Saitannis v Katsolos - [2023] NSWSC 146 - NSWSC 2022 case summary — Zoe

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Saitannis v Katsolos

[2023] NSWSC 146

Supreme Court of NSW|2022-09-09|Before: Robb J

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At a glance

Source facts

Court

Supreme Court of NSW

Decision date

2022-09-09

Before

Robb J

Source

Original judgment source is linked above.

Judgment (3 paragraphs)

[1]

Solicitors: Shad Partners (Plaintiffs) McDonnell Schroder Solicitors (Defendant) File Number(s): 2020/00197166

[2]

JUDGMENT

I published the primary judgment in these proceedings on 27 October 2022 following a hearing that took place in the period 5 to 9 September 2022: Saitannis v Katsolos [2022] NSWSC 1468 ("J").
These reasons deal with the final orders to be made in the proceedings, including the order as to costs.
As will be explained below, the primary judgment did not finally determine the issue of liability or the appropriate orders to be made. That was because both parties had not succeeded in establishing the relatively extreme positions that they adopted in the proceedings, and it had become apparent to me during the course of the hearing that the just outcome that was supported by the evidence was one that had not explicitly been sought by either party. As I will explain, at the end of the primary judgment I invited the parties to confer to see whether they could agree to final orders that would be most convenient to both sides.
In conformity with the approach adopted by the parties and in the primary judgment, and without meaning any disrespect, I will refer to the parties by their given names.
In accordance with directions that I made on 1 December 2022, Irene delivered submissions and draft short minutes of order on 7 December 2022. Helen and Louis replied by their submissions and draft short minutes of order on 16 December 2022. Irene delivered a reply dated 19 December 2022. In accordance with an order made on 1 December 2022, the determination of the outstanding issues has proceeded on the papers.

Helen and Louis relied upon a number of authorities in support of this submission. In Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11, McHugh J (dissenting in the result) said (footnotes omitted): "The discretion must be exercised judicially [65] Although the statutory discretion is broadly stated, it is not unqualified. It clearly cannot be exercised capriciously. Importantly, the discretion must be exercised judicially in accordance with established principle and factors directly connected with the litigation. In this manner, the law has gradually developed principles to guide the proper exercise of the discretion and, in some cases, to highlight extraneous considerations which, if taken into account, will cause the exercise of the discretion to miscarry. Consistent with the aim of justice, the law could not have developed otherwise. As Mason CJ said in Latoudis: "it does not follow that any attempt to formulate a principle or a guideline according to which the discretion should be exercised would constitute a fetter upon the discretion not intended by the legislature. Indeed, a refusal to formulate a principle or guideline can only lead to exercises of discretion which are seen to be inconsistent, a result which would not have been contemplated by the legislature with any degree of equanimity." [66] By far the most important factor which courts have viewed as guiding the exercise of the costs discretion is the result of the litigation. A successful litigant is generally entitled to an award of costs. As Devlin J said in Smeaton Hanscomb & Co Ltd v Sassoon I Setty, Son & Co (No 2), when setting aside an arbitrator's costs award: "the arbitrator is not directing his mind to one of the most, if not the most, important of the elements which ought to affect his discretion, namely the result of the case. Prima facie, a successful party is entitled to his costs. To deprive him of his costs or to require him to pay a part of the costs of the other side is an exceptional measure". The combined force of the sentiments recognised above by Mason CJ, regarding the need for consistency in order to avoid injustice, and by Devlin J, regarding the most significant factor affecting the costs discretion, provides the jurisprudential basis for the important principle commonly referred to as the "usual order as to costs". The usual order as to costs [67] The expression the "usual order as to costs" embodies the important principle that, subject to certain limited exceptions, a successful party in litigation is entitled to an award of costs in its favour. The principle is grounded in reasons of fairness and policy and operates whether the successful party is the plaintiff or the defendant. Costs are not awarded to punish an unsuccessful party. The primary purpose of an award of costs is to indemnify the successful party. If the litigation had not been brought, or defended, by the unsuccessful party the successful party would not have incurred the expense which it did. As between the parties, fairness dictates that the unsuccessful party typically bears the liability for the costs of the unsuccessful litigation."

In Mount Bruce Mining Pty Ltd v Wright Prospecting Pty Ltd (No 2) [2014] NSWCA 425, Macfarlan JA said (Meagher and Barrett JJA agreeing): "[26] The effect of UCPR r 42.1 is that the court must exercise the discretion as to costs conferred on it by s 98 of the Civil Procedure Act by ordering that costs "follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs". [27] Consistent with this rule, it has long been accepted that a plaintiff who obtains judgment at trial for a monetary sum will ordinarily be entitled to an order that the defendant pay his or her costs, notwithstanding that the plaintiff might not have recovered the whole of the amount he or she claimed. The circumstances of particular cases may warrant departure from this approach. In particular, where the defendant succeeded on a clearly dominant or separable issue, some variation may be warranted. In Bostik Australia Pty Ltd v Liddiard (No 2) [2009] NSWCA 304 at [38], this Court provided the following summary of presently relevant principles: "• 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. … • 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) 26 IPR 261 at 272."

Furthermore, during the course of her evidence in cross-examination, Helen unexpectedly gave evidence of an additional aspect of her discussions with Irene that had not hitherto been disclosed in the evidence. That was that Irene would allow Helen and Louis and their children to move into the Georges Hall property on the basis that the granny flat attached to the property would be renovated, and Irene could live in the granny flat and be cared for by Helen and Louis indefinitely. This new aspect of the alleged agreement was capable of changing the complexion of the case significantly: see J [85]-[90]. As I ultimately said in the primary judgment at J [99]: "[99] The problem the plaintiffs' case faces is that the Court has found that the representations that the plaintiffs alleged were made by Irene have not entirely been proved. There is sufficient evidence to justify a finding that Irene represented that she would leave the Georges Hall property to the plaintiffs in her will, but the evidence does not justify a finding that she represented that the plaintiffs would be entitled to immediate ownership of the property. That is because there was a counter-representation made by the plaintiffs, or an expectation on Irene's part, which was an integral part of the family arrangement, being that Irene would move back into the Georges Hall property to live in the granny flat for as long as she wished, and that she would be cared for by the plaintiffs. Irene would continue to be the owner of the property until her death. The counter-representation or expectation was not implemented. That was through no proved fault of any party. The consequence is that Irene does not have her own home, and, as long as that is the case, the need to provide a home and care for Irene is thrust upon Anastasia. That outcome would turn a family arrangement that might otherwise have been equitable into an unconscionable one on the plaintiffs' part, at least to the extent that they pursue relief that would have the effect that they have the sole right to occupy the property to the exclusion of Irene. I do not think it matters whether that consequence is considered as a failure by the plaintiffs to implement the expectation that they created in Irene, or whether it is treated as a failure of a joint endeavour without fault of the parties."

All of this led to me including the following observations at the end of the primary judgment at J [111]-[113]: "[111] During senior counsel for the plaintiffs' oral submissions, I raised the possibility that the Court may make the finding - that I have in fact made - that the arrangement between the parties involved mutual representations that constituted a joint endeavour that has failed in part. That finding would lead to the possibility that some relief other than the primary relief sought by the plaintiffs was appropriate. One possibility was that the appropriate remedy was an order that Irene pay the plaintiffs equitable compensation for the detriment the plaintiffs would suffer if Irene departed from her representation that she would leave the Georges Hall property to the plaintiffs in her will. Another possibility is that the Court make an order that had the effect that Irene would be obliged to bequeath the property to the plaintiffs, but that they would have no right to continue in occupation of the Georges Hall property because Irene is not living in the granny flat and being cared for by the plaintiffs. Senior counsel responded by saying that the plaintiffs wished to reserve their right, if that were possible, to elect between remedies after the Court delivered these reasons for judgment. [112] As it has happened, the parties have not had the opportunity to make submissions to the Court as to the precise terms of the relief that will be appropriate based on the findings that I have made in these reasons. I have to this point stopped short of formulating positive alternative orders that may be the subject of an election by the plaintiffs. It may well be that an order for payment of equitable compensation is the most appropriate form of relief. As I have said above, a quantum of equitable compensation of $800,000 would be justified in this case. The alternative, whereby the plaintiffs would have an entitlement to receive the Georges Hall property under Irene's will, but have no home or right to compensation until they gain title to the property, does not seem to be a convenient form of relief. [113] Having regard to the request made by senior counsel, I propose to publish these reasons and give the parties an opportunity to confer and to deliver further written submissions on the form of the relief that should be granted, based upon the findings that have been made in these reasons. I do not know whether there remains any possibility for the parties to salvage some mutually acceptable resolution of the dispute that does not depend upon the choice made by the Court."

In these circumstances, the orders of the Court are as follows: The Court: 1. Orders that the Defendant pay to the Plaintiffs equitable compensation in the amount of $800,000.00 ("the Equitable Compensation"). 2. Orders that the Plaintiffs pay to the Defendant the sum of $24,000.00 ("the Loan Judgment"). 3. Notes that the Loan Judgment payable by the Plaintiffs is to be offset against the Equitable Compensation payable by the Defendant/Cross-Claimant. 4. Makes no order for the cost of the proceedings with the intent that the parties bear their own costs. 5. Orders that the property referred to in the judgments in these proceedings as the Georges Hall property ("the Property") be charged as security in favour of the Plaintiffs for payment of the net amount payable by the Defendant pursuant to orders 1 to 3. 6. Notes the agreement of the parties that: 1. within 28 days of the making of these orders, the Defendant is to appoint an independent and qualified real estate agent approved by the Plaintiffs ("Agent") to prepare and advertise the Property for sale; 2. the Property is to be listed for sale by way of public auction to take place no later than 30 April 2023 with a reserve price as advised by the Agent; 3. in the event that the Property does not sell at the auction referred to in subparagraph (b), the Property is to be listed forthwith for sale by way of private treaty; 4. the Plaintiffs are to vacate the Property on or before the date that is 7 days before the date arranged between the parties to the contract for the completion of the sale; 5. the Plaintiffs are to maintain the Property in a neat and tidy state and shall ensure that the lawns and gardens are maintained in a saleable condition at their expense; 6. the Plaintiffs are to pay all council rates, water rates and utilities charges incurred in respect of the Property for the period up to and including the date of completion of the sale of the Property; and 7. the Plaintiffs are to comply with all reasonable requests made by the Agent for the purpose of preparing the Property for sale, including but not limited to requests for access; 8. the proceeds from the sale of the Property are to be distributed in the following priority: 1. in payment of the Agent's commission and costs of sale, including marketing and legal expenses; 2. in payment of any rates or utilities owing in respect of the Property; 3. a payment to the Trust Account of the Plaintiffs' Solicitors to be calculated as the total of $776,000.00 less half of the costs referred to in order 6(h)(i) and less the whole of any amount paid as referred to in order 6(h)(ii); and 4. the balance to the Defendant. 1. Orders that the statement of claim otherwise be dismissed. 2. Orders that the cross claim otherwise be dismissed. 3. Grant the parties liberty to apply on 3 days' notice for any further or consequential orders that may be necessary in the implementation of these orders and the agreements in paragraph 6 above.