GRAHAM MICHAEL VAN DER WOLFF v ANDREW MACKIE VAN DER WOLFF [2024] SASCA 125

On Appeal from SUPREME COURT OF SOUTH AUSTRALIA (THE HONOURABLE AUXILIARY JUSTICE DART) [2024] SASC 80 Applicant: GRAHAM MICHAEL VAN DER WOLFF Counsel: MS P EWENS - Solicitor: RANDLE & TAYLOR First Respondent: ANDREW MACKIE VAN DER WOLFF Counsel: MR I THOMAS - Solicitor: BRIAN DEEGAN LAWYERS Second Respondent: CHRISTOPER HUGO WOLF Counsel: MR I THOMAS - Solicitor: BRIAN DEEGAN LAWYERS Third Respondent: RICHARD GORDON VAN DER WOLFF In Person Fourth Respondent: DAVID CAREL WOLF Counsel: MR I THOMAS - Solicitor: BRIAN DEEGAN LAWYERS Hearing Date/s: 21/10/2024 File No/s: CIV-24-009113 B SUPREME COURT OF SOUTH AUSTRALIA (Court of Appeal: Civil) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. VAN DER WOLFF v VAN DER WOLFF & ORS [2024] SASCA 125 Judgment of the Honourable Justice Bleby (ex tempore) 21 October 2024 APPEAL AND NEW TRIAL - PROCEDURE - SOUTH AUSTRALIA - STAY OF PROCEEDINGS Application for a stay of execution of orders pending appeal. The applicant and the four respondents are brothers. They jointly own two titles of land at Aldgate as tenants in common in equal shares. The applicant resides on the land. The respondents made an application pursuant to ss 69 and 70 of the Law of Property Act 1936 (SA) (‘Law of Property Act’) for an order directing a sale of the property. The applicant opposed the application. The primary judge made an order for the sale of the land. The applicant and the respondent both indicated they wished to buy the land. The applicants indicated a preference for a sale process that kept the property in the family. The applicant and the respondents each procured a valuation. The higher of these was that procured by the applicant. Neither valuation ascribed value to leases to which part of the land was subject for use of a telecommunications tower. The applicant then indicated he could not afford to buy the land. The judge then proceeded on the basis that the land should be sold to the third respondent. The applicant belatedly recalled an emailed offer by a third party to purchase the leases. He obtained legal representation and sought an adjournment in order to obtain a further valuation. The judge refused the application and declined to receive the email. He ordered that the property was to be offered exclusively to the third respondent in the first instance, at a purchase price of not less than the valuation obtained by the applicant. -- 1 of 9 -- The applicant has appealed against the orders facilitating the sale, but not the order for sale itself. There are two grounds of appeal. The first is that the primary judge erred in construing s 71 of the Law of Property Act as permitting the third respondent (as an interested party requesting sale) to purchase the applicant’s share in the property. The second complains of the stipulation of the amount for which the property is to be sold in circumstances where there was no finding as to the value of the property and no evidence adduced of value or alternatively ‘no proper evidence of value’. The applicant now seeks a stay of execution of the primary judge’s orders pending hearing and determination of the appeal. Held, granting a stay of the orders pending the application for leave to appeal while varying the timeline for the applicant to vacate the property in preparation for sale: 1. The applicant’s argument on the proper construction of s 71 of the Law of Property Act is reasonably arguable. 2. The balance of convenience favours preserving the subject matter of litigation. The burden to the applicant of the property not going to sale and failing to receive its true market value is greater than the respondent’s burden in being delayed or forgoing potential windfall gains. 3. The applicant is, however, required to vacate the property with his possessions. The need to preserve the subject matter of the litigation extends to preventing the fire risk created by the applicant’s previous failure to comply with the primary judge’s orders to do so. Law of Property Act 1936 (SA), referred to. Van Der Wolff & Ors v Van Der Wolff [2024] SASC 80, discussed. Hackney Tavern Nominees Pty Ltd v McLeod (1983) 33 SASR 590; Teachers Registration Board of South Australia v Kourlas [2024] SASCA 88, considered. -- 2 of 9 -- VAN DER WOLFF v VAN DER WOLFF & ORS [2024] SASCA 125 Court of Appeal - Civil 1 BLEBY JA: This is an application for a stay of execution of orders pending appeal. The appeal has not yet been listed for hearing. The application is urgent, as the orders appealed against establish a regime for the sale and purchase of real property, settlement of which is to occur on 25 October 2024. 2 The applicant and the four respondents are brothers. They jointly own two titles of land at Old Mount Barker Road, Aldgate as tenants in common in equal shares. The applicant resides on the land and has done so for some time. The respondents made an application pursuant to ss 69 and 70 of the Law of Property Act 1936 (SA) (‘Law of Property Act’) for an order directing a sale of the property. The applicant opposed the application. He was self-represented at the hearing. Following the trial, the primary judge concluded that it was appropriate to make an order for the sale of the land. He then said:1 The third applicant has indicated he wishes to purchase the land. The Court may permit an owner to purchase the share of another owner.2 The respondent gave the Court the same indication. If that remains the position, the Court will order that the land be sold at public auction and permit the third applicant and the respondent to bid for the property at any such auction. I will hear the parties as to the form of the orders. (Footnote in original) 3 Following the delivery of that judgment on 11 June 2024, the matter came on before the primary judge again. The judge made the following remarks: The view of the applicants is that they would prefer a sales process for the land which keeps the two properties in the family. For that reason, they do not want a public auction. An expression of interest process might work best. The third applicant and the respondent both say they wish to purchase the land. An independent person will need to be appointed to conduct that process. We need the two valuations first. The respondent says he should have an adjustment in his favour for work done on the property. It is possible that the applicants may seek occupation rent. The respondent lives on the property rent free even though he only owns 20% of the interest in the property. 4 The judge then made orders requiring the applicants and the respondent to file evidence of valuation. Both sets of parties did so. The Herron Todd White valuation procured by the present applicant valued the land at $925,000. The Knight Frank valuation procured by the respondents to this appeal, valued the land at $860,000. 5 Part of the land is subject to leases to Telstra, Optus and Vodafone for use of a telecommunications tower. The Knight Frank valuation takes account of the Telstra lease. Relevantly, that valuation noted that the lease expires in December 1 Van Der Wolff & Ors v Van Der Wolff [2024] SASC 80 at [31]. 2 Law of Property Act 1936 (SA) s 71. -- 3 of 9 -- [2024] SASCA 125 Bleby JA 2 2024. It records an understanding that there were no agreements in place past that date and therefore had not added any value for that lease. 6 The Herron Todd White valuation obtained by the applicant appears to have taken no account of the lease at all. This gap is the subject of an affidavit of the applicant where he deposes that he was not able to give the details of the leases to the telecommunications company to the valuer as he did not have those details. The Herron Todd White report notes the following: … copies of any leases in relation to the phone tower have not been made available and the actual details of any lease terms and conditions, including any income derived by the property owners from the leases has not been disclosed. As such and by way of confirmation of our instructions, we have not been able to consider any assumed lease terms as a result of the lack of factual information surrounding any leases. For the purposes of this valuation report, we have undertaken our valuation on the assumption that no income is derived from the telecommunications tower, however that the tower does exist on this property. On this basis, our valuations reflective of the unsightly nature of a telecommunications tower and associated equipment on the property. With consideration to our above assumption, we stress that if here was tangible lease information which shows there to be an income stream from any of the leases over the telecommunications tower, it would be reasonable to conclude that there would be some added value to the overall holding dependent of length and strength of the leases. 7 The applicant emphasises that the valuation reports were not tendered in evidence, although they were exhibited to affidavits. 8 What happened next is the subject of the applicant’s affidavit. His evidence is that it became apparent to him, following receipt of the valuation reports, that he would not be able to raise funds to purchase the property. He then recalled that he had received an unsolicited letter from an investment company, AT Australia and New Zealand (‘AT’), indicating a willingness to purchase the leases. He telephoned the representative of the company on 23 August 2024 and was told that AT was willing to offer to purchase the leases for $985,000 plus GST and contribute $3,000 for legal fees. 9 It appears that on 30 August 2024, there was a further directions hearing at which the applicant advised the primary judge that he was unable to purchase the land. The primary judge remarked as follows: Up until today the matter has been proceeding on the basis that there are two potential purchasers for the land. The third applicant and the respondent have both previously indicated they wish to purchase the land, the respondent today has advised that he is not able to raise finance to purchase the land. All of the applicants agree that the third applicant can buy the land. … minutes need to be provided … -- 4 of 9 -- [2024] SASCA 125 Bleby JA 3 10 The applicant on the appeal (who was the respondent below) says in his affidavit that he did not agree that the third applicant could buy the land. Their remarks do not record that he did so. 11 On 4 September 2024, the representative of AT sent an email confirming in writing the offer to purchase the leases at $985,000 plus GST as well as a contribution of $3,000 towards legal fees. He also forwarded an email that had been sent to the first respondent, Andrew Van Der Wolff, making an offer in the same terms. 12 At this point, the applicant became concerned that the property was undervalued. He obtained legal representation. At the following directions hearing on 16 September 2024, it appears that counsel for the applicant sought an adjournment on the basis that the applicant wished to obtain a further valuation. The expressed basis for this was that neither valuation report referred to the lease income. The applicant’s affidavit says that counsel sought to provide a copy of the email from the AT representative but that the primary judge declined to receive the email. 13 The applicant’s affidavit then says that the primary judge enquired of counsel for the respondent as to whether the leases were being renewed. Counsel for the respondent advised that that there were some negotiations but did not provide further details. The affidavit says that the primary judge said that the prospect of further rental income being derived was ‘speculative’ and declined to grant the adjournment. The affidavit says that the applicant’s counsel did not consent to the orders that were then made. 14 The remarks on the record of outcome from that appearance read as follows: Reasons were delivered some time ago in relation to the requests of the applicants that the subject properties be sold. The applicants succeeded at trial and orders should have been made some time ago to finalise the matter. The properties have been in the family for a very long time. The parties were content that a family member buy the properties for the proper value. The respondent indicated he wished to purchase the properties. The third applicant also wished to purchase the properties. The parties were directed to obtain valuations. The respondent came in with the higher valuation. The Court has adopted the valuation evidence put forward by the respondent. A form of orders were formulated to permit the third applicant and the respondent to engage in an expression of interest process with a real estate agent to determine who would be the successful purchaser. Since that time, the respondent has advised that he is not in a position to purchase the properties. In the circumstances the third applicant should be permitted to purchase the properties. The Law of Property Act anticipates that one proprietor may purchase the interest of other proprietors. Today the respondent says he wants to get further valuation evidence. The time for that has passed. This matter has been delayed for far too long. 15 The primary judge then made orders in terms setting out the process for sale. 16 The applicant does not appeal against the order for sale. Rather, he appeals against the orders by which the property was to be offered exclusively to the third -- 5 of 9 -- [2024] SASCA 125 Bleby JA 4 respondent for sale at a nominated price. Order 3 of the orders of 16 September 2024 were as followings: 3. The Property is offered exclusively to the Third Applicant (in his own name or entity as nominated by the Third Respondent) in the first instance. The Third Applicant must enter into a standard REISA Contract for Sale/Purchase of the Property (Contract) on or before Friday 20 September 2024 where the terms, inter alia, are: 3.1. Purchase Price is an amount of not less than $925,000.00 3.2. Deposit – 10% of the Purchase Price and payable to Harris Real Estate Trust Account within 24 hours. 3.3. Settlement Date to occur on 25 October 2024. The appeal 17 There are two grounds of appeal. The first is that the primary judge erred in construing s 71 of the Law of Property Act as permitting the third respondent (as an interested party requesting sale) to purchase the share of the applicant in the property. The second ground complains of the stipulation of the amount not less than $925,000 for which the property is to be sold in circumstances where there was no finding as to the value of the property and no evidence adduced of value or alternatively ‘no proper evidence of value’. 18 It is well recognised that the successful litigant is ordinarily entitled to the benefit of a judgment unless and until that judgment is set aside or varied on appeal. The party seeking the stay has the onus of justifying the favourable exercise of the Court’s discretion.3 It is necessary on an application for a stay that the court find that the appeal is arguable, that there is a real risk to the applicant that a prejudice or damage would be suffered if the stay were not granted that would not be redressed on a successful appeal and to consider whether the balance of convenience favours granting a stay. These considerations overlap and cannot be considered in isolation.4 19 The first question then is whether the appeal raises serious issues for determination. Ground 1 raises the question of whether s 71 empowered the Court to order that the applicant sell his share in the property to the third respondent. Section 71 provides: 71—As to purchase of share of party desiring sale On any application for partition, if any party interested in the property requests 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 may, if it thinks fit, unless the other parties interested in the property, or some of them, undertake to purchase the share of the party requesting a sale, direct a sale of the property, and give all necessary or proper consequential directions, and in case of such undertaking being given the court may order 3 Hackney Tavern Nominees Pty Ltd v McLeod (1983) 33 SASR 590 at 594 (White J). 4 Teachers Registration Board of South Australia v Kourlas [2024] SASCA 88 at [9] (Livesey ACJ). -- 6 of 9 -- [2024] SASCA 125 Bleby JA 5 a valuation of the share of the party requesting a sale in such manner as the court thinks fit, and may give all necessary or proper consequential directions. 20 In this case, the four respondents requested the Court to direct a sale of a property. The applicant resisted that application and was unsuccessful. At some point prior to the delivery of judgment he had at least indicated a desire to purchase the property, as did the third respondent, Richard Van Der Wolff. For the purposes of the applicant’s argument on the construction of this section, however, the argument is that the applicant not having requested the Court to direct a sale, this section does not empower the Court to direct him to sell his share to any of his brothers. The argument is that the Court can only, in those circumstances, direct a sale of the property, effectively on the open market. 21 The history of this matter complicates things, not least by the applicant having obtained a valuation on which the Court then acted. But the applicant has raised a matter of construction that I am satisfied is arguable. 22 If the applicant is correct and the Court had no power to direct the sale of his share of the property, and the consequence of that being it goes to sale on the open market, the market will then determine the value of the property having regard to the leases. There is prima facie evidence that notwithstanding that they expire at the end of 2024, the leases have value. This is indicated by the offers to purchase the leases by AT this year, notwithstanding their imminent expiry. The applicant has also adduced evidence of correspondence from Herron Todd White indicating that this information would likely change their valuation of the property. 23 The existence of a written offer for the purchase of the leases in 2024 effectively suggests that the property may have a value of approximately double that which was valued by the two expert valuers. That is not to say that this is conclusive; there is limited information surrounding what AT has done, for example, by way of due diligence on the leases. Neither is there any evidence as to any negotiation about renewal of the leases. Notwithstanding those matters, however, I am satisfied that there is a real risk to the applicant that if the sale were to go ahead as ordered, he would suffer a significant financial disadvantage. That disadvantage could not be remediated following a successful appeal, as the land will have been sold. 24 As to the balance of convenience, I am conscious that this matter has occupied considerable time and resources. The primary judge’s frustration with the length of time that it had taken to get to the point where orders could be made is understandable. However, the result of a successful appeal will not be that the land is not sold. It will only be that the land is sold on the open market rather than on the terms set by the primary judge. If the third respondent wishes to bid for the land in that scenario, he would be able to do so. Subject to one further matter raised by the third respondent, the only potential prejudice that he would suffer in that situation is having to pay market price for the land as opposed to what might be less than market value at present. The prejudice there is really just the absence of -- 7 of 9 -- [2024] SASCA 125 Bleby JA 6 a windfall gain combined with, of course, some further delay. The converse of that is that the applicant may be kept out of the true value of the land. 25 These considerations are sufficient to determine the application. I do not bring to this consideration any assessment of the prospects of success of Ground 2. The judge had before him valuations exhibited to affidavit evidence. The form in which those valuations were provided was a consequence of the competing expressions of interest in purchasing the land by the applicant and the third respondent respectively. On the face of the materials before me, it would seem that the applicant did not properly prosecute his case for a full valuation at that time. 26 Whatever the reasons for his approach, the prospects of success on Ground 2 would likely in the first instance be met with strong arguments as to the operation of the principle of finality speaking against his ability to adduce any further evidence as to value. But ultimately, that is not what he seeks. 27 In my view, the applicant’s argument as to the construction of s 71 of the Law of Property Act is reasonably arguable. Moreover, the prejudice to the applicant in the event of the subject matter of the appeal not being preserved is potentially great. Finally, the balance of convenience favours preserving the subject matter of the litigation. The ultimate result will be either that the property is sold largely on the terms ordered by the primary judge, or that it is sold on the open market. The balance of convenience favours preservation of the subject matter of litigation pending appeal. 28 However, there is one further qualification to that. The third respondent, Mr Richard Van Der Wolff, who is self-represented, filed an affidavit of 18 October 2024, FDN 12, speaking to the history and identifying the noncompliance by the applicant with respect to obligations in respect of bushfire risk and the continuing risk posed by the accumulation of materials on the land. He made highly persuasive submissions as to the existence of current fire risk. Essentially, the position is that with the bushfire season to commence on 1 November 2024, the applicant has not complied with order 6 of FDN 52 in action number CIV-23-008449, which provides that the he must provide vacant possession, including removal of all personal property and equipment from the property, and the adjacent right of way driveway onto the property, on or before 4:00 pm, 17 October 2024. 29 I am persuaded that the applicant’s failure to comply with that order has the potential to create a serious bushfire risk as we move into summer. 30 While I am prepared to stay the critical orders going to the sale of the property, the preservation of the subject matter does not stop there. 31 It is most important both for the sake of the property but also to the risk of the community at large that order 6 be complied with. It appears there has been no compliance with that order, notwithstanding that it was made some time ago. -- 8 of 9 -- [2024] SASCA 125 Bleby JA 7 32 Mr Richard Van Der Wolff’s submissions as to his complete lack of confidence that the applicant could do anything, even with an extension of time, in order for all of the brothers to comply with their fire safety obligations with respect to the land before 1 November 2024, are persuasive. I think that the time for grace for the applicant to comply with that order has passed. Conclusion 33 I am prepared to order a stay of orders 3, 4 and 5 made on 16 September 2024 in action number CIV-23-008449, being FDN 52. 34 I will, however, make an order that order 6 of those orders be varied such that the applicant must provide vacant possession, including removal of all personal property and equipment from the property and adjacent right-of-way (driveway) of the property on or before 4:00 pm, 23 October 2024. I vary order 9 to read that should any personal property or materials remain on the property and adjacent right-of-way (driveway) after 4:00 pm, 23 October 2024, the real estate agent is authorised to arrange for professionals to attend the property and remove the same forthwith. Any costs associated with compliance with this order are to be borne by the applicant. 35 I indicate that in this regard, orders 1, 2, 7, 9 and 10 otherwise remain unchanged. 36 The costs of this interlocutory application are to be part of the costs on appeal. -- 9 of 9 --