Vidler v Simpson
[2013] NSWSC 1457
•27 September 2013
Supreme Court
New South Wales
Medium Neutral Citation: Vidler v Simpson [2013] NSWSC 1457 Hearing dates: 27 September 2013 Decision date: 27 September 2013 Jurisdiction: Equity Division Before: Ball J Decision: See paragraphs 20 to 24 of this judgment
Catchwords: PRACTICE AND PROCEDURE - dispute regarding sale of property held in co-ownership - performance of settlement agreement - abandonment of original settlement agreement - determination of the terms of the subsequent settlement agreement - contribution for outstanding fees - no issue of general principle Legislation Cited: Conveyancing Act 1919 (NSW) Category: Procedural and other rulings Parties: Jillian Diane Vidler (First Plaintiff)
Wendy Elizabeth Simpson-Jones (Second Plaintiff)
Peter Gordon Simpson (First Defendant)
Margaret Joan Simpson (Second Defendant)Representation: Counsel:
G A Moore (Plaintiffs)
M Klooster (Defendants)
Solicitors:
John W Hogan (Plaintiffs)
Sydney City Lawyers (Defendants)
File Number(s): 2012/202740 Publication restriction: Nil
EX TEMPORE Judgment
These proceedings were commenced on 28 June 2012 by the plaintiffs originally seeking an order under s 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees to sell a property at Marsden Park. The plaintiffs owned a one third share each of the property. The first defendant, their brother, owned a one sixth share and his wife, the second defendant, also owned a one sixth share.
There was a mediation in the matter on 30 November 2012 at which time the parties agreed to settle the proceedings on the following terms:
- The defendants agree to pay each of the plaintiffs $600,000 for their respective shares in the property; and
- Each of the parties release all others from any claim or demand in relation to any issue arising from the proceedings or any issue arising from the co-ownership of the property.
On 18 February 2013, the court made orders by consent to give effect to the agreement reached at the mediation. The orders made by the court do not reflect precisely the agreement that was reached and there are, in my opinion, difficulties with the orders because they include orders that the defendants pay the plaintiffs sums of money. In my opinion, orders in those terms are undesirable because they give rise to the possibility of contempt proceedings if the money is not paid in circumstances where I do not think that is what the parties could have contemplated. Although the orders do not reflect precisely the terms of settlement, I do not think the parties intended by the orders to amend those terms. It is clear that what the settlement contemplated was that the defendants would buy the plaintiffs' interest in the property for the amount specified.
The evidence is that the defendants intended to borrow the amounts they needed to pay to the plaintiffs in order to acquire the plaintiffs' interest in the property. They were unable to do so. They say that part of the reason for that was that the plaintiffs would not consent to the property being tenanted and that made it difficult for them to raise finance. There is a dispute about that. However, the defendants have not filed a cross-claim alleging that the failure to raise finance was caused by a breach by the plaintiffs of an implied term in the settlement agreement and in those circumstances I think that that issue can be put to one side.
On 1 March 2013, the solicitors for the plaintiffs wrote to the then solicitors for the defendants seeking performance of the settlement agreement and threatening to take steps to bring the matter back before the court if completion of the purchase of the property did not occur by 2 April 2013. In the meantime, on 23 February 2013, the defendants entered into an agency agreement with Hills Commercial Real Estate appointing Hills as the exclusive agent for the sale of the property. It is not clear precisely what happened after that, but at some stage it must have become apparent to the defendants that if they wished to sell the property they would require the plaintiffs' agreement.
On 7 March 2013 the first defendant wrote to Mr Hull, the agent at Hills responsible for selling the property. In that letter he said the following:
Thank you for your support and efforts with this matter.
Now that you have secured a lease and sale for the property, I would like you to write to my sisters through Mr Hogan and offer them the benefits that arise from this situation.
1. Mrs Vis Vidler and Mrs Simpson Jones sign a rental and sales agreement with Hills Commercial.
2. We share 1/3 equally in all costs and proceeds from the lease and sale.
3. We agree to Hills commercial being the administrator for the property.
4. You outline very clearly the arrangements for lease and sale so they can understand the value of the proposal.
5. They understand that this situation will create finality to issues and dealings between the parties.
6. The stock will need to be sold/removed ASAP and I am meeting with an auctioneer to discuss possibilities for this to happen.
It appears that after receiving those instructions, Mr Hull spoke to the plaintiffs' solicitors on 8 March 2013. It is not clear what occurred during that conversation. However, on 11 March 2013, Mr Hull sent the plaintiffs' solicitors an email which said:
Further to the above matter and following our conversation late Friday afternoon, I confirm that the agency agreement forwarded to you for signature by your clients Mrs Vidler and Mrs Simpson-Jones, is a joint agency on behalf of all vendors. The fee is to be paid in equal portions by each party to the agreement, Mr & Mrs Peter Simpson to be one of those parties.
The agency agreement is purely to allow me to legally handle the sale on behalf of the vendors. The agreement does not cover external issues to the sale such as the disposal of any items on site (namely pots) and nor does the agreement seek to address any disputes the vendors may have with each other in regards to claims they may have against each other for past alleged wrongs or expenses paid on behalf of others. Such discussions and subsequent arrangements and what impact they may have on the disbursement of monies on settlement are not within the scope of the agency agreement.
In simple terms a sale is being instructed at $2,000,000 plus GST, if applicable.
On settlement funds will be distributed as follows:-
Sale amount
$2,000,000
less fee
$ 50,000
Net proceeds
$1,950,000
Distribution to each party
$ 650,000
Would you please ensure your clients understand that these are the terms of the agency they are being asked to co-sign.
Upon the return of the correctly executed agency agreement we will be in a position to nominate the purchaser and issue the contract. Given that it is a condition of the sale that exchange occurs by 21st March in order to achieve settlement by 21st June, as required by your client, we ask you treat the matter with a high degree of priority.
...
Although the email does not set out all the terms that were described in the first defendant's letter dated 7 March 2013 to Mr Hull, I think it can be inferred that Mr Hull complied with his instructions and explained the position of the defendants in his conversation on 8 March 2013. In his email dated 11 March 2013 Mr Hull made it clear that what was contemplated was that, in return for the plaintiffs agreeing to Hills being, to use the words of the first defendant, "the administrator for the property," they would receive a third share each of the sale price after expenses.
At some time after that the plaintiffs signed the agency agreement with Hills.
On 20 March 2013 the plaintiffs' solicitor wrote to the solicitors for the defendants in which they said:
In light of the sales advice from Hills Agency I advise that my clients take the view that they are entitled at settlement to the greater of:
1. A one third share of the sale proceeds minus a one third share of agents' commission a one third share of your costs and a one third share of outgoings payable by the vendor. (Noting the purchaser is likely to go into occupation on exchange of contracts and be liable for outgoings from that date); or
2. An amount of $600,000.00 plus interest accruing from 1 March at 9% per annum and no deductions for costs or outgoings incurred by holding the property after 1 March 2013.
If the sale does not proceed my client will apply to the Court after 2 April 2013 to have the matter relisted to enforce the Agreement reached at the mediation.
We reiterated [sic] that our clients are each entitled to an amount of not less than $600,000.00 plus interest accruing from 1 March at 9% per annum and no deductions for costs or outgoings incurred by holding the property after 1 March 2013.
On 3 April 2013, the solicitor for the plaintiffs wrote a further letter enclosing a copy of the contract for sale of the land, executed by the plaintiffs. The letter also enclosed invoices for asbestos removal costs. Those costs had been incurred before the mediation in compliance with an order apparently made by the Environmental Protection Authority. The plaintiffs had paid two thirds of the relevant costs and were seeking to recover the remaining one third from the defendants, following a demand for their payment. The defendants did not pay their one third share and subsequently the plaintiffs paid the outstanding amount apart from a sum of $7,000.
The sale originally contemplated at the time the plaintiffs signed the agency agreement with Hills did not eventuate and, on 10 April 2013, the solicitors for the defendants wrote to the plaintiffs' solicitor advising that the defendants had agreed to have the property listed for auction. The letter went on to say:
We note that Hills Commercial Real Estate have been engaged as the selling agent. We would be obliged if you would have your clients confirm whether they would be agreeable to the property being put to auction.
The plaintiffs' solicitor responded to that letter on 10 April 2013 confirming that the plaintiffs were agreeable to the property going to auction and subsequently, on 17 April 2013, the defendants signed an auction agency agreement with Hills. At about the same time, the plaintiffs also signed that agreement.
The defendants' solicitor did not respond to the plaintiffs' solicitor's letter dated 20 March 2013. However, it seems to be clear that by this stage three things had happened. The first was that the defendants had been unable to raise the funds to permit them to comply with their obligations under the settlement agreement. Instead they had proposed to the plaintiffs that the property be sold and the proceeds of sale be split equally. In making that proposal, the defendants appreciated that they could not comply with their obligations to purchase the plaintiffs' interest under the original settlement agreement.
Second, by signing the agency agreement the plaintiffs must be taken to have accepted the terms that the defendants had proposed through Mr Hull.
Third, by their solicitor's letter dated 20 March 2013, the plaintiffs sought to impose an additional condition on the new arrangements, namely, a condition that they would receive the greater of a one third share or $600,000. Neither the defendants nor their solicitors responded to that proposal before the property was sold.
There is a question whether, by their conduct in permitting or taking advantage of the fact that the plaintiffs signed the second agency agreement, the defendants are estopped from denying that the additional condition contained in the plaintiffs' solicitors letter dated 20 March 2013 formed part of the agreement. However, in my opinion, it is not necessary to pursue that question given the events that have happened. As I have said, what does seem to be clear is that the parties agreed to abandon the original settlement agreement and agreed instead that the property would be sold and the proceeds of sale would be split equally.
The property was actually sold for the sum of $2.1 million. The plaintiffs claim that, after deducting expenses, they are entitled to a one third share each of the proceeds. The defendants claim that they are only entitled to be paid $600,000 each plus interest in accordance with the settlement agreement. For the reasons I have given, I accept the plaintiffs are entitled to a one third each of the sale proceeds after deducting expenses.
That leaves the outstanding fees incurred by the plaintiffs to comply with the order of the Environmental Protection Authority. The defendants maintain that the plaintiffs' right to recover those fees were released by the release originally contained in the terms of settlement. There may be a question whether that release continues to apply. However, in my opinion, even if it does, it cannot release the defendants from a liability to contribute to the costs incurred in complying with the order.
It seems clear that all of the defendants were jointly liable to the contractors engaged to perform the necessary work to comply with the order of the Environmental Protection Authority. Apart from a sum of $7,000, the plaintiffs have paid for that work. Their share was paid before the settlement agreement, but the balance (apart from the $7,000) was paid after the settlement agreement was entered into. In my opinion, the plaintiffs have a right of contribution from the defendants in respect of that payment. That right of contribution arose after the settlement agreement had been entered into and could not be one of the liabilities that the parties intended to release by the release contained in that agreement.
Given that the plaintiffs have paid the whole of the amounts for which the parties were liable, other than the sum of $7,000, it seems to me that they are entitled to claim contribution in an amount which is sufficient to ensure that they are only liable for a one third share each of those costs.
That leaves the question of interest. The last payment made by the plaintiffs to one of the contractors included a component for interest. The plaintiffs submit that they should be entitled to recover that interest, since that interest only related to the one third share that ought to have been paid by the defendants and if the plaintiffs had paid that amount earlier than they did, so as to avoid the payment of interest to the contractor, they would have been entitled to interest in any event from the defendants on their claim for contribution. I accept that submission.
It follows, from what I have said, that the plaintiffs are entitled to a one third share each of the proceeds of sale of the property after deducting expenses and are entitled to recover the amount that they have paid to contractors over and above their two third share of that liability.
I direct that the plaintiffs bring in short minutes of order to give effect to this judgment. If they can be agreed, I will then make them in chambers. If they cannot be agreed, then the matter can be relisted by contacting my Associate and I will hear further argument on the precise terms of the orders.
The defendants should pay the plaintiffs' costs of the application before me.
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Decision last updated: 10 October 2013
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