Asimus & Anor. v. Asimus & Anor. [1999] NSWSC 1020

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

NO. 2483 OF 1999 ASIMUS & ANOR. V. ASIMUS & ANOR.

1 HIS HONOUR: According to folio identifier 4/557887, the property, Lot 4 Maguires Road, Maraylya, is owned by the defendants John Asimus and Colleen Asimus as joint tenants in a one half share, and the plaintiffs Peter Asimus and Virginia Russell as joint tenants in a one half share, as tenants in common. Despite the reference to "half shares" in the title deed, it is common ground that the defendants, in fact, have a 60 per cent interest in the property, and that the plaintiffs have a 40 per cent interest, subject to an agreement as to recompensing each of them from the proceeds of any sale for the amount by which any improvements made by the plaintiffs and the defendants respectively have increased the value of the property. 2 In these proceedings, the plaintiffs seek the appointment of Guardian Trust Australia Limited as trustee for sale of the property pursuant to section 66G of the Conveyancing Act 1919. 3 This application is resisted by the defendants, on the basis of an agreement dated 15 May 1994 entered into by the parties at the time of the purchase of the property, and also on grounds related to the hardship which will be caused to them from the forced sale of their home. 4 I will commence by briefly outlining the main facts in the case. 5 The property was purchased by the parties by a contract which was completed in May 1994. There were and are two dwellings on the property. There is a timber house which is occupied by the defendants, and a brick house occupied by the plaintiffs. 6 As I mentioned earlier, at the time of the purchase, the parties entered into an agreement, the body of which was in the following terms: NOW THIS DEED WITNESSETH should the property be sold in its entirety by the parties that the First Purchasers are to receive sixty per cent (60%) of the proceeds and the Second Purchasers forty per cent (40%) provided that if either party spends money on improvements that party is to be reimbursed for the amount by which the improvements increased the value of the property. Such amounts to be determined, in the absence of a mutual agreement of the parties, by a registered valuer.

Should the property become capable of subdivision the land is to be divided equally between the parties, the First Purchasers to keep the timber house and the Second Purchasers to receive the brick house. This agreement is to be revised each three (3) years and both parties are to give to each other the right of first option to purchase should they decide to sell their interest in the property. Rates are to be drawn equally between the parties. 7 Since May 1994, the plaintiffs have operated a horse training business on the property. The first defendant has earned income as a motor dealer and a beef cattle producer. 8 There is a mortgage over the property to the ANZ Banking group securing amounts owing by the parties. As at August 1999, it appears that this mortgage secured about $70,000 owing by the plaintiffs and about $140,000 owing by the defendants. 9 On 29 May 1997, that is three years and two weeks after the date of the agreement, the first defendant, Mr Asimus, entered into an agreement with one Robyn Margaret O'Brien to agist over 500 head of cattle on her property from 1 June 1997 to 30 May 2000. 10 According to the first defendant, before entering into that agreement, he told the second plaintiff, Ms Russell, that he was thinking about entering into an agreement of that kind, and she raised no objection to it. Ms Russell does not absolutely deny such a conversation, but says that she did not signify agreement to that proposal. 11 According to the plaintiffs, there was a meeting between the plaintiffs and the defendants on 9 June 1997, at which the plaintiffs told the defendants that they wanted to finish the arrangement between them. The defendants denied that such a meeting took place. 12 It is common ground that a meeting did take place between the plaintiffs and the defendants on 14 May 1998. It seems clear that on that day, the plaintiffs told the defendants that they wanted to finish the arrangement, and that there was discussion of either side buying the other out. 13 There is in evidence a notice dated 19 August 1998 from the plaintiffs to the defendants, to the effect that the plaintiffs wished to end what they called the "partnership" and that they wished it not to continue beyond December 1998. This document set out a number of options, namely one side buying the other out; an auction; and legal action. The notice suggested a meeting on the following day. It would appear that such a meeting took place, but no agreement was reached. 14 By letter from the defendants to the plaintiffs dated 29 August 1998, the defendants expressed a wish to buy out the plaintiffs' interest but made no particular offer. 15 On 6 September 1998, the plaintiffs made an offer to buy out the defendants for $390,000. A letter dated 10 September 1998 from the defendants to the plaintiffs indicated that the defendants did not accept the offer. The letter went on to request that the parties "Continue as we are or under some new agreement suitable to both of us". It set out as other options that the defendants buy out the plaintiffs, or an auction in September/October 1999. 16 In September 1998, a valuation was obtained of the property, which gave a value of $690,000 on the basis that both houses had council approval, and $610,000 on the basis that only one house had council approval. 17 The plaintiffs wrote a further letter to the defendants on 21 September 1998 again asserting that they wanted to finish the "partnership". In this letter, the plaintiffs offered to sell their interest to the defendants for $320,000. 18 In a telephone conversation on 22 November 1998, the plaintiffs offered $420,000 for the defendants' share. In a further telephone conversation a week later, the defendants indicated that they would not accept that offer, but that they would buy out the plaintiffs for $300,000. 19 It appears that this offer was accepted in principle, and on 8 December 1998 solicitors acting for the plaintiffs recorded that matter and requested that contracts be signed and exchanged within 21 days. In this letter, the solicitors suggested that there should be a 10 per cent deposit and completion by 15 April 1999. 20 It seems that in a telephone conversation a few days later, the first defendant, Mr Asimus, told Ms Russell that he would not sign a contract on those terms, but that he was considering a contract with a one per cent deposit and completion in June 1999. 21 There followed correspondence between solicitors concerning this proposed contract. It appears that the plaintiffs indicated that they would agree to a contract containing a one per cent deposit and provided for completion in June 1999, but on the basis that if the matter was not settled by the end of July 1999, they would have an option to buy out the defendants for $420,000. No formal contract has been signed. 22 In May 1999, the defendants advertised their cattle for sale. Apparently no cattle was sold at around that time. I am told by the defendants that the value of their cattle is of the order of $300,000. 23 The summons in these proceedings was filed on 26 May 1999. There was some discussion of mediation. There is in evidence a letter dated 17 August 1999 from the proposed trustee for sale, pointing out the expenses and delays involved in taking Court proceedings and ultimately engaging a real estate agent to sell the property, and suggesting a mediation conference. 24 There is also in evidence an exchange of letters on 4 September 1999, in which the plaintiffs proposed a mediation meeting in the office of the proposed trustee on 14 September, and in which the defendants proposed "A completely independent mediation such as the Law Society's mediation system". It appears, unfortunately, that the proposal for mediation did not advance further than that. 25 This matter was before Registrar Howe on 17 September; and on that day it was put in the short notice list and from that list it has come on for hearing before me today. At the commencement of the hearing, there was an application for adjournment which I dealt with in an earlier judgment today. 26 The main issues that have been debated before me concern the effect of the agreement of 15 May 1994; the question whether the plaintiffs gave notice in June 1997 that they wished to end the agreement; the effect of the entry into the agistment agreement for a period of three years ending in May next year; and, finally, questions relating generally to the exercise of discretion by the Court as to the granting of the relief and the terms on which it is granted, including the possibility of a stay of the orders. 27 I will deal first with the effect of the agreement of 15 May 1994. The general principle in relation to properties held in joint ownership or ownership in common is that any part-owner is prima facie entitled to obtain a Court order for the sale of the property, so that the part-owner is not, against his or her will, locked into a situation of having an asset which cannot be dealt with in any way. That right can be cut down by agreement, and the question is whether the agreement of May 1994 relevantly cuts down the right of the plaintiffs to realise their interest in this property. 28 The agreement does not, in terms, prevent the making of an application to the Court for the sale of the property; indeed, it deals in terms with how the proceeds of any sale are to be dealt with. I am inclined to think that even within the first three years, the agreement does not prevent any of the part-owners applying to the Court for an order that the property be sold. 29 The agreement states that it is to be revised each three years; and the first defendant, John Asimus, has submitted that that plainly implies that the agreement is to continue in three year stages automatically, with only the possibility of revision of terms between one three year stage and the next. 30 In my opinion, that is not the correct interpretation of the agreement. I think, rather, it contemplates consideration after three years whether and on what terms the agreement is to continue; and, even if it did have the effect of cutting down any of the parties' rights to approach the Court for the first three years, in my opinion, it does not cut down the right of any of the parties to approach the Court after the end of the first three years. 31 The next question is the main factual dispute in the case; namely, whether the plaintiffs gave notice in June 1997 that they wished the arrangement to end. 32 Although the evidence of the plaintiffs on the one hand and of John Asimus on the other is directly opposed, I am not satisfied that either party is deliberately giving false evidence. I think all parties have given true evidence to the best of their ability and recollection. In my opinion, the diary entry produced by Ms Russell does strongly support the view that a meeting did take place on 9 June, and I think it is probable that at that meeting, the plaintiffs at least indicated dissatisfaction with the continuance of the arrangement. I am not satisfied, however, that an express agreement was entered into between the parties on that day that the arrangement should continue for 12 months and no more. 33 Turning to the effect of the agistment agreement, the fact of entry into that agreement has some bearing on the probabilities of what happened on 9 June, and I have taken that into account in reaching the finding I have indicated upon that matter. I think that agreement has some bearing on the exercise of the Court's discretion, but I do not think that agreement or the circumstances of its making gives any basis for precluding the plaintiffs' making and succeeding on this application. 34 Although I accept that it was mentioned to Ms Russell that an agreement of this kind was being entered into, I am certainly not satisfied that it was brought home to her attention that the defendants saw this as an important change in their position which would make it necessary for them to hold onto the property for a further three years, and I am certainly not satisfied that the plaintiffs had any view of that kind. 35 One further matter relevant to the effect of the agistment agreement is that it seems clear from oral evidence given today by John Asimus that he can, in all probability, bring it to an end earlier than May next year and, indeed, bring it to an end almost immediately so that he could commence retrieving and selling his cattle quite soon. John Asimus gave evidence that Margaret O'Brien was in breach of the agreement and, in any event, did not object to the agreement being ended early. There was a dispute between him and Margaret O'Brien being dealt with apparently by mediation; but, as I understood his evidence, that did not really affect his ability to regain control of his cattle, if he wished to do so. 36 Coming to the matters relevant to the exercise of discretion, I think it is of some significance that the property is regarded by the defendants as their home and that they have lived there, or on an adjoining property, for many years. A further matter relevant to the exercise of discretion is the defendants' wish, if possible, to buy out the plaintiffs; and they say they need time to raise money which would enable them to do so. 37 The final matter of some relevance to discretion is that the defendants still wish, if possible, to investigate the possibility of subdivision, which, if it could be achieved, would enable them to retain their home and enable the plaintiffs to realise their interest in the property by selling a subdivided part of the property. However, on the material before me, I have to say that the possibility of subdivision seems fairly remote, and it really is very late in the day for the defendants to be seeking to raise that matter now. 38 For those reasons, in my opinion, the plaintiffs are, in substance, entitled to the orders that they seek. However, I think it would be appropriate to stay those orders for a period of four months, to give the defendants an opportunity to raise money to either buy out the plaintiffs' interest, or at least to be in a position to bid at any auction by which the property is sold by the trustee. 39 In the course of argument, I adverted to the possibility of an application for extension of that period in certain eventualities. One of the eventualities discussed was that the defendants may, within that period, be able to raise some, but not all, of $300,000, which is the amount that the plaintiffs have been requiring to be bought out of their interest. However, I would have to say that unless the plaintiffs agreed to such an extension, I do not believe that could be a ground for applying for an extension of the stay, because the plaintiffs cannot be compelled to accept $300,000, or any particular amount, for their interest. They are entitled to insist, if they so choose, that an auction or other sale of the whole property proceed. 40 The other possible ground mentioned in argument for an application for a stay was that, if the Court could be satisfied that subdivision was a probability and only required limited additional time, the Court might be prepared to grant a stay on that basis. That still seems to me to be a possible ground for extending the stay, but it would be a matter for the Judge hearing any such application to determine whether such an extension is appropriate. 41 The plaintiffs have indicated in general terms that, for a limited period at least, they would still be prepared to accept $300,000 in payment out of their interest; and I think that is a reasonable basis as well as the subdivision question to grant the stay which I have indicated. 42 For those reasons, I propose to make the orders substantially as sought in the summons, although I will alter a little the provision concerning the shares payable to each party. 43 I will make a declaration establishing the interests of the parties in the property, as indicated earlier in my judgment, and I would propose to stay the operation of the orders until 7 February 2000, or such further time as may be agreed in writing between the parties. That will put it in the parties' power to extend the stay, if they wish to do it, but it would only be effected by agreement in writing by all parties. 44 The orders that I make are these. 45 I declare that the property comprised in folio identifier 4/557887 is owned as to 60 per cent by the defendants and 40 per cent by the plaintiffs, subject to the right of the defendants and plaintiffs respectively to be reimbursed from the proceeds of any sale of that property for the amount by which any improvements effected by the defendants and plaintiffs respectively have increased the value of the property. 46 I make order one in the summons filed 26 May 1999. 47 I order that the net proceeds of sale be applied as follows: (a) in paying the costs of the plaintiffs of these proceedings assessed at $2,890.27; (b) an amount of $50,000 should be set aside to be dealt with as stated in the following order; (c) to the defendants, 60 per cent of the balance plus the total debt to the ANZ Bank, less the whole of the defendants' share of the debt to the ANZ Bank; (d) to the plaintiffs, 40 per cent of the balance plus the total debt to the ANZ Bank, less the whole of the plaintiffs' share of the debt to the ANZ Bank. 48 From the sum of $50,000 referred to in the previous order, there should be paid to the defendants the amount by which the value of the property was increased by improvements effected by the defendants, and to the plaintiffs the amount by which the value of the property was increased by improvements effected by the plaintiffs, with any balance going as to 60 per cent to the defendants and 40 per cent to the plaintiffs. In default of agreement, such values are to be determined by a valuer agreed by the parties, or in default of agreement appointed by the President of the Real Estate Institute. 49 I reserve liberty to apply in case any problems arise with giving effect to the orders I have made. 50 I make orders 3 and 4 in the summons. 51 Apart from the provision for the plaintiffs' costs in a previous order, I make no further order as to costs. 52 I stay the foregoing orders until and including 7 February 2000, or such further time as may be agreed in writing between the parties. ************

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