DISTRICT COURT OF QUEENSLAND

1. [1]
   For a time, Ms Grant and Ms Hall lived as a couple. They purchased a property as joint tenants and moved in together. When their relationship broke down months later, Ms Grant moved out and Ms Hall remained. There is a lengthy history of attempts to reach a settlement about the property and associated debt and expenses. They are in dispute about whether they concluded an enforceable agreement. Ms Grant said they did not and commenced proceedings for orders to sever their interests. Ms Hall seeks to hold Ms Grant to an agreement she alleges they reached on 1 February last year. The proceedings are listed for trial in early October.

2. [2]
   Recently, Ms Grant renewed an earlier application to appoint trustees to sell the property. Her application is made under Section 38 of the Property Law Act 1974 (Qld), because their relationship was not long enough to qualify as a de facto relationship under Part 19 of that Act. Under s 38, on the application of any co-owner of property, the court may appoint trustees of the property and vest the property in them, subject to encumbrances, to be held on a statutory trust for sale.

3. [3]
   The issues are:

1. Should trustees be appointed to sell the property?

2. Who should be appointed trustees?

3. How should the proceeds of sale be dealt with, pending final orders?

1. 1.
   Should trustees be appointed to sell the property?

4. [4]
   The court has the discretion whether or not to make orders under s 38.^[1]Generally speaking, a co-owner is entitled to orders unless there is a good reason not to make them.^[2]Ms Hall argues to grant the orders would cause her hardship and would be unfair. She also argues it is inconsistent with an agreement she alleges Ms Grant entered into in February 2013, to transfer her interest to Ms Hall. Finally, Ms Hall argues Ms Grant is disentitled to relief because she does not come to court with clean hands.

1. (a)
   Hardship

5. [5]
   Ms Hall says she has no alternative accommodation and limited resources. The timing for giving vacant possession would create further disadvantage, she says, because this would occur when she has to re-plead her case and prepare for trial.

6. [6]
   Against this, Ms Hall has been on notice for some months now that Ms Grant had or would seek these orders from the court. Ms Hall has not always been averse to selling the property, having previously offered to sell her interest to Ms Grant or for the property to be sold. She made that suggestion as early as December 2012.^[3]More recently, she filed an affidavit in which a friend of hers, Ms Cribb, offered to purchase the property through her company.

7. [7]
   Since they separated, Ms Hall has had exclusive use of jointly owned property and Ms Grant has received no benefit. Both have met property related expenses to some extent in that time. They have a shared interest in arresting the accumulation of interest on their debt, which is eroding their equity. Clearing their debt will also bring to an end their enduring disagreements about who should service which loan and whether they are doing so.

8. [8]
   Great hardship may provide a basis for refusing the application,^[4]but I am not persuaded that is the case here. Ms Hall has received the benefit of the sole use of the property for a considerable time. Although she will be dislocated, she has been open to sale in the past and her financial interests are adequately protected by adjusting any award the court makes to take account of the parties’ respective contributions.

1. (b)
   Proprietary interest or contractual or fiduciary obligation

9. [9]
   One ground for refusing to make the orders is that to do so would be inconsistent with the respondent’s proprietary interest, or a contractual or fiduciary obligation owed by the applicant. In advancing that ground, Ms Hall relies on an agreement she says was concluded on 1 February 2013 on the following terms:

• Ms Hall would pay Ms Grant the sum of $45,000
• Ms Grant would pay Ms Grant’s share of the water rates
• Ms Grant would transfer her interest in the property to Ms Hall.^[5]

10. [10]
    Ms Grant denies an agreement was concluded on 1 February 2013. The documentary evidence does not strongly support Ms Hall’s case. That is a relevant factor in deciding whether to exercise discretion in her favour.

11. [11]
    On 5 February 2013, 4 days after she says they had reached agreement, Ms Hall sent an email to Ms Grant which bore the subject title: “Re: Re your offer of $45k”.^[6]In it, Ms Hall contended there were further payments that Ms Grant should make which had not been accounted for in the $45,000 that Ms Hall had agreed to pay to Ms Grant. Further, Ms Grant’s affidavit of 28 July 2014 includes a chronology of their communications between 29 January 2013 and June 2013. It shows ongoing discussions and competing propositions to resolve their arrangements. The fact that both continued to agitate the terms on which they should settle is inconsistent with Ms Hall’s allegation that a binding agreement was reached on 1 February 2013.

12. [12]
    Ms Hall referred to other cases in which applications under s 38 had been refused. Each of them turns on their own facts.

13. [13]
    In Re Permanent Trustee Nominees^[7]the Full Court of the Supreme Court concluded the application should have been refused because the parties had entered into a written agreement which included an express commitment not to apply for statutory trust orders without 12 months prior notice. To do so without giving notice was inconsistent with that express contractual obligation.

14. [14]
    Here, it is argued that applying for orders for sale is inconsistent with Ms Grant’s obligation to transfer her interest to Ms Hall. I have already adverted to the documentary evidence on the point. In any case, it is not clear when Ms Hall alleges their respective obligations arose. Ms Grant has not transferred her interest to Ms Hall, but neither has Ms Hall paid Ms Grant $45,000. Assuming there was a binding agreement it is by no means clear that Ms Grant is under a present obligation that is inconsistent with orders made under s 38.

15. [15]
    In Re Bolous,^[8]Justice Ryan declined to appoint trustees for sale of land used for partnership purposes because he considered to do so would or could be inconsistent with the rights of the parties under the partnership agreement, including the terms on which a partner might retire from the partnership and how the assets would be distributed.

16. [16]
    In this case, the land is not used for a joint endeavour. It was purchased as their home. The demise of their relationship has defeated that purpose. Orders under s 38 could not be said to be inconsistent with their rights under a related interest or undertaking, as it was in Bolous.

17. [17]
    In Official Trustee in Bankruptcy v Cameron^[9], Justice Daubney refused an application by the Official Trustee, in its capacity as the trustee of the bankrupt estate of Mrs Cameron’s husband. Mrs Cameron claimed either a charge over her husband’s interest in the property by reason of an equity of exoneration; or that her husband held his interest for her on a constructive trust. Underlying both claims was evidence from both Mr and Mrs Cameron about their plans for the use of the property and how the property had been charged largely to secure a business debt of Mr Cameron’s.

18. [18]
    Justice Daubney found the evidence strongly suggested that Mrs Cameron’s equity of exoneration in relation to that debt amounted to a charge over either the entirety or a very substantial part of the bankrupt estate’s interest in the property. As to the constructive trust claim, he observed that a finding that such a trust exists would be a powerful discretionary deterrent to making the orders. It is plain from his judgment that Mr and Mrs Cameron gave consistent evidence about the relevant matters.

19. [19]
    Here, there is not the same strong evidentiary foundation for resisting the orders. Further, Ms Hall’s case in constructive trust rests on her contributions to the renovation and maintenance of the property. She does not allege the parties agreed the property would be retained as her residence regardless of their circumstances (as the evidence suggested in Cameron). Ms Hall’s contributions can be accounted for in the distribution of the net proceeds of sale.

20. [20]
    Each case turns on its own facts and the court’s assessment of the evidence of the proprietary interest or contractual or fiduciary obligation. None of the cases to which Ms Hall referred me involved substantial conflicts in the evidence about the terms of the arrangements between the co-owners. Given the strenuous contest about the allegations Ms Hall relies upon to resist the orders, it would be inappropriate to exercise the court’s discretion to refuse Ms Grant the statutory remedy she seeks.

1. (c)
   Clean Hands

21. [21]
    Ms Hall asserted Ms Grant seeks relief that is essentially equitable in nature and has not approached the court with clean hands. Ms Hall alleges there are three reasons why Ms Grant’s conduct should disentitle her to relief under s 38.

22. [22]
    Firstly, she argued the fact that Ms Grant has breached their agreement is evidence of a lack of good faith. That presupposes a finding in her favour and, in any case, Ms Grant’s material demonstrates she has an arguable basis for contesting Ms Hall’s counter-claim for specific performance.

23. [23]
    Ms Hall has referred me to a number of cases in which applicants for specific performance of a contract were denied that relief because they were in breach of the contract they sought orders to enforce.^[10]They do not assist Ms Hall’s argument. Ms Grant is not asking for an order for specific performance, Ms Hall is. Ms Grant denies an agreement was concluded. I see no reason to refuse the application because Ms Hall alleges Ms Grant is in breach of an agreement.

24. [24]
    Secondly, Ms Hall relied on Ms Grant’s conduct in these proceedings. She accused her of intimidating witnesses, fabricating evidence and maliciously bringing proceedings with the aim of rendering Ms Hall homeless.

25. [25]
    In a similar vein, Ms Grant has alleged Ms Hall has intimidated witnesses, a claim based, in part, on the fact that a person appointed by the court to value the property asked to be relieved from further duty after contact with Ms Hall.

26. [26]
    Ms Grant has also filed material calling into question Ms Hall’s psychological state. This appears to me to be entirely irrelevant and objectionable and, unless I am persuaded otherwise at trial, it should be removed from the court file.^[11]

27. [27]
    Both parties have filed a great deal of material which seems to have no relevance either to this application or the proceedings, particularly about the history of their relationship and its demise. Their hostility has endured longer than their relationship. It may well be affecting their perceptions of the other’s actions and motives. Intimidation of a witness^[12]and fabrication of evidence^[13]are both criminal offences. The parties should take care not to abuse the process of the court. These proceedings will not be advanced by claims of grave misconduct on scant evidence.

28. [28]
    Unfortunately, because Ms Hall made her allegations in resisting this application, I must address them.

29. [29]
    Her allegation of fabrication of evidence relates to a document Ms Grant disclosed to her. It contained both the terms of an email Ms Hall sent Ms Grant and Ms Grant’s draft response to each of Ms Hall’s points.

30. [30]
    Ms Grant informed the court she no longer had the original email from Ms Hall, but had retained the draft email which included her response, and disclosed that as she thought she was required to do. She said she had never alleged that she had sent the document to Ms Hall. Further, she had not attributed her responses in the document to Ms Hall.^[14]

31. [31]
    Ms Grant tendered the original print out of the document which shows her responses in a different colour to Ms Hall’s email. Even without the aid of that change in colour, the content flags the transition from point to response. Ms Hall’s email, as sent, is in evidence and the comparison is easily done. I reject Ms Hall’s contention that the application should be refused for this reason.

32. [32]
    Turning to the remaining allegations; if an application is motivated by vindictive motives, this may be a reason not to make orders that would inflict great hardship on one of the parties.^[15]

33. [33]
    Ms Hall annexed a document purporting to be notes of a telephone conversation between Ms Grant and Ms Cribb, a friend of Ms Hall.^[16]In them, the author states that her conversation with Ms Grant made her think she did not want anything to do with the matter. This is, apparently, a reference to an offer previously made by her to purchase the property from Ms Hall upon Ms Grant’s interest being transferred to Ms Hall.^[17]

34. [34]
    The author describes Ms Grant as abusive and unpleasant to deal with. Some excessively emotive and threatening statements are attributed to her, including that she wants to see Amber (Ms Hall) on the streets, the house to burn and Amber to go with it.

35. [35]
    The notes are unsigned. Ms Cribb hasn’t averred their truth or accuracy. Even accepting Ms Grant said these things, or something similar, the subject of Ms Grant’s ire was Ms Hall, not Ms Cribb. Ms Grant did not threaten Ms Cribb. Assuming she is the author, Ms Cribb only said she found it unpleasant to deal with Ms Grant in such an emotional state.

36. [36]
    As to the argument Ms Grant has commenced proceedings with malicious intent, the comments were allegedly made in March this year, well after the proceedings started. They do not support Ms Hall’s submission that Ms Grant said her one goal is to see Amber homeless (at 2.7 of Ms Hall’s submissions).

37. [37]
    There is ample evidence of a legitimate purpose to seek relief from the court. The negotiations have dragged on. Until they are resolved, Ms Grant says she is under financial strain. An application of this nature has been canvassed during a number of preliminary hearings and is an orthodox way of terminating co-ownership of a property. Assuming Ms Grant did make the intemperate outburst apparently recorded in the notes, I see nothing improper in her application.

38. [38]
    I am not satisfied Ms Grant has conducted herself during the proceedings in a way that would disentitle her to relief she would otherwise be entitled to.

1. 2.
   Who should be appointed as trustees

39. [39]
    Ms Grant has proposed two trustees: Ms Grant disclosed at the hearing that one of them, Wendy Lanahan, is a personal acquaintance. Given the level of distrust between the parties I do not propose to appoint Ms Lanahan.

40. [40]
    Upon Ms Grant filing an affidavit from another proposed trustee willing to take on the role, with whom she has no personal connection and who has prior experience as a statutory trustee, I will make final orders to give effect to these reasons.

1. 3.
   How should the net proceeds be dealt with pending the determination of the proceedings?

41. [41]
    The parties agree that there are two loans that relate to the purchase of the property. There is a loan by Summerland Credit Union which is secured by a registered mortgage. That is not in contest.

42. [42]
    There is also an Equity Loan to Ms Grant by the Commonwealth Bank of Australia. That relates to a sum of $50,000 originally drawn down against a mortgage secured against another property that Ms Grant owned with the second plaintiff, Pauline Rosenblum. Some months later the balance of that loan was converted to an equity loan, which I understand to be in Ms Grant’s name only.

43. [43]
    The parties agree the $50,000 was used for the deposit and sale costs, with the balance paid into a joint account intended for renovation and other property related costs.^[18]Ms Hall agrees she transferred $19,000 from the joint account (referable to the balance of that loan) into her own bank account. She has since paid Ms Grant $10,000. There is a dispute about the remaining $9,000.

44. [44]
    Ms Grant provided the court with a breakdown of payments made against the initial drawdown on the home loan, to demonstrate how that was accounted for when the balance of more than $49,000 was translated to the equity loan. Although Ms Hall has not accepted those calculations are accurate, that is a matter of adjustment between the parties that can be resolved by final orders.

45. [45]
    In the meantime, the parties’ shared interest in maximising their net return on sale of the property supports an order that, after payment of sale costs, rates and taxes and the secured loan by the registered mortgage to Summerland, the net proceeds should be applied to the CBA Equity Loan.

46. [46]
    The parties agree the balance should be paid into court pending determination of the proceedings.

Other matters

47. [47]
    Finally, I will make brief observations about some of the submissions received on this and a related application about subpoenas (which cannot be determined until the pleadings have closed).

1. (a)
   Costs

48. [48]
    Although each has had some assistance from lawyers at some point in the proceedings, both are now representing themselves. Ms Hall has a law degree, but is not admitted to practise as a lawyer and has no experience as such.

49. [49]
    Both have agitated at some point or another for costs. The court has a general power to award costs.^[19]Costs are given by way of an indemnity, or partial indemnity, for professional legal costs actually incurred by a litigant in bringing or defending litigation.^[20]They do not include a non-lawyer’s own time expended in preparing and conducting litigation.^[21]The scope for reimbursement through a costs order might be negligible, except for the period during which either was represented. That is a matter best assessed when the proceedings have been determined.

50. [50]
    I will reserve the costs of this application to the final hearing.

1. (b)
   The Second Plaintiff

51. [51]
    Neither party considers Ms Rosenblum (the second plaintiff) has any interest in the proceedings as now pleaded. Ms Rosenblum and Ms Hall make no claim against the other. Ms Rosenblum has not appeared in person. Ms Grant advised Ms Rosenblum had no interest in continuing as a party. Given that, I order, by consent, that Ms Rosenblum be removed as a party to these proceedings.^[22]

1. (c)
   Directions

52. [52]
    The following directions were made on 30 July 2914, subject to submissions to the contrary by the parties:

1. Ms Grant has leave to amend the claim and statement of claim in the form filed on 6 June 2014.
2. Ms Hall has leave to file and serve an amended defence and counter claim by 18.08.14.
3. Ms Grant has leave to file and serve an amended reply and answer by 25.08.14.
4. Both parties must file and serve their list of documents by 01.09.14.
5. Both parties have leave to inspect documents by 08.09.14.
6. Both parties must file and serve any further affidavit material by 11.09.14.

53. [53]
    Having considered the parties’ subsequent submissions, I confirm the directions made on 30 July 2014.

Orders:

1. Ms Grant must file an affidavit by another proposed trustee with whom she has no personal connection and who has experience of statutory trusts and consents to the appointment.
2. Ms Rosenblum is removed as a party to these proceedings.
3. The directions made on 30 July 2014 are confirmed.

Orders will be issued to give effect to these reasons upon order 1 being complied with.