Litigation takes time, and property does not always wait. Order 14 Division 2 of the National Court Rules 1983 — headed Interim Preservation, etc. — deals with the problem.
Order 14 Rule 10
(1) In proceedings concerning any property, or in proceedings in which any question may arise as to any property, the Court may make orders for the detention, custody or preservation of the property.
(2) An order may authorize any person to enter any land or to do any other thing for the purpose of giving effect to the order.
(3) In proceedings concerning the right of any party to a fund, the Court may order that the fund be paid into Court or otherwise secured.
Note the second limb of sub-rule (1): the Rule applies not only to proceedings concerning property but to proceedings in which any question may arise as to any property. It is not confined to cases where title is the central issue.
Three distinct orders are available — detention (holding the thing), custody (placing it with someone), and preservation (steps to stop it deteriorating). Ask for the one that fits, and say who is to hold the property and on what terms.
Where the real dispute is about money — sale proceeds, insurance money, rent, a retention fund — an order that the fund be paid into Court or otherwise secured takes the money out of contention entirely. Nobody can spend it, and it earns interest while the case proceeds.
It is usually a far better outcome than an injunction restraining dealings, because it requires no policing. See payment into Court generally.
Rule 11 — sale before trial
Where, in proceedings concerning property other than land, or in which a question may arise as to such property, it appears to the Court that —
(a) the property is of a perishable nature or is likely to deteriorate; or
(b) for any other reason it is desirable that the property should be sold or otherwise disposed of,
the Court may order the sale or other disposal of the whole or any part of the property by such person, in such manner, and on such terms (if any) as the Court may direct.
“For any other reason it is desirable” is not confined to physical deterioration. It covers goods losing market value, vehicles or machinery incurring storage costs, livestock requiring feeding, and stock that will be unsaleable by the time of trial.
The proceeds then stand in place of the property, and are ordinarily secured under Rule 10(3). Both sides usually benefit: the asset is realised at its best value rather than at its worst.
Rule 11 does not apply to land. For land, see Order 14 Division 5.
Rules 12, 13 and 14
| Rule | Power |
|---|---|
| 12 | Where the property is more than sufficient to answer the claims on it for which provision ought to be made, the Court may allow part of the property to be conveyed, transferred or delivered to any person having an interest |
| 13 | Where the whole or part of the income of the property is not required to answer the claims, the Court may allow that income to be paid, during such period as the Court may determine, to all or any of the persons having an interest |
| 14 | Where two or more persons are entitled to share in a fund, the Court may order immediate payment to any of them of his share without reserving any part to meet the subsequent costs of ascertaining any other of them |
These rules are the answer to a common injustice in estate and trust litigation: a fund is tied up for years while one contested share is argued about, and beneficiaries whose entitlement nobody disputes go unpaid.
Rule 12 releases surplus property; Rule 13 releases surplus income; Rule 14 releases an ascertained share without waiting for the rest. They sit naturally with Order 5 Rules 14 to 16 on representation in administration and trust proceedings, and with Order 19.
Rule 9 — urgent cases
In an urgent case, the Court may, on the application of a person who intends to commence proceedings, grant an injunction, make orders in the nature of habeas corpus, make orders for the custody of minors, or appoint a receiver — to the same extent as if the applicant had commenced the proceedings.
Rule 9 covers injunctions, habeas corpus, custody of minors and receivers. It does not expressly extend to orders under Rules 10 or 11.
So where property must be preserved before proceedings are filed, the practical course is to seek an injunction under Rule 9(a) restraining dealings with it, and to apply under Rules 10 and 11 immediately after the originating process is filed. See obtaining an injunction.
Rules 15 and 16
15 — where, in proceedings commenced by writ, a party applies for an order under Rule 10 or 11, the Court may order that the proceedings be before the Court for directions, either immediately or on such date as the Court may appoint.
16 — the Court may make orders under this Division on terms and at any stage of the proceedings.
Apply by notice of motion citing Order 14 Rule 10 or 11, supported by an affidavit identifying the property, the applicant’s interest in it, the risk to it, and the order proposed — including who is to hold it, at whose cost, and on what terms.
Expect the Court to impose terms under Rule 16: storage and insurance costs, an undertaking as to damages, and a timetable. Expect also to be given directions under Rule 15 — the Court will not deal with the property in isolation from the progress of the case. See directions hearings.
Where an ongoing business or income-producing asset needs managing rather than merely holding, the better order may be the appointment of a receiver under Division 3.
Sources
- National Court Rules 1983 — O 5 rr 14–16; O 14 rr 9–16, Divs 3, 5; O 19
- Constitution — s 155(4)
Before relying on anything here, read the current text of the National Court Rules 1983 and check for later amendments. If a decision matters to you, get advice — start with the Office of the Public Solicitor, or find a firm in the law firms directory.