Dyson v Holden

CATCHWORDS : PROPERTY RELATIONSHIPS - consent orders made under Property (Relationships) Act 1984, s 20 to compromise claim brought by plaintiff - where defendant failed to comply with orders for payment of money and discharge of mortgage within specified period - where orders provided for plaintiff to receive net proceeds from sale of property in event of default by defendant - plaintiff seeking enforcement of orders - whether court has discretion enforce to orders - whether inequitable for court to enforce orders - defendant seeking variation of orders - whether orders to be varied - orders required to deal with defendant's default - plaintiff appointed trustee for sale

Property (Relationships) Act 1984 (NSW) LEGISLATION CITED : Interpretation Act 1987 (NSW) Trustee Act 1925 (NSW) Real Property Act 1900 (NSW)

In the Marriage of Ramsay (1982) 8 Fam LR 863 CASES CITED : Thwaite v Thwaite [1981] 2 All ER 789 Harvey v Phillips (1956) 95 CLR 235 Ross v Ross [2010] NSWCA 301

PARTIES : Plaintiff: Bruce James Dyson Defendant: Tina-Louise Holden

COUNSEL : Plaintiff: M Gilbert Defendant: G Hodgson (sol'r)

SOLICITORS : Plaintiff: Michael Dampney, Lawyer Defendant: Marriott Oliver

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2010/258430 Bruce James Dyson v Tina-Louise Holden JUDGMENT 1 HIS HONOUR: On 1 December 2009 I made orders, by consent, pursuant to s 20 of the Property (Relationships) Act 1984 (NSW). Those orders compromised a claim brought by the plaintiff under that Act. The orders were in the following terms: " By consent, and pursuant to s 20 Property (Relationships) Act 1984, the Court orders: 1. Order that, within 56 days of the date hereof and subject to the Plaintiff's compliance with Order 2 hereof, the Defendant: (a) pay the Plaintiff $35,000; (b) discharge registered mortgage 9142841 registered on Title to Lot 185 in DP 318167, being real property located at and known as 58 Waratah Crescent, Sanctuary Point, New South Wales ('the real property'); 2. Order that, subject to the Defendant's compliance with Order 1 hereof, the Plaintiff withdraw Caveat AB366943 registered on Title to the real property. 3. Order that, in the event that the Defendant does not comply with Order 1 hereof within 56 days from the date hereof, the parties do all acts and things and execute all such documents required: (a) to sell the real property and to deal with the proceeds as follows: (i) to discharge registered mortgage 9142841; (ii) to pay legal and real estate expenses on the sale; (iii) to pay the Plaintiff the balance. (b) on the part of the Plaintiff, to withdraw Caveat AB366943 registered on the title to the real property; (c) if the real property is not sold by private treaty within three months of the date of this Order, to take all steps necessary for the sale of the real property by auction and in particular to: (i) place the property with auctioneers; (ii) execute all documents requested by the auctioneers for the sale of the property by auction; (iii) request the auctioneers to recommend a reserve price to be placed on the property for the purpose of the auction sale and accept such recommended reserve price; (iv) pay to the auctioneers the sums requested for advertising expenses in relation to the auction; (v) attend the auction sale of the property and negotiate with the highest bidder in the event that the reserve price is not reached, accept the advice of the auctioneers as to the acceptance of a price less than the reserve price; (vi) execute a Contract for Sale; (vii) co-operation in every way with the auctioneers in relation to the auction of the property including making keys available, allowing inspection of the property at the time requested by the auctioneers, ensuring that the property is neat and of tidy presentation and in a clean condition at the time of inspection by prospective purchasers; (viii) execute all other documents necessary to complete the sale. 4. Order that each party pay his or her own costs. 5. Order that the proceedings otherwise be dismissed. NOTATION: A. The Court notes the intention of the parties, in conjunction with these Orders, to enter into a Binding Child Support Agreement in respect of the child of the relationship, Maddison, pursuant to which there be a notional lump sum of $20,000 credited to the Plaintiff and used to satisfy the Plaintiff's current arrears of child support and as a credit against future administrative assessments of child support until the remaining lump sum credit is exhausted. " 2 Order 1 provided that the plaintiff would withdraw a caveat on the Sanctuary Point property and the defendant would pay the plaintiff $35,000 and procure a discharge of the mortgage. 3 The defendant was the registered proprietor of the property. But the plaintiff and the defendant are both liable to make the payments pursuant to the mortgage. 4 In his application for relief under s 20 of the Act the plaintiff had sought orders to the effect that the Sanctuary Point property be sold and that he be paid 93.1 per cent of the net proceeds of sale, which he claimed represented his contribution to the acquisition of the property by the defendant. 5 The effect of order 3 made on 1 December 2009 was that if the defendant failed to comply with order 1 requiring payment of the sum of $35,000 and procuring the discharge of the mortgage within 56 days, the property would be sold and after discharge of the incumbrances and payment of expenses of sale, the plaintiff should receive the whole of the net proceeds. 6 The solicitor for the defendant points out that this outcome gives the plaintiff more than he had sought in his application. Nonetheless the parties compromised the plaintiff's claim on terms which included that he be required to accept payment of $35,000 and discharge of the mortgage. The settlement embodied in the consent orders was arrived at when both parties were legally represented. 7 The period of 56 days referred to in order 1 expired on or about 25 January 2010. Prior to that date there were some inconclusive discussions between the solicitors in relation to payment of the sum of $35,000 and any other moneys that had to be paid. But it does not seem that the defendant was in a position to discharge the mortgage at that time. It is unnecessary to consider the rights and wrongs of the debate then occurring in relation to what cheques should be provided on settlement. The defendant's solicitor, Mr Hodgson, properly accepts that the defendant did not comply with order 1 within 56 days. 8 The plaintiff did not seek to enforce order 3 immediately. On 28 February 2010 the plaintiff's solicitors advised that unless the defendant was ready, able and willing to settle the matter by close of business on 5 March 2010, they expected to receive confirmation that the defendant had put the property on the market and to be given details of the identity of the listing agent approved by the plaintiff. 9 On 4 March 2010 the defendant's solicitor advised that the defendant had applied for a loan and that she and a co-borrower were in the process of satisfying the requirements of an incoming mortgagee. However, no finance was then obtained which would have been necessary to discharge the mortgage and pay the plaintiff $35,000. 10 On 23 April 2010 the defendant's solicitor advised that loan approval had been received from the St George Bank. He advised that the plaintiff's solicitors would be told when a mortgage had been signed and when settlement could occur. The solicitor indicated that a realistic time for the matter to be finalised would be 3 May 2010. However, nothing eventuated on 3 May 2010. The plaintiff's solicitors advised the defendant's solicitor that the plaintiff instructed them to have the property put on the market. The effect of the orders of 1 December was that the plaintiff should receive the entire net proceeds of sale. The plaintiff's solicitors said the plaintiff should have the conduct of the sale. The plaintiff's solicitors asked the defendant to attend the offices of L J Hooker at Sanctuary Point to sign an agency agreement. On the following day the plaintiff's solicitor forwarded a proposed power of attorney to the defendant to sign to give the plaintiff the power to sell the property and to deal with the proceeds of sale. The defendant did not act on those demands. 11 On 12 May 2010 the defendant's solicitor advised that the defendant had raised $35,000 which could be paid to the plaintiff that week. However, the solicitor advised that the mortgage would not be discharged until February 2012. Unsurprisingly that position was not acceptable to the plaintiff. Further correspondence ensued in which the plaintiff's solicitor sought to obtain the defendant's co-operation for the property to be listed for sale. The defendant did not make any positive response. 12 On 4 August 2010 the plaintiff filed the summons in these proceedings. He seeks the following orders: " 1. That the Defendant specifically perform Clause 3 of Terms of Settlement dated 30 November 2009 in proceedings between the parties in the Supreme Court of NSW, Equity Division suit number 4969 of 2008 in respect of which Orders were made by this Honourable Court on 1 December 2009. 2. That the Defendant, in relation to real property located at and known as 58 Warratah [sic] Crescent Sanctuary Point NSW, being the land comprised in Lot 185 of DP 318167 ('the property'): a) within 7 days, attend the office of Elders Real Estate 3/16 Paradise Beach Road, Sanctuary Beach and sign all documents necessary to enable the sale of the property; b) within 7 days, provide to Elders Real Estate, Sanctuary Beach all necessary contact details of the current occupants of the property together with a copy of the current residential tenancy agreement in respect of the property; c) within 7 days, provide to Elders Real Estate, Sanctuary Beach any keys to the real property that are necessary in order to gain entry to the property and do whatever is necessary to enable Elders Real Estate to conduct an immediate inspection of the real property; d) within 7 days, provide to Elders Real Estate, Sanctuary Beach ongoing access to the real property for the purposes of enabling them to show the real property to prospective purchasers and to conduct inspections and auction sales as and when they may be necessary. e) within 7 days, instruct solicitors or licensed conveyancers to prepare a contract for the purpose of the sale of the real property; f) within 7 days, to accept the professional advice provided by Elders Real Estate, Sanctuary Beach in relation to the value of the property and the proposed price at which the property should be offered for sale; g) Upon negotiation of a sale of the real property, to sign all such documents as may be required to give effect to any such sale including but not limited to the contract of sale of land, the transfer and the authority to discharge any existing mortgage; h) Upon completion of the sale of the real property, to authorise and direct that the sale proceeds, following repayment of any mortgage, outstanding rates and taxes, real estate agent's commission and legal expenses on sale, be paid forthwith to the Plaintiff. 3. That, in the event that the Defendant fails to comply with any one or more of the orders contained in Orders 2 a. - h. hereof, then the Plaintiff be immediately be [sic] appointed as Trustee for Sale of the real property and that he shall have, by virtue of this Order, all powers necessary to conduct the sale of the real property including but not limited to: a) The power to enter into an agency Agreement for the sale of the real property; b) The power to instruct a solicitor or conveyancer to prepare a contract for the sale of the real property; c) The power to determine the method, manner and ultimate price in respect of the sale of the real property; d) The power to seek and obtain from the registered mortgagee a discharge of the mortgage registered against the real property; e) The power to take possession of the real property (subject to any current residential tenancy agreement which might exist) and to stand in the place of the Defendant in relation to seeking vacant possession of the real property; f) The power to direct any tenant of the property to pay rent to the plaintiff and to otherwise deal with the tenant in relation to the sale. g) The power to deal with the proceeds of sale upon completion of the sale of the real property. ... " 13 The plaintiff did not immediately press for the enforcement of order 3 made on 1 December 2009. For at least a couple of months the plaintiff was prepared to allow the defendant to comply with the orders by complying with order 1. It is not suggested that the plaintiff is estopped from enforcing order 3 made on 1 December 2009. It is not suggested, nor could it be, that there has been any consensual variation of those orders. Prima facie the plaintiff is entitled to whatever further orders are necessary to enforce the orders made on 1 December 2009. 14 Mr Hodgson for the defendant submitted that the time for compliance with order 1 should be extended to 31 January 2011. On behalf of the defendant he offered terms that the payment of $35,000 under clause 1 would be made with interest. He indicated that if order 1 were extended to 31 January 2011, the defendant would not oppose a self-executing order in the form of order 3 of the summons if order 1 were not complied with by the end of January 2011. 15 Mr Hodgson submitted that the court had a discretion as to whether or not to enforce the orders of 1 December 2009 and also had a discretion under r 36.5 of the Uniform Civil Procedure Rules 2005 to extend the time for compliance with order 1. In support of that application and that submission, oral evidence was called from the defendant as to the arrangements made to obtain loan finance. The defendant said that she has retained a finance broker, a Mr Ed Shulkin, to arrange a loan of $196,000. She said that the amount outstanding under the mortgage to be discharged is $134,000. She first contacted Mr Shulkin about four weeks ago. She said he had made arrangements for a loan to be provided by a wealthy lady living on the north shore of Sydney who was prepared to advance the sum at an interest rate of about 11 per cent. She gave evidence that she had filled out a loan application, paid fees and taken other steps required for the loan to proceed. This includes (for reasons which are not apparent) the formation of a company. It is her intention, or the requirement of the proposed lender, that the property in question be transferred to a company to whom the loan would be made. The existing mortgage would then be discharged. The defendant said that there was a "100% certainty" that the loan would proceed. However, there is no evidence to corroborate that opinion. There is no written confirmation from the finance broker, even as to the prospects of obtaining the loan. 16 As of yesterday, Mr Shulkin advised that the funder needed verification of payments the defendant receives, apparently from a cafe business. He sought the "financials" for the business and said that he needed more details of other payments that the defendant receives. He concluded by saying that the proposed lender needed evidence of sufficient income to service the pending debt. Given the apparent inability of the defendant to raise finance during the whole of 2010, this evidence falls far short of establishing that the defendant would be in a position to pay moneys under order 1 made on 1 December 2009 to discharge the mortgage by the end of January. But even if there were evidence to satisfy me that the defendant would be in a position to do that, the question would still arise as to why the orders of 1 December 2009 should be varied so as to deprive the plaintiff of what may be the benefit of order 3. 17 The agreement that the parties reached to settle the earlier application is that by a specified time the plaintiff would receive $35,000 and the mortgage would be discharged, or if not the property would be sold and he would receive the whole of the net proceeds of sale. It is not obvious to me why it would be equitable for the court to vary such an agreement or to refuse to enforce it in accordance with its terms. Mr Hodgson who has said all that could be said in support of the defendant's application, and done so with considerable skill, submits that the court has a discretion whether or not to enforce the orders, notwithstanding that the orders embody a contract. He referred me to the decision of the Family Court of Australia in In the Marriage of Ramsay (1982) 8 Fam LR 863. Whilst acknowledging that the facts of that case are far removed from the facts of the present case, he submitted that the case does show that the court has a discretion whether or not to enforce the existing orders. In that decision the Full Court of the Family Court referred, with approval, to a passage in the decision of the Court of Appeal in England in Thwaite v Thwaite [1981] 2 All ER 789 (at 794): " Where the order is still executory, as in the present case, and one of the parties applies to the court to enforce the order, the court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so. "

I think this is consistent with the decision of the High Court in Harvey v Phillips (1956) 95 CLR 235 at 243 and 244 because the assistance of the court is being sought to carry the parties' compromise into effect. 18 Whilst I accept the existence of that discretion, it does not appear to me that it would be equitable that the discretion be exercised as sought by the defendant. It is true, Mr Hodgson points out, that the effect of order 3 is that the plaintiff would receive the whole of the net proceeds of sale of the property which was more than the amount he sought in the original application. Nonetheless the plaintiff gave up other rights in compromising the proceedings. For example, the proceedings were compromised on the basis that each party pay his and her own costs. The plaintiff also agreed to accept the sum of $35,000 and the discharge of the mortgage if that were done within 56 days. There is nothing unjust or inequitable in the parties agreeing to a different regime which provides for the plaintiff to have the whole of the net proceeds of sale in the event of the defendant defaulting in compliance with the first order. 19 Moreover, the defence to the plaintiff's summons involves more than resistance to the enforcement of the orders. The defendant is seeking a variation of the orders. Whilst there is a general power to extend time under r 36.5, the power to vary orders made under s 20 of the Act is specifically dealt with in s 41 in the circumstances listed in paragraphs (a), (b) and (c) of that section. Relevantly, s 41(c) provides that: " 41. Where, on the application of a person in respect of whom an order referred to in section 20 ... has been made, a court is satisfied that:

… (c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order … :

the court may, in its discretion, vary the order … "

20 In Ross v Ross [2010] NSWCA 301 Macfarlan JA, with whom Campbell JA and Sackville AJA agreed, said that to vary an order under that provision it is not sufficient simply to prove that a default has occurred, and then to ask what variation is required by justice and equity. Rather the need for variation must arise out of the circumstances caused by the default. In the present case no circumstances arising out of the defendant's default in complying with order 1 would justify a variation of the order sought by the defendant. The kind of circumstance in which s 41(c) might operate, might be, for example, if the orders made on 1 December 2009 had provided for the plaintiff to receive 90 per cent of the net proceeds of sale in certain events, and if by reason of the defendant's default there was delay in receiving that amount of money, then the circumstances caused by default might make it just and equitable to vary the order, presumably by increasing the amount to be received in such a hypothetical case. Here, the circumstances caused by the default are simply that the plaintiff is being delayed in the land being sold and his receiving the net proceeds of sale. 21 The question is what orders should be made to enforce and give proper effect to order 3 made on 1 December 2009. The plaintiff did not press for the general order for specific performance in order 1 of the summons. He did press for the order in paragraph 2 of the summons which in substance seeks to state specifically what steps the defendant should take to implement order 3 of 1 December 2009. However, the defendant is already subject to orders that required her to take all necessary steps to dispose of the property by auction, including by placing the property with auctioneers and doing the steps contemplated by the orders now sought in paragraph 2 of the summons. Whilst a number of those steps are not specifically referred to in order 3 of 1 December 2009, they are encompassed by her obligation to do all acts and things and execute all documents which are required to sell the property, and to pay the plaintiff the net proceeds of sale. 22 I see no reason to make a further order to require the defendant to do what she has already been ordered to do. The question is what other orders should be made to deal with her default in compliance with order 3 of 1 December 2009. Section 38(1)(b) and (g) of the Property (Relationships) Act confers power on the court to order sale of the property, to order distribution of the proceeds of sale, and to appoint a trustee. I think the power in that section to appoint trustees extends to appointing an individual trustee (Interpretation Act 1987 (NSW), s 8). As the plaintiff is the person interested in the outcome of the sale (as he is to receive the net proceeds) I think it appropriate that he be appointed as the trustee for sale, notwithstanding that such a course is unusual. There is also power under s 70(1) and (2) of the Trustee Act 1925 (NSW) for the court to appoint a new trustee, even where there is no existing trustee, whenever it is expedient to do so, and it would be inexpedient and impractical to do so without the assistance of the court. 23 Had the position been reached that there were documents, such as a contract for sale or memorandum of transfer, that were required to be signed to implement order 3 of 1 December 2009, and the defendant refused to sign such documents, then the appropriate course would be to proceed under s 39 of the Property (Relationships) Act and appoint an officer of the court to execute them. However, more is required than merely the execution of instruments for the sale to proceed. 24 The defendant is the registered proprietor of the property. Without her co-operation, the various steps required for a sale could be unduly prolonged. There would be a real prospect of repeated applications having to be made to the court, if I merely, in effect, repeated the orders already made, as to the steps the defendant should take. 25 For these reasons I propose to appoint the plaintiff as trustee for the sale of the property and to make an order pursuant to s 71 of the Trustee Act vesting the property in the plaintiff, subject to any incumbrances. 26 There are questions in relation to the occupation of the property prior to completion of any sale, and in relation to rent. The plaintiff does not press for the order sought in paragraph 3(f) of the summons. The defendant's evidence is that two rooms of the property are subject to a tenancy, or, perhaps, to a licence, and $280 a week is being received. The orders of 1 December 2009 do not provide for the plaintiff to receive any rent for the property. Accordingly the plaintiff is not entitled to such rent. Title to the property will vest in the plaintiff upon the appropriate entries being made in the register under the Real Property Act 1900 (NSW) to give effect to the vesting order. This may mean that the tenant or licensee may wish to tender any rent or licence fee to the plaintiff. If the plaintiff does receive any such moneys he should account for them to the defendant. 27 Order 3 of 1 December 2009 made no provision for the defendant to withdraw from the property prior to its being marketed for sale. The plaintiff will be entitled to take or obtain possession in order to give vacant possession of the property to a purchaser on completion of the sale, but I do not think that I should make the order sought in paragraph 3(e) of the summons to give the plaintiff an unfettered power to take possession of the property. On the contrary, he should not disturb the occupation of the defendant, or the occupation of any tenant or licensee from the defendant, except as may be required to obtain vacant possession on completion of the sale. 28 The orders sought in paragraphs 3(a), (b), (c), and (d) of the summons are all necessarily incidental to an order appointing the plaintiff as trustee of the sale. 29 For these reasons I make the following orders:

Order pursuant to s 38(1)(g) of the Property (Relationships) Act 1984 (NSW) and s 70(1) and (2) of the Trustee Act 1925 (NSW) that the plaintiff be appointed as trustee for the sale of the property at 68 Waratah Crescent, Sanctuary Point, New South Wales, being the land in Lot 185, DP 318167 ("the property").

Order pursuant to s 71 of the Trustee Act that the property be vested in the plaintiff as trustee for sale, subject to incumbrances.

Order that the plaintiff, as trustee for sale, distribute the proceeds of the sale of the property as follows:

(a) in the discharge of incumbrances affecting the property; (b) in the payment of outstanding rates, charges or taxes owing to any public authority in respect of the property; (c) in the payment of the costs of the sale of the property including: (i) the commission of any real estate agent engaged by the plaintiff for the sale; (ii) the costs and disbursements of any solicitor retained by the plaintiff for the sale; and (iii) any other costs properly incurred by the plaintiff in relation to the sale; and

Order that the plaintiff account to the defendant for any rent or licence fee that may be received by him from any tenant or licensee of the property.

Order that the plaintiff not disturb the occupation of the defendant, or any tenant or licensee from the defendant, of the property otherwise than as required to obtain vacant possession on completion of the sale.

Subject to order 5, order that the plaintiff have power to take or obtain possession of the property in order to give vacant possession to a purchaser. 30 I should add that order 6 is probably unnecessary on the appointment of the plaintiff as trustee for the sale, but I make the order for abundant caution.

[Parties address on costs.] 31 The plaintiff seeks an order that the defendant pay his costs and that his costs be assessed on the indemnity basis. On 3 September 2010 the solicitor for the plaintiff wrote to the solicitor for the defendant stating that it was difficult to conceive of any basis on which the defendant could properly defend the proceedings. The plaintiff proposed that if the defendant consented to the orders in the summons, the plaintiff would not seek costs of the proceedings. In my view the rejection of that offer was not reasonable. Moreover these proceedings are instigated by the defendant's failure to comply with the earlier orders. In those circumstances the plaintiff should have his costs on the indemnity basis.

Order that the defendant pay the plaintiff's costs, and that those costs on and from 3 September 2010 be assessed on the indemnity basis. 32 The exhibits are to be dealt with in accordance with Pt 51, rr 51.24 and 51.43 of the Uniform Civil Procedure Rules 2005.

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