Purser v Purser

Supreme Court of NSW|2024-05-15|Before: Peden J, White J, Bell P, Basten J

Ex Tempore JUDGMENT - revised

These proceedings concern a property in Glen Davis in New South Wales. The plaintiff, Laura Purser, and the defendant, Glen Ian Purser, are the co-owners of the property, holding as joint tenants. They are husband and wife. Ms Purser seeks orders under s 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees for sale of the property.
The property was purchased by the parties in around 2014 and is subject to a registered mortgage in favour of Sydney Mutual Bank Ltd. As at 30 October 2023, around $88,000 was owing under the mortgage, and the mortgage repayments were in arrears. In September 2023, a caveat was lodged over the property by Southern Steel Supplies Pty Ltd. That company claims to have a charge over the property pursuant to a deed of guarantee.
Ms Purser deposes that she is concerned that Mr Purser has been dealing with the property without consulting her. Her evidence is that Mr Purser has refused her suggestion that the property be sold to discharge the debt secured over the property, and that she and her husband are unable to work together to manage and maintain the property.
In December 2023, Ms Purser commenced these proceedings.
On 2 April 2024, Mr Purser filed an appearance in these proceedings. On 9 May 2024, however, he filed a submitting appearance pursuant to which he submitted, "To the making of all orders sought save as to the costs order in favour of the plaintiff sought in para 9 of the summons."
By paragraph 9 of the summons, Ms Purser sought an order that the costs of the summons, including the trustees' costs, be paid on an indemnity basis from Mr Purser's share of the net proceeds of sale. However, Ms Purser has since decided to seek different orders to those in paragraph 9 of the summons, so that she now seeks the following to be paid from the proceeds before distribution to the parties: 1. Trustees' fees in an amount determined by the parties or the Court; and 2. Her costs on an indemnity basis.

Principles of s 66G

Section 66G(1) reads: 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.
There is no doubt the parties here are co-owners as defined in s 66F(1) of the Conveyancing Act. However, they hold as joint tenants, and the joint tenancy has not been severed. Orders made under s 66G for the appointment of trustees will not have the effect of severing a joint tenancy: see s 66G(7).
The principles which apply on an application under s 66G are well established. They were summarised by White J, Bell P and Basten J agreeing in Foundas v Arambatzis [2020] NSWCA 47 at [63] as follows: Although an order under s 66G is discretionary, such an order is almost as of right, unless on settled principles it would be inequitable to make the order. An order may be refused if the appointment of trustees for sale would be inconsistent with a proprietary right, or the applicant for the order is acting in breach of contract or fiduciary duty, or is estopped from seeking or obtaining the order (Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068 at 1068; Ngatoa v Ford (1990) 19 NSWLR 72 at 77; Williams v Legg (1993) 29 NSWLR 687 at 693; Hogan v Baseden (1997) 8 BPR 15,723 at 15,726-15,727; Tory v Tory at [42]). Hardship or general unfairness is not a sufficient ground for declining relief under s 66G (Hogan v Baseden (1997) 8 BPR 15,723 at 723; Ferella v Official Trustee in Bankruptcy at [36]-[40]).
As noted above, Mr Purser has submitted to orders for the appointment of trustees for sale. No reason has been put forth which points against the orders being made. As such, there is no basis for a finding that it would be inequitable or contrary to any contractual arrangement to order the sale.
The plaintiff has, in compliance with s 66G(3)(a), nominated two trustees. The nominated trustees are Kevin Emanuel and Stephen Flynn, both of whom are lawyers with Higgins Lawyers. The appointment of trustees for the purposes of s 66G is a matter of the Court's discretion. Some of the relevant considerations which inform the exercise of that discretion were summarised by Young CJ in Equity in Arrow Custodians Pty Ltd v Pine Forests of Australia Pty Ltd [2006] NSWSC 341 at [21].
Both trustees have affirmed affidavits consenting to appointment and deposing to their fitness. I also have regard to the affidavit of fitness by Ross Higgins, solicitor, who indicates in his opinion both proposed trustees are fit and proper persons to be appointed as trustees for the sale of the property. I consider the proposed trustees are appropriately qualified to conduct the sale where their duties are limited to the sale of the property.
The proposed trustees give evidence of their hourly rates but not their expertise. Mr Emanuel charges $550 per hour plus GST, and Mr Flynn charges $300 plus GST. I do not consider those hourly rates exorbitant. However, as is often the case, I consider it appropriate for the Court to impose a cap on costs in the first instance to be incurred by the trustees and to give the trustees liberty to apply to increase that cap if appropriate: see, eg, McLaughlin v Cunningham [2023] NSWSC 350 at [150].
Ms Purser submits that her costs of the proceedings should be paid out of the net proceeds of sale on an indemnity basis. As noted, Mr Purser filed a submitting appearance in respect of all orders save for the indemnity costs order sought at para 9 of the summons. In those circumstances, Ms Purser submits that the order for indemnity costs which is sought should be provisionally made, with Mr Purser being afforded an opportunity to file and serve submissions on the question of the appropriate costs order if he sees fit.
In terms of the costs order being sought by the plaintiff, she bears the onus to satisfy the Court that it is appropriate to depart from the usual order and award costs on an indemnity basis. The principles which apply to costs in s 66G proceedings were set out by Darke J in Stibbard-Leaver v Leaver [2021] NSWSC 65 at [5]: in litigation of this type under s 66G of the Conveyancing Act, it is usual to order that the costs of the proceedings be paid out of the proceeds of sale. The rationale for this approach is that the costs of such an application are an incident of joint ownership (see Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28]). It remains the case of course that unreasonable conduct by a party may be a basis to conclude that some other order is appropriate in a s 66G case. Lewin v Lewin [2019] NSWSC 380 is an example. In that case, it was held that certain unreasonable conduct led to an unnecessary incurring of costs. However, as I noted in that case (at [41]), a co-owner is ordinarily under no obligation to seek to avoid a need to bring a s 66G application (see also Chow v Chow (No 2) [2015] NSWSC 1348 at [12] where it was stated by Young AJA that co-owners have no obligation to negotiate their dissolution).
As those observations make clear, the mere fact that Ms Purser has needed to bring a s 66G application to compel the sale of the property does not suffice to justify an indemnity costs order. For such an order to be made, it must be established that the plaintiff has incurred unnecessary costs as a result of unreasonable conduct on the part of Mr Purser. Here, the question is whether it was unreasonable for Mr Purser to file an ordinary appearance in these proceedings and then shortly thereafter file a submitting appearance save as to costs.
Further, there is a question of whether this conduct caused Ms Purser to incur unnecessary costs. There is no evidence or submission to that effect. Further, Ms Purser has in fact changed her position in relation to costs. As indicated, because the joint tenancy has not been severed, it will be necessary for the Court to, in due course, consider the appropriate division of the net proceeds, in relation to which Mr Purser may have something to say. However, Ms Purser had sought the Court to determine on the application the division of the proceeds.
Therefore, I do not accept it is appropriate to make an order that Ms Purser's costs are paid from the net proceeds on an indemnity basis, however, I will afford both parties an opportunity to agitate for a different form of order if so advised.
Further, as accepted in oral submissions by Ms Hill for Ms Purser, because the joint tenancy has not been severed it will be necessary for the Court to determine the appropriate apportionment of the proceeds of sale, should the parties not agree.

Conclusion

With regard to the foregoing, the appropriate orders will be made in accordance with the amended short minutes of order that have been proposed by Ms Purser, as follows: 1. An order pursuant to section 66G of the Conveyancing Act 1919 (NSW) that Kevin Louis Emanuel of Level 3, York Street, Sydney, 2000 in the State of New South Wales and Stephen Flynn of 1 Lovejoy Street, Mudgee, 2850 in the State of New South Wales be appointed as Trustees of the land known as and situate at 399 The Gullies Road, Glen Davis 2846 in the State of New South Wales, being the whole of the land comprised in Certificate of Title Folio Identifier 12/249567 (the Property). 2. An order that the Property be vested in such Trustees subject to any incumbrances affecting the entirety of the Property but free from incumbrances, if any, affecting any undivided share or shares therein to be held by the said Trustees upon the statutory trust for sale under Division 6 of Part IV of the Conveyancing Act 1919 (NSW). 3. An order that the parties be at liberty to purchase the Property, whether at auction or by private treaty from the Trustees. 4. An order that any sale by the Trustees may be made to any of the parties either as a result of sale at auction or by private treaty without the requirement of the payment of a deposit and upon such terms as to the payment of the balance of the purchase price as to the Trustees appears appropriate. 5. Upon the sale of the Property, the proceeds are to be applied in the following order of priority: 1. In payment and discharge of all mortgages and other encumbrances registered on the title to the said land; 2. Council rates, water rates, any statutory duties and charges; 3. Payment of any agent's commission and other costs of sale; 4. Payment of the Trustee's fees capped at $5000.00 plus GST; 5. Payment of the Plaintiff's costs of these proceedings. 1. An order that the Trustees be at liberty to apply concerning the operation of these Orders. 2. An order that, if any party contends for an order as to the costs of these proceedings other than as pursuant to Order 5e above, is to file and serve within 7 days a document of no more than 3 pages setting out the terms of the costs order sought and that party's submissions in support of the costs order sought. 3. An order that any party wishing to respond to submissions filed and served in accordance with order 7 above shall file and serve their written submissions in response of no more than 3 pages within 7 days after filing and service of the submission responded to. 4. If the parties cannot agree on division of the net proceeds of sale then each party is to file and serve any evidence and submissions of no more than 3 pages within 14 days of these orders. 5. The issue of any alternative costs order and the appropriate division of the net proceeds will be dealt with on the papers if appropriate or listed for directions at the Court's discretion.

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: 22 May 2024

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