Ayshan v Abualadas (No 2)

[2024] NSWSC 824

Supreme Court

New South Wales

Medium Neutral Citation:

Ayshan v Abualadas (No 2) [2024] NSWSC 824

Hearing dates:

On the papers; final submissions 25 June 2024

Date of orders:

8 July 2024

Decision date:

08 July 2024

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

See [74]

Catchwords:

EQUITY — remedies — constructive trust — failed joint endeavour — declaration that joint endeavour property held on trust for sale and division of proceeds — form of declaration — indemnity against capital gains tax liabilities — appointment of independent trustee to effect sale — vesting order —former joint endeavour participants remaining in occupation — mode of sale — trustee’s responsibilities and discretions

Legislation Cited:

Conveyancing Act 1919 (NSW)

Income Tax Assessment Act 1997 (Cth)

Property Law Act 1974 (Qld)

Real Property Act 1900 (NSW)

Trustee Act 1925 (NSW)

Cases Cited:

Ayshan v Abualadas [2024] NSWSC 678

Foundas v Arambatzis [2020] NSWCA 47

MacDiarmid v MacDiarmid (1956) 74 WN (NSW) 170

Makaritis v Makaritis(No 3) [2023] NSWSC 409

McKinlay v Woods [2024] NSWCA 122

Muschinksi v Dodds (1985) 160 CLR 583

Texts Cited:

Nil

Category:

Consequential orders

Parties:

Principal proceedings
Linda Ayshan (First Plaintiff)
Imad Ayshan (Second Plaintiff)
Tareq Subhi Ahmed Abualadas (First Defendant)
Emaan Zarour (Second Defendant)

Cross-Claim filed 8 September 2023
Tareq Subhi Ahmed Abualadas (Cross-Claimant)
Linda Ayshan (First Cross-Defendant)
Emaan Zarour (Second Cross-Defendant)
Imad Ayshan (Third Cross-Defendant)

Representation:

Counsel:
D Robertson (Plaintiffs/First and Third Cross-Defendants)
B Phillips (First Defendant/Cross-Claimant)

Self-represented:
E Zarour (Second Defendant/Second Cross-Defendant)

Solicitors:
Fox & Staniland Lawyers (Plaintiffs/First and Third Cross-Defendants)
Proctor Phair Lawyers (First Defendant/Cross-Claimant)

File Number(s):

Nil

Publication restriction:

2023/166890

JUDGMENT

1. On 27 May, the final day of the trial in these proceedings, I delivered an extempore judgment setting out my conclusions on the parties’ claims. I deferred the making of final orders to allow the parties to consider the form in which those orders should be made. On 31 May, by agreement between the parties, I gave directions for the filing of further submissions on that question. The reasons I delivered on 27 May were revised and published on 3 June: Ayshan v Abualadas [2024] NSWSC 678 (“J1”). In this judgment I deal with the issues which have arisen concerning the form of the final orders.

2. The factual background to the proceedings is set out at J1 [1]-[8]. This judgment assumes familiarity with that background. Terms defined in my previous judgment have the same meaning in this judgment.

3. The parties to the proceedings are two couples: the Ayshans, who are the plaintiffs; and Mr Abualadas and his estranged wife, Ms Zarour, who are the defendants. Without intending any disrespect to Ms Zarour, when I refer to her and her husband collectively I refer to them as the Abualadases. Ms Zarour supported the Ayshans’ position in the proceedings (she is Ms Ayshan’s sister). Effectively, the contest was between Mr Abualadas on the one hand, and all the other parties on the other.

4. The proceedings arise out of the purchase by the parties of a block of residential land at Roselands, and its development into a duplex building consisting of two separate semidetached dwellings. The block was later subdivided into two lots, one for each of the dwellings, but for convenience I will, in this judgment, continue to refer to it as a single property.

5. The property was acquired in the names of Ms Ayshan, Mr Abualadas and Ms Zarour as tenants in common in equal one-third shares. It was common ground at the trial that this did not reflect the parties’ agreed financial contributions, which had been 50-50 between the two couples. The question was what form of trust should be recognised or imposed. In my 27 May judgment, I concluded that the Ayshans’ claim for recognition of a common intention constructive trust over the property failed, and Mr Abualadas’ cross-claim for the imposition of a failed joined endeavour constructive trust succeeded.

6. Pursuant to the directions I made on 31 May, each of the parties propounded a minute of order with supporting submissions. The timetable was extended to allow for a reply on behalf of Mr Abualadas, and then further extended to allow rejoinders on behalf of the Ayshans and Ms Zarour.

Ayshans’ claims

7. As already noted, I rejected the Ayshans’ claim for recognition of a common intention constructive trust. Claims to have other forms of trust interest recognised over the property were not pressed. The orders will therefore provide for the Ayshans’ claims as plaintiffs to be dismissed.

Constructive trust

Terms of declaration

8. In Makaritis v Makaritis(No 3) [2023] NSWSC 409, I dealt with various issues about the formulation of a failed joint endeavour constructive trust over a property following the breakdown of a family relationship. In the course of the hearing, I drew this decision to the parties’ attention. No party asked me to follow a different approach from that which I followed in Makaritis. In order to save time, I will therefore use my decision in that case as a starting point.

9. In Makaritis, I based the wording of the declaration which I made on the wording of the constructive trust proposed by Deane J in Muschinksi v Dodds (1985) 160 CLR 583: see Makaritis at [9]. The trust took the form of a trust for sale. For present purposes, it specified four elements:

1. the date from which the trust was to be imposed;

2. the use of the sale proceeds to repay debts secured on the property (and the expenses of sale and any other outstanding liabilities of the parties associated with the joint endeavour);

3. the repayment of the parties’ contributions to the joint endeavour; and

4. payment of any surplus (after deduction of the trustee’s expenses) to the parties to the joint endeavour in equal shares.

I deal with each of these elements below.

10. Date of imposition of constructive trust: The parties did not address this question. As in Makaritis (see [12]-[13]) I will use the date on which the final orders are made.

11. Joint endeavour debts to be paid out of sale proceeds: There was no dispute about this element of the declaration. National Australia Bank (“NAB”) holds a mortgage over the property which secures borrowings by the parties on title (Ms Ayshan, Mr Abualadas and Ms Zarour). There are three separate loans from NAB to those parties. The loan accounts have numbers ending #9623 (“Loan 1”), #9665 (“Loan 2”) and #8082 (“Loan 3”). On the evidence, there are no other outstanding labilities associated with the purchase and development of the property.

12. Contributions and allowances: All three of the borrowers were (and remain) jointly and severally liable to NAB for each of the loans, but, as between themselves, they divided up responsibility for the repayments. The purchase costs were divided, effectively equally, between the couples, with each couple contributing some of their own monies and borrowing the balance (J1 [27]-[30]). Loan 1 represented the Abualadases’ share and Loan 2 the Ayshans’. Loan 3 was obtained for the purposes of funding the building work. The duplex dwellings were virtually the same in terms of construction and cost (J1 [36]-[37]), and repayments were shared equally between the Ayshans and Abualadases, until 2016 when the Abualadases paid off their share. Thereafter, Loan 3 became the sole responsibility of the Ayshans: see J1 [41].

13. As I recorded at J1 [64]-[65], one of the arguments advanced at the trial by counsel for the Ayshans against the imposition of a constructive trust was that conducting some sort of accounting for the purpose of quantifying the parties’ contributions would impose unnecessary costs. Counsel pointed out that the two couples had gone to great lengths to ensure that their financial contributions were equal and that the NAB borrowings were divided up accordingly. This prompted a concession by counsel for Mr Abualadas that he would not seek any such accounting. Instead, it would be sufficient if the couples’ respective loan liabilities (Loan 1 in the case of the Abualadases; Loans 2 and 3 in the case of the Ayshans) were deducted from their share of the surplus.

14. Counsel for Mr Abualadas maintained this position in formulating the final orders for which he contended. But in his submissions, counsel for the Ayshans objected to the deduction of the parties’ allocated loan balances from their respective shares of the surplus. Counsel pointed out that the labilities to NAB remained joint and several. He submitted that it would be unfair for the Ayshans to be burdened with the repayment of their allocated loans if they did not receive the benefit of “any additional value which those borrowings have generated to their” dwelling in the duplex. Counsel submitted that the proper course was to divide the surplus equally without any deductions to reflect the agreed allocation of the liabilities under the NAB loans.

15. These submissions are directly inconsistent with the position taken by the Ayshans at trial. I have already referred to my findings, which were consistent with the Ayshans’ evidence, about the duplex dwellings and the parties’ financial contributions. I have also referred to the submissions made by counsel at the trial concerning the inutility of ordering an account. In fact, as counsel for Mr Abualadas pointed out, the submissions were also inconsistent with the Ayshans’ pleadings and with the way in which their case was opened for them at trial.

16. It is of course true that the parties remain jointly and severally liable to NAB for each of the loans. But the whole purpose of the failed joint endeavour doctrine is to adjust the participants’ ownership interests at law so as to prevent one of them obtaining a windfall. That is why equity intervenes in the first place. If the participants have made unequal contributions to repaying the borrowings undertaken to fund the endeavour, allowance for that must be made in distributing the proceeds.

17. If the Ayshans had conducted the case on a different basis, they might have been entitled to insist on the parties’ contributions being determined by way of an accounting process. But it is too late for that now. I reject the submissions by counsel for the Ayshans. The declaration will provide for the parties’ shares of the proceeds to be adjusted by reference to the loan balances, as sought by counsel for Mr Abualadas.

18. Before the parties exchanged written submissions, it seems that counsel for the Ayshans foreshadowed an application to index their cash contributions to the purchase of the property (Makaritis at [30]-[34]; but see now McKinlay v Woods [2024] NSWCA 122 at [121]-[134]). But this was not pursued. Nor was any allowance in the nature of rent sought for occupation of the property since the breakdown of the joint endeavour (cf Makaritis at [35]-[43]).

19. Capital gains tax: Everyone appears to agree that there has been a large capital gain on the property. At J1 [48], I quoted from pre-litigation correspondence from the Ayshans’ solicitor, Mr Lockhart, which referred to liability for capital gains tax (“CGT”). Mr Lockhart was trying to persuade Mr Abualadas to agree to a partition of the two properties on the ground that each dwelling in the duplex was held on resulting trust for the couple who was occupying it. Among the benefits Mr Lockhart advanced for his resulting trust analysis was that it would allow each couple to use the CGT exemption for owner-occupied residential properties to avoid any liability for CGT upon sale. In this regard, Mr Lockhart asserted that the parties had agreed to partition the property at the time the dwellings were constructed.

20. On the evidence before me, however, no agreement had been made for partition of the properties at the time the property was purchased: J1 [19]. Mr Lockhart’s contention that each of the dwellings was subject to a resulting trust in favour of one of the couples was untenable. It was not pursued by counsel.

21. This led me to wonder more generally about the CGT effect of imposing a constructive trust over the property. There appears to be no court decision which expressly considers that question. But there is a determination published by the Commissioner of Taxation (ATO Interpretative Decision 2009/129 (“ID 2009/129”) which considers the tax effect of an order appointing a statutory trustee for the sale of property under s 38 of the Property Law Act 1974 (Qld), the equivalent of s 66G of the Conveyancing Act 1919 (“CA”) in this State. I invited the parties to consider the question of CGT in the context of any orders which they might seek to give effect to my decision.

22. The CGT provisions of the Income Tax Assessment Act 1997 (Cth) (“ITA”) operate by designating various types of transaction as giving rise to a “CGT event” which then triggers a taxable capital gain for the purposes of the Act. ID 2009/129 considered a number of potential CGT events which can arise in the course of a sale under s 38.

23. Ordinarily, the creation of a trust over property so that it is thereafter held by a trustee gives rise to CGT event E1. But according to ID 2009/129, the requirements of event E1 are not satisfied where the trust is created by order of a court, or otherwise by operation of law. But upon the transfer of the legal title of the property to the trustee, CGT event A1 arises and this triggers a capital gain in the hands of the former co-owners, the gain being the difference between the value of the property at the time of the transfer to the trustee and the cost base incurred by the co-owners in originally acquiring the property.

24. Strictly speaking, the sale of the property by the trustee then gives rise to a further CGT event A1 for the trustee, the gain being the difference between the sale price and the value of the property at the time it was transferred to the trustee. But the Commissioner usually accepts that the sale price will have represented the value of the property at the time of transfer to the trustee. Unless there is reason to believe that there has been a movement in value between the transfer and the sale, the sale price is therefore treated as representing the value of the property for the purpose of the co-owners’ gain or loss, and there is no gain or loss for the trustee.

25. The same analysis would appear to apply to an order imposing a constructive trust over the Roselands property. No party submitted to the contrary.

26. It therefore appears that (subject to the availability of the exemption for owner-occupied residential property) the transfer of the Roselands property to the Trustee (see [33]-[34] below) will result in a substantial capital gain. Counsel for Mr Abualadas asked me to make allowance for this in my orders. Counsel pointed out that the capital gain will be divided between the holders of the legal title and thus will be split three ways between Mr Abualadas, Ms Zarour and Ms Ayshan. Counsel asked me to provide for an adjustment of 25% of the total capital gain between the Abualadases and the Ayshans to equalise the tax burden.

27. Counsel for the Ayshans opposed the making of any such adjustment. Counsel emphasised that the liability was that of the parties, not that of the Trustee, and they could be relied upon to comply with their own income tax obligations. Counsel also noted that the availability of the exemption was unclear and had not been considered by his clients. In her submission, Ms Zarour went further and asserted that “any capital gains tax implications are expected to be minimal or non-existent”.

28. I do not accept these submissions. It is not necessary to determine in the present proceedings whether the exemption is available. It is sufficient to say that, on the evidence, it may not be. I have already explained why I am not prepared to accept Mr Lockhart’s confident assertions on this point. The same goes for Ms Zarour’s assertion that the Abualadases were eligible for the exemption because they had lived in their dwelling since moving in. Neither the Abualadases nor the Ayshans occupied the whole of the relevant property, at least before it was subdivided. I do not think that it is a foregone conclusion that the exemption was available to either couple, at least during that period.

29. It follows that the making of the adjustment sought by counsel for Mr Abualadas cannot simply be waved away on the basis that the question of liability will not arise. Rather, the question for the Court is whether, given that such a liability may arise, provision should be made to accommodate that possibility.

30. In this regard, I do not think that the point taken by counsel for the Ayshans, namely that the liability is a liability of the co-owners, is of any significance. Again, the existence of liabilities at law upon the breakdown of the joint endeavour is a reason for equitable intervention, not an obstacle to it. In my opinion, any liability for capital gains tax on the sale of the property must be seen as equivalent to a contribution to the joint endeavour. It should be discharged out of the sale proceeds. The declaration will therefore provide for the parties to be indemnified from any such liability before any division of the remaining surplus between the parties.

31. Distribution of surplus: For reasons given above, the division of the sale proceeds after the discharge of the NAB loans (and any CGT liability of the owners arising on the transfer of the property to the independent trustee) will, subject to the deduction of the discharge amount for Loan 1 to the Abualadases and the deduction of the discharge amounts for loans 2 and 3 to the Ayshans, be equal between the two couples. Determinations of the couples’ rights inter se is addressed below.

Appointment of independent trustee

32. As explained at J1 [64]-[66] and [86], I did not think that the Court should simply make a declaration of constructive trust for sale against the existing co-owners. I considered that bad blood between the parties required the appointment of an independent trustee to effect the sale and wind up the trust’s affairs when that has been done.

33. Mr Abualadas nominated Mr Blair Pleash to act as trustee and this nomination was not opposed by the other parties. Subject to a point raised by Ms Zarour which I deal with below, my orders will therefore provide that, immediately upon the declaration of trust being made against the existing owners of the property, Mr Pleash (“the Trustee”) will be appointed as a replacement trustee to oversee the sale.

34. It was common ground that the Trustee’s position would be analogous to that of a trustee for sale appointed by the Court under CA s 66G. Counsel for Mr Abualadas proposed, consistently with s 66G(1), that, upon the appointment of the Trustee, the Court should make a vesting order in his favour, and this was not opposed either. As the Roselands land is under Torrens title, such an order will not immediately vest the legal title in the Trustee (Trustee Act 1925 (NSW), s 78(3)). But it will allow him the ability to make application for the necessary registration directly to the Registrar General (Real Property Act 1900 (NSW), s 86).

35. The orders proposed by counsel for Mr Abualadas also provided for the Trustee to be entitled to charge for his services at nominated insolvency rates. Again there was no objection from the other parties.

36. While accepting my decision to appoint an independent trustee, Ms Zarour sought a variation to the proposed orders to allow for herself and the Ayshans to have “first option” to purchase the property. Under the proposed orders, the parties would have 30 days to agree a purchase price, failing which the price was to be determined by an independent valuer. The Ayshans and Ms Zarour would then have a right, but not an obligation, to purchase the property within a further 14 days. The sale contract would be subject to “the usual terms and conditions of sale”. Only if the Ayshans and Ms Zarour failed to exercise their right to purchase would Mr Pleash be appointed as the new trustee and proceed with the sale.

32. Ms Zarour contended that she had a right, or at least should have the opportunity, to retain the Abualadases’ dwelling in the duplex for herself and their children, who live with her. She submitted that since her separation from Mr Abualadas in February 2021, she has been solely responsible for maintaining the dwelling, including the payment of taxes and utilities, and has made “extra mortgage payments” and undertaken “substantial property renovations” which have increased the dwelling’s value.

33. Ms Zarour referred, in this regard, to her proceedings against Mr Abualadas in the Federal Circuit and Family Court (to which I will refer, for simplicity, as the “Family Court proceedings”). She stated that her contributions to the property had been “presented” to the Family Court and she expected they would be “addressed in those proceedings”. She had not thought that she would need to provide details of them in this case.

34. Ms Zarour submitted that it was in the best interests of the Abualadases’ children to continue to live at the Roselands dwelling. She further submitted that, in the event of a forced sale, she would be deprived the opportunity to obtain a settlement in the Family Court proceedings which would allow her to retain the dwelling.

35. On a factual level, Ms Zarour’s submissions do not rise above assertion. They are not based on any findings by me in my principal judgment. Even if Ms Zarour did actually think that she could leave everything to be dealt with in the Family Court proceedings, that would not solve the problem. If Ms Zarour wished to resist Mr Abualadas’ claim in these proceedings on factual grounds, whether going to the grant of relief or the form of that relief, it was up to her to present evidence of those facts to the Court. She may be self-represented, but the Court cannot treat her differently on that account.

36. In any event there are more fundamental difficulties with Ms Zarour’s submissions. I have found that Mr Abualadas has an entitlement in equity to have the property sold so as to discharge the liabilities secured on it, and to have the surplus distributed among the participants in the joint endeavour. That entitlement cannot be displaced by complaints of hardship: cf Foundas v Arambatzis [2020] NSWCA 47 at [63]; see also J1 [65]-[67].

37. If Ms Zarour and the Ayshans, between them, have the financial capacity to buy the property, there is nothing to stop them making an offer to the Trustee, or from bidding at the auction. What Ms Zarour is really seeking is to postpone the sale and interpose an option mechanism to suit her interests. As I discuss in more detail below, it would not be proper for the Court to proceed in that way over Mr Abualadas’ objection.

38. The same problem can be seen when one considers the form of the orders proposed by Ms Zarour. She would allow the declaration of trust to go into effect but defer the appointment of the Trustee (and the vesting of the property in the Trustee) until she and the Ayshans have had an opportunity to purchase the property at a valuation determined by an independent valuer. But once the declaration has gone into effect, the co-owners’ obligation becomes an obligation to sell the property to the best advantage of all of the participants in the joint endeavour. They would no more be justified in delaying the sale or adopting a sale mechanism designed to advantage the co-owners who are still in occupation than an independent trustee would.

39. For these reasons, I reject Ms Zarour’s proposal. My orders will provide for the immediate appointment of the Trustee and the vesting of the property in him.

Directions to trustee

45. Counsel for Mr Abualadas proposed an order authorising the Trustee to engage the services of such real estate agents, Australian legal practitioners or licenced conveyers as he might consider appropriate to assist him to discharge his duties. There was no objection to this proposal from any of the other parties.

46. Next counsel for Mr Abualadas sought orders requiring Ms Zarour and the Ayshans to vacate the premises by 15 July and providing that, upon vacation, any chattels remaining at the property were deemed to have been abandoned and might be disposed of by the Trustee. In the event that the relevant parties failed to vacate by the nominated date, the Trustee was to have leave to obtain a writ of possession.

47. There was no opposition to the making of such orders as a matter of principle. But both the Ayshans and Ms Zarour sought more time to vacate. Ms Zarour sought to postpone the date for vacation until 18 August. She claimed that it was only on 27 May that she became aware that, if her estranged husband’s claim succeeded, she would need to vacate the property. She added that, on her understanding, the time for vacation would only begin to run once final orders were made. Ms Zarour submitted that 28 days was inadequate, particularly having regard to her obligations as primary career for the Abualadases’ children. In particular, she stated that the Abuladases’ eldest child was diagnosed with a medical condition in early June which resulted in surgery.

48. Finally, the written submissions by way of rejoinder for the Ayshans proposed some directions to facilitate the purchase by them of the dwelling they are occupying in the duplex (Lot 200). The submissions referred to CA s 66I, which allows the Court, upon the appointment of a statutory trustee for sale, to fix terms on which the co-owners may purchase the property from the trustee. Those terms may include a reduced deposit or a set-off between the purchase price and the distribution to which the co-owner is entitled. The argument was that the Court should make orders of this type in favour of the Ayshans.

49. Before addressing these proposed orders individually, it is convenient to say something about the Trustee’s duties and powers in general. The Trustee’s obligation will be to realise the Roselands property for the maximum return which can reasonably be obtained in the current market. To this end, the Trustee, like any trustee, is entitled to retain professional advisors to assist him with the discharge of his duty. No express authorisation is required, although directions may be sought by the Trustee, or by any other parties, in the case of uncertainty.

50. The Trustee will have a discretion, unless the Court makes a specific direction to the contrary, as to the mode of sale. The Trustee is not obliged to sell the property at a public auction, but may sell it by private treaty, or by any other method, if that is likely to secure a better return. That will be the paramount consideration. The suggestion on behalf of the Ayshans that they have some ongoing interest in Lot 200 which the Trustee or the Court should take into account is incorrect. Upon the Trustee’s appointment, the existing co-owners will have no more than an entitlement to enforce the terms of the trust.

51. The Trustee’s obligation to maximise the return to the parties will include maximising any income from the property prior to sale. Once he is registered as the proprietor of the property, the Trustee will be entitled to require any of the co-owners still in occupation to vacate or to pay rent: see MacDiarmid v MacDiarmid (1956) 74 WN (NSW) 170. Arguably that entitlement will arise on the Trustee’s appointment, but, in order to avoid any argument, the Trustee’s duty will be to obtain registration as soon as possible. He will then be obliged to negotiate the best available terms for payment of rent until the sale takes place.

52. In exercising his powers, the Trustee will be obliged to act neutrally between the former co-owners. In particular, if the Ayshans or Ms Zarour remain in occupation, financial or other hardship to them from having to vacate will be irrelevant to the discharge of the Trustee’s duties.

53. I now return to the proposed orders. There is no need for the order authorising the Trustee to retain real estate agents etc, but there is no harm in making the order. It should however be clearly understood that making the order will not prevent the Trustee from obtaining any other professional assistance if he sees fit.

54. As to the debate about when the property should be vacated, the response to Ms Zarour’s submissions is the same as it was for deferring the appointment of the Trustee. Hardship is not relevant. Both the Ayshans and Ms Zarour have had ample time to get ready. At the hearing on 31 May, I specifically warned them that the clock was ticking despite the fact that final orders had not yet been made.

55. Nevertheless, I am not sure that fixing a date is desirable. As I have said, the Trustee’s obligation will be to sell on the current market. But it may take some time for the Trustee to take advice and prepare for sale if the best available price is to be achieved. The problem with the Court specifying a particular date for the existing occupants to vacate is that it deprives the Trustee of the flexibility needed to maximise the ultimate return.

56. For these reasons, I do not propose to make any order requiring Ms Zarour or the Ayshans to vacate. I will leave it up to the Trustee’s judgment to make arrangements with them about when they vacate, and what rent they are to pay in the in the meantime. I will however give the Trustee liberty to apply for a writ of possession on short notice should he experience any difficulty in obtaining possession for the purposes of sale. In saying this, I make it clear that, if he considers that it is in the interests of maximising the ultimate return to do so, the Trustee may require possession in less than 28 days.

57. This brings me to the suggestion that the Court should make orders to facilitate the purchase by the Ayshans of Lot 200. Again, this falls squarely within the Trustee’s discretion. It is up to him to decide whether the two Lots should be sold in one line or separately. But if they are sold separately, facilitating a bid by the Ayshans for Lot 200 may assist with maximising the sale price and justify concessions in their favour so far as the amount of the deposit or a set-off against the purchase price are concerned. Of course, the costs of sale and of the Trustee’s administration will have to come out of the sale proceeds. Monies may also have to be withheld to meet CGT liabilities. For these reasons, a full set-off may not be justified.

58. In the end, there is no need to make an order about this. I will leave it to the judgment of the Trustee, guided, no doubt, by professional advice. If the Trustee feels any other directions are necessary, he may approach the Court for guidance.

Entitlements of couples inter se

59. As already noted, my contemplation on 27 May was that the orders made by the Court would deal only with the entitlements of each couple as against the other and that I would reserve further consideration of each couples’ rights inter se to a later point.

60. Counsel for the Ayshans submitted, however, that the determination of rights inter se was not necessary as between them. They did not seek any reservation of that question.

61. Ms Zarour also contended that there was no need to reserve the question of entitlement between her and Mr Abualadas as to how their proceeds should be divided up between them. She submitted that the issue would be dealt with in due course in the Family Court proceedings and sought an order for payment of the Abualadases’ share into a joint interest bearing account to abide by the outcome of those proceedings.

62. Counsel for Mr Abualadas acknowledged that questions of contribution, both monetary and non-monetary, to the marriage would inform the ultimate division of the Abualadases’ matrimonial pool of property in the Family Court proceedings. Counsel pointed out that the hearing was some time away yet.

63. On further reflection, it seems to me that the division of each couple’s entitlement amongst themselves does not need to be undertaken to make final orders in these proceedings. For practical purposes, I have only been concerned with the couples’ rights as against each other. The property can be sold, and the proceeds divided among the couples, without the need to go on and consider what entitlements they may have to their share of the proceeds amongst themselves. Once the property has been sold and the parties’ entitlements amongst themselves determined, the Trustee will be able to complete his task by paying each couple’s share into a joint bank account. If necessary, he may insist that the couples open or nominate such a bank account for that purpose. The division of the proceeds will give rise to quite different factual, and legal, questions with which the Trustee should not have to be concerned.

64. In these circumstances, I accept that there should be no reservation of the question of the Ayshans’ entitlements to their share of the proceeds as against each other. But although the question of division of the Abualadases’ share amongst themselves gives rise to separate questions from those so far considered in these proceedings, I do not think it would be reasonable to compel them to commence fresh proceedings at this point. For better or worse, the Court has some familiarity with the background. It may be that, if the issue is brought back to the Court, the Court will decide to leave the matter to the Family Court proceedings, or possibly some different proceedings elsewhere. But I think that Mr Abualadas should be given the opportunity to argue that this Court should deal with the question. I therefore propose to make an order reserving it for further consideration. Whether the Court will ultimately deal with it is another matter which will be considered in due course.

Costs

65. I dealt with costs in my judgment of 27 May: see J1 [85]-[100]. The parties are agreed on the form of orders to be made.

Stay

66. Counsel for the Ayshans proposed that the final orders made by the Court should be stayed for an initial period of 28 days to allow any of the parties to bring an appeal against the Court’s decision, and, in the event that an appeal is brought, that the stay continue until the determination of any such appeal. Counsel submitted that such a stay was justified because otherwise the Roselands property would be sold. Counsel submitted that the parties would “suffer irreparable prejudice” if that happened and an appeal later succeeded.

67. Ms Zarour supported the stay application. In her submissions she stated that she had “made preliminary enquiries for a review” of the judgment for the purposes of assessing the merits of an appeal, but had understood that this would need to occur “after final orders had been made and not before”.

68. The situation is unsatisfactory. As counsel for Mr Abualadas pointed out, the Ayshans and Ms Zarour have had ample opportunity to consider my decision, yet they are not in a position to say that definite instructions have even been given to mount an appeal, much less to identify the grounds of any such appeal. In particular, I reject the suggestion that Ms Zarour was entitled to wait for the making of final orders before considering her appeal rights.

69. The way in which the stay application has come forward places the Court in a difficult position. Without knowing what alternative orders are sought, it is impossible to make any sensible analysis of the practical effects that denying a stay might have on the Ayshans or Ms Zarour. And, without being able to assess their grounds of appeal against the judgment (which is presumptively correct), the Court cannot make any fair assessment of the balance of convenience.

70. What can be said at this point is that the claim of “irreparable prejudice” is an exaggeration. On no view is this the sort of case where the right of appeal will be rendered nugatory unless a stay is granted. And even if Mr Abualadas were for some reason not entitled to equitable relief, he would still, on the face of it, be entitled to a sale order under CA s 66G.

71. If they wish, the Ayshans and Ms Zarour will be able to bid for the Roselands property when it is sold by the Trustee. If an appeal is ultimately allowed, then restitution or compensation will be available for such loss as they may have suffered. Having to buy back the property may result in inconvenience and expense, but that can hardly be described as “irreparable prejudice”.

72. Nevertheless, I am unwilling to determine the question of a stay finally at this point. What I will do is grant an interim stay to allow the Ayshans or Ms Zarour, if so advised, to file appeal proceedings and bring an application before the Court of Appeal for an extension of the stay until the determination of those proceedings. If such an application is made, a Judge of Appeal will be better placed than I am to evaluate the relevant factors in the light of whatever hearing dates may be available.

73. The stay, however, should only be for a short time. Given the time the Ayshans and Ms Zarour have already had, I do not think I should allow longer than seven days. Nor do I propose to stay the operation of the costs orders. I see no justification for preventing Mr Abualadas, if he wishes, to move to have the amounts owing assessed.

Orders

74. The orders of the Court are:

1. Dismiss the plaintiffs’ claims.

2. Declare that, on and from the making of these orders, the cross-claimant, the first cross-defendant and the second cross-defendant (“the Co-Owners”) hold their legal interests in the land contained in the Certificates of Title with New South Wales Folio Identifiers 200/1188818 and 201/1188818 (“the Property”), upon trust (“the Trust”) for sale of the Property and, following its sale, distribution of the sale proceeds (net of sale costs and the costs of discharging the loans secured on the property, namely loan accounts with numbers ending in 9623 (“Loan 1”), 9665 (“Loan 2”) and 8082 (“Loan 3”)) and the net income, if any, earned from the Property prior to sale or earned on the proceeds prior to distribution, in the following sequence:

1. to pay any expenses incurred by the trustees for the time being of the Trust, and any remuneration to which those trustees may be entitled, in the course of their administration of the Trust;

2. to indemnify the cross-claimant, the first cross-defendant and the second cross-defendant against any liability for capital gains tax which may fall upon them by reason of the transfer of the Property out of their names; and

3. to distribute the balance in equal shares between the cross-claimant and the second cross-defendant (“the Abualadases”) on the one hand, and the first and third cross-defendants (“the Ayshans”) on the other, but deducting from the Abualadases’ share the amount paid to discharge Loan 1, and deducting from the Ayshans’ share the amounts required to discharge Loans 2 and 3.

3. Order that Blair Pleash (“the Trustee”) be appointed as the trustee of the Trust in place of the Co-Owners.

4. Order that the Property be vested in the Trustee subject to any encumbrances affecting the entirety of the Property but free from encumbrances (if any) affecting any undivided share or shares therein.

5. Order that the Trustee and other staff of his professional firm under his supervision be entitled to remuneration at the rates set out in Court Book 3/457-458 for work performed on administering the Trust.

6. Order that the Trustee be authorised to engage the services of such real estate agents, Australian legal practitioners or licensed conveyancers as he considers appropriate in the circumstances for the purposes of assisting him in relation to the performance of his duties in respect of the sale of the Property.

7. Reserve to the Trustee liberty to apply on short notice for any orders or directions (including the issue of a writ of possession) which may be required to obtain vacant possession of the Property.

8. Order that the first plaintiff (and, from 23 May 2024, the second plaintiff) pay the first defendant’s costs of their claim against him, including the general costs of the proceedings.

3. Order that the first and second cross-defendants (and, from 22 May 2024, the third cross-defendant) pay the costs of the first defendant/cross-claimant solely referable to his cross-claim, limited to the period from 22 May 2024 onwards.

4. Reserve for further consideration the beneficial entitlements among themselves of the Abualadases to the distribution to which they are entitled from the Trust.

5. Relist the proceedings on 15 October 2024 for directions on the reserved issue.

6. Stay the operation of orders (2) to (7) for seven days.

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Decision last updated: 08 July 2024