The present dispute arises from a judgment of Slattery J delivered on 7 February 2020: Three Co-Owners of Real Property v Another Co-Owner and a Trustee in Bankruptcy [2020] NSWSC 42 (the "February Judgment"). In that judgment his Honour made orders for the payment out in specified amounts to the three plaintiffs and the second defendant of funds paid into Court as the proceeds of sale of a property at Clovelly (the "Property").
His Honour stayed his orders up to and including 6 March 2020.
On 5 March 2020, the first defendant (by her son) filed a notice of motion seeking, among other things, a stay pending appeal from the February Judgment. That motion first came before me in the Duty List on 6 March 2020. When the matter was called, the only appearance was that of Ms S Nash, Solicitor, appearing for the second defendant (the "Trustee"), who is the trustee in bankruptcy of the first defendant.
Ms Nash applied for the first defendant's notice of motion to be dismissed. Given that no other party (including the first defendant) was present I made these orders:
"2. Dismiss the notice of motion filed 5 March 2020 purportedly on behalf of the first defendant;
3. Stay order 2 up to and including 9 March 2020."
The purpose of the stay I had ordered was for all relevant parties to be notified of the orders which I had made and for any further argument to take place before me today. That has occurred. The first defendant has purported to file a notice of intention to appeal from the February Judgment. The true nature of the proceedings today was an application that the February Judgment be stayed pending any appeal.
The background to these proceedings is lengthy. Their beginning may be traced to a judgment of Emmett AJA in 2017 which his Honour began by describing that "these proceedings involve an unseemly dispute between three brothers and their sister". The unseemly nature of the dispute has continued, including up to today.
The three plaintiffs are the brothers of the first defendant. The first and second plaintiffs appeared with representations being made on their behalf by the first plaintiff. The third plaintiff was represented today by Miss M Reid, Solicitor. The first defendant appeared in person. She made submissions on her own behalf, but submissions were also made for her by her son, who had filed the 5 March 2020 notice of motion and the supporting affidavit. Ms S Nash, Solicitor appeared again for the Trustee.
By his 2017 judgment, Emmett AJA appointed trustees for sale of the Property and made certain directions, including for the report of a quantity surveyor and valuer to determine how various adjustments should be made between the plaintiffs and the first defendant as the four registered proprietors of the Property. Those adjustments continue to be the source of the present dispute.
Shortly after the appointment of the trustees for sale, the first defendant was made bankrupt and the Trustee was appointed as her trustee in bankruptcy.
In a judgment delivered in 2018, Slattery J made orders for the issue of a writ for possession to facilitate the sale of the Property. The Property was sold and a fund of approximately $1.7 million was paid into Court.
A hearing was fixed before Slattery J for February of this year to determine how the funds in Court should be paid out between the parties. As the February Judgment records, before the matter was heard his Honour was informed that a settlement had been reached between the plaintiffs and the second defendant as to how the proceeds of sale should be apportioned between them. His Honour was presented with what were described as consent orders to that effect. However, his Honour noted that the proposed consent orders were not signed by the first defendant and that in those circumstances he was not prepared to make the orders in chambers. He required a hearing to take place to give the first defendant an opportunity to "propound any proper basis for opposing the making of the orders" (February Judgment at [7]).
The appearances at the hearing before Slattery J were substantially as before me today, although his Honour also had the benefit of an appearance from the Public Guardian. An important piece of background to the present dispute is that the first defendant is undeniably suffering from various mental health issues. One consequence of her current incapacity is that her estate is subject to a financial management order under the NSW Trustee and Guardian Act 2009 (NSW). That is the reason why these reasons are anonymised.
After hearing the first defendant, Slattery J accepted (at [10]) the submission of Ms Nash that all of the first defendant's rights as co-owner of the Property and her various claims for adjustment of the proceeds of sale had all vested in the Trustee, who was now the sole authority to resolve the proceedings on behalf of her bankrupt estate. Following from that conclusion, his Honour was also satisfied that there was no reason for a guardian to be appointed to the first defendant in relation to the present proceedings, because a consequence of the appointment of the Trustee was that the first defendant could not carry on proceedings in relation to the matters which had now vested in the trustee.
His Honour made final orders for the distribution of the funds out of Court in accordance with the agreement that had been reached between the plaintiffs and the second defendant. However, for reasons which he did not express, but which I surmise reflected a realistic assessment based on the history of these proceedings, his Honour stayed the orders which he was making up to and including Friday, 6 March 2020 "in case any party wishes to question the making of these orders" (February Judgment at [23]).
The fundamental question for the Court today is whether or not a stay ought to be granted to stay Slattery J's orders pending the filing and determination of an appeal. A significant issue on such an application is whether the putative appellant is able to identify reasonably arguable grounds of appeal.
Following what I apprehend from reading earlier judgments has been a pattern, the first defendant made numerous submissions and allegations against the plaintiffs and the Trustee nearly all of which were irrelevant to the question of whether or not she could demonstrate reasonably arguable grounds to appeal from the February Judgment. As I understood her submissions, and taking them at their highest, her complaint is that the Trustee has been misled by the plaintiffs because the Trustee has not been provided with a large amount of information (which the first defendant says she is now, or will shortly be, able to make available) that would demonstrate to the Trustee that the consent orders to which the Trustee has agreed work an injustice on the first defendant's bankrupt estate. She wishes to have the stay so that she can present that material to the Trustee and to prosecute her proposed appeal.
All the other parties at the Bar table opposed the relief being sought by the first defendant. I accept the submissions made on behalf of the second defendant by Ms Nash, being submissions also accepted by Slattery J, that the first defendant has no standing to make any of the claims which she now attempts to advance in these proceedings. That submission has been developed in the present application to include the proposition (which I accept) that the first defendant's rights (if any) in relation to any appeal are themselves after-acquired property which have vested in the Trustee: Sarkis v Moussa [2012] NSWCA 136.
Furthermore, I take into account that, in general, a consent agreement between parties to litigation can only be set aside on grounds analogous to those which would be sufficient to set aside any other contract at general law. Again, it is clear that any such right resides in the Trustee and not the first defendant. The first defendant's avenue for complaint against the Trustee for entering into the agreement with the plaintiffs is not in this Court. It is by way of complaint to the Australian Financial Security Authority, something I was told the first defendant has already done.
Simply put, the first defendant does not have any standing to make the claims which she says she wishes to prosecute in any proposed appeal from the February Judgment. Even if she did, she has been unable to demonstrate a reasonable basis upon which any such appeal could be brought. Her desire to present the Trustee with further information does not provide such a basis. In those circumstances, I do not propose to vary the orders which I made last Friday. That means that the dismissal of the first defendant's notice of motion filed 5 March 2020, which I ordered but stayed last Friday, will take effect from midnight tonight. It is not necessary for the Court to make any other order.
Finally, the plaintiffs and second defendant have taken the, with respect, entirely realistic position that it would be futile to apply for their costs of her motion from the first defendant. I record that no party sought any costs order in respect of the first defendant's motion.
[2]
Amendments
13 March 2020 - coversheet - removed file number
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Decision last updated: 13 March 2020