NSW Trustee & Guardian as Executor of the Will of Michael Robert Walsh (Deceased) v Gregory

Judgment 1Michael Robert Walsh ("the deceased") died on 16 December 2010. 2The deceased left a Will dated 1 February 2007. Probate of his Will was granted to NSW Trustee and Guardian ("the Plaintiff") on 15 March 2011. The Defendant named in the Summons, Sophia Maree Gregory, is not a beneficiary named in the deceased's Will. 3The Plaintiff seeks the appointment of trustees for the sale of a property situated at Willmot, in NSW ("the Property"). It also seeks orders for vacant possession of the Property to be given to the trustees for sale and for the application of the proceeds of sale. As far as the Plaintiff is aware, the Defendant, only, remains in occupation of the Property. 4The Defendant is a registered proprietor, with the deceased, of the Property, as tenants in common in equal shares. 5The proceedings by the Plaintiff were commenced by originating Summons filed on 6 October 2011. The Summons was returnable before the Registrar on 8 November 2011. In support of the Summons, the following was filed: two consents to act as trustee, one by each proposed trustee, two affidavits verifying consent to act as trustee, one in respect of each proposed trustee, and one affidavit of fitness of the proposed trustees, in which reference was made to each of the proposed trustees. These affidavits have been read on the hearing today. 6There was no appearance on the return date, by, or on behalf of, the Defendant. There was also no appearance by, or on behalf of, the Defendant before me today (although the matter was called outside the court). 7Personal service of the Summons was attempted on 22 October 2011, 30 October 2011, 2 November 2011, and 8 November 2011. 8By Notice of Motion filed on 28 November 2011, the Plaintiff sought an order for substituted service pursuant to the Uniform Civil Procedure Rules 2005 ("UCPR") rule 10.14. The Plaintiff relied on evidence of attempts to serve the Defendant, and on correspondence sent to her, neither of which elicited any response. 9The Registrar made an order for substituted service on 16 December 2011. Orders were made that the originating process was to be served by sending a copy thereof by pre-paid post, addressed to the Defendant at the Property. The Plaintiff was also ordered to send a letter addressed to the Defendant, with the originating process, advising her of the date on which the matter was next listed for directions. The originating process was to be taken to have been served on the Defendant one week after the copy of the originating process was posted to the Defendant. 10Adele Pamela Jarrett, a legal administrator in the employ of the Plaintiff's solicitors, swore an affidavit on 19 March 2012. She deposed to having "sent a letter to the Defendant by pre-paid post from Tamworth Post Office on 16 January 2012. She annexed a copy of a letter dated 16 January 2012 and says that the letter, the Summons in the proceedings and the order of the court dated 16 December 2011 were included in the envelope that she posted. She also stated the envelope included a return address and that neither the letter, nor the envelope, had been returned. 11Had that affidavit been the only source of proof of service of the Summons on the Defendant, I would not have been satisfied of proof of service by post. 12However, in an affidavit sworn on 23 April 2012, a process server stated that, on 28 March 2012, he left a copy of the Summons, the judgment/order dated 16 December 2011 and a letter in the letterbox at the Property. 13In an affidavit sworn on 15 May 2012, by Ms Jarrett, the letter referred to in the preceding paragraph was identified as one dated 26 March 2012. She stated that she had sent the original of that letter to the process server for service on the Defendant. The letter referred to the matter being listed before the Registrar at 9:00 a.m. on 9 May 2012. The letter also stated the address of the court where the Registrar usually sits. 14Annexed to the affidavit of Ms Jarrett of 15 May 2012, there was also a copy letter dated 12 May 2012 from ZuckerLegal, the Plaintiff's solicitors, to the Defendant, at the address of the Property. There is admissible evidence of service of the letter by post. Service is taken to have been effected one week after the documents were sent by post (19 May 2012). 15An affidavit of another process server sworn on 23 April 2012, also evidenced service of the Summons and other documents, by leaving a copy thereof at the Property. 16Finally there are two further affidavits of service, one by Ms Jarrett sworn on 12 June 2012 and one by Mr Zucker, the Plaintiff's solicitor, also of 12 June 2012, deposing to further service, by post of documents upon the Defendant. Documents included a letter informing the Defendant that the matter was listed for hearing today and that the Plaintiff would seek orders.

Hearing in the absence of a Party 17Rule 29.7 of the UCPR, relevantly, provides: "29.7 Procedure to be followed if party is absent (1) This rule applies when a trial is called on. (2) If any party is absent, the court: (a) may proceed with the trial generally or so far as concerns any claim for relief in the proceedings, or (b) may adjourn the trial. ..." 18The clear purpose of UCPR rule 29.7 is the efficient dispatch of court business. However, in dispatching court business, I cannot ignore the right of a defendant to be informed, or, at least, to be made aware, of a trial date. It is a fundamental principle that a party who may be adversely affected by the making of court orders has a right to be heard: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571, in which Rich J said (at 589): "It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside, and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside. ... In such a case there has been no valid trial at all." 19In the circumstances, the first issue to address is whether I am satisfied that it is appropriate to proceed in the absence of the Defendant or of anyone representing her. 20A party is "absent" within the meaning of the rule, when the trial is called on, only if it can be shown that he, or she, has knowledge, or notice, of the date of the trial, and is not physically present, or not represented. In other words, before the rule can be relied upon, there should be proof that the absent party has been given reasonable notice of, or has knowledge of, the date of the trial. 21Having read the evidence of service, some of which I have set out, I am now satisfied that all reasonable attempts have been taken to notify the Defendant of the Plaintiff's intention to obtain orders when the matter was listed before me today. Overall, I am satisfied that attempts have been made, fruitlessly, to get in contact with the Defendant, to provide her with the documents to be relied upon, and to allow her to participate in the proceedings. The Plaintiff has also established that all reasonable attempts to notify the Defendant of the date for the trial and that it was to then proceed have been made. 22Finally, on the question, I have not forgotten what I said in Smirski v Macander [2010] NSWSC 929 at [34]: "34 It is to be remembered that the primary considerations on whether to proceed ex parte concern whether there is urgency; whether irreparable damage would flow from making an ex parte order; whether hardship would flow to a party against whom an order is made and whether such an order can be set aside: Ndjamba v Toyota Finance Australia Ltd [2010] NTSC 23, per Blokland J at [8]." 23No particular urgency is disclosed. However, the deceased died 18 months ago and the Plaintiff cannot finally administer or distribute the estate until the deceased's interest in the Property is realised. The proceedings were commenced over six months ago and significant attempts have been made to have the Defendant take part. Finally, because of the form of orders proposed, the Defendant will not suffer irreparable harm if orders are made today. She will be allowed an opportunity to consider the orders and take such steps as she is advised. Whilst, of course, there may be some hardship for the Defendant in having to move out of the Property, there is no evidence that she would suffer such hardship. In any event, in my view, she has had some time to arrange her affairs. 24No application for an adjournment of the trial having been made by, or on behalf of, the Defendant, and being satisfied that the Defendant was, or should have been, aware of the Court date, and also that the trial would be proceeding, there is no ground on which it would be appropriate for the court to adjourn the trial. Thus, there would be no point in the Court, of its own motion, adjourning the matter, and I have proceeded to hear the matter in the absence of the Defendant.

Appointment of Trustees for Sale 25The Plaintiff must prove the claim so far as the burden of proof lies upon it and if it proves its claim is entitled to the relief claimed and such other relief as is consistent therewith: Re Anton Fabrications (NSW) Pty Ltd; Bentley Smythe Pty Ltd v Anton Fabrications (NSW) Pty Ltd [2011] NSWSC 186, per Ward J, at [11]. 26So far as is relevant, s 66G of the Conveyancing Act 1919, provides: "(1) Where any property (other than chattels) is held in co-ownership the court may, on the application of any one or more of the co-owners, appoint trustees of the property and vest the same in such trustees, subject to incumbrances affecting the entirety, but free from incumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition. (1A) Subject to this section, on the death of a co-owner, any proceedings by or against the co-owner under subsection (1) (whether instituted before or after the commencement of this subsection) survive against or for the benefit of the estate of the deceased co-owner despite, in the case of a joint tenancy, the rule of survivorship. (2) Where the entirety of the property is vested in trustees or personal representatives, those trustees or personal representatives shall, unless the court otherwise determines, be appointed trustees on either of such statutory trusts, but subject, in the case of personal representatives, to their rights and powers for the purposes of administration. (3) (a) Where the entirety of the property is vested at law in co-owners the court may appoint a trust corporation either alone or with one or two individuals (whether or not being co-owners), or two or more individuals, not exceeding four (whether or not including one or more of the co-owners), to be trustees of the property on either of such statutory trusts. (b) On such appointment the property shall, subject to the provisions of section 78 of the Trustee Act 1925, vest in the trustees. ... (6) In relation to the sale or partition of property held in co-ownership, the court may alter such statutory trusts, and the trust so altered shall be deemed to be the statutory trust in relation to that property. (7) Where property becomes subject to such statutory trust for sale: (a) in the case of joint tenancy, a sale under the trust shall not of itself effect a severance of that tenancy, (b) in any case land shall be deemed to be converted upon the appointment of trustees for sale unless the court otherwise directs. ..." 27The court's jurisdiction to appoint trustees depends upon the Property being held in "co-ownership" and, generally, an application being made by one, or more, of the co-owners. 28It will be appreciated that the Plaintiff is not a registered owner of the Property. 29However, s 66F(1) of the Conveyancing Act, for the purposes of Div 6 of Pt 4, which deals with statutory trusts of Property held in co-ownership, relevantly, provides that "co-ownership" means "ownership whether at law or in equity in possession by two or more persons as joint tenants or as tenants in common; ...". 30The "statutory trust for sale" is defined by s 66F(2)(a) in the following terms: "Property held upon the 'statutory trust for sale' shall be held upon trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses, and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners". 31The question, then, is whether the Plaintiff is a "co-owner". 32Section 44 of the Probate & Administration Act 1898 relevantly provides that upon the grant of probate of the will of any person dying after the passing of that Act, all real and personal estate which any such person dies seised or possessed of, or entitled to, in New South Wales, shall as from the death of such person pass to and become vested in the executor to whom probate has been granted. 33Importantly, s 66G of the Conveyancing Act does not require the party seeking the relief to be a registered proprietor of the property the subject of the application. What is required is that the applicant be a co-owner. 34It follows, in my view, that upon obtaining the grant of Probate in March 2011, the deceased's interest in the Property vested in the Plaintiff from the date of death (December 2010). Accordingly, it is a "co-owner". 35Whilst an order under s 66G is discretionary (see, for example, Matsen v Matsen [2008] NSWSC 135 at [57], per Hamilton J; National Australia Bank Ltd v Pasupati [2011] NSWSC 540, at [20], per Buddin J), the courts have declined to offer any comprehensive definition of the kinds of matters which would lead the court to decline to grant such an order. 36However, in Ngatoa v Ford (1990) 19 NSWLR 72, at 75, Needham J noted that in Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068, Myers J had referred to "some proprietary right, or some contractual or fiduciary obligation with which an order for sale would be inconsistent". 37Hamilton J referred to the authorities in Matsen v Matsen, at para [35], at [56]-[64], and also in Turner v Stone [2009] NSWSC 874 at [3]. His Honour added, in Matsen v Matsen, at [62], that "the courts have held that an agreement limiting the manner in which a person may dispose of his or her interest as a co- owner may provide a ground for refusal of an application for an order under s 66G". 38In Tory v Tory [2007] NSWSC 1078, at [42], White J referred to various authorities and said that an order under s 66G "is almost as of right unless on settled principles it would be inequitable to allow the application". His Honour also observed that an application would be refused if making the order would be inconsistent with a proprietary right or contractual or fiduciary obligation or might be refused on the basis of conventional estoppel or equitable estoppel. 39In Ross v Ross [2010] NSWCA 301, at [36], the discretion to refuse relief under s 66G was described as "a limited one". 40In Joseph v Agrey [2011] NSWSC 1601, White J expressed a similar view, saying: "It is only in exceptional circumstances that co-owners are not entitled to an order under s 66G of the Conveyancing Act 1919 for appointment of trustees for sale." 41Also see, Pascoe v Dyason [2011] NSWSC 1217 in which Black J reviewed the authorities. His Honour said: "5. The purpose of this section is 'to provide a mechanism for terminating the co-ownership [of property] where the co-owners themselves cannot agree on how the co-ownership should be determined': P Butt, Land Law , 6 th ed, 2010 at 265. In Callahan v O'Neill [2002] NSWSC 877, Young CJ in Eq observed: 'It is fairly clear that, as a general rule, any co-owner holding at least 50% of a parcel of real property is entitled almost as of right to an order for partition or sale under s 66G of the Conveyancing Act. It is only in situations where it would, under settled principles, be inequitable to permit such an application, including cases where there has been a contract not to make an application that the order may be refused. This appears from cases such as Ngatoa v Ford (1990) 19 NSWLR 72 and Williams v Legg (1993) 29 NSWLR 687.' 6. Although the Court has a discretion whether or not to make an order under this section, the grounds on which the Court will ordinarily refuse to make it are limited. For example, if it is inconsistent with a proprietary right or a contractual or fiduciary obligation, and there is no general jurisdiction to refuse to grant such an order on the basis of hardship or unfairness: Stephens v Debney (1960) 60 SR (NSW) 468; Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068; Ngatoa v Ford (1990) 19 NSWLR 72; Williams v Legg (1993) 29 NSWLR 687; Westpac Banking Corporation v Sansom (1994) 6 BPR 13,790; Woodson (Sales) Pty Ltd v Woodson (Aust) Pty Ltd (1996) 7 BPR 14,685. In Hogan v Baseden (1997) 8 BPR 15,723 at 15,723, Mason P observed that it 'would not be a proper exercise of discretion of the power to decline relief under s 66G ... to refuse an application on grounds of hardship or general unfairness.' His Honour also noted that: '[I]n the unhappy event that the parties are unable to settle their differences then the making of an order appointing trustees for sale seems inevitable unless the respondent could establish a legally binding agreement not to put her out of occupation of her home, or circumstances that would ground some estoppel to similar effect.' (at [59]). 7. In Chalhoub v Chalhoub [2005] NSWSC 572 at [17]- [18], McLaughlin AsJ observed that, where a plaintiff and defendant are registered as tenants in common in equal shares, then prima facie the plaintiff is entitled to relief by way of an order under s 66G of the Conveyancing Act for sale of the relevant property and for the division of the net proceeds of such sale between the plaintiff and the defendant in equal shares. It was for the defendant, who denied the plaintiff's entitlement to such relief, to establish that the legal rights of the parties consequent upon their status as registered proprietors as tenants in common in equal shares were in some way altered by the invocation of equitable rights recognised by a Court of Equity or that there was some other reason why the Court should, in the exercise of the limited discretion reposed in it by s 66G of the Conveyancing Act, decline to make an appointment of statutory trustees for sale of the subject property. 8. In Cain v Cain [2007] NSWSC 623 at [9]- [10], Young CJ in Eq noted that the Court will usually consider it appropriate to make an order under s 66G of the Conveyancing Act unless persuaded by cogent arguments from those who oppose. His Honour then noted Counsel's summary of the categories of cases in which the Court has declined to grant such an order as including: where the legal title is held by trustees and the trust instrument contains its own procedure for sale; where the plaintiff's conduct rates as an estoppel against the sale; and where an order would be incompatible with a contractual or equitable duty binding the applicant. In Tory v Tory [2007] NSWSC 1078 at [42], White J noted that an order under s 66G of the Conveyancing Act 'is almost as of right unless on settled principles it would be inequitable to allow the application', and observed that an application would be refused if making the order would be inconsistent with a proprietary right or contractual or fiduciary obligation or on the basis of conventional estoppel or equitable estoppel. In Spathis v Nanos [2008] NSWSC 418 at [19]- [20], Jagot AJ observed that the discretion was not at large and is not to be exercised by reference to personal views about hardship or unfairness. The Court of Appeal also noted that the discretion to refuse relief under s 66G of the Conveyancing Act was a 'limited one' in Ross v Ross [2010] NSWCA 301 at [36]; see also National Australia Bank Ltd v Pasupati [2011] NSWSC 540 at [20]." 42That case was referred to with approval by Stevenson J in Dixon as Trustee of the Bankrupt Estate of Badillo-Watiwat v Watiwat [2012] NSWSC 402 at [20]. 43Finally, Ball J in Forrest v Nix [2012] NSWSC 493, at [44] noted: "44The general principle is that a co-owner is entitled to an order under s 66G "almost as of right": Callahan v O'Neill [2002] NSWSC 877 at [8] per Young CJ in Eq; Chalhoub v Chalhoub [2005] NSWSC 572 at [17] per McLaughlin AsJ; Tory v Tory [2007] NSWSC 1078 at [42] per White J. However, that statement of general principle is normally restricted to cases where the applicant for an order has at least a 50 percent interest in the property. Moreover, although it is doubtful that the parties can by agreement exclude the operation of s 66G, a court may decline to make an order where the parties have entered into an agreement that binds them to deal with the property in a certain way: Ngatoa v Ford (1990) 19 NSWLR 72; Chalhoub v Chalhoub [2005] NSWSC 572; Tory v Tory [2007] NSWSC 1078." 44The discretion is not to be exercised by reference to personal views about hardship or unfairness: Hogan v Baseden (1997) 8 BPR 15,723, at 15,723, per Mason P; Spathis v Nanos [2008] NSWSC 418 at [20] per Jagot AJ. Furthermore, the party opposing sale has the onus of dissuading the Court from ordering a trust for sale (Woodson (Sales) Pty Limited v Woodson (Australia) Pty Limited (1996) 7 BPR 14,685 at 14,701 per Santow J); Eathorne v Araya-Marvin [2011] NSWSC 782 per Nicholas J at [19]. 45In this case, no evidence going to any matter which would dissuade me from ordering the sale of the Property has been advanced. 46The court has a complete discretion as to who it will appoint to conduct a sale. In Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151; (2005) 219 ALR 692, Young CJ in Eq (as his Honour then was) said at [88]: "A procedure has grown up in connection with sales ordered by the Court. The Court has a complete discretion as to who it will appoint to conduct a sale, being guided by how the Court considers it most beneficial to the estate, though ordinarily the conduct of the sale is given to the plaintiff even though the plaintiff may not have the greatest interest in the property; see eg Dixon v Pyner (1850) 7 Hare 331 ; 68 ER 135; Dale v Hamilton (1853) 10 Hare Appendix 1 vii; 68 ER 1116 and Murray v Geoffroy (1918) 18 SR (NSW) 259." 47In relation to the identity of the trustees for sale, where there is no consent, in Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2006] NSWSC 341, Young CJ in Eq (as his Honour then was) said at [21]: "When deciding upon trustees for sale, where there is no consent, four factors usually need to be considered by the court. These are, in no particular order of importance; (1) the principle that the court tends to prefer the preference of the person with the greater interest in the land. ... (2) the trustees should be independent and as free from conflict of interests as possible. ... (3) the trustees, particularly where they have more active duties than merely to sell a piece of real estate, should have the appropriate skill, expertise and experience; and (4) the court should endeavour to get the best value for the parties' money and see that as between two equally alternative proposals the cheaper is preferred." 48In my opinion, it is appropriate to appoint the trustees sought by the Plaintiff. 49Section 66H of the Conveyancing Act regulates the power of sale. The trustees have all the "ordinary duties and obligations of trustees" (Application of Richard Albarran; Harb v Harb [2010] NSWSC 1251 at [11], per Brereton J) and must comply with the requirements of the section including the requirement to consult all beneficiaries who are 18 years or older and not subject to any legal disability. However, as was said in Harb v Harb at [14],the "requirement that it imposes is one to give effect to the wishes of the beneficiaries or the majority of them by value 'so far as consistent with the general interests of the trust'. Thus, if the wishes of the beneficiaries are inconsistent with the general interests of the trust, the trustee is not obliged to give effect to those wishes". 50The final issue relates to whether an order for possession should be made. Clearly, to enable the sale of the Property, if that occurs, vacant possession will be required by the trustees for sale. There is no suggestion of any person, other than the Defendant, in occupation of the Property. 51No reason has been advanced for not making an order for sale now, although, without opposition from the Plaintiff, I shall allow a period of 29 days for a writ of possession to be executed. 52I am satisfied that the orders sought by the Plaintiff should be made. I shall, without opposition by the Plaintiff, allow one further opportunity to the Defendant to see if she can come to some suitable arrangement with the Plaintiff in order to avoid the costs of the trustees for sale and the costs of sale. It may be possible for her to avoid the writ of possession issuing, but that will be a matter for her to raise with the Plaintiff. In this regard, 21 days should be sufficient. 53Mr Zucker has provided proposed Short Minutes of Order which I have considered. I make the following orders: (a)Order that Kenneth John Fairfax, solicitor, and Timothy Joseph Ring, chartered accountant, be appointed trustees of all the land in Folio Identifier xxxx being Lot xxx in Deposited Plan 246360 at Mount Druitt and known as xxx, Willmot ("the Property") title to which is presently registered in the names of Michael Robert Walsh and the Defendant as tenants in common in equal shares. (b)Order that the Property be vested in the trustees subject to encumbrances affecting the entirety, but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale under Division 6 of the Conveyancing Act 1919 as amended. (c)Order that Orders (a) and (b) be stayed for 21 days. (d)Order that upon sale of the Property, the sale proceeds are to be applied in the following priority: i.Payment to Aussie Mortgages Limited of the amount required to secure discharge of mortgage xxx from Michael Robert Walsh and Sophia Maree Gregory to the mortgagee. ii.In payment of such agent's commission and costs of sale of the Property as the trustees may determine. iii.In payment to the trustees of their fees in such amount as the parties may agree or as the Court determines. iv.In payment to the Plaintiff of the Plaintiff's costs of these proceedings in such amount as may be agreed or assessed. v.In payment to the Plaintiff one half of the balance then remaining to be held by the Plaintiff in the estate of Michael Robert Walsh deceased. vi.In payment to the Defendant of the balance then remaining. (e)An order that the Defendant is entitled to purchase the Property: i.By private treaty at such price as is agreed between the Defendant and the trustees; or ii.By auction and offset, against the purchase price, the share of the proceeds of sale due to her pursuant to order (d)(vi). (f) Grant leave to issue a writ of possession forthwith, but such writ not to be executed until 29 days after the making of these orders. (g)Order that the Plaintiff's costs of these proceedings be paid out of the proceeds of sale as set out in Order (d)(iv). (h)Order that a copy of these Orders be sent by registered pre-paid post to the Defendant at the Property, postage to be no later than 4:00 p.m. on Wednesday, 20 June 2012. (i)Liberty is reserved to the parties and to the trustees to apply to the Court on seven (7) days notice, including to seek the advice of the Court as to distribution and as to the expenses of the trustees or to obtain such further, or other, relief to enable effect to be given to these Orders or the discharge thereof as are considered necessary or appropriate. (j)These orders shall be entered forthwith with the details of the complete title reference and address of the Property and of the mortgage being inserted.

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: 20 June 2012