Stoffels v Piper [2024] NFSC 2

Supreme Court of Norfolk Island

Stoffels v Piper [2024] NFSC 2 File number(s): SC 1 of 2023

Judgment of: WIGNEY J

Date of judgment: 30 January 2024

Date of publication of reasons: 5 February 2024

Catchwords: REAL PROPERTY – application for partition of property held by joint tenants – whether "good reason" not to order sale and partition under s 4(1)(b) of the Partition Act 1900 (NSW) in its application to Norfolk Island under the Partition Ordinance Act 1931 (NI) – no "good reason" not to order sale and partition of property – order for property to be sold

Legislation: Partition Act 1900 (NSW) Partition Ordinance 1931-1964 (NI)

Cases cited: Foote v Foote (2014) 11 ASTLR 504; [2014] NFSC 2 Sovova v Ojvan (1987) 72 ACTR 10 Squire v Rogers (1979) 27 ALR 330

Number of paragraphs: 24

Date of last submission/s: 30 November 2023

Date of hearing: 30 January 2024

Solicitor for the Plaintiff: J Brown of McIntyres Lawyers

Counsel for the Defendant: The Defendant appeared in person

ORDERS SC 1 of 2023

BETWEEN: ERIKA LEE STOFFELS Plaintiff

AND: ANDREW HARRY PIPER Defendant

order made by: WIGNEY J DATE OF ORDER: 30 JANUARY 2024

THE COURT ORDERS THAT:

1. Pursuant to section 4(1)(b) of the Partition Act 1900 (NSW), in its application to Norfolk Island under the Partition Ordinance 1931-1964 (NI), the property described as Lot 9 of section 30, portion 75e being the land comprised in Title number 1813 Edition 8, known as 65 Captain Quintal Drive, Norfolk Island (the Property), with an area of 2.638 hectares more or less, be sold. 2. Pursuant to ss 4(3) and 15(c) of the Partition Act 1900 (NSW), the sale of the Property be effected out of Court subject to the restrictions and directions set out in the following orders. 3. The sale be effected by a real estate agent carrying on business on Norfolk Island as the parties may agree in writing within seven (7) days from the date of these orders, failing which the sale shall be effected by such real estate agent carrying on business on Norfolk Island as may be selected by the Registrar in his or her absolute discretion. The agent shall be entitled to charge his or her usual commission in relation to the negotiation and effecting of the sale. 4. The agent in the first instance shall seek to sell the Property by private treaty for such price as may be agreed between the parties in writing, and failing such agreement, the agent shall offer the Property for sale by public auction, and for that purpose the reserve price shall be the amount referred to above as having been agreed between the parties in writing, and failing such agreement the reserve price shall be the average of market appraisals obtained from each of the estate agents who carry on business on Norfolk Island. 5. If no person purchases the Property at public auction at a figure equal to or in excess of the said reserve price, then the agent shall seek to sell the Property by private treaty at the best price available. 6. Either of the parties be at liberty to purchase the Property in any sale pursuant to these orders. 7. The Registrar be authorised to execute all contracts, deeds, documents or paper writings on behalf of the parties in his or her capacity as the proprietors of the Property that are necessary or desirable to effect and complete the sale of the Property in accordance with these orders, in the event that the parties or either of them fail to do so within seven (7) days from the date on which the documents or paper writings are submitted to them for execution. 8. The terms and conditions of sale (including but not limited to the provisions of the contract for sale) be as determined and agreed by the parties in writing, and failing such agreement within seven (7) days of a draft terms of sale being submitted to the parties, such terms and conditions shall be determined by the Registrar in his absolute discretion. 9. The defendant vacate the Property within twenty-one (21) days from the date of these orders and deliver the keys to the agent. 10. After completion of the sale, the proceeds of sale be used to pay any: (a) repayment of the mortgage to Westpac Banking Corporation which is secured against the Property; (b) unpaid rates, levies or other charges issued by the Norfolk Island Regional Council in respect of the Property; (c) insurance charges levied on or in respect of the Property; (d) vendor's legal fees in relation to the sale; and (e) agent's commission and other expenses in relation to the sale. 11. The balance of the proceeds of the sale of the Property be paid into Court pending further order of the Court in relation to the distribution of those proceeds. 12. The costs of this proceeding be paid on a party and party basis by the defendant, as agreed or taxed. 13. The parties have liberty to apply on five (5) days' notice for the purpose of making any supplementary or consequential or procedural orders or directions that may become necessary in respect of the sale of the Property.

REASONS FOR JUDGMENT

(Revised from transcript)

WIGNEY J: 1 The applicant, Ms Erika Lee Stoffels, and the respondent, Mr Andrew Harry Piper, are the registered proprietors as joint tenants of portion 75e being the land comprised in Title number 1813, Edition 8, known as 65 Captain Quintal Drive, Norfolk Island (the Property). For reasons that will be explained shortly, Ms Stoffels wants to sever her joint ownership of the Property with Mr Piper and have the Property sold. Mr Piper has made it clear that he does not want to sell the Property. Ms Stoffels has accordingly applied for an order pursuant to section 4(1)(b) of the Partition Act 1900 (NSW) as adopted and applied on Norfolk Island by the Partition Ordinance 1931-1964 (NI), that the Property be sold. She also seeks ancillary or consequential orders concerning how the sale should be effected and how the proceeds should be distributed. Mr Piper opposes Ms Stoffels's application. 2 The relevant facts may be shortly stated. Ms Stoffels and Mr Piper jointly purchased the Property in October 2016 for $285,000. Ms Stoffels contributed $50,362 towards the purchase price, and Mr Piper contributed $8250. The balance was borrowed from the Westpac Banking Corporation. That loan is secured by a registered mortgage over the Property in favour of Westpac. Ms Stoffels claims that she has made repayments to Westpac totalling $45,843.94, and that Mr Piper has contributed $10,808.06 towards the repayments. 3 The Property comprises a large rural lot of some 2.638 hectares, together with some improvements. Ms Stoffels and Mr Piper originally intended to grow industrial hemp on the Property, but that commercial venture did not proceed. There is also no prospect of that venture proceeding in the near future. That is because, for reasons that it is unnecessary to detail, the business relationship and any friendship between Ms Stoffels and Mr Piper have been fractured beyond repair. 4 Mr Piper currently resides on the Property. Ms Stoffels resided on the Property for short periods in the past, but that is no longer possible given the breakdown of their relationship. As for the loan from Westpac, which is in the joint names of Mr Piper and Ms Stoffels, Mr Piper stopped making any repayments to Westpac in February 2021. Ms Stoffels continued to make repayments, but for financial reasons has been unable to continue to do so since December 2021. The loan is accordingly now in default, and Westpac has demanded repayment in full. While there is no evidence that Westpac has commenced any enforcement action, or that any action is imminent, it may be inferred that enforcement proceedings at some point in the future are likely, if not inevitable, if the current impasse between Mr Piper and Ms Stoffels is not resolved shortly. While it is common ground that Mr Piper has been in contact with Westpac concerning the loan in recent times, there is no evidence concerning the outcome of those discussions. 5 Ms Stoffels's attempts, via her solicitor, to persuade Mr Piper to agree to a voluntary sale of the Property and the equitable distribution of the sale proceeds have thus far been been unsuccessful. The available inference from the evidence is that Mr Piper has no intention of agreeing to sell the Property and that, unless the Court orders a sale of the Property, he will continue to reside on the Property and treat it as his own to the exclusion of Ms Stoffels. 6 Section 3 of the Ordinance provides, in effect, that the Partition Act is adopted as a law of Norfolk Island. While the Partition Act has since been repealed in New South Wales, it continues to operate as a law of Norfolk Island by virtue of the Ordinance. Section 4 of the Ordinance provides, in effect, that the powers vested in the "court" under the Partition Act shall, in relation to Norfolk Island, be vested in, exercised, and performed by the Supreme Court of Norfolk Island. 7 Section 4(1)(b) of the Partition Act provides as follows: In a suit for partition where but for this Act or the Act hereby repealed a decree for partition might have been made, … if parties interested collectively to the extent of one moiety or upwards, or some persons as hereinafter provided on their behalf, request the Court to direct a sale of the property and a distribution of the proceeds instead of a division of the property between or among the parties interested, the Court shall, unless it sees good reason to the contrary, order a sale of the property accordingly. 8 While section 4(1)(b) of the Partition Act is expressed in somewhat archaic and arcane terms, the effect of it is to provide a statutory mechanism for a co-owner who wishes to terminate the co-ownership to apply to the Court for an order directing the sale of the Property and the distribution of the proceeds in circumstances where previously only a decree of partition might have been made. A decree of partition is an equitable remedy which terminates co-ownership by effecting a division of the Property and conferring separate estates in fee simple to each co-owner. 9 Cognate partition legislation has been construed as being "facultative legislation in that it confers a wide power to make an order for sale in lieu of partition in circumstances where previously sale in lieu of partition was only available, with the assent of the court, if all the parties agreed that a sale was the most beneficial way of disposing of their interests": Squire v Rogers (1979) 27 ALR 330 at 340. Where an application is made pursuant to section 4(1)(b) of the Partition Act, the onus is cast on the defendant to show "good reason" why a sale should not be directed: Sovova v Ojvan (1987) 72 ACTR 10 at 13. 10 It is readily apparent that section 4(1)(b) of the Partition Act as adopted as a law of Norfolk Island applies to the circumstances of this case. Ms Stoffels is a co-owner of the Property. She wishes to terminate the co-ownership because her business relationship with Mr Piper has broken down and the purpose for which she acquired the Property with Mr Piper can no longer be fulfilled. In those circumstances, but for the application of the Partition Act, "a decree of partition might have been made". It follows that the Court's power to make an order pursuant to s 4(1)(b) of the Partition Act is enlivened. 11 The Court's power to make an order under s 4(1)(b) of the Partition Act having been enlivened, the Court must order the sale of the Property unless Mr Piper discharges his onus of showing a "good reason" why such an order should not be made. Mr Piper has failed to discharge that onus. Indeed, he has failed to show any reason, let alone a good reason, why the Court should not order the Property to be sold. 12 Mr Piper's defence to Ms Stoffels's application filed raised a number of collateral contentions and issues. Most of them are not relevant to the question whether there is a good reason not to order the sale of the Property and were not, in any event, pursued or pressed by Mr Piper in his final submissions before the Court. When pressed at the hearing to identify any good reasons why the Court should not order the sale of the Property, Mr Piper identified three such reasons. 13 First, Mr Piper contended that the Property should not be sold pursuant to a Court order because he believes that the Property could be sold at a better price if he was permitted to sell it privately at some point in the future. Mr Piper made a number of assertions from the Bar table in support of that contention. He did not, however, adduce any evidence which would permit the Court to conclude that some better outcome could or would be obtained by permitting Mr Piper to voluntarily sell the Property at some stage in the future. In any event, it may readily be inferred that, unless ordered to do so, Mr Piper is highly unlikely to agree to a sale of the Property, now or at any time in the future. 14 Second, Mr Piper pointed out that Westpac has not taken any enforcement action and that he has had some discussions with Westpac in recent times. As noted earlier, however, while Mr Piper may have had discussions with Westpac in recent times, there is no evidence about the outcome, or likely outcome, of those discussions. In any event, the mere fact that Westpac has not taken any enforcement action, or that foreclosure and repossession may not be imminent, does not provide a good reason not to order the sale of the Property. 15 Third, Mr Piper has asserted, from the Bar table, that he has plans to improve the Property, including by building some further dwellings and removing some contaminants that might impede the immediate sale of the Property. Mr Piper did not, however, adduce any evidence concerning the feasibility of his plans in that regard, or what he has done to advance those plans, or how or when they might be completed. Those plans might amount to little more than pipe dreams. They hardly provide a good reason for not ordering the sale of the Property. 16 None of the reasons put forward by Mr Piper, considered individually or collectively, establish or constitute a good reason not to order a sale of the Property. 17 There is no dispute that Ms Stoffels is a co-owner of the Property. She wishes for good reason to terminate the co-ownership. Her purpose for jointly purchasing the Property can no longer be fulfilled and she is unable to reside at the Property or otherwise enjoy the fruits of her share or co-ownership of the Property. Mr Piper has, however, made it tolerably clear that he does not and will not agree to sell the Property. In the past, before the Partition Act, Ms Stoffels's only remedy in the circumstances would have been a decree for partition. The effect of the Partition Act, however, was to permit the Court to direct a sale of the Property in circumstances such as those faced by Ms Stoffels. Indeed, a directed sale effectively became the default or preferred remedy in the circumstances. The onus was on the co-owner, in this case Mr Piper, to demonstrate to the Court that there was a good reason why the Court should not direct the sale of the Property. For the reasons that have been given, Mr Piper has failed to discharge that onus. 18 It follows that it is appropriate to make an order directing the sale of the Property, along with ancillary orders to facilitate that sale. Section 15 of the Partition Act provides that: Wherever the Court orders a sale under the Act it may order such sale to be effected– (a) by the Court; or (b) out of Court subject to such restriction as the Court thinks fit; or (c) altogether out of Court. 19 The order sought by Ms Stoffels is that the sale be effected out of court, but subject to various ancillary orders. That would appear to be the most efficient and effective way for the Court to proceed. Mr Piper did not submit otherwise. 20 In Ms Stoffels's originating application, and in some draft orders provided to the Court today, Ms Stoffels clearly identified the ancillary orders which she sought to facilitate the Court ordered sale. Mr Piper did not make any submissions concerning the appropriateness or otherwise of those ancillary orders. I also note that the ancillary orders proposed by Ms Stoffels are similar to the orders made by former Jacobson CJ in relatively analogous circumstances in Foote v Foote (2014) 11 ASTLR 504; [2014] NFSC 2. Subject to some minor variations, it is appropriate to make the ancillary orders proposed by Ms Stoffels concerning the means by which the sale of the Property out of court should be effected. 21 There is, however, an issue concerning the distribution of the proceeds of sale. The orders initially sought by Ms Stoffels envisaged that the mortgagee and any unpaid rates, levies, or charges over the Property be first paid out of the proceeds of sale. That would appear to be an appropriate order. The more contentious issue, however, is how the balance of the proceeds of sale should be divided between Ms Stoffels and Mr Piper. 22 The effect of the order initially sought by Ms Stoffels was, in summary, that the proceeds be divided between her and Mr Piper broadly in proportion to their respective contributions towards the purchase price, mortgage repayments and other outgoings connected with the Property. While at first blush that would appear to be an appropriate way to distribute the proceeds of sale, it seems that Mr Piper disagrees. Moreover, if an order to that effect is made, it is likely to give rise to disputes in the future concerning the contributions that have been made. Some process or procedure may need to be put in place to determine the respective contributions that have been made. 23 In light of that difficulty, the appropriate order at this stage, in my view, is that the balance of the proceeds of the sale, after the mortgagee has been paid out, and any outstanding rates and levies have been discharged, be paid into Court, pending further order by the Court in respect of the distribution of the proceeds between Mr Piper and Ms Stoffels. When the Property is sold and the balance of the proceeds of sale has been paid into Court, the matter should be relisted. Consideration can then be given to the fair and equitable distribution of sale proceeds as between Mr Piper and Ms Stoffels and the process or procedure that should be put in place in that regard. It may, for example, be appropriate at that point to refer the matter to mediation concerning the distribution of the funds. 24 Both Mr Piper and Ms Stoffels did not disagree that the appropriate order concerning the proceeds of sale at this stage was that, once the mortgagee has been paid and outstanding rates and levies discharged, the balance be paid into court until further order. I certify that the preceding twenty-four (24) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wigney.

Associate: Dated: 5 February 2024