Strange v Turnbull; McKenzie v Turnbull

Solicitors: Aptum Legal (Plaintiffs) Cole & Butler (Defendant) File Number(s): 2015/183692; 2017/229368

REVISED Ex Tempore Judgment

1. HIS HONOUR: These matters come before me as the Duty Judge in the form of two notices of motion for hearing filed on 24 December 2020 by the plaintiffs and another by the defendant on 21 January 2021.
2. The background to the matter, insofar as it is relevant to this hearing, is that on 29 July 2014, Glendon Turner, who was the partner of Alison McKenzie, was murdered by Ian Turnbull (now deceased), who was the defendant's partner. Mr Turnbull was convicted of murder, the circumstances of which are set out in the remarks on sentence by Johnson J: R v Turnbull (No 26) [2016] NSWSC 847. Mr Turner was in the company of a work colleague, Robert Strange, at the time of his murder.
3. Proceedings were commenced in the Common Law and Equity divisions of this Court by Mr Strange and Ms McKenzie, the latter doing so on her own behalf and as tutor for the two children of her relationship with Mr Turner.
4. In 2018, the proceedings were settled by way of Deeds of Settlement and Release, which took effect from 15 November 2018. The Deeds of Settlement provided that Mr Strange would be paid the sum of $1,750,000 and Ms McKenzie the sum of $2,500,000. The amounts were to be paid on or before 30 June 2020 from the net proceeds of sale of three rural properties in the Moree area.
5. The defendant acknowledged and agreed that if these settlement sums were not paid on or by that date, the plaintiffs would have liberty to enter judgment in the Common Law proceedings in the agreed sums, together with pre-judgment interest, pursuant to s 100 of the Civil Procedure Act 2005 (NSW) from 15 November 2018 until the date of judgment.
6. In a letter dated 19 June 2020, Mr Sylvester Joseph, of the firm Cole and Butler Solicitors, wrote to the solicitors for the plaintiffs advising that the sale of the properties had yet to be finalised due to the impact of the ongoing drought on the saleability of the properties, in combination with the impact of the COVID-19 pandemic on the economy generally.
7. Mr Joseph stated: "… it is envisaged that a settlement of a sale of our client's properties will likely occur towards the end of this year…Accordingly, our proposal is for parties to mutually agree to an extension of time for the payment of the settlement sum to on or about 31 December 2020 and all other terms of the deed remaining as they are."
8. By letter dated 3 July 2020, solicitors for the plaintiffs responded, seeking certain information in relation to a number of matters concerning the marketing of the properties and details of the proposed sale and the purchaser. In a letter dated 15 July 2020, the solicitors for the plaintiffs again sought further information in relation to any proposed sale and sought a response by 22 July 2020. It is asserted by the plaintiffs that they did not receive a response to either letter.
9. Judgment was registered against the judgment debtor, the defendant, in both matters on 29 September 2020. In affidavit evidence read before me, Mr Joseph stated that he had several telephone conversations with counsel for the plaintiffs at that time, as well as with counsel's instructing solicitor on that date. He stated that in those conversations, he informed counsel that the defendant had executed contracts for sale for the properties and that settlement was scheduled to occur on 17 December 2020.
10. On 19 October 2020, solicitors for the plaintiffs wrote to Mr Joseph stating that they were interested in exploring a possible resolution of the dispute and that they would consider any reasonable proposal put by Mr Joseph's clients to avoid the time and expense associated with enforcing the judgment debts. They stated: "Any proposal would need to include the following: (a) disclosure of any sale contracts for properties owned by your clients; (b) a binding proposal to satisfy payment of the judgment debt that would include a schedule for payments expressly linked to the proceeds derived from the sale of any properties; (c) security for the payment proposal in the form of security over each property and over the proceeds of sale for those properties that are currently the subject of a contract for sale." No response was received to this letter.
11. On 24 December 2020, Cavanagh J heard two notices of motion filed by each plaintiff on ex parte bases, seeking freezing orders in relation to any proceeds from the sale of one or more of the relevant properties. The orders sought by one of the plaintiffs, Ms McKenzie, included the following: "With respect to the Judgment Debtor 4 The Judgment Debtor is not to dissipate any of the sale proceeds, or further dissipate any such proceeds, received with respect to the sale of the real property known as 'Erralee' being the land contained in folio 11/1017699 (the Sale Proceeds). 5 The Judgment Debtor is not to dissipate any other sale proceeds, or further dissipate such proceeds, received, or receivable, with respect to any sale of any other real property (other Sale Proceeds). 6 At or before a date to be fixed by the Court, the Judgment Debtor is to inform the Judgment Creditor in writing of the bank account details where the Sale Proceeds, and or the Other Sale Proceeds, are held on account and the remaining balance(s) together with production of account statements or verified account transaction records. 7 At or before a date to be fixed by the Court, the Judgment Debtor is to inform the Judgment Creditor in writing of the settlement date of any other contracts for the sale of interests in real property. 8. The Judgment Debtor must not remove from Australia, or in any way dispose of, deal with or diminish the value of the Judgment Debtor's assets in Australia, held beneficially or otherwise, so that the collective net unencumbered value does not fall beneath $3,233,238.71."
12. The orders sought by the other plaintiff, Mr Strange, were identical, except for the value stated in order 8. Order 8 of Mr Strange's notice of motion read as follows: "8. The Judgment Debtor must not remove from Australia, or in any way dispose of, deal with or diminish the value of the Judgment Debtor's assets in Australia, held beneficially or otherwise, so that the collective net unencumbered value does not fall beneath $2,773,321.31."
13. His Honour delivered an ex-tempore judgment: Strange v Turnbull; McKenzie v Turnbull [2020] NSWSC 1923. The background to the application, as set out in his Honour's judgment, was that, not having received a reply to their correspondence, enquiries made by the plaintiffs established that one of the three affected properties was no longer owned by the defendant. Numerous attempts to communicate with Mr Joseph and his firm following the discovery had also gone unanswered.
14. His Honour made an interim freezing order in relation to the proceeds of sale of the property that had been sold and any other sale proceeds from the sale of any other affected property, initially until 30 December 2020. On that date, his Honour extended the orders until 8 January 2021: Strange v Turnbull; McKenzie v Turnbull (No 2) [2020] NSWSC 1924.
15. The matter came before Campbell J on 8 January 2021. Mr Joseph appeared for the defendant. His Honour continued the interim freezing orders that had been made by Cavanagh J and directed that the matters be stood over for hearing to 22 January, before the Duty Judge, as to whether the orders should be further continued. His Honour ordered that the defendant was to file and serve any affidavit upon which they proposed to rely by 15 January 2021.
16. Two affidavits were filed, both sworn by Mr Joseph, on 20 January 2021 and 21 January 2021. A notice of motion was also filed on 21 January 2021 seeking the following orders: "1. That the Notice of Motion be made returnable before the Duty Judge on 22 January 2021. 2. Time for service of the Notice of Motion and the Affidavit in support be abridged to 5:00 pm on 20 January 2021 and such service be by way of email to Ms Elaine Stops, Mr Mark Walter and Ms Eileen Nguyen of the firm of the solicitors named 'Aptum'. 3. Pursuant to section 136 of the Civil Procedure Act 2005, the Court order a stay of enforcement of the Judgment entered in favour of the Judgment Creditors on 29 September 2020 for 12 months pending the settlement of the sale of the properties known as 'North Yambin' and 'Buckie'. 4. Mrs Robeena Turnbull is not to dispense with any of the net sale proceeds of the properties 'North Yambin' and her interest in 'Buckie' ("the sale proceeds") other than for the purpose of obtaining funds to pay the settlement sums owing to the Judgment Creditors. 5. Mrs Robeena Turnbull is to not in any way dispose of, deal with or diminish the value of her assets in Australia, held beneficially or otherwise, so that the collective net and unencumbered value does not fall beneath $5,177,706.09. 6. Mrs Robeena Turnbull is to within fourteen (14) days of the receipt of the net proceeds of sale of the properties 'North Yambin' and her interest in 'Buckie' pay to the Judgment Creditors the settlement sums owing. 7. Costs of this application be reserved. 8. Any further or such orders as the Court deems fit."
17. In his affidavits, Mr Joseph stated that settlement had taken place for one of the three properties on 22 December 2020, the sale price being the sum of $3,500,000. After the discharge of a mortgage to the ANZ Bank, as well as a payment for "farming expenses" of $282,000, the amount remaining was approximately $147,600.
18. In relation to his failure to respond in writing to the letters of the plaintiffs' solicitors dated 3 July 2020, 15 July 2020 and 19 October 2020, Mr Joseph relied on his conversations with their counsel on 29 September 2020 in respect of the July letters.
19. In relation to the letter of 19 October 2020, Mr Joseph stated: "I do not recall receiving Aptum Legal's emailed letter to me of 19 October 2020. I only became aware of the existence of that letter when I read the affidavits filed by Aptum Legal on 4 January 2021 when our office reopened after the Christmas holidays."
20. Mr Joseph said that he did not immediately receive any of the correspondence forwarded to his office after 15 December 2020 for the same reason; his firm was closed for the holidays.
21. In oral submissions, Mr Joseph submitted that order 3 that he sought was appropriate because the prospective purchaser of the remaining two properties needed to sell properties of his own before he would have sufficient funds to complete the purchase. The respective sale prices of these two properties are $8 million and $14 million.
22. Mr Joseph stated that the contracts of sale had not been provided at the request of the purchaser and that his instructions were to not provide them to the plaintiffs. He further submitted that the plaintiffs' positions were protected by the continuing accrual of interest in relation to the outstanding agreed settlement sums.
23. In the hearing before me, Mr Joseph did not oppose the interim orders being made final and certain other orders that were sought by the plaintiffs. In response to an expressed concern by Senior Counsel for the plaintiffs that the contracts of sale may not exist, Mr Joseph responded that he had sighted the contracts.

Consideration and determination

1. It is accepted by the parties that the deeds of settlement obliged the defendant to pay the agreed sums on or before 30 June 2020. The history of the matter since that date, in my view, justifiably raised concerns on the part of the plaintiffs that the defendant was less than forthcoming as to what steps she was taking to secure as early a sale of the properties as possible.
2. Order 3 sought by the defendant in her notice of motion dated 21 January 2021 is, in my opinion, without any reasonable justification, particularly in light of the failure of the defendant, to provide the plaintiffs with copies of the contracts for sale.
3. If there is any justifiable basis for concern that dissemination of the terms of the contracts would harm the commercial positions of the prospective purchaser and/or the vendor, that concern could be met by conditional release of those documents to the plaintiffs. When asked why this had not been explored, Mr Joseph replied that he had not sought instructions as to that possible course.
4. I conclude that order 3 that is sought by the defendant in the notice of motion should not be made. The remaining orders effectively replicate some of the orders sought by the plaintiffs.
5. I propose to make orders 4, 5, 6 and 8 sought by the plaintiffs and re-drafted order 7.
6. I make the following orders: In proceedings 201722936181:
7. The notice of motion of the defendant filed on 21 January 2021 is dismissed with costs.
8. The Judgment Debtor is not to dissipate any of the Sale Proceeds or further dissipate any such proceeds received with respect to the sale of the real property known as "Erralee" being land contained in folio 11/1017699 (the Sale Proceeds);
9. The Judgment Debtor is not to dissipate any other Sale Proceeds, or further dissipate such proceeds received, or receivable, with respect to any sale of any other real property (Other Sale Proceeds);
10. By Thursday 28 January 2021 at 5pm the Judgment Debtor is to inform the Judgment Creditor in writing of the bank account details where the Sale Proceeds and/or the Other Sale Proceeds are held on account and the remaining balance, or balances, together with production of account statement or verified account transaction records;
11. The Judgment Debtor is to inform the Judgment Creditors in writing of any settlement date, or dates, of any contracts for the sale of interests in real property no later than five business days after any such date or dates have been agreed;
12. The Judgment Debtor must not remove from Australia or in any way dispose of, deal with or diminish, the value of the Judgment Debtor's assets in Australia, held beneficially or otherwise, so that the collective net unencumbered value does not fall beneath $3,233,238.71.
13. Without the prior agreement of the Judgment Creditors or the leave of the Court first obtained, the Judgment Debtor is not to further encumbrance the properties referred to in these proceedings as "North Yambin", including Field 81, and "Buckie Station". In proceedings 2015/183692:
14. The notice of motion of the defendant filed on 21 January 2021 is dismissed, with costs;
15. The judgment debtor is not to dissipate any of the sale proceeds or further dissipate any such proceeds received with respect to the sale of the real property known as "Erralee" being the land contained in Folio 11/1017699 (the Sale Proceeds);
16. The Judgment Debtor is not to dissipate any other Sale Proceeds, or further dissipate such proceeds received, or receivable, with respect to any sale of any sale of any other real property (Other Sale Proceeds);
17. By Thursday 28 January 2021 at 5pm the Judgment Debtor is to inform the Judgment Creditor in writing of the bank account details where the Sale Proceeds and/or the other Sale Proceeds are held on account and the remaining balance, or balances, together with production of account statements or verified account transaction records;
18. The Judgment Debtor is to inform the judgment creditor in writing of any settlement date, or dates, of any contracts for the sale of interests in real property no later than five business days after any such date or dates have been agreed;
19. The Judgment Debtor must not remove from Australia, or in any way dispose of, deal with or diminish the value of the Judgment Debtor's assets in Australia, held beneficially or otherwise, so that the collective net unencumbered value does not fall beneath $2,773,321.31;
20. Without the prior agreement of the Judgment Creditor or the leave of the court first obtained, the Judgment Debtor is not to further encumbrance the properties referred to in these proceedings as "North Yambin", including Field 81, and "Buckie Station".
21. [DISCUSSION RE COSTS]
22. I make a further order for costs to the plaintiffs and make the observation that a fundamental issue in dispute was whether the orders previously made on 29 September 2020 by Walton J should be stayed for a period of twelve months. The remaining orders sought by the plaintiff were, in my view, not unreasonable, given the difficulty that the plaintiffs had encountered in communicating with the defendant.

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: 29 January 2021