Joseph v Agrey [2011] NSWSC 1601

Supreme Court New South Wales

Medium Neutral Citation: Joseph v Agrey [2011] NSWSC 1601 Hearing dates: Thursday, 24 November 2011 Decision date: 24 November 2011 Jurisdiction: Equity Division - Duty List Before: White J Decision: Refer to para [1 4 ] of judgment. Catchwords: REAL PROPERTY - appointment of trustees for sale - s 66G, Conveyancing Act 1919 - distribution of proceeds of sale - where property partnership asset - net proceeds of sale to be applied in repayment of loans made by partners with interest and thereafter any surplus to be divided in accordance with partners' legal title Legislation Cited: Partnership Act 1892 Conveyancing Act 1919 Category: Interlocutory applications Parties: Adrian Joseph (1st Plaintiff) Marita Joseph (2nd Plaintiff) Peter Elder Robinson (3rd Plaintiff) Robert Lance Agrey (1st Defendant) Lucienne Faye Manzart (2nd Defendant) Aer Eeja Agrey (3rd Defendant) Representation: M Klooster (Plaintiffs) K Longin (Defendants) Maxwell & Co (Plaintiffs) John D Weller & Associates (Defendants) File Number(s): 2011/275407

Judgment 1HIS HONOUR : This is an application for the appointment of trustees for the sale of property in [xxxxxxx yyyy], South Lismore, and for orders as to the distribution of the net proceeds of sale. 2The property is in co-ownership. There are three sets of co-owners. Adrian and Marita Joseph hold a three-eighths share; Peter Elder Robinson holds a three-eighths share; and Robert Agney, Lucienne Fay Manzart and Aer Eeja Agney hold a two-eighths share. 3The property was purchased under a contract of sale of land entered into on 23 March 2004. There were additional purchasers to those who are currently the owners of the property. The purchasers conducted a partnership for the acquisition of land and the construction of a building on the land. The sum of $277,393 was spent prior to 30 June 2005 for the construction of building improvements. 4The partnership financial statements for the years ended 30 June 2005, 2006 and 2007 record the loans made by the partners to the partnership. The interests of certain of the original partners have been acquired by the plaintiffs, Adrian and Marita Joseph, and by Peter Elder Robinson. The defendants are Robert Agney, Lucienne Manzart and Aer Agney, whom I will call the Agney interests. 5When the application was called on for hearing, counsel representing the Agney interests applied for an adjournment. That application was refused for reasons which I then gave. Counsel for the Agney interests did not have instructions to appear on the hearing of the matter, and the hearing proceeded without further contest. 6As well as seeking orders for the appointment of trustees for sale, the plaintiffs sought orders that the net proceeds of sale, after payment of the trustee's costs, be applied by first making a payment of $448,204 to the plaintiffs, being a payment as to a one-half share to Adrian and Marita Joseph and as to the other half share to Peter Elder Robinson. 7The basis for this order was set out in the affidavit of Mr Robinson. He deposes that the amount of $277,393 applied to building improvements and was contributed " mostly " by the plaintiffs and the prior partner whose interest was acquired by the plaintiffs. He said that the Agney interests contributed $10,144. No allowance was made in the orders proposed in the summons for repayment of the sum of $10,144 with interest. 8In his affidavit Mr Robinson said that the initial capital expenditure contributed by co-owners other than the Agney interests was $267,249. However, that is not supported by the balance sheets. The balance sheets show that the amounts contributed by way of loans by co-owners other than the Agney interests was $221,376. The balance sheets also show that the Agney interests contribution was also by way of loan. 9The solicitor for the plaintiffs was not able to point to any authority or principle that warranted the charging of interest at nine per cent per annum compounding at annual rests on the amount of the loans. Subject to any contrary term of the partnership agreement, or any custom of a particular trade (and it is not suggested that there is any such term or custom), a partner making an advance for the purpose of the partnership beyond the amount of capital the partner has agreed to subscribe is entitled to interest at the rate of seven per cent per annum from the date of the payment or advance ( Partnership Act 1892, s 24(3)). 10This is not a suit for the taking of partnership accounts, but the partnership will be dissolved on the sale of the partnership asset, assuming, as I understand to be the evidence, that this was a partnership for a single undertaking ( Partnership Act , s 32(b)). 11In my view it is appropriate that the net proceeds of sale be applied in the manner which, according to the evidence, the partners would be entitled to the proceeds of sale. In saying that, I express no conclusion as to whether or not the defendants would be entitled to the taking of an account, and the adjustment of accounts between partners, if the defendants can establish that the plaintiffs have obtained more than that to which they are entitled. By the same token, I see no reason that the plaintiff also would not be entitled to a final accounting. 12I understood from what I was told by counsel appearing for the Agney interests when the matter was first called on today that the defendants did not, at least in principle, oppose the appointment of trustees for sale. It is only in exceptional circumstances that co-owners are not entitled to an order under s 66G of the Conveyancing Act 1919 for appointment of trustees for sale. 13In my view, the net proceeds of the sale should be applied, after payment of the trustees' proper remuneration and costs, and after payment of the costs of sale, in repayment of the loans made by the partners, with interest at seven per cent per annum. Thereafter, the surplus, if any, should be divided between the parties in accordance with their legal title. 14For these reasons I make the following orders: 1. I make an order in accordance with para 1 of the summons. 2. Order that such property vest in the Trustees subject to incumbrances affecting the entirety but free from incumbrances affecting any undivided shares to be held by them on statutory trust for sale under s 66G of the Conveyancing Act 1919. 3. I make an order in accordance with para 3 of the summons. 4. Order that the Trustees be authorised to charge remuneration at their usual professional rates for their services as trustees. 5. Order that the net proceeds of sale of the property after adjustments and after deduction of fees and expenses of real estate agents and solicitors acting on the sale be applied: (a) in payment of the Trustees' proper remuneration and any other proper expenses; (b) in payment of $221,376 plus simple interest at seven per cent per annum from 1 July 2005 to the date of distribution; (i) as to a half share to Adrian Joseph and Marita Joseph; (ii) as to a half share to Peter Elder Robinson; (c) in payment of $10,144 plus simple interest at seven per cent per annum from 1 July 2005 to the date of distribution to the defendants. (d) in payment to the plaintiffs of the costs of these proceedings as agreed or assessed. (e) as to the balance, if any: (i) as to a three-eighths share to Adrian Joseph and Marita Joseph; (ii) as to a three-eighths share to Peter Elder Robinson; and (iii) as to a one-quarter share to the defendants. 6. Order that if the net proceeds of sale are insufficient to make the payments in order 5(a), (b) and (c) the payments to the person entitled under orders 5(b) and (c) are to abate proportionately. 7. Order that the costs payable to the plaintiff pursuant to order 5(d) should be assessed on the indemnity basis. 8. Orders may be entered forthwith. 15Given that these proceedings concern the administration of a partnership estate, and are brought by the plaintiffs in effect as a step in the administration of the partnership estate, I think the appropriate order in relation to payment of costs is that the costs payable to the plaintiffs pursuant to order 5(d) should be assessed on the indemnity basis. 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: 20 December 2011