Manifis v Mouzalidis - [2021] WASC 454

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION:   MANIFIS -v- MOUZALIDIS [2021] WASC 454
CORAM:   MASTER SANDERSON
HEARD:   24 NOVEMBER 2021
DELIVERED          :   13 DECEMBER 2021
FILE NO/S:   CIV 1455 of 2021
BETWEEN:   MICHAEL MANIFIS
First Plaintiff

JAMES MANIFIS
Second Plaintiff

HELEN ANASTASAS
Third Plaintiff

DESPO EFSTATHIS
Fourth Plaintiff

DIANE KASSAPIS
Fifth Plaintiff

AND

NIK MOUZALIDIS as administrator of the estate of JOHN MOUZALIDIS
First Defendant

NIK MOUZALIDIS as administrator of the estate of ANNA MOUZALIDIS
Second Defendant

TONY MOUZALIDIS as administrator of the estate of ANNA MOUZALIDIS
Third Defendant

Catchwords:

Property law - Application for sale in lieu of partition under s 126 of the Property Law Act - Form of orders

Legislation:

Property Law Act 1969 (WA)

Result:

Orders made for sale

Category: A

Representation:

Counsel:

First Plaintiff	:	KA Parker
Second Plaintiff	:	KA Parker
Third Plaintiff	:	KA Parker
Fourth Plaintiff	:	KA Parker
Fifth Plaintiff	:	KA Parker
First Defendant	:	MJ Keating
Second Defendant	:	MJ Keating
Third Defendant	:	MJ Keating

Solicitors:

First Plaintiff	:	Greenstone Legal
Second Plaintiff	:	Greenstone Legal
Third Plaintiff	:	Greenstone Legal
Fourth Plaintiff	:	Greenstone Legal
Fifth Plaintiff	:	Greenstone Legal
First Defendant	:	Williams & Hughes
Second Defendant	:	Williams & Hughes
Third Defendant	:	Williams & Hughes

Case(s) referred to in decision(s):

Nil

MASTER SANDERSON:

This was an application for sale of a property in lieu of petition under s 126 of the Property Law Act1969 (WA). By the time the matter was called on for hearing, the parties had resolved the property should be sold. There was a dispute about the form of the orders. As counsel for the defendant pointed out in his submissions, orders facilitating a sale varied widely. But there are some principles which are consistently reflected in the orders made for sale. This case well illustrates those principles.
Ultimately the orders I made were as follows:
1.The land and buildings known as 558 Newcastle Street, West Perth in the State of Western Australia, more particularly described as Lot 133 on Plan 2360 and being all that land comprised in Certificate of Title Volume 1118 Folio 682 (Property), be sold free of encumbrances.
2.Within 28 days:
(a)the first defendant shall lodge all documents with, and do all things required by, Landgate to transmit the title in the Property held by the late John Mouzalidis to the first defendant;
(b)the second defendants shall lodge all documents with, and do all things required by, Landgate to transmit the title in the Property held by the late Anna Mouzalidis to the second defendants; and
(c)the plaintiffs will, simultaneously with the lodgement at Landgate by the defendants of the documents required by sub-paragraphs a and b above, produce the duplicate Certificate of Title for the Property at Landgate to enable Landgate to process the documents lodged by the defendants.
3.The plaintiffs have the conduct of the sale of the Property in accordance with the following:
(a)the Property is not to be sold to any party to these proceedings or their children or any trusts or companies in which any of them has a direct interest;
(b)as soon as practicable after the making of these orders the plaintiffs shall engage in the name of the plaintiffs and the defendants a licensed real estate agent carrying on business in the Perth metropolitan area to act on such sale (Agent);
(c)the plaintiffs shall forthwith upon appointment of the agent notify the defendants and provide to the defendants a copy of the agency agreement;
(d)the plaintiffs shall cause the Agent appointed by the plaintiffs to:
(i)recommend a reserve price for the sale of the Property;
(ii)adopt the reserve price recommended by the Agent as a reserve for the sale of the Property; and
(iii)market, advertise and offer the Property for sale by way of private treaty;
(e)if the defendants are not satisfied with the agent who is nominated, there be liberty to apply within 7 days to set aside the appointment;
(f)the plaintiffs upon being notified by the Agent of the recommended reserve, give notice in writing to the defendants of such reserve;
(g)any notices required to be given to the defendants be sent by email to both of the following addresses:…
(h)at any time within the period of 3 months from the date of the Agent's appointment, the Agent may recommend an alteration to the reserve price adopted for the sale of the Property and upon such recommendation being made by the Agent in writing, the plaintiffs shall adopt the recommended altered reserve price as the reserve and give notice of the same in writing to the defendants;
(i)the plaintiffs and the defendants have liberty to apply to the Court in respect of the reserve price;
(j)if the plaintiffs receive an offer or offers at or above the reserve price, they are to give the defendants notice, and not accept such offer before a period of 7 days unless the defendants consent to an earlier time;
(k)the defendants have liberty to apply in relation to the offer the plaintiffs propose to accept;
(l)if within 3 months of the date of the retainer of the Agent by the plaintiffs an offer at or above the reserve price and otherwise acceptable to the plaintiffs is not received by the Agent, the plaintiffs shall as soon as practicable engage a licenced auctioneer (Auctioneer) in the name of the plaintiffs and the defendants;
(m)the plaintiffs shall request the Auctioneer to provide recommendations in writing as to how the Property is to be marketed by public auction, including the period of advertising, the form of advertising and a recommended auction reserve and thereafter the plaintiffs shall cause the Property to be offered at a public auction in accordance with the Auctioneer's recommendations;
(n)upon receipt of the Auctioneer's recommended auction reserve, the plaintiffs will immediately, and at least 14 days prior to the date of auction, notify the defendants of the auction reserve;
(o)the defendants have liberty to apply to the Court if the defendants seek any variation to either the reserve price or to the terms or date of such auction;
(p)on any sale of the Property made pursuant to the terms of the Court's orders:
(i)the defendants will be given the opportunity to sign the transfers, but if they do not do so and do not apply to the court within 7 days, then the plaintiffs shall be authorised by these orders to sign, for and on behalf of themselves and the defendants, any transfers. The plaintiffs are otherwise authorised by these orders to sign, for and on behalf of themselves and the defendants any notice of appointment of agent or other documents necessary to give effect to the sale of the Property; and
(ii)any sale shall be pursuant to the current applicable joint terms and conditions for the sale of real estate published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (Inc) unless otherwise ordered by the Court of application of any party;
(q)the defendants co-operate fully with the plaintiffs, the Agent and the Auctioneer in the sale process.
4.The net proceeds of the sale, after payment of all proper costs, charges and expenses of the sale, be paid to the plaintiffs and the defendants in proportion to their respective shares as set out in Certificate of Title Volume 1118 Folio 682.
If it is necessary to have the court determine the form of orders to facilitate the sale, it is clear the parties are in dispute and there will probably be a lack of co-operation and disagreements between the parties even after the sale order is made. With that in mind it is generally the case that one of the parties will have conduct of the sale. In this case it was the plaintiffs. Contrary to a submission made by counsel for the plaintiffs, that is not the 'usual' order. But in this case it was the plaintiffs who initiated the application and the defendants who effectively conceded the application and agreed to the sale. That is a factor in favour of giving control of the sale to the plaintiffs. Of course there may be instances where the defendants are in a better position than the plaintiffs to effect the sale. For instance, if the defendants are resident in the property and can liaise with a real estate agent to allow for inspection by potential purchasers, then it may be appropriate to order that the defendants have conduct of the sale. But the idea of the parties jointly arranging the sale - in other words making the sale conditional upon the parties actually agreeing - more often than not creates more problems than it solves.
The party in charge who is selling the property then has to engage a real estate agent and settle on a reserve price. The agent will no doubt recommend a marketing campaign and the party selling the property can negotiate just how that marketing campaign is to be instigated. The non-selling party, in this case the defendants, are entitled to be advised as to which agent is engaged and the reserve price suggested by the agent. If the non-selling party believes the agent engaged is not at arm's length from the selling party or is in some respects unsuitable, then an application can be made to the court in chambers and the issue will be dealt with promptly. The same is true of the reserve price. So the non-selling party, while excluded from the actual decision-making process, is to be kept informed and is to have the right to challenge any decision which it sees as improper.
In this case, the parties were agreed there should be a restriction on family members purchasing the property: see order 3(a). It is by no means unusual for one other of the parties to be interested in buying the property. That creates difficulty because both parties will be aware of the reserve price. In other words, it may not be possible to obtain a better price than the reserve. There is no mechanism for overcoming that problem. The only option is to ensure the property is marketed in line with the recommendations of the real estate agent. If no better offer is received beyond the reserve price and one of the parties has offered the reserve price then the property will be sold accordingly. But there is no warrant for restricting the right of any of the co-owners or their associates from purchasing the property. Section 126 does not contain any such restriction and it would take special circumstances for the court to order there be such a restraint in the absence of special circumstances.
In this case the defendants sought an order the parties take advice from a real estate agent and undertake minor repairs and maintenance of the property with a view to maximising the sale price. Counsel for the defendants submitted it was common knowledge that any real estate agent selling a property would recommend some cosmetic work be undertaken to maximise the return. There was no evidence on this point but for the purposes of these reasons, counsel's submission can be accepted. Counsel for the plaintiff pointed out this property was likely to be demolished and developed as a showroom, offices or apartments. On that basis, she maintained no maintenance was necessary. Counsel for the defendants countered by pointing out that it would take any purchaser some time to obtain planning permission and approval and in the meantime the property might be rented out. If some work was undertaken to make the premises attractive and habitable, it might make the property more attractive to a developer.
While accepting the strength of the defendants' argument, it is difficult to craft orders to give practical effect to what they proposed. It would involve making orders which required the plaintiffs to contribute funds for the repair work undertaken. The orders can be crafted so that if one party is willing to pay for any remedial work, then the amount expended can be recovered as a charge on the net proceeds of sale. That can lead to the parties arguing about whether or not the work undertaken was necessary and whether or not it had any effect on the eventual sale price. But absent agreement between the parties as to what work should be undertaken and the budget for such work, orders for repairs and maintenance will not generally be made.
The orders made under s 126 are for sale of the property. They are not orders for sale 'at the best possible price'. If the parties are unable to agree on what needs to be done to the property to obtain the maximum return, then they simply have to live with the consequences. That may be seen as unfair to the party who wants to spend the money and maximise the return. All that can be said in response is that the outcome is due to the fact of joint ownership and the mechanism available under s 126.
If the property cannot be sold by private treaty, then auction is the next logical step. Once again, it is for the selling party to agree the reserve price with the auctioneer. The non-selling party should be advised of the reserve price and have liberty to apply. Consistent with the approach adopted in relation to sale by private treaty, the selling party is not constrained by requiring agreement from the non-selling party; but the non-selling party is not excluded from the sale process because they are kept informed of all relevant information and have the right to apply to the court if they are dissatisfied.
In relation to sale by private treaty, particularly in a case where the owners are not permitted to purchase the property, it is appropriate to have the non-selling party notified of the sale price and given the opportunity to apply to the court if for whatever reason the offer is thought to be inappropriate. That seven day window may have adverse consequences - it may deter a potential purchaser who wants a prompt answer to an offer. The parties can always agree and the seven day period can be shortened but absent such agreement, it is appropriate the non-selling party be kept informed and have the chance to apply to the court if it was thought appropriate.
In this case, there was no dispute the net proceeds of the property should be divided between the plaintiffs and the defendants. It is not uncommon for one party to claim they are entitled to a greater share of the net proceeds than they would receive if the proceeds were paid in proportion to their interest in the property. If such a dispute arises, there is really no alternative but to order the net proceeds, or at least that proportion of the net proceeds which is in dispute, be paid into court. Once the parties are aware of the amount of the net proceeds, they can determine whether or not an argument is warranted. If an order is made for payment into court, the parties can always agree at a later date not to argue further and vary the order so as to allow payment to each of them.
In relation to costs, there can be no usual order. When there is a degree of intransigence on both sides, often the order will be each party bear their own costs. But if the position of one party requires an application to be made, then even if subsequent agreement is reached, the oppositional party is at risk as to costs. Anyone who is a joint owner of property and subject to action under s 126 of the Property Law Act ought be aware of the risk as to costs if agreement is not reached prior to proceedings being issued.

In this case both parties filed submissions with respect to costs. On behalf of the plaintiff it was submitted orders were made largely in terms of their minute, they were effectively successful in their application and costs should follow the event. On behalf of the defendants, the correspondence passing between the solicitors was lodged. The thrust of this correspondence on the defendant's view of matters was that the defendants had been prepared to agree to a sale of the property provided that there was an arms-length transaction. That is to say that the defendants were concerned that the plaintiffs would sell the property under value. The defendants maintained they were effectively successful in obtaining orders which resulted in an arms-length sale and therefore they should have the costs of the matter.
On balance, I am satisfied that each party should bear their own costs. Both parties make cogent argument in their favour. The fact remains the need for a court hearing to determine what order should be made was necessitated by the attitude of both parties. It would be inappropriate to penalise either party with an order for costs. Accordingly, the order will be that each party bears their own costs.
It is for these reasons I made the orders in this case.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
MM
Court Officer
13 DECEMBER 2021