Michaelson v The Registrar of Titles

[2006] WASC 2

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   MICHAELSON -v- THE REGISTRAR OF TITLES [2006] WASC 2

CORAM:   SIMMONDS J

HEARD:   28 DECEMBER 2005, 5 JANUARY 2006

DELIVERED          :   5 JANUARY 2006

FILE NO/S:   CIV 2495 of 2005

BETWEEN:   CATHERINE LOUISE MICHAELSON

Plaintiff

AND

THE REGISTRAR OF TITLES
Respondent

Catchwords:

Trustees Act 1962 (WA) - Application under s 82 Trustees Act 1962 for applicant to be appointed to sell minors' share of property - New property to be purchased by applicant solely - Protection of minors' interests

Legislation:

Rules of the Supreme Court 1971 (WA), O 70 r 3(8)

Trustees Act 1962 (WA), s 82

Result:

Application granted

Category:    B

Representation:

Counsel:

Plaintiff:     Ms K L Guerinoni

Respondent:     No appearance

Solicitors:

Plaintiff:     Kott Gunning

Respondent:     No appearance

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

Rubery & Anor v Rubery & Anor [2003] WASC 164

Case(s) also cited:

Nil

1. SIMMONDS J:  This matter first came before me on 28 December 2005 as an application by originating motion for an order under the Trustees Act 1962 (WA), s 82 appointing the applicant to sell and convey nominated real property; to sign, as guardian ad litem for the applicant's two minor children whose names appear on the title for the property, the transfer of land documents for the sale together with incidental documents; and to pay the costs of the sale and conveyance and the costs of the application out of the proceeds of the sale and purchase of a nominated property.

2. That hearing was adjourned after I expressed some concerns about the effects of the orders sought and the form of the proceedings.  The matter came back before me today with proposals for amendments to the orders sought.

3. I should begin with a background to the application. I refer to the terms of s 82 which permit the court where it considers it necessary or desirable in the interests of an infant to make an order, amongst other things, appointing a person to sell and convey, lease, mortgage or charge the property or otherwise to exercise such of the powers as are conferred by or under this Act on a trustee as the court may in the order specify.

4. The applicant, as I have indicated, is the mother of two minor children.  Their father is deceased.  The minors are Stephanie Louise Michaelson, born 29 May 1988 and Benjamin Christopher Michaelson, born 23 May 1990.  The nominated property is the family home at 63 Bennett Drive, Canning Vale.  That property is the whole of the land contained in Certificate of Title Volume 2145, Folio 953 ("the Bennett Drive property").

5. The Bennett Drive property is unencumbered.  The affidavit of the applicant in support of the original application sworn 22 December 2005 deposes that the applicant purchased the property using her own funds.  She put the minors' names on the title "to protect them should anything happen to me" ([5] of her affidavit).  The original application was made as the applicant had entered into a contract of sale of the Bennett Drive property on 18 November 2005.  The applicant's December 2005 affidavit says the property was sold "because we needed a smaller property without a swimming pool" ([7]).  Settlement is due on 6 January 2006.

6. The contract of sale by offer and acceptance annexed to the December 2005 affidavit indicates the sale price as $425,000.  The applicant brought on the original application on the basis of a certificate of urgency explained to me in terms of that settlement date.  There was no appearance for the respondent at the hearing nor at the subsequent hearing before me, a matter to which I will return.

7. The applicant's December 2005 affidavit also deposes that on 13 December 2005, the applicant entered into a contact to purchase a residential property at 13 Stembridge Way, Canning Vale ("the Stembridge Way property").  This is Lot 271 on Deposited Plan 35769 being the whole of the land contained in Certificate of Title Volume 2536, Folio 362.  The applicant's December 2005 affidavit deposes that "the Stembridge Way property is smaller and more suitable for our current living situation" ([9]).

8. Settlement on that property is also to occur on 6 January 2006.  The contract of sale by offer and acceptance annexed to the December 2005 affidavit indicated that the purchase price was $375,000.  It further indicated that there would be a mortgage on the Stembridge Way property in the amount of $100,000.  In relation to the form of the purchase of the Stembridge Way property the applicant deposes in [10] as follows:

   "The Stembridge Way Property is being purchased in my name solely.  Stephanie and Benjamin are the sole beneficiaries of my will.  They will continue to reside in the Stembridge Way Property for as long as they choose and will inherit it, or any subsequent property that I purchase, on my death in equal shares."

9. At the original hearing before me on 28 December 2005 I noted the apparent effects of the two transactions completing.  The minors would on the face of it have no interest, legal or beneficial, in the Stembridge Way property.  Further, that property would be encumbered where the Bennett Drive property was not.  The question arose of the appropriateness of the Court providing for the disposition of the minors' interests in the latter without provision for the proceeds (compare the orders in Rubery & Anor v Rubery & Anor [2003] WASC 164, Barker J at [44]).

10. I further noted that the minor children were not parties to the proceedings.  There was also a question of having their interests represented in these proceedings by their mother as their guardian ad litem when she also had a beneficial interest in the sale transaction for which the authorisation of the Court was sought (compare the form of the proceedings in Rubery).

11. In the event, the hearing on 28 December 2005 was adjourned.  This brings me to the proposed amended originating motion in the proceedings before me today.  The matter is now before me again with amendments proposed to the originating motion and further material.  The amendments of the originating motion are to appoint the minors' maternal grandmother, Beverly Gillian Joan Caten, rather than the applicant during the children's minority to sell and convey the Bennett Drive property and adding that Ms Caten apply the proceeds of sale on behalf of the minors to the purchase of the Stembridge Way property.

12. The minors' two‑thirds share of the Stembridge Way property is to be "beneficially held by the applicant on trust for the minors" and Ms Caten is to lodge a caveat over the property on behalf of the minors stating their interest in the property.  The cost of the purchase and conveyance of the Stembridge Way property, like those of the Bennett Drive property, are to be paid out of the proceeds of sale of the latter property.

13. Any remaining funds are to be utilised for the purposes listed in the further affidavit of the applicant sworn 5 January 2006.  The applicant in her January 2006 affidavit deposes that after payment of settlement‑related costs of the two property transactions there will be a residual amount of $13,687.12 and that it is "my intention to use this money to make improvements to the Stembridge Way property including installation of air conditioning throughout the property, minor renovations to the bathroom fittings, and legal costs" ([14]).

14. I was assured at the hearing today that "legal costs" referred to the legal costs associated with the application in these proceedings.  I take it that the reference to [14] is to the "purposes listed" for the purposes of the proposed amended order and I was so assured at the hearing.  The applicant in her January 2006 affidavit also deposes, at [6], that she has attempted to obtain finance using her one‑third share of the Stembridge Way property to pay for school fees and associated costs for Benjamin.

15. The declaration of trust annexed to the affidavit, CLM5, states she is "proposing to mortgage against my interest to provide available funds to finance my children's education".  The mortgage annexed to the affidavit, CLM6, does not however appear to acknowledge that the interest the subject of the security is limited to the applicant's beneficial interest in the property or indeed that the applicant is a trustee. 

16. Further, the applicant deposes the principal will be $115,000.00. The applicant deposes to fees arrears for Benjamin, who is about to enter year 11, being approximately $32,845.95, with his school fees for the two years including related costs such as uniforms and books totalling a further $36,000.00 while also referring to the need for certain fixtures for and work on the Stembridge Way property, all in [10]. I am thus led to conclude that a portion of the proceeds of the mortgage would be applied to the Stembridge Way property.

17. There is a further affidavit, 4 January 2006, filed for the purposes of the adjourned hearing before me.  It is by the solicitor for Ms Caten annexing her consent to act as guardian ad litem for the purposes of these proceedings and apparently prepared in accordance with O 70 r 3(8). However, I note that there is no statement as required by O 70 r 3(8)(c)(iv) that the minors, both of whom are over 14 years of age and neither of whom is a represented person for the purposes of the guardianship legislation, have consented to Ms Caten acting as their guardian ad litem.

18. Also I note that I do not have any material before me indicating what position Ms Caten takes on behalf of the children in relation to the proposed amended orders sought and by three of which she is expressly bound.  Indeed the children are still not parties to the proceedings.  It is not clear to me how the minors through their guardian ad litem would be bound without them being joined through her as parties.

19. I now turn to whether leave to amend the originating summons should be granted and to the orders to be made.  I consider that the proposed amendments and the appointment of Ms Caten as the minors' guardian ad litem address most of the concerns I had noted at the original hearing.  I also consider, subject to a point I will reach, that the sale of the Bennett Drive property and its replacement with the Stembridge Way property on the terms of the proposed amendments with certain modifications has been shown to be desirable in the interests of the minors.

20. They will have a new residence which their mother considers to be more suitable.  I note the responsibility of the applicant as trustee for the remaining funds and for any subsequent dealing with the children's interests.  Such dealings might of course, as in the case of the dealing with the Bennett Drive property, require a further order of the Court.  However, I would require at least one modification in the order as to the application of the remaining funds; it would be to make it clear that the purposes referred to are those I identified in this regard above.

21. It also appears to me that a final conclusion on the point as to the desirability of the sale of the Bennett Drive property assumes the guardian ad litem's consent to the proposed orders.  While that consent is not determinative of the issue (see Rubery), it has an important role to play in proceedings such as these where the mother has a beneficial interest in the transactions proposed.  I have no reason of course to believe that the mother has anything other than the best interests of the children in mind.  However, the Court plays an important role in determining whether to grant the relevant authority to persons who have an independent beneficial as well as legal interest in the property to be sold.

22. It would follow that I would be prepared to give leave to amend the originating motion as prepared with certain modifications and to make the orders proposed in the minute of proposed orders with corresponding modifications subject to certain undertakings.  I consider that the minors must be joined as parties to these proceedings through their guardian ad litem.  In addition, any orders made in these proceedings must be based upon the solicitor for the guardian ad litem filing an affidavit fully conforming with O 70 r 3(8) as well as confirming that the guardian ad litem consents to the orders as proposed.

23. The solicitor for the applicant has given her undertaking as an officer of the court that these matters will be attended to.  I also note that the Registrar of Titles is named as the respondent to these proceedings, as I have indicated.  I am led to believe he is aware of these proceedings and further led to believe he does not propose to take any part in them.  However, the orders that I make are further based on an undertaking, again from the solicitor for the applicant as I have indicated, that an affidavit of service of notice of these proceedings on the registrar and of the position he would take with respect to them is provided for.

24. Finally, I note that no order is sought with respect to any mortgage of the Stembridge Way property, although as I have indicated there are references in the January 2006 affidavit of the applicant to a mortgage of her one‑third interest in that property.  Were the trustee, the applicant, to seek to mortgage not only her own beneficial interest but also the interests of the children, questions would arise as to her power to do so and, if she had such power, whether it was in the interests of the children to exercise it.  I note the orders as to mortgaging the replacement investment property in the application of the proceeds in Rubery, the case I referred to earlier, at [44] orders 7 and 8. However I do not need to consider such questions here.