Reported Decision : (2002) NSW ConvR 56-005 New South Wales Supreme Court CITATION : Ricardo v Svir [2001] NSWSC 953 CURRENT JURISDICTION: Common Law Division FILE NUMBER(S) : SC 12661 of 1999 HEARING DATE(S) : 3 October 2001 JUDGMENT DATE : 26 October 2001 Ricardo Pty Limited (Plaintiff) PARTIES : v Iole Svir (Defendant) JUDGMENT OF : Master Malpass LOWER COURT Supreme Court (Assistant Registrar) JURISDICTION : LOWER COURT 12661 of 1999 FILE NUMBER(S) : LOWER COURT Assistant Registrar Howe JUDICIAL OFFICER : COUNSEL : Mr M W Young (Plaintiff) Mr R Freeman (Defendant) SOLICITORS : R L Kremnizer & Co (Plaintiff) Daniel Svir (Defendant) CATCHWORDS : Costs of mortgagee - powers of the court - entitlement to order - unreasonable conduct - otherwise order - onus. Real Property Act 1900, s 57 (2) (b). LEGISLATION CITED : Supreme Court Act 1970, s 76. Supreme Court Rules 1970, Pt 52 r 65, Pt 52A r 4, r 42. CASES CITED : N/A DECISION : See Paragraph 27. IN THE SUPREME COURT OF NEW SOUTH WALES COMMON LAW DIVISION 12661 OF 1999 MASTER MALPASS FRIDAY 26 OCTOBER 2001 Ricardo Pty Limited v Iole Svir Judgment 1 Master: These proceedings arose out of a mortgage dated 3 March 1998. Under the mortgage, the defendant was required to make monthly interest payments. The principal sum was repayable on 3 March 2000. 2 The plaintiff as the mortgagee filed a Statement of Claim on 2 November 1999. In that process, it sought both possession of the mortgaged property and a monetary judgment for principal and interest. 3 In paragraph 6 of the process, the plaintiff alleged default in relation to some seventeen monthly instalments during a period from 3 February 1999 to 3 October 1999. In paragraph 7, the plaintiff alleged service on or about 21 June 1999 of a notice pursuant to s 57 (2) (b) of the Real Property Act 1900. In paragraph 8, it is alleged that the defendant had paid some moneys since the issuing of the notice but continued to be in default. A verifying affidavit was sworn by Mr Hill (a director of the plaintiff). 4 Subsequently, the defendant filed a Defence and Cross-Claim. It put in issue default and alleged compliance with the statutory notice. 5 In the course of the proceedings, the plaintiff brought two Notices of Motion for summary judgment. The first was filed on 21 January 2000. The second was filed on 12 May 2000. 6 The mortgage was discharged on 23 May 2000. Thereafter, although the defendant sought to have the proceedings dismissed, the proceedings continued on foot until 23 April 2001 (inter alia they were transferred to the Possession List, a status hearing was appointed and there were a number of court listings requiring appearance by the parties). 7 The defendant had to bring a Notice of Motion to finalise the proceedings. It came before the court on 23 April 2001. On that day, by consent, the proceedings were dismissed. 8 Apart from seeking a dismissal of the proceedings, the Notice of Motion sought relief in relation to questions of costs. The costs issues were heard on 25 June 2001 before Assistant Registrar Howe. His reasons for decision were delivered on 6 July 2001. On that day, he made the following orders:- "1. The plaintiff is to pay the defendant's costs of the proceedings. 2. The plaintiff is to pay the defendant's costs of the notice of motion of 16 February 2001." 9 On 24 July 2001, the plaintiff filed a further Notice of Motion. It sought a review of the decision of the Assistant Registrar, the setting aside of his orders and an order that the defendant pay the plaintiff's costs of the proceedings and of the Notice of Motion. 10 A review was conducted on 3 October 2001. The orders of the Assistant Registrar stand unless disturbed by the court. The applicant bears the onus of satisfying the court that the orders should be disturbed. 11 The powers and discretions of the court concerning costs may be found in s 76 of the Supreme Court Act 1970. Rule 4 of Part 52A provides that such powers and discretions shall be exercised subject to and in accordance with that Part. They are to be exercised judicially. The court has regard to the relevant circumstances of the particular case before it and the interests of justice between the parties. 12 The nub of the dispute between the parties concerns r 42 (its predecessor was r 65 of Part 52). It is in the following terms:- "42 (1) Where a person is or has been a party to any proceedings in the capacity of trustee or mortgagee, he shall, unless the Court otherwise orders, be entitled to the costs of the proceedings out of the fund held by the trustee or out of the mortgaged property, as the case may be, in so far as the costs are not paid by any other person. (2) The Court may otherwise order pursuant to sub rule (1) only where— (a) the trustee or mortgagee has acted unreasonably; or (b) in the case of a trustee, he has in substance acted for his own benefit rather than for the benefit of the fund." The plaintiff claims entitlement to the costs pursuant to that provision. 13 The defendant accepts that it is a provision relevant to the question of the plaintiff's alleged entitlement to costs. 14 This provision confers an entitlement, which is subject to an otherwise order of the court. The otherwise order may be made only where the mortgagee has acted unreasonably. The making of such an order will be considered having regard to the relevant circumstances of the particular case before the court. The onus rests with the party seeking the otherwise order. 15 The dispute between the parties has a long and unfortunate history. It has seen unnecessary litigation and the throwing away of costs. A history of the dispute, both preceding and subsequent to the commencement of the proceedings can be found in the reasons of the Assistant Registrar. The parties have not taken issue with that history. Accordingly, it need not be repeated in this judgment. It suffices to merely refer to certain aspects of it. 16 The statutory notice was given in relation to interest payments said to be due on 3 May 1999 and 3 June 1999. Moneys were paid in July 1999. This payment brought about compliance with the statutory notice. It also had the effect of making a payment of interest in advance. Later in July 1999, the solicitor for the plaintiff confirmed in writing that all payments were up to date. 17 Thereafter, the defendant continued making payments, which were accepted by the plaintiff. Prior to the service of the Statement of Claim in November 1999, apart from the making of the payments, there was no other communication between the parties (in particular there was no complaint of default). 18 On any view, largely the allegations made in paragraph 6 of the Statement of Claim are not true (and should have been known to be untrue). There is conflict with the contents of another affidavit sworn by Mr Hill (as well as other evidence placed before the court). 19 Before the Assistant Registrar it was contended by the plaintiff that there was default in the sum of $2,045.62 at the time of the commencement of the proceedings. This was said to arise from the non-payment of a sum of $266.66 and some underpayments. 20 The defendant disputes that there was default at the time of commencement of proceedings. The Assistant Registrar did not determine the question of default. In my view, it was open to him to proceed on that basis. I consider that the questions of costs can be determined without a deciding of that issue. 21 I should add that it is conceded that at the time of the commencement of the proceedings the plaintiff was not entitled to require repayment of the principal sum. 22 On the return date of the first of the two Notices of Motion for summary judgment both parties appeared and the application was stood over to the next day. On that day, neither party appeared. The Assistant Registrar has expressed the view that this application had been abandoned without explanation. No issue has been taken with that expression of view. 23 Prior to the filing of the second of the two Notices of Motion for summary judgment, there was activity directed towards effecting discharge of the mortgage. There may have been some difficulty in bringing that to come to pass. In any event, on 3 May 2000 an appointment was made for a discharge of the mortgage on 23 May 2000. Despite the making of that arrangement, on 12 May 2000, the plaintiff filed the second Notice of Motion. It was returnable on 1 June 2000. On 22 May 2000, it was sent to process servers for service. The mortgage was duly discharged on 23 May 2000. On that day, the defendant not only paid the principal sum together with interest, there was also a payment of the amount claimed by the plaintiff for costs. The amount paid in respect of costs was expressed to be made under duress. Despite the discharge of the mortgage, the plaintiff did not seek to withdraw its instructions for service of the Notice of Motion and it did not seek to inform the defendant of the bringing of it. Indeed, no communication took place between the parties concerning it following service. On the return date, the plaintiff did not appear and the defendant had the Notice of Motion dismissed with costs. 24 After the discharge, the plaintiff did not act to bring about an end to the proceedings. The proceedings remained on foot until 23 April 2001 when they were dismissed by consent at the instance of the application brought by the defendant. During the period that intervened the proceedings were left to be dealt with by the court on a number of occasions (inter alia 20 October 2000, 15 December 2000, 2 February 2001 and 20 February 2001). During this time, there were instances of the plaintiff taking the course of resisting a prompt disposition of the proceedings. Apart from the waste of valuable court time, the conduct of the plaintiff led to the throwing away of further costs. 25 In his reasons, the Assistant Registrar does not expressly refer to either r 42 or r 65. Neither rule was mentioned in the written submissions placed before him. I am informed by counsel that oral reference was made to r 65. However, his decision is consistent with a finding that the plaintiff has acted unreasonably and that he was satisfied that an otherwise order should be made. 26 Be that as it may, I am satisfied that the plaintiff has acted unreasonably (inter alia in and about the commencement of proceedings and the conduct of them) and that the defendant is entitled to an otherwise order. In my view, the orders made by the Assistant Registrar best serve the interests of justice between the parties. I am not satisfied that they should be disturbed. 27 The Notice of Motion is dismissed. The plaintiff is to pay the costs of the Notice of Motion. The Exhibits may be returned. ********** Last Modified: 12/05/2001 DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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