Pileggi v Barnes JV Pty Ltd

[2011] WASC 115

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   PILEGGI -v- BARNES JV PTY LTD [2011] WASC 115

CORAM:   ACTING MASTER CHAPMAN

HEARD:   28 FEBRUARY 2011

DELIVERED          :   2 MAY 2011

FILE NO/S:   CIV 2218 of 2010

BETWEEN:   FRANK PILEGGI

Plaintiff

AND

BARNES JV PTY LTD
Defendant

Catchwords:

Property Law Act, s 126 - Sale of land - Partition - Constructive trust

Legislation:

Property Law Act 1969 (WA), s 126
Rules of the Supreme Court 1971 (WA), O 21 r 3, O 53 r 2, r 6

Result:

Application dismissed

Category:    B

Representation:

Counsel:

Plaintiff:     Mr A J N Aristei

Defendant:     Ms G B A Visscher

Solicitors:

Plaintiff:     Irwin Legal

Defendant:     Gadens Lawyers

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

Giacci v Giacci Holdings Pry Ltd [2010] WASC 349

Martin‑Smith v Woodhead [1990] WAR 62

Pitt v Jones [1885] AC 651

Western Australian Club Incorporated v Nullagine Investments Pry Ltd (1992) 6 WAR 441

ACTING MASTER CHAPMAN: 

Application

1. The defendant by chamber summons filed 17 December 2010 seeks an order for the sale of certain lands on terms set out in a minute of proposed orders.  On 23 February 2011, the defendant filed a minute of proposed amended chamber summons which, in the alternative, sought leave to apply, and for summary judgment, pursuant to O 16. 

2. Applications brought pursuant to O 16 should be brought within 21 days after appearance or, at any later time, by leave of the court.  In this matter, the appearance was filed on 8 August 2010.  Thus the application is well out of time.  An affidavit explaining the delay was filed by the respondent on the same day as the amended chamber summons, which was just five days before the hearing of the special appointment.  It is not clear when the solicitor for the defendant became aware that an amendment to the chamber summons should be considered.  On what is before me, I am not persuaded the amendment, in this form at this late stage, would be appropriate, and accordingly I would not grant the leave sought. 

Background

1. It is common cause that the property situated at 235 Balcatta Road, Balcatta is registered in the names of the plaintiff and the defendant as tenants in common in equal shares.

2. The plaintiff at pars B and C of the prayer for relief in the statement of claim sought:

   B.Directions (including any necessary or proper ancillary or consequential directions) that the Defendant's interest in the Property be valued for the purposes of determining the amount for which it may be sold to the Plaintiff and that it be ordered that the said Property be sold pursuant to the directions in paragraph C. herein unless the Defendant undertakes to sell its interest to the Plaintiff for the said amount at which it was valued.

   C.Directions that the Property be sold and the net proceeds of the sale of the Property (if any) be distributed between the parties equally, and for such necessary or proper consequential and ancillary directions as this Honourable Court may deem fit, including directions allowing the Plaintiff to bid at the sale of the Property, pursuant to sub‑section 126(6) of the Act;

3. Paragraphs 3, 7 and 8 of the statement of claim refer to s 126 of the Property Law Act 1969 (WA) (the Act).

4. On 7 October 2010, pursuant to O 21 r 3 of the Rules of the Supreme Court1971 (WA), the plaintiff filed an amended statement of claim which deleted reference to s 126 of the Act in par 3 and 7, and amended pars B and C of the prayer for relief to read:

   B.Directions (including any necessary or proper ancillary or consequential directions) that the Defendant's interest in the Property be valued for the purposes of determining the amount for which it may be sold to the Plaintiff. and that it be ordered that the said Property be sold pursuant to the directions in paragraph C. herein unless the Defendant undertakes to sell its interest to the Plaintiff for the said amount at which it was valued.

   C.Directions that the An order that the Defendant's interests in the Property be sold to the Plaintiff and the net proceeds of the sale of the Property (if any) be distributed between the parties equally, and for such necessary or proper consequential and ancillary directions as this Honourable Court may deem fit, including directions allowing the Plaintiff to bid at the sale of the Property, pursuant to sub‑section 126(6) of the Act pursuant to Order 53 Rules 2 and 6 of the Supreme Court Rules, including any ancillary or consequential directions to give effect to that sale.;

5. On 25 February 2011, pursuant to O 21 r 3 of the rules of the court, the plaintiff filed a reamended statement of claim. This deleted par 5 from the statement of claim which read:

   By reason of the intended or actual termination of the joint interests of the Plaintiff and the Defendant in the Property (referred to in the previous paragraph herein), this action has been commenced for orders to partition the joint interests of the said parties in the Property.

6. As will be seen from the reamended statement of claim, the plaintiff now relies on O 53 r 2 and r 6 of the rules of the court as the grounds upon which the property is to be sold rather than s 126 of the Act. Counsel for the defendant contends that the reamended statement of claim makes it clear that the primary relief sought is a declaration of constructive trust. He submits it is not an application for petition. The chamber summons was filed after the amended statement of claim but before the reamended statement of claim was filed. It states the grounds of the application are:

   A.The Plaintiff's action is an action for partition of the Land.

   B.The Defendant is interested in the Land to the extent of a half share.

   C.Pursuant to s 126(1) of the Property Law Act 1969 (WA) the Defendant requests the Court to direct a sale of the Land instead of a division of the Land between the parties interested.

7. Given that par 5 of the statement of claim was included in the amended statement of claim, the defendant can be forgiven for considering the plaintiff sought partition of the land, notwithstanding the amendment made to the statement of claim.  Paragraph 5 has now been deleted.

Statutory provisions relied upon

1. Section 126(1) and (3) of the Act reads:

   126.In action for partition Court may direct land to be sold

   (1)Where in an action for partition the party or parties interested, individually or collectively, to the extent of a half share or upwards in the land to which the action relates request the Court to direct a sale of the land and a distribution of the proceeds, instead of a division of the land between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale accordingly.

   …

   (3)The Court may also, if it thinks fit, on the request of any party interested, direct that the land be sold, unless the other parties interested, or some of them, undertake to purchase the share of the party requesting a sale; and, on such an undertaking being given, may direct a valuation of the share of the party requesting a sale.

2. Order 53 r 2 and r 6 of the rules of the court read:

   Order 53 ‑ Sales of land by the Court

   …

   2.Power to order sale of land

   If in any cause or matter relating to any land it appears necessary or expedient for the purposes of the cause or matter that the land or any part thereof should be sold, the Court may order that land or part to be sold, and any party bound by the order and in possession of that land or part, or in receipt of the rents and profits thereof, shall deliver up such possession or receipt to the purchaser or to such other person as the Court may direct.

   …

   6.Mortgage, exchange or partition

   Rules 3, 4 and 5 apply so far as applicable and with the necessary modifications, to the mortgage, exchange or partition of any land under an order of the Court, as they apply to a sale of any land pursuant to this Order.

The issues

1. The defendant contends that O 53 r 2 of the rules of the court does not give the court power to order the sale of land unless it is necessary for the purposes of the suit before it. I accept that this rule does not provide an alternative means of obtaining an order for sale in lieu of partition. That said, the action brought by the plaintiff is not confined to this rule.

2. The defendant further contends that the sale of the property should be ordered for the following reasons.  The court has no discretion in determining a request for relief pursuant to s 126 of the Act to refuse that request entirely.  The discretion is limited to a choice between partition or sale:  Western Australian Club Incorporated v Nullagine Investments Pry Ltd (1992) 6 WAR 441. Section 126(3) of the Act does not allow the court to make an order to force a co‑owner to accept a sale of his interest at a valuation: Pitt v Jones [1885] AC 651; Martin‑Smith v Woodhead [1990] WAR 62, at 68 per Kennedy J; Giacci v Giacci Holdings Pry Ltd [2010] WASC 349 at [34] ‑ [38]. The mortgagee will not consent to the partition of the property.

3. In the alternative, the defendant seeks an order pursuant to s 126(2) of the Act.  The defendant submits the following in support of that proposition:

   9.In respect of the application under s 126(2), of the Property Law Act 1895 (WA), a sale of the Property would be for the benefit of the parties interested because:

   9.1.The loans of both the Plaintiff and the Defendant, which arc secured by the Property, are in default and have expired: GFBl Barnes III;

   9.2.The mortgage over the Property, which secures the loans of the Plaintiff and the Defendant, was granted by both the Plaintiff and the Defendant: GFBX Barnes II;

   9.3.If the Property is not sold in the near future, the ANZ will take action to sell the Property: GFB37 Barnes I and GFB1 Barnes III;

   9.4.The Plaintiff and the Defendant each provided a guarantee for the other's loan: GFB12, Pileggi para 30, 45 and 51c; and Barnes JV continues to suffer financially, due to having to pay default interest on its loan after the lease payments from the Property were held in trust by the commercial property managers, Davenport Commercial, on the instruction of the Plaintiff.

4. It is contended for the plaintiff that he has not sought any relief for partition of the property, albeit there is an erroneous reference to partition in par 5 of the amended statement of claim.  It is said the relief sought by the plaintiff is a claim for a declaration that the interests of the parties as tenants in common have been terminated and a declaration that the defendant's interest in the property is held upon either a resulting, or alternatively, constructive trust for the benefit of the plaintiff.  Related relief is sought for the sale of the defendant's interest in the property, but not for an order for partition itself.

5. The plaintiff contends there was a joint enterprise between the parties to purchase the property for training purposes.  It is said this property was purchased and would operate as business premises for a company which Mr Barnes and Mr Pileggi were directors.  Ultimately, the relationship between the two broke down, which, it is said, resulted in the joint endeavour being terminated.  The plaintiff further contends that the respective contributions made to acquire the property was not equal.

6. There is material before me which would indicate the plaintiff paid amounts for stamp duty and possibly rates and taxes.  How those amounts are to be treated is quite another thing.  There is also material which would indicate there was a joint endeavour which has broken down and the manner in which the property would be distributed on this happening is open to argument. 

7. On the evidence before me I consider there is sufficient evidence for the plaintiff to argue that he made a greater contribution to the purchase of the property, and thus he may be able to argue he has a greater equitable interest in the property than the 50%.  If s 126 of the Act were to apply to this case, that may be of some significance.  Even if s 126 of the Act were not to apply, this fact would have a bearing on the orders the defendant seeks. 

Conclusion

1. I am of the view that this is not a case which should properly be disposed of at this preliminary stage.  The issues raised should properly be tested at trial and determined prior to the making of the type of order the defendant seeks.  I do not consider an order for sale of the property should be made at this juncture.