Supreme Court New South Wales Medium Neutral Citation: Bowden v Bowden [2020] NSWSC 1863 Hearing dates: 17 December 2020 Date of orders: 17 December 2020 Decision date: 17 December 2020 Jurisdiction: Equity Before: Slattery J Decision: The parties are directed to put on further evidence. The matter is adjourned. Costs are reserved. Catchwords: CIVIL PROCEDURE – Alternative dispute resolution – Court referral to referee – Court's use of report – in a May 2019 judgment of the Court the first plaintiff and the first defendant were found to each hold a 50% interest in certain real property – the balance of the proceedings concerning the parties' contributions to the improvement of that property was to be determined by a referee, pursuant to Uniform Civil Procedure Rules 2005, r 20 – the referee produced a report to the Court on 25 May 2020 – the defendants seek orders that this report be adopted – the first and second plaintiff resist the making of such an order – where the report does not consider the contributions made to the real property by the second plaintiff, a family trust – where other complaints are made about the report the first and second plaintiff seek an adjournment to put on further evidence. Legislation Cited: Conveyancing Act 1919, s 66G Uniform Civil Procedure Rules 2005, Pt 20, Div 3, rr 20, 20.24 Cases Cited: Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd [2003] NSWSC 547. Franks v Berem Constructions Pty Ltd [1998] NSWCA 87 Morris v Morris [1982] 1 NSWLR 61 Tryhaz Pty ltd v Fielders Engineers Pty Ltd [2005] NSWSC 906 Category: Consequential orders Parties: Plaintiff: Kevin Alwyn Bowden First Defendant: Julie Gaye Bowden Second Defendant: Ian Bowden Representation: Counsel: First and Second Defendants: D. Eardley Solicitors: Plaintiff: Kevin Alwyn Bowden File Number(s): 2017/376872 Publication restriction: No EX TEMPORE Judgment 1. The first defendant, Mrs Julie Bowden, is the registered proprietor of certain residential property in the Nowra district ("the Nowra property"). She is married to the second defendant, Mr Ian Bowden. Mr Kevin Bowden, the first plaintiff, is Ian Bowden's and Julie Bowden's brother-in-law. Kevin Bowden and a family trust of which he is the trustee, the second plaintiff, commenced these proceedings in 2017, seeking declarations that the plaintiffs held a 50 per cent interest in the property. 2. The proceedings came on for hearing before Pembroke J on 10 April 2019. His Honour gave judgment after a short hearing, in which he described these proceedings as "an untidy case", an observation with which the Court agrees. His Honour found that Kevin Bowden and Julie Bowden each held a 50 per cent interest in the property. His Honour's judgment finds that Kevin Bowden and Julie Bowden each had the 50 per cent interest in the acquisition of the unimproved land component of the Nowra property before any building was erected on it through the efforts of the plaintiffs and the defendants. His Honour found that: "The only reasonable conclusion having regard to the evidence is that the original arrangement was that the plaintiff and the first defendant were intended to be joint owners each having a 50 per cent interest in the property." 1. His Honour's judgment did not distinguish between Kevin Bowden and the family trust in considering the interest they each held in the unimproved Nowra property. His Honour then dealt with events that followed the acquisition of the land, which included the construction of a house on the property. His Honour's reasons contemplated that because of the competing claims of the parties, each of whom claimed to have expended money on the construction of the house on the Nowra property, the original agreement as to a 50 per cent interest for each of Kevin Bowden and Julie Bowden might have to be adjusted. Based on Morris v Morris [1982] 1 NSWLR 61, a decision of McLelland J, his Honour said the following: "It seems clear enough that the plaintiff should be entitled to an equitable charge over the 50% interest of the first defendant to secure the amount of the contributions that he has made to the land. Similarly, if the first defendant is able to prove that she has made contributions to the land, she should have an equitable charge over the 50% interest of the plaintiff. The principles upon which such an interest is determined are those set out in Morris v Morris [1982] 1 NSWLR 61." 1. Consequent upon these reasons, his Honour made orders for the balance of the proceedings to be referred out to a referee, Mr Shon Condon, pursuant to Uniform Civil Procedure Rules 2005, Part 20, Division 3, for a report determining the expenditure of each of the plaintiffs and the defendants in the construction of a house on the Nowra property. This was to be done in order for his Honour to be able to determine what the final adjusted interest of each of the plaintiffs and the defendants would be in the property. 2. The referee completed a report, which was submitted to the Court on 25 May 2020. The referee's report made findings about the relative financial and non-financial contributions of the parties and made adjustments to the original 50:50 ownership of the Nowra property determined by Pembroke J. 3. On 19 June 2020, the defendants sought by motion to have the referee's report adopted. That motion came on for hearing today. The adoption of the complete report would vary the parties' interest in the Nowra property, with the plaintiff holding 52.2 per cent and the defendant holding 47.8 per cent. The defendants' motion not only seeks adoption of the report and declarations that these percentages represent the respective interests in the completed Nowra property, but also seeks the sale of the property by the trustees for sale under Conveyancing Act 1919, s 66G. 4. Mr D. Eardley of counsel, instructed by a solicitor, Mr Phillip John Carey, appears for the defendants and pressed for these orders today. Kevin Bowden appears for himself. 5. It is common ground that the respondent to the motion, Kevin Bowden, has little capability to represent himself. He sought the assistance of another brother, Mr Phillip Bowden, to represent him. The Court has granted Phillip Bowden status as a "next friend" to assist his brother, Kevin Bowden. Philip Bowden has done so admirably, in accordance with the Court's leave to assist his brother. 6. The case that Kevin Bowden puts, through his brother Phillip, is that the referee's report should not be adopted for several reasons. Before discussing these reasons, a short serving of the applicable law is appropriate. 7. The Court has a broad discretion as to how a referee's report is dealt with under UCPR, Part 20, Division 3. Rule 20.24 relevantly states: "20.24 Proceedings on the report (1) If a report is made under rule 20.23, the court may on a matter of fact or law, or both, do any of the following – (a) it may adopt, vary or reject the report in whole or in part, (b) it may require an explanation by way of report from the referee, (c) it may, on any ground, remit for further consideration by the referee the whole or any part of the matter referred for a further report, (d) it may decide any matter on the evidence taken before the referee, with or without additional evidence, and must, in any event, give such judgment or make such order as the court thinks fit. (2) Evidence additional to the evidence taken before the referee may not be adduced before the court except by leave of the court." 1. The principles the Court will consider when exercising this discretion were comprehensively set out by Einstein J in Chocolate Factory Apartments Pty Ltd v Westpoint Finance Pty Ltd [2003] NSWSC 547. 2. In circumstances where the accuracy of the report is disputed by Kevin Bowden, the Court may also consider whether it is appropriate to review the evidence which was before the referee. But this should only be considered in the three circumstance set out in Franks v Berem Constructions Pty Ltd [1998] NSWCA 87 at 8 (Priestley JA, Fitzgerald AJA and Hodgson CJ in Eq) and cited with approval in Tryhaz Pty ltd v Fielders Engineers Pty Ltd [2005] NSWSC 906 (Macready AJ) at [14]: "If there were a real question as to whether there was evidence on which the referee, without manifest unreasonableness, could have come to the decision to which he or she did come. This was not required "by a mere suggestion of factual error such that, if it were made by a trial judge, an appeal judge would correct it". The application was far more limited: 'to the situation where it is seriously and reasonably contended that the referee has reached a decision which no reasonable tribunal of fact could have reached; that is, a decision that any reasonable referee would have known was against the evidence and weight of evidence.' A second circumstance in which it could be necessary or appropriate for a court considering the adoption of a referee's report to go the evidence is where the referee's reasons on the face of them appear adequate, but the party challenging the report contends that the reasons are not adequate because there was very significant evidence against the referee's finding which the referee did not deal with at all. Such a contention may concede that the referee's conclusion was one which a reasonable referee could have reached on the whole of the evidence, and also that the referee's reasons on the face of them appear sufficient; and yet claim that examination of evidence would show that the reasons were in fact quite inadequate because some very significant evidence was not referred to at all. Thirdly, if a court considering the adoption of a referee's report decided that the referee's reasons were flawed, either on the face of them or because they did not deal at all with an important matter appearing in the evidence, the court could, if it thought appropriate, rather than automatically declining to adopt the report, itself look at the detail of the evidence in order to decide whether or not the expense of further proceedings before the referee was really justified." 1. In oral submissions, the plaintiffs/respondents advance several reasons why the report should not be adopted. 2. The first reason advanced is that the report does not consider the various contributions made by the family trust, in the construction of a house on the Nowra property. The report refers to both Kevin Bowden and the trust jointly as "the plaintiff". The financial interest of the family trust is not accounted for separately in the report and any trust contributions are not treated separately. Just how the trust's contributions were taken into account in the referee's report reasoning may need to be analysed more closely. 3. The second point made on behalf of the plaintiffs relates to the report's analysis of the financial contributions of the defendants to the Nowra property as a result of the construction of a residence on it. The plaintiffs submitted that no credit should be given in the report for any financial contributions by the defendants. But the Court pointed out that in fact the report does not give any credit for financial contributions by the defendants; it assesses them at nil. But the plaintiffs also submitted that the non-financial contributions alleged by the defendants were much lower than the report found and do not come to the figure of approximately $67,000 that the referee had determined. 4. The third point made by the plaintiffs is that the referee's report does not take proper account of the plaintiffs' construction expenditure in the provision of bearers and joists, doors, the kitchen and tiles among others, incorporated into the building on the Nowra property. 5. Whether there is substance in any of these criticisms or not, the Court has not yet determined. But an overarching criticism that the plaintiffs also make of the referee's report is that the referee did not have regard to material which the plaintiffs attempted to put before the referee. The plaintiffs say this material proved their expenditure and did not find its way into the report. This is, in effect, a contention that proper process was not observed by the referee. 6. At one level this is a surprising contention. The referee's report states repeatedly the great difficulty that the referee had in getting information from both sides in the case. The referee said under the heading "Documentary Evidence" on page 3 of the report: "Information has been received from the parties involved in this matter and it is fair to say that much of that information was lacking in quality and completeness and included some material which was simply irrelevant to the performance of the task allotted to me." 1. And again on the same page: "The obtaining of supporting documentary information has been extremely difficult. I was required to make a number of requests of the parties. Details of these requests are summarised in annexure A." 1. Annexure A to the referee's report sets out an extensive request for information, which the referee said was not met by the parties. 2. The principal submission today of Phillip Bowden, on behalf of Kevin Bowden, is that they have not had time to put on the evidence that they wish to advance, to show amongst other things: (a) what material was given to the referee which was not taken into account by him; and (b) what material before the referee shows that a different conclusion should have been reached by him. This would require an adjournment and some time for them to put this material on. 3. This application is late. As counsel for the defendants points out, the plaintiffs were ordered on 29 June 2020 and again on 20 August 2020 to put on their evidence on this application and appear not to have done so. 4. But the Court is mindful that Phillip Bowden is not well. He says that he has recently undergone heart surgery. He claims for this reason not to be readily able to manage the gathering of evidence. The plaintiffs had retained Carroll & O'Dea Solicitors, but recently had differences with that firm concerning legal fees, which led to Carroll & O'Dea terminating their retainer. Phillip Bowden says that he wants to try and get a new solicitor for Kevin Bowden. He also says that he is already very concerned about the level of legal fees incurred in this case. 5. Those circumstances lead the Court to grant the application for adjournment which is being sought. But in doing so the Court observes that this is a last opportunity for the plaintiffs to put on their evidence. They have not complied with the orders in June and August this year. If the plaintiffs do not comply with these orders then they can expect that the Court will proceed on the next occasion without the evidence which they say they wish to rely upon. Conclusion and Orders 1. Accordingly, the Court makes the following orders and directions: 1. Direct the plaintiffs to put on any evidence upon which they wish to rely in order to oppose the adoption of the referee's report by 4pm on Friday, 12 February 2021. 2. Direct the defendants to put on any evidence upon which they wish to rely in reply by 4pm on Friday, 26 February 2021. 3. Direct the parties to file and serve any supplementary submissions on the question of the adoption of the referee's report (of no more than 3 pages) by 4pm on 10 March 2021. 4. Adjourn these proceedings for further hearing at 9.30am on Thursday 11 March 2021. 5. Costs of today are reserved. ********** 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: 18 December 2020