Li v Chao

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

PROPERTY LIST

S ECI 2022 04781

XIA LI	First Plaintiff
– and –
YINGDE INVESTMENTS PTY LTD (ACN 620 151 126)	Second Plaintiff
v
YU WEN CHAO	Defendant

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JUDGE:	Harris J
WHERE HELD:	Melbourne
DATES OF HEARING:	28–30 May 2024
DATE OF JUDGMENT:	28 June 2024
CASE MAY BE CITED AS:	Li & Anor v Chao
MEDIUM NEUTRAL CITATION:	[2024] VSC 371

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PROPERTY LAW – Orders for sale of land – Just and fair mode of sale of englobo land – Whether appropriate mode of sale is by public auction or expression of interest campaign – Appropriate terms of settlement for sale – Jurisdiction of Supreme Court in co-ownership matters under the Property Law Act 1958 (Vic), Part IV – Property Law Act 1958 (Vic) ss 225, 228, 232, 234C.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiffs	Mr S V Palmer	Oakley Thompson & Co
For the Defendant	Mr S Hopper	Merton Lawyers

TABLE OF CONTENTS

Introduction........................................................................................................................................ 1

Facts relevant to the proceeding...................................................................................................... 1

The issues for determination and the parties’ positions............................................................ 5

Jurisdiction of the Supreme Court in matters under Part IV of the Property Law Act........ 6

Principles relevant to orders for the sale or division of land.................................................. 11

Does s 228 permit the Court to order a sale on the basis of expressions of interest?......... 13

What method of sale is just and fair in the circumstances?..................................................... 15

The evidence as to sale of the Land by auction or expression of interest campaign........ 15
The expert evidence as to method of sale...................................................................... 16
Evidence as to fairness and justice of the auction method of sale.............................. 21

Conclusion – sale by expression of interest is a just and fair method of sale.................... 24

What settlement period is just and fair in the circumstances?............................................... 24

The evidence as to the appropriate settlement period having regard to market expectations and industry practice................................................................................................................ 25
Conclusion – market expectations and industry practice favour a longer settlement period for sale of Land of this kind........................................................................................................... 27
The evidence as to other matters relevant to what settlement period is just and fair...... 28
Legal authority on terms of sale and settlement periods...................................................... 33
Conclusion – a longer settlement period which is more likely to achieve the best price is also just and fair................................................................................................................................ 35

The declaration sought by the plaintiffs as to Ms Li’s interest being held on trust for Yingde 36

Form of Orders.................................................................................................................................. 38

Costs.................................................................................................................................................... 38

Parties’ positions on costs.......................................................................................................... 38
The parties should bear their own costs in the circumstances of this proceeding............ 40

Orders................................................................................................................................................. 41

HER HONOUR:

Introduction

The first plaintiff Ms Xia Li and the defendant Ms Yu Wen Chao are the registered proprietors of undeveloped land in Rockbank in Victoria (the Land). They originally purchased the land in 2001.

Ms Li and Ms Chao hold the land as tenants in common in equal shares.[1] In July 2018, Ms Li sold her interest in the Land to the second plaintiff, Yingde Investments Pty Ltd, a company which is engaged in both property development and in purchasing undeveloped land for resale. In May 2021 the sale of that interest to Yingde settled and from that date, Ms Li held her interest in the Land on trust for Yingde.[2]
[1]SoAF dated 14 May 2024, admitted pursuant to s 191 of the Evidence Act 2008 (Vic) marked Exhibit A (SoAF), [1].
[2]SoAF, [16].

Ms Li and Yingde seek orders for the sale of the Land pursuant to s 228(1) of the Property Law Act 1958 (Vic), which empowers the Victorian Civil and Administrative Appeals Tribunal or, in certain circumstances,[3] this Court, to ‘make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs’.
[3]Noting the limitations on the jurisdiction of the Supreme Court referred to in s 234C of the Property Law Act, addressed below.

The parties agree that the Land should be sold, however, they disagree on the method of sale and appropriate settlement period. The issue for resolution in this proceeding is, therefore, the terms on which the Court should order that the Land should be sold.

Facts relevant to the proceeding

The original pleadings canvassed a range of factual matters not all of which remained relevant by the time of the hearing, as the parties had resolved a number of the issues between them. However, some of the history of the relationship between the parties remained relevant to the parties’ positions as to the terms on which an order for sale should be made. The parties usefully tendered a statement of agreed facts (SoAF) addressing most of the relevant matters. Evidence was also given by lay witnesses Ms Li, Mr Hua (Tony) Diao (a former employee of Yingde) and by Ms Chao.

Ms Li and Ms Chao purchased the Land in 2001, contributing equally to the purchase price, and were registered as proprietors on 22 November 2001. Ms Li had been introduced to Ms Chao by her husband, Puan Liu, as a potential investment partner. Ms Li and Ms Chao each borrowed $152,000 from the ANZ Banking Group Limited to assist with the purchase, and ANZ registered a mortgage over the Land to secure each of the loans.[4]
[4]SoAF, [2]-[5]; Exhibit P1 (Outline of Evidence of Xia Li).

In November 2005, Ms Li and Mr Liu, and Ms Chao, entered into an agreement with respect to the Land (the 2005 Agreement). The terms of the 2005 Agreement were described by the parties as follows:[5]
[5]SoAF, [6].

(a) Ms Li and Mr Liu would take out a loan from ANZ to repay Ms Li’s loan;

(b) The 2001 ANZ Mortgage would be discharged;

(c) Ms Li, Mr Liu and Ms Chao would grant ANZ a new mortgage over the Land to secure the loans to Ms Chao and to Ms Li and Mr Liu;

(d) Ms Chao would guarantee the ANZ loan to Ms Li and Mr Liu;

(e) Ms Li and Mr Liu would guarantee the ANZ loan to Ms Chao;

(f) If Ms Li and Mr Liu defaulted in repayment of their loan, and ANZ sought to exercise rights under the mortgage, Ms Chao would be entitled to purchase Ms Li and Mr Liu’s interest in the Land for a price equal to the amount owing by them to ANZ;

(g) If Ms Chao defaulted in repayment of her loan, and ANZ sought to exercise rights under the mortgage, Ms Li and Mr Liu would be entitled to purchase Ms Chao’s interest in the Land for a price equal to the amount owing by her to ANZ;

(h) In the event that the non-defaulting party did not exercise their right to purchase the defaulting party’s interest in the Land, the non-defaulting party could elect to sell the Land by public auction, and if the defaulting party’s share of the proceeds of sale was insufficient to settle their outstanding debt to ANZ the defaulting party would pay the shortfall to ANZ.

On 8 March 2006, Ms Li transferred her interest in the Land to herself and Mr Liu as joint tenants. On that date, the 2001 ANZ mortgage was discharged; Ms Chao paid out her ANZ loan and entered a new loan agreement with ANZ, which was guaranteed by Ms Li and Mr Liu. Ms Li and Mr Liu repaid Ms Li’s ANZ Loan and entered a new loan agreement with ANZ, which was guaranteed by Ms Chao. ANZ registered a mortgage over the Land to secure the loans. Mr Liu later passed away and Ms Li was registered as sole proprietor of the interest in the Land that had previously been held by her and Mr Liu jointly.[6]
[6]SoAF, [7], [10]-[11].

In September 2012, a Caveat was lodged over the Land in favour of Lixin Zhao and Cathy Zhou. The grounds of claim identified in the Caveat were:[7]

By a written agreement dated 3 January 2009 between the Caveators and Yu Wen Chao, the Registered Proprietor Yu Wen Chao charged her interest in the land to Lixin Zhao and Cathy Zhou.

[7]Exhibit P3 (Caveat under s 89 of the Transfer of Land Act 1958).

Ms Chao gave evidence at trial that she had instructed her lawyer to put the Caveat on the title.[8]
[8]Transcript 29/05/254 T175.17-T176.08.

Ms Chao had not informed Ms Li that she had charged her interest in the Land, nor did she inform her about the relevant loan or the sum that the charge secured.[9] At the hearing, Ms Chao said that she had borrowed approximately $500,000,[10] but said that she could not remember whether this was by more than one loan and also that although there had been a written record of it, she had torn it up after the loan was paid off.[11]
[9]Transcript 28/05/24 T60.14-.22; Exhibit P1, [17].
[10]Transcript 29/05/24 T172.18-24.
[11]Transcript 29/05/24 T173.18-T174.06.

In July 2017, the Commissioner of State Revenue lodged a Statutory Charge over the title to the Land pursuant to s 96(1) of the Land Tax Act 2005 (Vic) to secure arrears of land tax that Ms Chao had not paid.[12] In March 2020, ANZ also served a notice of default as a result of Ms Chao’s default in payment of amounts due under her ANZ loan. No action was taken on the notice.[13]
[12]SoAF, [13]; Exhibit P2 (Electronic Instrument Statement referring to Notice of Statutory Charge lodged 24 July 2017 by the Commissioner of State Revenue).
[13]SoAF, [15]; Exhibit D12 (Outline of Evidence of Yu Wen Chao), [28]-[31].

Ms Li entered into the contract of sale with Yingde for her half interest in the Land in July 2018. The contract of sale provided for settlement to occur on 1 May 2021, giving a settlement period of approximately 34 months.[14] Settlement occurred on 30 May 2021.[15]
[14]Exhibit D6 (Contract of Sale of real estate with respect to property address 1010-1024 Leakes Road Grangefields 3335).
[15]SoAF, [14], [16].

This proceeding was issued by Ms Li in November 2022. The Statutory Charge and the Caveat were withdrawn in February and September 2023 respectively.[16]
[16]SoAF, [17], [18].

After the proceeding was issued Ms Chao’s daughter started assisting her with managing her affairs and was paying bills relating to the Land.[17]
[17]Transcript 29/05/24 T194.25-T195.2; T208.11-29.

Counsel for the plaintiffs referred to the judgment in another proceeding in this Court involving Yingde and another party, relating to Yingde’s acquisition of properties in the Melton Area.[18] However it was not submitted that there was any specific matter in that judgment that I should take into account, nor that findings in that case would otherwise be relevant, noting that it did not involve the defendant in the current proceeding.
[18]Transcript 28/05/24, T107.15-108.01; Ran Bi v Yingde Investments Pty Ltd [2019] VSC 324 (Riordan J).

The issues for determination and the parties’ positions

The parties now agree that the Land should be sold.[19] However, they are not agreed as to the way in which the Land should be sold. The two main areas of dispute between the parties are:

(a) the method of sale, and in particular whether the Land should be sold by auction, as proposed by the plaintiffs, or by sale by expression of interest, as proposed by Ms Chao;[20] and

(b) what the settlement period should be on a contract of sale; the plaintiffs submit that the settlement period should be between 30 to 120 days,[21] while Ms Chao contends that a much longer period of up to 5 years is appropriate.[22]

[19]SoAF, [21]; Amended Statement of Claim filed 29 May 2024, Prayer for Relief B; Further Amended Defence and Counterclaim filed 30 May 2024, Prayer for Relief C1.

[20]Ms Chao identified another alternative method to auction, as sale by private treaty, however this was not pursued at the hearing: See Defendant’s Submissions dated 23 May 2024, 3, heading 1(c).

[21] Transcript 30/05/24, T277.31-278.27; Plaintiffs’ Submissions dated 23 May 2024, [4].

[22]Defendant’s Submissions dated 23 May 2024, [19]; Defendant’s Closing Submissions dated 30 May 2024, [22].

The parties agreed that in either method of sale, it would be necessary to have orders for a process to appoint an independent valuer to set the reserve price, and to appoint a real estate agent to sell the land. They agreed that if they cannot agree on an agent, that should be decided by the President of the Real Estate Institute of Victoria. It was also agreed that there should be a process to select a solicitor for the conveyancing work on the sale, and that if the parties cannot agree the solicitor would be selected by the President of the Law Institute of Victoria.[23] The parties submitted their proposed forms of order at the conclusion of the hearing. They are annexed to this judgment as Annexures A and B.[24]
[23]Transcript 28/05/24, T5.14-T6.17.
[24]Orders were handed up during closing submissions. I gave leave to the parties to provide any amended proposed orders after the hearing. Plaintiffs’ Proposed Orders, 30 May 2024; Defendant’s Further Minute of Proposed Orders dated 7 June 2024.

The plaintiffs also sought a declaration to the effect that Ms Li holds her interest in the Land on trust for Yingde. Ms Chao submitted that no declaration was necessary in circumstances where there was no controversy to be resolved between the parties on that issue, as Ms Chao agrees that Ms Li’s interest is held on trust for Yingde.[25]
[25]Transcript 30/05/24, T247.15-248.02.

Jurisdiction of the Supreme Court in matters under Part IV of the Property Law Act

A preliminary issue is whether this Court has jurisdiction to make orders under s 228(1). That section is in Part IV of the Property Law Act. Section 234C(1) of that Act provides that this Court and the County Court do not have jurisdiction to hear an application under Part IV, subject to exceptions identified in s 234C. Section 234C(4) provides:

(4)The Supreme Court and County Court have jurisdiction to hear an application under this Part if—
(a)in any proceeding which has commenced in the Supreme Court or the County Court (as the case requires), the issue of co-ownership of land or goods arises in the course of that proceeding; or
(b)in the opinion of the Supreme Court or the County Court (as the case requires), special circumstances exist which justify the Supreme Court or County Court hearing the application.

‘Special circumstances’ are defined for this purpose in s 234C(5) as circumstances in which:
(a) the matter which is the subject of the application is complex; or
(b)the matter which is the subject of the application, or a substantial part of that matter, does not fall within the jurisdiction of VCAT.
In this proceeding, the plaintiffs originally sought relief in their writ and statement of claim in relation to a number of matters, including based on the 2005 Agreement and the rights of compulsory purchase said to arise out of that agreement. They sought:

(a) Declarations that:

(i) Yingde is the beneficial owner of half a share in the Land;

(ii) Ms Li assigned to Yingde its rights under the 2005 Agreement and Yingde is entitled to enforce that agreement against Ms Chao;

(iii) Ms Chao breached the terms of the 2005 Agreement;

(iv) Ms Chao is liable to procure the discharge of the Statutory Charge and the discharge of the Caveat in relation to the Land;

(b) Orders for the sale of the Land under Part IV of the Property Law Act; and

(c) Orders under ss 28A, 232, 233 of the Property Law Act that Ms Chao must account to Yingde for certain outgoings paid by Yingde in relation to the Land.

On 15 May 2024, the parties filed the SoAF. On 29 and 30 May 2024, the parties filed with leave of the Court amended pleadings that reflect the matters which were agreed in the SoAF. The effect of this was:

(a) Ms Li and Yingde only press their application insofar as it relates to the application for a declaration that Yingde is a beneficial owner of a half share of the Land and orders for the sale of the Land.

(b) Ms Chao accepts that Ms Li holds her interest in the Land on Trust for Yingde and agrees that the property should be sold, however, she disputes the plaintiffs’ proposed method of sale and settlement period.

Ms Li and Yingde submitted that this Court has jurisdiction because the subject matter of the application was complex, so that there were special circumstances that exist that justify this Court hearing the application, within the meaning of s 234C(4)(b). They submitted that:

(a) Ms Chao originally did not admit in her defence that Yingde was the beneficial owner of half a share in the Land;[26]

(b) the potential value of the Land is in excess of $10,000,000;[27] and

(c) the proceeding is, in their submission, self-evidently complex.[28]

[26]Transcript 30/05/24, T330.23-.26.

[27]Transcript 30/05/24, T331.01-.03.

[28]Transcript 30/05/24, T330.28-.31.

It was also submitted that the issues under the Property Law Act arose in the course of the proceeding within the meaning of s 234C(4)(a).[29]
[29]Transcript 28/06/24, T4.09-.25.

Ms Chao did not object to the Court exercising jurisdiction under s 234C(4)(a) or (b) if the Court is satisfied that either of those sub-sections is properly invoked.[30]
[30]Defendant’s Submissions dated 23 May 2024, [12]; Transcript 30/05/2024, T331.23-332.08.

I do not accept that the claims in this matter, as originally pleaded, were of such complexity that they were unsuitable for determination by the Tribunal. The Tribunal is experienced in real property related claims, and in particular, in issues involving consideration of the application of planning schemes and property valuation. It is plain from the terms of the legislation, which gives the Tribunal jurisdiction without exception under Part IV of the Property Law Act, that it is intended that co-ownership matters arising under that part should generally be dealt with by the Tribunal. In Djordjevich v Peter Djeka Pty Ltd the Court of Appeal observed:[31]

In relation to the limitation of the Supreme Court’s jurisdiction, found in s 234C of the Property Law Act, the then Attorney-General said as follows:
The reason that the Supreme Court’s jurisdiction to hear disputes between co-owners is limited is to ensure that these disputes can be dealt with in a more accessible and affordable forum for dispute resolution.[32]

[31][2024] VSCA 60, [55] (McLeish, Walker and Macaulay JJA).

[32]Citing Victoria, Parliamentary Debates, Legislative Assembly, 14 September 2005, 880 (Rob Hulls, Attorney-General).

The value of the Land did not make the claims in this case so complex that they were not comfortably capable of resolution in the Tribunal. The resolution of any issue of Yingde’s beneficial ownership of the interest in the Land is also something that, in connection with the application for orders under the Property Law Act, is within the Tribunal’s jurisdiction.[33] It is a relatively straightforward issue, being based as it is on a documented declaration of trust executed in the context of a contract of sale.[34]
[33]See, for example, the discussion in Doolkoora Pty Ltd v Stumpy Gully Holdings Pty Ltd [2024] VSC 155, [75]-[77], [97]-[144] (Gray J).
[34]Statement of Claim dated 22 November 2022, [2]; Exhibit P4 (Declaration of Trust made 30 April 2021); Transcript 28/05/24, T73.14-.25.

However, I accept, having regard to the original claims for relief, that the issue of co-ownership of land arises in the course of a broader proceeding, and that s 234C(4)(a) of the Property Law Act applies. Those original claims involved issues regarding the existence of an equitable interest, the formation, terms and enforceability of a contract, the scope of a co-owner’s duty to take steps to remove charges of her interest in the Land, and the proper construction of Part IV of the Property Law Act.

The parties’ efforts to narrow the issues in dispute have reduced the scope of this proceeding. The outcome is that the remaining substantive issues involve the orders sought under ss 228 and 232 of the Property Law Act. The plaintiff continues to seek a declaration that Ms Li holds her interest in the Land on trust for Yingde; but as this is a fact that is not contested between the parties, it cannot be said to be the subject matter of the controversy between the parties in this proceeding.

However, the reduction in scope of the issues between the parties does not mean that the Court lacks jurisdiction to hear this proceeding.

Jurisdiction with respect to a matter is ‘jurisdiction to entertain, and determine, all claims constituting [the matter], whatever their ultimate fate’.[35] The approach to jurisdiction in the Federal Court of Australia is instructive in demonstrating that if jurisdiction is originally validly attracted, it will not be lost if the claims attracting jurisdiction are resolved, leaving matters which otherwise would not be within the jurisdiction of the court.[36] The authorities establish that this is the case unless the claims or defences that give rise to that jurisdiction are ‘“colourable” in that [they are] made for the purpose of “fabricating” jurisdiction’.[37]
[35]Burgundy Royale Investments Pty Ltd v Westpac Banking Corporation (1987) 18 FCR 212, quoted with approval in the context of the discussion of whether a claim or defence gives rise to a matter within the description in s 76(i) or (ii) of the Constitution in Citta Hobart Pty Ltd v Cawthorn (2022) 276 CLR 216, [36]-[38] (Kiefel CJ, Gageler, Keane, Gordon, Steward, and Gleeson JJ).
[36]See, for example, Unilan Holdings Pty Ltd v Kerin, (1993) 44 FCR 481, 481-482, (Neaves, Ryan and Gummow JJ) where the accrued jurisdiction of the Federal Court of Australia to hear a claim in tort was not lost in circumstances where the claim under federal legislation which originally engaged the Court’s jurisdiction was struck out.
[37]Cawthorn, [36] (Kiefel CJ, Gageler, Keane, Gordon, Steward, and Gleeson JJ). See also Gibbs v Kinna (1999) 2 VR 19, [18] (Kenny JA, Ormiston and Phillips JJA agreeing); in the context of jurisdiction under the Charter of Human Rights and Responsibilities Act 2006 (Vic), s 39, Kheir v Robertson [2019] VSC 422, [100]-[101] (McDonald J).

This line of authority is useful in applying s 234C(4)(a) of the Property Law Act. If a proceeding has been commenced in the Supreme Court which is within the Court’s jurisdiction, and the issue of co-ownership under Part IV of the Property Law Act arises in the course of that proceeding, the Court’s jurisdiction will remain pursuant to s 234C(4)(a) even if the non-Part IV claims are resolved, unless they were brought in the proceeding were made for the purpose of fabricating jurisdiction in the Court.

In this case, the claims that, together, gave rise to the proceeding which attracted this Court’s jurisdiction were not colourable. They originally involved claims as to the basis on which Ms Li holds her interest in the Land, and claims requiring payment by Ms Chao of amounts alleged to be owing and which had given rise to third party claims on the Land. The issues have been confined because:

(a) The Plaintiffs no longer seek to make claims based on the 2005 Agreement;

(b) Ms Chao has agreed that Ms Li holds her interest in the Land on trust for Yingde;[38]

(c) Ms Chao has agreed that Yingde is entitled to be the registered proprietor of Ms Li’s interest in the Land;[39] and

(d) Ms Chao’s outstanding debts have been paid, and the Statutory Charge and Caveat have been withdrawn.[40]

[38]SoAF, [16].

[39]SoAF, [20].

[40] SoAF, [17]-[18].

I am therefore satisfied that that the issues under Part IV of the Property Law Act arise in the course of a proceeding commenced in the Court in which the Court has jurisdiction. Pursuant to s 234C(4), this Court has jurisdiction to hear the application for orders pursuant to ss 228 and 232 of the Act.

Principles relevant to orders for the sale or division of land

Part IV of the Property Law Act applies to co-owned land and goods and provides a range of powers to address disputes and issues that may arise as between co-owners of land or goods.

Section 228 of the Property Law Act provides:

228What can VCAT order?
(1)In any proceeding under this Division, VCAT may make any order it thinks fit to ensure that a just and fair sale or division of land or goods occurs.
(2)Without limiting VCAT’s powers, it may order—
(a)the sale of the land or goods and the division of the proceeds of sale among the co-owners; or
(b) the physical division of the land or goods among the co-owners; or
(c)that a combination of the matters specified in paragraphs (a) and (b) occurs.

Section 228 is, by its broad terms, a discretionary power of the widest ambit.[41] In determining what is just and fair in making an order for sale, considerations of fair market value will be relevant.[42]
[41]Djordjevich v Peter Djeka Pty Ltd [2022] VSC 732 (Djordjevich First Instance), [57]-[58] (Garde J); approved by the Court of Appeal in Djordjevich, [25], [48].
[42]See, in the context of predecessor powers of sale in the Property Law Act 1958, Adler v Ferguson [1962] VR 129, 130.

Section 229(1) provides:

229 Sale and division of proceeds to be preferred
(1)If VCAT determines that an order should be made for the sale and division of land which is, or goods which are, the subject of an application under this Division, VCAT must make an order under section 228(2)(a) unless VCAT considers that it would be more just and fair to make an order under section 228(2)(b) or (c).

In this case, the evidence was, and the parties agreed that, it was not possible to divide the Land under the current planning scheme.[43] It is not, therefore, open to make an order for division of the Land, and the agreed resolution is that the Land must be sold.
[43]Exhibit D13 (Expert Report of Geoffrey Brown dated 15 May 2024), 10. Transcript 28/05/24, T7.06-.12; Transcript 29/05/24, T218.25-T219.1

Section 232 also provides for a very wide range of other matters that may be ordered,[44] as follows:
[44]See Djordjevich, [53] (McLeish, Walker and Macaulay JJA).

232     Other matters in VCAT orders
In any proceeding under this Division, VCAT may order—
(a)       that the land or goods be sold by private sale or at auction;
(b)that the co-owners may purchase the land or goods at that sale or auction;
(c)in the case of a private sale, that the sale be at fair market price as determined by an independent valuer;
(d)in the case of an auction, that the reserve price is the reserve price set by VCAT;
(e)that an independent valuation of the land or goods take place;
(f)that a sale is to be completed within a specified time;
(g)that the costs of the sale be met—
(i)         by one or more of the co-owners; or
(ii)       from the proceeds of the sale;
(h)that the sale and division of the proceeds of sale or the physical division of the land or goods is subject to any terms and conditions which VCAT considers necessary or desirable in any particular case;
(i)in the case of land, that any necessary deed or instrument be executed and documents of title be produced or other things be done that are necessary to enable an order to be carried out effectively;
(j)in the case of land to which the Transfer of Land Act 1958 applies, directing the Registrar of Titles to make amendments to the Register within the meaning of that Act or do any act or make any recordings necessary to give effect to an order under this Division.

Does s 228 permit the Court to order a sale on the basis of expressions of interest?

The first basis on which the plaintiffs opposed any order for sale of the Land by expression of interest was a submission that the Property Law Act does not permit the making of an order for the sale of land by an expression of interest campaign. The primary basis of the submission was that s 232(a) of the Property Law Act provides that orders may be made that ‘the land … be sold by private sale or auction’, and does not refer to expression of interest campaigns.[45] It was submitted that ‘inviting expressions of interest from potential purchasers is not a sale’, rather it is a way of testing the market, and may not result in a sale at all.[46] It was also submitted that s 229 of the Property Law Act reinforced the requirement of a ‘sale’, by providing that if it is determined that an order should be made for the sale and division of land, the order must be made under s 228(2)(a) (requiring a sale of the land) unless it is considered more just and fair to make an order under s 228(2)(b) or (c).[47]
[45]Plaintiffs’ Submissions dated 23 May 2024, [7].
[46]Plaintiffs’ Submissions dated 23 May 2024, [8]; Transcript 28/05/24 T9.25-10.03; 30/05/24 T317.14-.22.
[47]Transcript 28/05/24, T25.28-26.11.

The defendant contends that sale by expression of interest is merely a form of private sale, and that the primary statutory basis for the order for sale sought in this proceeding is, contrary to the submission of the plaintiffs, s 228, rather than s 232(a).[48]
[48]Transcript 28/05/24, T20.06-21.18.

The first difficulty with the plaintiffs’ submission is that the primary source of the power to make the order for sale of the Land is not s 232(a), but s 228(1). That section, as noted by the Court of Appeal in Djordjevich, and by Garde J at first instance, is a power of the widest ambit.[49] The Court of Appeal stated that:

Section 228(1) is to be construed with all the generality its language permits; and while s 232 sets out a range of orders VCAT may choose to make under pt IV, it does not exhaust the possible orders that may be made.[50]

[49]Djordjevich (First Instance), [57]-[58]; Djordjevich, [25], [48].

[50]Djordjevich, [48].

Section 228 is not to be read down by reference to s 232, which imposes no conditions or restrictions on the power in s 228.[51] Section 228(1) provides a power for the Tribunal and the Court in this case to ‘make any order it thinks fit to ensure that a just and fair sale or division of land … occurs’. Section 228(2)(a) provides, expressly without limiting the powers in s 228(1), that the Tribunal may order ‘the sale of the land … and the division of the proceeds of sale among the co-owners.’ The method of sale of land is not stipulated in s 228(2)(a).
[51]Djordjevich (First Instance), [59]-[63]; Djordjevich, [48].

The second difficulty with the plaintiffs’ position is that insofar as there was evidence as to what was involved in selling property through an expression of interest campaign, that evidence supported the view that it was a method properly understood as a ‘sale’ of property. Mr Brown, the expert called by Ms Chao, referred to an expression of interest campaign as a ‘method of sale’. He described the procedure involved in such a campaign and identified it as a process which ‘allows the Vendor to set the timeline of the sale process’.[52] He gave evidence that an expression of interest was not itself a binding offer by a purchaser, and that not all expressions of interest or subsequent offers would be acceptable to a vendor.[53]
[52]Exhibit D13, 7-8.
[53]Transcript 29/05/24, T215.14-.25, T216.01-217.04.

Mr Zhou, the expert called by the plaintiffs, also used the phrase ‘sold via EOI’ in his report, and accepted in giving evidence that the expression of interest process usually leads to a sale.[54]
[54]Exhibit P8 (Expert report from Mr Benson Zhou of Savills); Transcript 29/05/24, T155.10-.12.

Although the expression of interest process may not inevitably lead to a sale, the purpose of an expression of interest campaign is plainly to sell the land. The same can be said of an auction,[55] where a property is advertised for sale by auction, and bids invited, but there is no guarantee the property will sell at that auction.
[55]As was recognised in the expert evidence: Mr Brown, Transcript 29/05/24, T227.05-.18, T231.22-.26.

A sale by expression of interest is properly understood as a sale process, and I am satisfied that s 228(1) and s 228(2)(a), in combination with s 232 of the Property Law Act, empower the making of an order that land be sold by an expression of interest campaign.

What method of sale is just and fair in the circumstances?
The evidence as to sale of the Land by auction or expression of interest campaign

The Land is undeveloped land identified as being in Grangefields, in the City of Melton.[56] It is a slightly irregular parcel of 11.74 hectares. It is not subdivided, but is within the Western Growth Corridor in the Urban Growth Zone, and is included in the Melton East Precinct Structure Plan (PSP) process.[57] It is not possible to develop the Land until the PSP is in place.[58]
[56]The Land was also referred to as being in neighbouring Rockbank, which shares the 3335 postcode but most documentation described it as being situated in Grangefields.
[57]Exhibit D13, 4, 6 and Attachment 4.4 Melton Planning Scheme Ordinance.
[58]Transcript 28/05/24, T89.22-.28, T93.07-.27; Transcript 29/05/24, T152.02-.16, T218.21-.24.

The evidence was that the value of the Land was attached to the anticipated adoption of the PSP.[59]
[59]Transcript T89.18-T90.02; T150.06-161.15; T212.25-31

The evidence as to the status of the PSP process was somewhat unsatisfactory. Expert evidence from Ms Sarah Horsfield, a town planner, as to the PSP process was filed by Yingde, and not tendered, but was referred to in examining the witnesses.[60] The evidence was to the effect that Mr Diao agreed with Ms Horsfield’s opinion, at the time of her report in August 2023, that the Melton East PSP was ‘at least 36 months away’ from gazettal, but also might be longer.[61] Mr Brown’s evidence was that the Melton East PSP was in the initial stages of preparation.[62]
[60]Report of Sarah Kate Horsfield, Director of Urbis Pty Ltd, August 2023.
[61]Transcript T28/05/24, T91.03-93.02. Mr Zhou understandably declined to express a view on whether this time period was correct as he was not a town planning expert; Transcript 29/05/24, T151.19-154.09. Ms Chao gave evidence that the PSP process is ‘coming to the middle now’ on the basis of a document sent to her by Melton Council which was not in evidence: Transcript 29/05/24, T200.10-.17.
[62]Exhibit D13, 6: ‘Background studies have been undertaken for the Melton East PSP including the Vision & Purpose document, dated August 2022. A draft PSP is still being prepared with the timeline for completion being unknown.’ See also Transcript 29/05/24, T219.02-.08.

A document titled PSP 2.0 Melton East Precinct Structure Plan Co-design Workshop Summary dated April 2023 was in evidence as an annexure to the report of Mr Zhou. That document, issued by the Victorian Planning Authority (VPA), states that the VPA is preparing the Melton East PSP, in partnership with the City of Melton and with input from State government and the local community. The document refers to the next steps in the process and identifies the process as being in the ‘current phase’ of PSP and Infrastructure Contribution Plan development, with public consultation and exhibition of the PSP anticipated in late 2023.[63]
[63]PSP 2.0 Melton East Precinct Structure Plan Co-design Workshop Summary dated April 2023, 35.

No evidence was tendered as to the current stage of progress of the Melton East PSP as at the time of the hearing.

I conclude, doing the best that I can on the evidence, that gazettal of the Melton East PSP is not likely to occur before late 2026, and potentially after that time. This conclusion was based on the reference to Ms Horsfield’s opinion in August 2023, that gazettal was ‘at least 36 months away’, and the other evidence indicating that the PSP was in its initial stages, but progressing through the stages towards gazettal.

The expert evidence as to method of sale

Expert evidence was given for the plaintiffs by Mr Benson Zhou. He is a licensed real estate agent and Director of Commercial Sales for Savills, a real estate agency. He heads the Asia Markets team at Savills and has ten years’ experience in the industry. His report referred to Savills having been involved in numerous property transactions, although these were primarily in urban locations.[64]
[64]Exhibit P8, Appendix 1. One aspect of Mr Zhou’s report was objected to, relating to an estimated sale price for the Land, and it was admitted with the exception of that part: Transcript 29/05/24, T142.08-.21.

Mr Geoffrey Brown gave expert evidence for Ms Chao. He is a property valuer and real estate agent and Senior Director at LAWD, a real estate and valuation firm. He is a licensed estate agent, Fellow Member of the Australian Property Institute, and a Certified Practising Valuer. He has practised as a valuer since 1991 and as an estate agent since 2003.[65]
[65]Exhibit D13, 2-3; Transcript, 29/05/2024, T211.23-.24.

The weight of the evidence given by the experts was overwhelmingly to the effect that undeveloped land which was not subdivided was generally sold by way of an expression of interest campaign, and very rarely sold by public auction.

Mr Brown gave evidence that public auction of the Land would not be the most appropriate method of sale because the market is not using auction campaigns for properties with the characteristics of the Land. To maximise sale price of development land which is not subject to an approved PSP, purchasers would expect flexibility in sale terms, which is not allowed for by the auction process. Because the auction process is public, potential purchasers can see what offers are made and technically only have to pay $1.00 more than the underbidder, unless the property is passed in and negotiation occurs after the auction.[66] Although there was nothing to prevent an auction being held for the Land, Mr Brown would not recommend it because an auction is ‘probably not pushing it out to the whole of the market because englobo land parties actually want some form of settlement terms’, and an auction involves offering the property on defined terms. Impeding the pool of potential purchasers in this way would potentially affect sale price, without any definite sale date as the property may be passed in.[67]
[66]Exhibit D13, 7.
[67]Transcript 29/05/24, T226.21-T227.9.

Mr Brown’s opinion was that the appropriate method of sale would be by an expression of interest campaign, because:

(a) This method is the most flexible method of sale, which is paramount when taking assets to the market that require an increased level of due diligence, and potentially time to allow for the Foreign Investment Review Board to review a potential purchaser. The Land is such an asset, being incorporated within the Melton East PSP which is still in its initial stages of preparation.[68]
[68]Exhibit D13, 7.

(b) The expression of interest process involves making invitations to a target market to register interest by nominating their opinion on value, terms of sale, and providing evidence of their funding capacity to complete the transaction. There is a real benefit in the market not knowing what others are offering in the expression of interest process, as it fosters competition between purchasers.[69]

(c) The expression of interest method permits the vendors to set the timeline of the sale process and create a sense of urgency and competitive tension from purchasers. The confidentiality of the process also allows for an anxious purchaser or adjoining owner to pay a premium for the land by bidding against themselves.[70]

(d) The process permits background investigations on all the potential purchasers who have made offers, and who can be negotiated with to arrive at terms to best suit the vendors, and who will be best placed to settle at the proposed time. It enables the agent to do investigations as to any parties submitting expressions of interests who are not known to them. This gives the vendor’s agent some ability to control the sale process in assessing the potential purchasers and to eliminate prospective purchasers who may not settle on the property.[71]

[69]Exhibit D13, 7; Transcript T230.02-.04.

[70]Exhibit D13, 7-8.

[71]Transcript 29/05/24, T228.6-23, T229.29-T230.01, T235.07-.25.

Mr Brown expressed the opinion that the expression of interest process is very familiar to potential purchasers in this market and is the preferred method of sale by real estate agencies. He illustrated this opinion as applied to the Land in this case by referring to 18 properties in the Western Growth Corridor which had been offered for sale via expression of interest campaigns in the period late 2022-2024. The properties range in size from 3.29 ha to 174.57 ha (the Land being 11.74 ha). He also gave evidence that in his research of marketing material he identified other properties that were offered for private sale and off market transactions, but did not identify any englobo parcel of land offered for sale via auction.[72]
[72]Exhibit D13, 8.

Mr Brown’s opinion in comparing the methods of sale was that there was more risk in a public auction, as compared to an expression of interest campaign, because in an auction of englobo land the auctioneer can lose control of the process but with expression of interest campaigns there was more control with a larger pool of purchasers.[73] He explained that the loss of control may arise in the context of an auction because for englobo land parties will want to propose bids on different terms, and if that occurs the auctioneer will lose control of how the auction proceeds and would need to pass the property in. He acknowledged in cross examination that it was not inevitable that an auctioneer would lose control of the process but that he would be concerned about that risk in selling the Land, and that it was one of the reasons he would not sell this property by auction.[74]
[73]Transcript 29/05/24, T230.16-.23, T236.21-238.02.
[74]Transcript 29/05/24, T237.10-238.22.

Mr Brown also acknowledged in cross examination that if there was a range of offers on different terms made in an expression of interest process, and the two vendors disagreed on the terms, the real estate agent may not be able to resolve the different terms.[75] However, he also gave evidence that the vendor in a sale by expression of interest can limit the conditions that are placed on offers, and can specify that the only variables in the sale are price and settlement term.[76]
[75]Transcript 29/05/24, T232.18-.25.
[76]Transcript 29/05/24, T233.12-25.

Mr Zhou gave evidence, in an expert report responsive to Mr Brown’s report, that he would sell the Land by public auction. He said that this method would ‘provide the best opportunity of running a fully transparent process and extracting the highest possible price through competition come auction day’.[77]
[77]Exhibit P8, 2.

Mr Zhou acknowledged in his report that development sites are usually sold by expression of interest campaign.[78] He referred to having been involved in the sale of government assets which are required to be sold by auction. He also did give some examples of ‘development sites’ which Savills had ‘transacted through the auction process’, however these were, with one exception, sites in urban areas.[79] It was also unclear whether these were the government assets which were required by law to be sold by auction.
[78] Exhibit P8, 2.
[79]Exhibit P8, 2 referring to Broadmeadows, Wantirna, Burwood, Corio and Clifton Hill.

Mr Zhou accepted Mr Brown’s understanding and description of the Land and its key elements but disagreed with his views on the auction process. This was on the basis that Savills’ experience in selling the development sites referred to in Mr Zhou’s report was that an auction could leverage the competitive nature of the auction process to achieve the maximum sale price for the Land. He identified as a basis for this view that the auction process would minimise any potential for added terms and conditions in favour of the buyer.[80]
[80]Exhibit P8, 2-3.

It appeared from the terms of Mr Zhou’s report that it was prepared by Mr Zhou on the basis that he was, with his agency, proposing to sell the property for Yingde.[81] Although Mr Zhou rejected the proposition that in preparing the report he was hoping to get Yingde’s work,[82] the report did reflect views as to how Mr Zhou would sell the Land, and he accepted in cross examination on the issue that he would love to have the work of selling it.[83] I could not exclude the possibility that Mr Zhou, in approaching the issue from the perspective of how Savills ‘propose to sell the property’ was taking into account Yingde’s desires as to how the property should be sold in asserting that the appropriate method for sale was public auction. More importantly, however, the properties Mr Zhou identified, as the basis of his opinion that sale by auction would enhance competition and maximise price, were ‘development sites’, in urban areas. Even if these sites were completely undeveloped (which was unclear on the evidence) they were not a strong basis on which to form his opinion. The appropriate comparator is englobo land which is still awaiting a PSP to enable subdivision and development. Mr Zhou’s opinion that it was desirable to use auction as this minimises any potential for added terms and conditions was also inconsistent with Mr Brown’s evidence that purchasers expected some flexibility as to terms in sales of englobo land. The specific expectations of purchasers of this kind of land were not addressed by Mr Zhou.
[81]Exhibit P8, 2: ‘We propose to sell the property by auction …’; 3: ‘An auction will provide the best opportunity to extract the highest possible price from the market. It will also enable us to provide the market with the most transparent sale process that can be relied upon to achieve the best result …’.
[82]Transcript 29/05/24, T146.29-147.28.
[83]Transcript 29/05/24 T147.01-.02.

Finally, in considering the evidence given with respect to method of sale, Ms Chao was questioned about the 2005 Agreement which provided for the sale of the Land by public auction if a party had defaulted in mortgage payments and the other party did not wish to buy out their interest.[84] I did not regard that 2005 Agreement as having any bearing on what the appropriate method of sale would be now.
[84]Transcript 29/05/24, T177.13-.29.

I preferred Mr Brown’s evidence on the question of the most appropriate method of sale to obtain the best market price. In addition to his extensive experience, his report identified comparable properties and their terms and method of sale to support his views that the prevailing method of selling englobo land of this nature was by expression of interest, and not by auction. His explanation as to why an auction process may create risks to a satisfactory sale process for vendors, which risks are less readily able to be contained than in a sale by expression of interest, was also considered and explained in a way not addressed by Mr Zhou.

Evidence as to fairness and justice of the auction method of sale

Ms Chao submitted that Yingde was a motivated buyer of the Land, and would have a special interest in purchasing it. It was submitted this was relevant because an auction sale, favouring a short settlement period, is likely to have a smaller pool of buyers ready to purchase.[85] This would suit Yingde, as a buyer apparently motivated and ready to purchase immediately. Conversely, this would disadvantage Ms Chao because an auction with a short settlement was not the method of sale most likely to achieve the optimal price, and Yingde would achieve a windfall gain at her expense.[86]
[85]Transcript 29/05/24, T230.24-231.04.
[86]Defendant’s Submissions dated 23 May 2024, [31]; Defendant’s Closing Submissions dated 30 May 2024, [25].

The evidence was that Yingde already has very substantial landholdings in the Melton PSP area. Mr Diao was taken to a list of 23 properties which he gave evidence were owned by Yingde. All but one of the properties was in the Melton East PSP, and 11 of the properties were in Grangefields, in the same postcode as the Land. The properties were of sizes ranging from 11.447 ha to 55.0388 ha. The sale prices were between $2,286,438 and $32,539,200.[87] Mr Diao gave evidence that Yingde also owned two properties neighbouring the Land: the property adjoining the Land,[88] and also a property adjoining that property.[89]
[87]Transcript 28/05/24, T96.15-98.02; Exhibit D5 (Table titled Annexure A, prepared by Merton Lawyers).
[88]Transcript 28/05/24, T87.18-.30; Exhibit D10 (Contract of sale of Real Estate, 1026-1040 Leakes Road, Grangefields), 35.
[89]Transcript 28/05/24, T101.33-102.28; Exhibit D7 (Contract of sale of real estate for 1042-1060 Leakes Road, Grangefields).

Mr Diao was asked whether Yingde would bid on the Land when offered for sale. He responded:

I guess if you, ah, ask me, that's always a commercial – ah, that's always commercial decision, ah, to, ah, bid, ah, or not for any property.[90]

[90]Transcript 28/05/24, T94.05-.08.

When asked specifically if Yingde would bid on the Land if it was sold by public auction he said:

Like what I said, it's always a commercial – commercial decision if the – if at the right price, um, I would say 'yes'.[91]

[91]Transcript 28/05/24, T94.24-.26.

Yingde’s statement of claim, both as originally filed, and as amended during the hearing, sought in the prayer for relief orders for sale of the property by auction, ‘each party being able to purchase the land at sale or auction’.[92]
[92]Statement of Claim, 22 November 2023, prayer for relief B.

Ms Chao was also questioned about an offer she had made to Yingde to purchase its share of the Land in around 2019.[93] The evidence was that Yingde had offered to buy her share for $5 million, an offer that she rejected as too low, and offered to pay $6 million for their interest in the Land. She said that she did not have those funds herself but that she had friends who said that if the other half share of the Land was available for under $10 million they would buy it.[94] She was asked to identify the friends but first said she could not without their permission and when pressed said she could not remember.[95] It was put to her that based on that prior potential offer she must be in a position, if the Land was to be sold by auction, to bid up to $20 million for the Land. Ms Chao did not accept that proposition.[96] There were aspects of this evidence which were difficult to accept, including the inability to recall the friends who were willing to finance an offer of up to $10 million to purchase Yingde’s interest in the Land. However, I did not regard the issue as having particular significance to the issues for determination, as Ms Chao did not accept that any such assistance would be available now for the purpose of bidding at auction for the whole of the Land. The evidence as a whole did not contradict that position, nor establish the premise that a bid of $20 million would in any event be sufficient to secure the Land at auction.
[93]Transcript 28/05/24, T183.26-186.16; Exhibit D8 (We Chat messages from 1 January 2019 to 26 February 2019). The $5 million offer by Yingde appears from that exhibit to have been proceeded by an offer to purchase for $4.5 million.
[94]Transcript T188.03-.31, T195.29-196.21
[95]Transcript 29/05/24, T196.16-197.27.
[96]Transcript 29/05/24, T189.03-.10, T198.04-199.05.

Although it was submitted for Yingde that no decision had been made as to purchase,[97] this was not supported by any evidence from Yingde. As no current officer or representative of Yingde was called, there was no evidence to contradict the overwhelming inference from the available evidence that Yingde would wish to purchase the Land.
[97]Transcript 28/05/24, T33.15-16.

I accept from all of the evidence that Yingde is both a motivated buyer of the Land and likely to have resources to do so, whereas Ms Chao is not in a position to bid for the Land if it goes to auction. Yingde, as a likely potential purchaser of the Land, may benefit from the transparency of the auction process as opposed to an expressions of interest process where it is required to place a competitive offer against unknown potential bidders. It is difficult to assess how much of a disadvantage an auction would create for Ms Chao in her objective of achieving the best price for the Land, or conversely how much of an advantage it would give Yingde in purchasing the Land at a lower price than might be achieved by expression of interest. I accept that it is a relevant consideration, supporting the expert evidence favouring the expression of interest process, but only of relatively minor weight.

Conclusion – sale by expression of interest is a just and fair method of sale

I am satisfied on the evidence that sale by expression of interest is a method more likely to achieve a fair price at market for the Land than sale by auction. It accords with market practice. It also accords with the general expectations of purchasers, which anticipate a longer period of settlement for land which is undeveloped, and particularly land for which a PSP is anticipated in the future, but at a time not yet known with precision. The expression of interest process gives more flexibility and control for the vendors as to terms, and enables the vendors’ agent to investigate offerors’ capacity to settle.

Although an auction is more transparent, that is not a feature which will necessarily benefit vendors in the ordinary course, as the evidence is that if prospective purchasers are unaware of other bidders and the range of their bids, this has the potential to draw out better offers. Further, in this case, Yingde is not an ordinary vendor as it has particular reasons for being motivated to acquire the full interest in the Land for itself. I accept that an auction may attract a smaller pool of potential purchasers, which would be to Yingde’s advantage, but not to Ms Chao’s advantage.

I am also satisfied, having regard to the evidence of Mr Brown, that issues as to terms of sale and the potential for the parties not to agree on which offer is preferable are risks which are common to both methods of sale. Such risks may arise in the context of a sale by expression of interest, however they are also risks that cannot be excluded in the auction process, where parties may seek to make bids subject to conditions, or the property may be passed in, leading to a private negation process. These risks can be addressed to a significant degree by making orders restricting the scope of the conditions on which offers can be made in the expression of interest process.

I conclude for these reasons that sale by expression of interest is a just and fair method for the sale of the Land.

What settlement period is just and fair in the circumstances?

The plaintiffs’ submission that a short settlement of no more than 120 days was appropriate was supported by very limited evidence. Rather, it was submitted that such a settlement was appropriate as settlements of 30, 60, 90 or 120 days are the standard terms for an auction.[98] It was also supported by reference to authority to the effect that a five year settlement period was inappropriate in a court ordered sale, which is considered further below.[99]

The evidence as to the appropriate settlement period having regard to market expectations and industry practice

[98]Transcript 30/05/24, T277.31-278.27.

[99]Adler v Ferguson [1962] VR 129.

The plaintiffs’ expert was not instructed to give an opinion on the appropriate settlement period in a sale of the Land. As discussed below, the plaintiff addressed the issue of appropriate settlement terms not by reference to evidence of industry practice but instead focussed matters which made a shorter settlement term just and fair within the meaning of s 228(1).

Mr Zhao did, however, give evidence that purchasers may pay more for a longer settlement on Land for which the relevant PSP was going to be gazetted in the not too distant future.[100]
[100]Transcript 29/05/24, T150.01-.15.

Ms Chao gave evidence that she wished to wait until the PSP; she said that she had held the land for 20 years and ‘why hurry now?’.[101] The Land was her only property.[102]
[101]Transcript 29/05/24, T199.29-200.13.
[102]Transcript 29/05/24, T201.25-.27.

Mr Brown’s opinion was that it was appropriate to have an extended settlement period of between three to five years.[103] He gave four examples of properties in the vicinity of the Land, for which he had been able to ascertain the settlement period. The contract dates and settlement periods were two year terms for a sale date in August 2022, four year terms for a property sold in July 2022, 18 month terms for a property sold in December 2021, and 26 month terms for a property sold in November 2021.[104] His opinion was that generally, the longer the settlement terms, the better the price.[105]
[103]Transcript 29/05/24, T223.08-.13, T229.02-.09.
[104]Exhibit D13, 9.
[105]Transcript 29/05/24, T220.03-.10.

Mr Brown gave evidence as to how a valuer can give a present value to two prices payable at different times. It was possible as a valuer to consider a price with a three month settlement period and a price with a five year settlement period and determine which is the more valuable offer in terms of price. This is done by a net present value calculation adopting an appropriate discount rate over the term of the sale. The discount rate takes into account factors including the alternate use of funds over the settlement period, and settlement risk, to provide a cash equivalent price.[106]
[106]Transcript 29/05/24, T233.28-235.05.

Mr Brown acknowledged that there was a risk to both vendor and purchaser in a terms contract given the potential for interests rates and property values to go up or down. It is necessary to balance the risk, and the vendor’s objectives as to price and as to whether they wish to settle quickly or are willing to wait.[107]
[107]Transcript 29/05/24, T222.06-223.07, T224.31-.19.

In addition to the expert evidence, there was evidence as to the terms on which properties in the Melton East area owned by Yingde had been acquired. The list of properties which Mr Diao agreed were properties of which Yingde was registered proprietor showed the dates on which the properties were sold and the dates on which Yingde was registered on the title, enabling an estimate of the settlement period provided for in the contract of sale.[108] The evidence of Mr Diao was that Yingde had purchased many of the contracts through nomination from a third party and that Yingde had not negotiated the terms. Nevertheless, the contracts gave an indication of the settlement periods for sales of land of a comparable kind in the PSP. The contracts of sale for the properties were entered into over the period from 15 March 2017 to 13 July 2021, and had settlement periods of between nine months and five years.[109] Of the additional neighbouring properties also owned by Yingde, one had a four year settlement period[110] and the other a period of just over a month. The evidence was that the latter sale was a mortgagee exercising its power of sale.[111]
[108]Transcript 28/05/24, T96.15-98.02; Exhibit D5.
[109]Exhibit D5; Transcript 29/05/24, T111.07-.27.
[110]Transcript 28/05/24, T102.21-103.06; Exhibit D7.
[111]Transcript 29/05/24, T116.06-.25; See Exhibit D10 and Exhibit D11 (Contract of Sale of Real Estate, 1026-1040 Leakes Road Grangefields, with Vendor Curo Capital Pty Ltd as mortgagee exercising its power of sale).

Of the properties owned by Yingde identified in the table and otherwise in evidence, the longer settlement periods of 5 years were for contracts entered in 2017. Later contracts had shorter periods ranging between four years to nine months.

The contract of sale by which Yingde purchased Ms Li’s share of the land, in July 2018, had a settlement period of just under three years.[112] When Mr Diao, on behalf of Yingde, had offered to purchase Ms Chao’s share of the Land in 2019, he had proposed a five year settlement period.[113]

Conclusion – market expectations and industry practice favour a longer settlement period for sale of Land of this kind

[112]Transcript 28/05/24, T100.25-101.17; Exhibit D6.

[113]Transcript 28/05/24, T103.07-19; Exhibit D8.

The uncontested evidence was that in the overwhelming majority of sales of englobo land, settlement periods which are significantly longer than those for sales of developed property are desired by purchasers, and are expected by vendors. The evidence indicated that this was in part because of the uncertainty of when the land could be developed, and purchasers’ preferences to obtain the benefit of any appreciation in value of the land without having to commit finances until a date closer to the time when development becomes possible. The market would anticipate a long settlement period being available for a land acquisition of this kind. I am satisfied that to stipulate a short settlement period would create a real risk of reducing the pool of potential purchasers for the Land.

In this case, the anticipated adoption of the Melton East PSP is a factor which is highly relevant to the value of the Land. Longer settlements are sought where the PSP is not yet gazetted, but is anticipated to be some years away.

The evidence established that settlement periods of between nine months and five years were used for land in the Melton East PSP. However I do take into account that the five-year periods were generally for contracts entered into earlier in the period of available data, and primarily in 2017. More recent contracts had shorter terms, which I infer is because of progress towards the Melton East PSP.

Taking into account my conclusion that the Melton East PSP is not likely to be gazetted before late 2026, I conclude that a settlement period of up to four years would be consistent with current market expectations, and would be more likely than a short settlement period of up to 120 days to elicit the best range of offers for the Land.

It remains to consider whether that settlement period as a term of the sale of the Land is just and fair as required by s 228(1) of the Property Law Act.

The evidence as to other matters relevant to what settlement period is just and fair

The plaintiffs rightly emphasised that the question for the Court arising under s 228(1) was not what sale terms would produce the highest price for the Land, but what were just and fair terms for the sale.[114]
[114]Transcript 28/05/24, T7.13-.23.

The plaintiffs’ contention that there should be a short settlement period of up to 90 days was based primarily on its submissions that the plaintiffs wished to end their relationship with Ms Chao. It was said that this was their wish because of Ms Chao’s history of defaulting in loan repayments, charging the property without the plaintiffs’ consent to secure personal loans, delaying in paying her share of outgoings and ‘unreasonably obstructing the first plaintiff’s sale of her interest in the [Land]’.[115] The plaintiffs’ evidence, however, did not address satisfactorily whether there was any basis for a continuing concern based on this history of defaults, so as to justify a short settlement period which was inconsistent with market expectations.
[115]Plaintiffs’ Submissions dated 23 May 2024, [9].

Ms Li gave evidence that she sold her interest in the land to Yingde because she wanted to get out of the undesirable partnership, which had caused her stress and anxiety.[116] Ms Li’s evidence was that:
[116]Transcript 28/05/2024, T61.14-.26.

(a) She continued to be guarantor of Ms Chao’s loan to ANZ.[117]
[117]Exhibit P1, [8].

(b) In 2012 Ms Chao charged her interest in the Land in favour of third parties without her consent.[118]
[118]Exhibit P1, [17]; Exhibit P3.

(c) Ms Chao failed to pay her share of the land tax on the Land in 2017 which resulted in the State Revenue Office lodging a statutory charge on the title to the Land.[119]
[119]Exhibit P1, [19]; Exhibit P2 (2018 Land Tax Overdue Notice to Xia Li and Yu Wen Chao, showing $3,383.50 overdue; 2019 Land Tax Overdue Notice to Xia Li and Yu Wen Chao, showing $12,065.00 overdue).

(d) In 2020, Ms Chao failed to make repayments on the mortgage on the Land, which resulted in ANZ serving a notice of default.[120]

(e) In 2021, Ms Chao refused to sign a contract of sale of Ms Li’s interest in the Land to Yingde, so that Yingde has been unable to register its interest in the Land.[121]

(f) When she received notices for outstanding amounts in relation to the Land she would have to call Ms Chao to ask her to pay. Ms Chao would pay some outstanding amounts but some continued to be a problem.[122]

[120]Exhibit P1, [23], Exhibit P2 (2020 Notice of Default showing $1,944.88 owing).

[121]Exhibit P1, [25].

[122]Transcript 28/05/24, T61.19-25.

I accept that the conduct of Ms Chao in defaulting on payments with respect to the Land, and exposing it to claims by third parties, caused stress and anxiety to Ms Li over the course of their relationship, and that she wishes to extract herself completely from co-ownership of the land. However, the evidence also established that the primary reason for the difficulties in the relationship, being Ms Chao’s delay in paying amounts required to be paid with respect to the Land, had been resolved from Ms Li’s perspective by May 2022 when the sale of Ms Li’s interest to Yingde was settled. Notably,

(a) Yingde had paid all arrears of outgoings on the Land at settlement, including outgoings owed by Ms Chao;[123]
[123]Exhibit P1, [25]; Transcript 20/05/24, T70.28-71.03.

(b) The Declaration of Trust executed by Ms Li and Yingde in 2022:

(v) provided that Yingde was required to pay all insurances, rates, taxes and other expenses relating to the interest in the Land, and

(vi) Indemnifies and holds harmless Ms Chao against any and all monies payable in respect of the interest in the Land, and all costs, expenses and damages of any kind which may be incurred by reason of or arising from the interest in the Land being held in the name of Ms Li.[124]
[124]Exhibit P4, clauses 2 and 3.

(c) The contract of sale dated 5 July 2018 between Ms Li and Yingde included special conditions acknowledging the mortgages in the names of Ms Li and Ms Chao, and that each had guaranteed the others’ loan. The contract provided that Ms Li would pay out the loan in her name, and that she was not responsible to pay out the other loan, and stipulated that it was then Yingde’s responsibility to procure the discharge of the mortgage. The special conditions also provided that Ms Li assigned to Yingde all her rights entitlements and obligations pursuant to the 2005 Agreement.[125] That agreement included the obligation that Ms Li would guarantee Ms Chao’s loan. It was, therefore, unclear whether Ms Li did in fact have any exposure to the guarantee on the loan in Ms Chao’s name.

(d) All outstanding amounts in respect of rates, land tax and Ms Chao’s loan on the Land had been repaid.[126] In future, after a sale of the Land, it could be expected that Ms Chao would have a significant deposit from the time of sale which would provide additional funds to pay outgoings on the Land. She gave evidence that she anticipated a 10 per cent deposit and had no plans for how she would use that money.[127]

(e) Ms Chao had also proposed in the past, through her solicitor, that a resolution of any financial obligations of Ms Chao which affected the land could be resolved by Yingde paying the loans and having the proceeds deducted from Ms Chao’s share of the ultimate sale price of the property.[128]

[125]Exhibit D6, special conditions 25-32.

[126]Exhibit D12, [30]; Transcript 28/05/24, T 22.01-.06; Transcript 29/05/24, T171.13-.27, T194.20-.26.

[127]Transcript 29/05/24, T210.09-.17.

[128]Exhibit D3 (Letter dated 22 July 2022 from Sackville Wilks Lawyers to Oakley Thompson & Co).

It was not apparent, therefore, that at the time of this proceeding Ms Li had any continuing financial exposure arising from any potential future default by Ms Chao. There were no amounts outstanding with respect to the Land. Yingde was responsible for any debts that did arise with respect to Ms Li’s interest in the Land, and was also holding her harmless with respect to any default on payment of Ms Chao’s loan.

The plaintiffs’ claim that Ms Chao had obstructed the transfer of Ms Li’s interest in the property to Yingde was resisted by Ms Chao. The evidence did establish that Ms Chao had not facilitated the transfer of Ms Li’s legal interest in the land to Yingde. However, Ms Chao gave evidence, which was consistent with the contemporary correspondence between her solicitors and solicitors for Ms Li, that she had not been given any significant notice of the settlement of Ms Li’s sale of her interest. She was notified of the settlement of that sale only in April 2021 and had declined to consent to the transfer until further information about the sale was provided.[129] She proposed instead that Ms Li declare her interest in the property to be held on trust for Yingde on receipt of the purchase price as permitted by a special condition in the contract of sale, which occurred.[130] The requested information was not provided by Ms Li because she had signed a confidentiality agreement.[131]
[129]Transcript 28/05/24, T64.18-65.20; Exhibit D1 (Letter dated 27 April 2021 from Robert Wood and Associates to Jason Coppard).
[130]Transcript 28/05/24, T66.06-.29; Exhibit D2 (Letter dated 28 April 2021 from Robert Wood and Associates to Willerbys solicitors.
[131]Transcript T69.08-.17.

The evidence relating to Ms Chao’s position on the transfer of Ms Li’s interest to Yingde does indicate that there was some lack of proactivity or cooperation on both sides. It is ultimately of limited relevance to the issues to be determined. I accept that it is part of the reason why Ms Li wishes to end her co-ownership of the Land with Ms Chao, and that Yingde would have preferred to have been registered as the legal title holder upon settlement. However Ms Chao now formally agrees (as recorded in the SoAF) that Yingde is entitled to be registered as the proprietor of Ms Li’s interest in the Land.

The only evidence given as to the position of Yingde was given by Mr Diao, who gave evidence that he was formerly employed by Yingde as the chief operating officer.[132] He also gave evidence that he had until January 2024 been employed by an Yingde’s associated company, 3L Alliance.[133] Although there was evidence that Yingde and 3L worked together in property development projects, it was not made clear whether Mr Diao had in fact been employed by 3L when acting in the role at Yingde, or whether his employment with Yingde predated a term of employment with 3L. Whatever the status of Mr Diao’s previous role with Yingde, he was not in a position to give evidence as to that entity’s current position on the Land in the circumstances prevailing at the time of the hearing, given that he was not employed by it and his association with 3L had ceased in January 2024.
[132]Exhibit P5 (Outline of Evidence of Hua Diao), [1]; Transcript 28/05/24, T75.25-.26.
[133]Transcript 28/05/24, T75.27-.31; Transcript 29/05/24, T118.21-119.26.

Mr Diao gave evidence that Ms Chao had been ‘difficult to deal with, constantly defaulted in the payment of her share of outgoings, made default on the ANZ loan’ and that ‘Lisa and Yingde Investments wish the loan, of which Lisa remains a guarantor’, to be paid out.’[134] He did not identify a basis on which he was in a position to give evidence on behalf of Yingde as to its current wishes. He also did not give evidence to elaborate on how Ms Chao had been ‘difficult to deal with’ and whether this involved anything other than the difficulties experienced with Ms Chao making late payments of charges and costs on the Land. It may have been a reference to frustrations that Ms Chao would not sell the land to Yingde in response to its offers. If so, it is not a relevant consideration as to what terms of sale are just and fair.
[134]Exhibit P5, [17]-[18].

It might be inferred from Mr Diao’s evidence that Yingde had a concern about being exposed to continuing defaults by Ms Li in paying costs and charges relating to the Land. However that evidence did not address the fact that the outstanding payments had been brought up to date and that the statutory charge and caveats had been discharged.

Yingde also did not give any evidence as to its financial position. The available evidence was to the effect that it was a company with very substantial landholdings[135] and access to resources to continue to acquire property interests.[136] There was, therefore, nothing to indicate that any financial exposure to Ms Chao’s share of costs relating to the Land would create any significant difficulty in the period up until settlement, when those costs could be offset against Ms Chao’s share of the proceeds of sale.
[135]Exhibit P5, [4]; Exhibit D5; Transcript 28/05/24, T96.15-98.07.
[136]Transcript 29/05/24, T121.23-.28.

Counsel for Ms Chao submitted in the course of the hearing, in response to the concerns raised about her past encumbering of her interest in the Land, that in the event that orders were made as she proposed, Ms Chao would undertake not to encumber the Land between now and settlement in any sale, absent agreement or order of the Court.[137]
[137]Transcript 30/05/24, T305.08-.13.

Legal authority on terms of sale and settlement periods

The plaintiffs relied on the decision of Adler v Ferguson[138] which was said to establish a presumption that a sale should be on short terms, and if a party ‘want[s] to do it differently, then the onus is on them’.[139] It was also said to show that a sale on terms which included a five-year settlement would be inappropriate [140]
[138][1962] VR 129, 132.
[139]Transcript 30/05/24, T293.03-.15.
[140]Plaintiffs’ Submissions dated 23 May 2024, [10]; Transcript 28/05/24, T8.10-.16.

In Adler v Ferguson, a brother and sister were co-owners of land inherited from their mother. They sought an order for sale of the land pursuant to s 223 of the Property Law Act, but were in dispute as to whether the sale should be for cash or on terms. Evidence was given of an opinion of auctioneers that a sale on five-year terms would achieve a higher price than a cash sale.[141]
[141]Adler v Ferguson [1962] VR 129, 132.

Justice Sholl refused to order a sale on terms, and made orders for the property to be sold at a public auction with the ‘sale to be for cash’. His Honour held:[142]

I, therefore, conclude that the Court has power in a proper case to order a sale on terms, but whether and when it should exercise the power is another matter. The general principle must be that if a person is entitled to a sale it is for the purpose of giving him money instead of his interest in the property to be sold and, if he has a present right to exchange the property for money and it is a property saleable for cash, why, then ordinarily should he not have a sale for cash?
…
Where a sale for cash is possible, at a fair market value, as I hold to be the case here, then prima facie that is the proper method of sale, and the party opposing it must show some strong reason why that should not be ordered.

[142]Adler v Ferguson [1962] VR 129, 131-132.

This decision is distinguishable from the present case, in that the property in question in Adler v Ferguson consisted of shops and a dwelling in Middle Park, a developed urban area. It is understandable that a settlement period of five years would be quite inconsistent with market practice for such a property.

Further, in Adler v Ferguson, the vendors were brother and sister, and the brother wanted his money from sale of the property immediately as he ‘has a nervous disorder and [did] not want the worry of having to wait for the money’. This is a compelling reason for a sale with rapid settlement. No similarly compelling reason arises for Ms Li and Yingde in this case. Ms Li has received her money from her earlier sale of the Land, and she is protected from further expense for the reasons discussed above. Yingde is a company specialising in development and land acquisition, with very significant land holdings and apparently access to financial resources.

The decision in Adler v Ferguson is distinguishable on those grounds. More importantly, Sholl J was considering his powers under s 223 of the Property Law Act as it stood in 1962, which was in quite different terms from Part IV of the Property Law Act. Section 223 provided:

In an action for partition where if this Act or any corresponding previous enactment had not been passed a judgment for partition might have been made, then if the party or parties interested individually or collectively to the extent of one moiety or upwards in the property to which the action relates request the Court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested the Court shall, unless it sees good reason to the contrary, direct a sale of the property accordingly, and give all necessary or consequential directions.

The Property Law Act at that time did not provide expressly for the range of other specific orders that may be made, as are currently provided for by s 232 of the Act.

Justice Sholl made observations in Adler v Ferguson that remain relevant to the current powers for sale of land, and to the type of Land involved in this case. His Honour referred to the objective of gaining a sale for cash ‘at a fair market value’.[143] If the sale process most likely to get fair market value involves a longer settlement period, to order a sale on terms allowing for that long settlement period would be consistent with this objective, and, in my view, not inconsistent with this authority.

Conclusion – a longer settlement period which is more likely to achieve the best price is also just and fair

[143]Adler v Ferguson [1962] VR 129, 132.

Ms Li understandably wishes to terminate any relationship with Ms Chao with respect to the Land. However, the evidence as to the legal arrangements between Ms Li and Yingde established that she had limited, if any, financial exposure by reason of continuing to hold the land as Trustee for Yingde until settlement of a sale of the Land. The risk of Ms Chao not paying costs and charges referable to the Land is now borne by Yingde, and that risk would be mitigated to a material degree if Ms Chao gives the undertaking that she proposed in the course of the hearing.

No evidence was given on behalf of Yingde to contradict these conclusions.

I can infer, even in the absence of any current officer of Yingde giving evidence, that the company wants to end the relationship with Ms Chao, in particular because she had not facilitated the transfer of the legal title in the land to Yingde by Ms Li. However there was no evidence that Yingde had experienced any significant inconvenience itself by reason of Ms Li’s past defaults. Although there was evidence that it had at the time of settlement paid out outstanding sums relating to the Land which were attributable to Ms Chao’s half interest, there was no evidence that this was a significant amount or one which created any particular difficulty for Yingde.

The evidence did not establish that there was any particular prejudice to the plaintiffs in having a settlement term which accorded with market expectations, which I have concluded, is likely to be up to four years. A longer settlement period, taking into account the likely progress in finalising the PSP, is consistent with the method of sale by expression of interest, and would be likely to lead to a better price for the Land.

However I do accept that it is undesirable to make orders which would result in the parties continuing to be in a co-ownership relationship for an extended period, given the past difficulties in the relationship. It is necessary to balance Ms Chao’s desire to achieve the best price for the Land, her only asset, against the plaintiffs’ desire to terminate co-ownership. I also take into account the objective of minimising, to the extent that is fair, the period during which there is potential for any further conflict. That potential may be more likely to arise during the sale process, and the parties have sensibly agreed certain elements relating to the involvement of independent parties to assist in making decisions during that process.

Taking all these matters into account, I consider that a sale on terms of a settlement period of no more than three years is just and fair.

The declaration sought by the plaintiffs as to Ms Li’s interest being held on trust for Yingde

The plaintiffs originally sought a declaration that:

Yingde is the beneficial owner of a one half share in the land situate and known as 1010-1024 Leakes Road, Rockbank 3335 in the State of Victoria.

It was contended for the plaintiffs that ‘co-ownership was originally disputed’ and that there was a defence based on whether Yingde was entitled to be a co-owner.[144] It was submitted that it would be of assistance to the plaintiffs ‘in dealing with … getting the transfer through. We’ve got to deal with banks and so on…’.[145]
[144]Transcript 30/05/24, T330.23-.26.
[145]Transcript 28/05/24, T44.18-.20.

Ms Chao resists that submission on the basis that she had not contested the beneficial ownership, but had simply not admitted the pleading that the plaintiffs were entitled to the declaration, on the basis that in circumstances where she was not a party to the declaration of trust, the question of entitlement to a declaration was not for her to admit.[146]
[146]Transcript 30/05/24, T331.23-332.02.

Although the power of this Court to make declarations is very broad, there are certain limits on when a declaration will be made. A declaration must be ‘directed to the determination of legal controversies’.[147] This entails generally there would be a person who has a true interest in opposing the declaration.[148] The Court will also not make a declaration which would produce no foreseeable consequences for the parties.[149]
[147] Ainsworth v Criminal Justice Commission (1992) 175 CLR 564, 582 (Mason CJ, Dawson, Toohey and Gaudron JJ) citing In re Judiciary and Navigation Acts (1921) 29 CLR 257.
[148]JN Taylor Holdings Ltd (in liq) v Bond (1993) 59 SASR 432, 436-7 (King CJ).
[149]Ainsworth, 582 (Mason CJ, Dawson, Toohey, Gaudron JJ), citing Gardner v Dairy Industry Authority (NSW) (1977) 52 ALJR 180, 188 (Mason J); JN Taylor Holdings Ltd (in liq) v Bond (1993) 59 SASR 432, 437.

In this case, there was no real controversy that Yingde is the beneficial owner of a half share in the Land. That Ms Li held her interest in the Land on trust for Yingde, and that Yingde was entitled to be registered as the proprietor of that interest, were the subject of formally agreed facts.[150] There was no real contradictor to the position that Yingde is the beneficial owner of a half share in the Land.
[150]SoAF [16], [20].

I do not exclude the possibility that a declaration may, notwithstanding these issues, be appropriate if the evidence is clear that the making of the declaration would have clear consequences for the parties.[151] However, although it was submitted by the plaintiffs that it would assist in the transfer process and in dealing with banks, no evidence was tendered as to why this was the case or what assistance it would provide.
[151]See the observations of EM Heenan J in Hamersley v Newton (2005) 30 WAR 568, 582 [41]-[42]; See also Collins v Equity Trustees Executors & Agency Company Ltd [1997] 2 VR 166. 169 (Batt J).

In these circumstances, I decline to make the declaration. Should the need for any such declaration become clear during the sale process, this can be raised with the Court pursuant to the liberty to apply that I will reserve in my orders.

Form of Orders

Prior to delivering judgment in this proceeding, I provided the parties with a draft of the orders that I was considering making, and had the proceeding mentioned for hearing. The primary purpose for the mention was to ascertain whether Ms Chao would give the undertaking that had been proposed in the course of the hearing if the orders were made not entirely as she sought, but with some material variations as to the settlement period (being up to three years rather than up to five years) and as to costs (being that the parties bear their own costs, rather than that the plaintiffs pay Ms Chao’s costs).

At the mention, counsel for Ms Chao confirmed that Ms Chao would give the proposed undertaking with respect to the orders and formally gave that undertaking on her behalf.

Costs
Parties’ positions on costs

At the mention referred to above, the parties addressed me on costs. The draft orders provided to the parties reflected my preliminary view that each party should bear their own costs of the proceeding.

Counsel for the defendant contended that orders should be made that the plaintiffs pay the defendant’s costs of the proceeding and sought that further time be given to enable submissions to be filed on the issue. The plaintiffs resisted that course, expressing the view that the usual position is that parties bear their own costs, and that without reasons for judgment, and given the short notice which had been provided of the mention, it was inappropriate to depart from the order which had been foreshadowed.

I permitted counsel for the defendant to address me on costs, on the basis that if I intended to alter the foreshadowed costs order on the basis of any submission made, I would reserve the question of costs to enable the plaintiffs to make submissions.

It was submitted for Ms Chao that the plaintiffs should pay her costs for the following reasons:

(a) The general position, at least prior to the changes to the Property Law Act which gave the Tribunal primary responsibility for co-ownership matters, was that parties share costs of a partition proceeding equally, citing Adler v Ferguson[152] and Scates v Scates.[153]
[152][1962] VR 129.
[153][1962] VR 398.

(b) That general position should not prevail in this Court, and there should be an order that costs follow the event. As Ms Chao had obtained substantially the orders she had sought, this should result in the plaintiffs paying her costs. It was submitted that the general position in partition matters should not apply because:

(vii) The claim which had been the cause of the proceeding instituted in this Court, rather than in the Tribunal, was the claim relating to the 2005 Agreement. However, that was, after the proceeding was instituted, abandoned by the plaintiffs. Ms Chao should not have to pay the costs of this dispute, and of the proceeding being issued in the Supreme Court, in circumstances where that claim had fallen away.

(viii) The usual course in a co-ownership dispute would be for the proceeding to be heard in the Tribunal, which is generally a no costs jurisdiction.[154] It was submitted that it could be inferred from the fact that the Property Law Act did not make any provision that the same position would apply if proceedings were heard by this Court in the circumstances anticipated by s 234C that the legislature intended that the general rule applicable in proceedings in this Court, namely that costs follow the event, would apply.

[154]Victorian and Civil Administrative Tribunal Act 1998, s 109.

The parties should bear their own costs in the circumstances of this proceeding

In matters relating to partition of property, there is authority that the general practice is that the costs be borne equally by the parties.[155]
[155]Adler v Ferguson [1962] VR 129, 133 (Sholl J); Scates v Scates [1962] VR 398, 400 (Lowe J).

This proceeding when instituted did not relate solely to an application for an order for sale of the property, and was not confined to issues under the Property Law Act. The issues originally raised with respect to the 2005 Agreement and its enforceability did not arise under the Property Law Act and were appropriately brought in this Court. It is relevant to my discretion on costs that this aspect of the proceeding, which was not insignificant, was no longer relied on by the plaintiffs. However it is also relevant that the plaintiffs raised in their original statement of claim the fact that Ms Chao had not paid outgoings on the land, and by reason of her failure to pay her share of land tax, the Statutory Charge had been placed on the Land; and by reason of her having given her interest in the Land as security for a loan, the Caveat had been placed on the title of the Land.[156] The evidence was that the outstanding debts which had given rise to the Statutory Charge and the Caveat were paid, and the Statutory Charge and Caveat withdrawn, in February 2023, after the proceeding had been issued.[157]
[156]Statement of Claim [29]-[33].
[157]See paragraphs [14] and [100(d)] above.

While one significant aspect of the hearing was ultimately not pursued by the plaintiffs, the evidence indicates that it was likely to have been the issuing of this proceeding which resulted in Ms Chao paying the amounts outstanding which had given rise to the Statutory Charge and the Caveat. In these circumstances, and taking into account the general position with partition or co-ownership disputes, I consider it most appropriate that the parties bear their own costs.

I do not identify anything in the Property Law Act that would suggest that I should approach the question of costs any differently by reason that the application for orders proceeded in this Court rather than in the Tribunal. The fact that there is a clear objective in Part IV that co-ownership disputes be heard in the Tribunal, and that proceedings in this Court are exceptional, may suggest that to the extent possible, the no costs approach of the Tribunal should be regarded as relevant to the costs discretion in this Court in co-ownership disputes. There is also no basis to consider that fact that the matter proceeded in this Court rather than the Tribunal caused any increase in costs.

I will therefore order that the parties bear their own costs of the proceeding.

Orders

I will make the following orders:

1. Pursuant to ss 228(1) and 232 of the Property Law Act 1958 (Vic):
(a)the land at 1010-1024 Leakes Road, Rockbank 3335 in the State of Victoria, being the land more particularly described in Certificate of Title Volume 10847 Folio 300 (Leakes Road Land) be sold;
(b)sale of the Leakes Road Land be conducted by a suitably qualified real estate agent engaged by the parties (Selling Agent). If the parties cannot agree on a Selling Agent by 29 July 2024, then they are to engage a Selling Agent nominated by the President of the Real Estate Institute of Victoria (REIV) at the request of either party;
(c)sale of the Leakes Road Land be by expression of interest as follows:
(i)the Leakes Road Land be advertised as being available for sale with a settlement period of up to three years;
(ii)the expression of interest process be conducted on the basis that expressions of interest:
(A)be subject to no conditions other than the sale price and the length of the proposed settlement term; and
(B)be in the form of an offer that is capable of acceptance without further negotiation;

(iii)the sale be conducted by expression of interest by interested purchasers who are not made aware of the terms of offers made by other interested purchasers;
(iv)the sale campaign be otherwise conducted in accordance with the usual practices and the recommendations of the Selling Agent;
(v)if it accords with the Selling Agent’s usual or preferred practice to set a reserve price for sale by expression of interest, the Selling Agent may seek instructions from the parties as to the appropriate level of that reserve price, below which the Property is not to be sold. If the parties cannot agree on that reserve price, then the parties may appoint a suitably qualified valuer to set that reserve price. If the parties cannot agree on a valuer to set that reserve price, they are to engage a valuer nominated by the President of the REIV, at the request of either party; and
(vi)the Selling Agent must refuse to accept an expression of interest from a potential buyer if, after making reasonable investigations into the financial resources and reputation of the potential buyer, the Selling Agent forms the view that the potential buyer does or will not have the financial resources to purchase the Leakes Road Land or is otherwise unlikely to do so; and

(d)if, within the Selling Agent’s assessment of a reasonable time for the conduct of the expression of interest process, there is more than one offer to purchase the Leakes Road Land pursuant to sale by expression of interest:
(i)the various offers be put to the plaintiffs and the defendant to elect their preferred offer;
(ii)if, within 14 days of having been informed of those offers by the Selling Agent, the plaintiff and the defendant do not agree on which is their preferred offer, then the parties will engage a licenced valuer mutually agreeable to the parties who will determine which of the offers is the most valuable offer;
(iii)if the parties cannot agree on a valuer within 14 days of either party recommending a licenced valuer to the other party, then either party may request that a valuer be appointed to determine that question by the President of the REIV; and
(iv)the plaintiffs and the defendant will be bound by that determination and the Leakes Road Land will be sold to the buyer with the most valuable offer as determined by that valuer; and

(e)if the Leakes Road Land is not sold by expression of interest within the Selling Agent’s assessment of a reasonable time for the sale (being not less than 6 months from the date of his or her engagement), then the parties will direct the Selling Agent to sell the Leakes Road Land by public auction with an advertised settlement period of up to 24 months at a reserve price agreed between the parties. If the parties cannot agree on that reserve price, then the parties may appoint a suitably qualified valuer to set that reserve price. If the parties cannot agree on a valuer to set that reserve price, within 14 days of the direction to sell the Leakes Road Land by public auction, then they are to engage a valuer nominated by the President of the REIV at the request of either party;
(f)the parties are to engage a firm of solicitors to prepare a contract of sale and to convey the Leakes Road Land. The firm of solicitors shall be agreed between the parties. If the parties are unable to agree by 29 July 2024 which firm of solicitors to appoint, either party make seek request that the President of the Law Institute of Victoria nominate an appropriately qualified firm of solicitors;
(g)the parties are to sign all documents and do all things as are reasonably necessary to give effect to these orders and to effect the sale of the Leakes Road Land. If either party fails or refuses to sign any such document within 14 days of a request to do so, the other party may approach the Court pursuant to the liberty to apply reserved in order 3;
(h)both parties have leave to make offers to purchase the Leakes Road Land by expression of interest or otherwise bid to purchase the Leakes Road Land if a public auction is required in accordance with these orders; and
(i)upon sale of the Leakes Road Land, the proceeds of sale will be applied as follows and in the following priority:
(i)payment of the Selling Agent’s commission and/or fee, including any auctioneer’s fee and other expenses of the sale;
(ii)payment of the fees of any valuer engaged in accordance with these orders;
(iii)payment of the reasonable legal costs associated with the sale and conveyance of the Leakes Road Land to the solicitor engaged in accordance with these orders;
(iv)payment of any outstanding rates, charges, taxes and imposts on the Leakes Road Land which have not already been paid;
(v)reimbursement of any rates, charges, taxes and imposts paid between the date of final order and sale by one party on behalf of the other party to the party who has paid the relevant amount; and
(vi)the net balance shall be paid to the parties in the following proportions:
A.to the Second Plaintiff: one half, less any amounts paid on its account in accordance with (iv) and/or (v) above; and
B.to the Defendant and/or her mortgagee: one half, less any amounts paid on her account in accordance with (iv) and/or (v) above; and
C.the balance following any deductions on account of (iv) and/or (v) above be divided equally between the Second Plaintiff and the Defendant.

2.        The parties bear their own costs of the proceeding.
3.        Liberty to apply is reserved.
4.        The proceeding is otherwise dismissed.

ANNEXURE A

PLAINTIFFS’ PROPOSED ORDERS

THE COURT ORDERS THAT:

1. The land at 1010-1024 Leakes Road Rockbank (also known as Grangefields) in the State of Victoria (‘the Leakes Road land’) being the land described in Certificate of Title Volume 10847 Folio 300 be sold by public auction to take place no later than.

2. By 2024, the parties engage a licensed real estate agent to market and sell the Leakes Road land and to select and appoint an auctioneer. The real estate agent shall be agreed between the parties. If the parties are unable to agree by 2024 which real estate agent to appoint the real estate agent shall be nominated by the President of the Real Estate Institute of Victoria.

3. By 2024, the parties engage a valuer to determine the reserve price for the Leakes Road land. The valuer shall be agreed between the parties. If the parties are unable to agree by 2024 which valuer to appoint the valuer shall be nominated by the President of the Real Estate Institute of Victoria.

4. By 2024, the parties engage a firm of solicitors to prepare the auction contract for and to convey the Leakes Road land. The firm of solicitors shall be agreed between the parties. If the parties are unable to agree by 2024 which firm of solicitors to appoint, the solicitors will be nominated by the President of the Law Institute of Victoria.

5. The Leakes Road land shall be offered for sale at public auction subject only to the reserve price set pursuant to order 3, with settlement to take place 120 days from the date of sale or earlier by agreement with the purchaser.

6. Both parties have leave to bid to purchase the Leakes Road land at the auction.

7. The net proceeds of sale after adjustments and payment of all selling and marketing costs and disbursements, the auctioneer’s costs and legal costs and disbursements be divided equally between the second plaintiff and the defendant with any amount that is payable to the Australian and New Zealand Banking Group Limited to discharge mortgage registered in dealing number AE227885H be deducted and paid from the defendant’s share of the sale proceeds.

8. A declaration that Yingde Investments Pty Ltd is the beneficial owner of the one half share of which Xia Li is the registered proprietor in the land situate and known as 1010-1024 Leakes Road, Rockbank 3335 in the State of Victoria.

---

ANNEXURE B

DEFENDANT’S FURTHER MINUTE OF PROPOSED ORDERS

The proposed orders below are filed pursuant to the Court’s order dated 31 May 2024.

The defendant proposes the following final orders:

(1) The plaintiffs’ claim on the statement of claim be dismissed.
(2) Judgment for the defendant on its counterclaim.
(3)The Court orders that pursuant to ss 228(1) and 232 of the Property Law Act 1958 (Vic) (PLA):

(a) the land at 1010-1024 Leakes Road, Rockbank 3335 in the State of Victoria, being the land more particularly described in Certificate of Title Volume 10847 Folio 300 (Leakes Road Land) be sold;

(b) sale of the Leakes Road Land be conducted by a suitably qualified real estate agent engaged by the parties (Selling Agent). If the parties cannot agree on a Selling Agent by [#30 days from the date of final order], then they are to engage a Selling Agent nominated by the President of the Real Estate Institute of Victoria (REIV), or alternatively the Prothonotary, at the request of either party;

(c) sale of the Leakes Road Land be by expression of interest as follows:

(ix) the Leakes Road land be advertised as being available for sale with a settlement period of up to 5 years;

(x) the expression of interest process be conducted on the basis that expressions of interest:

A.be subject to no conditions other than the sale price and the length of the proposed settlement term; and
B.be in the form of an offer that is capable of acceptance without further negotiation;

(xi) the sale be conducted by expression of interest by interested purchasers who are not made aware of the terms of offers made by other interested purchasers;

(xii) the sale campaign be otherwise conducted in accordance with the usual practices and the recommendations of the Selling Agent;

(xiii) if it accords with the Selling Agent’s usual or preferred practice to set a reserve price for sale by expression of interest, the Selling Agent may seek instructions from the parties as to the appropriate level of that reserve price below which the Property is not to be sold. If the parties cannot agree on that reserve price, then the parties may appoint a suitably qualified valuer to set that reserve price. If the parties cannot agree on a valuer to set that reserve price, the they are to engage a valuer nominated by the President of the REIV, or alternatively the Prothonotary, at the request of either party; and

(xiv) the Selling Agent must refuse to accept an expression of interest from a potential buyer if, after making reasonable investigations into the financial resources and reputation of the potential buyer, the Selling Agents forms the view that the potential buyer does or will not have the financial resources to purchase the Leakes Road Land or is otherwise unlikely to do so; and

(d) if, within the Selling Agent’s assessment of a reasonable time for the conduct of the expression of interest process, there is more than one offer to purchase the Leakes Road Land pursuant to sale by expression of interest:

(i) the various offers be put to the plaintiffs and the defendant to elect their preferred offer;

(ii) if, within 14 days of having been informed of those offers by the Selling Agent, the plaintiff and the defendant do not agree on which is their preferred offer, then the parties will engage a licenced valuer mutually agreeable to the parties who will determine which of the offers is the most valuable offer;

(iii) if the parties cannot agree on a valuer within 14 days of either party recommending a licenced valuer to the other party, then either party may request that a valuer be appointed to determine that question by the President of the REIV, or alternatively the Prothonotary; and

(iv) the plaintiffs and the defendant will be bound by that determination and the Leakes Road Land will be sold to the buyer with the most valuable offer as determined by that valuer; and

(e) if the Leakes Road Land is not sold by expression of interest within the Selling Agent’s assessment of a reasonable time for the sale (being not less than 6 months from the date of his or her engagement), then the parties will direct the Selling Agent to sell the Leakes Road Land by public auction with an advertised settlement period of up to 24 months at a reserve price agreed between the parties. If the parties cannot agree on that reserve price, then the parties may appoint a suitably qualified valuer to set that reserve price. If the parties cannot agree on a valuer to set that reserve price, then they are to engage a valuer nominated by the President of the REIV, or alternatively the Prothonotary;

(f) the parties are to engage a firm of solicitors to prepare a contract of sale and to convey the Leakes Road Land. The firm of solicitors shall be agreed between the parties. If the parties are unable to agree by [#30 days from the date of final order] which firm of solicitors to appoint, either party make seek request that the President of the Law Institute of Victoria nominate an appropriately qualified firm of solicitors;

(g) the parties are to sign all documents and do all things as are reasonably necessary to make any request to the REIV, to appoint any valuer, to appoint the Selling Agent, engage a solicitor and to effect the sale of the Leakes Road Land. If either party fails or refuses to sign any such document within 14 days of a request to do so, the Prothonotary is authorised and directed to execute that document on that party’s behalf;

(h) both parties have leave to make offers to purchase the Leakes Road Land or otherwise bid to purchase the Leakes Road Land if a public auction is required in accordance with these orders; and

(i) once the Leakes Road Land is sold, the proceeds of sale will be applied as follows and in the following priority:

(i) payment of the Selling Agent’s commission and/or fee, including any auctioneer’s fee and other expenses of the sale;

(ii) payment of the fees of any valuer engaged in accordance with these orders;

(iii) payment of the reasonable legal costs associated with the sale and conveyance of the Leakes Road Land to the solicitor engaged in accordance with these orders;

(iv) payment of any outstanding rates, charges, taxes and imposts on the Leakes Road Land which have not already been paid;

(v) reimbursement of any rates, charges, taxes and imposts paid between the date of final order and sale by one party on behalf of the other party; and

(vi) the net balance shall be paid to the parties in the following proportions:

A.to the Second Plaintiff: one half; and
B.to the Defendant and/or its mortgagee: one half.

4. The plaintiffs pay the defendant’s costs of the proceeding.

5. Liberty to apply is reserved.

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[2024] VSC 371

28 June 2024