Simone Starr-Diamond v Talus Diamond

Supreme Court of NSW|2013-04-05|Before: Slattery J, Hoeben JA

Judgment 1This is my third judgment in these proceedings. My principal judgment in the matter was given on 19 June 2012: Simone Starr-Diamond v Talus Diamond [2012] NSWSC 675. My second judgment was given on 20 July 2012: Starr-Diamond v Talus Diamond (No 2) [2012] NSWSC 1650. The second judgment dealt with the form of final orders and costs issues. But the second judgment did not appoint trustees for sale of the Baker's Beach and Ambleside properties in Tasmania. This third judgment now deals with that issue, on the defendant's motion. Persons, matters and things are referred to in this judgment in the same way as they are in my principal judgment and the second judgment. All three judgments should be read together. 2Since the second judgment the plaintiff has commenced proceedings in the Court of Appeal seeking an extension of the stay upon the orders made in my second judgment. Hoeben JA (as his Honour then was) determined the plaintiff/appellant's stay application adversely to her on 12 February 2013: Starr-Diamond v Diamond [2013] NSWCA 7. The defendant now moves the Court for the appointment of trustees for sale of the Tasmanian Properties. The present motion was contemplated by Order 2 of the Court's orders of 20 July 2012. That order provided for a mechanism by which the President of the Law Society of Tasmania would nominate persons suitable to act as trustees for the sale of the Tasmanian Properties. It then provided for relisting of the proceedings for the appointment of trustees for sale, unless there were objections to the trustees so nominated. 3The evidence on this motion makes clear that the Law Society of Tasmania through its President and through its executive director Mr Martyn Hagen made considerable efforts to find suitable trustees to act as trustees for sale in the present circumstances. The Court now formally thanks them for their assistance in this task. That assistance has enabled neutral trustees to be appointed to sell these two properties. 4The defendant also seeks in her motion to have herself appointed to sell the properties. This is not acceptable. Although it might save expense, such a course is unlikely to engender the confidence of both parties and it is likely to risk further conflict between them. The law is clear that the trustees appointed for sale must be impartial as between the co-owners, so much so that it is even regarded as inadvisable for the trustees to engage the same solicitor to act for them as may act for one of the co-owners: Dixon v Roy (1991) 5 BPR 11,655. I will therefore not appoint the defendant to sell the Tasmanian properties. 5Three questions arise for consideration in this judgment: (1) what is this Court's power to order the appointment of trustees for sale in Tasmania; (2) has the defendant established on the motion the requisite elements for the appointment of the trustees for sale; (3) should any special terms be included in the orders that the Court makes.

(1) The Court's power to make orders over Tasmanian property 6Courts in all Australian states and territories have well-established jurisdiction to make orders in respect of land outside the state and in accordance with the law of the state or territory where the land is situated. This jurisdiction is conferred in this State under Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) s 4(3) which is relevantly in the same terms as the Tasmanian Act of the same title. This legislation is part of an interacting legislative scheme involving all the States and Territories of Australia. This legislative scheme and in particular Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) s 4(3) has been used to make orders in respect of land in other states on many occasions: see for example Equus Financial Services Ltd & Anor v RMBL Investments Pty Ltd (1996) 22 ACSR 744 at 745. The scheme is supported with respect to the sale of land in NSW by the Jurisdiction of Courts (Foreign Land) Act 1989 (NSW) s 3 which abolishes the Mozambique rule (British South Africa Co v Companhia de Mocambique [1893] AC 602, 625. Lord Herschel LC 629) within this state. 7The interacting scheme works in accordance with the command of Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) s 4 which provides "the Supreme Court of another state or a territory has and may exercise original and appellate jurisdiction with respect to state matters." Because these parallel provisions in both the Tasmanian and NSW legislation this Court may make orders in respect of "state matters" which include making orders under Tasmanian legislation to appoint trustees for sale. 8Tasmanian legislation for the appointment of trustees for sale parallels NSW legislation and creates the statutory trusts for sale. In Tasmania the equivalent of Conveyancing Act (NSW) 1919 s66G is the Partition Act 1869 (Tas) s 3, 5 and 7 which provide as follows: 3. In partition action Court may order sale instead of division An action for partition, where, if this Act had not been passed, an order for partition might have been made, then, if it appears to the Court that by reason of the nature of the property to which the action relates, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of some of those parties, or of any other circumstances, a sale of the property and a distribution of the proceeds would be more beneficial for the parties interested than a division of the property between or among them, the Court may, if it thinks fit, on the request of any of the parties interested, and notwithstanding the dissent or disability of any others of them, direct a sale of the property accordingly, and may give all necessary or proper consequential directions. 5. As to purchase of share of party requesting sale (1) In an action for partition, where, if this Act had not been passed, an order for partition might have been made, then, if any party interested in the property to which the action relates requests the Court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the Court may, if it thinks fit, unless the other parties interested in the property, or some of them, undertake to purchase the share of the party requesting a sale, direct a sale of the property, and give all necessary or proper consequential directions. (2) Where such undertaking is given, the Court may order a valuation of the share of the party requesting a sale in such manner as the Court thinks fit, and may give all necessary or proper consequential directions. 7. Application of Trustee Act 1898 Section thirty-nine of the Trustee Act 1898 shall extend and apply to cases where, in actions for partition, the Court directs a sale instead of a division of the property. 9In my view these provisions fully authorise this Court to make the orders sought on the motion. If any of the Court's present orders need enforcement in Tasmania one means to achieve that is provided under the Service and Execution of Process Act 1992 (Cth) s 105, which allows for the enforcement of judgments given in one State in another State by a process of registration. Once this judgment is registered in the Supreme Court of Tasmania it is enforceable as such a registered judgment, should that be required.

(2) Is the evidence on the motion sufficient? 10The plaintiff did not attend the hearing in person. I decided to proceed with the hearing in her absence. The affidavit evidence of Mr Hodges and the tendered email my associate sent to the plaintiff on 2 April 2013, all indicate that the plaintiff had clear email notice at her usual email address of the defendant's motion and that the hearing would take place this morning at 9.30 am. 11A facility was provided to her to attend the hearing by telephone. The Court rang her telephone number three times between 9.35 am and 9.50 am. But only the phonecalls only encountered the plaintiffs' recorded message service. It was clearly her telephone number. The hearing went on without her. 12In my view the defendant has made out a case on the motion for the appointment of trustees for sale. Such an outcome was already contemplated by my orders of 12 July 2012. 13The plaintiff and the defendant are co-owners of the Ambleside Property and the Baker's Beach Property. They cannot agree upon the partition or sale of these properties. The Court has been given the necessary consents to act as trustees for sale from two solicitors in the local area near the two properties. Their evidence shows that they are Australian legal practitioners admitted to practice in the State of Tasmania and by reason of those qualifications are fit and proper persons to be trustees. They are Anthony James Mihal and Eleanor Esme James. They have practised together in partnership as solicitors in northern Tasmania. I see no reason not to appoint them as the trustees for sale. But there are issues concerning the terms of their appointment.

(3) Some specific terms in the orders 14I note from the evidence adduced that the proposed trustees Mr Mihal and Ms James ("the trustees") have asked a number of questions in their letter of 15 January 2013 about the administration of their proposed trusteeship under the statutory trusts for sale. Some of those questions may conveniently be dealt with in some observations from the Court. 15The trustees want to sell the Baker's Beach Property first. There is no reason why they should not do so. As they are being appointed to sell more than one property this ordering of the sales of the two properties has been specifically provided for in the Court's orders, as has a mechanism to defer the distribution of half the proceeds of sale of the Baker's Beach Property, so they may be invested into preparing the Ambleside Property for sale. 16I note that the Amberside Property is said presently to be uninsured. But these orders operate from today. It is clearly in the interests of all parties that the Ambleside Property be insured, if it can be insured, as soon as possible. Counsel for the defendant Ms Sinclair, has pointed out that the Ambleside property may be difficult to insure while it is unoccupied. The best course in my view is to require the Ambleside Property to be sold within about 10 months, that is by 31 January 2014. But the trustees will have to approach the Court in the unlikely event that they need to extend that time. This will give the trustees the flexibility to sell in the most suitable market. It will also allow the trustees to lease or licence the property, subject to the application of the Trustee Act 1898 (Tas), pending sale within that 10 month period, which may assist the capacity to insure the property. 17The trustees are concerned about their authority to dispose of chattels left in the Ambleside Property. The orders made below require the parties to give possession of the property to the trustees by 5.00pm on 26 April 2013. After that date if any chattels remain in the property they may be disposed of by the trustees in accordance with the general law of Tasmania. The trustees may also need to secure the property to discharge their obligations to preserve it; they may need to change the locks and take other protective steps for this purpose. 18The trustees have also raised an issue concerning the personal liability in executing the statutory trusts for sales. It seems to me that this just a matter for the general law. A trustee has a right to resort to and apply trust funds for the discharge of liabilities incurred in the authorised conduct of the trust: Octavo Investments Pty Ltd v Knight (1979) 144 CLR 360 at 371. Moreover, multiple beneficiaries of a trust who are sui juris and absolutely entitled may also be personally liable to indemnify a trustee for liabilities properly incurred: see Balkin v Peck (1998) 43 NSWLR 706. 19The trustees seek an order that their firm be engaged to act for them. I will not order that but I will authorize that course in these orders. The parties will no doubt receive copies of the costs disclosures and have their rights under the applicable costs legislation. 20Finally, the orders sought by the defendant on the motion would have permitted the defendant simply to deduct her unassessed costs from the proceeds of sale. I will not permit that to occur unless those costs have been agreed or otherwise assessed. But in light of the apparent impecuniosity of the parties and the financial prejudice to the defendant from seeking a full assessment this is a situation where the Court should in my view consider the making of a lump sum costs order on the basis of limited materials indicating the costs that the defendant has incurred. Such orders can be made under Civil Procedure Act 2005 s 98(4)(c) before costs are referred for assessment and commonly are in situations such as this: Harrison v Schipp (2002) 54 NSWLR 738. I will grant liberty to the defendant to file a motion for this purpose returnable before me. This has also been included in the orders. 21The defendant asks for the costs of her motion today. The defendant has been successful and costs should follow the event.

Orders 22The Court: 1.Orders that ANTHONY JAMES MIHAL of Turners Beach, Tasmania and ELEANOR ESME JAMES of Forth Tasmania, be appointed trustees ("the Trustees") of the following properties: (a) the Ambleside Property in Tasmania and (b) the Baker's Beach Property in Tasmania. 2. Orders that the said properties be vested in the Trustees subject to any encumbrances affecting the entirety and free from any encumbrances affecting any undivided share or shares therein to be held by such trustees upon the Statutory Trust for sale before 31 January 2014 under the Partition Act 1869 (Tas) and the Trustee Act 1989 (Tas) s 39, pursuant to the Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) s 4 3. Orders in accordance with the following (A-H): A. The plaintiff shall surrender the Certificates of Title of the Ambleside Property and the Baker's Beach Property and the keys to Ambeside Property to Walsh Day James Mihal Pty Barristers and Solicitors of Walsh Day James Mihal Pty Barristers and Solicitors of Ulverstone, Tasmania to act as the Solicitors on the sale ("the Solicitors") by 5.00 pm on Friday, 26 April 2013. B.The parties shall by 5.00pm on Friday, 12 April 2013 attempt to agree upon a fair market price for the Trustees to sell each of the Tasmanian Properties and in default of such agreement, the fair market value of the Tasmanian Properties shall be determined by a licensed real estate valuer appointed by the Trustees' and such valuer's professional fees and disbursements shall be paid out of the proceeds of sale of the Tasmanian Properties. C.To ensure the orderly sale of the Tasmanian Properties each of the plaintiff and the defendant is hereby restrained from contacting any selling agent of the Tasmanian Properties. D.The Trustees may not, without the leave of the Court, sell either of the Tasmanian Properties for a price lower than its fair market value as determined by the valuer appointed pursuant to the mechanism in order 3B. E.The Trustees shall be entitled to sell the Baker's Beach Property prior to the Ambleside Property provided that (i) one half of the proceeds of sale of the Bakers Beach Property is applied for cleaning and maintenance and to pay other expenses and outgoings related to maximising the sale price of the Ambleside Property and to secure payment of the fees of the trustees, and further provided that (ii) the other half of the said proceeds can be distributed immediately upon the sale of the Bakers Beach Property in accordance with Order 3F below, and thereafter any balance of monies remaining upon the sale of both of the Tasmanian Properties may be distributed in accordance with order 3F below. F.Upon completion of the sale of the Baker's Beach Property which may occur before the sale of the Ambleside Property and after adjustment for outgoings, legal fees and disbursements, selling fees and commission and other expenses relating to the sale of the property, the net proceeds of sale shall be divided equally between the parties after satisfying any costs orders made in these proceedings, which costs orders have resulted in a judgment for a fixed amount of costs in the proceedings after either agreement or assessment. G.Upon completion of the sale of the Ambleside Property and after adjustment for outgoings, legal fees and disbursements, selling fees and commissions and other reasonable expenses relating to the sale of such property, the net proceeds of sale shall be divided equally by the parties after the reimbursement to the defendant in the sum of $120,000, such sum being in respect of the interest payments made by her to conserve the property and after satisfying any costs orders made in these proceedings, which costs orders have resulted in a judgment for a fixed amount of costs in the proceedings after either agreement or assessment. H.Note that neither party is prohibited from bidding for the purchase of either of the Tasmanian properties, provided that any such bids must be lodged in writing with the trustees at their business address recorded in order 3A. 4. Orders that the plaintiff give possession of the Ambleside Property by 5.00pm on 26 April 2013 to the trustees, to allow the Ambleside Property to be prepared and marketed for sale. 5. Notes that the trustees propose to engage Walsh Day James Mihal Pty Barristers and Solicitors of Ulverstone, Tasmania to act as the Solicitors on the sale ("the Solicitors"), and authorizes that course provided regular costs disclosures are provided to the plaintiff and the defendant by the trustees. 6. Orders that to the extent to which either of the parties provide money either to the Trustees or to the selling agent or to the Solicitors to cover holding costs or costs of the sale, such monies are to be separately reimbursed from the proceeds of sale, together with any unpaid costs, and expenses and outgoings including rates, strata levies and taxes and the balance of the proceeds of sale of the property is to be distributed to the parties in accordance with Orders 3F and G. 7. Orders that the costs and disbursements of the Trustees of the sale of the two properties be deducted from the net proceeds of sale prior to distribution to the parties. 8. Each party and the trustees to be at liberty to apply on 7 days' written notice. 9. Grants liberty to the defendant to move the Court for the making of a lump sum costs order under Civil Procedure Act 2005 s 98(4). 10. Order that the plaintiff pay the defendant's costs of the present motion for appointment of trustees for sale.

Amendments 17 June 2013 - correct citation for second judgment - replaced 2013 with 2012 Amended paragraphs: 1 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: 17 June 2013

Trustee Act 1989(Tas)s 39, pursuant

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (6 paragraphs)

Parties

Legislation Cited (7)

Cases Cited (7)