Kousal v Adkins & Anor [2005] VSCA 327

"1. The defendants' appeal from the orders, declarations and directions made by Master Evans on 26 May 2005 be allowed on condition that the defendants deliver up to the Prothonotary of this court the duplicate certificate of title for the land by 4 p.m. on 19 August 2005.

2. The Prothonotary hold and preserve the duplicate certificate of title until further order of this court."

His Honour further ordered that if the defendants did not comply with that condition - that is to say, the delivery up of the duplicate certificate of title - then there be judgment entered for the plaintiff in the terms set out in the order, including that the plaintiff was entitled to be registered as the proprietor of the land and that the plaintiff recover possession of the land. In the event, that condition was not complied with. As he was entitled to do, Mr Kousal, the plaintiff, entered judgment, pursuant to the self-executing order, on 26 August 2005. No stay application was made by the defendants. On 2 September 2005, the defendants filed at the Court of Appeal a notice of appeal dated 26 August against that judgment, the central ground being that the appellants - that is to say, the Adkins - were entitled to unconditional leave to defend the action itself.

5 On 21 September 2005 a warrant of possession was issued to the Sheriff to enter the land and cause the plaintiff to have possession of it. On 31 August 2005 the learned judge in the Practice Court had granted injunctions to the plaintiff restraining the defendants from dealing with the land - that is, disposing of or encumbering it in any way - until 16 September 2005, and there was a stay of the 26 August judgment until the same date. According to the material, that was done by his Honour to enable the defendants, if so advised, to seek a stay of the judgment pending their appeal. As I have said, no such stay was sought. Mr Adkins informs the Court that he adjudged it unnecessary to seek a stay because, first of all, they had filed a notice of appeal and, secondly, he anticipated that if any move was to be made to execute on the judgment he would have some notice, which would enable him then to seek to prevent that occurring.

6 On 13 December 2005, without notice to the plaintiff, Mr Adkins on behalf of himself and his wife made an oral application to the judge in the Practice Court seeking a stay of execution of the warrant of possession. That application was dismissed, evidently on the ground that the warrant had already been executed.

7 By summons dated 20 December 2005, the plaintiff sought a mandatory injunction requiring the defendants and their children to vacate the land and restore possession to the plaintiff by 21 December 2005. On 20 December, the learned judge in the Practice Court made that order and granted an injunction restraining the Adkins family from re-entering the land. On 21 December Mr Adkins, again in person and again without notice to the plaintiff, made oral application to the same judge for a stay of the order made the previous day. That application was refused.

8 The terms of the mandatory injunction required the Adkins family, as I have said, to vacate the land by not later than midday yesterday, 21 December 2005. Mr Adkins has informed the court that that order was complied with. We should also mention that, in order to vindicate his right to possession, the plaintiff arranged for the goods and chattels of the Adkins family formerly in the dwelling on the property to be removed into secure storage. We are informed by counsel for the plaintiff that this involved an expenditure of some $6,250 plus a down-payment of $200 towards the storage of those goods and chattels.

9 That was how the position stood when the Court of Appeal received notice yesterday that the defendants, Mr and Mrs Adkins, wished to make an urgent application for a stay of the orders requiring them to vacate. The Court was informed, and it has been confirmed by Mr Adkins in court, that the Adkins family had been obliged, following their leaving the property, to find emergency housing.

10 In the course of argument this morning, in which we have been much assisted both by Mr Adkins and by Mr Kewley of counsel for the plaintiff, it has emerged that there are two important factual issues to be investigated, upon which the ownership of this land ultimately depends. The first is whether - as Mr Adkins says and has for some time said - the subject property is trust property, that is, property held by him and his wife as trustees of the Adkins Family Trust. The second and related question is whether the debt, in enforcement of which the original sale in December 2004 took place, was a debt incurred by the family trust or not. We note that Mr Adkins says that it was not, that it was a debt incurred by the partnership of himself and his wife, which carried on a business of earth-moving. Mr Kewley has very properly conceded that if the property is trust property, and if the debt is a non-trust debt, then it must follow that the property was not available to satisfy the debt.

11 Mr Kewley says that these factual issues have been repeatedly raised at various stages in this already long and costly proceeding without the material in support of them on behalf of Mr and Mrs Adkins being properly presented either to his client or to the court. Be that as it may, it is clear that they are, for the reason I have already given, very important matters. The resolution of these issues in Mr Adkins's favour will, it seems, have the consequence that Mr Kousal, the plaintiff, did not acquire, as he thought, legal and beneficial title to the Daylesford property. As we have indicated in argument, that consequence would raise very real questions about the basis upon which the Sheriff purported to sell the property and a question of the potential liability of the Sheriff - not personally but in his capacity as an officer of the court and therefore of the State of Victoria - in having sold to the plaintiff something which was not saleable pursuant to the Sheriff's powers.

12 Mr Kousal, through his counsel, does not oppose the course which we raised in the course of argument and which we now propose to follow, the object of which is to assist - indeed, so far as possible, require - the parties to bring these critical matters to trial at the earliest practicable opportunity. The factual matters, though significant, do not to us appear to be very broad in compass, but they will, of course, require proper oral and documentary evidence in order for a judge of this Court to resolve them. As to whether the Sheriff, or the legal interest represented by the Sheriff, needs to be joined, that is a matter for the plaintiff and his advisers.

13 It is unnecessary, for the purposes of the disposal of the summons which the defendants have brought on, to enter into the question whether there was any error in the exercise of discretion by the judge in the Practice Court in making the leave to defend conditional upon the production of the duplicate certificate of title. It is sufficient that we say that the interests of justice now plainly demand that that decision be set aside, in order to place Mr Adkins and his wife in the position where they have unconditional leave to defend the proceeding. It seems to us that there is quite enough in the documents which Mr Adkins showed us to justify unconditional leave to defend. That will enable the matter to be referred to the Listing Master for directions. Again, it suffices that we say that, given the time and expense already taken up in the plaintiff pursuing in good faith what he has understood to be his rights as purchaser, it will be in the parties' interests if this matter can be brought on for hearing at an early date in 2006.

14 There has been no real argument about the balance of convenience, but it follows from what we have said that, in our view, there is a serious question to be tried whether the judgment should stand, that is to say, a proper basis for an injunction pending trial. As to the balance of convenience, Mr Kewley having properly informed us that there is no personal or compassionate issue affecting the plaintiff or his family in relation to the property, the balance of convenience seems to us clearly to favour a restoration of the status quo, by staying the orders which currently require the Adkins family to be absent from the property, and also by facilitating the regaining by the Adkins family of their possessions which were removed, that being a matter for them. We have already mentioned the costs incurred by the plaintiff in removing them and Mr Adkins says he will incur costs in taking them back. That is a matter to be dealt with at trial as a consequence, on both sides, of what has occurred in relation to the fundamental issue, that is, the sale of the property in the first place.

15 Accordingly, subject to any other submissions, what we propose to do is treat the summons as an application for leave to appeal from the order of his Honour granting conditional leave to defend; grant the application for leave to appeal; treat the appeal as having been heard instanter and allowed; set aside the order granting conditional leave to defend and in its place make an order that the defendants have unconditional leave to defend; stay the order of Bongiorno, J. made 20 December 2005; stay any enforcement action on the judgment entered 26 August 2005; refer the proceeding to the Listing Master for further directions; and reserve to the trial judge the plaintiff's costs of today and of the appeal.

(Mr Kewley applied for an appeal costs certificate.)

MAXWELL, P.: In relation to the stay on the judgment and the stay on the order of Bongiorno, J., I did not say, but should say, that there will be a stay until the hearing and determination of the proceeding or further order.

(Discussion ensued.)

MAXWELL, P.: We will grant the certificate.

(Discussion ensured.)

MAXWELL, P.: In relation to the terms of the order, it would be possible for an order to be drawn up and authenticated today. These are the orders we will make:

1. There be leave to amend the summons to include an application for leave to appeal from the order of Hargrave, J. made 12 August 2005.

2. The application for leave to appeal be allowed.

3. The appeal be treated as having been heard instanter and allowed, but without a determination on the merits.

4. The order of his Honour made 12 August giving the defendants conditional leave to defend the proceeding be set aside and in lieu thereof there be an order that the defendants have unconditional leave to defend the proceeding.

5. There be a stay of the judgment entered 26 August 2005 in the proceeding until the hearing and determination of the proceeding or further order.

6. There be a stay of the orders made by Bongiorno, J. on 20 December 2005 until the hearing and determination of the proceeding or further order.

7. Upon Colin Adkins giving notice before 5 o'clock today to the firm known as Max Reynolds Removals of 328 Eureka Street, Ballarat, that firm and, to the extent that his authority is required, the plaintiff do cause and permit Mr Adkins to collect from the premises of Max Reynolds Removals, at his own expense, all of the goods, chattels and other possessions belonging to him and his family which, at the instance of the plaintiff, were removed from the property and placed in storage there.

We will record in "Other Matters" that both the plaintiff and the defendants complain that their expenses of removal of the Adkins possessions, initially from the property and then back to the property, are not expenses which they should respectively have to bear. The Court merely notes that the question of the liability to reimburse one or other or both parties for their costs of removal is a matter for determination at the trial, subject to any view of the trial judge.

8. The proceeding be referred to the Listing Master for directions and for listing at the earliest practicable date.

9. There be a certificate under s.4 of the Appeal Costs Act in respect of the plaintiff's costs of this appeal.

10. Any other outstanding question of costs be reserved to the trial judge.

It will be recorded in "Other Matters" that Mr Adkins, on behalf of himself and his wife, undertakes to the Court that until the hearing and determination of the proceeding or further order they will keep the property and the dwelling in its present condition and will undertake such repairs and maintenance as may reasonably be required.

(Discussion ensued.)

MAXWELL, P.: In "Other Matters" in the orders we will add this: The Court notes that, as the registered owner, the plaintiff is liable to pay council rates. The defendants inform the Court that there is a pre-existing dispute with the council about rates. All I would add to that, I think, is that, given that the essence of the proceeding is the dispute about who the owner is, this would seem a case where consideration might be given by the council to deferring any recovery action in respect of the rates pending the resolution of the matter. That is not something we can order, it is not within our jurisdiction, but it may assist the parties to have had that said.

---