Nitopi v Nitopi (No 2) [2016] NSWSC 476

Supreme Court New South Wales

Medium Neutral Citation: Nitopi v Nitopi (No 2) [2016] NSWSC 476 Hearing dates: 1 April 2016 Date of orders: 01 April 2016 Decision date: 01 April 2016 Jurisdiction: Common Law Before: Wilson J Decision: 1. The defendant's motion is dismissed. 2. The costs of the motion are awarded on an ordinary basis in favour of the plaintiff. 3. I stand this matter into the Registrar's list on 15 April 2016 for further mention and directions. Catchwords: PROCEDURE – civil – security for costs – conduct of the plaintiff Legislation Cited: Civil Procedure Act 2005 (NSW) Limitation Act 1969 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Byrnes v John Fairfax Publications Pty Ltd [2006] NSWSC 251 Hoxton Park Residents Action Group Inc v Liverpool City Council [2012] NSWSC 1026 Idoport Pty Limited v National Australia Bank Ltd [2001] NSWSC 744 Morris v Hanley [2000] NSWSC 957 Rajski v Computer Manufacturing and Design Pty Ltd [1982] 2 NSWLR 443 Welzel v Francis [2011] NSWSC 477 Category: Procedural and other rulings Parties: Christina Pirrello Nitopi (Plaintiff) Guiseppi Nitopi (Defendant) Representation: Mr Ireland (Plaintiff) Mr H Stitt (Defendant) File Number(s): 2015/94733

EX TEMPORE Judgment 1. By notice of motion dated 3 February 2016, the defendant Giuseppi Nitopi seeks an order against the plaintiff Christina Pirrello Nitopi for security for his costs in the sum of $28,720. 2. Leave was granted to the defendant to amend the orders sought. The order sought is that the plaintiff provide security for the costs of the proceedings in the sum to which I have referred or such other amount as determined. The amendment was to delete the reference to the Uniform Civil Procedure Rules 2005 (NSW), this being an application brought pursuant to the Court's inherent jurisdiction. 3. The defendant additionally seeks an order staying the proceedings pending payment of the security into court. 4. Read in support of the motion is an affidavit of Vincent Parisi, the defendant's solicitor, affirmed 3 February 2016. Objection was taken by the plaintiff to discrete paragraphs but I have determined to admit the whole of the document since the issues raised went to weight rather than admissibility. 5. The motion refers to a statement of claim against the defendant which was filed by the plaintiff on 30 March 2016 in the Equity Division of this Court. In the statement of claim the plaintiff seeks an order against the defendant for a sum of money being the claimed amount of $6.2 million together with interest and costs. The total claim against the defendant is for a sum of almost $6.8 million. 6. The plaintiff pleads that, in or about 1999 her son (the defendant) asked her if he could borrow the sum of $2 million using a property she owned in Riverstone as security. The plaintiff pleads that her son promised to make all repayments to the bank issuing the loan such that he would be responsible for the repayment of the entirety of the loan and interest. The plaintiff pleads in pleadings and particulars that she relied on his statements. 7. She subsequently obtained a loan facility in the amount of $2 million from the ANZ Bank and she says that money received from the bank went to her son. The plaintiff pleads that the defendant used the money to purchase a business, Combined Excavations Pty Limited, a property at Drummoyne, and some factory storage to be used for equipment, in furtherance of the defendant's business. 8. The plaintiff pleads that in or around January 2009, the defendant asked the plaintiff to re-finance the loan indicating he required further funds and the plaintiff did so by arranging a further loan of $4.1 million with the Westpac Bank. When that money was received from the bank, she transferred the whole amount to the defendant who subsequently told her he had used the money for his business and that he would attend to making all repayments on the loan. 9. The plaintiff indicates in her statement of claim that she at no stage received statements or any document or other correspondence from the bank, believing all such correspondence went directly to the defendant or was in some way intercepted by him. She pleads the defendant frequently asserted he was repaying the loan and attending to it and that there was nothing for her to be concerned about. 10. On or about 30 January 2009 the plaintiff pleads that the loan facility was increased to the sum of $5 million. In August 2009 an additional $100,000 was borrowed by the plaintiff at the request of her son to fund some development costs associated with the conduct of his business. The plaintiff indicates at paragraph 22 of the pleadings that she was not aware of a variation to the loan, and that she saw no correspondence in relation to the loan. 11. Subsequently, on about July 2013, the plaintiff pleads that she became aware of problems with the loan and of the appointment of a receiver in relation to the property. The property was subsequently sold, although the amount for which it was sold is in dispute and the plaintiff pleads that the whole of the funds secured on the sale of the property went to the bank to pay the loan obtained for her son. 12. In a defence filed 15 May 2015, the defendant denies the plaintiff's claim, asserting such moneys borrowed by the plaintiff were for her own benefit, and that the loan moneys were never received by him. He denies responsibility for the loan moneys. 13. The defendant raises in his defence the operation of the Limitation Act 1969 (NSW) and asserts that the whole of the plaintiff's claim is barred. 14. There have been earlier motions that the Court has had to determine relating to these proceedings. On 4 December 2015 Adamson J dealt with a show cause hearing that came before her on 3 December 2015. The defendant had raised issues concerning the attestation of an affidavit by the plaintiff and whether or not it was sworn contemporaneously with annexures which were attached. Her Honour ultimately made orders for the affidavit to be re-sworn in identical form save as to date. Her Honour made orders for costs in favour of the defendant, costs which, as of today, are yet to be paid. 15. In support of the defendant's motion, the defendant relies upon the affidavit of his solicitor Mr Parisi. Mr Parisi deposes that he received some instructions from his client in or around December 2015 to the effect that the defendant was concerned that the plaintiff was divesting herself of assets so that any costs orders made against her would not be recoverable. Mr Parisi has undertaken various searches on title and discovered that the plaintiff had, in fact, transferred her real property to her daughter Christina. The transfer of property was for both a property at Croydon and a property in Surfers Paradise. 16. The plaintiff objected to the affidavit filed by Mr Parisi, specifically paragraphs 9, 10, 11, 12 and 13. Broadly speaking, those paragraphs deal with the costs that the defendant has incurred to date in relation to the claim against him, together with estimates of costs that will be incurred in the future in defending the action. Mr Parisi additionally deposes to the fact that the costs order made on 4 December 2015 have not yet been paid. 17. The paragraphs that are objected to were said to lack sufficient particularity to permit the Court to make any proper estimate of the costs involved in this litigation. The expertise or experience of Mr Parisi is called into question, in terms of his capacity to provide a proper estimate of costs, in particular costs likely to be encompassed by an award for costs against the plaintiff. 18. Whilst I accept that there is a lack of particularity to some extent in the impugned paragraphs, it seems to me that Mr Parisi does have some capacity to advise the Court, certainly for costs already incurred, but to give an estimate of those likely to be incurred in the future. The level of particularity in the paragraph is something which, to my mind, is more relevant to weight than to admissibility and on that basis, I determineD to admit the evidence. 19. Mr Stitt, who appears for the defendant, submits that the court should make the orders sought in the exercise of its inherent jurisdiction. He says the orders should be made in favour of the defendant as sought. It is submitted that the plaintiff's claim will be difficult for her to succeed in. There is the question of the application of the limitation period which, it is contended, renders the action barred. 20. The question of the plaintiff's financial means is raised as an issue, and it is contended that the plaintiff has no obvious means of satisfying an adverse costs order. It is submitted that the transfer of her Croydon property to her daughter Christina, was done as a means of avoiding any order for costs in the defendant's favour. Additionally, the plaintiff has other litigation on foot in the Probate Division and the costs of the two sets of litigation, together with the ordinary expenses that the plaintiff has for day to day life, will quickly exhaust the cash deposit the plaintiff says she has standing to her credit. 21. Finally, the defendant argues that his defence is a substantive one and gives rise to further concerns about the plaintiff's claim against him. It was, in summary, contended that the plaintiff has made herself "judgment proof" by her actions in transferring her property. 22. In reply, the plaintiff relies upon her affidavit of 11 February 2016 together with the affidavit of her solicitor, Mark Smith, of 17 March 2016. As to the transfer of her real property assets to her daughter, the plaintiff deposes that the properties were transferred in accordance with a deed of transfer to her daughter on the basis of a gift made in gratitude of all the care and assistance provided by the transferee, that being the plaintiff's daughter, to the plaintiff throughout her life, and as a reflection of the good relationship between the transferor and the transferee. 23. The plaintiff deposes in her affidavit that she has no intention of avoiding legal costs should such an order be made in favour of the defendant and that she has the resources to pay such costs should any order be made in favour of her son. She deposes to the contents of a bank account she holds with the National Australia Bank said to be in excess of $40,000 on deposit. This is a fund that the plaintiff uses for her daily maintenance. 24. Mr Smith in his affidavit produces the deed of transfer as annexure A. The deed dated 31 July 2015 provides for the transfer of two properties for no monetary consideration. The recital in the deed refers to each of two properties, one at Croydon and one at Surfers Paradise, and notes that the transfer was by way of gift with no consideration to be paid by the transferee to the plaintiff. The transfer was effected on 29 July 2015. The deed notes that the plaintiff as transferor is the mother of the transferee and the gift of the two properties are made in gratitude of the care and assistance, and as a reflection of their good relationship. The deed additionally recites that the transferor wished to make the gift of the property during her lifetime specifically to prevent her other children, another daughter and the defendant, from receiving any benefits as beneficiaries of the plaintiff's estate after her death. 25. Mr Ireland, for the plaintiff, argues that the Court's inherent jurisdiction to order security for costs should only be exercised if necessary to do so to prevent the abuse of the court's process. It is conceded that the Court has the power to make such an order against an actual person and it is submitted an order of that nature can only be made when truly necessary to do so to protect the Court's process. 26. It is submitted that the plaintiff as a natural person brings a substantial claim against the defendant in her own right and for her benefit. 27. Reliance is placed on the plaintiff's affidavit in which she asserts she has the means to meet any costs order, and transfered her property for reasons unconnected with the litigation between she and the defendant. It is submitted that nothing in the evidence establishes that the plaintiff's claim could be characterised as an abuse of process. 28. Issue is taken with the amount of costs claimed by the defendant and the expertise of Mr Parisi to assess the costs in the way he has done. It is submitted that the plaintiff has, in transferring her two real property assets, done no more than attend to estate planning and management by a person of advanced years. It is submitted that there is no basis for the Court to conclude that the transfer of the properties was done as a means of frustrating any adverse order for costs against the plaintiff and the Court could not conclude that there has been any abuse of the Court's process. 29. The defendant contends that the Court has the power to make orders for security of costs against an individual and, in the circumstances of this case, should do so. The defendant has referred the Court to what are said to be serious difficulties with the viability of the plaintiff's claim, not least being the issue of the application of the Limitation Act. It is submitted by the defendant that the fact that the plaintiff has transferred her only real assets, either at the time or around the time of the initiation of these proceedings, mean it is safe for the Court to infer that the transfer has been done as a means of frustrating any claim by the defendant for costs against the plaintiff should the action be adverse to the plaintiff.