Harvey v Barton

Supreme Court of NSW|2015-06-17|Before: Slattery J, Robb J

EX TEMPORE Judgment

Two motions are before the Court in these proceedings. First, the trustees the Court appointed for the sale of a property in Woolooware, a southern Sydney suburb, seek payment of their professional costs and disbursements for the sale of the property from the sale proceeds. Secondly, the plaintiff seeks orders that the defendant's share of the sale proceeds bear certain of the costs associated with the sale.

Background

This is my fourth judgment in these proceedings; the earlier judgments being Harvey v Barton [2014] NSWSC 1422; Harvey v Barton (No. 2) [2014] NSWSC 1478; and Harvey v Barton (No. 3) [2014] NSWSC 1724. It is the Court's sixth judgment in the proceedings, Robb J having given judgment in both Harvey v Barton [2013] NSWSC 1779; and Harvey v Barton [2014] NSWSC 303.
On 6 December 2013, Robb J made declarations and orders in the proceedings after a hearing in July, August and October 2013: Harvey v Barton [2013] NSWSC 1779. In that judgment Robb J declared that the defendant, Ms Barton, held her interest in the subject land at Woolooware ("the Property") on resulting trust for the plaintiff, Ms Harvey. His Honour also appointed trustees for sale of the Property ("the Trustees"), Mr Barnden and Mr Geoff Reidy of Rodgers Reidy Chartered Accountants. The Court vested the Property in the Trustees and made consequential orders to effect the sale, including orders for the Trustees to charge their usual professional fees for this work. His Honour also declared that the amount of any loans secured by any mortgage or charge over the title to the Property should be discharged out of the 65 per cent remaining interest in the Property held beneficially by Ms Barton.

Recent Procedural History - November 2014 to June 2015

On 7 November 2014, the Trustees were required to serve on Ms Barton a report as to what works they had been able to undertake on the Property to enable it to be marketed. The Court also noted the parties' agreement that day as to a schedule of works to be completed on the Property. The parties' appearance on 21 November 2014 was unremarkable. But on 28 November 2014 Ms Barton was directed to provide a written list to the Trustees clearly identifying any trades works that she alleged had been carried out incompletely or in a less than workmanlike manner, such as might have risked the Property achieving less than its full market value on sale. On that day, the Court also ordered that from 27 March 2015 the stay for the writ of possession would be lifted; it being anticipated that the planned marketing programme would allow the sale to take place in early 2015.
The matter was then adjourned to three occasions before the Court this year prior to today: 7 April, 12 May and 10 June 2015. Although Ms Barton appeared last year in these proceedings, despite being given adequate notice, she has not appeared on any of those dates this year.
On 7 April 2015, the Court ordered the Trustees to file affidavit evidence in respect of the professional charges and disbursements that they proposed to deduct from the proceeds of sale. The Court directed the Trustees to serve that material at the email address for service which Ms Barton had provided in the proceedings.
On 12 May 2015, the Court made detailed orders about the packing, removal and auditing of Ms Barton's goods. By that date the Trustees had exchanged contracts for the sale of the Property and wished to complete the sale. But they could not do so without Ms Barton's cooperation in removing her possessions, which were still at the Property. On 12 May the Court ordered the Trustees to engage solicitors to prepare an inventory of the furniture and other goods at the Property, to photograph them at the premises and then to serve those photographs on Ms Barton in order to give Ms Barton an opportunity to pack and remove her goods. If Ms Barton did not take that opportunity, the Trustees were authorised to appoint a solicitor, Mr Mathew Jessup, to oversee the packing and removal of Ms Barton's furniture, and its transfer into storage.
Those orders also noted that Ms Barton would be given notice of the location of the storage facility together with a notice that the goods would be disposed of by public auction should she not collect them within three months of the date that she had been notified the goods were being stored. Ms Barton was notified of the whereabouts of the goods at Kennards Storage in Caringbah and that the three month period had commenced to run.
The matter came before me again on 10 June 2015. The Court was then informed that Ms Barton's goods had been removed and the sale of the Property was ready for completion. The Court made orders to bring this matter to finality. The Trustees had leave to file motions returnable for today and the time for service of those motions was abridged. I directed that the motions be served on Ms Barton's address for service by 5pm last Friday 12 June 2015. This was done. If Ms Barton wished to raise any further issues about the conduct of the Trustees, she could have done so before today.
The Court has received affidavits of service of the plaintiff Ms Harvey's motion and an affidavit in the Trustees' motion. Those affidavits satisfy the Court that Ms Barton was served with notice of these proceedings by the afternoon of 12 June 2015 in accordance with the Court's orders. Neither the Court nor the other parties have had any communications from Ms Barton since then.
The matter was called outside court today. Ms Barton did not appear. But an email was received from her in the course of the Court giving this judgment. This resulted in the Court considering the contents of Ms Barton's email, mid-judgment, about 11.50am. The Court adjourned for morning tea at half past 11. My Associate informed me at that stage she had received an email from Ms Barton (Exhibit D). This email was as follows: "Since sending you my email last Tuesday 9th June 2015, it appears that I have 14 emails in total from either yourself, the trustees, their legal representation and also from the plaintiff's legal aid representative. As I have only just been able to access my emails and have not have the opportunity to read any of these emails, as yet would you please be so kind as to advise me COB today, if the hearing is on this Friday 19th June 2015, as I requested or is it being adjourned to a later date next week. Thank you for your assistance. Yours sincerely Maria Barton"
Both Mr Lipp for the Trustees and Ms Critchley for Ms Harvey submit the Court should proceed now despite this email. I agree with those submissions. Ms Barton has been given adequate notice of these proceedings. She must take responsibility for keeping the email address for service that she has provided in proper working order. I am satisfied that the Court's orders were complied with on Friday by service of materials to Ms Barton's email address in the proceedings, [Ms Barton's email address].
The Court is content to proceed with this matter for a number of reasons. Firstly, Ms Barton's email address has been used as the address for service of orders under the Court's orders on 27 October 2015 (order 15), on 7 November 2014 (orders 3 and 15) and on 12 May 2015 (orders 3 and 8). It is quite apparent from the correspondence the parties and the Court has received from Ms Barton since the making of these orders, that this email address has worked satisfactorily. But it is also evident that Ms Barton has been well aware of these proceedings were listed today as the recent history will demonstrate.
On 9 June at 1.40am, Ms Barton sent the following email to all the parties and to my Associate: "Please be so kind as to advise his Honour Justice Slattery, that I am currently in excruciating pain and I am unable to attend the Supreme Court of NSW hearing on Wednesday 12th June 2015, as I have injured my left knee (please see photograph attached) and as a result of this injury, I am unable to walk. Earlier this evening I was changing a light globe and I slipped and fell damaging my left knee and other parts of my body, also. I have not been able to walk since and as you can see from the photograph, my knee is bruised and significantly swollen (it is almost double in size). Therefore please be so kind as to advise his Honour Justice Slattery, that I respectfully request an adjournment to the hearing date on Wednesday 10th June 2015, until next Friday 19th June 2015. If this date is not suitable, then any date after Friday 19th June 2015, shall be suitable for me. Thank you for your assistance. Yours sincerely Maria Barton"
Mr Downey then sent an email of 9 June 2015 to my Associate and the other parties at 3.15pm on 9 June: "Thank you for your email. The matter is due to settle on Friday this week (12 June) and our clients were going to seek orders that after the usual adjustments and payment of the mortgagee we be entitled to direct payment for; 1. The debt owing to Legal Aid for its costs for which their client has a writ and caveat recorded on title, noting that they require payment at settlement in order that they might provide withdrawals of same; 2. The various tradespeople engaged to perform works on the property; 3. The real estate agents; 4. Part of Rodgers Reidy's costs (amounting to $16,500), being the amount originally proposed in the orders of Robb J ($15,000 plus GST); 5. The deposit ($140,000.00) to be paid to our (Downeys Lawyers) trust account pending resolution of any costs applications; 6. A partial distribution to each of Ms Harvey (the Plaintiff) and Ms Barton (the Defendant) - after payment of the amounts referred to above and Further orders were to be sought providing for our clients to pay, from the withheld sum: 1. Storage costs at Kennards Caringbah at the rate of $940.00 per month for the storage of Ms Barton's furniture and personal effects; 2. Insurance for Ms Barton's furniture and personal effects whilst in storage ($850); 3. The professional costs of Mathew Jessep, Lawyer, the solicitor engaged to supervise packing and removal of Ms Barton's furniture and personal effects from the property. Procedural directions were also to be sought and I was planning on circulating draft orders for comment this afternoon. I have attached a draft settlement statement and supporting invoices for the amounts sought to be paid at settlement, from the proceeds of sale. The settlement statement does not take into account adjustments for rates etcetera (amounts as yet unknown) or the amount payable to the mortgagee. The mortgagee will not provide a payout figure until tomorrow, but as of 23 April the amount owing was $446,576.74. I was planning to circulate orders to the above effect to Ms Critchley and Ms Barton this afternoon, however if the Court is content for us to direct payments for the amounts above from the settlement proceeds on Friday, then perhaps the adjournment would be acceptable to Ms Critchley's client and directions might be made for the filing of evidence and submissions on costs. Kind Regards,"
My Associate then sent an email to all the parties and the Trustee at 3.54pm on 9 June: "Dear parties, His Honour has asked me to convey the following. His Honour has read Mr Downey's email sent at 3.15pm. In light of the settlement due to occur on Friday of this week, the directions hearing will proceed tomorrow and directions will be given to the trustees for sale. To this end it is important that Mr Downey circulates immediately to all parties the orders which he asks the Court to make. The trustees should not assume that the Court will make any directions for the payment of funds as proposed at settlement. All payments out are subject to Court approval on proper proof by the trustees of the requirement of each payment. If Ms Barton is indisposed tomorrow, the contest about payment of these amounts will be adjourned to next Wednesday, 17 June 2015 at 9.30am. But all parties should note this: Unless Ms Barton has admissible affidavit evidence from a legally qualified medical practitioner, of her inability to attend Court on 17 June, the matter will then proceed fully in her absence. But as indicated the trustees are expected to attend tomorrow, whether or not Ms Barton is able to be present, as there are matters of directions to attend to in any event that will not affect her rights. The provision of settlement sheets and invoices attached to emails to the Court is not an appropriate way for the trustees to proceed. The Court will only hear motions and take evidence from the trustees in proper affidavit form served in advance on the other parties. If this basic protocol is not observed the trustees may find they will be deprived of their legal costs in respect of unnecessary appearances because Court rules have not been observed."
On the following day, 10 June, Mr Downey and Ms Critchley appeared and the Court made the following orders: "His Honour makes the following orders and directions: 1. Grant leave to the trustees and to the plaintiff to file motions and make such motions returnable before me at 9.30am on Wednesday, 17 June 2015. 2. Abridge time for service of those motions but direct that the motions must be served at the defendant's address for service by 5pm on Friday 12 June 2015. 3. Direct that the trustees for sale shall after payment out of the first mortgagee, Westpac, and the Legal Aid Commission in respect of the writ over the subject property, pay the balance of the proceeds of sale into the trust account of the solicitor for the trustees, Downeys Lawyers Pty Ltd, from where it may be distributed only by further order of the Court. 4. Adjourn these proceedings for further hearing to 9.30am Wednesday, 17 June 2015 before me. 5. Note my Associate will provide a copy of these orders by email to all parties. 6. Note the Court is unlikely to further adjourn these proceedings on the grounds of any party's medical condition unless a motion is brought before the Court in accordance with the Rules of the Court and supported by medical evidence on affidavit."
I am satisfied that these orders have been complied with. I am satisfied that if Ms Barton really wished to seek an adjournment on proper grounds, she had sufficient notice to do so. The warning from my Associate together with the service of documents from the other parties is quite sufficient to alert her to the fact the matter would proceed in her absence today. Her email communication this morning is insufficient for the proceedings to be adjourned.

The Trustees' Motion

There are two motions before the Court today, the trustees' motion and Ms Harvey's motion. The Trustee's motion seeks the following relief: "On the grounds set out in the affidavits of Andrew James Barnden and David Kelvin Downey sworn 12 June 2015 the Applicants seek the following orders: Andrew James Barnden and Geoffrey Philip Reidy (Trustees) are to pay from the proceeds of sale of [the Property] the amounts owing to the tradespeople, real estate agents, removalists and consultants as specified in the affidavits of Andrew James Barnden and David Kelvin Downey sworn 12 June 2015. The Trustees are to be reimbursed for the cost of storage of the Defendant's furniture and personal effects at Kennards Self Storage Caringbah at the rate of $1,036.00 per month, for up to 3 months, from the proceeds of sale of [the Property]. The Trustees are to be reimbursed in the amount of $850.00 for the cost of insurance of the Defendant's furniture and personal effects for 3 months whilst they are in storage at Kennards Self Storage Caringbah from the proceeds of sale of [the Property]. The Trustees are to pay the professional costs of Mathew Jessep Lawyer, the solicitor engaged to supervise packing and removal of the Defendant's furniture and personal effects from [the Property], in accordance with Order 6 of the Orders of the Court made 12 May 2015. That pursuant to section 98(4) of the Civil Procedure Act 2005 the Trustees be paid their costs and disbursements of the conveyance and the proceedings from the proceeds of sale of [the Property] in the amount of $70,345.69. That pursuant to section 98(4) of the Civil Procedure Act 2005 Downeys Lawyers Pty Ltd be paid their costs and disbursements of the conveyance and the proceedings from the proceeds of sale of [the Property] in the amount of $57,275.72. Such further or other orders the Court sees fit."
It is not possible to provide in this short judgment a full account of the history of the difficulties of the Trustees in selling the Property. But on the material read in the proceedings, the Trustees have executed their task in a thorough and professional manner despite an immense quantity of correspondence and other communications from Ms Barton about the quality of their work. The Trustees have been as economical in their task as possible, given the difficulties that Ms Barton placed in their path which slowed the sale of the Property. Their preparation of the Property for sale, their marketing of it and their overall work has meant that the Property, which was auctioned with a reserve price of $1.1 million, was sold for $1.4 million. The Trustee's work resulted in increased sale proceeds, which will be shared by both Ms Harvey and Ms Barton.
The Trustees' claims divide into a number of general categories: the Trustees' own professional costs and disbursements, the Trustees' solicitors' costs and the Trustees' expenditure on repairs and minor improvements.

The Trustee's Costs and Disbursements

The Trustees' have given evidence as to their costs and disbursements through Mr Barnden, who had principal charge of the matter for the Trustees, and through Mr Downey, the solicitor engaged on behalf of the Trustees. That evidence has helpfully set out what would be the normal costs of the Trustees and the normal costs of the solicitor for the Trustees in executing a task such as this in uncontroversial circumstances, compared with the actual costs that were incurred in this case.
In summary, the Trustees say, and I accept, that their own ordinary costs associated with the sale of a suburban property such as this by them as trustees for sale would have been $22,388.25. Their evidence is that their actual costs have been much higher than that. They have given detailed evidence showing that their total costs have, in fact, been $70,345.69, excluding certain tradesmen's outgoings (considered later in these reasons), but including actual costs to date, actual disbursements to date and a small sum of anticipated costs and disbursements to cover today's hearing and matters consequent on today's hearing.
Ms Barton has not appeared today to answer any of the material filed against her about the Trustees' professional costs and disbursements. She had adequate notice of the hearing today. In addition, she has had ample notice of the existence of these proceedings and of her right to appear. The Court has on many occasions extended to her the invitation to put on such evidence by motion and affidavit as she might wish, to challenge the contentions of the Trustees.
I regard the Trustee's professional costs and disbursements as reasonable. The Trustees are entitled under either Trustee Act 1925, ss 59 or 93, and also by general principle, to an indemnity out of the trust estate for their costs: see Octavo Investments Pty Limited v Knight (1979) 144 CLR 360, at 371. I see no basis in the Trustees' conduct, which would justify the Court not ordering that the Trustees be indemnified for whole of their costs out of the proceeds of the Property's sale, and I will so order. I do so noting that the actual costs are $50,000 more than the ordinary costs the Trustees would have incurred on such a sale. But the Court is not at all surprised that the costs have escalated far above ordinary costs, given Ms Barton's conduct. The mere fact the costs are above ordinary costs is not a reason to deny the Trustees a full indemnity, considering all the circumstances.

The Trustees' Solicitor's Costs - Gross Sum Costs Order

The Court now turns to the Trustees' solicitor's costs, the costs of Mr Downey. Mr Downey's firm, Downeys Lawyers Pty Limited, has been the solicitors on the record since the Trustees were appointed. Mr Downey also said that his costs have increased because of Ms Barton's opposition to the Trustees' sale of the Property. I accept Mr Downey's evidence that this has occurred. That the costs of the Trustees' solicitors should have increased is equally unsurprising. This is not just because of the increased appearances that Mr Downey has had to make as earlier detailed. But the Court has made extensive orders to contain the fractious relationship between Ms Barton and the Trustees, which orders Mr Downey has executed on behalf of the Trustees. This alone would have considerably increased the Trustees' legal costs.
I accept that the conveyancing costs for the sale of a property by trustees for sale in these circumstances will usually be higher than those associated with an ordinary private sale. I accept Mr Downey's evidence, that the slightly elevated ordinary costs of sale involving trustees for sale would in these circumstances be $7,763.42. Instead, the actual solicitor's costs the Trustees have incurred are much higher. They are $57,275.72, including Mr Downey's professional costs and disbursements associated with attendances at court in these proceedings.
I accept Mr Downey's evidence that the higher costs incurred in this case were not at all surprising. For a start, Mr Downey has had to attend Court on every one of the occasions the Court has identified above, together with some occasions in September last year before the matter came to me.
The essential reason for this increase in costs is Ms Barton's conflict with the Trustees. Ms Barton has made a variety of accusations against the Trustees. She alleged they: incurred unnecessary fees, did not market the Property correctly, withheld information from her, did not take proper care of her goods, and appointed the wrong real estate agents. This is not the limit of her allegations. Ms Barton has criticised almost every aspect of the Trustee's conduct of the sale, without now advancing evidence to support her allegations.
Of the $57,275.72 Mr Downey claimed in legal costs and disbursements on the sale of the Property for the Trustees, the table below shows the extent to which those costs exceeded ordinary conveyancing costs. It also shows how these costs are to be borne by Ms Harvey and Ms Barton, as will be explained later in these reasons. Description Amount Payable by Ms Harvey Payable by Ms Barton Ordinary costs and disbursements of conveyance $7,763.42 $2,717.20 $5,046.22 Costs and disbursements extraordinary to the conveyance $18,887.80 $18,887.80 Costs and disbursements incurred in relation to obtaining vacant possession of the Property since 27 April 2015 $30,624.50 $30,624.50 $57,275.72 $2,717.20 $54,558.52

How are Mr Downey's costs to be assessed? I have reviewed the materials provided by Mr Downey. The Trustees seek an order that Mr Downey's costs be paid out of the trust estate on an indemnity basis in an amount that the Trustees ask in their motion (prayer 6) for the Court to assess under Civil Procedure Act, s 94(4) by way of a gross sum costs order instead of assessed costs. In my view, this is an appropriate case for that to be done.
Civil Procedure Act, s 98(4) provides as follows: "(4) In particular, at any time before costs are referred for assessment, the court may make an order to the effect that the party to whom costs are to be paid is to be entitled to: (a) costs up to, or from, a specified stage of the proceedings, or (b) a specified proportion of the assessed costs, or (c) a specified gross sum instead of assessed costs, or (d) such proportion of the assessed costs as does not exceed a specified amount."
The Court may make such an order at "any time before costs are referred for assessment". I will order that the Trustees' costs, including their legal costs, be paid out of the trust estate on the indemnity basis. The costs order I will make today has not yet been referred for assessment. So the Court has power now to exercise its discretion under s 98(4) to make an order for costs of a specified gross sum. And Ms Barton has had notice that this application would be made today on the materials that have been served upon her.
Specified gross sum costs orders, or as I will call them in these reasons "lump sum costs orders" are a well-established feature of the Court's costs jurisdiction. A lump sum costs order under s 98(4)(c) can be fixed broadly having regard to all of the information available to the Court: C2C Investments Pty Limited v Commonwealth Bank of Australia (No 4) [2013] NSWSC 761. What is required is the Court take a "logical, fair and reasonable" approach to the assessment of the costs, and the Court should only exercise the discretion when the Court considers it can do so "fairly between the parties and this includes sufficient confidence at arriving at the sum on the materials available": per Giles JA in Harrison v Schipp [2002] NSWCA 213 at [22].
There are two lump sum costs order questions for consideration. One is, whether this is an appropriate case for ordering a lump sum costs order instead of assessed costs? And secondly, what is the appropriate amount of lump sum costs to be ordered in this case?
This is an appropriate case for ordering lump sum costs. It is highly desirable, given the acrimonious nature of these proceedings, for this final part of the proceedings to be brought to a conclusion as rapidly as possible.
The costs orders against Ms Barton that Robb J made in December 2013 were the subject of a later costs assessment but were not paid. As a result, the Legal Aid Commission was required to place a writ of attachment for those costs on the title to the Property. The writ was only satisfied when the Property was sold.
The course of these proceedings to date gives the Court reason to believe that any further costs assessment is likely to be unnecessarily and unreasonably protracted and difficult. It is important that the Trustees, Ms Harvey and Ms Barton be able to conclude their involvement in these proceedings without any of them incurring further unnecessary costs. It seems to me this is an appropriate case therefore for the making of a lump sum costs order. The immediate history of this application is that Ms Barton has not appeared this year to provide any evidence to support her serious allegations of misconduct against the Trustees, despite raising many difficulties about the Trustees' conduct. It is on the cards that if this matter now went to a costs assessment, a similar pattern of events is likely to occur.
The next question is what is an appropriate lump sum costs order? The context here that the Trustees should be indemnified under the Trustee Act and at general law for their costs if the Trustees have incurred the sum of costs claimed by Mr Downey, a sum of $57,275.72. I do not see why they should not be fully indemnified for those costs provided incurring of the costs is established as proper and reasonable. If I do not make an order for them to be indemnified, then the Trustees would have to bear the shortfall between their actual costs and their indemnity for those costs out of their own pocket.
I approach the matter this way. It is appropriate that the Trustees be indemnified by having all of their legal costs paid. Having reviewed the whole of Mr Downey's memoranda of costs, I am satisfied that they are all reasonably and properly incurred and should be recoverable on an indemnity basis. I will make a gross lump sum costs order in that amount.
But I am also prepared to assess the quantum of those costs now under Civil Procedure Act, s 94(4). Mr Downey has explained in detailed evidence all the expenditure incurred in professional legal costs and disbursements. This has allowed the Court to make a judgment about the amounts concerned, and the purposes for which they were incurred. In view of how this case was conducted, the costs claimed do not appear unreasonable. In my view they should be approved in the form of a lump sum costs order.
In lump sum costs order cases it is common for the Court to discount the lump sum being ordered to a degree from what is claimed. But that is not appropriate in this case. First, the order is being made on an indemnity basis. Secondly, having looked through the materials I regard this as a case where the lump sum costs order should reflect the full fees charged on ordinary principles in any event: all the fees were incurred and were necessary.
That deals with the professional costs and disbursements of the Trustees and their solicitors.

The Trustees' Expenditure on Repairs

Much of the Trustees' work in repairs and improvements to prepare the Property for sale would have had to be done despite the many differences between Ms Barton and the Trustees. The Property needed to be prepared for sale with repairs and minor improvements, by painting and decorating, and by the work of plumbers, locksmiths, landscapers and other repairers to make the Property as presentable as possible. Ms Barton was critical of some of this expenditure. Ms Barton has real estate expertise. She said the Property would be best sold to a developer so that this expenditure would be avoided.
But the Trustees' expenditure on all these items was entirely reasonable. The Trustees were ensuring the Property was marketable to the broadest number of potential purchasers, not just to developers, but also to general residential buyers. The table set out below, supplied by the Trustees and Ms Harvey, summarises all this third party expenditure. It also indicates the Court's view as to how the cost of reimbursing the Trustees for the third party expenditure should ultimately be borne between Ms Harvey and Ms Barton, an issue relevant to Ms Harvey's motion, considered later in these reasons. Supplier Description of work Amount Payable by Ms Harvey Payable by Ms Barton A.T.P Painting and Decorating Services Paint interior walls, doors and exterior $5,550.00 $1,942.50 $3,607.50 New Level Group Pty Ltd Install timber trims and architraves, doors and handles $3,817.00 $1,335.95 $2,481.05 MTD Plumbing Pty Ltd Repair sewer and works to downstairs bathroom $5,527.54 $1,934.64 $3,592.90 Bruce Bros Floor Coverings Supply and install carpet and underlay $2,332.00 $ 816.20 $1,515.80 AAA Auction Recyclers Prepare for marketing, general clean to interior and pack loose items $957.00 $334.95 $622.05 Preddeys Locksmith Pty Ltd Change locks on the Property after defendant moved out $201.96 $70.69 $131.27 Vision At Your Service Pty Ltd Landscaping and garden maintenance $6,902.50 $2,415.88 $4,486.62 Quadrant Real Estate Formal valuation $440.00 $154.00 $286.00 HPA Cronulla Sales Pty Ltd t/a Highland Property Agents Agents engaged to market and sell the Property $27,681.00 $9,688.35 $17,992.65 Blue Broking Pty Limited Insurance for Property $3,574.24 $1,250.98 $2,323.26 Slattery Valuations Australia Pty Ltd Inspection and production of inventory of Ms Barton's furniture and personal effects $5,500.00 $5,500.00 Removals Coast to Coast Pack and remove Ms Barton's furniture and personal effects to storage at Kennards Storage Caringbah $2,800.00 $2,800.00 Mathew Jessep Lawyers Oversee the removal of Ms Barton's furniture and personal effects $6,160.00 $6,160.00 Blue Broking Pty Ltd Insurance for Ms Barton's furniture and personal effects in storage $850.00 $850.00 $72,293.24 $19,944.14 $52,349.10

Ms Harvey's Motion

There are three main matters to be dealt with on Ms Harvey's motion. The first is the allocation of the burden of costs between Ms Harvey and Ms Barton including with respect to the costs which the Trustees have incurred to tradesmen. The second is the costs associated with removal of Ms Barton's goods from the property and their storage and insurance at Kennards Storage at Caringbah. The third is how the Court should deal with the proceeds of sale in the event of further disagreement. All of these three matters are to a degree associated with Ms Harvey's motion in the proceedings.
Ms Harvey's motion seeks the following orders: "1. Costs incurred by the trustees in relation to the sale of the property that were incurred due to the actions or inaction of the Defendant be deducted from the Defendant's share of the proceeds of the sale of the property. 2. The payment made at settlement to discharge the mortgage on property subject of the proceedings be paid out of the Defendant's share of the proceeds of sale as per the order of Justice Robb made on 6 December 2013. 3. The payment of the debt owed by the defendant to the Plaintiff's solicitor pursuant to costs order made by Justice Robb on 6 December 2013 be paid out of the Defendant's share of the proceedings of the sale of the property."
Some of the orders sought in the Trustees' motion have already been the subject of action. The sale of the Property settled on Monday and that payments were made on settlement. These were as follows: Payee Description Amount Legal Aid NSW Costs payable by defendant $92,606.71 Sutherland Shire Council Council Rates $5,569.87 Sydney Water Water Rates $716.80 Westpac Banking Corporation Discharge loan $461,726.05 Downeys Lawyers Law Practice Trust Account Balance of proceeds of sale $699,406.62 Total of cheques $1,260,026.05 Proceeds of sale held on trust Highland Property Agents $140,000.00 Downeys Lawyers $699,406.62 Total $839,406.62

The orders of Robb J envisaged that the amount secured by mortgage over the property to Westpac Banking Corporation ($461,726.05) would be paid out of Ms Barton's 65 per cent share of the interest in the Property. It is evident from the above figures that Westpac has been paid at settlement. It is equally evident from the above figures that the costs orders Robb J made and, which have been assessed at $92,606.71, have been satisfied on settlement of the property. Robb J expressly decided that the mortgage amount should be discharged out of Ms Barton's share. In the final accounting that is what must occur. As to Ms Harvey's costs in the proceedings, I see no reason why they too should not be dealt with consistently with the effect of Robb J's orders. Ms Harvey's legal costs, deducted at settlement, will therefore be borne by Ms Barton's 65 per cent of the net proceeds of sale of the Property.

Apportioning the Burden of Costs

The first issue for analysis is the first order which Ms Harvey seeks in her motion: that the costs incurred by the Trustees, including their legal costs, be deducted from Ms Barton's share of the proceeds of sale of the Property.
The logical approach to this question is that the parties should bear the ordinary cost of the sale of the Property in the ratio of their sharing in the proceeds of sale. If the sale process had not been lengthened by Ms Barton's conduct, then these ordinary sale costs would still have been incurred. These costs are respectively for the Trustees, $22,338.25 and for Mr Downey, $7,763. In my view 35 per cent of those ordinary costs should be borne by Ms Harvey, and the remaining 65 per cent by Ms Barton. But the costs over and above those sums are Mr Barnden's and Mr Downey's professional costs and disbursements caused by Ms Barton's conduct in obstructing the Property's sale. These should be borne by Ms Barton. I see reasonable no basis for costs that have been wholly occasioned by Ms Barton's conduct being borne in any degree out of Ms Harvey's share of the sale proceeds. The Court will order that the difference between the total costs and what I call the ordinary costs of both Mr Barnden and Mr Downey be borne out of Ms Barton's share of the net proceeds of sale.
That does not deal with all the outgoings. The Trustees have also incurred a figure of approximately $49,453.27 in the payment of various tradespeople who performed work to prepare the Property for sale, in addition to their normal disbursements. These various tradespeople's figures have been detailed in paragraphs 18, 22, 23, and 37 of Mr Barnden's affidavit of 12 June. And they are set out in the table at paragraph [52] of these reasons. It seems to me that these expenses should also be borne in the ratio of 35 to 65 between Ms Harvey and Ms Barton. They are expenses that would have had to have been incurred for the sale of the property in any event, namely, the interior painting, timber, carpentry works, plumbing works, carpeting, general packing, preparation for locksmiths and landscaping.
Ms Barton did not supply the Trustees with details of any current insurance policies, it is not clear there was a current insurance policy. It seems to me to be a precaution in the interests of all the parties that this outgoing should also be borne in the ratio of 35 to 65.

Orders Relating to the Removal and Storage of Ms Barton's Belongings

The remaining expenditure concerns the removal of Ms Barton's goods to the facility at Kennards Storage at Caringbah. The removal and the inspection and inventory taking, the supervision of the removal process by the solicitor Mr Jessup, should all be to Ms Barton's account, and I will so order. These are all items specifically related to the removal of her goods. The evidence shows she did not cooperate at all in their removal. Therefore all this additional expenditure became necessary. These items of expenditure appear above in the table of the Trustees' costs in paragraph [52] of this judgment.
Other matters remain in relation to the storage and disposal of Ms Barton's goods, after their removal from the Property. The Court's orders on 12 May indicate they can be stored for a further three months. The Court ordered on 12 May in relation to Ms Barton's goods as follows: "5. If the defendant does not pack and remove her furniture and other personalty from the property at [the Property] by 5.00pm on Monday 1 June 2015 the Trustees are to engage a removalist of their choice to pack and remove the defendant's furniture and personal effects from [the Property] at their earliest opportunity. 6. The Trustees are to appoint a solicitor admitted to practice in New South Wales to oversee the packing and removal of the furniture and personal effects at [the Property] and the loading of same into storage at Kennards Storage facility located at 26 Endeavour Road, Caringbah, New South Wales. 7. The defendant is to be given notice of the location of the storage facility referred to in order 6 hereof, together with Notice that the goods will be disposed of by way of public auction should they not be collected by her within a period of 3 months beginning on the date that she is notified of the goods being stored. 8. The defendant is to be notified of these orders by way of email […] by the solicitors for the Trustees, within 24 hours of the orders being entered."
It is incidental to the Trustees' power of sale of the Property to dispose of these goods, which had to be removed from the property in order for it to be sold. I will therefore direct the Trustees to sell these goods subject to the order of 12 May 2015 by public auction unless they are collected within three months from the date of service of the orders of 12 May.
The Trustees now seek recourse to the funds resulting from the sale of Ms Barton's property to recover their costs of storage of that property for three months in the amount of $1,036 per month. That order should be made. The Trustees also seek recourse for an amount of $850 in respect of their costs of insuring Ms Barton's property. That order also should be made. Those costs will be incurred only because of Ms Barton's failure to cooperate in removing her goods from the Property, and should therefore be to her account.
Further costs can be anticipated in the sale of Ms Barton's goods. The Court has authorised the Trustees to sell those goods, if they are not claimed. Ms Barton's costs of storing and insuring them have now been covered. But there may yet be further correspondence with Ms Barton about disposal of these goods. And there may be unexpected costs associated with their sale. I will authorise a sufficient sum to be set aside from the proceeds of sale to cover the auction of these goods or to cover reasonable costs associated with the collection of the goods from the storage facility. I authorise the Trustees to meet their reasonable costs out of a sum of $10,000 that will be set aside in respect of the final disposal of these goods. This sum should come from Ms Barton's share, as these expenses all relate to the disposal of her goods.

Distributing the Net Proceeds of the Property's Sale

That then leaves the question of distributing the proceeds of sale. There will probably be no difficulty with Ms Harvey co-operating in receiving her share of the proceeds of sale. Her solicitor, Ms Critchley has attended most of these directions hearings. No doubt Ms Harvey will cooperate with the Trustees for the transmission of her share of the proceeds of sale.
But it is not yet clear whether Ms Barton will accept what the Trustees calculate is her share of the proceeds of sale. There should be a completely open exchange of information about the Trustees' final payment. Ms Barton and Ms Harvey should both see the Trustees' final accounting. When the Trustees have completed their duties I direct them to provide an accounting to both parties and to the Court of how the Trustees calculate the final net balance payable to Ms Harvey and Ms Barton. I do not expect the Trustees to provide any more of the underlying evidence to justify this accounting than has already been explained in the affidavits filed in these proceedings. But there are still a fairly significant number of unknown figures that have still to be ascertained after this judgment has been given. It is desirable Ms Barton and Ms Harvey have the calculation explaining the final figure reached for each of them. The direction will only require that they be shown how the final figure was calculated after this judgment.
If Ms Barton fails to cooperate with the Trustees concerning the net proceeds of sale, the Trustees can, if they are so minded, take advantage of Trustee Act, s 95(1) to pay the money into Court. Trustee Act, s 95(1) provides as follows: "(1) Where trustees, or the majority of trustees, have in their hands or under their control money or securities belonging to a trust, they may pay the same into court."
To avoid the Trustees being locked in future conflict with Ms Barton the appropriate course then seems to be the following. When the Trustees calculate the final figure, I direct them to write to Ms Barton offering to pay her the sum which the Trustees calculate is due to her and to ask Ms Barton whether she wishes to accept that sum within fourteen days. If there is no clear answer to that correspondence within that time, I will direct the Trustees to pay Ms Barton's sum into court and to inform Ms Barton that they have done so. She can then apply for payment out to her.

Conclusion and Orders

Accordingly for these reasons, the Court makes the following orders and directions: The Court notes that:
The sale of (the Property) by Andrew James Barnden and Geoffrey Philip Reidy (Trustees) resulted in gross sale proceeds of $1,400,000 (Sale Proceeds).
Pursuant to the orders of Robb J made in these proceedings on 6 December 2013 that the respective interests of the parties in the Sale Proceeds is:
35% as to the plaintiff (Plaintiff's Share); and
65% as to the defendant (Defendant's Share).
Noting that the defendant (a) is liable for the payment of the loan secured by mortgage to Westpac over the title of the Property (see Robb J's orders (1) of 6 December 2013), and (b) liable for the payment of the costs owing to the Legal Aid Commission of NSW (the Commission) in the sum of $92,606.71, which were deducted at settlement of the sale of the Property pursuant to the Commission's writ of attachment, order that both amounts shall be paid from the Defendant's Share. The Court orders that: The Trustees have recourse to the Sale Proceeds in respect of the amount of disbursements incurred by them for trades, agents and Matthew Jessup, independent solicitor, in the amount of $72,293.24 (Trade Costs). That the Trade Costs be deducted from the parties' interests as follows. $19,944.14 as to the Plaintiff's Share; and $52,349.10 as to the Defendant's Share. The Trustees have recourse to the Sale Proceeds in respect of the amount of costs incurred by them in the sale of the Property being the amount of $70,345.69 (Trustee's Costs). That the Trustees' Cost be deducted from the parties' interests as follows. $10,694.77 as to the Plaintiff's Share; and $59,650.92 as to the Defendant's Share. The Trustees have recourse to the Sale Proceeds in respect of their costs of these proceedings and are to be paid a specified gross sum, instead of assessed costs, in the amount of $57,275.72 (Legal Costs). The Legal Costs be deducted from the parties' interests as follows. $2,717.20 as to the Plaintiff's Share; and $54,558.52 as to the Defendant's Share. The Trustees have recourse to the Sale Proceeds in respect of their costs of storage of the defendant's goods, currently held at Kennard's Self-Storage Caringbah (Defendant's Goods) in the amount of $1,036.00 per month for up to four months and this amount is to be paid from the Defendant's Share. The Trustees have recourse to the Sale Proceeds in respect of their costs of insuring the Defendant's Goods in the amount of $850.00 and this amount is to be paid from the Defendant's Share. The Trustees are to deduct from the Defendant's Share and hold separate the amount of $10,000.00 for the purpose of administering, auctioning or disposing of, insofar as necessary, the Defendant's Goods and the Trustees may deduct such reasonable costs as incurred by them for that purpose. To the extent that any part of the amount specified in order 12 is not required for its purpose, it is to be credited to the final account of the defendant and treated as part of the Defendant's Share and treated accordingly. In the event that the defendant fails or refuses to take custody or control of the Defendant's Goods by 12 September 2015, the Trustees will: cause those goods to be auctioned by 31 October 2015; cause any proceeds of sale resulting from said auction to be: firstly, applied to the costs of and incidental to the auctioning of the goods; and secondly, the balance credited to the account of the defendant and treated as part of the Defendant's Share and treated accordingly, to the extent that those goods cannot be auctioned or are passed in at auction, the goods are to be disposed of or destroyed. Any flammable material located at the Property, including paint and petrol, is to be disposed of or destroyed by the Trustees. Within 14 days of effecting orders 4 to 15, the Trustees or either of them will file and serve an affidavit updating and confirming, so far as necessary, the accounts of the estate and the manner in which the final payments to the plaintiff and defendant are calculated. Upon finalising the amounts due to the defendant the Trustees are to write to the defendant and offer to pay to her the final amount due to her at her direction and will comply with any reasonable direction of the defendant in respect of that payment. Should the defendant decline to accept payment in accordance with order 17 or the defendant fail to respond to the Trustees within 14 days of service of the said correspondence, the Trustees will pay the amount due to the defendant into Court in accordance with s. 95(1) of the Trustee Act 1925. Service of any document on the Defendant pursuant to or in aid of these orders will be effected by sending that document to the email address [of the Defendant]. Grant liberty to apply in relation to the implementation of these orders.

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: 23 June 2015

At a glance

Court

Decision date

Before

Source

Judgment (15 paragraphs)

Parties

Cases Cited (8)