W v D (No 2)
[2013] SASCFC 6
•1 March 2013
SUPREME COURT OF SOUTH AUSTRALIA
(Full Court)
W v D (No 2)
[2013] SASCFC 6
Judgment of The Full Court
(The Honourable Chief Justice Kourakis, The Honourable Justice Anderson and The Honourable Justice David)
1 March 2013
APPEAL AND NEW TRIAL - APPEAL - PRACTICE AND PROCEDURE - SOUTH AUSTRALIA - POWERS OF COURT - REOPENING APPEAL
REAL PROPERTY - GENERAL PRINCIPLES - INCIDENTS OF ESTATES AND INTERESTS IN LAND - JOINT TENANCY AND TENANTS IN COMMON - GENERALLY
This Court allowed an appeal brought against orders made by a Judge of the District Court for the division of the proceeds of sale of jointly owned land. The appeal was allowed. After delivery of its reasons, the Court heard submissions on final orders which should be made, the question of costs and on an application by the respondent to re-open the hearing of the appeal. The respondent sought to make a claim, regarding ouster by use of land in a way which is inconsistent with joint ownership, not made at trial nor on appeal.
The issues that now fall to be determined are as follows – (1) whether the respondent should be given permission to re-open – (2) the amount of interest for which appellant should account to the respondent with respect to the redraw – (3) the costs of the appeal – (4) the costs of the trial – (5) the conditions of sale.
Held: (1) respondent’s application to re-open dismissed – the claim is contestable and was raised at such late notice – (2) interest on the amount of the redraw to be at the bank interest rate compounded – (3) the respondent pay the appellant 50% of his costs on appeal – (4) the appellant pay the respondent 85% of her costs of trial – (5) the following conditions are placed on the order of sale – that until the farmlet is sold the appellant pay an occupation fee – the occupation fee from 24 October 2011 to 31 December 2012 to be accounted for in the division of proceeds of sale – interest at base mortgage rate will accrue on the occupation fee – occupation fee for first quarter of calendar year 2013 to be paid by 29 March 2013 and the occupation fee payable each month thereafter to be paid by the last business day of each month – the parties to make, in equal shares, mortgage payments at a rate that would have been made in the ordinary course and operation of the loan.
De Facto Relationships Act 1996 (SA), referred to.
W v D [2012] SASCFC 142, discussed.
Clone Pty Ltd v Players Pty Ltd (In Liquidation Receivers Appointed) & Ors [2012] SASC 12, considered.
W v D (No 2)
[2013] SASCFC 6Full Court: Kourakis CJ, Anderson and David JJ
KOURAKIS CJ: On 21 December 2012 this Court delivered its reasons for holding that an appeal brought by W against the orders made by a Judge of the District Court for the division of the proceeds of sale of jointly owned land should be allowed.
After the delivery of its reasons, the Court heard submissions on the final orders which should be made and on an application by the respondent, to re-open the hearing of the appeal. These reasons should be read together with the reasons given for disposing of the appeal in W v D[1] (the primary reasons). It is nonetheless convenient to relate again the salient factual circumstances.
[1] [2012] SASCFC 142.
In 1993 the appellant, W, and the respondent, D, purchased a house and farmlet (the farmlet) in the Adelaide Hills. They borrowed money from a bank, secured by a mortgage on the farmlet, to complete the purchase. They lived together in the farmlet until the relationship broke down in 1997 at which time D left the farmlet. D was not physically excluded from the farmlet by W at that time, and D never indicated a desire to return to live on the farmlet thereafter. They both continued to make mortgage payments until October 2009. On 13 February 1998, W was advanced a sum of $17,500 by the bank by drawing down on the mortgage for his personal purposes (“the redraw”). D and W remain liable to the bank for that amount, and the interest on it, in addition to the balance of the monies which were advanced for the purchase of the farmlet.
In about October 2009, D brought proceedings seeking a sale of the farm and an equal division of the proceeds of sale. W defended her claim and counterclaimed seeking a division of property pursuant to the De Facto Relationships Act 1996 (SA). That claim, being the counterclaim, was dismissed and not appealed against. The Judge made orders for the sale of the farmlet. That order was not challenged on appeal. On the issue of the division of the proceeds of sale, D’s claim to be entitled to 50 per cent of the net proceeds of the sale was disputed by W who claimed that he was entitled to a greater proportion of the proceeds which was commensurate to his contribution to the purchase price. The Judge determined that W’s interest in the farmlet was 56 per cent and D’s 44 per cent. W and D also disputed, at trial and on appeal, the accounting between them as to their respective contributions and offsets relating to the farmlet in the period of their cohabitation and subsequently I will refer to those issues as the miscellaneous contribution issues. On appeal the miscellaneous contribution issues, save for the fundamental question to which I will shortly refer, were resolved largely in favour of D.
The fundamental question to which I just adverted was whether an occupation fee for W’s continued occupation of the farmlet could be deducted from W’s capital share of the farmlet. The trial Judge held, correctly, that the occupation fee should be offset against any credit to which W was otherwise entitled for his miscellaneous contributions. However, the Judge also held that the balance of the occupation fee in excess of the value of W’s contribution should be deducted from W’s capital share of the proceeds of sale. The latter holding was overturned by this Court.
The Judge quantified the total occupation fee for the period from the time D left the farmlet to trial to be at $150,876. Together with the redraw of $17,500, W was found liable to account to D for $168,376. The credit for the miscellaneous contributions to which W was entitled was assessed by the Judge to be $61,873. W was ordered to pay to D the difference between the occupation fee and the credit for W’s contribution, $106,503, out of his share of the proceeds of sale. On appeal, for various reasons which need not be canvassed again in these reasons, the quantum of the credit to which W was entitled for his contribution was reduced. However, as I have observed, this Court held that D was entitled to rely on the occupation fee only to the extent that it offset the credits claimed by W. In the absence of a finding of ouster, this Court held that D was not entitled to recoup the excess of the occupation fee over W’s credit entitlements from W’s capital share of the sale proceeds.
After delivering its reasons, this Court invited the parties to make submissions on the final orders and on the questions of costs. When the matter was called on for that purpose, D made an application to re-open her appeal. Accordingly, the issues which now fall to be determined are as follows:
1Whether D should be given permission to re-open.
2The amount of interest for which W should account to D with respect to the redraw.
3The costs of the appeal.
4The costs of the trial.
Application to re-open
In [78] of my primary reasons,[2] I observed that if, after the breakdown of a relationship, a resident co-owner brings another person into the home as a domestic partner, the circumstances may constitute a use of the jointly owned property which was so inconsistent with the absent co-owner’s rights to possession that it amounted to an ouster. I made that observation in the context of considering how the quantum of the occupation fee in the case of a relationship breakdown should be determined.
[2] W v D [2012] SASCFC 142.
D had not claimed before the Judge, or on appeal, that she had not been denied her right to occupy the farmlet when W commenced to cohabit on the farmlet with his new partner. D’s claim was that she was entitled to an occupation fee from the time she left the farmlet because of the breakdown of the relationship. D never claimed that she wanted to return to the farmlet at some time after her departure but had been unable to do so because W had brought his new partner onto the farmlet. In response to the way D had formulated her claim, W submitted at trial, and on appeal, that if his primary case which was that, in the absence of an ouster, he was not liable to be charged with an occupation fee at all was rejected then, in the alternative, the fee should be calculated from a later time than D’s departure in 1997. W advanced as alternatives the date on which he brought his new partner on to the farmlet and the date on which D brought her proceedings for sale and division. However, those submissions were made in response to D’s claim that she was entitled to charge occupation fee because of the breakdown of their domestic relationship and not in response to an allegation of an actual ouster. In short, therefore, D now seeks to make a claim which was not made at trial or on appeal.
Ouster by use of the land in a way which is inconsistent with joint ownership is a question of fact. A co-owner is of course entitled to use and occupy the entire property, as I explained in [29]-[35] of the primary reasons. Ouster by inconsistent use involves conduct by a co-owner which is calculated to effectively deny the absent co-owner the capacity to exercise his or her equal right to the use and enjoyment of the whole of the land. In this case, however, D had left the house and farm acknowledging that W was better equipped to manage it. She never indicated an intention to return to the house. Plainly enough, there are many reasons why a partner who has left a relationship will not wish to return to the formerly shared home. If a resident co‑owner invites others to share the home against the wishes of the absent co-owner who would like to return, a question of ouster by inconsistent use might arise. That was not the case here. I acknowledge that D, in correspondence with W’s solicitors in 1999, indicated her dissatisfaction with the position which had left W living in the house rent free for many years. She also communicated her desire to have the property sold as soon as possible. However, those communications fall short of manifesting an intention to return.
For the above reasons, D’s prospects of succeeding on this claim are, at best, remote. D’s remote prospect of success is sufficient reason to deny her application to re-open on this ground.
D also seeks permission to re-open to prove an actual ouster in 2010 and another in 2012. On 14 August 2010, D went to the farmlet with her sons pick up some items of personal property pursuant to an arrangement made through her solicitor. W was not there but they were met by a group of four other persons who were unknown to her. D was only allowed access to a garage. When she asked that group to allow her into the home, they told her they were instructed to call the police if she tried to get into the house. As D proceeded to walk around the house, they called the police. When the police arrived they told D that she could only access the garage.
On 19 August 2010, again D requested permission through her solicitor to inspect the farmlet. The purpose of the request was said to be to ensure that the property was being properly maintained. W’s solicitor responded denying the request, claiming that D’s real purpose was to intrude into W’s personal life. By return letter, D’s solicitor gave an assurance that that was not so.
In September 2010, D, through her solicitor, again sought permission to inspect the farmlet. W again refused and an interlocutory application was filed in the District Court. The matter was argued on 18 January 2011 and an order allowing inspection was made by a Master of the District Court on 4 February 2011. D finally inspected the farmlet in accordance with the Master’s order on 24 February 2011.
On 9 February 2012, after the Judge had delivered his reasons, the matter was called on to deal with several incidental matters. In the course of submissions, W’s counsel indicated that D would be allowed onto the farmlet to inspect the house.
On 13 February 2012, D went to the farmlet after making arrangements for police to attend to ensure that there was no discord. When D arrived at the farmlet she was met by W’s de facto partner who handed a mobile telephone to the police. The police who had accompanied D appeared to speak to someone on the other end of the telephone. The police then informed D that she had no permission to attend the property and asked her to leave. D contends that an inference can be drawn that the police were acting on W’s instructions.
Counsel for W opposed the application to re-open. He informed the Court that some of the surrounding facts and circumstances of the events alleged by D were disputed. I suspect that the core facts are likely to be objectively verifiable because of the involvement of police, but it will probably to be necessary to resolve all of the surrounding disputed circumstances before a firm conclusion can be reached about the nature, extent and duration of any ouster of D. In particular, some care would need to be taken before drawing an inference from those isolated occasions that a permanent return to the premises would have been resisted. In short, the legal effect of the alleged incidents is debatable and further time would be required to determine the proper application of legal principle to the facts as fully found.
There is no good reason why the alleged actual ouster which had occurred before trial could not have been raised at trial. Indeed, it appears from the affidavit of D which was filed in support of the application to re-open that a forensic decision was made not to do so.
It can be accepted that this Court has a wide discretion to re-open a matter after pronouncing its oral judgment but before that order is perfected in the records of the Court.[3] However, the efficient disposition and finalisation of cases is a very important consideration in the exercise of that discretion. By this application D not only asks that this Court re-open the hearing of the appeal, but asks that we do so to hear an argument which was not advanced at trial.
[3] Clone Pty Ltd v Players Pty Ltd (In Liquidation Receivers Appointed) & Ors [2012] SASC 12 and cases cited therein.
With respect to W’s obstruction of access before trial, after balancing the competing considerations, D’s claim for redress on a claim which has some prospects of success on the one hand, against the interests of W, and the community, in the efficient disposition of this Court’s work, I would dismiss D’s application to re-open. My reasons for doing so are the contestable nature of the claim, and D’s failure to raise it until “one minute before midnight”.
As will shortly be seen, the refusal after judgment can be dealt with adequately by imposing conditions on the order for sale. For this reason, I would also refuse leave to re-open the appeal on the alleged ouster in 2012.
Allowance for Interest on Redraw
It is D’s contention that, in bringing into account W’s $17,500 redraw on the mortgage, the Court should also make allowance for the interest on that sum. D and W continued to make the same instalment payments on the mortgage after the further advance as they had before the draw down. They both stopped making mortgage payments in October 2009. It follows that W and D have become jointly liable for the amount of the redraw and the interest charged by the bank on it from the time the further advance was made. The bank interest is charged on a compound basis. If the allowance sought by D is not made, D will, when the mortgage is repaid, have paid interest on a further advance which was for the sole benefit of W.
I would therefore order interest on the amount of $17,500 at the bank interest rate compounded. The total capital and interest to 13 December 2012 is $49,475.20. I would order that on the sale of the property the share of W be adjusted for that fixed amount and for any further interest which thereafter accrues on the advance at the bank interest rate on a compound basis. Of course, if W were to make a repayment of $17,500, the interest charge would cease to accrue.
Costs
W seeks the costs of the appeal. In terms of the ultimate result, W was successful in that the balance of the occupation fee over and above the credits to which W was entitled will not be charged against his capital share of the proceeds of sale. On the other hand, in addition to appealing on the ground that the occupation fee was wrongly offset against his capital share, W had submitted that the occupation fee should not be offset at all against his miscellaneous contributions claims and chose to contest some of the miscellaneous adjustments made by the Judge. On those issues W was largely unsuccessful.
There is an additional consideration. D made an offer of compromise of the proceedings after the appeal was instituted which is lower than the amount to which W is now entitled from the proceeds of sale but which nonetheless approximated the ultimate result. In matters such as this some weight should be given to reasonable attempts to settle the proceedings, particularly when those attempts are not reasonably reciprocated.
For the above reasons, I would order that D pay W 50 per cent of his costs of the appeal.
The Judge’s award of costs at trial must now also be reconsidered in light of the greater success of W on appeal and the more advantageous ultimate orders he has obtained. It still remains the case, however, that W’s De Facto Property Act claim was dismissed. Moreover, he ultimately failed on most of miscellaneous adjustment issues. D had also made an offer at trial which approximated the final result on appeal. Be that as it may, in the final result W’s contentions that he was entitled to a greater than 50 per cent capital share and that the occupation fee could not be charged against his capital share have prevailed. In those circumstances the award of costs in D’s favour should be modified. I would order that W pay D 85 per cent of her costs of trial.
Conditions of sale
The farmlet is yet to be sold pursuant to the order of the Judge. Market conditions are depressed. The parties have continued to dispute aspects of the sale strategy. There is a strong disincentive for W to promote the sale whilst he remains in, effectively, rent free occupation.
In my view, the power of the Court pursuant to s 69 of the Law of Property Act 1936 (SA) to order the sale and division of jointly owned property carries with it a power to impose conditions on the parties to ensure a just result. The order for sale, like an order for partition, should be treated as ending the joint and several right to use and possess the entirety of the jointly owned land. A co‑owner who remains in possession should, in the ordinary course, account to the absent co-owner for an occupation fee proportionate to that owner’s share in the land. Such an order will tend to encourage the parties to cooperate sensibly and commercially to secure a sale of the land. In the period after an order for sale, both of the abovementioned considerations support the charging of an occupation fee at market rental rates.
In this case, justice is best achieved by placing the following conditions on the order of sale:
1.1That until the farmlet is sold W pay an occupation fee in the sum of $11,176 per annum calculated from 24 October 2011 for his occupation of the home and farmlet.
1.2The occupation fee from 24 October 2011 to 31 December 2012 is to be accounted for in the division of the proceeds of sale.
1.3Interest at the base mortgage rate will accrue on the occupation fee.
1.4The occupation fee for the first quarter of the calendar year 2013 is to be paid by 29 March 2013 and the occupation fee payable in each month thereafter is to be paid by the last business day of each month.
2That until the farmlet is sold W and D forthwith commence to make, in equal shares, mortgage payments at the rate at which the mortgage payments would have been made in the ordinary course and operation of the loan.
The parties are to file minutes of order quantifying the payments required by the proposed orders and specifying accounts into which the payments must be made.
ANDERSON J: I agree with the reasons of the Chief Justice and with the orders that he proposes.
DAVID J: I agree with the reasons of the Chief Justice and with the orders that he proposes.
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