DISTRICT COURT OF QUEENSLAND

Introduction

1. [1]
   On 18 May 2011 I made orders in this proceeding pursuant to Part 19 of the Property Law Act 1974 (“PLA”).

2. [2]
   In those orders I gave leave to both parties to file draft orders and make further submissions, if any, as to the appointment of trustees for sale and as to costs.

3. [3]
   Both parties have taken advantage of all three matters. I received the last of the submissions, finally, on 3 June 2011.

Trustees for sale

4. [4]
   It is not in dispute between the parties that there should be a trustee, or trustees, appointed for sale of the relevant Unit 15, situated at 15/67 Edmund Rice Drive, Southport in the State of Queensland.

5. [5]
   The plaintiff submits that the appointment of a trustee should be attempted to be agreed between the parties, by their solicitors in writing within 14 days, or failing agreement, by the Chief Executive Officer (or equivalent) of the Real Estate Institute of Queensland, or his nominee from time to time, with any costs of nomination to be borne equally between the parties.

6. [6]
   The defendant’s submission is that a nominated solicitor, Peter John Sheehy, be appointed as the sole trustee for sale. This was the person originally nominated by the defendant when she brought her original Originating Application in the Supreme Court pursuant to s 38 of the PLA. Mr Sheehy has filed an affidavit in the Southport Registry on 25 May 2011 setting out his experience and his consent to so act. He states that he knows neither the plaintiff nor the defendant.

7. [7]
   The plaintiff’s concern is that both parties should be given a reasonable time to investigate, consider and come to a commercially sensible decision as to the appointment of a trustee, or trustees.

8. [8]
   While I might otherwise be inclined to accept the approach of the plaintiff, there has been nothing advanced on the plaintiff’s behalf showing that the character of Mr Sheehy or the scale of fees and charges he would charge (contained in an exhibit to his affidavit) are other than proper and appropriate. It seems to me that the prospect of both parties agreeing to somebody other than Mr Sheehy is remote. That would have the consequence that the parties would be in the position where a third party nominates the trustee, or trustees, where no indication would have been given as to that particular person’s scale of fees and charges.

9. [9]
   Given the extensive costs that have so far been incurred by both parties in this proceeding, I am loathe to make orders that could be productive of even more costs and, potentially, some delay.

10. [10]
    Accordingly, I intend to make an order substantially in the form submitted by the defendant concerning the appointment of Mr Sheehy as the statutory trustee for sale.

Costs

11. [11]
    Despite the submissions, in reply, by the defendant that the Queensland Court of Appeal decision of Grace v Jeneka [2002] QCA 335 was in relation to security for costs, and that this is not a security for costs application, it is clear from any close reading of Grace that there were two distinct aspects to the decision. As remarked by Atkinson J, on behalf of the court, the leave to appeal sought was against “both aspects of the costs order”: at p 2.

12. [12]
    What Grace establishes concerning s 341 of the PLA is that – relying upon Penfold v Penfold (1979) 144 CLR 311 – in order to make an order for costs, the judge must make a finding of “justifying circumstances”: at p 4; and with reference to s 341(2). Further, because of the particular wording of s 341 of the PLA, it is a mandatory requirement to consider the matters listed in s 341(4): at p 5. In doing so, the approach of Moynihan J in Stephens v Ell [2002] QSC 166, at [6], is to be adopted: at pp 5-6. That approach states that each relevant matter set out in s 341(4) should be considered “with regard to its relevance and whether deviation from the usual order in such a case that each party should bear its own costs is justified”.

13. [13]
    Before turning, then, to such a seriatim consideration, it is noted that the defendant contends that the defendant made 3 separate offers, although only one was an offer to settle under the Uniform Civil Procedure Rules 1999 (UCPR): see s 341(4)(f). The 3 “offers” are as follows:

1. (a)
   by letter from Charles Cooper Lawyers, solicitors for the defendant, to Hunter Solicitors, solicitors for the plaintiff, dated 2 May 2008 the defendant offered to settle on the basis that the defendant would transfer her interest in Unit 15 to the plaintiff “on the provision that your client provides to our client 50% of the equity in that property”, with a market appraisal being enclosed indicating a value of $312,500.00, and with the nomination of the sum of $156,250.00 – no time was given for a response other than a statement that if a “prompt response” was not received then instructions would be sought about making an application to the Supreme Court of Queensland for the appointment of a trustee for the sale of the property;

2. (b)
   by a “without prejudice” letter from Charles Cooper Lawyers, solicitors for the defendant, to Hunter solicitors, solicitors for the plaintiff, dated 11 June 2009 and stated to be pursuant to Part 5 of the UCPR, the defendant offered to transfer Unit 15 to the plaintiff and for the plaintiff to pay to the defendant, through her solicitors’ Trust Account, the amount of $120,000.00 “by way of cleared funds”, with both parties (essentially) retaining all items, interests and resources in their possession or control, and with each party paying their own costs – the offer was stated to remain open for a period of 28 days from the date of the letter; and

3. (c)
   by letter from Charles Cooper Lawyers, solicitors for the defendant, to Hunters solicitors, solicitors for the plaintiff, dated 3 September 2010, in response to the plaintiff’s solicitors asking the defendant’s solicitors to obtain instructions about any possible offer, the defendant offered, in almost identical terms to the “UCPR” offer of 11 June 2009, the same sum of $120,000.00.

14. [14]
    Although the plaintiff’s written submissions state that as at 11 June 2009 there was “no agreed value to the property at (that) time”, it seems tolerably clear from the submissions in reply on behalf of the defendant that there was a “Valuation Report” dated 8 April 2009 made by Planet Valuation Services, under the hand of a Certified Practising Valuer, stating that the market value was $260,000.00. It is also tolerably clear that that report was prepared for both the plaintiff’s solicitors and the defendant’s solicitors: see paragraph 18 of these Reasons.

15. [15]
    But it is also tolerably clear that, as at the time of the UCPR offer, no estimate had been made of the costs which would have been necessarily incurred in such a transfer so as to obtain a “net” calculation of each party’s interests on a 50% split.

16. [16]
    It should be remarked at this time that the written submissions filed on behalf of the plaintiff state that the plaintiff does not rely upon any offer made and rejected.

17. [17]
    The plaintiff’s position concerning the offer made in June 2009 is that the proceedings were then at a “nascent stage” wherein no offer could be appropriately considered, particularly because disclosure was not then complete, or even close to complete. At the same time as the 11 June 2009 letter of offer was written, Charles Cooper Lawyers, for the defendant, wrote an open letter on 11 June 2009 in which it is clear that the defendant was not able to make full disclosure, purportedly because of difficulties created by the plaintiff. Furthermore, the defendant sought specific specified further disclosure from the plaintiff and sought that a forensic accountant should be engaged to determine the value of the plaintiff’s “business”. As the conclusion to that letter states, the suggestion is made that “both” clients complete their disclosure, that once disclosure occurred there be agreement on an asset pool and, if there be no agreement, that valuations (or updated valuations) occur at the joint expense of the parties. What is important is the state of play at the time of the offer and not whether some further disclosure was made by the end of the offer period. Where, as here, the claim is not for recovery of money or damages, disclosure is of major significance in attempting to assess and calculate what the asset pool is, including (sometimes) unknown resources.

18. [18]
    Further, as for the “offer” contained in the letter of 11 June 2009, the plaintiff’s solicitor in a letter dated 11 September 2009 to the defendant’s solicitor, besides confirming that the Planet Valuation of 8 April 2009 was to be “admitted by consent”, noted that there was no response to the plaintiff’s solicitors’ letter of 24 July 2009 concerning “outstanding disclosure”. Of some moment is that copies of certain specific documents were enclosed by way of further disclosure by the plaintiff.

19. [19]
    Turning then to a detailed consideration of the matters stated in s 341(4) of the PLA that have relevance here, certain conclusions can be reached.

20. [20]
    As I noted in the reasons for decision, IBM v TTV [2011] QDC 076, the income, property and financial resources of each party is not so disproportionate that it provides any reason why the prima facie order should not be the appropriate one: at [115]. As I also stated in that paragraph, there is nothing in the conduct of the parties in relation to the proceeding which would make it unjust, or unfair, to have each party bear their own costs. That, of course, is subject to the submission made on behalf of the defendant that the plaintiff was “completely unsuccessful”. While it is correct that the plaintiff did not obtain a declaration of trust and that the existence of a de facto relationship was held to exist for the relevant period, the plaintiff, at trial, as an alternative, or fall-back, position did participate in the contested part of the defendant’s pleadings which relied upon in Part 19 of the PLA. It was not obvious beyond argument, before hearing the evidence, that the full de facto relationship alleged by the defendant existed. It is not without significance that the defendant sought in her written submissions at the end of the trial that she was entitled to more than 50% of the net asset pool. To that extent, she herself was “unsuccessful”. To the extent to which it is contended on behalf of the defendant that the order now to be made about the appointment of a trustee, or trustees, for sale shows that “exactly the same relief” is being given that the defendant sought in the Supreme Court of Queensland, it has to be noted that the claim for that relief was discontinued, after transfer to this Court, on 25 August 2008, although an alternative claim for relief was sought in the defendant’s counter-claim to the same effect:  it became unnecessary to consider it. Moreover, the order made in this case for such an appointment is pursuant to s 333(1)(f) of the PLA. Therefore, in that sense, the defendant was unsuccessful under s 38 of the PLA. Apart from such matters, there is nothing about the pleadings, particulars, disclosure, inspection, and the production of documents that shows any relevant point of distinction between the conduct of either party by himself or herself, or through each respective solicitors. In conducting this analysis, I have taken into account that s 341(4)(e) specifically identifies as a matter for consideration “whether any party has been wholly unsuccessful in the proceeding”. Of course, the plaintiff has obviously obtained some share of the property from the orders made, and to be made.

21. [21]
    The next matter to be considered is the offer to settle under the UCPR. In RD v DB (No 2) [2011] QSC 124, Applegarth J, when considering a similar application as to costs, referred to a decision of Nygh J in Robinson v Higginbotham (1991) 14 Fam LR 559, at 561, when dealing with the federal equivalent. Nygh J held that this particular matter does “not have any particular priority” but “its importance must surely be weighed in light of all the circumstances of the case, bearing in mind that it is quite clear” that the “purpose” is to “ensure that offers to settle, if made seriously, are considered seriously, to ensure that the cost of litigation is avoided and the workload of (the) Court is lightened”.

22. [22]
    In light of all the circumstances of this case, the offer was certainly a serious one. It was less than one-half of the then joint valuation obtained to that time. As well, it deals with other assets and resources in a not dissimilar way to that eventually determined by this Court. But it is also important, in any full consideration of the offer, as to whether the plaintiff considered the offer seriously. Undoubtedly, an acceptance of the offer would have saved a substantial amount of costs. At that time the defendant contends in her written submissions that costs “on a solicitor and own client basis” – seemingly, a reference to the “standard” basis – were $30,509.85, when the costs at trial of the defendant had reached $71,270.66, although that was not contended to be on any particular assessment basis.

23. [23]
    The plaintiff’s response argues that the rejection was reasonable on the basis that there is not even now any evidence available as to the true selling costs, the costs of a trustee (when appointed) and the costs of real estate agents, so that an estimate of the net proceeds can be determined for the purpose of considering whether the judgment that I reached was “no less favourable” than the offer made.

24. [24]
    In the final consideration, it is impossible to determine how close the offer was in terms of equal, or more, favourability, even if one were to accept the assertion judicial knowledge can be taken of the fact that the relevant REIQ scale of costs for a sale of $275,000.00 is $8,057.50 (as contended for by the defendant, in reply). The difficulty that is created in such circumstances is that the proceeding, taken overall, does demonstrate that disclosure had not been completed. It was impossible at that time to show what effect final disclosure would have had. But the more important consideration is that the offer required the plaintiff to pay a certain sum of money. The judgment does not. The inability to pay – considering that the most the plaintiff offered was some one-half only of that certain sum – has not been explored, but the agreement by both parties to the appointment of a trustee for sale strongly indicates that the defendant’s UCPR offer was not capable of being carried out in its terms. Hence, while the offer did deserve serious consideration and while it is true that if it had been accepted substantial costs would have been avoided, I do not conclude that the defendant’s offer to settle was not considered seriously by the plaintiff in the terms in which it was made. In all of the circumstances, it does not justify an order that the plaintiff pay an indemnity-based proportion of all the defendant’s costs:  see r 360, as applying to a counter-claimant.

25. [25]
    Finally, as noted by Applegarth J in RD, this is but one matter to be taken into account, albeit an important one: at [13]. Parliament could have made it the sole or predominant matter:  but it did not.

26. [26]
    The last relevant matter to be considered is any fact or circumstance that the Court considers that the justice of the case requires to be taken into account. Both parties participated in mediation. As to this matter, it is also appropriate, as contended for by the defendant, to consider both the pre-proceeding offer and the September 2010 offer which was non-compliant with the UCPR. As to the first, given the way that these proceedings have flowed from the Supreme Court to this Court, any pre-proceeding offer, particularly given issues of disclosure, does not raise for proper consideration how the justice of the case would require it to be taken into account, particularly where Part 5 of Chapter 9 only applies to “party” to the “proceeding”:  see r 353(1). As for the post-UCPR offer, r 360 applies to the first offer only, even if this second one had been compliant. Even if it could be taken into account, there is nothing which provides a distinguishing feature between the analysis just undertaken and the analysis that would be made with respect to this September offer. Accordingly, it does not incline the Court to a view different from that already reached above.

27. [27]
    What now must be considered is how all of those matters under s 344(4) of the PLA coalesce in a general consideration of whether “justifying circumstances” have been established to the requisite satisfaction. While this proceeding does raise matters to be considered which take it close to a decision that it could be appropriate that there be a departure from an order that each party pay its own costs, I am not satisfied from full consideration of all relevant matters that the outcome of this case justifies a departure from the prima facie position. Accordingly, as I intimated in my original Reasons, there should be no order as to costs.

Orders

I intend to make the following orders:

1. That, pursuant to s 333(1)(f) of the Property Law Act 1974, Peter John Sheehy, Solicitor, of Level 24, 239 George Street, Brisbane in the State of Queensland be appointed as a trustee for sale (“trustee”) of the following property, and that such property vest in the trustee for the purpose of that sale: the real property situated at Unit 15, Summerfield, 15/67 Edmund Rice Drive, Southport in the State of Queensland, more particularly described as Lot 15 on GTP 2280, County of Ward, Parish of Nerang, and being all that land contained in Title Reference 17488050.

2. That the trustee be entitled to sell the property by such method as he deems appropriate in the circumstances, including, but not limited to, sale by auction or by private treaty.

3. That in the event of sale by private treaty, the trustee shall determine the appropriate marketing of the property including the listing price from time to time, the appointment of any agent or agents for the sale of the property, and the terms and conditions of such appointment or appointments.

4. That in the event of sale by public auction:

1. (a)
   the trustee shall determine the appropriate marketing campaign for the property including a marketing budget for advertising, the appointment of any agent or agents for the sale of the property, and the terms and conditions of such appointment or appointments;

2. (b)
   the trustee shall determine the reserve price of the auction after consultation with the auctioneer; and

3. (c)
   should either of the parties be the successful bidder at auction, the trustee is authorised to sell to that party without a requirement that that party pay a deposit at the time of the execution of the contract.

5. That in the event that the trustee deems it necessary that money be expended on the property in preparation for its sale, or for the marketing or advertising, then both parties shall contribute equally to such expenses and costs as reasonably requested by the trustee from time to time from them and that, otherwise, both parties shall co-operate fully with the trustee and his agents, shall ensure that the property is kept in a neat, tidy, clean and presentable condition for the purposes of sale at all times and shall ensure that any mortgage payments, rates, upkeep and similar outgoings be paid by the party then residing in the property.

6. That, in relation to the distribution of sale proceeds from the sale of the property, as and when the sale occurs, the proceeds shall be distributed in the following manner and priority:

1. (a)
   in payment of all necessary selling costs, including agent’s commissions, legal costs, marketing and advertising costs and all other necessary costs incurred in the sale;

2. (b)
   in discharge of any liabilities secured against the property by registered bill of mortgage;

3. (c)
   in payment of the trustee’s costs (wherein the trustee is entitled to charge for all reasonable costs and disbursements incurred by the trustee for the payment of his fees and charges, arising from the duty imposed upon him pursuant to these orders);

4. (d)
   as to the balance of the remaining sale proceeds, in distribution equally between the plaintiff and the defendant.

7. That all joint accounts, including that described as the National Australia Bank “Homestyle Capital Lending” Account, be closed by the parties and that the remaining balance payable, if any, by the Bank be paid to the trustee to be distributed equally between the plaintiff and defendant.

8. That each party have liberty to apply with respect to the carrying out of these orders, with notice to be given to the solicitors for the other party by way of 2 business days’ notice in writing to the other.

9. Save and except for the property otherwise dealt with in these orders, the parties are each entitled to, and will retain as his or her own property absolutely, all assets and financial resources of whatever description and wheresoever situated of which that party has presently in his or her possession or control as at the date of these orders, including but not limited to motor vehicles, shares, furniture (and other such chattels) and superannuation interests.

10. That there be no order as to costs.