Sergei Ivanovski v Keith Stevens McConnell

Supreme Court of NSW|2009-10-16|Before: Hammerschlag J

CITATION : Sergei Ivanovski v Keith Stevens McConnell [2009] NSWSC 1129

HEARING DATE(S) : 16 October 2009 JUDGMENT OF : Hammerschlag J

DECISION : The estate of the late Walter Perdacher is indebted to the plaintiffs in the amount of $3,573,608.32. The transfer by the late Walter Perdacher on 5 January 2006 of his interest in the property located at 14 Tranquil Street, Sunnybank Hills, Queensland 4109 to the second defendant is avoided. The second defendant to reconvey a one half share in the Property to the executor or representative of the estate as tenant in common. The estate of the late Walter Perdacher to pay the plaintiffs' costs of the proceedings against it.

CATCHWORDS : PRACTICE AND PROCEDURE - Costs and orders - plaintiffs succeed against one party and entitled to costs - Plaintiffs partially succeed and failed against another party - in the circumstances no order for costs between plaintiffs and that other party

LEGISLATION CITED : Uniform Civil Procedure Rules 2005

CASES CITED : Ivanovski v McConnell as representative of the Estate of Walter Perdacher (deceased) [2009] NSWSC 1036 Sergei Ivanovski v Walter Perdacher [2009] NSWSC 913

Sergei Ivanovski - First Plaintiff PARTIES : Galina ivanovsky - Second Plaintiff Keith Stevens McConnell as representative of the estate of Walter Perdacher (deceased) - First Defendant Marie Perdacher - Second Defendant

J. Horowitz [Plaintiffs] COUNSEL : K.S. McConnell - Solicitor [First Defendant] M.D. Bolster - Solicitor [Second Defendant]

Horowitz & Bilinksy [Plaintiffs] SOLICITORS : McConnell Jaffray [First Defendant] Bolster & Co [Second Defendant]

7 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION COMMERCIAL LIST

50091/2006 SERGEI IVANOVSKI & ANOR -V- KEITH STEVENS McCONNELL AS REPRESENTATIVE OF THE ESTATE OF WALTER PERDACHER (DECEASED) & ANOR EX TEMPORE JUDGMENT 1 HIS HONOUR: The principal proceedings were disposed of on 30 September 2009 (see Ivanovski v McConnell as representative of the Estate of Walter Perdacher (deceased) [2009] NSWSC 1036 ("the principal judgment"). The hearing took place over three days from 17 to 19 August 2009. After the hearing the plaintiffs moved for the appointment of a representative of the estate of the deceased ("the estate") (see Sergei Ivanovski v Walter Perdacher [2009] NSWSC 913). 2 Terms defined in the principal judgment have the same meaning here. 3 The plaintiffs have succeeded against the estate in their money claims. The first defendant put no submissions on quantum. 4 The plaintiffs are entitled to judgment in an adjusted amount of $3,573,608.32, and they are entitled to an order that the estate pay the costs of the claim against it. 5 As against Marie, the plaintiffs have succeeded to the extent that they have established an entitlement to an order that the transfer by Walter of his share in the Property to her be set aside, and that that share be reconveyed to the estate. The plaintiffs have failed against Marie on their claims that she guaranteed Walter's obligations, and for damages. 6 On 13 August 2009 the plaintiffs offered to compromise their claims against Marie ("the offer"). The offer was in the following terms: "The Plaintiffs offer to compromise their claim against the Second Defendant on the basis that the Court make the following declaration and orders: 1. A declaration that the transfer registered on 5 January 2006 of the property located at 14 Tranquil Street, Sunnybank Hills, Queensland 4109 (the "Property") is voidable by reason of it having been made with intent to defraud the plaintiffs. 2. An order that the Second Defendant reconvey a one half share of the Property to the executor or representative of the First Defendant's estate. 3. An order that the Second Defendant pay the Plaintiffs' costs of the proceedings against her on the ordinary basis. This offer shall remain open until 14 August 2009 at 5pm. This offer is made in accordance with Rule 20.26 of the Uniform Civil Procedure Rules 2005." 7 The plaintiffs put that: a Marie should pay 50 percent of their costs up to and including 13 August 2009 on the ordinary basis; b they should pay 50 percent of her costs up to and including 13 August 2009 on the ordinary basis; and c Marie should pay two thirds of their costs on the indemnity basis from and including 14 August 2009 with the exception of the costs of the Notice of Motion dated 25 August 2009, with the plaintiffs' costs to be reduced to the extent that they recover any costs from the first defendant (which I take to mean the estate). 8 As I understand it, the proposed orders are intended to reflect what the plaintiffs say are the shares of success and failure as between them and Marie, and to give effect to the notion that subsequent to the offer, the plaintiffs are entitled to indemnity costs in respect of the fraudulent conveyance claim. 9 On behalf of Marie it is put that the plaintiffs should pay 75 percent of her costs on the ordinary basis and that she should pay 25 percent of their costs on the ordinary basis (meaning that she gets 50 percent of her costs). 10 The respective approaches recognise that neither the plaintiffs nor Marie were entirely successful. Each failed in significant respects. 11 For the reasons which follow I consider that neither of the mooted outcomes is appropriate. 12 Although the offer states that it is made in accordance with Uniform Civil Procedure Rules 2005 ("UCPR") r 20.26, I do not consider that it was. 13 Firstly, r 20.26(2) provides as follows: "An offer must be exclusive of costs, except where it states that it is a verdict for the defendant and that the parties are to bear their own costs."

14 Contrary to the rule, the offer included an order that the second defendant pay the plaintiffs' costs. 15 Secondly, UCPR r 20.26(7) provides as follows: "The following provisions apply if an offer is limited as to the time it is opened for acceptance: (a) The closing offer must be left for such time as was reasonable in the circumstances in the case of an offer made less than two months before the date set down for the commencement of the trial."

16 The offer was made on 13 August 2009 and remained open until 5pm on 14 August 2009. 17 In my view, the period for which the offer remained open was not reasonable in the circumstances. The proceedings had been on foot against Marie for a significant period of time and the point at which the offer was made (on the eve of the trial) made the period for which it remained open unreasonable. 18 The offer may nevertheless be treated as a Calderbank letter. To the extent that it is, I consider that Marie's conduct in not accepting it was reasonable, given the unreasonably short time for acceptance which it imposed. Additionally, the offer contemplated Marie paying the plaintiffs' costs of the entire proceedings whereas on any view, a significant share of the proceedings was devoted to the plaintiffs' failed claims against her (which were for a significant amount of money). 19 Doing the best I can, having regard to the material in the affidavits devoted to the two categories of claim against Marie, and to the time spent during the hearing directed to one or the other, my perception is that the plaintiffs' failed claims should be treated as being roughly equivalent to the fraudulent conveyance claim. 20 It follows, in my view, that the appropriate order as to costs between the plaintiffs and Marie is that there should be no order to the intent that each should pay their own. I exercise my discretion accordingly. 21 So far as the form of the orders with respect to the transfer of property is concerned, the plaintiffs put firstly that there should be an order declaring that the transfer of part of lot 153 on registered plan 144770 with registered dealing number 709266213 in the Queensland Registry is avoided. 22 Such an order is appropriate. 23 The plaintiffs put that there should be orders that Marie sign all such documents as are necessary to effect the transfer of an undivided one half share in the Property to the first defendant as tenant in common to hold on trust for the benefit of the estate of Walter Perdacher, and a declaration that, pending registration of the transfer Marie holds an undivided one half share in the property on trust for the estate of Walter Perdacher.

24 For Marie it is put that the form of the orders proposed by the plaintiffs might give rise to disputes as to whether the property to be transferred is available for all of the creditors of the estate on the basis that a view might be taken that it is available only to satisfy the plaintiffs' claims. Clearly the form of the order is not intended to afford nor will it have the effect of affording, the plaintiffs any preference to which they are otherwise not entitled at law. 25 Although there is no reason why the parties should not have confidence that the first defendant will not discharge his duties accordingly, it seems to me that there is some difficulty with the orders in the form proposed by the plaintiffs in that the first defendant's appointment is for the purposes of the proceedings only, and once property is transferred to him in accordance with the Court's orders, the proceedings will have been completed and his appointment will have come to an end. 26 In those circumstances, it seems to me that the appropriate order is that the property be transferred, as the second defendant suggests, "to the executor or representative of the estate of the late Walter Perdacher". Undoubtedly, Mr McConnell would be an appropriate person to be so appointed. I will stand the proceedings over to the Probate judge so that the plaintiffs (or any other party) may bring an appropriate application if so advised. 27 The first defendant submitted (and neither plaintiffs or Marie put anything to the contrary) that there should be an order that his costs as the representative of the estate for the purposes of the proceedings be a charge on the property to be transferred to the estate. I propose to so order. 28 The orders of the Court will accordingly be as follows:

It is declared that the estate of the late Walter Perdacher ("the estate") is indebted to the plaintiffs in the amount of $3,573,608.32, and that the plaintiffs are entitled to judgment against the estate in that amount.

It is declared that the transfer by the late Walter Perdacher on 5 January 2006 of his interest in the property located at 14 Tranquil Street, Sunnybank Hills, Queensland 4109 ("the Property") to the second defendant being dealing no. 709266213 in the Queensland Registry is avoided.

The second defendant is to reconvey a one half share in the Property to the executor or representative of the estate as tenant in common.

The second defendant is to sign all such documents as are necessary to effect that transfer.

The estate of the late Walter Perdacher is to pay the plaintiffs' costs of the proceedings against it.

The costs of the first defendant as representative of the estate for the purposes of these proceedings are a charge on the interest in the Property in the hands of the estate. 29 The parties are to bring in Short Minutes. 30 I stand the proceedings over before the Probate Judge at 9.30am on 30 October 2009. **********

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.

At a glance

Court

Decision date

Before

Source

Judgment (21 paragraphs)

Parties

Cases Cited (2)