Xie v Chan

[2022] NSWSC 652

Supreme Court

New South Wales

Medium Neutral Citation:

Xie v Chan [2022] NSWSC 652

Hearing dates:

8 April 2022

Date of orders:

8 April 2022

Decision date:

08 April 2022

Jurisdiction:

Common Law

Before:

Campbell J

Decision:

1) Order pursuant to s66G of the Conveyancing Act 1919 (NSW) that David Wang, solicitor, (the Trustee) be appointed as trustee of the property situated at and known as Lot 7 in Strata Plan 60536 also known as Unit 7/3-9 Second Avenue, Campsie (the Property) which vests in him, subject to incumbrances, to be held by him on the statutory trust for sale.

2) Order that the Trustee be empowered and authorised to obtain a valuation of the Property by engaging a registered valuer.

3) Order that the Trustee be empowered to offer the Property for sale, and to sell the Property by engaging a licenced real estate agent (the Agent).

4) Order that the Defendant provide vacant possession of the Property to the Agent on or before the date fixed by any contract of sale for completion, except if the Defendant is the purchaser named in the contract.

5) Order that on or before the date fixed for completion:

a) the Defendant and any other occupants vacate the Property;

b) the Defendant deliver up all keys for the Property to the Agent; and

c) the Defendant remove from the Property all personal property being vehicles, rubbish and chattels which are not vested in the Plaintiff for the purpose of providing vacant possession, unless she is the purchaser named in the contract for sale.

6) In the event that the Defendant fail to deliver up vacant possession of the Property in accordance with the orders sought in 5 herein, a Warrant or Writ of Possession shall issue forth with in favour of the Trustee / Plaintiff to secure possession of the property.

7) Order that the Plaintiff's costs of these proceedings to be paid out of the proceeds of sale, and if necessary, to be assessed, as to the Plaintiff’s share a proportion 1/3 and the Defendant’s share a proportion 2/3.

8) Order that the Trustee’s costs be paid out of the proceeds of sale.

9) Order that the Trustee apply the proceeds of sale of the Property as follows:

a) pay the costs of the sale of the Property, including but not limited to the costs of the Trustee’s fees, the Agent’s fee’s, tax and duty, and disbursements;

b) apportion 50% of the remaining balance to the plaintiff and pay the plaintiff the whole of that portion; and

c) apportion 50% of the remaining balance to the defendant and from that portion pay the whole of the outstanding mortgage to Perpetual Trustee Company Limited then pay the defendant the remainder of that portion, the balance to the defendant.

10) Liberty to apply on 3 days' notice.

Catchwords:

LAND LAW – co-ownership – statutory trust for sale – appointment of trustee – re-payment of mortgage over land by co-owners

Legislation Cited:

Conveyancing Act 1919 (NSW), s 66G

Cases Cited:

Nil

Texts Cited:

Nil

Category:

Principal judgment

Parties:

Jian Xi Xie (Plaintiff)
Kwai Wan Chan (Defendant)

Representation:

Counsel:
Mr A Zhou (Solicitor)(Plaintiff)
Ms Chan (Litigant in Person)

Solicitors:
Ren Zhou Lawyers (Plaintiff)

File Number(s):

2021/324061

Publication restriction:

Nil

Extempore Judgment (Revised)

1. I am dealing with an application under s 66G of the Conveyancing Act 1919 (NSW) for the appointment of trustees for the sale of a home unit at Campsie.

2. The plaintiff is the executor of the estate of the late Mr Chu Wong, probate of whose will was granted by this Court on 5 October 2021. Prior to his death, Mr Wong owned the property as tenant in common with the defendant, Ms Chan, in equal shares.

3. From the evidence, the history of the matter is that Ms Chan was a friend of Mr Wong and his wife, Mrs To Wong, and they bought the home unit together in about 1999: Mr and Mrs Wong, as joint tenants in respect of one share; and Ms Chan as the sole proprietor of the remaining share. The purchase was financed by a loan raised through a brokerage named AIMS Home Loans Proprietary Limited.

4. On the evidence that Ms Chan has tendered, the actual mortgagee was Permanent Custodians Limited when the loan was taken out. It seems, given the separate interests of Mr and Mrs Wong on the one hand, and Ms Chan on the other, although a single loan was created in the sum of $230,000, it was divided in two parts, being part A and part B. Part A was the part of the loan for which Ms Chan was responsible, and part B was the part of the loan for which Mr and Mrs Wong were responsible. The portion borrowed by Ms Chan was $150,000. It follows that the portion borrowed by Mr and Mrs Wong was $80,000. I refer to these matters at the start of my judgment because it is obvious that a significant issue between the parties relates to responsibility for the amount still outstanding on that mortgage.

5. According to the records attached to Mr Zhou's affidavits of 6 April 2022, 7 April 2022 and 8 April 2022, there remain outstanding amounts in respect of each part of the loan. Insofar as part A is concerned, an amount of $71,789.63 is presently owed; insofar as part B is concerned, according to affidavit of the executor, Jian Xi Xie, affirmed on 5 April 2022, $32,307.19 is owed. There was a significant issue between the parties before me as to who is responsible for those amounts.

6. The plaintiff's case is that Ms Chan is entirely responsible for both amounts, in circumstances which I will soon explain; and Ms Chan's case is that the plaintiff is responsible for those amounts, in circumstances likewise I will soon explain.

7. There is also another issue between the parties which relates to figures which are set out, at least in part, in exhibit 3, that Ms Chan says she has paid through outgoings in respect of the property for council rates, strata fees, water rates, and utilities.

8. At the end of the day, there is no real dispute from Ms Chan that the property has to be sold, and that it is appropriate that I make an order under s 66G(1) appointing a trustee to hold the property on the statutory trust for sale. She has made it clear to me that she would like the opportunity of buying out the estate and retaining her home. I interpolate that is a perfectly natural desire on her part. However, she has told me she accepts that if that cannot be done then the property must be sold. Mr Zhou who appears for the plaintiff accepts, correctly, that the appointment of a trustee would not of itself deny Ms Chan the opportunity to try to buy the property, especially as one of the orders proposed is that the trustee be empowered and authorized to obtain a valuation of the property from a registered valuer.

9. I return to the dispute about the mortgage. Ms Chan gave evidence before me that she felt sure that she had paid out part A of the mortgage in 2013. And in support of that evidence, she tendered exhibit 1, and perhaps more significantly, exhibit 2, which is a ledger of payments she made in respect of her share of the mortgage from 2001 to 2013. There is no record of her payments between the inception of the loan in 1999 and 31 December 2000 because they are missing. But over the period for which she had her personal records, she pointed out that she had paid $165,133.50. She says if you take into account what she must have paid in the missing records, she feels sure she would have covered both the principal and interest due from her. From that, she asked me to infer that, if there is an amount apparently in excess of $100,000 still due in respect of the total loan, it must be the responsibility of the estate.

10. In cross-examination, it was put to Ms Chan by Mr Zhou that she must be mistaken about that. She did not accept it was possible she could be mistaken. But Mr Zhou also elicited that Ms Chan had no record from the mortgagee that she could produce which would illustrate or demonstrate or confirm that her understanding of her financial position was correct.

11. On the other hand, as I have said in various places in the plaintiff's evidence, I have records from AIMS, the broker, in the nature of statements of account in respect of each part of the loan. As I have already mentioned, the affidavit of the executor which annexes a letter from AIMS, dated 16 March 2022, which says the current outstanding balance for each of part A and part B are the figures I have already referred to.

12. There is also a statement of transactions in part B of the loan for which Mr Wong was responsible before his death, which illustrates that, although there was a nil balance on his loan, for a considerable period of time, perhaps going back as far as 2003, having regard to the records in exhibit A a process of draw down commenced in about 2019, during Mr Wong's lifetime, where funds were transferred from his part of the loan to part A, resulting in the re-incurring of a debt on part B. I note that the life of the loan was 30 years, and obviously, the loan was subject to that draw down facility. This is explained by admittedly hearsay evidence contained in Mr Zhou's affidavit of 7 April 2022, where he was advised by a Mr Jason Wang of AIMS that:

“As portions A and B are both secured by the same property... (they are) cross-collateralized and are regarded as the same loan facility under the loan agreement, (the mortgagee) do not require authorisation from the other borrowers to transfer funds between accounts if one portion is in default and other has surplus funds/redraw."

That material is contained in an email communication which is annexure A to Mr Zhou's affidavit. And although it is hearsay, looking at the form of it, I think it is reliable.

13. But the business records, in any event, speak for themselves. And annexed to Mr Zhou's affidavit of 8 April is a statement for part A, Ms Chan's part, commencing on 30 April 2015, and concluding on 1 April 2022. Now, it demonstrates that, as at 30 April, there was the sum of $71,266.58 due on part A which blew out, if I may put it that way, to $91,000 in August 2019, when this transfer by way of draw down from part B commenced. And those funds, covering payments of principal and interest, have reduced the indebtedness referable to part A to again a figure of $71,789.63 as at 1 April 2022.

14. Although, may I say, the plaintiff and the defendant have at times during the matter been very suspicious of each other's motives and each other's part in the continuing accrual of debt, it seems to me that on the evidence I have the most likely explanation is that provided by Mr Wang of AIMS. That is to say, acting on the authority no doubt granted originally when the loan was taken out in 1999, the mortgagee itself has, to regularize part A, redrawn funds available from part B.

15. It follows from this that I am satisfied on the balance of probabilities that Ms Chan is mistaken in her very firm belief that she had paid off the mortgage, insofar as it concerned her. I form this conclusion not on the basis of anything other than a clear-headed examination of the objective facts presented by the admissible business records. Obviously, account will have to be taken of that. I am also satisfied that Ms Chan has paid outgoings in respect of the property which would have been payable by Mr Wong and by the estate, in respect of council and water rates, and strata levies. I am also satisfied that she has paid utilities during Mr Wong's lifetime, for which he would have been responsible to at least make a contribution. It would be necessary for the trustees to make some adjustment in Ms Chan's favour in regard to those matters.

16. However, since his death, of course, the consumption of electricity, gas and other essential services would be the sole responsibility of Ms Chan, who has been the sole occupant of the premises.

17. I then turn to the question of whether Ms Chan should be solely responsible for costs of these proceedings, and for the trustee's costs of executing the statutory trust.

18. There is no doubt, on the whole of the evidence before me, without reciting it chapter and verse in this extempore judgment, that the executor and Mr Zhou, as the executor's solicitor, have on frequent occasions, including very recently, sought to persuade Ms Chan to agree to a sale without the need for the appointment of a trustee.

19. It is obvious, as I have said, from the whole of the material, including some material which was not read by Mr Zhou, but was before me when the matter was before me yesterday, that there has been a significant degree of mutual distrust between the executor and Ms Chan. Such a matter is not beyond the bounds of ordinary human experience. Moreover, at one stage, she was privately represented but could not afford to continue with that representation. I has referred her previously for pro bono representation under the rules, and that was provided for a period by Ms Brenda Tronson of the Bar, for whose acceptance of the referral I am grateful, but without saying anything about any confidential communication between her and Ms Chan, their relationship, I think I can say, apparently broke down, and Ms Tronson was given leave to withdraw.

20. It does seem to me that there have been extra costs incurred because of adjournments and the like that have been necessary in these otherwise straight-forward proceedings to enable Ms Chan to obtain legal advice and to provide other evidence. That circumstance has probably increased the costs of this application.

21. Given my impression of a degree of mutual distrust, it seems to me, on the probabilities that an order for a statutory trust was inevitable, and in any event, provides certain safeguards for the interests of each party which would not be available necessarily if the property was sold by private arrangement, particularly having regard to the dispute about the mortgage which I acknowledge I have resolved in favour of the plaintiff.

22. I am of the view that an application would have been inevitable, but the costs are greater now than they would have been had Ms Chan, may I say with respect, adopted the attitude then that she adopts now. She also failed to respond to the statement of claim by filing a defence and the like for some time, and only appeared unexpectedly, I might say, when the matter was first listed before me, as it happens, on 4 March. It seems to me in those circumstances that the plaintiff's costs of this application should be apportioned, and that two-thirds of the costs should be borne from Ms Chan's share of the proceeds of sale, and one-third from the plaintiff's share of the proceeds of sale.

23. I turn then to the question of who should bear the costs of the trustee.

24. I will say for the third time that I formed a firm impression about the mutual distrust between the parties. I repeat my finding, that an application under the section was probably inevitable, despite Mr Zhou's best endeavours, and in the circumstances, I think it is fair that the costs of the trust for sale be borne equally.

25. That leads me to the question of the identity of the trustee. I have evidence from two experienced solicitors prepared to accept appointment as the trustee, being a Mr Gang Sun, solicitor, and Mr David Wang, solicitor. The only real objective difference between them seems to be the charge out rate, and Mr Wang's hourly rate is somewhat more modest than Mr Sun's. Mr Sun has given me a total estimate of the cost of performing the trust; Mr Wang has not. But I think Mr Zhou accepts that, as the work properly to be done must be the same whoever is appointed, then perhaps it can be said that Mr Wang's total charges are likely to be more economical, and I accept that submission.

26. I am unaware of the value of the home unit, a property in Campsie. Given the other charges to be deducted, the cost of performing the trust is no doubt a legitimate concern of both the plaintiff and the defendant. For that additional reason, although cheaper is not always better, I am of the view that Mr Wang should be appointed as the trustee.

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Decision last updated: 23 May 2022