The Applicant purchased the property for one sole reason - monetary benefit. The Applicant has no intention of residing in the property. Apart from the initial rates arrears payment the Applicant has not paid the rates or contributed to the maintenance the property (including cutting the grass, removing rubbish or pay for any repairs or replacement of fixtures).
I accept that the Respondent and his wife purchased the property in 1989 for $83,000 and that the property value (as a whole) in 2001 was approximately $142,000.
Mr Robbie proferred no reason for sale of the property at this stage other than he thought that it was a suitable time. There was no suggestion on his part of any desperate need for money or any obligations he had to meet.
Mr Fitzpatrick is a disability pensioner. He suffers from acute depression and anxiety due to a nasty episode which occurred on 27 November 1990 when he lost his life savings through an armed robbery. He stated that he has never recovered from the episode. Mr Fitzgerald receives $530 per fortnight by way of pension as does his wife. Half of their combined savings go to pay the off Commonwealth Bank mortgage. According to Mr Fitzpatrick they have never "missed a beat" in that respect. The rest of their pension is consumed with living expenses. The Fitzpatricks have resided at the property for 21 years.
If the property is sold Mr and Mrs Fitzpatrick are faced with the prospect of never being able to own their own home again and being forced to attempt to rent a property in what is currently a tough rental market. The Fitzpatricks have no family who can offer them accommodation.
The real estate agent called to give evidence for the Applicant has never entered inside the boundary of the property and his estimates of value of the property are based simply on knowledge of the area. The agent had no real idea of the size of the property or indeed its internal condition.
Mr Robbie gave evidence that he spoke to a local solicitor in Thomastown who was prepared to act in the conveyance and as a trustee in division of the sale proceeds. No letter consenting to act was submitted nor any estimate of fees provided.
Mr Robbie purchased the property in a different name to his full correct name; using his middle name as his Christian name and a business address as his address. He swore on oath that he had spoken to the Law Institute and that they had no difficulty with his conduct in that respect.
There are no caveats lodged on the title by Mrs Fitzpatrick claiming any interest in the land on any basis. Both Mr and Mrs Fitzpatrick live together as husband and wife with Mrs Fitzpatrick her husband's carer.
Mr Fitzpatrick was in the witness box a person who was clearly shattered and decimated by this proceeding. It is clearly for him a significant life impacting situation.
There is no correspondence from the current mortgage obtained by the Applicant as to what is currently outstanding on the mortgage; although evidence was given by Mr and Mrs Fitzpatrick that they owe $23,000 (approximately). It would appear that the mortgagee has no notice of Mr Robbie's intention to sell the property (despite there being a requirement under s225(3) of the Property Law Act1958 that this be given).
[2]
I accept Mr Lithgow's submission that the Part IV of the Property Law Act replaced the old law under which it was compellable to make co-owners partition the property. The Part IV provides a comprehensive situation with respect to co-owned land and sets out the manner of sale, the mechanics of the sale and the division of proceeds including if appropriate the necessity to account.
Section 228(1) of the Property Law Act states that may (my emphasis) make any order it things fit to ensure (my emphasis) a just and fair sale or division of land etc.
(1) In any proceeding under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs.
[5]
(a) the sale of the land or goods and the division of the proceeds of sale among the co-owners; or
[6]
(b) the physical division of the land or goods among the co-owners; or
[7]
(c) that a combination of the matters specified in paragraphs (a) and (b) occurs.
[8]
Section 228(2) of the Property Law Act states that "without limiting VCAT's powers" VCAT may order and then it provides three options:
[9]
Namely sale of the land and division of the proceeds among co-owners;
2. Physical division of the land or goods among the co-owners; or
[10]
Importantly this sub section grants VCAT additional powers apart from either sale or physical division.
[11]
Section 229(1) empowers the tribunal to make other orders other than a sale and division of land, because the first part of that sub section is premised on the notion that if VCAT makes the order.
The Tribunal is given a broad direction as to what considerations it should take into account in respect to what the Tribunal can order. The criteria has to be what is just and fair. Section 232 even does not limit the orders that VCAT can make in respect to matters of this nature by again using the word "may".
The Property Law Act is silent as to what other remedies are open for VCAT to consider.
[12]
As Mr Lithgow observed, the Applicant acquired a share in the property for a ridiculously low figure. His share of the property is recognized and protected. Mr Robbie in evidence has indicated that he was in the business of acquiring these sort of properties in the same situation (with a partner). The property cannot be regarded as a liquid investment but nonetheless is an investment. It is not as Mr Lithgow described it "like cash in the bank". Mr Robbie has taken no steps to advertise the property for sale or sell to anyone his interest in the property. He has simply at this stage attempted to force Mr Fitzpatrick to either buy his interest or sell the property without any effective notice or reasoned and proper discussion.
The decision made by Mr Robbie to seek a sale was virtually made without notice particularly after so many years of total inaction by him. Given the current financial predicament of the Respondent it at this stage leaves the Respondent with absolutely no room to manoeuvre at this stage.
The hardship suffered by the Respondent and his wife will be severe, extreme and life changing. Any decision to sell the property would be absolutely totally detrimental to them.
The Applicant has issued this application in haste and without full and proper regard to all issues that need to be addressed before VCAT;
[13]
the Applicant has not obtained a proper formal valuation of the property;
2. the Applicant has failed to provide proper or sufficient notice to the current mortgagee of the property
[14]
the Applicant has not obtained any real consent in writing of a solicitor to act both in respect to the conveyance and also as a trustee but a mere verbal indication;
[15]
No proper inspection has occurred of the property by the Applicant or any other party;
2. The Applicant's representative after being reminded by the Tribunal asked the real estate agent his commission charges and fees. Nothing has been fixed or quoted in writing by this agent;
3. Ensuring his name was correct on the Certificate of Title.
Overall the Applicant's conduct in respect to preparation is poor and the attention to detail scant. It seems the focus has been simply to pressurise the Respondent through correspondence and the issuing of these proceedings.
[16]
There is no suggestion on the evidence by any party that the sheriff at the auction of the property put any reserve on Mrs Fitzpatrick's interest in the property.
There is no issue between the parties that the value of the property at the time of the sheriff's auction was $142,000 with the mortgage to the Commonwealth Bank being $47,300.13, there being a net equity of $94,699.87. Dividing that net equity by two means that at the time of sale there was an equity for Mrs Fitzpatrick of $47,349.94. Mr Robbie purchased that interest for $5,500.00. The net gain for Mr Robbie at that stage was a massive $41,849.94.
Order 69 of the Civil Procedure Rules in Victoria requires that the sheriff is bound to act with due diligence and is under a duty to get as good a price is reasonable in the circumstances. The bid which the sheriff accepts must bear a fair relationship to what is sold and unless ordered by the court to do so, the sheriff ought not to sell at an unreasonably low price. A sale at a gross undervalue may be set aside. Here clearly all of the evidence as to the sale was not put into evidence. The disparity between the purchase price and Mrs Fitzpatrick's equity in the property is large. Time has also passed with respect to the sale. These things are not matters I am able to deal with, but are factors to be taken into account when deciding the orders to be made.
[17]
The Applicant has failed to produce all necessary material and proper evidence to support his application seeking sale of the property. It is incumbent upon the Applicant to do this. On that basis alone I strike out the Applicant's proceeding but give the applicant liberty to renew on proper material.
Additionally it is inherent in the legislation that the sale or physical division of property between co-owners be on a just and fair basis. This on my view would include all aspects antecedent to any VCAT application, including proper and realistic discussion between the parties, notification to the mortgagee, considering options available to the parties and consideration of all non parties' interests (including spouses) that those steps clearly have not occurred. The legislation in my view is not meant to favour opportunism. On this basis I would decline to make an order in respect to the sale of the property at 21 Valentine Avenue Thomastown.
Parties
Applicant/Plaintiff:
Robbie
Respondent/Defendant:
Fitzpatrick
Legislation Cited (1)
Law Act 1958
Cases Cited (1)
Robbie v Fitzpatrick (Real Property) [2010] VCAT 959 (8 June 2010)