Oswin v Kozjak

CATCHWORDS : FAMILY LAW - de facto relationship - COSTS - offer of compromise - whether Court should otherwise order - terms of short minutes

PARTIES : Kerin Jayne Oswin (Plaintiff) Richard Charles Kozjak (Defendant)

COUNSEL : Ms E. Cohen (Plaintiff) Mr D. Dura (Defendant)

SOLICITORS : Broun Abrahams Burreket (Plaintiff) Gayle Meredith & Associates (Defendant)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3604 of 2007 KERIN JAYNE OSWIN -v- RICHARD CHARLES KOZJAK JUDGMENT 1 HIS HONOUR: On 22 May 2009 I published my reasons for judgment herein. 2 I stood the matter over to a date to be fixed by arrangement with my Associate for the bringing in of short minutes to reflect my conclusions expressed in those reasons, and, if desired, to hear arguments as to costs. 3 The matter was listed for such purposes on 5 August 2009. 4 The parties were not able to agree upon the appropriate form of short minutes which would reflect my conclusions in my reasons for judgment. 5 Further, the Plaintiff sought an order that the Defendant should pay her costs of the proceedings, whilst the Defendant was content with the preliminary view concerning costs which I had expressed in my reasons for judgment, being that there should be no order as to costs, to the intent that each party should bear her or his own costs of the proceedings. 6 I have had the benefit of receiving a written outline of submissions from Counsel for the respective parties, together with the form of the orders which each party sought should be made, to reflect the conclusions set forth in my reasons for judgment. Those documents will be retained in the Court file. 7 I will deal first with the matter of costs. 8 In support of her submission that the Defendant should pay her costs, the Plaintiff relied upon an offer of compromise, pursuant to Part 20, rule 20.26 of the Uniform Civil Procedure Rules 2005, made by the Plaintiff by way of letter from her solicitors, dated 1 August 2008, addressed to the solicitors for the Defendant. 9 That offer of compromise provided that within a specified period: the Defendant pay to the Plaintiff the sum of $500,000; the Defendant pay the Plaintiff's costs of and incidental to the proceedings; the Plaintiff transfer to the Defendant her interest in the Keith Street property; both parties (a) effect an assignment to the Defendant of any debt owed by the Plaintiff to Virtual Developments, and (b) effect an assignment to the Defendant of any sum due to the Plaintiff from Virtual Developments; the Defendant indemnify the Plaintiff in relation to any debt owed by her to Virtual Developments; and a declaration that the parties be otherwise declared sole legal and beneficial owner of all other items of property in their respective possession and control. 10 It was submitted on behalf of the Plaintiff that, the Defendant not having accepted the foregoing offer of compromise within the period specified there in for such acceptance, the consequence provided by Part 42 rule 42.14 should take effect. 11 That consequence is that, unless the Court otherwise orders, the Defendant pay the costs of the Plaintiff on the party and party basis up to an including the date of the offer of compromise, and after that date the Defendant pay the costs of the Plaintiff on the indemnity basis. 12 It will be appreciated that the foregoing offer of compromise was not a matter of which the Court could be made aware until after the determination of the substantive claims of the respective parties. Accordingly, at the time when I expressed the preliminary view in paragraph 75 of my reasons for judgment that there should be no order as to costs, I was unaware of the offer of compromise. 13 As a consequence of my conclusions in the substantive claims of the respective parties, the Plaintiff has effectively received a monetary sum in the vicinity of $800,000, and, further, there has been a finding that the Plaintiff has no liability in relation to an alleged loan to her from Virtual Developments. By her statement of claim the Plaintiff sought that the entirety of the Keith Street property be transferred to her and the rental of that property paid to her. On the other hand, the Defendant sought that the Keith Street property be transferred to him, and that the Plaintiff pay one half of the amount of $1,242,552 allegedly owed by the parties to Virtual Developments. 14 The effect of the offer of compromise was that the Defendant should pay to the Plaintiff the sum of $500,000 plus costs, and in return therefor the Plaintiff would transfer to the Defendant her interest in the Keith Street property, and that the Plaintiff should be absolved from any liability in respect to an alleged indebtedness to Virtual Developments. It should also be borne in mind that, as I have recorded in my reasons for judgment, the Defendant did not file a cross-claim until the third day of the hearing, 28 August 2008, although, as I have also recorded, the Defendant somewhat curiously, had annexed to his defence the items of relief which he stated he was seeking in the proceedings. 15 The offer of compromise was made on 1 August 2008, before the commencement of the hearing and before the filing of the cross-claim. The period of 21 days specified in that offer of compromise during which it was open for acceptance, had already expired before the filing of the cross-claim. 16 In the circumstances of the instant case, the ultimate entitlement of the Plaintiff (that she receive about $800,000 and the Defendant receiving the Keith Street property) was no less favourable to her than the terms of the offer of compromise (by which she would have received $500,000 plus costs, and the Defendant receiving the Keith Street property). 17 It follows, then, that "unless the Court otherwise orders", the effect of rule 42.14 upon the circumstances of the instant case is as I have already set forth. 18 However, the Defendant submits that this is a case in which the Court should "otherwise order", and that since the Plaintiff is to receive considerably less than was originally sought by her, it is appropriate that the Court should otherwise order. 19 Whilst I recognise that the Plaintiff is to receive considerably less than she sought in her statement of claim, nevertheless, she is to receive considerably more than she sought in the offer of compromise. 20 In these circumstances I do not consider that it is appropriate for the Court to otherwise order. Therefore the provisions of rule 42.14 take effect, and I propose to order that the Defendant pay the costs of the Plaintiff of the proceedings, those costs to be on the party and party basis until 1 August 2008, and on the indemnity basis after that date. 21 I have already observed that the parties could not agree as to the appropriate form of short minutes of order which should be made in order to give effect to my conclusions in the substantive proceedings. 22 The orders originally proposed on behalf of the Plaintiff made provision for Virtual Developments to be joined as an additional defendant to the proceedings and for there to be judgment for the Plaintiff in a specified amount against Virtual Developments. However, at the hearing concerning costs and concerning the form of the orders to he made, the Plaintiff agreed to the deletion of those two orders from the short minutes, and to the substitution of two further orders (which did not require the joinder of Virtual Developments, but bound the Defendant, in his capacity as sole director of that company. Further, the Plaintiff sought a notation to be included in the short minutes, evidencing the agreement between the parties that the indebtedness of Virtual Developments to the Plaintiff as at 30 June 2009 was in the sum of $191,952. 23 I am in agreement that the substitutional orders 1 and 2 and the foregoing notation should be included in the short minutes. Certain consequential alterations will then be necessary to the short minutes, as recognised by the Counsel for the Plaintiff. 24 The other areas in dispute between the parties related to the question of whether the Keith Street property should be valued with the Development Approval attached, or whether it should be valued without that approval. It was submitted on behalf of the Defendant that, since it was the Defendant who had been responsible for obtaining the Development Approval, that Development Approval should be treated somehow as a personal asset of the Defendant, and should not be treated as pertaining to the Keith Street property. 25 I am of the view, however, that the land should be valued with the benefit of the Development Approval, which approval must be attached to and only be relevant to that property, irrespective of who obtained that approval. 26 To the extent that the short minutes propounded by the Plaintiff include orders that the Defendant indemnify the Plaintiff, I am not satisfied that the Plaintiff has entitled an establishment to such an indemnity. 27 The parties appeared not to be able to reach agreement concerning the amount of rental which the Plaintiff was liable to pay to the Defendant for the Plaintiff's occupation in the Keith Street property for a period of about one year after the termination of the de facto relationship. If the parties cannot agree as to the amount of that rental, it is proper that I should direct the taking of an account. It will be appreciated by the parties that such a taking of such an account will attract further costs and delay in the proceedings. 28 I make orders as in Short Minutes attached to these reasons. The exhibits may be returned.

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

3604 of 2007 KERIN JAYNE OSWIN -v- RICHARD CHARLES KOZJAK SHORT MINUTES

1. The Court orders that within 42 days of the date hereof the Defendant, as director of Virtual Developments Pty Limited ("Virtual Developments") do all things necessary and sign all documents to cause Virtual Developments to pay the sum of $191,952) together with interest thereon at the rate of 12 per centum per annum from July 2009 to the date of payment to the Plaintiff. 2. The Court orders that, upon the payment of the sum mentioned in order 1 hereof, the Plaintiff is restrained from taking any further action against Virtual Developments for any moneys owing by Virtual Developments to the Plaintiff. 3. Pursuant to section 20 of the Property (Relationships) Act 1984, the Court declares that: (a) the Plaintiff is the absolute owner of a one half share in the property situate at and known as 23 Keith Street, Clovelly ("the Keith Street property"), being the whole of the land contained in Folio Identifier 1/115292. (b) The Plaintiff is the absolute owner of moneys lent by the Plaintiff to Virtual Developments in the sum of $182,222 as at 30 June 2008, plus interest at the rate of 12 per centum per annum on $81,085 from 1 July 2008. (c) The amount owing by Virtual Developments to the Plaintiff as at the date hereof is $191,952. (d) The Plaintiff is entitled to one half of the rent received by the Defendant from the Keith Street property since 25 July 2005, to the date of these orders, which sum is agreed at $15,000. (e) Each party is entitled to all other assets, including superannuation entitlements, held by that party at the date of these orders. 4. Pursuant to section 20 of the Property (Relationships) Act 1984, the Court orders that within 42 days of the date of these orders: (a) the Defendant pay to the Plaintiff the sum of $15,000, being her one half share of the rent of the Keith Street property from 25 July 2005, to the date of these orders. (b) the Defendant pay to the Plaintiff the sum of $600,000, being the agreed value of the Plaintiff's one half share in the Keith Street property, (c) upon receipt of the sums referred to in paragraphs 4(a) and 4(b), the Plaintiff forthwith do all acts and things and sign all documents necessary to transfer to the Defendant the whole of her right, title and interest in the Keith Street property. 5. In the event that the Defendant fails to comply with order 5 hereof within 42 days of the date of these orders, the parties shall forthwith upon such failure do all acts and things and sign all documents necessary to list the Keith Street property for sale by private treaty thereafter, and in particular will: (a) List the property for sale with an agent agreed upon by the Plaintiff and the Defendant, and failing agreement the Plaintiff shall in writing nominate three agents from whom the Defendant shall within seven days select one, and failing which the Defendant shall select one who shall be the agent appointed ("the agent"). (b) The Plaintiff and the Defendant shall execute all documents requested by the agent for the sale of the Keith Street property, and in the event that the Plaintiff and the Defendant cannot agree on the terms of the agent's contract within seven days of the agent being selected, the contract is to be in the agent's standard terms, with the agent's standard fees. (c) The Plaintiff and the Defendant shall give such instructions as are necessary to a solicitor agreed upon between the Plaintiff and the Defendant, and failing agreement the Plaintiff shall forthwith in writing nominate three solicitors from whom the Defendant shall within seven days select one, and failing which the Plaintiff may select one, who will be the solicitor appointed. (d) The market price shall be agreed between the parties, and failing agreement as recommended by the agent. (e) The Plaintiff and the Defendant shall co-operate in every way with the agent in relation to the sale of the Keith Street property at all times as requested by the Agent. (f) The Plaintiff and the Defendant shall execute all other documents necessary to complete the sale within the time required by the contract for sale to ensure that the purchaser does not have a right to terminate or rescind due to failure to do so. 6. That in the event that the Keith Street property fails to sell within three months of the date of listing for sale by private treaty, the Plaintiff and the Defendant shall: (a) Place the Keith Street property for sale by public auction to take place by way of public auction to take place on a date within a period of eight weeks from the date of listing for sale by public auction. (b) Agree to the reserve price for sale by public auction, and failing agreement the reserve price shall be as recommended by the agent. (c) Attend at the auction sale and negotiate with the highest bidder in the event the reserve price is not reached, and accept any offer which is made and which is the highest and not below 5 per cent below the reserve price unless the parties otherwise agree. 7. The Court orders that, upon settlement of the sale of the Keith Street property, the parties shall do all acts and things and sign all documents necessary to distribute the proceeds of sale in the following manner and priority: (a) in payment of agent's commission and expenses of sale. (b) in payment of legal expenses of sale (c) in payment to the Plaintiff of 50 percent of the remaining balance (d) in payment to the Plaintiff of the sum of $15,000, (e) in payment to the Plaintiff of the sum of $191,952, together with interest calculated at $26.20 per day from 30 June 2009 to the date of payment. (f) payment to the Plaintiff of the Plaintiff's legal costs of these proceedings from 22 August 2008 on the indemnity basis if those costs remain unpaid by the Defendant at the date of completion of the sale (g) in payment to the Defendant of the remaining balance. 8. The Court orders that the Defendant pay the costs of the Plaintiff of the proceedings, such costs to be on the party and party basis up to and including 1 August 2008, and on the indemnity basis thereafter. 9. The Court orders that the statement of claim filed by the Plaintiff on 13 July 2007 and the cross-claim filed by the Defendant on 28 August 2008 be otherwise dismissed. 10. The Court notes that the parties have agreed that the sum owing by Virtual Developments to the Plaintiff as at 30 June 2009 is $191,952.

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