Van der Velde v Dunstan

[2012] QDC 83

[2012] QDC 83

DISTRICT COURT

CIVIL JURISDICTION

JUDGE ROBIN QC

No 1263 of 2012

TERRY GRANT VAN DER VELDE and JASON SHANE CRONAN	Applicants
and
JOANNE PAMELA DUNSTAN	Respondent

BRISBANE

..DATE 16/04/2012

ORDER

CATCHWORDS

Property Law Act 1974 s 38

Application by trustees of a bankrupt for appointment of two chartered accountants as trustees for sale - respondent joint tenant (with bankrupt) not extending full cooperation, apparently on basis of currently depressed state of property market - sale should be ordered - consideration of ways of limiting expenses of achieving sale and what costs the respondent should bear

HIS HONOUR: This is an application by trustees in bankruptcy un s 38 of the Property Law Act 1974 for a court order for a sale of a residential property which was owned by the respondent and her husband, who has become bankrupt. The applicants are his trustees and they have become registered as co-owners as joint tenants of the property.

They have achieved only limited success in gaining the co-operation of the respondent, who has not appeared on the hearing of the application today when called, although appropriately served, to achieve a sale of the property co-operatively.  Such a sale would seem to me to be self-evidently for the benefit of all concerned, in particular for the respondent and her husband's creditors.

What she has been prepared to do is sign a document consenting to the appointment of a real estate agent to market and sell the property.  By that document she also undertakes to sign an agency agreement with a suitably qualified real estate agent selected by the trustees.  This further step hasn't occurred and common experience suggests that it is unlikely that a real estate agent would be prepared to act except on the basis of an appointment mentioning him or her, which is signed by the respondent.

The document which she did sign agrees "that the costs of the realisation will be shared equally between me and the bankrupt estate".  That arrangement is more generous to her than what's proposed today, which is that she bear the costs of the application and sale and particularly that those come out of her share of the proceeds of sale.

...

HIS HONOUR:  There should be a change to (a).  I think we'll say after "sale of the land", “except for costs that would in the usual case be shared by co-owners such as agents' commission and conveyancing costs, as to which her liability is limited one-half”.

The change of ground in respect of costs is what one would expect, the fifty-fifty arrangement being appropriate in the event of a co-operative sale where there's no meritorious defence available to court proceedings rendered necessary by the respondent's lack of co-operation.  A serious question arises whether or not she ought not to have to pay the costs rendered necessary by what must be counted an obstructive attitude.

The respondent has been given fair warning that if the application became necessary, as it has become necessary, costs would be sought to be recouped at her expense.  An amendment has been made to the draft order to make clear and express what was probably always implied, namely that those costs which ordinarily would be equally borne, such as real estate agent's fees and conveyancing fees, continue to be borne equally and stand outside the court's costs order.

Mr Shaw's written submissions collect some authorities which confirm that there really is now no answer to an application of this kind.  There are none of the special circumstances, such as contractual arrangements, which might deny or modify the entitlement to sell present here.  It appears that all the respondent has to support her is the poor state of the market at the moment.

The court's satisfied that the market is depressed, one indication of which is the dramatic decline in Valuer-General valuations of properties in South-East Queensland.  It's understandable that the respondent might wish to hold on in the hope that the market will rise.  Perhaps the creditors have a similar interest.

Considerations of that kind, on the authorities, must not be allowed to stand in the way of the court giving effect to the right of any co-owner to have the property sold.  An amendment has been made by me to the order proposed to make it clear that whether the sale is by public auction or private treaty, the respondent may be the purchaser.  If she can arrange the finance in that regard, a negotiated outcome which sees her buy in the outstanding equity in the property may be the best that can be hoped for.

There's little reason to be sanguine about what a forced sale now may achieve.  The court's told that there's a mortgagee whose payout figure is something like $259,000.  The mortgagee hasn't been served with the proceeding; that is sometimes done.  The reality, however, is that unless it can be paid its entitlement there's not going to be a sale without its positive co-operation.

The range of values indicated by two real estate agents who've  been asked for opinions is $295,000 to $380,000.  The costs are beginning to loom very large.  One particular aspect, about which I've made some comment, is that the appointment of two chartered accountants, jointly and severally as statutory trustees for the sale, is proposed.  They will be charging at ordinary rates.

I have inserted some words in the order to make express what Mr Shaw indicated was the understanding, that the point of there being two trustees is simply so that in the event of an inability of one, the other may act.  It would plainly be most undesirable to have two professional trustees both acting and charging for their individual time for work that could have been done by one alone.  I'm not suggesting there was intention to do that but words have been inserted in the order to encourage the trustee’ acting severally by one alone rather than acting jointly where that would limit costs,

The respondent has had notice of the applicants' intention to engage the two gentlemen appointed in the court's order and it's appropriate given her non-participation today to make an order appointing them.

In previous applications like the present, I have thought it right for the court to go to some trouble to limit costs which obviously will inevitably be incurred if new players have to be brought into a scenario to open a file, consider what to do and then do it.  I have always been amenable to proposals, indeed sometimes been the source of the proposals myself, to limit costs by appointing as trustee persons already au fait with a lot of the circumstances.  For example, solicitors may be appointed as trustees for sale - which seems particularly appropriate in a context, of which the present is not one, where there is a solicitor on both sides to come in an a trustee for sale ensure fair play.

Even in the case of a solicitor for one side only, in principle, it seems to me such an appointment could be made.  Indeed, there are precedents, I think, for the appointment of an applicant in a proceeding such as the present to be trustee for sale.  There's precedenct for applicants being appointed receivers and managers.  The present applicants are likely to be suitable persons to be trustees for sale.  Obviously, if there had been no aspect of co-ownership, they would have sold this property already.

I'm making comments at some length in this matter, given the alarming news from Mr Shaw that the present application may be the precursor of many.  Indeed, he has another one in my list later in the week.  I think it would be helpful to devise what might be called lean ways of proceeding in the interests of limiting the costs for all concerned and maximising realisations.

So, orders as per initialled draft.  Thanks, Mr Shaw.

MR SHAW:  Thank you, your Honour.

-----