Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Segal v Barel (No 2) [2013] NSWCA 148 Hearing dates: On the papers Decision date: 12 June 2013 Before: McColl JA; Barrett JA; Preston CJ of LEC Decision: 1.Appeal allowed. 2.Set aside orders (1), (2), and (3) made on 2 November 2012. 3.In lieu thereof, order that pursuant to s.66G of the Conveyancing Act 1919 Margaret Colleen Hole of Level 7, 9 Barrack Street, Sydney and Michael Osborne of Level 14, 6 O'Connell Street, Sydney, solicitors, be appointed trustees of the property known as XXXX Street, North Bondi (also referred to as Dover Heights) in the State of New South Wales and being the whole of the land the subject of folio identifier 152/740177 and that the property vest in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale. 4.Vary order (7) made on 2 November 2012 by deleting the words "upon partition" and inserting "upon termination of the co-ownership of the property" in lieu thereof. 5.Set aside orders (8) and (9) made on 2 November 2012. 6.In lieu thereof order that the trustees are to apply the proceeds of sale (subject to Order 7 of these orders) as follows: 6.1to the payment of all costs and expenses of the sale; 6.2to divide the balance into 2 equal shares, one for the appellant and one for the respondent; 6.3as to the appellant's share: (a)to the payment to the Commonwealth Bank of Australia for the appellant's share of the housing loan (account 255477505), the appellant's share of that loan to be calculated in the ratio of 132,891.00:894,172.29 to the total amount of the loan then due; (b)to the payment to the Commonwealth Bank of Australia for the balance of Viridian account 2124 10567813; (c)to the payment to the respondent of the sum of $428,080.50; and (d)to the payment of the balance to the appellant; 6.4as to the respondent's share: (a)to the payment to the Commonwealth Bank of Australia for the respondent's share of the housing loan (account 255477505), the respondent's share of that loan to be calculated in the ratio of 761,280.29:894,172.29 to the total amount of the loan then due; (b)to the payment to the Commonwealth Bank of Australia for the balance of Viridian account 2124 10520759; and (c)to the payment of the balance to the respondent. 7.Set aside Order (14) made on 2 November 2012 and order in lieu thereof that the costs of both parties of the Equity Division proceedings be paid out of the proceeds of sale before they are applied in accordance with Order 6 of these orders. 8.Order that the respondent pay the appellant's costs of the appeal. 9. Order that the respondent have a certificate under the Suitors' Fund Act 1951, if qualified. [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Catchwords: COSTS - costs at first instance in proceedings for sale or partition of co-owned land - analogy with suit for dissolution of partnership Cases Cited: Official Trustee in Bankruptcy v Ritchie (No 2) (unreported, Powell J, 25 November 1988) Segal v Barel [2013] NSWCA 92 Category: Consequential orders Parties: Phillip Segal - Appellant Elie Barel - Respondent Representation: G R Waugh - Appellant J A Loxton - Respondent Low Doherty Stratford - Appellant Coopers Law Firm - Respondent File Number(s): 2012/367918 Decision under appeal Citation: Barel v Segal [2011] NSWSC 1181; Barel v Segal (No 2) [2012] NSWSC 1054; Barel v Segal (No 3) [2012] NSWSC 1319 Date of Decision: 2012-11-02 00:00:00 Before: Pembroke J File Number(s): 2010/412807 Judgment 1THE COURT: The parties have agreed the form of the orders appropriate to give effect to the Court's decision of 29 April 2013: Segal v Barel [2013] NSWCA 92. They have also made submissions on the question of the costs at first instance. 2The primary judge ordered that the defendant (present appellant) pay 40% of the costs of the plaintiff (present respondent). In doing so, the primary judge noted that there were two distinct issues, one concerning the question whether there should be partition or sale; and the other concerning the accounting between the parties. 3In relation to the second issue, the judge decided that neither party had achieved substantial success at the expense of the other and that the costs related to the accounting should be left to lie where they had fallen. 4In relation to the aspect concerning the question of partition versus sale, the primary judge recognised that, where partition is ordered, it is common practice to proceed by way of analogy with dissolution of partnership, so that there is no order for costs: Official Trustee in Bankruptcy v Ritchie (No 2) (unreported, Powell J, 25 November 1988). 5The judge said that the level of the appellant's opposition to partition (as distinct from sale) went further than manifestation of differences and disagreement "that might usually be expected between co-owners" and that the appellant's opposition to partition was "entrenched and unreasonable". There was also reference to "obstructive behaviour" of the appellant. Furthermore, "[p]artition was the obvious outcome". 6Those aspects of the appellant's behaviour were seen by the judge to warrant a departure from the analogy with dissolution of partnership. 7A combination of the finding that each party should bear his own costs of the accounting and that the appellant had acted unreasonably in relation to the other aspect caused the judge to decide that the appellant should pay 40% of the respondent's costs of the proceedings as a whole. There was no apportionment between the two separate aspects of the case. 8His Honour explained the percentage thus (at [17] of the second judgment): "In arriving at the figure of 40% I have taken into account the fact that the accounting exercise took up more time and resulted in more cost and expense than the claim for partition. That is not to say that the claim for partition was straightforward, even without the necessary accounting. It was complex, a feature to which the defendant added substantially by, among other things, his claim that there should be a sale and his claims for equality money and an occupation fee. However, a figure higher than 40% would not reflect my conclusion that each party should pay his own costs relating to the accounting." 9The appellant says that, in view of the outcome on appeal, the appropriate course is simply to reverse the position and to order that the respondent pay 40% of the appellant's costs below. 10The respondent contends for a different approach, namely, that, in light of the result on appeal, the percentage of the respondent's costs to be paid by the appellant should be reduced from 40% to 20%. 11It is not appropriate simply to reverse the positions, as put by the appellant. The course the judge adopted took account of what he regarded as unreasonable conduct of the appellant. There is no basis for subjecting the respondent to an order that had regard to conduct of that kind when there is no suggestion that the respondent engaged in such conduct. 12Nor is it appropriate merely to reduce the percentage of the respondent's costs to be paid by the appellant when the outcome at first instance on the partition versus sale question, according to this Court, should have been that for which the appellant contended. 13On the whole, the decision of this Court in favour of sale (as sought by the appellant in his cross-claim) rather than partition (as sought by the respondent) means that the respondent, as plaintiff below, should not be awarded any part of his costs at first instance; and that the analogy with a partnership suit should be maintained in full form, so that the costs of both parties at first instance are paid out of the proceeds of the sale of the co-owned land. 14The orders are therefore as follows: 1. Appeal allowed. 2. Set aside orders (1), (2), and (3) made on 2 November 2012. 3. In lieu thereof, order that pursuant to s 66G of the Conveyancing Act 1919 Margaret Colleen Hole of Level 7, 9 Barrack Street, Sydney and Michael Osborne of Level 14, 6 O'Connell Street, Sydney, solicitors, be appointed trustees of the property known as XXXX Street, North Bondi (also referred to as Dover Heights) in the State of New South Wales and being the whole of the land the subject of folio identifier 152/740177 and that the property vest in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale. 4. Vary order (7) made on 2 November 2012 by deleting the words "upon partition" and inserting "upon termination of the co-ownership of the property" in lieu thereof. 5. Set aside orders (8) and (9) made on 2 November 2012. 6. In lieu thereof order that the trustees are to apply the proceeds of sale (subject to Order 7 of these orders) as follows: 6.1 to the payment of all costs and expenses of the sale; 6.2 to divide the balance into 2 equal shares, one for the appellant and one for the respondent; 6.3 as to the appellant's share: (a) to the payment to the Commonwealth Bank of Australia for the appellant's share of the housing loan (account 255477505), the appellant's share of that loan to be calculated in the ratio of 132,891.00:894,172.29 to the total amount of the loan then due; (b) to the payment to the Commonwealth Bank of Australia for the balance of Viridian account 2124 10567813; (c) to the payment to the respondent of the sum of $428,080.50; and (d) to the payment of the balance to the appellant; 6.4 as to the respondent's share: (a) to the payment to the Commonwealth Bank of Australia for the respondent's share of the housing loan (account 255477505), the respondent's share of that loan to be calculated in the ratio of 761,280.29:894,172.29 to the total amount of the loan then due; (b) to the payment to the Commonwealth Bank of Australia for the balance of Viridian account 2124 10520759; and (c) to the payment of the balance to the respondent. 7. Set aside Order (14) made on 2 November 2012 and order in lieu thereof that the costs of both parties of the Equity Division proceedings be paid out of the proceeds of sale before they are applied in accordance with Order 6 of these orders. 8. Order that the respondent pay the appellant's costs of the appeal. 9. Order that the respondent have a certificate under the Suitors' Fund Act 1951, if qualified. ********** 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: 12 June 2013