Chen v Eumeralla Estate Pty Ltd (No 2)
[2022] VCC 2030
| IN THE COUNTY COURT OF VICTORIA AT Melbourne COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
General List
Case No. CI-20-02509
| Zhiying Chen | First plaintiff |
| and Xiufeng Chen v | Second plaintiff |
| Eumeralla Estate Pty Ltd (ACN 622 510 276) and others according to the Schedule attached | Defendants |
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JUDGE: | HER HONOUR JUDGE A RYAN | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 3 November 2022 | |
DATE OF RULING: | 28 November 2022 | |
CASE MAY BE CITED AS: | Chen v Eumeralla Estate Pty Ltd (No 2) | |
MEDIUM NEUTRAL CITATION: | [2022] VCC 2030 | |
REASONS FOR RULING
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Subject:PRACTICE AND PROCEDURE – ANCILLARY RELIEF
Catchwords: Ancillary relief sought by the plaintiffs to further the enforcement of Court ordered sale of property – orders sought for the third defendant to deliver up keys to a court appointed real estate agent and to vacate the property by a specified date – indemnity costs
Legislation cited: Civil Procedure Act 2010
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr N Paterson | Jem Lawyers |
| For the Defendant | Mr O Wolahan | Hiways Lawyers |
SCHEDULE OF PARTIES
BETWEEN
Zhiying Chen First plaintiff
Xiufeng Chen Second plaintiff
and
Eumeralla Estate Pty Ltd (ACN 622 510 276) First defendant
Bo Xuan Second defendant
Chi Yung Chan Third defendant
HER HONOUR:
1On 4 November 2022, I made various orders (“the Orders”) after hearing an oral interlocutory application brought by the plaintiffs for ancillary and injunctive relief the day before. On 9 November 2022, the defendants’ solicitors requested written reasons for my decision. This ruling comprises those reasons.[1]
[1] The provision of these reasons was slightly delayed in part to my taking annual leave and ill health.
2This proceeding has a long and protracted history. After a lengthy trial, His Honour Judge Macnamara made orders on 21 May 2021, declaring inter alia that the plaintiffs were part owners of 695 Toorak Road, Kooyong (“the property”) owned by the third defendant by way of trust as to an interest of 11 percent and ordering that the property be sold by public auction.[2] Extensive orders were also made setting out the various steps required to effect a court ordered sale of the property (“the sales orders”). The defendants appealed His Honour’s judgment. The defendants were granted stays of the sale orders and variations of those orders pending appeal.[3] The defendants’ appeal was dismissed on 2 May 2022.[4] The plaintiffs’ subsequent attempts to enforce the sales orders made by Judge Macnamara have been thwarted by the defendants’ repeated refusal to co-operate with the steps prescribed.
[2] See Chen & Anor v Eumeralla Estate Pty Ltd & Ors [2021] VCC 453
[3] Orders of Judge Macnamara dated 12 August 2021
[4] Eumeralla Estate Pty Ltd & Anor v Chen & Anor [2022] VSCA 78
3Since the dismissal of the appeal, the defendants have:
(a) failed to pay the monetary component of the judgment;
(b) refused to agree on the appointment of a real estate agent and solicitor to sell the property, necessitating that orders be made by Judicial Registrar Muller appointing such on 14 June 2022;
(c) unsuccessfully sought, by application made 19 August 2022, to have the appointed estate agent replaced, asserting that she was not acting in the best interests of the owners of the property (the third defendant and the plaintiffs) on the basis that the defendants did not agree with the agent’s sale price estimate;
(d) failed to sign papers to appoint the estate agent confirmed by the Judicial Registrar, necessitating that the Judicial Registrar do so by Order dated 4 September 2022;[5]
(e) refused to agree to the estate agent’s recommendation that the property be staged with furniture to achieve a better sale price;[6]
(f) attempted, after the Judicial Registrar’s orders of 30 August 2022, to interfere in the estate agent’s proposed auction timetable and reserve price;[7]
(g) filed a personal safety intervention order against the estate agent, Ms Tian, in respect of which the agent denies the conduct alleged and which Ms Tran, the plaintiffs’ solicitor, expresses a belief that it is no more than a ploy;[8]
(h) failed, despite various promises made by their solicitors, to allow the estate agent access to the property to take photographs of it;[9]
(i) in that context and following a request made 14 September 2022,[10] refused to hand over a set of keys to property to the estate agent to facilitate inspections and other sale processes;[11]
(j) agreed to inspections to be coordinated each Saturday, commencing 24 September 2022;[12] but
(k) on 3 October 2022 asserted that the property should not be sold, pending repairs to it,[13] having obtained an inspection report;[14] and
(l) on 30 August 2022, Judicial Registrar Muller ordered that the third defendant pay the plaintiffs' costs and incidentals to the application fixed in the sum of $5,000 within 30 days from that date. The third defendant failed to do so until the day before the hearing on 3 November 2022.[15]
[5]See paragraphs [12] and [13] of the affidavit of Jennie Tu Tran sworn 4 October 2022 (“the Tran Affidavit”) and the orders of 4 September 2022
[6]Paragraph [10] of the affidavit of Rui Tian; see also the defendants’ solicitor letter extracted at paragraph [12(b)] of the Tran Affidavit
[7] Paragraph [12(b)] of the Tran Affidavit
[8] Paragraph [14] of the Tran Affidavit; Ex JTT1 p41
[9] Paragraphs [16] of the Tran Affidavit
[10] Paragraph [16(g)] of the Tran Affidavit; Ex JTT1 p49
[11] Paragraph [16(h)] of the Tran Affidavit; Ex JTT1 p50
[12] Ex JTT1 at pp49, 50, 52, 53, 54
[13] Ex JTT1 p56
[14] Ex JTT1 p58-121
[15] Paragraph [30] of the Tran Affidavit
4Against this background, the plaintiffs filed a summons on 19 October 2022 seeking the following orders:
(a) requiring the second and third defendants deliver to the plaintiffs’ solicitors a set of keys to the property within 24 hours of the date of any order made;
(b) requiring the defendants to remove all chattels from the property within 7 days of the date of any order made; and
(c) restraining the defendants, whether themselves or by their servants or agents, from:
(i)coming any closer than 500 metres to the property;
(ii)damaging the property or its fixtures or fittings;
(iii)altering or causing any person to alter or repair the property, save with the express written consent of the solicitors for the plaintiffs;
(iv)impeding or attempting to impede any agent appointed to sell the property or that agent’s staff (“the agent”) from accessing the property or doing anything related to the sale of the property;
(v)participating in the sale of the property;
(vi)interfering in the sale of the property, including but not limited to: communicating with the agent, communicating with potential purchasers, communicating information to any person or doing any thing that might reasonably expected to delay or hinder the sale of the property; and
(vii)inducing others to do any of the things listed above.
5The plaintiffs also sought an order that the defendants pay the costs of their application on an indemnity basis.
6At the hearing on 3 November 2022 (“the hearing”), the plaintiffs relied on their written submissions dated 2 November 2022, along with the affidavit of Jennie Tu Tran filed 4 October 2022, and the affidavit of Rui Tian filed 29 August 2022. In opposition to the plaintiffs’ application, the defendants relied upon an affidavit of Jeff (Chi Yung) Chan, the third defendant, dated 2 November 2022.
7At the start of the hearing, counsel for the plaintiffs objected to Mr Chan’s latest affidavit dated 2 November 2022 being received into evidence. Counsel noted that the affidavit was only filed on the afternoon before the hearing, and that it raised various matters and annexed material that would require a detailed response. The plaintiffs did not seek further time to respond, but instead submitted that this late filing was yet another example of ongoing and unreasonable delay on the defendants’ behalf, and that the affidavit ought not be admitted in the circumstances. Whilst I agreed the delay was unfortunate, the Chan affidavit appeared to contain relevant and admissible material. I indicated that unless the plaintiffs wished to make an application to adjourn the proceeding to allow them further time to consider the affidavit, I would admit it into evidence. Counsel for the plaintiffs chose to continue with the application and the matter proceeded.
8The agents do not have keys for the property and have not been able to take internal photographs in order to prepare marketing materials.[16] The plaintiffs allege that the sales efforts for the property have effectively come to a halt for that reason. The agents depose that the property contains various furniture and belongings which, in their view, will not assist in achieving the highest sale price for the property and that they are concerned that the defendants will not allow access to the property for inspection by potential purchasers.[17]
[16] Paragraph [18] of the Tran Affidavit
[17] Ibid
9As there was evidence from the third defendant to say he is still living in the property, I told the parties it would therefore be inappropriate for the agents to be given a set of keys and to come and go as they pleased. However, I also noted that some arrangement would need to be put in place for the agents to gain limited access to the property in order to progress the sale.
10The defendants’ counsel agreed that the sale had to proceed, submitting that:
“…the sale order needs to be effected, it’s in place…the third defendant needs time to move out. He says there are safety issues that if rectified he will undertake at his own expense. In my submission he should hand over the keys at the end of a reasonable period of time to move out and attend to those safety issues. On his evidence, there’s a builder that says he can fix the issues in 4 to 6 weeks… I would ask your Honour to take judicial notice of a worker shortage in qualified tradespeople, I would be pessimistic about the 4 to 6 weeks. Perhaps a period of 2 months.
What I don’t want to happen is that, is applications for more time where the parties in any way have to negotiate. It would be better if there be some sort of clean break, so a period of time to fix the issues, to move out, and then essentially there’s a black line, he hands the keys over and that’s it. And if, you know, counsel need to confer as to an appropriate order to put that in place I would certainly be very happy to have that conversation with my learned friend, perhaps we could adjourn shortly, or perhaps we can talk about it open court. That is in my submission the way forward.”
11The plaintiffs suggested that a “middle position” regarding the proposed order that keys to the property be given to the agents might be a requirement that a certain period of notice be given to the defendants before the agent attends the property. They also suggested that, although the third defendant would need some time to vacate and remove his goods from the property, he should have done so already and now ought be required to do so within a fairly short timeframe. Noting the protracted history between the real estate agent and second and third defendants as the former attempted to come and take photos of the property for sale, they suggested that the matter was at a stage where there was no genuinely workable way for the defendants to be left in total control of access to the premises if the sale were to be effected. Counsel for the plaintiffs emphasised that the majority of the benefit of the sale of the property, being the net value after the first mortgage to ANZ Bank was paid out, would go to the plaintiffs, and that the defendants had very little real financial interest remaining in it. In addition to the 11 percent interest, the plaintiffs also hold a second mortgage over the property in the sum of $370,000 to secure the judgment.
12Counsel for the defendants agreed that the third defendant would need to vacate the premises, but argued that he would need time to do so as it is currently his primary place of residence. He also agreed that the sale must proceed, and suggested that it was in all parties’ interest to maximise the sale process. He raised the issue of reasonable notice in the plaintiffs’ suggested process regarding the keys, submitting that instead “there should be … an order that presents a drop dead date with perhaps directions from the Court that any attempt to extend that date will be looked at with extreme scepticism”. Counsel for the defendants suggested that whether or not the Court accepted that the repairs were required, an order could be made providing a date for the third defendant to have “severed any connection with the property”. Counsel suggested that the Court “could pick a similar time” period for the third defendant to be required to vacate the property and return the keys as the period nominated by the defendants as necessary for the repairs to be carried out, being approximately eight weeks, and that the third defendant could conduct any repairs he considered necessary during that period.
13Counsel for the plaintiffs submitted that the repairs raised in the builders report annexed to Mr Chan’s affidavit were simply the latest in a long string of reasons proposed by the defendants why the property should not be sold. The plaintiffs asked that the property be sold as is, describing the report as a mere opinion. They suggested that if the proposal had been raised earlier, the plaintiffs may have considered it, but in circumstances where eighteen months had passed since the original judgment and six months since the Court of Appeal’s judgment, the plaintiffs had no faith that the third defendant was genuine in his proposal regarding the repairs. The plaintiffs submitted that there was no evidence that the repairs, even if effected, would improve the value of the property. Moreover, although the third defendant asserted in his affidavit that he would pay for the repairs, counsel for the plaintiffs submitted that there is no evidence that he has the means to do so.
14I declined to accede to the third defendant’s request that the sale process be further delayed so that some mooted repairs could take place over an unspecified period, particularly, in circumstances where it was unclear that Mr Chan could pay for those repairs. There was also no evidence, apart from the third defendant’s self-serving statement, that if the repairs were not undertaken, this would have an adverse effect on the sale price that could be achieved for the property.
15Taking up on the defendants’ counsel’s earlier suggestion, I proposed standing the matter down so that parties could discuss proposed orders and submit a minute of consent, if possible. The parties agreed, the plaintiffs noting that they would not resile from their position that repairs and maintenance should only be effected by the defendants on the property with their consent. I told the parties I was minded to make an order that the third defendant vacate by a particular date to be agreed upon between the parties, by which the defendants would have removed all chattels from the property and have left it in a clean condition. I also indicated that an order should be made requiring the keys to be handed forthwith to the real estate agent on appropriate terms regarding access. I said that I would be content to make an order along the lines of the one proposed regarding repairs being conducted but only with the consent of the plaintiffs’ solicitor. I noted that all of these orders seemed reasonable to me having regard to the lamentable history of the matter, including the defendants’ past obstructive behaviour. I told the parties that I considered the plaintiffs’ fear that the defendants would continue to act in this way had, in my opinion, a real basis.
16I also said to the parties that I considered the orders proposed by the plaintiff in paragraph 3 of their summons seemed reasonable, subject to the plaintiffs giving an undertaking as to damages. Counsel for the plaintiffs said that he had instructions to give that undertaking. He said the plaintiffs would provide the Court with a breakup of the amount sought in costs if the parties could not agree on a final figure. Counsel for the defendants noted that he would ask the plaintiffs to agree to some amendments to paragraph 3 of the summons, in particular, to the prohibition on communication between the defendants and the estate agent. Counsel for the plaintiffs said he would be happy to discuss that and the matter was stood down for those discussions to take place.
Proposed form of Order prepared by the parties
17Later that afternoon, my chambers received an email from counsel for the plaintiffs copying all parties (“the email”), and attaching a word document setting out a proposed minute of order (“the proposed orders”). As noted by counsel in the email, the proposed orders were broadly set out in accordance with the orders proposed in that morning’s hearing, but contained some amendments agreed between the parties, and some marked up changes that remained contentious. As stated in the email, subject to my wishing to hear further from the parties, the parties were content for me to resolve the remaining issues on the papers.
18In paragraph 1 of the proposed orders, the plaintiffs proposed the following order:
The second and third defendants deliver to plaintiffs’ solicitors a set of keys to the property located at 695 Kooyong Road Toorak (Property) within 24 hours of the date which the plaintiffs’ solicitors undertake to provide to the agent conducting the sale of the Property (Agent) upon receipt of a written undertaking by the Agent and each person to whom the Agent proposes to provide the keys, to the effect that they will each not access the Property, until the time provided in order 2 hereof, except:
a. between the hours of 9am and 6pm on Monday to Saturday;
b.for the purpose of taking photographs, inspections or showing the Property to prospective purchasers; and
c.having given the defendants no less than 48 hours notice by email to [the third defendant’s email] of the date and time of the access,
and only otherwise if they have obtained the prior written consent of the solicitors for the defendant.
19The defendants opposed this proposed order, submitting in the email that any requirement for them to hand back keys before vacancy would be onerous and resisted in circumstances where they do not trust the estate agent. It should be noted here that the agent, against whom an intervention order was taken out, has put in place arrangements for another estate agent from her agency to deal with the sale process so as to avoid any potential contravention of the intervention order.[18]
[18] Paragraph [15] of the Tran affidavit
20Paragraph 2 of the proposed orders dealt with the date by which the defendants must vacate and remove all chattels from the property. The plaintiffs proposed 11.59pm on 3 December 2022 as the cut off, while the defendants proposed 11.59pm on 10 January 2023. The defendants submitted that the third defendant would need longer to vacate, noting in the email that evicted tenants ordinarily receive 60-90 days to leave a rental property for notices to vacate without cause. Noting that Christmas shut downs would also have an impact, they requested 60 days plus about one week from the date orders were made.
21Paragraph 3 of the proposed orders dealt with various restrictions to be placed on the defendants. Sub-paragraphs (a)-(c), comprising prohibitions on the defendants re-entering the property after the date in paragraph 2; damaging the property; or altering or repairing the property without express written consent were agreed between the parties. Sub-paragraph (g), which prohibits the defendants from “inducing others to do any of the things listed above” was also agreed. The following sub-paragraphs were contested:
(a) Sub-paragraph (d), a prohibition on the defendants “impeding or attempting to impede any agent appointed to sell the Property or that agent’s staff (Agent) from accessing the Property or doing anything related to the sale of the Property” could not be agreed between parties on the basis of the defendants’ position in paragraph 1. The defendants wished for this prohibition to commence “after the date for vacation referred to in paragraph 2”.
(b) Sub-paragraph (e), whereby the plaintiffs proposed a prohibition on the defendants either “participating in the sale of the property” or “participating in the sale of the property, other than by the attendance of a solicitor, as witness”. The defendants submitted in the email that this sub-paragraph was vague and unclear.
(c) The plaintiffs proposed for sub-paragraph (f) that the defendants be prohibited from “interfering in the sale of the property; including but not limited to: communicating with potential purchasers, communicating information to any person other than by way of the vendor statement prepared by the solicitors appointed by the Court to conduct the sale, or doing anything that might reasonably be expected to delay or hinder the sale of the property.” In the email, the defendants objected to this sub-paragraph on the basis that the prohibition on interference should be enough on its own, and the examples provided after those words extend beyond interference.
22Paragraph 4 related to costs, with the plaintiffs seeking that the defendants pay the costs of and incidental to their application fixed in the sum of $12,000 to be paid within 30 days of the date of the order. In the covering email, the plaintiffs described this amount as costs sought on an indemnity basis, and provided the following break up of costs incurred:
•Solicitor costs pre-application following the last hearing, pertaining to the communications with agents, opposing solicitors and client re access to the property and sale at $440 per hour: $2,360
•Solicitor costs of drawing application and affidavit; conferring with counsel and client re same and attendance at hearing at $440 per hour: approx. $5,000
•Counsel fees totalling $4,800, comprised of attendances and advice re application and affidavit in support ($1,300) and drafting submissions and appearance ($3,500) at $350 per hour
•Disbursements totalling $714.96 comprised of: $593.12 filing fee on application; $80.24 water meter and special reading; $41.60 ASIC search fee (the latter two being exhibits to the affidavit of Ms Tran)
together totalling: $12,874.96.
23The defendants contended in response that their conduct did not rise to a level which justified the award of indemnity costs. They suggested that a lower fixed amount ought be awarded, noting that costs awarded by Judicial Registrar Muller on 30 August 2022 were fixed at $5,000, while accepting that this application raised more complicated issues.
24The parties agreed to paragraph 5 of the proposed orders, reserving them liberty to apply.
Orders 4 November 2022
25On 4 November 2022, I made the Orders in this matter based on the evidence presented to the Court in the hearing on 3 November 2022, the submissions made together with the proposed orders submitted and the covering email.
26The first paragraph of the Orders was made in largely the same form as proposed by the plaintiffs in the proposed orders, with the exception that the Orders required the second and third defendants to deliver the keys to the property by 4.00pm on 9 November 2022. This order was made in line with my repeated indications to the parties during the hearing that while I did not believe it appropriate for the agents to have carte blanche to access the property while the third defendant was living there, I did consider it appropriate for the agent to have access upon giving appropriate notice to the third defendant. Such access is necessary to enable the agent to prepare the sale marketing materials, hold inspections and to show prospective purchasers through in line with the previous orders made in this proceeding to progress the sale of the property under the sales orders.
27The second paragraph of the Orders is in the same form as the defendants’ proposed paragraph 2 in the proposed orders. I acceded to the defendants’ request that the third defendant be allowed to stay in the property until 10 January 2023 rather than the deadline sought by the plaintiffs of 3 December 2022.
28The third paragraph of the Orders is in the same form as the plaintiffs’ proposed paragraph 3 in the proposed orders. I consider the prohibitions at paragraphs (d) to (f) reasonable in circumstances where the defendants have a clear history of attempting to interfere with or obstruct the estate agent in taking the steps required to conduct the sale. As I indicated to parties during the hearing, I accepted the plaintiffs’ apprehension that the defendants will attempt to impede or obstruct the court ordered sale has a clear, cogent evidentiary basis, and it was appropriate to make orders to guard against this eventuality.
29In the fourth paragraph of the Orders, I ordered the defendants pay the plaintiffs’ costs of and incidental to their application fixed in the sum of $9,500 to be paid within 30 days from the date of the order. The defendants agreed they ought pay the plaintiffs’ costs, disputing only costs on an indemnity basis. I arrived at this sum by allowing counsel’s fees, disbursements, and half of the sum sought by the plaintiffs’ solicitors. This sum seemed to me to strike a reasonable balance between the competing positions, given the defendants accepted this matter was more complicated than the hearing before Judicial Registrar Muller when costs were fixed at $5,000.
30It is highly regrettable that the defendants have failed to act with their obligations under s20 of the Civil Procedure Act to cooperate in the conduct of the proceeding and that the plaintiffs were forced to bring this application because of the defendants’ continued stonewalling. In those circumstances, I was satisfied that a substantial award of costs against them was appropriate given the defendant’s persistent lack of cooperation with the sales orders, and that an order should be made that those costs be paid within 30 days.
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Certificate
I certify that these 14 pages are a true copy of the Reasons for Ruling of Her Honour Judge A Ryan delivered on 28 November 2022.
Dated: 28 November 2022
Associate to Her Honour Judge A Ryan
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