Pico Holdings Inc v Voss

[2003] VSC 449

IN THE SUPREME COURT OF VICTORIA Not Restricted

AT MELBOURNE

PRACTICE COURT

No. 7324 of 2001

PICO HOLDINGS INC.	Plaintiff
v
PETER DAVID VOSS	Defendant

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JUDGE:	HABERSBERGER J
WHERE HELD:	MELBOURNE
DATE OF HEARING:	24 OCTOBER 2003
DATE OF JUDGMENT:	24 OCTOBER 2003
MEDIUM NEUTRAL CITATION:	[2003] VSC 449

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PRACTICE AND PROCEDURE – Application to vary asset preservation order to allow sale of real estate property in name of the applicant and his wife in the United States of America, on condition that 50% of the net proceeds of sale paid into the trust account of the applicant’s solicitors to be subject to asset preservation order – Whether material sufficient to justify making order – Whether 100% of the net proceeds should be paid into the trust account in any event.

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APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Mr M. Pearce	Herbert Geer & Rundle
For the Defendant	Mr J. Simpson	Mallesons Stephen Jaques

HIS HONOUR:

1. This is an application by the defendant, Peter David Voss, for orders varying an asset preservation order made by Beach, J. on 5 September 2001.  The trial of this proceeding was held earlier this year but the decision is still reserved, so the order by Beach J is still in operation. 

1. What the defendant seeks is an order permitting him to dispose of his interest in a property located at 8275E, Wood Drive, Scotsdale, Arizona – and I am now quoting from the summons – “which he owns jointly with his wife, Catherine Mary Voss, by selling the property to Mark Diamond or his nominee for $US620,000, so long as fifty percent of the net proceeds of sale, after payment of reasonable selling expenses and discharge of mortgages, are paid into the Mallesons Stephen Jaques trust account to be subject to paragraph 4 of this order [the order of Beach, J. of September 2001]”. 

1. The application is opposed by the plaintiff.  It seems to me that there are two significant deficiencies in the material before the court, which lead me to conclude that this application should not be granted at this stage.  First, there is no proper valuation of the property in question before the Court, so that, whilst there is some valuation material, the Court is left in a position of uncertainty as to whether the figure of $US620,000 is a fair price.  The question of a valuation was first raised between the parties by a letter from the plaintiff’s solicitors dated 29 August 2003.  It seems to me that it was open to the defendant, in the time that has elapsed since then, to obtain a valuation and put that material before the Court.  Mr Simpson of counsel, who appeared for the defendant, pointed out that in this case the property has been listed for sale since June 2002 and the offer by Mr Diamond is the best that has been obtained in that time.  He therefore submitted that the offer was indicative of the current market value.  However, I think the Court should have the certainty of a valuation before allowing a sale, where the price in question, $620,000, is $59,000 less than the purchase price paid by Mr and Mrs Voss in October 1999.  There is some suggestion in the material that the events of 11 September 2001 have depressed property valuations in the United States of America, but in my opinion that should all be dealt with in a properly prepared valuation. 

1. The second deficiency in the material raised by Mr Pearce of counsel, who appeared on behalf of the plaintiff, is the lack of proper proof of the existence of a mortgage.  There is a document which seems to be a loan statement from Washington Mutual Home Loans, dated 13 June 2003, and Mr Voss deposes to the fact that he and his wife borrowed money from Washington Mutual Home Loans and gave a mortgage to Washington Mutual Home Loans.  However, the amount of the loan of approximately $480,000 is a very substantial part of the purchase price.  Again, I think the Court should have before it material establishing that there is in fact a mortgage over this property, that the mortgage is still in existence and that the amount owed to Washington Mutual Home Loans is indeed secured.  An up to date statement of the amount owed would also be of assistance.  If that had been the only criticism, I would not have been so concerned to insist on production of such a document, but in any fresh application I see no reason why there should not be an up to date statement of the amount owed before the Court.

1. Other criticisms made by Mr Pearce concerned the title to the property.  The only document produced that could establish title was an unusual one that seemed to be more to do with a beneficiary obtaining some entitlement under a deed of trust, rather than a document evidencing ownership of real estate.  It was headed “A Deed of Release and Conveyance”.  Perhaps in the State of Arizona that is the only document that one can look to to establish ownership of real estate, but there is no explanation before me as to what the status of that document was. 

1. However, that is in a sense neither here nor there, because the plaintiff is really accepting that this is a property owned by Mr Voss because otherwise, if it is not owned by Mr Voss, it is not subject to the Mareva order, so that establishing the title of itself is not of importance.  There is a dispute about the nature and extent of Mrs Voss’s interest.  What Mr and Mrs Voss, in a joint affidavit sworn yesterday, have said is that –

“At all times we have regarded ourselves as entitled to equal half interests in the Scotsdale property.  We have agreed with each other that the Scotsdale property is held by us as tenants in common in equal shares.  We have also agreed that we will share equally in any net proceeds of sale of the Scotsdale property.”

That statement is, of course, lacking in particulars as to dates.  I raised in the course of argument whether, if that agreement changing what was said to have been a joint interest into a tenancy in common occurred after the making of the asset preservation order by Beach, J., that may not have been a breach of the order. 

1. The importance of the nature of Mrs Voss’s interest is that what Mr Voss sought by his application was to pay only half of the net proceeds into his solicitors’ trust account to be subject to the order, whereas what Mr Pearce submitted was the appropriate order was that the whole of the net proceeds should be paid into the account.  It is not strictly necessary for me to decide this issue, having indicated that I am not prepared to make the order, but, having heard the argument, I think I could indicate that I would only have been prepared to make an order once satisfied as to the amount of the sale price, and the amount of the mortgage and the existence of the mortgage, if all of the net proceeds had been paid into the solicitors’ trust account.  It seems to me that the position is, as Gillard, J. apparently found in dealing with a contempt application against Mr Voss, that, if he indeed has a joint ownership, all of the proceeds of a sale are subject to the asset preservation order. If there is to be a fresh application, that conclusion may well change if there is more detail and explanation given about the way in which this property was originally purchased, how it was held, and, if there has been any change in the nature of the joint ownership, when that occurred.

1. For the sake of completeness I mention that Mr Pearce drew my attention to the fact that, in the letter of 29 August from Mallesons to Gilbert & Tobin and their agents in Victoria, Herbert Geer & Rundle, the Arizona property was said to be owned jointly by Mr Voss with his wife.  Further, in his first affidavit in support of the application, Mr Voss said that he jointly purchased the home with his wife, and, as I have already read, the application itself, seeking an additional paragraph to the asset preservation order, described the Arizona property as being owned jointly with Mrs Voss.  Therefore, on the material before me, if I had otherwise been prepared to make the order, I would have required all of the proceeds to be paid into the solicitors’ trust account as a condition of the approval.  However, the situation is such that at this stage I think the application should be dismissed.

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