Re: Application of Penelope Champion

[2020] NSWSC 1023

Supreme Court

New South Wales

Medium Neutral Citation:

Re: Application of Penelope Champion [2020] NSWSC 1023

Hearing dates:

21 April 2020, 12 May & 15 May, 4 August 2020

Date of orders:

4 August 2020

Decision date:

04 August 2020

Jurisdiction:

Equity - Duty List

Before:

Slattery J

Decision:

Orders made, permitting $51,958.68, being one half of the funds in Court, to be paid out to the third applicant.

Proceedings adjourned to allow further evidence to be adduced in support of the third applicant’s claim to the other half of the funds in court.

Catchwords:

CIVIL PROCEDURE – payment out of court – a fund, being the proceeds of sale of certain real property is paid into Court – claim made against the funds in court – property was held by tenants in common is auctioned by a mortgagee in possession – the third applicant for the funds was one of two tenants in common of the auctioned property – the whereabouts of the other tenant in common, who defaulted on the mortgage over the real property is unknown – the third applicant applies for the payment out of Court of $51,958.68, being one half of the amount in Court, being $103,917.35 – the third applicant also makes a claim against the other tenant in common to the balance of the funds in Court.

EQUITY –Trusts and trustees — Bare trusts - Trustee Act 1925, s 95 – payment into Court – application to pay funds out of Court under Uniform Civil Procedure Rules 2005, r 55.11 – bank exercises its mortgagee’s power of sale of a property and after deduction of the first mortgage amount pays the balance of the proceeds of sale into Court.

Legislation Cited:

Trustee Act 1925, s 95

Uniform Civil Procedure Rules 2005, r 55.11

Category:

Procedural and other rulings

Parties:

First applicant: Jeffrey Norm Ellis
Second applicant: Craig Stuart Lucey
Third applicant: Penelope Champion

Representation:

First applicant: Jeffrey Norm Ellis in person
Second applicant: Craig Stuart Lucey in person
Third applicant: Penelope Champion in person

File Number(s):

2018/00335070

Publication restriction:

No

Judgment

1. This is the Court's second judgment in these proceedings. In the Court's first judgment, Re: Application of Ellis and Lucey (2020) NSWSC 657, the Court authorised under Uniform Civil Procedure Rules 2005 r 55.11 the payment from funds in Court of two sums of money, one each to applicants, Mr Jeffrey Ellis and Mr Craig Lucey. This judgment should be read with the Court's first judgment, and persons, events and things are referred to in the same way in both judgments.

2. The Court's first judgment explains that Mr Ellis and Mr Lucey were claimants to part of a fund of $174,249.93, which was paid into Court as surplus proceeds after the Commonwealth Bank of Australia (“CBA”) exercised its powers of sale as a mortgagee over a property in Rampion Hills Road, Carrick, New South Wales. As a result of the Court's first judgment, moneys were paid out of Court to Mr Lucey and Mr Ellis.

3. There now remains in Court, as at today's date, the sum of $103,917.35. Ms Champion applies for the payment of that sum out of Court today. She does so by motion which was the vehicle for the application of Mr Lucey and Mr Ellis. That motion was amended to add her as a third applicant to claim the remaining funds in Court.

4. Although the circumstances are more fully explained in the Court's first judgment, Ms Champion’s claim to the funds in Court can be divided into two parts. The sum of $51,958.68, being 50% of the amount in Court, is a sum to which Ms Champion is automatically entitled. The Court will make an order today authorising payment of that sum out to Ms Champion. The entitlement of Ms Champion to these funds arises from her position as a one half co-owner of the Carrick property as tenant in common at the time of its sale. And the Court is already satisfied, from considering Mr Ellis and Mr Lucey's application, that there are no other claimants to this fund ahead of the registered proprietors, Ms Champion and a Mr David Kersten.

5. Ms Champion also claims the other half of the fund in Court. In order to claim the balance of the fund, Ms Champion would need to prove that she is entitled as against Mr David Kirsten to the balance of the sale proceeds. And because he has not yet appeared in these proceedings some evidence of attempts to locate and serve him with process (or the difficulties in doing so) would be required.

6. Ms Champion lives in Queensland. She is appearing in person but due to Covid-19 travel restrictions she has attended the hearing by telephone. She has explained to the Court the basis of her claim against Mr David Kirsten. On the face of it, it appears to be both logical and maintainable. But the Court cannot act upon a general description of the claim; it can only act upon evidence proving the underlying facts, and for that reason the Court will allow an adjournment for a period of approximately a month for Ms Champion to gather that evidence. The Court has suggested to her that she use some small part of the funds to which she has just now gained an entitlement, to engage a lawyer to assist her to provide the proof she needs. The exercise has a degree of formality but should not be particularly difficult and therefore the Court expects she should not incur a significant amount in legal fees.

7. From what Ms Champion has told the Court, her claim is constructed of several parts. She raised one part today in submissions and she mentioned the other part when she was before the Court at the time of the application of Mr Lucey and Mr Ellis.

8. She said today that she paid for her half share of the Carrick property upfront at the time of its purchase and that Mr David Kirsten needed to borrow money from the CBA to complete the purchase on his side. Ms Champion and Mr David Kirsten were both mortgagors of the property, although the mortgage secured only his borrowing obligation, as the Court understands it. But Mr David Kirsten appears to have defaulted on the mortgage, causing the CBA to exercise its mortgagee's power of sale.

9. Ms Champion says that she became aware that Mr David Kirsten had defaulted upon his mortgage obligations when the CBA contacted her. She then paid his arrears of $5,500 to prevent an immediate repossession of the property and to allow her to try and negotiate the sale to Mr Ellis and Mr Lucey. But the CBA ultimately exercised its power of sale and deducted from the sale proceeds all the amounts outstanding from Mr Kersten secured by the mortgage.

10. It is not presently clear to the Court exactly how much was owing to the CBA for arrears and in costs that were deducted from the sale proceeds by the CBA before they were paid into Court. Ms Champion says with considerable justification, that at least half of what was so deducted by the CBA was Ms Champion's money, which the CBA was applying to satisfy Mr David Kirsten's residual financial obligations to the bank. Ms Champion would now be entitled in restitution from Mr Kersten to the return of her half of that money.

11. And she may indeed be entitled to more than half of what was deducted by the CBA. This is because the mortgage over the Carrick property was only taken out to secure Mr Kersten’s liability to the bank, not Ms Champion’s. Therefore as between Ms Champion and Mr Kersten, all the CBA’s deductions have resulted from Mr Kersten’s borrowings and default and should only be to Mr Kersten’s account.

12. The Court's first judgment referred to three other claims Ms Champion made against Mr David Kirsten. First, she claims to have paid arrears of $5,500 to the CBA to forestall the sale of the Carrick property and to facilitate the sale to Mr Ellis and Mr Lucey. Second, she claims she loaned him about $20,000 in respect of the purchase of a bobcat excavation vehicle for the property. And third, she claims she funded Mr Kersten’s half share of the original deposit of $20,000 on the purchase of the property, namely, $10,000.

13. The claim that Ms Champion has outlined today, if it can be established by proper evidence, is probably the simpler claim. The only other thing Ms Champion will need to prove is that some attempts were made to find Mr David Kirsten, the co-owner. The Court is aware from the evidence put on by Mr Lucey and Mr Ellis that attempting to find Mr David Kirsten has been immensely difficult and that he may not want to be found. But some current evidence about attempting to serve him or to find him is nevertheless important.

14. The Court has gone to the lengths of explaining the relevant procedure to Ms Champion because she is not legally represented and because she lives in Queensland and the borders are closed between Sydney and Queensland, and she is unable to be here in person.

15. The Court will pay out from the funds in Court in this matter the sum of $51,958.68, being one half of the amount in Court as at today, which is $103,917.35. The Court will direct, Ms Champion to provide to the Court's finance department her BSB and account details, so the payment can be made to her. And the Court will adjourn the proceedings to a date in September to allow this evidence to be assembled.

Conclusion and Orders

16. Accordingly, the Court makes the following orders, notations and directions:

1. Order that there be paid out of the funds in Court in these proceedings the sum of $51,958.68 (being one half of the amount in Court today which is $103,917.35) to the applicant, Ms Penelope Champion of [address not published].

2. Direct that the applicant, Ms Champion provide to the Supreme Court Finance Department her bank account and BSB details so the amount can be paid to her.

3. Note that Ms Champion wishes to claim the balance of the funds in Court but the Court has informed her that further evidence will be required before such an order could be made.

4. Adjourn these proceedings part-heard before me for mention at 9.30am, Tuesday 1 September 2020.

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Decision last updated: 05 August 2020