VELLA v. MINEO [2006] NSWSC 233

Supreme Court of NSW|2005-06-02|Before: Hall J

HEARING DATE(S) : Thursday 2 June 2005; Friday 3 June 2005; Monday 20 February 2006

CATCHWORDS : Costs on summons and statement of claim where plaintiff failed to establish constructive or resulting trust - awarded 50% to the defendant/cross-claimant who failed to establish financial contributions alleged by her - costs of cross-claim under Property Relationships Act - awarded 80% to defendant/cross-claimant on the basis of substantive but not complete success.

LEGISLATION CITED : Property Relationships Act 1984 Uniform Civil Procedure Rules 2005

Fexuto Pty. Limited v. Bosnjak Holdings Pty. Limited (No. 3) (1998) ACSR 20 CASES CITED : Rosniak v. GIO (1997) 41 NSWLR 608 NRMA Limited v. Morgan [1999] NSWSC 768

PARTIES : VELLA, Caterina Gabrielle, as Tutor for LEONARDI, Rosario v. MINEO, Lucia

COUNSEL : P: M. Gilmour D: J. Stoljar/W. Dawson

SOLICITORS : P: L.P. Alidenes & Co. D: Browns, The Family Lawyers

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

CATERINA GABRIELLE VELLA, as Tutor for ROSARIO LEONARDI v. LUCIA MINEO JUDGMENT (On application for costs) 1 HIS HONOUR: Judgment was delivered on 25 November 2005. Pursuant to paragraph [188], the parties made written and oral submissions in relation to the form of orders to give effect to those proposed in the judgment, in particular, in relation to the cross-claim made pursuant to the Property Relationships Act 1984. 2 Both the written submissions on behalf of the plaintiff dated 17 December 2006 and those on behalf of the defendant/cross-claimant dated 17 February 2006 addressed the question of the form of orders and attached proposed orders for consideration. On 20 February 2006 in oral submissions, the parties were granted time in which to consider whether or not agreement could be reached on the form orders, other than those as to costs. 3 In an email dated 22 February 2006 addressed to my associate, Mr. Stoljar of counsel advised that the defendant/cross-claimant would consent to orders substantially in terms of orders 1 to 11 and order 15 in the proposed form or orders drafted by Ms. Gilmour of counsel, subject, (a) to specified amendments thereto to be made by consent to proposed orders 6(ii), 6(iii) and 6(iv) and, (b) certain other additions as proposed on behalf of the defendant/cross-claimant. 4 In relation to the orders referred to in [3] above set out below (at [20]), I note:-

(a) The period specified in order 6(i) is seven days.

(b) The three month period on order 6(ii) is 4 July 2006.

Costs 5 On behalf of the plaintiff, Ms. Gilmour submitted that the plaintiff had no alternative other than to commence the proceedings, given the defendant's failure to respond in any meaningful way to correspondence sent prior to the filing of the summons on 7 May 2003. 6 Although the plaintiff failed on the statement of claim, it was submitted for reasons specified that the defendant should pay 50% of the plaintiff's costs of the statement of claim. 7 It was further submitted on behalf of the plaintiff that, in relation to the cross-claim proceedings, he had succeeded in an adjustment being made in his favour of part of the legal interest held by him in the Russell Lea property. It was further submitted that the defendant did not succeed in the relief sought by her. In the ultimate determination of what was "just and equitable", the value of her legal interest in the property was reduced to $405,366. It was submitted that the defendant/cross-claimant should pay the plaintiff's costs of defending the cross-claim. 8 It was further submitted that this is not one of those cases where it had been held that neither party has succeeded or substantially succeeded and in which the parties have been left to pay their own costs. 9 In the written submissions on behalf of the defendant/cross-claimant, it was contended that the plaintiff should pay the defendant's/cross-claimant's costs of the proceedings on the statement of claim, inter alia, upon the bases:-

• That in the summons and statement of claim, the plaintiff had sought orders to the effect that the defendant/cross-claimant, despite being the registered proprietor of the Russell Lea property, held her entire interest in that property on trust for him.

• The plaintiff's claim based on the resulting or constructive trust failed.

• The cross-claim pursuant to the Property Relationships Act was, in part, defensive, although it was acknowledged that it went beyond this in that the defendant/cross-claimant's claim, as ultimately formulated, was for an adjustment of 75%.

• The plaintiff had opposed the cross-claim in its entirety and contended that it should be dismissed and had sought orders that the cross-claimant transfer her interest in the property to him with no adjustment being made.

• Neither party, whether in the statement of claim or in the cross-claim, sought orders other than orders affecting the defendant's/cross-claimant's interest in the Russell Lea property. 10 It was contended on behalf of the defendant/cross-claimant that she had been successful on the statement of claim and that costs should follow the event and that she had succeeded in establishing a significant beneficial interest in the property and that costs should, accordingly, be awarded in her favour on the cross-claim. 11 In addition to the above matters, the defendant/cross-claimant relied upon a number of factual issues that arose on the cross-claim which were determined in her favour and that by reason of the way the plaintiff propounded his claim, detailed evidence as to the parties' financial and other contributions would, in any event, have had to have been adduced and tested, apart from those issues being raised in the cross-claim. 12 Finally it was submitted on behalf of the defendant/cross-claimant that an order adjusting her interest in the Russell Lea property has been made, this not being a result for which the plaintiff ever contended, he having maintained the position throughout that the defendant/cross-claimant had no interest in the Russell Lea property and should transfer her interest in that property to him in its entirety.

Consideration 13 A substantial issue raised in the proceedings concerned the financial contributions which the defendant claimed she had made to the purchase of the Haberfield property (see paragraphs [47] to [63] of the judgment of 25 November 2005). A smaller financial contribution was alleged to have been made by the defendant/cross-claimant to the acquisition of the Russell Lea property (see paragraphs [65] to [67] of the judgment). However, in accordance with the finding made in paragraph [68], it was determined that the defendant/cross-claimant had only contributed the amount of $12,692 towards the acquisition of the latter property. 14 In this respect, it is to be noted that the defence filed to the statement of claim raised the question of a financial contribution having been made by the defendant towards the purchase of the Haberfield property (see paragraphs 7 and 16 and the defence filed on 22 October 2004). 15 As submitted on behalf of the plaintiff, there was a considerable amount of evidence, including financial and accounting records, which required close examination for the purposes of determining the substantial question of financial contributions relevant to both the plaintiff's claim and the defendant's claim under the Property Relationships Act. Apart from the amount of $12,692, the defendant/cross-claimant failed to establish the financial contribution claimed by her and the order to be made in her favour under the Act is, as was contended on behalf of the plaintiff, largely based upon findings made as to the nature and extent of the non-financial contributions which she had made to the relationship. 16 I am of the view that, whilst the claims made in the statement of claim were dismissed, the defendant is not entitled to an order that all of the costs associated therewith should be paid by the plaintiff given the failure by her to establish a central issue, namely, the financial contributions claimed, being a significant issue arising on contentions raised by her in respect of both the primary proceedings and the cross-claim proceedings: see Fexuto Pty. Limited v. Bosnjak Holdings Pty. Limited (No. 3) (1998) ACSR 20, 24 per Young, J; Rosniak v. GIO (1997) 41 NSWLR 608 at 615; NRMA Limited v. Morgan [1999] NSWSC 768 at [24] per Giles, J. 17 I consider, accordingly, that in the exercise of the discretion arising under Part 42 Rule 42.1 of the Uniform Civil Procedure Rules 2005, the appropriate order is that the plaintiff should pay 50% of the defendant's costs of the summons and the statement of claim. 18 In relation to the cross-claim, I accept the submission made on behalf of the defendant/cross-claimant that, although she failed to obtain an adjustment of 75% of the Russell Lea property in her favour, she nonetheless did succeed in obtaining an order, albeit, slightly less than 50% in her favour. In relation to the proceedings under the Property Relationships Act, there were a significant number of factual issues which arose for determination, most of which were resolved favourably to her. The issue of the alleged financial contributions was but one of the issues that fell for determination. 19 I consider that the defendant/cross-claimant's substantial (although not complete) success in relation to the cross-claim entitles her to an order for costs in her favour, though with a proportionate allowance being made for her failure to prove the financial contributions alleged by her. I consider an appropriate order in this respect is that the plaintiff/cross-defendant pay 80% of the defendant's/cross-claimant's costs of the cross-claim on the basis that that percentage, without pretence to mathematical precision, reflects the defendant/cross-claimant's substantial failure on the financial contributions issue to which I have referred in the context, however, of her succeeding on the other issues and also having regard to the substantive outcome of the cross-claim in her favour. 20 Accordingly, I make the following orders:- (1) The Public Trustee be appointed as Trustee for the sale of the property at Lot 15 of Section B in Deposited Plan 7156, being comprised in Folio Identifier 15/B/7156 ("the property"). (2) The property be vested in the Public Trustee subject to any encumbrances affecting the entirety of the property but free from encumbrances affecting any undivided share or shares therein to be held by the Public Trustee upon the statutory trust for sale pursuant to Division 6 of Part 4 of the Conveyancing Act 1919. (3) The defendant's interest in the net proceeds from the sale of the property be adjusted from a 50% (½) share to a 42.67% share (%$405,366 is of $950,000). (4) Declares the plaintiff's interest in the net proceeds from the sale of the property to be 57.33% (%$544,634 is of $950,000). (5) Declares the defendant's interest in the net proceeds from the sale of the property to be 42.67%. (6) Orders (1) and (2) above to take effect unless, within three months from the date of the making of these orders:- (i) the property is listed for auction within seven days by the plaintiff and the defendant with Burridge Real Estate, Drummoyne;

(ii) the property is to be sold by auction (on or by 4 July 2006);

(iii) the conveyance of the property is to be conducted by Egisto Solicitors;

(iv) the net proceeds from the sale of the property are to be held by Egisto Solicitors for distribution in accordance with the shares referred to in orders (4) and (5) above;

(v) the defendant pays to the plaintiff the sum of $2,269.30 within 28 days of the making of these orders and upon each 28 day anniversary of these orders until the plaintiff receives the net proceeds from the sale of the property to which he is entitled;

(vi) the defendant pays to the plaintiff the sum of $10,000 within 14 days to be deducted, such sum to be deducted from the plaintiff's share of the sale proceed. (7) Alternatively, and in addition, orders (1) and (2) above will not take effect in the event that the defendant pays to the plaintiff the sum of $544,634 (less the payment referred to in paragraph 6(vi) above) plus interest from the date of these orders on that amount conformably with order 6(v) above within three months from the date of these orders. (8) Upon any default in compliance with the orders contained in paragraph (6) above, orders (1) and (2) are to have immediate effect. (9) Upon the payment of the amounts referred to in paragraph (7) by the plaintiff above the property is to be transferred to the defendant. (10) The summons and statement of claim to otherwise be dismissed. (11) The cross-claim to otherwise be dismissed. (12) The plaintiff is to pay 50% of the defendant's costs on the summons and statement of claim. (13) The plaintiff/cross-defendant is to pay 80% of the defendant's/cross-claimant's costs of the cross-claim. (14) Liberty to restore on three day's notice. **********

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At a glance

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Judgment (25 paragraphs)

Cases Cited (2)

Cited By (1)