On 19 October 2022, I made orders transferring these proceedings to the Federal Circuit and Family Court of Australia (FCFCA), as sought by the applicant's notice of motion: Wurz bht NSW Trustee & Guardian v Elawaad [2022] NSWSC 1404 (Judgment).
These reasons deal with the issue of costs and assume familiarity with and adopt the same terms as those used in the Judgment. In accordance with the directions made on 19 October 2022, the parties have filed written submissions on costs and that issue is being dealt with on the papers.
By way of background, the contested application for transfer to the FCFCA was made by Mr Elawaad's former de facto wife, who had commenced proceedings in the FCFCA last year seeking a division of property assets, that includes a property in West Hoxton, NSW that is registered in the name of the Mr Elawaad.
In the Judgment, I concluded that the interests of justice would be best served, including for reasons of efficiency and expense, by having all of the issues between the parties determined in one Court and that the Division 1 Court of the FCFCA was the most appropriate Court to do so. This was in the context where, in these proceedings, Ms Wurz also makes a claim to an interest in the West Hoxton property. It was my view that the question of Ms Wurz's claimed interest in that property and to other assets which Mr Elawaad contends he owns should be determined under the umbrella of the issue of de facto property in the Division 1 Court.
Ms Tretiak seeks an order that Ms Wurz and Mr Elawaad pay her costs of the notice of motion seeking the transfer of the proceedings, the effect of which would make Ms Wurz and Mr Elawaad jointly and severely liable for Ms Tretiak's costs on an ordinary basis, as agreed or assessed, to be payable at the conclusion of the proceedings.
Ms Tretiak submits that there is no reason to depart from the general rule that costs follow the event in circumstances where the application was contested, the nature of the relief sought and granted went to a discrete procedural aspect of the proceeding, the outcome of which is independent of the ultimate merit of the proceedings, and the opposition to the relief sought necessitated additional costs. Ms Tretiak submits that her intervention in these proceedings is of no consequence as she ought to have been a defendant by reason of her caveat on the title to the West Hoxton property and the opposition to the transfer application was difficult to maintain given Ms Wurz effectively conceded at the hearing that the two sets of proceedings ought to be heard together in one Court. She also submits that Ms Wurz's limited financial means should not detract from a proper consideration of costs as a similar submission could be made in relation to her position.
Ms Wurz contends that there are grounds for the Court to depart from the usual order that costs follow the event and seeks an order that each party bear their own costs of Ms Tretiak's notice of motion and an order that the costs of the substantive proceedings be costs in the cause, or otherwise be reserved to the FCFCA. Ms Wurz's submissions place emphasis on her being an elderly woman represented by the NSW Trustee & Guardian, her proceedings being grounded on assertions that she has been subject to elder financial abuse, and evidence that indicates she has no assets and will be reliant upon the outcome of her claim to have any material means to meet a costs order. Ms Wurz also submits that each of the parties to the notice of motion had an arguable perspective that required the Court's determination, despite having differing interpretations of what the interests of justice would be in this case, and contends that the recent changes to the legislation governing de facto marital causes and which Division of the newly constituted FCFCA those proceedings should be heard in, rendered the position of jurisdiction unclear such that judicial intervention was appropriate.
Mr Elawaad also contends that costs should not follow the event and seeks on order that each party to bear their own costs of the notice of motion or for the costs to be in the cause. He submits that such an order is appropriate based on the unusual circumstances of "this two relationship matter" (as he described them in his submissions), there were grounds to oppose the transfer application and it was incumbent on Ms Tretiak to satisfy the Court that it was in the interests of justice for the proceedings to be transferred.
The determination of the issue of costs involves the exercise of a discretionary power. While unfettered, that power must be exercised judicially having regard to established principle: Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [134] (Oshlack).
The general rule is that costs follow the event, unless it appears to the Court that some other order ought to be made as to the whole or part of the costs: Uniform Civil Procedure Rules 2005 (NSW), r 42.1 (UCPR). The "default" position in respect of costs of interlocutory applications is that they are to be paid and otherwise dealt with in the same way that general costs of the proceedings, unless the Court otherwise orders: UCPR, r 42.7.
The authorities recognise that the general rule that costs follow the event founds a reasonable expectation on the part of the successful party of being awarded costs against the unsuccessful party, unless for some reason connected with the case, a different order is specifically warranted: Oshlack at [134].
Having considered the submissions made, I have concluded that, in the exercise my discretion, an order should be made that the costs of Ms Tretiak's notice of motion be costs in the cause, and that the costs of these proceedings should be otherwise reserved to the FCFCA.
I am satisfied that it is appropriate to make an order that departs from the usual rule. This is not a case where the proceedings that were transferred could or should have been commenced in the FCFCA initially. In my view, there were also reasonable grounds on which to contest the transfer application. These proceedings were well advanced and there were issues raised about the accrued jurisdiction of the FCFCA to determine the issues in these proceedings and the jurisdiction of this Court to determine de facto financial causes and to transfer proceedings to the Division 1 Court (following the enactment of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and the amendments to ss 39A and 39B of the Family Law Act 1975 (Cth)), in addition to the considerations of where the interests of justice lie.
I accept that had Ms Wurz and Mr Elawaad not opposed Ms Tretiak's application, some costs may have been saved. It may have been possible for the application to be determined on the papers without the need for an oral hearing. However, as the application raised questions as to jurisdiction and the key question was where the interests of justice lie, the Court was assisted by the presence of the contradictors: CL Asset Holdings Pty Ltd v Chamoun Investments Pty Ltd [2020] NSWSC 1817 (CL Assets v Chamoun) at [24].
Ms Wurz's financial circumstances are not, by themselves, a significant factor on the question of costs. However, it is relevant to the exercise of the Court's discretion on costs that the asset over which all parties make claim is the West Hoxton property. Just as Ms Wurz's claim to the West Hoxton property (and other assets) in these proceedings are to be dealt with under the umbrella of Ms Tretiak's claims in the FCFCA proceedings, so too should the costs of Ms Tretiak's notice of motion, in my view. This is particularly as, subject to the outcome of the proceedings as transferred, it is likely that the West Hoxton property will bear the burden of any costs orders made in the future.
In reaching my conclusion, I have also had regard to the approach of other judges of this Court, who have made orders for costs to be in the cause where transfer applications (to the Federal Court) were contested and successful: see for example, Credit Suisse AG v Gu (No 2) [2022] NSWSC 198; Brejcha v Krieger [2020] NSWSC 964; CL Asset v Chamoun; Gleeson as trustee for the bankrupt estate of Ren v Kong [2018] NSWSC 1275; Tonbul Baykal v Terry Van Der Velde as trustee for bankrupt estate of Hakan Tandogan [2017] NSWSC 36.
Section 12 of the Jurisdiction of Courts (Cross-vesting) Act 1987 (NSW):
12 Orders as to costs
Where a proceeding is transferred or removed to a court, that court may make an order as to costs that relate to the conduct of the proceeding before the transfer or removal if those costs have not already been dealt with by another court.
Having regard to that provision and the circumstances of this case, I also consider that the fairest outcome for the parties is to order that the costs of these proceedings, which may include costs thrown away by reason of the transfer to the Division 1 Court, be costs in the cause or otherwise be reserved to the FCFCA.
For these reasons, I make the following orders:
1. The costs of the applicant's notice of motion filed on 13 September 2022 (and as amended on 4 October 2022) be costs in the cause.
2. The costs of these proceedings, including any costs thrown away by reason of the transfer, be costs in the cause or otherwise be reserved to the Federal Circuit and Family Court of Australia (Division 1).
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Decision last updated: 17 November 2022