Kousal v Adkins
[2006] VSC 405
•27 October 2006
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
No. 4226 of 2005
| RONALD GEOFFRY KOUSAL | Plaintiff |
| v | |
| COLIN JEFFREY ADKINS & ORS | Defendants |
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JUDGE: | HARPER J | |
WHERE HELD: | MELBOURNE | |
DATE OF HEARING: | 25-27 OCTOBER 2006 | |
DATE OF JUDGMENT: | 27 OCTOBER 2006 | |
CASE MAY BE CITED AS: | KOUSAL v ADKINS | |
MEDIUM NEUTRAL CITATION: | [2006] VSC 405 | |
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LAND – Claim for possession of land – Property purchased by plaintiff at a Sheriff’s auction – Refusal by first and second defendants to give possession of land – Possession granted.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J. Kewley | Leddra Westmore & Co. |
| No appearance for any defendants |
HIS HONOUR:
The plaintiff is the registered proprietor of the land formerly described in Certificate of Title Volume 10381 Folio 448 and now described in Certificate of Title Volume 10907 Folio 212. He acquired his interest at a sale by the Sheriff following a sheriff's auction. The previous registered proprietors were the first and second defendants. They were indebted to the Commonwealth Bank of Australia, which instigated the sale.[1]
[1]The first and second defendants assert, as I understand it, that the debt was never lawfully incurred; but on 12 April 2000 (in proceeding No. 4249 of 2000) the Bank obtained a judgment against those defendants in the sum of $74,262.85. A warrant of seizure and sale was issued by the Court pursuant to that judgment on 3 April 2003.
The purchase price was $101,000. It was paid to the sheriff by the plaintiff. Thereafter it was dispersed, in part, to the two entities who were, as I understand it, judgment creditors of the first and second defendants: the Commonwealth Bank, and a firm of solicitors in Ballarat. As I understand it, these debts were thus extinguished. The balance was paid to the first and second defendants.
Mr and Mrs Adkins nevertheless not only retain the benefits of the purchase price, but also remain in possession of the land. They therefore have their cake. For 22 months they have succeeded in eating it, too. For that same 22 months the plaintiff has been out of pocket in the sum paid for the land while receiving nothing in return.
In my opinion, it is now more than time that this extraordinary circumstance come to an end. First, however, it is necessary to trace the progress of the matter from the sale of the land to the present.
The sale took place on 15 December 2004. On the same day the Sheriff, or one of his officers, signed a transfer of the land to the plaintiff - and gave him a receipt for the purchase price of $101,000. On the following day, the plaintiff wrote to the first and second defendants with a request that they deliver to him the duplicate certificate of title together with vacant possession.
Neither request was complied with. Accordingly, on 17 January 2005, the plaintiff commenced this proceeding. Appearances were filed on 4 February 2005 (by the first defendant) and on 14 February 2005 (by the second defendant). On the same day, the first and second defendants filed their defence. It contains a series of bare denials and non-admissions, contrasted only by an allegation that at all material times those defendants held no interest in the property save as bare trustees of the Adkins Family Trust.
In these circumstances, the plaintiff - by summons dated 28 April 2005 - sought summary judgment. On 26 May 2005, Master Evans declared that the plaintiff was entitled to be registered as the proprietor of the land (then described in Certificate of Title Volume 10381 Folio 448) and ordered that, within seven days of the date of the order, the first and second defendants produce the duplicate of the title to the Registrar of Titles. The Master further directed that, in the event that the defendants failed to comply with the order to produce the duplicate certificate of title, the Registrar of Titles delete the folio of the register to which the title related, and create a new folio in the name of the plaintiff. The Master also directed that the plaintiff recover possession of the land and that the defendants pay damages.
The first and second defendants appealed. The appeal was heard on 12 August 2005 by Hargrave J. He ordered that the appeal be allowed, but did so on condition that the defendants deliver to the prothonotary by 4.00 p.m. on 19 August 2005 the relevant duplicate certificate of title. His Honour further ordered that, should the defendants not comply with the order for delivery of the duplicate certificate, there be judgment for the plaintiff on the same terms as the declarations, orders and directions made by Master Evans on 26 May.
The first and second defendants failed to comply with the condition thus imposed by Hargrave J for their being given leave to defend. Accordingly, in conformity with the orders made by his Honour, the prothonotary on 26 August 2005 gave judgment for possession. The judgment is in the following terms:
"The court declares that -
(1)the plaintiff is entitled to be registered as the proprietor of the land described in Certificate of Title Volume 10381 Folio 448 ('the title') and known as 1 Hodge Street, Daylesford, Victoria ('the land') and the court orders that -
(2)the first and second defendants produce the duplicate of the title to the Registrar of Titles within seven days of the date of this judgment.
(3)In the event that the first and second defendants do not comply with paragraph 2 of this judgment, the third defendant [the Registrar of Titles] delete the folio of the register to which the title relates and create a new folio of the register in the name of the plaintiff.
(4)The plaintiff recover possession of the land from the first and second defendants.
(5)The first and second defendants pay the plaintiff's damages to be assessed.
(6)The first and second defendants pay the costs of this proceeding including the costs of this application and any reserved costs".
Again, the first and second defendants failed to do that which they had been ordered by the court to do. Instead, on 2 September 2005 they filed a notice of appeal against the orders made on 26 August. They did not, however, seek a stay of execution of that judgment. As a result, the prothonotary on 21 September 2005 issued a warrant of possession addressed to the Sheriff.
This was followed on 14 October 2005 by the delivery to the first and second defendants of a Sheriff's Notice advising the defendants to vacate the premises voluntarily by 11 November 2005. Then, on 21 October 2005, the Registrar of Titles cancelled Certificate of Title Volume 10381 Folio 448. This was done pursuant to the orders of 26 August. As those orders also required the creation of a new folio of the register in the name of the plaintiff, a new folio was, on the same day, created accordingly. Hence, the plaintiff is now, and has since 21 October 2005 been, the registered proprietor of the land in dispute - with all the protection that the Transfer of Land Act 1958 gives to a person in that position.
The appeal instituted on 2 September 2005 was heard by the Court of Appeal on 22 December last year.[2] At the same time that Court heard an application for leave to appeal from the order of Hargrave J made on 12 August 2005. That application was allowed and the appeal was treated as having been heard instanter and allowed - but without a determination on the merits.
[2][2005] VSCA 327
The essence of the reasoning of the Court of Appeal is to be found at [10] and [11] of its judgment. Paragraph [10], and the relevant portion of paragraph [11] read as follows:
“[10]In the course of argument this morning, in which we have been much assisted both by Mr Adkins and by Mr Kewley of counsel for the plaintiff, it has emerged that there are two important factual issues to be investigated, upon which the ownership of this land ultimately depends. The first is whether – as Mr Adkins says and has for some time said – the subject property is trust property, that is, property held by him and his wife as trustees of the Adkins Family Trust. The second and related question is whether the debt in enforcement of which the original sale in December 2004 took place was a debt incurred by the family trust or not. We note that Mr Adkins says that it was not, that it was a debt incurred by the partnership of himself and his wife which carried on a business of earthmoving. Mr Kewley has very properly conceded that if the property is trust property and if the debt is a non-trust debt then it must follow that the property was not available to satisfy the debt.
[11] … the resolution of these issues in Mr Adkins’ favour will, it seems, have the consequence that Mr Kousal, the plaintiff, did not acquire, as he thought, legal and beneficial title to the Daylesford property…”.
In the meantime, the Sheriff had on 13 December 2005 executed a warrant of possession. The plaintiff, having for the first time the physical capacity to enter the land he purchased 12 months before, used the opportunity to change the locks on the premises; but otherwise he did not himself take physical occupation of the land. Then, on 16 December 2005, the first and second defendants - taking the law into their own hands - re-entered the land and changed the locks again. They have been in possession ever since, despite a mandatory injunction issued by Bongiorno J sitting in the Practice Court on 20 December. This required the first and second defendants to vacate and restore possession to the plaintiff by the following day, 21 December. At the same time, that judge granted an injunction restraining the first and second defendants from any further re-entry.
The Court of Appeal dealt with this circumstance by an order that the orders made on 20 December be stayed until the hearing and determination of the proceeding or further order.
When the trial commenced before me on 25 October, the first defendant sought an adjournment. I refused that application for reasons which I gave on 26 October. It is sufficient to say now that Mr Adkins wished to have time to examine documents and follow consequential lines of enquiry that had been the subject of a subpoena issued by the plaintiff to the Bank of Melbourne. Those documents, if relevant at all, were relevant to the family trust, the issue which principally concerned the Court of Appeal on 22 December last.
Following my refusal to adjourn the trial, Mr Adkins withdrew from the hearing. As a consequence, no evidence was called on behalf of the first and second defendants.
The evidence called by the plaintiff on the first point of concern to the Court of Appeal – whether the subject property is trust property - came from a solicitor of this court, Mr Francis O'Loughlin. His evidence was, in effect, that he recognised his signature as the signature of the witness to two other signatures which appear on a statutory declaration dated 16 April 1993. This document contains, in part, the following affirmation:
"We, Colin Jeffrey Adkins and Beverley Anne Adkins do hereby jointly and severally solemnly and sincerely declare, represent and warrant as follows:
...
(19)that we are or at settlement will be the legal and beneficial owners of the land [now described in Certificate of Title Volume 10907 Folio 212] and do not and will not hold the land on trust for any other person".
Mr O'Loughlin gave evidence that, while he did not recognise the signatures shown opposite the date recorded on the statutory declaration, nevertheless he could say that he would not have signed the document as a witness were he not satisfied that the two persons named in it were the persons who signed it before him.
I am satisfied that the signatures on the statutory declaration are the same as the signatures appearing on court documents signed by the first and second defendants. I am accordingly satisfied that the first and second defendants did, indeed, sign the statutory declaration in question; and that, by so doing, they warranted to the Bank of Melbourne that they were then (16 April 1993) and would for the indefinite future continue to be the legal and beneficial owners of the land, which would not be held on trust for any other person. There is no evidence of any change in this position. Nor did Mr Adkins at any time in his attendance at this trial assert any such change, although he consistently maintained from the bar table that the land was beneficially owned by the beneficiaries of his family trust. At the same time, he declined my invitation to give evidence about the provenance of the statutory declaration, and indicated that his concern was whether his mind went with his signature. He, however, declined to give any evidence to that effect.
I, accordingly, find that the land the subject of this dispute was not held in trust by Mr and Mrs Adkins at any material time. But even if it were, the plaintiff dealt through the Sheriff with the registered proprietors when he purchased the land; and he is now himself registered as the proprietor of an estate in fee simple in that land.
The second question of concern to the Court of Appeal was whether the debt, in enforcement of which the original sale in December 2004 took place, was or was not a debt incurred by the family trust. Mr Adkins doubtless took the position in the Court of Appeal that it was not (and the result of proceeding No. 4249 of 2000 is consistent with this). If it was not, then it was a debt incurred personally by the defendants; and the bank’s judgment could properly be the subject of a warrant of possession of the Daylesford land. I, accordingly, conclude that the two issues of concern to the Court of Appeal should be resolved in the plaintiff's favour.
Even if I am wrong about this, the first and second defendants - either on their own behalf or in their capacity as trustees - have, in my opinion, made an election: it is to retain the purchase price or its benefits. They have evidenced this election by their refusal to comply with orders of this Court made on 12 May 2006 and varied on 5 July 2006 and 27 July 2006. Those orders were that the first and second defendants file and serve an affidavit as to their receipt of the proceeds of the sale of the property in question, and as to the disposition of those proceeds.
On 3 August 2005, Byrne J found that the first and second defendants were in contempt of court inasmuch as they had failed to comply with the orders to which I have just referred.
I should say a word or two more about the position of the plaintiff as registered proprietor of the land. So far as is presently relevant, the Transfer of Land Act provides by s.43 that, except in the case of fraud, no person taking or proposing to take a transfer from the registered proprietor of any land shall be affected by notice actual or constructive of any trust; and the knowledge that any such trust or unregistered interest is in existence shall not of itself be imputed as fraud.
That section appears under the heading "Effect of Registration" in Part III of the Act. Another section under that heading is s.40. It provides, so far as is presently relevant, that no instrument until registered shall be effectual to pass any interest in any land; but, upon registration, the interest shall pass in the manner specified by the instrument.
In this case, the relevant instrument was the transfer signed by or on behalf of the Sheriff. That transfer is one which falls within the provisions of s.52 of the Act which, in turn, is to be found in Division 3 of Part IV of the Act. Section 52 provides, (again, so far as is relevant) that, after land has been sold by the Sheriff under any judgment of the Court then, provided the other relevant provisions of s.52 have been complied with, the Registrar shall on lodgement of a transfer in approved form register that transfer; and, on registration, the purchaser shall become the transferee and be the proprietor of the land in all respects as if the transfer were a transfer for valuable consideration to the purchaser by the registered proprietor.
I read those provisions as giving effect to the transfer signed by or on behalf of the Sheriff in this case – and giving it effect in such a way as to result in the plaintiff becoming the registered proprietor of the land unaffected by notice actual or constructive of any trust.
For these reasons, it seems to me that the plaintiff is entitled to judgment. I add only, in relation to the election which I have found the first and second defendants have made, that they cannot retain both the proceeds of sale and the subject of the sale. Given that they have chosen to retain the proceeds, they must disgorge the subject.
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