Maria Luz Harvey by her tutor Peter David Barton v Maria Luz Barton

EX TEMPORE Judgment 1On 6 December 2013, after declaring that the plaintiff and the defendant each had a beneficial interest in the Woolooware property the subject of these proceedings, the Court appointed trustees for sale to the property: Harvey v Barton [2013] NSWSC 1779 2A curiosity of this case is that the trustees for sale and the plaintiff want that property sold and so does the defendant. But although this Court's December 2013 orders envisaged a sale within the short to medium term, the property is still unsold. Nor is it ready to be sold, partly because of its physical state and partly because of disagreements between the parties about access to prepare it for sale. 3In short, the implementation of the Court's December 2013 orders is wholly unsatisfactory. This situation cannot be allowed to continue and the purpose of the Court's orders today is to begin to resolve it. 4This is my second judgment in these proceedings. My initial judgment was given on 15 October 2014 when this matter was listed before me and the defendant did not appear. The basic facts of the case are set out in that judgment: Maria Luz Harvey by her tutor Peter David Barton v Maria Luz Barton [2014] NSWSC 1422. There is no need to repeat them again. This judgment should be read together with these two earlier judgments of the Court. 5In the Court's 15 October judgment orders were made for the service of various documents including that judgment on the defendant. The defendant has appeared today and has propounded her motion for removal of the trustees. So issues of proof of service upon her do not arise. The Dispute 6The Court has two motions before it. The trustees' motion seeks: (1) orders for approval of their remuneration up to a maximum amount of $35,000 plus GST and disbursements; (2) leave to make a further application for an increase in their remuneration; (3) vacant possession of the Woolooware property; (4) a writ for possession of the property; and (5) costs. 7The defendant's counter motion seeks: (1) removal of the trustees for sale of the Woolooware property; (2) the denial of any remuneration to the trustees for sale; (3) a direction that the agent that the trustees for sale have appointed should sell the subject property to a property developer, rather than on the general real estate market; (4) an order that the defendant be permitted to remain in the property until the date of settlement; and (5) orders for compensation due to the delay in the sale of the property. 8The plaintiff supports the relief the trustees seek in their motion, although the plaintiff has not taken an active part in the motion. After covering relevant background, these reasons deal with each of these motions. 9Although the Court's orders appointed the trustees in December 2013, in March 2014 Robb J finally resolved issues between the parties concerning the alleged conversion of certain personal property and made costs orders which then cleared the way for steps to be taken to sell the property. 10There is considerable evidence before me of what has happened between March this year and the present time in relation to the possible sale of the property. It is not necessary to go through all of that material. But two major themes of the dispute between the trustees and the defendant can be identified. 11The first theme is refusal of access to the property. The trustees seek access to the property to assess what works need to be carried out to prepare the property for sale. They contend that this denial of access will delay the holding of an open house and there has been a general denial of an opportunity to undertake an orderly sale of the property. The trustees engaged the Highland Property Group to undertake real estate agency work with respect to the sale of the property but they have had only limited access to it. The defendant disputes that she has denied access. 12The second theme is a dispute about an insurance claim. The defendant says she has an insurance policy over the property which will permit the making of payments for repairs which will assist in preparing it for sale. The defendant says there is a $900 excess on that insurance policy. The trustees seek some basic information about the insurance documents before they decide whether or not they will pay the excess and reimburse themselves for the amount of the excess from the proceeds. There seems to be a stand-off between the parties about the defendant not relaying information about insurance to the trustees and about the trustees being unwilling to pay the excess without some basic documentation. 13I will now deal with each of these themes in turn chronologically by reference to some of the correspondence in the proceedings. Preparations for Sale - March to October 2014 14Shortly after Robb J's judgment on 21 March 2014, the trustees wrote to Ms Barton on 2 April and said that they agreed to communicate by way of email. They agreed that they would await the receipt of a property appraisal and that Ms Barton could stay in the property, provided she assisted and made it available for inspection. The trustees indicated that they were prepared to allow Ms Barton to stay in the property until four days prior to the anticipated settlement date, an offer which seems objectively to have been reasonable. 15The agents, Highland Property, indicated to the trustees that they anticipated the property would attract buyers with budgets in the vicinity of $1.1 million to $1.2 million. Highland Property estimates that the range could well go higher. On the other hand Ms Barton, who is herself a real estate agent, says she believes it will sell for about $900,000 and that the existing mortgage to Westpac over the property has about $500,000 owing on it. 16Agents from Highland Property were then clearly given some access to the property. They undertook an assessment of its condition prior to sale, which they delivered to the trustees on 8 May. The detail of that assessment is not presently material. But the assessment shows that in their opinion there still seems much to be done: "The stairwell and hallways upstairs are missing carpet, with the floorboards exposed...All walls in the area are in poor cosmetic condition as well...A couple of the bedrooms have severe scratch damage from the cats that are being housed there...The sewage pipe has been disconnected and raw sewage is exposed on the Western side of the home.." 17If one accepts this report at face value, then clearly there are a number of things to be done to prepare the property for sale. Despite those requirements, Highland Property believed the property to be structurally sound and the size of the land was a significant factor in their assessment of the market price. 18The stand-off between the parties in relation to the two main themes identified above seems to have started in mid-May, shortly after this report was delivered. 19On 15 May 2014, Ms Barton emailed one of the trustees, Mr Barnden. She reiterated in this email what she had said in her telephone conversation of 7 April: that because the roof and the upstairs ceiling had been damaged by storms in January/February 2013, she would have discussions with the insurance company about organising repairs to rectify that damage. She then went on in her email: "Obviously, there is the question of the $900 excess which has to be paid before any work can commence on my property. I am currently in receipt of government assistance and as I have already informed them, as they have not resolved my insurance claim in a reasonable timeframe, it has been almost 1.5 years, I am not prepared to pay the excess. So they have until COB on Friday 23rd May 2014, to respond to me. Obviously, for the reasons set out above, you will not be obtaining my insurance policy by COM on Thursday 15th May 2014, which is now today." 20But in this same email, Ms Barton stated, when talking about the cats on the property, something which gives the Court cause to believe that she does not fully accept the orders of the Court made by Robb J in December: "As to the cats causing any further damage, unless you have a crystal ball - good luck. Perhaps what the firm of Rodgers Reidy need to be made aware of is that this property that everyone is referring too actually belongs to me and not anyone else and the property shall be sold as is, minus any pets as my pets are not included." 21Ms Barton is the registered proprietor of the property. But she only holds a 65% beneficial interest in it. In discussion with the Court, Ms Barton said she accepted that the property had to be sold and that in this email she was actually referring to the fact that she was not the legal owner of the property. But her conduct generally in these proceedings shows an attitude of exclusive proprietorship over the property without reasonable regards to the plaintiff's rights to it. She has tried to exert a degree of control over the sale of the property which is inconsistent with the execution by the trustees for sale of their trusteeship duties. 22After delay in the trustees' agent getting access to the property, the lawyers for the trustees, Downeys Lawyers, wrote a definitive letter of demand on 11 June 2014 on both themes. They sought access to the property for Mr Wheeler of Highland Property agents "to assess whether or not the insurance works are beneficial for the sale or whether the damage should be disclosed in the contract for sale." He also mentioned that the trustees "may be willing to pay the $900 excess, with this amount being reimbursed out of the sales proceeds, if it is beneficial to do so." 23On the other main theme, which is access for the repair works generally, the letter said: "We request your co-operation in allowing the tradesmen, in the presence of Mr Wheeler, to access your property to provide quotes on the suggested repairs," and the letter went on, "Upon receipt of the quotes, the Trustees in conjunction with Mr Wheeler will assess as to whether or not it is commercially beneficial for the repair works to be undertaken, the cost of which will be paid out of the sale proceeds. Copies of all quotes obtained will be provided to each party." The letter then looked forward to Ms Barton's response. 24This letter seems to have been framed to bring together the two themes as a result of correspondence in late May between Ms Barton and the trustees in which Ms Barton had refused to provide any information about the insurance claim. 25In answer to an earlier request to make the property available for people to undertake quotes, rather than give permission, Ms Barton's reply had simply asked more questions thus: "In respect of the possibility of repairs work identified by the Agent, please provide me with a list of the actual repair work that you are referring to? Also you need to advise me as to who it is that you think is going to pay for these repairs? Please be so kind and please do not state that they will be paid from the proceeds of the sale of my property as I definitely would not be in agreement to this and I am sure neither will the plaintiff." 26The trustees' final letter of 11 June was an attempt in an objective way to deal with this kind of unsatisfactory response. The correspondence viewed as a whole does show Ms Barton's failure to engage reasonably and to deal with the trustees'' requests for access, largely by asking questions back to the trustees. The sale process could not be advanced in those circumstances. 27As to the matter of the insurance excess of $900, it seems that at least one of the reasons Ms Barton is refusing to provide information about her insurance policy to the trustees is that she also has a claim on the insurance company for damage to her personal effects; she does not want the trustees to get control of this other claim. It seems to me that this is quite understandable. But in the course of argument before the Court the trustees expressly disclaimed any interest in Ms Barton's claim in respect of her personal property. This is to be expected as they are only trustees for sale over the real estate. It seems to me that an obvious short-term solution of the insurance issue is that the defendant must disclose details of her insurance cover to the trustees and the trustees must leave it to the defendant herself to deal with any claims in respect of lost chattels and personal property. But the trustees should be authorised by the Court order to deal with the insurance claim about damage to the property directly. The trustees should not have to deal with this through the defendant. The insurance policy has been taken out to indemnify for damage to the property. Once appointed, the trustees have a right, as trustees for sale, to deal with the insurance company. 28On the question of delay or denial in access for repairs, the other theme, there is one more stage before the matter came to court today. On Monday, 15 September of this year, Downeys Lawyers provided a detailed regime for the respondent to remain in the property but not to hinder the trustees and their agents from carrying out work on the property, or deny them free access. The regime set out in the proposed orders on 15 September is as follows: "Trustees' Proposed Orders 15 September 2014 1.The remuneration of the trustees appointed pursuant to section 66G of the Conveyancing Act 1919 by order of the court in these proceedings on 2014 ('the trustees') is approved to a maximum amount of $35,000.00. 2.The trustees have leave to make further application to the court for an increase in remuneration if the work involved in selling the property known as 148 Kingsway Woolooware (Lot 4/DP8658) ('the property') exceeds the estimates of the trustees. 3.The trustees are granted vacant possession of the property. 4.Leave is granted to the trustees to apply to the court for a writ of possession. 5.The Respondent is to provide the trustees and/or their agents a set of keys for the property within 48 hours of the making of these orders. 6.The Respondent will grant access to the property to the trustees and the trustee's agents for the purpose of inspecting the property, arranging quotations by tradespeople for repairs to the property, conducting open-house inspections and showing prospective purchasers the property on 48 hours' notice. 7.The Respondent will provide free and unhindered access to any tradespeople engaged by the trustees to perform work on the property on 48 hours' notice and continuing until any works on the property are completed. 8.For the purposes of orders 6 and 7 of these orders, notice is to be forwarded to the Respondent's email address and is deemed to be effective upon transmission of notice by email to the Respondent's email address by the trustees or their agents. 9.The Respondent will remove all animals from the property during times when the trustees' agents are arranging quotations by tradespeople for repairs to the property, conducting open-house inspections of the property or otherwise showing prospective purchasers the property. 10.The Respondent will absent herself from the property for a period commencing half an hour before and ending half an hour after the time period notified to her by the trustees or their agent pursuant to order 5 that they require for any open-house inspection or other inspection of the property by prospective purchasers. 11.The Respondent is to provide the trustees' solicitors with the name and contact details of the insurer of the property with which she has lodged a claim for damage to the property, the claim number and the name and telephone number/s of the builder or other tradesperson/people to be engaged by the insurance company to carry out repair works to the property. 12.The Respondent is to take all reasonable steps to assist the trustees in ensuring that any repair works to be carried out by the insurer of the property, if deemed necessary by the trustees, are completed in a prompt and timely manner. 13.The Respondent will not hinder the trustees or their agents in their efforts to market and sell the property. 14.The Respondent will not hinder the trustees, their agents or any tradespeople engaged by them to carry out works on the property and will take all reasonable steps to ensure that they have free access to the property to perform any works. 15.The Respondent will vacate the premises 2 business days prior to the day originally fixed for settlement of the sale of the property in any contract of sale between the trustees and a purchaser of the property, unless the Respondent otherwise enters into a formal agreement with any purchaser of the property that she may remain in occupation of the property as a tenant or licensee after settlement of the sale. 16.The costs of this application are to be paid by the Respondent. 17.Liberty to restore on 2 days' notice. 18.Such further or other orders the court sees fit." 29This was a reasonable proposal in the circumstances. The response from the defendant was illuminating. Her reply to this letter of 17 September said: "I definitely do not consent to the draft orders that you sent me on Monday 15th September 2014. I am still appalled by the fact that your email was even worse that the NOTICE OF MOTION and that you have the audacity to continue delaying this matter and that the trustees/you are determined to continue to delay complying with his Honour Justice Robb's orders and then expect me to pay your costs." 30She then reiterated her request that the trustees try and find a property developer to purchase the property. As in my view the request that was made by the trustees in all the circumstances was reasonable, the appropriate result is that some orders be framed around that proposal. I will direct the parties to prepare short minutes of order to give effect to a working framework like their September proposal but taking into account these reasons. 31But the trustees want more than that - some of which in my view they can have but some of which they cannot. I find it necessary to consider the relief sought under each of the motions and to deal with it. Consideration 32I will deal with the defendant's motion first. It seeks perhaps the more fundamental relief, including the removal of the trustees. The relief sought in Ms Barton's motion for removal of the trustees should not be granted. Removal of trustees is a serious matter only ordered after proven misconduct of recognised categories which endanger the trust property or show want of reasonable fidelity: Miller v Cameron (1936) 54 CLR 572. 33Ms Barton puts her argument on two bases. She says that the trustees have not provided her with the $900 excess. And she says that the trustees have not taken steps to repair or to get the property ready for sale and they have not done the repairs to the roof. The problem with each of those complaints is that they are all matters which required some co-operation on her part but which, on the evidence and in my view, has not been forthcoming. It is not at all unreasonable for the trustees not to pay the $900 until they see there actually is an insurance policy with an excess of $900. 34As to access to the property for sale, it is quite evident from the correspondence that I have noted that the trustees' reasonable requests for access have not been engaged with by the defendant. The defendant has not given a cooperative reply to the requests of 11 and 19 June. She says she telephoned the trustees' representatives on 30 June. That may well be so, but no clear and reasonable proposal for access has been forthcoming from her side. Nor has any permission to enable the sale to take place. I do not regard any delay as being sufficiently the responsibility of the trustees that it would warrant their removal given the clear burden of proof on the parties, such as Ms Barton, seeking to remove the trustee in such circumstances. 35Ms Barton claims that the trustees have permitted the orders of the Court to be contravened. I have insufficient material from Ms Barton to warrant their removal. Nothing in the material before me at present shows such misconduct by the trustees that would make even a prima facie case for removal, or in the alternative, for the denial of their remuneration. Their remuneration will be considered by the Court for approval after the sale. The defendant can raise such matters as she is advised at that time. 36The next application that the defendant makes is that Highland Property sell the property to a properly developer. The reason Ms Barton propounds for that order is that it would not be necessary to do the roof repairs if the property were to be sold to a developer who would only knock it down and the defendant would not have the problem of dealing with the insurance issues. She would not have to allow access to the property in those circumstances, since the agents would deal with the property developer with the sole objective of demolition. 37The trustees can market the property on the advice of their agents, Highland Property as they see fit. The way that the property is to be marketed is for them to decide, subject to the Court's supervision. I see no basis on the evidence to interfere with the trustees' decision to take Highland Property's advice to market the property to the widest possible market of people, and not just property developers. That is a matter for trustees' judgment based on the real estate agent's advice that they have. 38Ms Barton is a real estate agent and she may have strong opinions about how the property should be marketed. But at the end of the day, whilst the trustees are in control of the process, they can take such reasonable advice as they regard as of merit. 39Ms Barton also seeks in her motion to be allowed to remain in her property until the date of settlement and seeks compensation for the home mortgage payments. The question of how long Miss Barton should remain in the property seems to me to be entirely in her own hands and is entirely dependent upon her behaviour. The Court expresses considerable displeasure with the unsatisfactory way she has corresponded with the trustees so far. It seems to me to be obstructive. Whatever her genuine beliefs about the sale process, it is in the hands of the trustees and that is a matter she must accept. 40I now move to the trustees' motion. So unsatisfactory is this situation that I have decided that I will make the orders the trustees seek on their motion and make an order for possession of the property. The Court has power to do this, as strictly speaking the order appointing the trustees for sale converts the interests of the co-owners in the land into personalty; they lose their interest in the land itself and the right to occupy it: Abbott v Pegler (1980) 1 BPR 9267 and Lamru Pty Ltd v Kation Pty Ltd (1998) 44 NSWLR 432 at [435] - [436]. I will allow a writ for possession to be issued because it seems to me in these circumstances to be the only way to bring home to this defendant that the trustees must be given control of the sale process, and her cooperation is a necessary part of that occurring, as her present conduct is inconsistent with execution of the trust. 41I have decided however, that I will stay those orders for a limited period of time to give the defendant, Ms Barton, one last chance to show that she can cooperate with the trustees in the sale process. If she does not co-operate, I will lift the stay and the order for possession can be executed over the property. 42On their motion the trustees seek an order that their remuneration be approved to a maximum of $35,000 plus GST and disbursements. The trustees' original evidence in support of the order made by Robb J in March 2014, was that they estimated that the professional fees they were then to charge for an appointment to sell the Woolooware property would be $16,500 including GST. They made that estimate understanding the general nature of the issues between Ms Barton and her mother, as Robb J's judgment was published by that time. They did say if Ms Barton did not assist in the sale process their fees would be in the professional range of $22,000-$38,500. The evidence set out some analysis of how the lower range of fees that they were then proposing would be calculated. 43Unfortunately there is no real evidentiary basis to justify the $35,000 the trustees have claimed in order 1 and I am not inclined to make that order. This does not preclude the trustees, however, from making an application for approval of the fees they have actually incurred at the end of the process in the usual way. 44I am not prepared to approve the expenditure of money up to an amount of $35,000. But I will make an order that the trustees are to incur no more than $35,000 without further approval of the Court. And whether their fees are ultimately to be approved or not, will otherwise be determined after the sale process is concluded. 45Having seen all the correspondence in this case, I am mindful of the fact that the trustees will need to spend more money than they now have on hand. So it should be clearly understood that the Court is simply saying: the trustees can spend no more than that sum of $35,000, but whether that expenditure is approved for deduction from the proceeds of sale is still a matter to be determined by the Court at the end of the day. 46The trustees next seek orders for a further possible application to increase remuneration. It seems to me I do not have to deal with that now. If the orders the Court is to make are complied with and all goes well, such an order will not be needed. 47The trustees seek an order for vacant possession of the property and for a writ of possession of the property. I will make both of those orders. 48I am not inclined to yet make any order for costs. On the question of costs, there seem to be a lot of mechanical matters that need to be dealt with by the parties before we get to the issue of costs. 49I will reserve for further consideration questions raised by both motions as to: (1) whether Ms Barton should be compensated for any delay causing her to make increased interest payments on the mortgage; or (2) whether the plaintiff should be compensated for the fact that there has been delay caused by Ms Barton, and whether Ms Barton should be charged any occupational fees. These issues will be deferred. 50There is one supplementary matter. Ms Barton also argued on her motion that there was a conflict of interest on the trustees' part. This was advanced to support her argument that they should be removed. The contention was that counsel for the plaintiff, at the time the trustees were appointed, said words to the effect: "Don't worry about the trustees. Andrew [Mr Brunden] and I are friends". 51I do not have to decide whether this was said. But if it was said, it is unfortunate. It does not, on its own, show a conflict of interest or indeed show without more enough to cast doubt upon the integrity of the trustees' execution of their duties. But the trustees have been appointed by the Court and their conduct and their fees ultimately remain subject to the Court's approval. If Ms Barton has any complaint about the trustees' performance of their duties, that can be addressed when I considered the trustees' fees.