Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin [2021] NSWSC 94

Supreme Court New South Wales

Medium Neutral Citation: Franjo Strumfin by his Litigation Guardian Peter Chodat v Anka Strumfin [2021] NSWSC 94 Hearing dates: 10 December 2020 Date of orders: 16 February 2021 Decision date: 16 February 2021 Jurisdiction: Equity Before: Robb J Decision: See par [32] Catchwords: COSTS — Party/Party — Bases of quantification — Indemnity basis COSTS — Party/Party — Court's discretion Legislation Cited: Trustee Act 1925 (NSW) Cases Cited: Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84 Category: Principal judgment Parties: Franjo Strumfin by his Litigation Guardian Peter Chodat (plaintiff) Anka Strumfin (first defendant) Elizabeth Strumfin (second defendant) Representation: Counsel: Keith Francis (plaintiff)

Solicitors: Kovacevic Lawyers (plaintiff) Self-represented (second defendant) File Number(s): 2020 / 324369

Judgment 1. The plaintiff commenced these proceedings by summons filed in court by leave of the duty judge on 13 November 2020. 2. The plaintiff, who sues by his litigation guardian, was the husband of the first defendant and is the father of the second defendant. 3. The parties to these proceedings are also parties to family law proceedings in the Federal Circuit Court of Australia, No (P)WOC309/2015, which have the same name as these proceedings. 4. In 2019, by consent, the Federal Circuit Court of Australia made orders that required the second defendant to pay the sum of $105,000 to the plaintiff in respect of a property at Wollongong that was the subject of those proceedings, together with an additional amount of $11,559.13 5. The orders permitted the plaintiff to lodge a caveat against the title to the property to protect his interest in the orders. 6. The plaintiff lodged a caveat AP735071 in December 2019 7. By reason of non-compliance by the defendants with the first orders, and by consent of the parties, the Federal Circuit Court made further orders on 14 August 2020. 8. The property referred to in the orders was the subject of a contract for sale. The solicitor for the plaintiff sought to participate in the PEXA workspace to ensure that on settlement the moneys payable to the plaintiff were paid into the solicitor's trust account, and to cause the caveat to be withdrawn to permit settlement as was required by the Federal Circuit Court's orders. The second defendant took steps that frustrated the solicitor's attempt to participate in the settlement of the contract. 9. On 26 October 2020, the plaintiff's solicitor was served with a lapsing notice in respect of the caveat at the instance of the defendants. 10. By his summons, the plaintiff sought an order that the second defendant cause the sum of $120,977.53 to be paid into the trust account of the plaintiff's solicitor from the proceeds of sale of the property in order to comply with the Federal Circuit Court's orders. 11. In the duty list on 16 November 2020, in conformity with the orders made by the Federal Circuit Court, I made an order extending the caveat until further order. 12. I made an order requiring the defendants to take steps to permit the plaintiff's solicitor to participate in the PEXA workspace. This was for the purpose of giving effect to an order I made that, upon settlement of the contract for sale, the following moneys be paid by the defendants to the plaintiff's solicitor; the moneys ordered to be paid to the plaintiff by the Federal Circuit Court, as well as interest in the sum of $4,418.40 calculated from the date of 21 March 2020 to 13 November 2020, a further $4,000 to cover future interest, and finally $10,000 for the costs and disbursements of the application. I made an order that the plaintiff's solicitor hold the funds received pending further order of the Court. 13. As all of these orders were made ex parte, I made an order that gave the defendants leave to relist the matter if they wished to apply for an order varying the orders that were made. The defendants did not exercise this leave. 14. As I did not know when settlement of the contract for sale would take place, I made a further order directing the plaintiff's solicitor to relist the proceedings before the duty judge on a date soon after settlement. 15. Settlement of the contract for sale has since taken place, and the proceedings were relisted before me on 10 December 2020. 16. The second defendant is the only defendant who has taken an active part in these proceedings. 17. The plaintiff delivered and served on the second defendant written submissions on 10 December 2020. The second defendant appeared by telephone at the hearing. As the second defendant had only received short notice of the plaintiff's submissions, I fixed a timetable for the second defendant to serve any further evidence and submissions. The second defendant served an affidavit affirmed by herself on 19 December 2020 and written submissions of the same date. 18. The plaintiff's submissions were simple. First, the Court should make an order permitting the plaintiff's solicitor to pay to him the money ordered to be paid by the Federal Circuit Court plus interest at the court rate. Secondly, the plaintiff submitted that the Court should make an order that the defendants pay his costs of the proceedings on the indemnity basis. 19. The second defendant submitted that the orders made by the Federal Circuit Court were void because they were made outside that Court's jurisdiction. She submitted that this was because the property in Wollongong was found not to be an asset of the marriage, and because the Federal Circuit Court did not have jurisdiction to make an order replacing a trustee under the Trustee Act 1925 (NSW). The second defendant also submitted that the orders were void because, even though they were made by consent, they were made under a misunderstanding concerning whether stamp duty would be payable on the transfer of the property from the first defendant to the second defendant. 20. The second defendant claimed in her affidavit that she was coerced by her solicitor into giving her consent to the orders made by the Federal Circuit Court and that she was confused when she gave her consent. She also said that she was wrongly advised by her solicitor concerning whether any stamp duty would be payable as a result of the implementation of the orders. 21. Nothing has been done by the second defendant, by way of application to the Federal Circuit Court, to set aside the orders made by that Court. Those orders stand, and there is no basis for this Court to decline to make orders that permit the Federal Circuit Court's orders to be implemented. That is the case whether it is said that the Federal Circuit Court lacked jurisdiction or whether the consent given by the second defendant to the making of the orders by that Court is vitiated. That said, I do not consider that any reason is disclosed by the evidence that casts doubt on the validity of the Federal Circuit Court orders. 22. Consequently, an order should be made that authorises the plaintiff's solicitor to pay to the plaintiff the money held on trust by the solicitor in the amount that is necessary to implement the orders made by the Federal Circuit Court. 23. As to the $4,000 that was paid to the plaintiff's solicitor to cover continuing interest, the plaintiff should only be entitled to additional interest from 13 November 2020 to the date of payment calculated at the rate that would be allowed by the Federal Circuit Court. If there is any balance retained, it should be paid to the second defendant. 24. On his application for an order for costs, the plaintiff relied upon the decision of the Court of Appeal in Nichols v NFS Agribusiness Pty Ltd (2018) 97 NSWLR 681; [2018] NSWCA 84. In that case, the Court of Appeal considered, among other things, the principles that are to be applied to deal with the costs of proceedings that have been settled between the parties. Generally, the parties can expect that the Court will make no order as to costs. However, where one party's conduct has been manifestly unreasonable, having regard to all of the known circumstances, the Court may make an order that that party pay the other's costs. 25. It is not clear that this principle is applicable in the present case as the second defendant ultimately opposed the making of the orders sought by the plaintiff and was unsuccessful. Perhaps the principle may be applicable to an extent because the Court made ex parte orders, the effect of which required the relevant part of the price for the property to be paid to the plaintiff's solicitor, and the second defendant ultimately did not put those orders in issue by applying for them to be varied. 26. I am satisfied that, given the clear effect of the consent orders made by the Federal Circuit Court, which included that the plaintiff was entitled to lodge the caveat provided he removed it on settlement of the contract for the sale of the property, it was entirely unreasonable for the second defendant to exclude the plaintiff's solicitor from the PEXA workspace, to cause the lapsing notice to be served, and then to resist orders made by this Court to facilitate the implementation of the consent orders made by the Federal Circuit Court. Accordingly, to the extent that it may be necessary to apply the principle discussed in Nichols v NFS Agribusiness Pty Ltd, I consider that the second defendant's conduct has been so unreasonable as to make it proper for the Court, in the exercise of its discretion, to order that the second defendant pay the plaintiff's costs of the proceedings. 27. There was no warrant at all for the second defendant to take any of the steps that she has taken with the intent of thwarting the implementation of the Federal Circuit Court's orders. Her conduct was egregious in this regard and it is proper that she be ordered to pay the plaintiff's costs on the indemnity basis. 28. It is not clear to me why the order for costs should be made against the first defendant. I note that order 2 made by the Federal Circuit Court on 21 November 2019 recorded that the first defendant was unfit to act as trustee of the property or otherwise as trustee on behalf of the second defendant's children. This suggests that the first defendant may lack capacity. The first defendant does not appear to have involved herself in these proceedings. 29. In the circumstances, I will only make the costs order against the second defendant. However, I will give the plaintiff leave to apply for the costs order to be extended to the first defendant if there are proper factual grounds for doing so. This leave should be exercised cautiously. 30. The plaintiff's submissions included a request that the Court make a gross sum costs order. I will consider making such an order provided that the plaintiff delivers to my Associate, within 14 days, evidence of the total amount of the plaintiff's legal costs in these proceedings. The plaintiff may make submissions limited to two pages. Any material provided to my Associate should be served on the second defendant, who will have a further 14 days to reply. 31. The plaintiff's solicitor should only be authorised to apply so much of the $10,000 that was retained for costs as are ultimately quantified as the costs of the plaintiff payable by the second defendant. Any balance retained must be returned to the second defendant. 32. For these reasons the Court makes the following orders: 1. Order that the solicitor for the plaintiff is authorised to pay to the plaintiff or at his direction the money referred to in order 4(a) to (c) made by the Court on 16 November 2020. 2. Order that the solicitor for the plaintiff is authorised to pay to the plaintiff or at his direction from the $4,000 referred to in order 4(d) made by the Court on 16 November 2020 interest on the money referred to in order 4(a) and (b) from 13 November 2020 to the date of payment at the rate authorised by the Federal Circuit Court of Australia on unpaid damages, with any balance being payable to the second defendant. 3. Order the second defendant to pay the plaintiff's costs of the proceedings on the indemnity basis. 4. Grant leave to the plaintiff to apply on seven days' notice if he should be so advised for an order that the first defendant pay the plaintiff's costs of the proceedings. 5. Grant leave to the plaintiff to apply for an order for his costs on a gross sum basis in the manner described in the reasons for judgment. 6. Order that the solicitor for the plaintiff is authorised to pay to the plaintiff or at his direction out of the money referred to in order 4(e) made by the Court on 16 November 2020 such amount as may ultimately be determined is payable by the second defendant to the plaintiff for the costs of these proceedings, with any balance being payable to the second defendant. 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: 22 February 2021