Bhattacharyya v Sarikaya

Judgment 1HIS HONOUR: This litigation involves an unfortunate dispute between parties who were, formerly, in a relationship. Ward J referred the matter to me, for hearing, in the Friday Duty List, on 26 August 2011. 2The Plaintiff filed a Summons on 11 August 2011 in which she sought orders in what might be regarded as the usual, uncomplicated, form, under section 66G Conveyancing Act 1919, for the appointment of trustees for sale of a property, situated at Eden on the far south coast of New South Wales, (to which I shall refer as "the property"). Other than in respect of costs, no orders are sought, in the Summons, as to the destination of the proceeds of sale. No Cross-Claim has been filed by the Defendant. 3There is no dispute that the parties purchased the property in October 2008 as joint tenants. The purchase price of the property was $634,000. Part of the purchase price ($480,000) was borrowed, with the parties contributing about $154,000. The property has an area of 1.492 hectares and has built upon it a two-storey house with 6 bedrooms and three bathrooms, a detached metal garage/work shed, water tanks and other ground improvements. There is an easement on title for electricity purposes. 4There is also no dispute that the property has a current value of $600,000 (exclusive of GST) and that there is a mortgage registered on title securing a debt of about $480,000. 5The relationship between the parties ended in about February 2010. The precise circumstances surrounding the breakdown of their relationship is not relevant to the matters I have to decide. 6Since then, there have been a series of unsuccessful negotiations between them, with, or without, the assistance of legal representatives, all of which have proved unsuccessful. I am informed, from the bar table, that there is a high level of distrust by the Plaintiff of the Defendant. There was no dispute about this fact. (I do not need to determine whether this assertion is justified.) There was no cross-examination of either deponent on her, or his, affidavit. 7The Defendant has commenced other proceedings against the Plaintiff in the District Court of New South Wales. Again, those proceedings are not really relevant to the proceedings, other than to demonstrate that there is, outside these proceedings, another legal conflict between them. 8During the hearing, it was difficult to determine whether the Defendant, who appeared in person, was opposing the sale of the property, or simply opposing the appointment of trustees for sale. The evidence revealed that in September 2010, he did not consent to the sale of the property. In a letter dated 8 October 2010, his solicitors advised that he did consent to the sale of the property, "but claims that [the Plaintiff] owes him money as a result of their business dealings and wants payment of the debt as a condition of his consent". 9In a letter dated 23 August 2011, signed by the Defendant, he set out what he described as "a suggestion" for the sale of the property, including the division of the surplus proceeds of sale. There does not appear to have been a response to this "suggestion". 10In a document headed "Defence" which was sought to be relied upon, the Defendant stated that "he did not consent to the [property] vesting in trustees and believes that such vesting would be a breach of covenants in the mortgage ...". Nothing specific was said about opposing the sale of the property otherwise. However, the Defendant took me to a copy document, headed "Agreement", which refers to an agreement between the parties not to sell the property without consent. This suggested that the sale was being opposed, other than to the Defendant, and provided a hint that reliance was being placed on the principle that an order under s 66G would be inconsistent with a proprietary right, or a contractual or fiduciary obligation owed to the Defendant. 11In an affidavit read by the Defendant, a number of paragraphs were devoted to what were said to be prior agreements between the parties relating to a first right to buy out the interest of the other prior to any sale, and to other requests by the Defendant to purchase the interest of the Plaintiff. 12Ultimately, however, the Defendant orally stated, explicitly, that he agreed that the property needed to be sold, that he no longer wished to purchase the Plaintiff's interest in it, and that he did not oppose the sale of the property by auction. He stated that he did not wish the costs associated with the appointment of trustees for sale to be incurred. He also said that he did not know either of the trustees who had been nominated and who had consented to act and that he had not had any discussions with them. For this reason, too, he opposed their appointment. No submission was made that either trustee was not a fit and proper person to be appointed. (Based upon what I have read, I am, in any event, satisfied that the two trustees, who have consented to being appointed, are fit and proper persons to be appointed.) 13Then, the Defendant stated that he was prepared to consent to an order that: (a) the Plaintiff nominate a firm of solicitors, of her choice, to act on the sale of the property; (b) the Plaintiff appoint a local licensed real estate agent, of her choice, to market the property for sale; and that he would also undertake to the court to sign any documents reasonably necessary, or required, by either the chosen agent, and/or solicitor, to achieve compliance with (a) and (b), as well as any document, including a contract for sale, reasonably necessary to effectuate a sale of the property at the best price able to be obtained. 14He did not indicate any time within which he would be prepared to sign such documents. However, I gather from what he said, that he would be prepared to do what was required of him promptly, and in any event, within a reasonable period. Also, implicit in what he said, was the understanding that he would not in any way hinder, or prevent, any sale that was negotiated, from occurring, and that he would do whatever was necessary, after exchange, on his part, to carry out the obligations under any contract that was entered into. 15Counsel for the Plaintiff submitted that even if the orders to which the Defendant was prepared to consent were made, and the undertakings were given, this would not satisfy the Plaintiff, as the history between the parties, particularly negotiations that had been conducted in the past, led her to believe that there would be further delay and disagreement in the future. 16Counsel also pointed to the fact that the parties remained in dispute in the District Court proceedings and that this was likely to cause further conflict between them. He submitted that in the ordinary course, a co-owner is entitled "almost as of right" to an order under s 66G ( Callahan v O'Neill [2002] NSWSC 877 at [8] and Tory v Tory [2007] NSWSC 1078 at [42]) and that the party opposing sale has the onus of dissuading the Court from ordering a trust for sale ( Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14,685 at 14,701). 17The Defendant seemed to accept that the Court has a discretion under s 66G whether to make any order, and, if so, with respect to its terms. He submitted, however, that where an open offer along the lines proposed was made, the Court should exercise its discretion and not make an order. The discretion is not to be exercised by reference to personal views about hardship or unfairness: Spathis v Nanos [2008] NSWSC 418 at [20]. 18I offered the parties an opportunity to obtain a court annexed mediation, which might be available promptly, in order to see if they could resolve all financial disputes between them, but the Plaintiff's counsel, after obtaining instructions, refused this opportunity because of the history to which reference was made. 19During the submissions, I was attracted to the prospect of saving the parties the costs of appointing trustees for sale, especially in view of the concessions made by the Defendant. However, on more mature consideration, I have come to the view that I should not do so for the following reasons: (a) the parties remain in dispute and it appears from what I have read, and heard, that the level of conflict between them is, currently, and has been, significant; (b) whether justified or not, the level of trust, between the parties is said to be non-existent; (c) the Defendant lives in Sydney, as does the Plaintiff, whereas the property is in Eden, on the far south coast of New South Wales; (d) the appointment of a solicitor and real estate agent in the local area who must send documents to one place in Sydney, wait for them to be returned and then send them to another place in Sydney, might provide logistical problems; other alternatives in this regard may prove costly and/or time consuming; (e) both of the trustees are solicitors in the same firm of solicitors, in Sydney, so this problem would be avoided (assuming that they chose a local Eden solicitor to handle the conveyancing transaction) or at least reduced significantly; (f) since the trustees are in Sydney, compliance with s 66H of the Conveyancing Act (consultation and giving effect to wishes of persons beneficially entitled, so far as consistent with the general interests of the trust), might be easier also; (g) the difficulties associated with obtaining instructions from two clients, particularly two who do not get on with, or trust, each other, would also provide further difficulty, perhaps delay and additional costs; there may even be a dispute between the parties about the reserve price if the matter proceeds by public auction, or sale price if by private treaty; (h) there is no evidence that, in the circumstances of this case, there would be any significant difference in costs, or that the course proposed by the Defendant will involve a significant saving in costs; (i) Trustees for sale are under a duty to sell as expeditiously as possible and to get the best possible purchase price for the property. This will avoid any undue delay. 20On balance, whilst the open offer made, on its face, appears to be one that is reasonable, the Defendant has not pointed to any circumstances that would make it inequitable for an order to be made under s 66G of the Act. An order would not be inconsistent with any right, or obligation, of the parties. Continuation of the present state of affairs is obviously detrimental to both parties and the delay in finalising their financial relationship has gone on long enough. 21As a matter of discretion, I am satisfied that the making of orders would fulfil the purpose the statutory provisions are intended to perform and it accords with common sense and practical reality. None of the arguments or submissions made by the Defendant in opposition to the relief sought by the Plaintiff, in my view, enlivens the exercise of the judicial discretion against the making of the order. 22Since I am satisfied as to the identity of the proposed trustees, and of their fitness, by the affidavit of fitness which has been read, together with their consent, I propose to appoint those trustees as sought. 23I make orders in accordance with Paragraphs 1 and 2 of Plaintiff's Summons. 24The Plaintiff sought costs of the proceedings in relation to the order that was resisted by the Defendant. Where one party seeks an order for the appointment of trustees for sale pursuant to s 66G of the Act, the costs incurred in such proceedings are an incident of the joint ownership, and would be necessarily incurred by one, or other of the parties, in the obtaining of an order for the appointment of trustees. Accordingly, the usual order in relation to the costs for such an application would be that the costs of the proceedings be paid from the net proceeds of sale and, hence, be borne equally by both parties: Ferguson v Hyndman [2006] NSWSC 538 at [2]-[3]; Spathis v Nanos (No 2) [2008] NSWSC 470; MacDonald v MacDonald [2009] NSWSC 794 at [64]. 25In this case, until the hearing of the notice of motion, the Defendant's position was not as clear as it might have been. Whilst he did say that he would consent to sale, that consent, until the hearing, was upon certain terms and conditions. At the hearing, however, he did make a reasonable and practical suggestion as to the way forward. The Plaintiff did not accept the course proposed. 26In the circumstances, despite the fact that I have made orders sought by the Plaintiff, after a contested hearing, I order that the costs of the proceedings should be borne equally by the parties out of the net proceeds of sale. 27In addition, I reserve further consideration of the matter and grant liberty to either party, or to the trustees, to apply on seven days notice.