succeeded on that issue, there should be some adjustment of the costs order in her favour. 13. The applicable principles were summarized in Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 (Beazley, Ipp and Basten JJA) as follows: "38 The principles governing the making of an order as to costs so as to reflect the time taken in dealing with a particular issue in which the successful party in the proceedings or on the appeal did not succeed were reviewed by this Court in Elite Protective Personnel Pty Ltd & Anor v Salmon (No 2) [2007] NSWCA 373. Those principles may be summarised as follows: Where there are multiple issues in a case the Court generally does not attempt to differentiate between the issues on which a party was successful and those on which it failed. Unless a particular issue or group of issues is clearly dominant or separable it will ordinarily be appropriate to award the costs of the proceedings to the successful party without attempting to differentiate between those particular issues on which it was successful and those on which it failed: Waters v P C Henderson (Aust) Pty Ltd(Court of Appeal, 6 July 1994, unreported). In relation to trials it has been said that it may be appropriate to deprive a successful party of costs or a portion of the costs if the matters upon which that party was unsuccessful took up a significant part of the trial, either by way of evidence or argument: Sabah Yazgi v Permanent Custodians Limited (No 2) [2007] NSWCA 306 at [24]. A similar approach is adopted on appeal. If the appellant loses on a separate issue argued on the appeal which has increased the time taken in hearing the appeal, then a special order for costs may be appropriate which deprives the appellant of the costs of that issue: Sydney City Council v Geftlick & Ors (No 2) [2006] NSWCA 374 at [27]. Whether an order contrary to the general rule that costs follow the event should be made depends on the circumstances of the case viewed against the wide discretionary powers of the court, which powers should be liberally construed: State of New South Wales v Stanley [2007] NSWCA 330 at [18] per Hislop J (with whom Beazley and Tobias JJA agreed). A separable issue can relate to " any disputed question of fact or law " before a court on which a party fails, notwithstanding that they are otherwise successful in terms of the ultimate outcome of the matter: James v Surf Road Nominees Pty Ltd (No 2) [2005] NSWCA 296 at [34]. Where there is a mixed outcome in proceedings, the question of apportionment is very much a matter of discretion and mathematical precision is illusory. The exercise of the discretion depends upon matters of impression and evaluation: James v Surf Road Nominees Pty Ltd (No 2) , citing Dodds Family Investments Pty Ltd v Lane Industries Pty Ltd [1993] FCA 259; (1993) 26 IPR 261 at 272. These principles were applied in City of Canada Bay Council v Bonaccorso Pty Ltd (No 3) [2008] NSWCA 57 at [22] and most recently in Turkmani v Visvalingham (No 2) [2009] NSWCA 279." 14. In the appeal the damages issues were addressed with brevity, both in written submissions and at the hearing. The consideration of the quantum issues did not increase the hearing time or otherwise take up "a significant part" of the appeal. The fact that one issue on which a party failed on the appeal is separable or discrete is not, without more, sufficient to warrant departure from the ordinary rule.
She also relied on the observation of Ball J in Tzaneros Investments Pty Ltd v Walker Group Constructions Pty Ltd (No 3) [2016] NSWSC 526, who, after quoting the passage referred to in the preceding paragraph, said: 41. Generally, in applying these principles, the court is less willing to separate issues in relation to the costs of a successful defendant. As Hodgson JA (with whom Allsop P and Macfarlan JA agreed) explained in Macquarie International Health Clinic Pty Ltd v Sydney South West Area Health Service (No 2) [2011] NSWCA 171 at [10]: Where a plaintiff's case fails, it may sometimes be appropriate to order the plaintiff to pay the costs of issues unsuccessfully raised by the defendant, even if those issues are severable, so long as the defendant acted reasonably in raising those issues. It is I think less often the case that a defendant would be ordered to pay the costs of severable issues unsuccessfully raised by an otherwise successful plaintiff. However, the requirements of s 56 of the Civil Procedure Act 2005 that parties assist the court to facilitate the just, quick and cheap resolution of the real issue on the proceedings, and take reasonable steps to resolve or narrow the issues in dispute, do apply to defendants as well as plaintiffs; and this is relevant to the exercise of the costs discretion. See also Griffith v Australian Broadcasting Corporation (No 2) [2011] NSWCA 145 at [19] (per Hodgson JA, with whom Basten JA and McClellan CJ at CL agreed); Bondi Beachside Pty Ltd v Chief Commissioner of State Revenue (No 2) [2014] NSWCA 128.
Chris' submissions were: 1. Costs should follow the event. The outcome of each of the three cases was clear and costs should follow accordingly. 2. In Maria's Case a significant discount was justified because her estoppel claim depended on representational matters which were distinct from her PRA claim. The latter turned on events surrounding her marriage to George. Maria had failed on her estoppel case and had failed on credit. Cross-examination and submissions in relation to Maria's credit had themselves occupied several days of the hearing. 3. George's Case was factually quite discrete from Maria's case, involving an examination of his relationship with Chris. 4. Insofar as there would be any need to identify what attendances related to which case, a costs assessor was best qualified to deal with those issues. Maria's solicitor's own evidence on the present application that George's Case had occupied only between 8% and 12% of the solicitor's attendances suggested that he had been able to keep clear records of which attendances related to which case.
Maria made two answers in response.
First, she submitted that Chris' submissions in relation to Maria's Case raised a false dichotomy between her estoppel claim and her claim under the PRA. With the possible exception of the quite confined evidence about the circumstances of her betrothal to George, all of the evidence (and hence trial time) dealing with what she had done for Chris after she married George was relevant to both her estoppel claim (to demonstrate what she had done in reliance upon the alleged representations) and her PRA claim (to demonstrate her domestic support, personal care and non-financial contributions: see ss 5(2) and 20(1)(a) of the PRA).
Second, it was submitted that in proceedings of this length and factual complexity, it was inappropriate and unrealistic to leave to a costs assessor the task of parsing to which claim particular attendances related for the purposes of costs.

Costs generally - resolution

These proceedings are an excellent example of a case where a broad brush global costs order is required to achieve a just outcome. Looking at the three cases overall, it is clear that Maria and George had by far the greater measure of success over Chris. Chris' victory was confined to his resistance of George's Case. The Court accepts Maria's submission that the extent of Chris' victory (being time and effort taken in matters solely limited to George's Case) is properly reflected by a 25% discount in the fruits of Maria's and George's victory insofar as costs are concerned. Maria's case was also advocated on the basis that result would not require any special costs order in favour of Maria (to which the Court considers she clearly would have been entitled) in respect of costs thrown away by the late notification that certain witnesses in Chris' Case who had sworn affidavits were not to be called.
There are five reasons for the Court's conclusion expressed in the preceding paragraph.
First, although not formally consolidated, both sets of proceedings involving all three cases were heard together. Although there were in effect three cases, the overall dynamic of the litigation was binary: Maria and George (who had common representation) on one side and Chris on the other (see paragraph [11] of the Principal Judgment set out in paragraph [3] above). Insofar as the actual hearing was concerned, there was not a day when evidence or submissions relevant to each of the three cases did not take place. Any attempt at apportionment of court time between the three cases would be difficult and inaccurate in equal measure.
Second, as might be expected, the majority of Maria's, George's and Chris' evidence went to all three cases. The evidence of all the other family members went to at least two of the three cases, if not all three cases. The evidence of each non-family member was relevant, in part or whole, to at least two, if not all three, cases.
Third, the Court accepts Maria's submission (see paragraph [16] above) that with the exception of the evidence concerning her betrothal to George (in particular, the representations alleged to have been made to her at that time), the balance of her evidence was relevant to both her estoppel claim and her PRA claim. It would be both contrary to principle and practice as set out in the authorities cited above for the Court to determine some reduction in the costs to which Maria is otherwise entitled by reference to the time taken up with evidence of her betrothal to George.
Fourth, the Court accepts that George's evidence of his financial dealings with his father would not have been explored in the same detail if George's Case had not been part of the proceedings. That fact is the basis for the largest part of the discount which the Court has determined in favour of Chris. However, the discount is also informed by the fact that the force of the submission is blunted by two considerations: 1. As I observed in paragraph [266] of the Principal Judgment, George's case "gave rise to an extraordinarily detailed analysis, as far as the evidence allowed it to go, of the financial dealings between the parties" (emphasis added). The point is that although the examination was detailed, it was in respect of a relatively confined group of documents. 2. Some examination of George's financial circumstances and alleged contributions towards his father would in any event have been necessary in connection with Maria's PRA claim because "the parties also accepted that by virtue of their being married, George's assets should be treated as Maria's marital property" (Principal Judgment, paragraph [410]).
Fifth, the power to award costs under the CP Act and the Uniform Civil Procedure Rules must itself be exercised so as to give effect to the overriding purpose of facilitating "the just, quick and cheap resolution of the real issues in the proceedings" (s 56(2) of the CP Act). That includes the Court being cognisant of the possibility, and consequences for the parties, of costs having to be assessed. While this outcome cannot always be avoided, the need to facilitate the overriding purpose means that the Court should strive to make costs orders that do not invite an unnecessarily complicated assessment process.
In the present case, determining costs in a broad brush way by reference to costs incurred by particular parties means that any assessment process will be relatively straightforward. With no disrespect to the skills and diligence of costs assessors, the costs orders sought by Chris would commit to a costs assessor the complex task of having to assign particular attendances and disbursements, either in whole or in part, to particular cases over a very large case with multiple issues. That would require extensive written submissions prepared on behalf of the parties. In other words, to make such a costs order would only be to open up another theatre in this family's litigious war. To do so would be neither to facilitate the overriding purpose nor advance the parties' interests in resolving the litigation and getting on with their lives.
Orders 1 and 4 are intended to give effect to this aspect of the Court's decision.

Costs - hearing fees

In accordance with the usual practice of the Court, Maria has been charged hearing fees. These amount to a substantial sum.
The parties accepted that, normally, hearing fees were a disbursement that would be subsumed in the Court's overall costs order. However, there was some urgency in the present case because Maria was primarily liable for those fees, had not yet paid them and had now been contacted by debt collectors apparently acting on behalf of the Crown.
Having indicated my view as to how costs generally should be determined, there was no dispute between the parties that liability for the hearing fees should be divided accordingly. Furthermore, because it was not disputed that Maria is indigent and dependent upon receiving the proceeds of sale of No 5 and reimbursement of her costs in order to be able to pay the hearing fees, the Court is satisfied that it is appropriate that she not be required to pay those hearing fees until she has received the fruits of her success in the proceedings.
Accordingly, the Court exercised its jurisdiction under Regulation 10 of the Civil Procedure Regulation 2012 (NSW) to make Orders 3 and 6. As a matter of fairness to Chris' side of the record, I was satisfied that Chris' obligation to pay his proportion of the hearing fees should also be delayed until the date Maria is required to pay her share of those fees.

Costs - interest rate on costs - the parties' submissions, including an oversight

Maria sought a variation in interest on costs pursuant to s 101 of the CP Act, which since 24 November 2015 has provided: 101 Interest after judgment … (4) Unless the court orders otherwise, interest is payable on an amount payable under an order for the payment of costs. (5) Interest on an amount payable under an order for the payment of costs is to be calculated, at the prescribed rate or at any other rate that the court orders, as from the date the order was made or any other date that the court orders.
Chris did not dispute the appropriateness of Maria receiving interest on costs insofar as she would be able to demonstrate that she had in fact paid legal costs during the course of the litigation. However there was a dispute about the appropriate interest rate.
It will be observed (see paragraph [31] above) that under s 101(5) of the CP Act interest on costs runs "at the prescribed rate or at any other rate that the court orders". The Court had been told during the course of the proceedings that Maria and George had exhausted their funds and had been required to take out a loan to fund the litigation. There was evidence on the present application that such a loan had been taken out (in the names of George and Belinda but Chris made no point about this) from Hargraves Secured Investments Limited (the "HSIL Loan"). The evidence showed what interest rate was being charged on the HSIL Loan.
The written submissions that had been provided on behalf of Maria include an application that the Court should order Chris to pay the interest costs which had been incurred on the HSIL Loan. Mr Sirtes of Senior Counsel, who appeared with Ms Avery-Williams of Counsel for Maria, candidly accepted that it was difficult to identify the source of the Court's power to make such an order. It was accepted that interest on the HSIL Loan would not normally fall within the description of costs for the purposes of a costs order or constitute a disbursement for the purposes of such an order.
It was ultimately submitted for Maria that the Court had power to make an order requiring Chris to pay a sum equivalent to the interest which Maria had incurred on the HSIL Loan pursuant to s 74P of the Real Property Act 1900 (NSW): 74P Compensation payable in certain cases (1) Any person who, without reasonable cause: (a) lodges a caveat with the Registrar-General under a provision of this Part, (b) procures the lapsing of such a caveat, or (c) being the caveator, refuses or fails to withdraw such a caveat after being requested to do so, is liable to pay to any person who sustains pecuniary loss that is attributable to an act, refusal or failure referred to in paragraph (a), (b) or (c) compensation with respect to that loss. (2) Compensation referred to in subsection (1) is recoverable in proceedings taken in a court of competent jurisdiction by the person who claims to have sustained the pecuniary loss. (3) A person who is a caveator is not entitled to bring proceedings under subsection (1) (b) if that person, having had an opportunity to do so, has failed to take all reasonable steps to prevent the caveat from lapsing.
The factual basis for such a claim appears in the Principal Judgment: 226. On 15 December 2011 (one month after Maria had begun Maria's Case and one day before its first return date) Chris lodged a caveat over No 7 relying upon the 2003 Mortgage. The nature of the estate or interest claimed was described in the caveat as "pursuant to unregistered mortgage in respect of loan advance of $1,000,000 from caveator to registered proprietor and Bill Saravinovski". Chris' signature on the caveat was witnessed by Mr Bryant, whose firm was given as the address for service of any lapsing notice. George issued a lapsing notice which led to the commencement of Chris' Case.
As a consequence of the outcome of these proceedings, the interlocutory extension of Chris' caveat over No 7 was terminated. Mr Sirtes SC outlined an argument to the effect that Maria and George had been required to take out the loan because the Caveat over No 7 had prevented what would otherwise have been the sale of that property to fund the litigation.
Quite apart from the novelty of the argument, both parties accepted that it was attended by procedural difficulties at this late stage of the proceedings. No claim for such damages had been included in the proceedings and each party would have adduced additional evidence if it had been. Dr Birch of Senior Counsel, who appeared for Chris, foreshadowed opposition to an amendment to these proceedings or the commencement of fresh proceedings to bring such a claim by reference to principles of Anshun estoppel.
After some debate between the parties, it was accepted on behalf of Maria that if the Court were to exercise its undoubted jurisdiction in relation to the interest rate on costs paid, this would go a considerable way to dealing with the problem which had enlivened the discourse set out in paragraphs [35] to [38] above. Accordingly, it was to that aspect of the argument that the parties turned their attention.
The essential ground of opposition advanced on behalf of Chris to an interest rate other than the prescribed rate was a concern that it may have been the case (there was no evidence about this) that the HSIL Loan had been drawn down and interest incurred before costs had in fact been paid. If this had occurred, there would be a real unfairness in Chris in having to pay that interest.
In the course of preparing these reasons it became apparent to me that Chris' argument was, with respect, misconceived. This was because both parties argued the application by reference to ss 101(4) and (5) not in their current form, but rather as they were before 24 November 2015: (4) The court may order that interest is to be paid on any amount payable under an order for the payment of costs. (5) Interest under subsection (4) is to be calculated, at the prescribed rate or at such other rate as the court may order, as from: (a) the date or dates on which the costs concerned were paid; or (b) such later date as the court may order.
The Court was satisfied that insofar as Maria could demonstrate that costs were paid out of the HSIL Loan, then, from the date on which those costs were paid, interest should be calculated so as to compensate Maria at the same interest rate that was being incurred under that loan. Interest is allowed on costs that have been paid to compensate a party for the loss of the benefit of the use of the funds. It is not necessary for a party to demonstrate what he or she might have done with the funds but for having to pay the costs.
In its amended form s 101(5) provides that interest will run "as from the date the order was made or any other date that the court orders". The new default position of interest running from the date of the order presumably reflects a view that, prima facie, interest should only run from the date on which the obligation to pay costs came into existence. Nevertheless, the Court retains a discretion to order an earlier date. Where a party has had to borrow money to fund litigation, the compensatory nature of the power to award interest on costs paid will be better served by an interest rate being ordered which matches the interest rate that the party has had to pay on its litigation loan, with such interest to run from the date the costs were actually paid. That is because Maria has been able to demonstrate that an actual interest cost was incurred in paying fees from the HSIL Loan. However, making the starting date (at either interest rate) from when the costs were paid also meets Chris' concern to ensure that he is not liable for interest on any drawdown of the HSIL Loan before costs were actually paid.
I should make it clear that, in the discretionary circumstances of the present case, the Court's decision is also based on its satisfaction that Maria had no alternative means of funding the litigation other than by taking out the HSIL Loan. It may be that a different exercise of discretion would be appropriate, both as to from when interest runs and at what rate, if a party has chosen to take out a loan to fund his or her litigation when in fact they could have done so out of their own funds. That is not this case.
Orders 2 and 5 were intended to give effect to the Court's conclusion on this point. Because of the amendments to s 101 of the CPA only coming to attention after the hearing it is necessary for the Court to make an order under the slip rule specifying the date from which interest should run. In this case that should be from the date costs were paid either at the prescribed rate or, for sums paid from the HSIL Loan, at the rate charged on that loan. Neither party wished to take up the Court's invitation to address on this application of the slip rule. The Court will therefore make the orders under the slip rule set out in paragraph [74] below.

Valuation or partition - the parties' submissions

In giving effect to the Principal Judgment the Court made this order on 8 August 2016 in relation to No 5: 1. Pursuant to s 20 of the Property Relationships Act 1984 (NSW) (the "Act") the interest of the Defendant Chris (Krste) Saravinovksi in the property contained in folio identifier XXX (the "Property") be adjusted so that with effect from the date of this order the Property is held as to 30% by the Plaintiff Maria Saravinovska and 70% by the Defendant Chris (Krste) Saravinovski as tenants in common;
By her notice of motion, Maria sought orders under s 66G of the CA for the appointment of trustees for sale of No 5 to enable her to realise the interest which the Court had declared.
By his notice of motion, Chris sought orders which, while allowing for relief under s 66G as the last resort, interposed a process of independent valuation of No 5 with Chris then being given a short, but reasonable, time to buy Maria out. The Court is satisfied on the evidence in the main proceedings that Chris would have the resources to do so.
Evidence was adduced from Louie to prove two matters. First, Louie's evidence was that Chris continued to reside at No 5 under the care of Louie and his family. Second, the evidence was to the effect that Chris had a deep sentimental attachment to No 5, in which he felt the spirit of his late wife Rada resided and in which he had indicated a desire to die.
It was another example of the completely fractured relationship between the parties that there was a dispute about a question as apparently simple as whether or not Chris continued to live in No 5. Maria's solicitor filed an affidavit in which, on information and belief from Maria, evidence was adduced from which the Court was invited to infer No 5 was unoccupied. It was submitted for Maria that the adverse credit findings which the Court had made in relation to Louie in the Principal Judgment meant that the Court should not accept his evidence in relation to who is currently living at No 5. With no disrespect intended, that submission overlooked similar findings that the Court made about Maria.
In the final result it is not necessary for the Court to determine whether or not, in fact, Chris continues to reside at No 5. Whether he does or does not, I have no doubt from the evidence which I heard during the course of the trial that, to the extent Chris retains the cognitive capacity to have such thoughts, he is deeply attached to No 5.
In support of the valuation and buyout procedure Chris relied on: 1. His continuing residence at No 5 and his deep attachment to it. 2. The saving of costs to all parties that would be achieved by not having to pay the fees of the trustees for sale and the costs associated with the sale of No 5 itself. In that regard, Chris pointed to the estimate of possible fees provided by one of the proposed trustees, Mr G Salier, a well respected Sydney solicitor, of up to $75,000. The Court must immediately observe that Mr Salier's estimate - which on its face does seem very high - on analysis was clearly expressed to be on a "worst case basis" allowing for disputes over vacant possession and the like. That was not unreasonable given the history of the Saravinovski family exposed through these proceedings.
Maria's insistence on the immediate application of s 66G was based on three submissions: 1. The interposed valuation and buyout procedure was another attempt by Chris to control the quantum to which Maria was entitled by excluding the public from determining the sale price. A public auction was the best way to determine the true value of No 5 and, therefore, the value of Maria's interest. 2. The trustees had an obligation to get the best price reasonably available. Chris' desire to continue to own No 5 was protected by his being able to bid at any auction. 3. The Court was referred to the well-known authorities in relation to s 66G applications that there was no general jurisdiction to refuse such an application on the grounds of hardship or unfairness. While not put quite as high as there being a right to relief under s 66G, it was submitted that the cases make it clear that such an order should be made provided it would not be inconsistent with a proprietary right or a contractual or fiduciary obligation. It was said there was no such cause for restraint in the present case.

Valuation or partition - resolution

For the reasons which follow, the Court determined that it was appropriate to accede to Chris' application that a valuation and buy out process be interposed before s 66G is invoked.
Maria's entitlement to rely on s 66G arises from orders made by the Court in these proceedings. What has passed since the Court delivered the Principal Judgment does not preclude Chris from making submissions as to appropriate orders to give effect to the Court's basic finding. That is a task which the Court was finalising in making the Orders and is a consequence of the way the parties ran the case. As I observed in the Principal Judgment: 411. Next, the parties conducted the proceedings on the basis that there was no evidence as to the current value of the various components of the divisible pool of property. They agreed that the precise values could be the subject of further evidence at a later stage of the proceedings if necessary. They accepted that the Court could award Maria an adjustment of interests in the nature of a percentage of either the pool of the property or specific property which Chris holds without knowing the precise value of the pool.
It follows that it is not apposite to view Maria's rights under s 66G, such as they may be, in isolation from the broader context of the working out of the result of the proceedings. That context is the juridical circumstance in which the Court is considering the matter. For that reason, while matters of hardship and Chris' affection for No 5 would not be sufficient to resist a s 66G application simpliciter, they are relevant to the exercise of the Court's discretion in fashioning orders to give effect to the Principal Judgment.
The Court has taken those matters into account, along with the desirability of trying to avoid the costs that would be visited on the parties if s 66G were applied, even if those costs might be lower than the worst case basis postulated (entirely properly) by Mr Salier.
The proposed timetable for the valuation and buyout suggested a delay of not more than three months. The view to which the Court has come, reflected in Orders 7 to 12, reduces that to ten weeks, with the valuation completed by 19 October 2016 and the buyout by no later than 16 November 2016. That is not a long time in the history of this litigation. To ameliorate Maria's concerns about the reliability of a valuation as opposed to going to auction, the Court specified that an independent Certified Practising Valuer with at least twenty years' experience in Sydney residential property be nominated by the Chairman of the Australian Valuers Institute to undertake the task.
While the Court will do everything it can to restrain the parties from prolonging their dispute by turning the case into one about the accuracy of whatever valuation is ultimately produced, if there is a real difficulty with that valuation then the parties can exercise the general liberty to apply reserved in relation to the working out of the Orders.

Stay pending appeal - the parties' submissions

On Chris' application the Court had stayed some of the operative orders consequent upon the Principal Judgment up to and including the hearing on 7 September 2016. By his notice of motion Chris now sought a stay of the Court's orders pending an appeal. He has filed a Notice of Intention to Appeal. As it was argued, Chris sought a stay that would expire within a further 28 days unless a Notice of Appeal (which necessarily specifies grounds - see UCPR Pt 51 r 51.18(1)(e)) was filed in that time.
The Court was informed that Chris had instructed his solicitors to brief senior counsel not previously involved in the proceedings to advise on the prospects of appeal. Dr Birch SC informed the Court that he had been instructed to undertake that task but he had only recently been briefed and his attention had thus far been focussed on the present applications. Another senior counsel who had been briefed earlier had returned the brief due to pressure of other work. Therefore, it was submitted, it could not be said that Chris had been dilatory. The Principal Judgment was long and complex and senior counsel new to the matter had to be given a reasonable time to consider it.
Those acting for Chris accepted that the Court was under a disadvantage insofar as it did not have the benefit of any grounds of appeal and was therefore unable to determine whether they were arguable. Chris submitted this could be overcome by providing liberty for the matter to be relisted after the Notice of Appeal had been filed. If Maria wished to contend that the grounds were not such as to warrant a stay, then in those circumstances Chris would have to bear the onus of establishing that any stay should continue.
Maria resisted the stay for four reasons.
First, and foremost, she submitted that there was no serious issue for determination by the Court of Appeal, referring to cases such as Kalifair Pty Ltd v Digi-Tech (Australia) Ltd (2002) 55 NSWLR 737 at 741-742. This was for at least two reasons: 1. No serious issue could be demonstrated because no proposed grounds had been formulated. The Principal Judgment had been delivered on 12 July 2016. Nearly two months later not even draft grounds for appeal had been prepared to assist the Court. 2. In any event, this was a case where there could not be any serious issue for determination by the Court of Appeal. As had been acknowledged in the Principal Judgement (at [26] reproduced in paragraph [3] above), credit had been "the most important issue for the resolution of each of the proceedings". The Principal Judgment was based upon a large number of closely reasoned factual findings turning on matters of credit. On the basis of those findings the Court had then exercised a discretionary judgment. No serious issue could be presented for determination by the Court of Appeal. No attempt had even been made from the Bar table by those representing Chris to indicate what such grounds of appeal might be.
Second, Maria would be prejudiced by a stay. She was now an indigent widow who was indebted to her legal team and relying on their continuing goodwill. George's estate owed the HSIL Loan.
Third, Chris' position could be protected without a stay if George's estate was distributed to Maria, its sole beneficiary. The probate application listed the assets of George's estate as comprising some $3,000,000. Even after payment of the HSIL Loan, the assets of that estate exceeded the value of her 30% interest in No 5. Chris would be able to recover any money paid to Maria in the event that he succeeded on appeal. (There was no evidence before the Court of the likely value of No 5 but, for the purposes of this interlocutory application, I was prepared to accept that, mathematically, this submission was correct.)
Fourth, there could be no doubt that the relationship between Chris (and his supporters in the family) and Maria was now beyond repair. As a matter of the balance of convenience, it was highly desirable that any period of co-ownership of No 5 should be as short as possible.

Stay- resolution

The Court dismissed Chris' stay application for two reasons: lack of utility and as a matter of principle.
As I have noted above, the process of valuation and buy out will take several weeks. Under the Orders the independent valuer will be asked to provide his report no later than 19 October 2016. That is more than 28 days hence. There is no prejudice to Chris in allowing steps in the process for Maria to realise the fruits of her litigious success to continue while Chris obtains advice on the question of appeal. If there is to be an appeal then a stay can be sought from the Court of Appeal (with the benefit of a Notice of Appeal) which intercepts the process after the point of the delivery of the valuation but before Chris is required to buyout Maria's interest. If the appeal is unsuccessful then the parties will have the benefit of the valuation already having been done.
Quite apart from the question of utility, the Court determined to dismiss the application for a stay as a matter of principle. It is sometimes said that making an application to a trial judge for a stay of his or her own decision pending an appeal places that judge in an invidious position. I respectfully disagree. A judgment is the result of the careful consideration of arguments and counter arguments. It necessarily carries with it the possibility, in most cases, that different minds can reasonably take a different view of arguments which the trial judge has rejected.
The trial judge is not in an invidious position precisely because the party applying for a stay is required to articulate grounds which demonstrate that there are real issues for determination by the Court of Appeal. In many cases, for example a finely balanced construction suit, that may not be a particularly high bar and the grounds can be rapidly formulated. This is not such a case.
With respect, I am unable to accede to the full force of Maria's submission that a judgment such as the Principal Judgment could not be successfully appealed against. However, it is no more than an application of well-known principles such as House v R (1936) 55 CLR 499; [1936] HCA 40 to observe that a judgment founded on detailed credit findings with the consequential application of discretionary principles falls into a more challenging category of judgment for an appellant to overturn. But that does not mean that an appellant cannot succeed in such a case.
For present purposes the point is that in such a case it is almost essential that a putative appellant propound even draft grounds of appeal in support of an application for a stay. Even allowing for changes in, and difficulties with obtaining, new senior counsel, after nearly two months since the delivery of the Principal Judgment Chris has made no attempt to offer the slightest indication of what his grounds for appeal might be. In a case of this kind that is sufficient to dismiss Chris' application for a stay as a matter of principle. The same consideration of the nature of the Principal Judgment urges that, if and when those advising Chris do develop what they consider to be reasonably arguable grounds of appeal, it is, in my respectful opinion, appropriate for any further application for a stay relying on those grounds to be considered by the Court of Appeal.

Orders

The only order the Court must now make is under the slip rule in each of the proceedings for the reasons set out in paragraphs [41] to [45] above. That order is: 1. Orders 2 and 5 made on 7 September 2016 be amended under the slip rule by the addition at the end of each of those orders of the words "and the relevant rate of interest shall apply as from the date the particular costs were paid"
The Court's orders made on 7 September 2016 (with the subsequent amendments to orders 2 and 5 under the slip rule shown in italics) therefore are: Proceedings 2012/39748 1. The Plaintiff/Cross-Defendant Chris Saravinovski to pay 75% of the costs of the Defendant/Cross-Claimant George Saravinovski's costs of the proceedings, including the costs of today. 2. The Plaintiff/Cross-Defendant is to pay the Defendant/Cross-Claimant interest on costs in accordance with s 101 of the Civil Procedure Act 2005 (NSW) at the rate prescribed for the purposes of s 101(5) of that Act, provided that in relation to costs paid by or on behalf of the Defendant/Cross-Claimant from funds obtained under a loan to G & B Saravinovski from Hargraves Secured Investments Limited ("HSIL"), then the rate on those costs shall not be the prescribed rate but shall be the rate charged on those funds by HSIL and the relevant rate of interest shall apply as from the date the particular costs were paid. 3. As to the hearing fees in relation to these proceedings: (a) They are to be paid as to 75% by the Plaintiff/Cross Defendant and 25% by the Defendant/Cross Claimant; (b) They are payable on 23 November 2016 subject to any further order of the Court (including of the Registrar or the Court of Appeal) Proceedings 2011/361081 Costs 4. The Defendant Chris Saravinovski to pay 75% of the costs of the Plaintiff Maria Saravinovska's costs of the proceedings, including the costs of today. 5. The Defendant is to pay the Plaintiff interest on costs in accordance with s 101 of the Civil Procedure Act 2005 (NSW) at the rate prescribed for the purposes of s 101(5) of that Act, provided that in relation to costs paid by or on behalf of the Plaintiff from funds obtained under a loan to G & B Saravinovski from Hargraves Secured Investments Limited ("HSIL"), then the rate on those costs shall not be the prescribed rate but shall be the rate charged on those funds by HSI and the relevant rate of interest shall apply as from the date the particular costs were paid. 6. As to the hearing fees in relation to these proceedings: (a) They are to be paid as to 75% by the Defendant and 25% by the Plaintiff; (b) They are payable on 23 November 2016 subject to any further order of the Court (including of the Registrar or the Court of Appeal) Valuation and Partition 7. Pursuant to Section 20 of the Property Relationships Act 1984 (NSW) the Defendant pay to the Plaintiff on or before 16 November 2016 an amount (the "Amount") equal to 30% of the current market value of the property contained in Folio Identifier XXX (the "Property"). 8. The current market value of the Property for the purpose of Order 6 will be determined in accordance with Orders 9 - 12. 9. On or before 14 September 2016 the Plaintiff by her solicitors is to write on behalf of the Plaintiff and Defendant to the Chairman of the Australian Valuers Institute requesting him or his nominee to nominate within 7 days of receipt of the request a Certified Practising Valuer of not less than 20 years' experience valuing Sydney residential property who is independent of the parties (the "CPV"). 10. Within 7 days of the Plaintiff's solicitor being informed of the identity of the CPV, the Plaintiff and the Defendant shall jointly retain the CPV to determine (acting as an expert and not as an arbitrator) the market value of the Property as at the date of the CPV's valuation and to retain the Valuer to provide such valuation no later than 19 October 2016. 11. The Plaintiff and the Defendant shall be jointly liable to the CPV for his or her costs of the retainer referred to in Order 10 but the Defendant shall pay those costs and any nomination fee for the CPV and shall not be entitled to any contribution or reimbursement from the Plaintiff for those costs or the nomination fee. 12. The Plaintiff and the Defendant shall co-operate with each other and with the CPV to assist the CPV in his or her task including, without limitation, the prompt provision of any information requested by the CPV and enabling prompt access to the Property for the CPV or his or her employees or agents. 13. If the Defendant does not pay the Amount to the Defendant on or before 16 November 2016, then Orders 14 - 21 shall come into effect on and from 17 November 2016. 14. Pursuant to s 66G of the Conveyancing Act 1991 (NSW), Gordon Salier, solicitor of 12/32 Martin Place, Sydney, and Richard Gulley, solicitor of 267 Edgecliff Road, Woollahra be appointed trustees of the Property. 15. The Property be vested in the trustees, free from any encumbrances, to be held by them on statutory trust for sale under Division 6 of the Conveyancing Act 1919. 16. If as at 17 November 2016 the Defendant is continuing to reside permanently in the Property, the trustees shall not require the Defendant to vacate the Property any earlier than 21 days before the completion of any sale of the Property whilesoever the Defendant and any other persons living in the Property co-operate with the trustees in the orderly sale of the Property. 17. Upon sale of the Property, the sale proceeds be applied in the following priority: (a) In payment of such agent's commission and costs of sale of the Property as the trustees may determine; (b) In payment to the trustees of their fees in such amount as the parties may agree or as the Court determines; (c) In payment to the Plaintiff of 30% of the balance; (d) Of the remaining 70% balance, first in payment to the Plaintiff of the Plaintiff's costs of these proceedings and George Saravinovski's costs of proceedings 2012/39748 (in accordance with the Court's orders) in such amount as agreed or assessed and the remainder to the Defendant. 18. The Defendant be entitled to purchase the Property at any auction of the Property at a price equal to or above the reserve. 19. Grant leave to issue a writ of possession forthwith. 20. Liberty is reserved to the parties and trustees to apply to the Court on 7 days' notice including to seek the advice of the Court as to distribution and as to the expenses of the trustees or to obtain such further, or other, relief to enable effect to be given to these Orders or the discharge thereof as are considered necessary or appropriate. 21. Orders that 2(b) and 3 made on 8 August 2016 be vacated and that the relevant party is forthwith to deliver to the trustees the Certificate of Title to the Property and the executed transfer of a 30% interest in the Property to the Plaintiff. 22. Upon the undertaking of the Defendant through his tutor and by his Senior Counsel to the Court that the Defendant will not deal with or dispose of any interest in the Property up to and including the first to occur of the payment of the Amount or 16 November 2016, stays order 2 made on 8 August 2016 up to and including the first to occur of the payment of the Amount or 16 November 2016. 23. Liberty is reserved to any party to apply to the Court on 7 days' notice in relation to the working out of these orders.

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: 13 September 2016

Civil Procedure Regulation 2012(NSW)

Property Relationships Act 1984(NSW)

Conveyancing Act 1991(NSW)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (13 paragraphs)

Parties

Legislation Cited (8)

Cases Cited (21)