Xie v Chan (No 2)

On 8 April 2022, I made orders under s 66G of the Conveyancing Act 1919 (NSW) that Mr David Wang, solicitor, be appointed as trustee of the subject property located at Second Avenue, Campsie for the purpose of a statutory sale. I made other orders to give effect to that order, and for establishing the terms and conditions of the trust.

At the hearing before me on 8 April 2022, there was no real concentration upon when possession should be delivered up to the trustee by the defendant, Ms Chan, who has remained in sole occupation of the property since the death of the survivor of two joint tenants of one half share with Ms Chan the owner of the other half share as tenant in common. Rather, I simply provided that possession was to be delivered up on or before the date fixed by any contract of sale of the property for completion.

The trustee, and the plaintiff, who is the executor named in the will of the surviving joint tenant, have applied for a variation of the orders I made and, in particular, for variation of the orders I made, being orders 4 and 5, dealing with the surrender and possession.

I have had the benefit of very helpful written submissions from Mr Chen of counsel who appears for the trustee, which are adopted and supported by Mr Zhou, solicitor, who appears for the plaintiff as before. I am well satisfied that I have the power to vary the orders made on 8 April 2022, by force of s 66G(6) which is in the following terms:

From the affidavits that have been read, being the affidavit of the trustee, Mr Wang, affirmed on 11 August 2022, and the affidavit of the plaintiff, Mr Xie, affirmed on 5 September 2022, I am satisfied that, regrettably, the defendant, Ms Chan, who has not appeared today, has been obstructive to such an extent that the attempts of the trustee to discharge the obligations of his office have been very effectively frustrated.

As I remarked in my judgment of 8 April 2022, it was obvious that Ms Chan was interested in exploring whether she could buy the remaining half share in the property, and she made an offer in that regard, according to Mr Wang (see affidavit at [9]). However, when Mr Wang attempted to initiate consultation on a formal basis with Ms Chan by letter dated 29 June 2022, he received no response from Ms Chan. And, indeed, he received no formal offer of purchase from her in response to that letter and, I infer, he has received no formal offer since.

There has been a further important development in the matter and that is to say that Ms Chan has continued her omission to pay the mortgage on the property which, in accordance with my findings made on 8 April 2022 are her responsibility. I infer from Mr Wang's affidavit that the mortgagee, who is now legally represented by Dentons Lawyers, has expressed a desire to exercise its power over their security having regard to Ms Chan's default. Mr Wang, as it were, has had to hold them off while he executes the obligations of his office.

It is obviously important that progress be made on the sale before the intervention of the mortgagee given the consideration that sale by mortgagee in possession, generally speaking, is likely to yield a poorer result than sale of the property in the usual way on the open market. Mr Wang has annexed to his affidavit the default notice and notice of exercise of power of sale that was issued by the mortgagee requiring compliance by 8 August 2022.

It is also the case that Mr Wang has consulted experienced real estate agents in the Campsie area who have expressed some pessimism about the sale price given the current condition of the property. The advice he has received is that prospects of a satisfactory sale would be enhanced if the property could be marketed without her occupation.

Mr Wang has also expressed the concern that given his dealings with the defendant, she is hostile, and he expresses the view that he has little confidence that she will make a satisfactory offer to buy. He doubts very much whether the defendant will co-operate by cleaning out the premises and permitting some cosmetic renovation to be carried out before sale. In his view, the defendant will not co-operate with open house arrangements if she remains in occupation. All of that evidence persuades me that a case for variation of the orders has been made out.

I should say that the consideration that Ms Chan enjoyed legal title to the property as a tenant in common is no bar to the Court making an order for possession with immediate effect in favour of the trustee. Although Mr Wang has yet to register the Court's order with the Registrar General, and I interpolate that step should be taken as soon as possible, that is no bar to me making an order of the type sought. As White JA pointed out, with the agreement of Bell P (as the Chief Justice then was) and Basten JA, in Foundas v Arambatzis (No 3) [2020] NSWCA 87 (“Foundas (No 3)”), the effect of the order I made on 8 April 2022 is to convert the plaintiff's legal title into a right to participate in the proceeds of the sale in accordance with the terms of the trust. His Honour said (at [11]):

The only question remaining is how long should be permitted for possession to be surrenderd. It seems to me, following discussion with Mr Chen, that an appropriate period of time is no more than 4 weeks but I would grant liberty to the trustee to obtain the issue of a writ of possession forthwith, not to be executed prior to the expiration of 28 days from today’s date.

Mr Zhou also sought additional orders. He pointed out that additional fees had been incurred by the plaintiff, which may require some variation of the orders I made on 8 April concerning the division of the costs of sale between the plaintiff and defendant. I indicated to him after hearing his submission and I would certainly be of the view that the costs of this additional application ought to be borne solely by Ms Chan whose obstructionism, at least on the evidence before me, has necessitated the application and has been responsible for the delay. Mr Zhou indicated that he was content with a variation to give effect to that expression of opinion, and I will attend to that matter.

Finally, I should say that I am satisfied by the contents of exhibit A and exhibit B that were tendered before me at the commencement of today’s hearing that Ms Chan has had reasonable notice of today’s hearing, the nature of the relief sought and the variation of the commencement time from 10am to 2pm. I am satisfied that she has had a reasonable opportunity to appear today to resist the orders sought, had she so desired. Her non-appearance is entirely unexplained, but I am satisfied that there is no denial of natural justice by the hearing proceeding today, especially given the matters to which I have referred in this judgment requiring expedition in the execution of the statutory trust.

For those reasons, I make the following orders: