Hummelstad v Hicks

[2006] NSWSC 120

Reported Decision: (2006) NSW ConvR 56-150

New South Wales

Supreme Court

CITATION:	Hummelstad v Hicks [2006] NSWSC 120 This decision has been amended. Please see the end of the judgment for a list of the amendments.
HEARING DATE(S):	17 May 2005, 23 August 2005 (written submissions to 30 August 2005)
JUDGMENT DATE :	7 March 2006
JURISDICTION:	Equity Division
JUDGMENT OF:	Associate Justice McLaughlin at 1
DECISION:	Subject to any arithmetical corrections, I make the following orders. (1) I make orders as in prayers 1 and 2 in the amended summons. (2) I order that the statutory trust for sale be altered pursuant to section 66G(6) of the Conveyancing Act 1919, to provide, (a) that the Plaintiff shall receive out of the proceeds of sale of the land the amount of $4,313, and (b) that the trustees shall implement the agreement made between Helen Margaret Hummelstad and David Paul Hicks on 3 August 2002. (3) I order that the Plaintiff shall be at liberty to purchase the land whether at auction or by private treaty. (4) I order that the costs of each party on the party and party basis be paid out of the proceeds of sale of the land. (5) I reserve to the parties liberty to apply.
CATCHWORDS:	Real property. Co-ownership. Trustees for sale. Variation of statutory trust. Liability of one co-owner to pay an occupation fee to the other. Whether there has been an ouster of one co-owner by the other.
LEGISLATION CITED:	Environmental Planning and Assessment Act 1979 Conveyancing Act 1919
CASES CITED:	Biviano v Natoli (1998) 43 NSWLR 695 Bull v Bull [1955] 1 QB 234 Forgeard v Shanahan (1994) 35 NSWLR 206 Henderson v Eason (1851) 17 QB 701; 117 ER 1451 Jacobs v Seward (1872) LR 5 HL 464 Leigh v Dickeson (1884) 15 QBD 60 Luke v Luke (1936) 36 SR (NSW) 310 McMahon v Public Curator of Queensland [1952] QSR 197 Ngatoa v Ford (1990) 19 NSWLR 72 Pascoe v Swan (1859) 27 Beav 508: 54 ER 201 Rice v George (1873) 20 Gr 221 Rees v Rees [1931] SASR 78 Re Tolman’s Estate (1928) 23 TasLR 29 Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476. Williams v Williams (1899) 68 LJ (Ch) 528 Jones v Jones [1977] 1 WLR 438
PARTIES:	Helen Margaret Hummelstad (Plaintiff) David Paul Hicks (Defendant)
FILE NUMBER(S):	SC 1402/04
COUNSEL:	I. Archibald (Plaintiff) A. Seward (Defendant)
SOLICITORS:	Davoren Associates (Plaintiff) Michael Dakin & Associates (Defendant)

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IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

ASSOCIATE JUSTICE McLAUGHLIN

Tuesday, 7 March 2006

1402/04 HELEN MARGARET HUMMELSTAD –V- DAVID PAUL HICKS

JUDGMENT

1 HIS HONOUR: These proceedings were instituted by summons filed by the Plaintiff, Helen Margaret Hummelstad on 10 February 2004. Subsequently the Plaintiff filed an amended summons on 12 May 2004.

2 By that amended summons the Plaintiff claims relief pursuant to Division 6 of Part 4 of the Conveyancing Act 1919 in respect to certain land situate at and known as 4 Montwood Drive, Lennox Head, of which the Plaintiff and the Defendant, David Paul Hicks, are the registered proprietors as tenants in common in equal shares. (I shall refer to that land as “the subject property”.) The Plaintiff seeks the appointment of statutory trustees for sale of the subject property. However, she seeks also that the statutory trust for sale be altered in the manner set forth in prayer 3 in the amended summons, essentially to the following effect:

(a) that the costs of the Plaintiff of the proceedings be paid out of the share of the Defendant;

(b) that the Plaintiff receive a credit of $8,838.13 in respect to outgoings paid by her:

(c) that the costs and expenses of the sale and all outgoings of the nature described, from 13 April 2004 to settlement of the sale, are to be paid out of the share of the Defendant;

(d) that the costs of John Hamilton Maxwell of acting as trustee are to be paid out of the share of the Defendant.

3 The parties met when the Defendant answered an advertisement for share accommodation which the Plaintiff had inserted in a local newspaper in about mid-2001. Thereupon they commenced to rent conjointly the subject property, which previously had been rented by the Plaintiff alone, since 1999. A dwelling house stands upon the subject property. The parties entered into occupation of that dwelling house, each residing in a separate area thereof. At no time have the parties been in any personal relationship, other than as, first, co-tenants, and, subsequently, co-owners, of the subject property.

4 The circumstances surrounding the acquisition of the subject property by the parties, and their decision to enter into co-ownership of the land are set forth in the affidavit of the Defendant sworn on 21 July 2004.

5 The subject property was purchased by the Plaintiff and the Defendant in June 2002, for a purchase price of $350,000. That purchase was funded by a mortgage loan from Perpetual Trustees Victoria Limited, and contributions from the Plaintiff and the Defendant in amounts of $100,605 and $51,115 respectively.

6 On 3 August 2002 the parties entered into a written agreement in relation to the ownership of the subject property. That agreement recognises, in the preamble, that the Plaintiff made an initial contribution to the purchase of the subject property in the sum of $100,605, whilst the Defendant made an initial contribution to the purchase in the sum of $51,115. Clauses 3 and 4 of the agreement are as follow,

3. Interest payable on the initial difference between the contributions will be calculated at the time of any subsequent sale of the property at a percentage rate agreed to by both parties, (or if agreement on such a rate cannot be reached then at the parties current bank loan interest rate at the time of sale) and such interest shall be payable by the Second Contributor [the Defendant] to the First Contributor [the Plaintiff] as provided in Clause 4.3.
4. The parties agree that at the time of any subsequent sale of the property payment of the purchase moneys will be applied as follows:
4.1 Payment of any commission and legal fees in respect of the sale;
4.2 Payout of the parties mortgage (if any) held over the property at the time of the sale;
4.3 Repayment of the initial purchase contribution amounts to each party, plus any interest component calculated at the time of sale as provided in clause 3;
4.4 The balance of funds to be divided equally between the parties.

7 It will be observed that the written agreement between the parties made no provision concerning costs of outgoings or maintenance costs, or the identity of the party or parties who would be responsible for those costs. However, it was the evidence of the plaintiff that there was an oral agreement between the parties in that regard, by which each of the parties would pay 50 percent of the mortgage and that they would share the electricity, rates, insurance, and any outgoings relating to the property, including maintenance and upkeep, and that they would personally share the workload in that regard. It was the Plaintiff’s evidence that both she and the Defendant maintained the property. The Defendant did not dispute his liability to meet one half of the mortgage and the aforesaid charges.

8 Throughout the second half of 2002 problems had arisen between the Plaintiff and the Defendant concerning their co-ownership of the subject property and their conjoint occupancy of the residence thereon. The Plaintiff made an offer to purchase the interest of the Defendant therein, and the parties agreed that a valuation should be conducted by Neale John Frogley, a registered real estate valuer. Mr Frogley’s report of 30 December 2002 valued the subject property at $430,000.

9 Various proposals and counter-proposals concerning the purchase by one or other of the parties of the interest of the other party in the subject property did come to fruition. The personal relationship between the parties deteriorated further, with apprehended violence orders being taken out by each of the parties against the other.

10 On 10 February 2004 the Defendant departed the subject property. At about the same time, or very shortly thereafter, the Plaintiff caused the locks of the dwelling house to be altered. There is a dispute between the parties as to whether or not the Plaintiff effected an ouster of the Defendant from the subject property.

11 The Defendant in his affidavit of 21 July 2004 does not contest the prayers for appointment of trustees for sale of the subject property, and does not object to the identity of the two persons proposed as trustees. The dispute between the parties, however, is in respect to the alterations to the statutory trust which the Plaintiff claims in prayer 3 of the amended summons.

12 Apart from the amount of $8,838.13 referred to in prayers 3A(d) and 3.2(d) of the amended summons, the Plaintiff seeks an order that the Defendant pay the following expenses which, according to the Plaintiff, she has paid since the filing of her affidavit of 28 May 2004;

Mortgage payments from January 2004 to date (one half of such payments being at the rate of $803.50 a month), the totality whereof the Plaintiff has been paying since the Defendant departed from the subject property.

Municipal rates totalling $569, paid to the Ballina Council.

Building report, in an amount of $795.40, which was provided by Point Maintenance & Building Services on 21 January 2005, at a cost of $875. The Plaintiff seeks reimbursement from the Defendant of one half of that cost.

13 I have already referred to the valuation report of Neale Frogley, of 30 December 2002. An affidavit of Mr Frogley sworn 16 June 2004, annexing a subsequent valuation, dated 16 February 2004, in an amount of $460,000, was placed in evidence on behalf of the Plaintiff. (It will be observed that that figure of $460,000 is the figure above or below which the Plaintiff seeks the alternative relief claimed in prayer 3A and in prayer 3.2 respectively of the amended summons.)

14 It is relevant to that valuation, and also to the condition of the subject property, that in late April 2003 the Defendant, without the permission of the Plaintiff – indeed, in the face of active opposition on her part – installed an internal wall in the house upon the subject property, such wall having the practical effect of physically dividing that part of the residential premises occupied by the Defendant from that part occupied by the Plaintiff. On 9 December 2003 the Ballina Shire Council issued an order under section 121B of the Environmental Planning and Assessment Act 1979 (consequent upon notification previously given of the intention of the Council to issue such an order), requiring the Plaintiff,

To remove internal timber wall erected without Council consent and to cease use of building as a dual occupancy.
REASON : Wall has been constructed without prior development consent from Council.

15 A further report by Mr Frogley dated 13 May 2005, expressing a valuation of the subject property at $455,000 at that date, was placed in evidence.

16 The attitude of the Defendant to the relief sought by the Plaintiff in the amended summons was set forth in the Defendant’s affidavit of 21 July 2004. The Defendant does not oppose the relief sought in prayers 1, 4 and 5 of the amended summons, that is, for orders appointing trustees of the subject property, and for the Plaintiff to be at liberty to purchase the subject property, whether at auction or by private treaty, and for the making of further or other orders. The Defendant does not oppose the relief sought in prayer 2 of the amended summons, that the land vest in the trustees upon the statutory trust for sale, other than the qualification, “subject to the alterations to the statutory trusts set out in order 3” (which qualification is opposed by the Defendant). The Defendant does, however, resist prayers 3(b) to (e) and 6 of the amended summons. (I would here interpolate that I assume that the foregoing reference to prayers 3(b) to (e) is intended to refer to prayer 3.2(b) to (e), which relate to the rights of the co-owners “if the property sells for an amount less than $460,000”. There is no prayer 3A(b) to (e) in respect to the alternative relief sought “if the property sells for an amount equivalent to or in excess of $460,000”. Prayer 6 is a claim for costs.) The Defendant does not dispute the relief sought by the Plaintiff in each of prayers 3A(a) and 3.2(a), being relief, in either of the circumstances postulated, that “the trustees shall implement the agreement made between Helen Margaret Hummelstad and David Paul Hicks on 3 August 2002”.

17 In regard to costs the Defendant in the foregoing affidavit states that he is agreeable to the costs of the trustees and the costs of the sale being met from the proceeds of sale of the property.

18 I have already referred to the deterioration in the relationship between the parties. By the end of 2002 that relationship had totally broken down. It is unnecessary for me to set forth details of the various incidents alleged by one or other of the parties (and frequently disputed by the other party), some of which incidents gave rise to the various apprehended violence orders which were made (usually by consent and without admissions) at the instance of one or other of the parties against the other party, and the visitations by members of the police to the subject property at the behest of one or other of the parties (and of, on at least one occasion, the Plaintiff’s son). Suffice it to say that ultimately the Defendant departed the subject property on 10 May 2004, and that not long thereafter the Plaintiff effected alterations to locks in the house which had the practical effect of denying to the Defendant access to that part of the house which he had previously occupied. The Plaintiff has remained in residence upon the subject property to the present time. She has continued to meet all outgoings in respect thereto, and also the totality of the mortgage payments.

19 I have had the benefit of receiving written outlines of submissions from Counsel for the respective parties, together with a chronology from Counsel for the Plaintiff.

20 I have already recorded that the Defendant does not oppose the appointment of the two proposed persons to be the trustees of the subject property, and does not oppose those persons holding the subject property upon the statutory trust for sale of the nature described in Division 6 of Part 4 of the Conveyancing Act (in particular, section 66F thereof). However, the Defendant opposes the alterations to the statutory trust for sale which are sought by the Plaintiff. Those alterations would have the effect that the costs of Mr Maxwell as trustee would be paid out of the share of the Defendant in the net proceeds of sale; and, further, that the costs of the Plaintiff of the proceedings would be paid out of the share of the Defendant in the net proceeds of sale.

21 In respect to this last matter of costs supplementary submissions were lodged by Counsel for the Plaintiff, in which it was sought that, in the light of the various offers and proposals which had been made on behalf of the Plaintiff to the Defendant personally and later to the Solicitors for the Defendant, both before and since the institution of the present proceedings, the costs which the Plaintiff submits should, in effect, be paid to her by the Defendant should be on the indemnity basis, rather than on the more usual party and party basis.

22 During the course of the hearing there was prepared by Counsel for the respective parties a document headed “Summary of Payments as between the parties”, which became Exhibit B.

23 Unfortunately the personal and social problems resulting from the fact that both the Plaintiff and the Defendant were sharing occupancy of the residence on the subject property, and the problems consequential thereto (including the various apprehended violence orders sought, and obtained, by each party against the other, and the various visitations to the premises by the police), resulting in the total breakdown of communications and of any form of civil relationship between the parties, have had the effect of blurring the legal rights and obligations of the parties arising out of their co-ownership of the subject property.

24 At the outset, those rights and obligations were defined by the parties themselves, both in their written agreement of 3 August 2002, which made express provision for what should happen upon the sale of the subject property, and in the oral arrangements between the parties, concerning the payment of outgoings and expenses relating to the subject property. The terms of that agreement and those arrangements cannot, of course, alter the rights which the parties have as co-owners under the provisions of Division 6 of Part 4 of the Conveyancing Act. Section 66F sets forth, in subsection (2)(a), the effect of property being held upon the “statutory trust for sale”, as follows,

Property held upon the “statutory trust for sale” shall be held upon trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners.

25 Section 66G(1) allows any one or more of the co-owners of property (other than chattels) which is held in co-ownership to apply to the Court for the appointment of trustees of the property and the vesting of the property in such trustees, to be held by them on the statutory trust for sale. (As to the extent to which the Court in the exercise of its statutory discretion may refuse such an application, see Ngatoa v Ford (1990) 19 NSWLR 72.)

26 Further, the Court has a discretion, under section 66G(6) to “alter such statutory trusts, and the trust so altered shall be deemed to be the statutory trust in relation to that property”.

27 It is essentially in respect to the application by the Plaintiff for the alteration of the statutory trust for sale that there is presently dispute between the parties.

28 As I have already observed, the Defendant does not oppose the appointment of the two nominated persons as trustees of the subject property or the vesting of the subject property in those trustees upon the statutory trust for sale. The Defendant does, however, oppose the alteration of the terms of that statutory trust in the manner sought by the Plaintiff.

29 Unless the Court, in its discretion, alters the terms of the statutory trust for sale, the effect of the appointment of such trustees and the vesting therein of the subject property, to be held by them upon the statutory trust for sale, will be that, pursuant to the provisions of section 66F(2)(a), the trustees will, “after payment of costs and expenses, and of the net income until sale after payment of costs, expenses and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings”, hold the net proceeds of sale upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners. In the instant case the rights of the co-owners must therefore be determined in the light of the written agreement into which they entered at (or very shortly after) the time of the acquisition of the subject property. Thus, unless the Court in its discretion is persuaded to alter the statutory trust for sale (pursuant to section 66G(6)), the net proceeds of sale will be disbursed first by discharge of the mortgage over the property, then by repayment of the initial purchase contributions made by the respective parties, plus any interest component calculated at the time of sale as provided in clause 3 of the agreement. Thereafter the balance of any such proceeds of sale are to be divided equally between the parties.

30 I shall deal seriatim with the alterations to the statutory trust for sale which the Plaintiff by her amended summons seeks and which are opposed by the Defendant.

Prayer 3(b): The costs of Mr Maxwell to be paid out of the Defendant’s share of the net proceeds of sale.

31 The claim of the Plaintiff as originally formulated in her summons filed on 10 February 2004 identified two proposed trustees. The Plaintiff subsequently agreed to the Defendant’s choice of trustee, Mr Maxwell, replacing one of the persons originally proposed as trustees by the Plaintiff. The amended summons reflected that agreement, by naming as the proposed trustees Bruno Ivan and John Hamilton Maxwell.

32 The fact that the Defendant did not agree to the identity of the trustees originally proposed by the Plaintiff, and that after negotiation the Plaintiff accepted the suggestion of the Defendant concerning replacement of one of those proposed trustees, and in her amended summons reflected that acceptance, does not in my view constitute an entitlement on the part of the Plaintiff to have the costs of the Mr Maxwell paid out of the Defendant’s share of the proceeds of sale.

33 If individual trustees (as distinct from a trust corporation) are to be appointed, then at least two individuals (but no more than four) (section 66G(3)(a)) must be appointed. The Defendant was entitled to express any concerns he held regarding the identity of the trustees proposed by the Plaintiff, especially since the Plaintiff, both before the institution of the proceedings and thereafter – even to the time of the hearing – has indicated a firm desire to purchase the Defendant’s interest in the subject property. I am in agreement with the submission on behalf of the Defendant that he was entitled to have as one of the trustees a person of his own choosing, in order to safeguard his interests in circumstances where the Plaintiff was, and is, a potential purchaser, to whose benefit it would be for the trustees to sell at the lowest purchase price possible. In such circumstances I consider that the Defendant was entitled to seek that one of the trustees be a person nominated by him whilst the other trustee was nominated by the Plaintiff.

34 There is no basis for the submission of the Plaintiff that the exercise by the Defendant of such an entitlement concerning the identity of the trustees (an entitlement identical to that which the Plaintiff was asserting for herself) should have the concomitant that the costs of the trustee proposed by the Defendant should be paid out of the Defendant’s share in the net proceeds of sale. The costs and remuneration of both trustees should be paid out of the proceeds of sale, in accordance with the terms of the statutory trust for sale set forth in section 66F(2)(a), before the net proceeds are ultimately divided between the parties. I do not propose to make the alteration sought by the Plaintiff in respect to Mr Maxwell’s costs.

Prayer 3(c): The costs of the Plaintiff in the proceedings to be paid out of the Defendant’s share in the net proceeds of sale.

35 The costs of both co-owners in proceedings for the appointment of statutory trustee for sale of land held in co-ownership are usually paid out of the proceeds of sale, and not out of the share of one or other of the co-owners. It is only in unusual circumstances that a party to proceedings for the sale of jointly owned land is entitled to have his or her costs paid out of the share of the other party in the net proceeds of sale.

36 It must be appreciated that in the instant case the Plaintiff herself is seeking an alteration to the terms of the statutory trust for sale, and in that regard is submitting that the Court should exercise its discretion in her favour. The Defendant is not opposing the statutory rights of the Plaintiff for the appointment of trustees for sale of the subject property. He is opposing, as he is entitled, the alteration of those statutory rights. It is for the Plaintiff to persuade the Court that in the exercise of its discretion it is appropriate that those statutory rights should be altered. I do not see why the Defendant in opposing the exercise by the Court of its discretion in the manner sought by the Plaintiff should thereby be subjected to what is in effect a costs order against him.

37 It would have been necessary for the parties, even if in total agreement, and not in any situation of personal dispute or confrontation, to have approached the Court for the appointment of trustees for sale of the subject property. Where, as here, the Plaintiff is seeking an alteration of the terms of the statutory trust for sale, it seems to me to be quite inappropriate that she should adopt the position that, unless the Defendant agree to such an alteration to the terms of the statutory trust (or, indeed, possibly, even if he were to agree to such alteration), he should, in effect, be required to pay the costs of the Plaintiff. I do not propose to grant the relief sought by the Plaintiff in this regard.

Prayer 3(d): The Plaintiff to receive a credit of $8,838.13 in respect of outgoings by her.

38 Although at the outset of the proceedings the Plaintiff had not itemised the basis for this claim, nevertheless, during the course of the hearing there was admitted into evidence a handwritten document prepared by Counsel for the respective parties (Exhibit B), dealing with the various items which are the subject of this monetary claim by the Plaintiff.

39 That document, which is headed “Summary of Payments as between the parties” sets forth the various monetary amounts which are the subject of claims by the Plaintiff, and the response of the Defendant in respect to each of those amounts. I shall deal with each of those items seriatim, as follows.

· Electricity agreed by parties

½ payments to 2.04 $951.40

The Defendant does not dispute the entitlement of the Plaintiff to this item

· Rates to date claimed by Plaintiff

½ amount $1,349.34

The Defendant denies liability to pay this amount, since it includes a component in respect to the period after, as is asserted by the Defendant, he had been excluded from the subject property by the Plaintiff. However, the Defendant does not dispute the entitlement of the Plaintiff to the amount of $1,074.84, representing rates to 10.2.04, that being the date upon which the Defendant ceased to be in occupation of the subject property. The Defendant agrees to pay the amount of $1,074.84.

· Mortgage each party

$750 per month $11,250

The Defendant concedes that the amount of $11,250 represents one half of the mortgage payments made by the Plaintiff since the Defendant departed the subject property. However, the Defendant asserts an entitlement to a set-off in respect to the occupation by the Plaintiff of the subject property since the date of the Defendant’s departure. The parties are in agreement that an appropriate amount for such an occupation fee is $175 a week from 10 February 2004. The Plaintiff, however, denies any liability to pay such an occupation fee.

· House insurance

$500 per annum $750

$500 agreed by Defendant who says he paid 50% of first year insurance.

The Defendant agrees that $500 a year is appropriate, as is the amount of $750 (representing one half of insurance for a period of three years). However, the Defendant asserts that he has already paid to the Plaintiff in cash an amount of $250, being part of that amount of $750.

· Maintenance (not agreed)

½ costs $2,442

The Defendant agrees that the amount in respect to items claimed from him by the Plaintiff is $2,442, that being one half of the total amount actually paid by the Plaintiff in respect to those items. However, the Defendant disputes his liability to pay any amount in respect to those items.

· Occupation fee: $175 per week from 10.2.04

The parties are in agreement that an appropriate amount for an occupation fee is $175 a week from 10 February 2004. But the Plaintiff denies liability to pay any occupation fee in respect to her occupation of the subject property after the departure therefrom of the Defendant.

40 The liability of the Defendant to contribute to a number of the foregoing items set forth in Exhibit B depends upon whether those items can be characterised as improvements, or merely as incidents of the co-ownership by the parties. Further, in respect to the occupation fee asserted by the Defendant to be payable by the Plaintiff from 10 February 2004, the question arises whether the Defendant has been excluded from the subject property by the Plaintiff. If so, then the Plaintiff, remaining in sole occupation of the subject property, is liable to pay an occupation fee for the period of the exclusion of the Defendant.

41 The incidents of co-ownership, especially in regard to the liability of one co-owner to pay an occupation fee, have been considered by the Court of Appeal of New South Wales in Forgeard v Shanahan (1994) 35 NSWLR 206 (where all relevant authorities were reviewed). Meagher JA (with whom Mahoney JA agreed) said, at 223,

Turning to the liability of a co-owner in occupation to pay an occupation fee, the position at law is fairly clear. He was not liable unless he excluded his co-owner, in which case he rendered himself liable in ejectment and for mesne profits, or if he constituted himself a bailiff, in which event he would be liable in an action of account, like any other bailiff: Re Tolman’s Estate (1928) 23 TasLR 29 at 31; Rees v Rees [1931] SASR 78 at 80-81. ... As far a equity is concerned, an occupation fee will be exacted in at least two circumstances: first, in a partition suit (or related litigation): if there has been an exclusion, the tenant in occupation will be charged with an occupation fee (see, eg, Pascoe v Swan (1859) 27 Beav 508: 54 ER 201); this is an example of equity following the law; and secondly, if the owner in occupation claims an allowance in respect of improvements effected by him, equity will permit such an allowance only on terms that he is accountable for an occupation fee – this is an example of he who comes to equity having to do equity: see Teasdale v Sanderson (1864) 33 Beav 534; 55 ER 476.
…
There is, of course, ample authority that an occupying party may be charged with an occupation rent if he has ousted the other party or if he is seeking an allowance for improvements; but there is no authority that goes beyond that.
…
If a co-owner in occupation effects improvements on the co-owned property he may claim allowance for any improvements in value effect by him. Such an allowance may be claimed in an action for partition. The allowance is not a reimbursement of the amount expended, but an allowance in respect of the amount by which the value of the property has been increased, not exceeding the amount expended, the “value” to be ascertained at the commencement of the action. The law has thus been stated in a number of cases, including Williams v Williams (1899) 68 LJ (Ch) 528: [and other authorities]. Thus, in summary a tenant who effects repairs is entitled to an allowance for the lesser of the value of the enhancement of the property and the cost of effecting the repairs.

There is authority that no allowance for improvements will be allowed in favour of the occupying owner unless the non-occupying owner seeks to charge him with an occupation fee, so that the two rights are truly mutual: one cannot claim one without suffering the other: see Teasdale v Sanderson and Rice v George (1873) 20 Gr 221; but it is not difficult to point to cases where improvements have been allowed although no occupation fee was charged: For example McMahon v Public Curator of Queensland [1952] QSR 197.
…
What is meant by [improvements] is something more than mere repairs and maintenance, for which no allowance can be made: Leigh v Dickeson (1884) 15 QBD 60; Henderson v Eason (1851) 17 QB 701; 117 ER 1451; McMahon v Public Curator of Queensland .

42 It becomes necessary, therefore, for the Court to decide first, whether there has been an ouster of the Defendant effected by the Plaintiff. Unless there has been such an ouster, then the Plaintiff will not, in any event, be liable to pay an occupation fee to the Defendant. Further, it becomes necessary for the Court to determine whether the payments which were made by the Plaintiff were in the nature of improvements to the subject property or were merely in the nature of repairs and maintenance. If they were for improvements, then, in the event that the Plaintiff had ousted the Defendant from his occupation, the Plaintiff will be liable to pay an occupation fee, in return for being reimbursed to the extent of the enhancement in the value of the property or the cost of effecting improvements (whichever is the lesser).

43 Therefore, if there has been an ouster of the Defendant by the Plaintiff, it follows that the Plaintiff is liable to pay an occupation fee in respect to her continued occupancy of the subject property, in return for the Defendant meeting payments in respect to improvements (as distinct from mere maintenance) of the property. I do not regard the payments made by the Plaintiff for any of the outgoings listed in Exhibit B as being more than maintenance. No evidence was placed before the Court to suggest that the value of the property had been enhanced as a result of those payments made by the Plaintiff. In my conclusion they do not constitute improvements.

44 It becomes necessary, therefore, to establish whether or not there was an ouster of the Defendant by the Plaintiff from the subject property. I have been taken to a number of decided cases in which this question of ouster was considered. It will be appreciated that each of those cases essentially depends upon its own facts. For example, the exclusion of a co-owner from the subject premises by reason of an apprehended violence order issued at the behest of the other co-owner does not of itself constitute ouster of the co-owner so excluded (Biviano v Natoli (1998) 43 NSWLR 695 at 702-703 per Beazley).

45 Essentially, the question of whether or not one co-owner has been ousted or excluded by the other co-owner is a question of fact which must be decided upon the evidence in each individual case. In the instant case it is quite apparent that the Plaintiff was desirous of getting rid of the Defendant from the subject property. When, on 10 February 2004, the Defendant departed in circumstances which he described in his affidavit of 9 May 2005 and in his oral evidence, and when he attempted to return to the house, he, on account of the conduct of the Plaintiff in relation to the locks, was not able to regain access. Once the Defendant had departed the Plaintiff was not prepared to have him return. The asserted failure of the Defendant to meet his share of the mortgage payment for February 2004 did not justify the Plaintiff in depriving him of occupation of the subject property. It seems to me that the practical effect of the conduct of the Plaintiff was to oust or to exclude the Defendant from his rightful occupation of the subject property, to which as a co-owner he was entitled. (See, for example, Luke v Luke (1936) 36 SR (NSW) 310; Jacobs v Seward (1872) LR 5 HL 464; Bull v Bull [1955] 1 QB 234; Jones v Jones [1977] 1 WLR 438; see, also, Megarry & Wade, The Law of Real Property 5 ed. (1984), Stevens, London, at 422). Since I am satisfied that the conduct of the Plaintiff constituted ouster of the Defendant from the subject property, the Defendant is in consequence entitled to be paid an occupation fee by the Plaintiff.

46 The occupation fee which the Plaintiff is liable to pay will not be offset on account of payments by the Plaintiff for any improvements, since I regard the payments made by the Plaintiff as being for maintenance and not by way of improvements to the subject property. It was no disputed on behalf of the Plaintiff that an appropriate occupation fee was $175 a week. Therefore, the Plaintiff is liable to pay to the Defendant a total amount of $18,550 (representing $175 a week for 106 weeks, from 10 February 2004 to 1 March 2006). That occupation fee, from 10 February 2004 will, however, be offset against the Defendant’s share of the mortgage payments, which have been paid in totality by the Plaintiff. The Defendant’s share of such liability is $803.50 a month.

47 I recognise that the Defendant asserts that he paid an amount of $250 in cash to the Plaintiff in respect to house insurance. That payment is denied by the Plaintiff. In the absence of any documentation in support of the Defendant’s assertion, I am not satisfied that that amount was paid. It follows that the liability of the Defendant in respect to the Plaintiff’s claim for house insurance must be in the full amount of $750.

48 For completeness I should also refer to the claim of the Plaintiff for reimbursement of one half of the cost of the building report from Point Maintenance & Building Services of 21 January 2005. That report was prepared for the purposes of the present proceedings. The cost thereof does not constitute maintenance of (let alone improvements to) the subject property. The Plaintiff is not entitled to reimbursement from the Defendant in respect to that report.

49 The Defendant is liable to pay to the Plaintiff the following amounts:

Electricity $951.40

Municipal rates $1,074.84

Mortgage payments $20,087.50 (representing $803.50 a month from 10 February 2004 to 1 March 2006)

House insurance $750

Totals $22,863

50 It follows therefore that the Defendant is liable to pay to the Plaintiff a net amount of $4,313 (being the difference between the foregoing amount of $22,863 which the Defendant is liable to pay to the Plaintiff and the occupation fee of $18,550 which the Plaintiff is liable to pay to the Defendant). That amount should be paid out of the proceeds of sale, before the distribution of the net balance of those proceeds between the Plaintiff and the Defendant in accordance with the terms of their written agreement.

51 I summarise, as follows, my foregoing conclusions. The Plaintiff is entitled to the appointment of trustees, to hold the subject property on the statutory trust for sale, those trustees being Mr Ivan and Mr Maxwell. The statutory trust will be altered by the Plaintiff being entitled to receive an amount of $4,313 from the proceeds of sale (that sum being the difference between, on the one hand, the outgoings and expenses totalling $22,863 which the Defendant was liable to pay but did not, and which were paid on his behalf by the plaintiff, and, on the other hand, the occupation fee of $18,550 which the Defendant is entitled to receive from the Plaintiff, in consequence of the ouster by the Plaintiff of the Defendant from the subject property). The net proceeds of sale held by the trustees after payment of the various items referred to in section 66F(2)(a) shall be held in accordance with the provisions of clause 4 of the written agreement between the parties of 3 August 2002 (it being observed that the effect of clause 4.1 of that agreement replicates, to an extent, the provision of section 66F(2)(a), relating to “payment of costs and expenses”).

52 Neither the costs of Mr Maxwell acting as trustee, nor the costs of the Plaintiff of the proceedings (let alone such costs on the indemnity basis) should be paid out of the share of the Defendant in the net proceeds of sale. The totality of the costs of the two trustees should be paid in accordance with the provisions of the foregoing paragraph of section 66F(2).

53 Whilst the Plaintiff was entitled to approach the Court seeking the appointment of trustees for sale of the subject property, pursuant to section 66G, the Plaintiff sought much more than that. She sought an alteration of the statutory trust for sale, such alteration being, as I have already recorded, that various costs and expenses be paid out of the share of the Defendant and that the Plaintiff herself receive a credit in a specified amount. The Defendant was fully entitled to oppose that application on the part of the Plaintiff. In the event, that application has by no means been completely successful. In those circumstances, I do not consider that the fact that the Plaintiff may ultimately have obtained an order for the appointment of trustees for sale (an order not opposed by the Defendant), which will, ultimately, enable her to attempt to purchase the interest of the Defendant in the subject property, should entitle the Plaintiff to what is, in effect, a costs order against the Defendant, merely because the Defendant did not, before the institution of the proceedings (or even at any stage after their institution, but before the final hearing) agree to the various proposals put to him by the Plaintiff for the sale to her of his interest in the property.

54 It was not unreasonable for either party to allow the Court to make a determination in this matter. In all the circumstances, I should not depart from the usual costs order in respect to an application under section 66G of the Conveyancing Act, being that the costs of each party on the party and party basis be paid out of the proceeds of sale of the jointly owned property.

55 Any arithmetical corrections in respect to calculations herein may be effected by Counsel approaching my Associate in that regard within seven days from today.

56 Accordingly, subject to any such arithmetical corrections, I make the following orders.

(1) I make orders as in prayers 1 and 2 in the amended summons.

(2) I order that the statutory trust for sale be altered pursuant to section 66G(6) of the Conveyancing Act 1919, to provide,
(a) that the Plaintiff shall receive out of the proceeds of sale of the land the amount of $4,313, and
(b) that the trustees shall implement the agreement made between Helen Margaret Hummelstad and David Paul Hicks on 3 August 2002.


(3) I order that the Plaintiff shall be at liberty to purchase the land whether at auction or by private treaty.

(4) I order that the costs of each party on the party and party basis be paid out of the proceeds of sale of the land.

(5) I reserve to the parties liberty to apply.

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