New South Wales Supreme Court CITATION : Dobrijevich v Burge [2001] NSWSC 1176 CURRENT JURISDICTION: Equity FILE NUMBER(S) : SC 3391/01 HEARING DATE(S) : 3 December 2001 JUDGMENT DATE : 3 December 2001 PARTIES : Irena Dobrijevich (P) Peter John Burge (D) JUDGMENT OF : Hamilton J COUNSEL : S J Motbey (P) D in person SOLICITORS : S A Teen (P) D in person CATCHWORDS : REAL PROPERTY [315] - Partition of land - Statutory trust for sale - Effect of statutory trust - Power of Court to vary trust - Whether power may be exercised after sale - Whether statutory trust should be varied so that defendant's share of proceeds should bear whole of trustee company's costs of acting. LEGISLATION CITED : Conveyancing Act 1919 s 66F, 66G(6) CASES CITED : Re Estate of R D Firns [2001] NSWSC 184 DECISION : Application to vary statutory trust so that defendant's share of proceeds should bear whole of trustee company's costs of acting refused. IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J MONDAY, 3 DECEMBER 2001 3391/01 IRENA DOBRIJEVICH v PETER JOHN BURGE JUDGMENT 1 HIS HONOUR: This is an application by motion in proceedings in which the plaintiff claimed an order for the appointment of a trustee for sale under s 66G of the Conveyancing Act 1919 ("the CA"), and the defendant resisted the appointment of a trustee in circumstances that I shall return to. There is also pending in the proceedings a cross-claim brought by the defendant against the plaintiff concerning matters independent of the sale of the property which was the subject of the plaintiff's claim. Master McLaughlin on 16 August this year appointed the Permanent Trustee Company Limited as the trustee for sale and the property has since been sold at auction. 2 As the trustee approaches the distribution of the funds, it is apparent that the major items to be deducted as costs and expenses pursuant to the definition of the statutory trust for sale in s 66F of the CA are as follows: Agents' fees and commission $10,376.50 Permanent Trustee Company Limited fees $ 9,868.38 Solicitor's fees $ 2,000.00 The item among these that causes controversy is the trustee's fees of almost $10,000. There is no dispute that the other items should be borne equally between the parties' share of the proceeds. However, by her motion the plaintiff seeks a declaration that by virtue of the trust for sale created by Master McLaughlin's order the trustee, which has been made the second respondent to the motion, should hold the proceeds on trust in such a way that the defendant's share of the proceeds should bear the whole of the trustee's fees to the relief of the plaintiff's share. 3 The procedure which the plaintiff has sought to invoke does not seem to me appropriate, although Young J, as his Honour then was, in Re Estate of R D Firns [2001] NSWSC 184 held that in special cases declarations may be made on a motion (contrary to the received doctrine that declarations should only be made upon summons or statement of claim after a trial of the principal proceedings). But I do not think this would be an appropriate case to proceed in that way. However, that is of no moment, because s 66G(6) of the CA provides that the Court may alter the terms of the statutory trust for sale or the statutory trust for partition. It seems to me that the necessary alteration of the terms of the trust could be made, if the Court deemed fit, by order made in exercise of the jurisdiction conferred on the Court by that subsection. The subsection is general in terms. It certainly does not, on its face, limit the occasion of the making of such an order to the time when the statutory trust for sale was first ordered by the Court. It may be that where, as here, the alteration is sought after the appointment of the trustees and, indeed, after the sale has been effected, there are additional discretionary barriers to be overcome by an applicant in having the terms of the trust altered. But it seems to me that whether that be so or not, the power still remains after the original s 66G order is made for the Court to make orders under subs (6) if it be so minded. 4 The parties to these proceedings at one stage lived in a de facto relationship. The plaintiff initially owned the premises at 1132 Booyong Road, Clunes ("the property"). She sold a half interest in it to the defendant. A deed was entered into between the plaintiff and the defendant dated 24 June 1999 to regulate their proprietary affairs in light of this transfer of the property and in light of the provisions of the Property Relationships Act 1984. The deed provided by clause 7D that if, after the cessation of cohabitation, one of the parties remained in the property, that party should be entitled to do so for a maximum term of two years, terminable at any time on twenty-eight days notice to the other party, at a rental payable calendar monthly in advance equal to half of the current market value of the property at the commencement of the occupancy. The deed further provided by clause 7F(ii) that the: "Parties must sell the property and divide the proceeds of sale between them ... if the occupant terminates his/her right of occupancy prior to the expiration of the maximum term of occupancy of two years." 5 The plaintiff occupied the property for a time after the cessation of cohabitation and did not pay the rental to the defendant, although acknowledging her obligation to do so. However, within the two year term she terminated that occupancy. There was then debate between them as to whether and how the property should be sold. The defendant initially contended that he had entered into the deed on the basis of a representation that there would be no sale within two years because he had "negative equity" in the property, since he had borrowed more than half of the value of the property to pay the agreed purchase price to the plaintiff and to provide some additional funds that he needed for other uses. At one stage he contended that either a term to this effect was to be regarded as included in their arrangement, or that there was a representation to that effect which was operative to disentitle the plaintiff from insisting on a sale within that period. More recently he has eschewed that claim. He certainly does so today. The time at which he first eschewed it more will be said about in due course. 6 There were various discussions and correspondence between the parties about the matter but, in short, the plaintiff on 4 July 2001 issued a summons in which she claimed the appointment of a trustee upon the statutory trust for sale. That matter first came before the Court constituted by Master McLaughlin on 26 July 2001. On that day the plaintiff's solicitor deposed, and it is not disputed, that the defendant stated to the Master, in answer to an inquiry as to whether he opposed the claim, that he did oppose it because he "was to have two years to buy the plaintiff's share". The matter was on that day stood over to 16 August 2001 for hearing. It should be said that in the discussions that had taken place up to that time the defendant had also been insisting that he would not participate with the plaintiff in selling the property because she was in breach of contract in not having paid him the rent stipulated for by the deed. 7 However, on 14 August 2001, shortly before the matter was again to come before Master McLaughlin, the defendant radically changed course. On that day he wrote to the plaintiff's solicitor as follows: "Due to the potentially enormous costs chargeable by a trustee would your client consider an order by consent to dispose of the Clunes property by:- a. appointing Millers Real Estate to auction the property; b. both parties contribute the sum of One thousand dollars ($1,000) in respect of advertising (in accordance with the attached advertising schedule); c. the reserve price to be Two hundred and twenty thousand dollars ($220,000); d. the conveyancing solicitor to be Heydon Hertzberg & Associates; e. the proceeds of sale after discharge of mortgage, agent's fees and conveyancing costs be placed in a jointly operated interest-bearing account pending Orders of the Court or further Orders by consent. I look forward to receiving your response." This letter was tendered before Master McLaughlin on 16 August 2001. Also on 14 August the defendant propounded a cross claim, which was filed on 15 August 2001, and he made by various prayers claims that replicated the content of his letter of 14 August 2001. 8 When the learned Master delivered judgment on 16 August 2001, a considerable part of his judgment was taken up with a separation of the claim concerning the sale of the property from the cross claim concerning other matters and various other matters relating to the cross claim. In due course, however, the learned Master turned to the disposal of the claim. The Master said that the defendant opposed the making of the order under s 66G before him because the parties, by agreement between themselves, would be able to effect the sale of the property with a considerable saving of cost to the parties, bearing in mind that the costs of the statutory trustee sought to be appointed would be considerable. The learned Master referred to the recent correspondence. However, the plaintiff was insistent upon the making of the order sought by her and, because of that insistence, the Master took the view that it was "appropriate therefore for the Court to proceed to a hearing of that claim for relief". He concluded that it was appropriate that the Court should make an order for the appointment of the nominated trustee company as the trustee for sale upon the statutory trust for sale and made an order accordingly. 9 The principal contention put before me on the plaintiff's behalf is that at the time the summons was taken out on 4 July and when it was first returned before the Court on 26 July 2001, the defendant was either unwilling altogether to participate in the process of selling the property, or was insistent upon attaching to his participation conditions which he was not entitled to attach. It was only on 14 August, two days before the final hearing before the Master, that he manifested a change of attitude. The plaintiff says also that it was reasonable for her to insist upon the appointment of the corporate trustee upon the statutory trust for sale, bearing in mind the lateness of the defendant's change of heart and the disagreements between them which had persisted up to that point of time. 10 It well may be that it was not unreasonable for the plaintiff to seek to have the greater assurance that she sought by having the sale conducted by a court appointed trustee, and a trustee company at that, rather than attempting herself to deal with the defendant with whom, up until then, she had not been able to reach final agreement. In saying that, I must say there was not really very much more dealing to be done about the matter, since the auction sale was subsequently conducted by the very agent with whom the parties had been discussing the matter, and sold at a price in the middle of the range that that agent had stipulated. However, she wanted the assurance, she insisted upon it and she got it. As I say, that may not be unreasonable, but it does not seem to me to be a sufficient ground, nor does the defendant's conduct seem to me, either in the matters that I have recited or any of the other matters that appear in the evidence, to have been such that it could be said that it would have been impossible for the sale to have been conducted between them, or that for any other reason his share alone, rather than a fund constituted by the whole of the proceeds of the property, should bear the additional considerable cost of the trustee company's fees. In those circumstances, no order should be made altering the trust so as to alter the incidence of the trustee company's fees. 11 Debate has taken place before me on the question of costs, both of the summons generally and of the motion that has been heard by me today. Prayer 1 of the summons was disposed of by Master McLaughlin's order made on 16 August 2001. Prayer 3 of the summons has been disposed of by the order made by me today. The only outstanding prayer in the summons, other than for costs, is for liberty to the plaintiff to apply for judgment for certain sums said to arise out of the agreement. However, a number of these are now the subject of agreement between the parties. There is only one outstanding claim by the plaintiff for $398 (for half the cost of some repairs effected by her whilst she was occupying the premises), and in view of the small amount of this claim, it has wisely been waived by her representatives and will not now be pressed in these proceedings. In those circumstances, nothing remains under the summons and there is no reason why I ought not determine the costs of the summons as opposed to the cross claim, including indeed the costs reserved by Master McLaughlin. 12 Whilst I have held earlier in this judgment that the defendant's conduct was not such as to entitle the plaintiff, by insisting upon the appointment of a statutory trustee, to throw the whole of the burden of the fees of a trustee company appointed as statutory trustee upon the defendant's share of the property, it does not flow from that that the plaintiff is not entitled to her costs of bringing the proceedings. As has already appeared, there is no reason to doubt that the defendant was resisting a sale at the time that the summons was taken out on 4 July 2001 and it is clear from the evidence that he continued to resist a sale when the summons was first returned before Master McLaughlin on 26 July 2001. It was only two days before the final hearing before Master McLaughlin that he reversed that stance. By that time the plaintiff was committed, in effect, to the whole of the costs of the proceedings. In these circumstances, it seems to me that the reasonable course is that the defendant should be ordered to pay the plaintiff's costs of the proceedings up to and including 16 August 2001. 13 In relation to the motion that I have dealt with today, it first seemed to me that it should flow from the defendant's success in resisting the motion that he should have his costs of the motion. However, Mr Motbey, of counsel for the plaintiff, has pointed out to me in the argument as to costs that, whilst the defendant today did not argue that the plaintiff's share of the proceeds should bear the whole of the trustee company's costs, but propounded only the course that they should be paid out of the undivided fund, that had not been his stance before today. In fact, the plaintiff's solicitors wrote to the defendant on 5 November 2001 and offered to allow the trustee company's fees to be paid out of the undivided fund. In that letter the plaintiff offered, as I understand she had always offered, $4,770 in the defendant's favour, in relation to the rent. There was a stand taken regarding other small items, including the $398 for repairs that I have earlier mentioned as claimed by her, but on the major items the outcome offered was what has in fact happened. In reply to this quite reasonable offer, the defendant wrote on 13 November 2001, curtly, "that the figures and arrangements contained in your letter are not acceptable to me" and "the terms of your letter do not provide for me to put a counter proposal". Furthermore, in his affidavit sworn 28 November 2001, and read on the motion, the defendant's stance was not that the undivided funds should bear the trustee company's fees, but that the plaintiff's half share of the proceeds should bear the whole of the fees. In other words, although he did not avowedly put that position to me in court today, that was his stance up to within a couple of days of the motion coming on for hearing. 14 In those circumstances, the principal case put forward by both parties right up to the eve of the hearing has failed, and the middle course of the trustee company's fees being borne by the undivided fund has been decided by me to be the appropriate course. In those circumstances, it is my view that there should be no order as to the costs of the notice of motion. 15 I shall give liberty to either party to apply on twelve hours' notice in relation to any direction sought as to the dispersal of the trust fund. The orders of the Court are: 1. Order that the plaintiff's notice of motion filed 16 November 2001 be dismissed. 2. Order that the defendant pay the plaintiff's costs of the proceedings up to and including 16 August 2001. 3. Order that there be no order as to the costs of the notice of motion. 4. Liberty to either party to apply on twelve hours' notice in relation to any directions sought as to the dispersal of the trust fund. ********** Last Modified: 03/18/2002 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.