These proceedings, which were largely resolved by Consent Orders entered on 17 March 2022, concerned an application brought by the plaintiff (Ms Widjaja) for the imposition of a statutory trust for the sale of certain co-owned land situated on Brenan Street, Smithfield, pursuant to s 66G(1) of the Conveyancing Act 1919 (NSW). Ms Widjaja owned a half-interest in that property, as a tenant in common in unequal shares with the first defendant (Mr Vincenzo Noto), second defendant (Mr Giuseppe Noto) and third defendant (Ms Graziella Granata) - her step-children - each of whom owned a one-sixth interest in the property.
In accordance with the Consent Orders entered on 17 March 2022: trustees for the sale of the Smithfield property were appointed; the sale was conducted; and the proceeds thereof, totalling around $757,468.53, have since been proportionately distributed to the parties.
Regrettably, Ms Widjaja and Mr Vincenzo Noto are in dispute as to who should bear the parties' costs incurred to date. Mr Giuseppe Noto and Ms Granata, consistently with their general approach to this litigation, have not sought to involve themselves in this outstanding controversy between their step-mother and their brother.
In my opinion, having considered the submissions provided by the plaintiff (dated 14 September 2022, and 21 October 2022 in reply) and the first defendant (dated 15 October 2022), and for the reasons I now provide, there ought to be no order as to costs, in relation to both the substantive s 66G proceedings and this costs application brought by the plaintiff.
As against Mr Vincenzo Noto, Ms Widjaja submits that she should receive her costs of the proceedings on any or all of the following bases, namely:
1. that the eventual sale of the Smithfield property by the statutory trustees is such as to render her the "successful party", with the result that the Court's discretion as to costs ought to be guided by the ordinary position that costs follow the event (see Uniform Civil Procedure Rules 2005 (NSW) r 42.1; Northern Territory v Sangare (2019) 265 CLR 164; [2019] HCA 25 at [25] per Kiefel CJ, Bell, Gageler, Keane and Nettle JJ);
2. that she acted reasonably in seeking the first defendant's agreement "in relation to the inevitable sale" of the Smithfield property, and that her costs in that regard were "brought about by reason of the first defendant's conduct"; and
3. that the first defendant acted unreasonably in the proceedings by ignoring "costs warnings" issued by her solicitors, and failing initially "to engage in correspondence and this litigation" (cf Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 at [8] per Basten JA).
Dealing with the first of these matters said to justify a costs order in Ms Widjaja's favour, it is sufficient to note that, in proceedings of this nature, the Court's discretion as to costs is not ordinarily guided by the principle that "costs follow the event". Instead, as correctly submitted by Mr Vincenzo Noto, the costs of an application under s 66G(1) of the Conveyancing Act are usually ordered to be paid out of the proceeds of sale of the co-owned property. In such cases, a departure from the usual position that costs follow the event is seen to be warranted. That approach has been taken by this Court in numerous cases, including Goldberg v Goldberg [2000] NSWSC 399 at [9] per Young J (as his Honour then was), and by the Court of Appeal in cases such as Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28] per Brereton J (as his Honour then was), with whom Basten JA and Hunt AJA agreed, and Zhang v Metcalf; Metcalf v Zhang [2020] NSWCA 228 at [133] per Gleeson JA, with whom Payne and White JJA agreed.
Had such an order been made, the practical effect would have been that the costs of the proceedings would have been borne as to half by the plaintiff and as to one-sixth by each defendant. Of course, in this case, there are no remaining proceeds of the sale from which to satisfy the costs incurred by the parties to date. As mentioned, those proceeds have already been distributed to Ms Widjaja, Messrs Noto and Ms Granata in proportion to their respective former interests in the Smithfield property. That, however, does not persuade me that a different order as to costs should be made in this case. Instead, I am inclined to agree with the first defendant's submission that the proper course is for there to be (in the absence of unreasonable conduct on his part) no order as to costs. Indeed, it is difficult to conceptualise why the plaintiff should be in a better position vis-à-vis the first defendant for having failed to seek a determination of costs prior to either the sale itself or the distribution of its proceeds.
I am similarly unpersuaded by the second ground advanced by Ms Widjaja, namely, that she acted reasonably in seeking Mr Vincenzo Noto's assent to the sale of the Smithfield property prior to instituting these proceedings, and that his subsequent refusal to assent "brought about" the litigation. In this regard, it seems to me that the plaintiff is labouring under a misapprehension. A co-owner, as Young AJA rightly observed in Chow v Chow (No 2) (2015) 18 BPR 35,385; [2015] NSWSC 1348 at [12], is generally under no obligation to assent to the dissolution of the co-ownership relationship; in the absence of such assent, it will always be necessary for a co-owner seeking sale of the co-owned property to approach the Court for relief under s 66G(1) of the Conveyancing Act (see, for example, Ferguson v Hyndman [2006] NSWSC 538 at [2]-[3] per White J (as his Honour then was); Spathis v Nanos (No 2) [2008] NSWSC 470 at [6] per Jagot AJ (as her Honour then was)).
As regards the final basis identified by Ms Widjaja in support of her costs application, while it is true that unreasonable conduct on the part of a co-owner in the conduct of the litigation might justify a departure from the usual position as to costs (see, for example, Stibbard-Leaver v Leaver [2021] NSWSC 65 at [5] per Darke J; Watson v Watson [2021] NSWSC 1544 at [10] per Darke J), I am not satisfied that the first defendant has relevantly acted unreasonably in this case. Undoubtedly, during the early stages of this dispute, the first defendant did not move with any discernible haste to engage with the proceedings. At times, his conduct was dilatory. To this end, the plaintiff highlights that several letters sent by her, and by the second and third defendants' solicitors, went unanswered by the first defendant. Those letters generally sought the provision of documents anticipated to be required in any sale of the property, and the first defendant's assent thereto. Mr Vincenzo Noto deposes that, for at least some of those letters, he consciously chose not to respond as he intended to represent himself in Court when the litigation was ultimately commenced. It is also the case that he failed to appear at the first directions hearing on 3 February 2022. After the first defendant retained a lawyer, seemingly on 7 February 2022, he thereafter participated in the proceedings and sought the appointment of trustees other than those proposed by the plaintiff, to keep the costs of sale as low as possible.
The first defendant's procedural conduct leaves something to be desired. However, I do not think that, in itself, it is sufficient to justify an order that he pay the plaintiff's costs of the proceedings. This is not a case where a co-owner seeking to resist a sale pleads an untenable defence that results in the incurring of unnecessary expenditure on the moving party's part (cf Spathis v Nanos (No 2) (supra) at [13] per Jagot AJ). Indeed, the first defendant did not seek to raise a substantive defence at all to the plaintiff's claim (cf Kardos v Sarbutt (No 2) at [28] per Brereton J), he only sought a change of trustees for the purpose of cost-efficiency. Mr Vincenzo Noto's conduct was not unreasonable in the sense required to justify a costs order against him.
For the above reasons, I decline to make an order that Mr Vincenzo Noto pay Ms Widjaja's costs of the s 66G(1) proceedings. In my opinion, the proper order is to make no order as to costs, to the intent that the parties bear whatever costs they have incurred in the proceedings, including in respect of the present application.
Mr Vincenzo Noto submitted that, in the event that he succeeded against Ms Widjaja on the question of costs, he would have been put to "unnecessary cost and expense" in defending the application, and that his victory in that regard should lead the Court to conclude that the "costs of the issue should follow the event".
While there is some merit in that submission, I decline to make a separate order for Ms Widjaja to pay Mr Vincenzo Noto's costs of the costs application. Accepting that the first defendant did not act unreasonably in his conduct of the proceedings, his initially dilatory approach to the litigation, which resulted in at least one wasted directions hearing, would have caused the plaintiff to incur some costs that would otherwise have been avoided. I think that, in those circumstances, the fairer result would be to leave the parties to bear their own costs of the costs application.
For the above reasons, the Court will order that there be no order as to costs in respect of both the s 66G(1) proceedings and the costs application brought by Ms Widjaja.
[2]
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: 24 October 2022