Estates
& Trusts
Newsletter
S e p t e m b e r 2 01 5
"The law provides a deadlock breaking mechanism to deal with a situation
where two co-owners are not co-operating in the proper management of
real estate and one refuses to sell. The threat of a section 66G application
is often enough to cool tempers and allow for an orderly sale, but if
intransigence prevails, then an independent party will be appointed by
the Court to sell at the best price for the benefit of both parties. This
article discusses the use of section 66G Conveyancing Act in these
Michael Henley, Partner and Team Leader.
circumstances.”
Forcing the sale or partition of a property
that you own with someone else?
You own a property with one or more people. The
other co-owners of a property are not providing
you information you have requested. Or the coowners are not accounting to you for your share
of the rental profits. Or the relationship you have
with the other owners has simply broken down.
These are common situations where the ongoing
co-ownership of property is no longer viable.
Section 66G
There is process of applying to the Supreme
Court of New South Wales for the appointment
of statutory trust for the sale or partition of a
property under section 66G of the Conveyancing
Act 1919 (the Act).
The section states that where a property is held in
co-ownership, the Court may on the application
of a co-owner, appoint trustees to sell or partition
the property subject to any encumbrances on
the property (such as a mortgage or outstanding
land tax). The Court order, if made, is for the
appointment of a statutory trustee for sale or
partition.
Co-ownership is defined as “ownership whether
at law or in equity in possession by two or
more persons as joint tenants or as tenants in
common”.
“Partition” terminates co-ownership. By partition,
each co-owner becomes the sole owner of a
specifically ascertained portion of the land
and their interests in the land become divided.
Partition might involve a duplex being divided
into strata units or a large block of land being
subdivided. Partition is usually impracticable
and valuation evidence is desirable, as well as
evidence that the proposed partition is feasible.
The onus of showing that partition is more
beneficial than sale, rests on the co-owners that
desire it.
The trustee that the Court can appoint is:
1. a trustee company alone;
2. a trustee company with one or two individuals;
or
3. two or more individuals not exceeding four
people.
The trustees may include some of the coowners. The Court will prefer a trustee that is
independent, as free as possible from any
conflict and that possesses appropriate skill
and experience. The trustee for sale must sell
"There is process of applying to the
Supreme Court of New South Wales
for the appointment of statutory
trust for the sale or partition of a
property under section 66G of the
Conveyancing Act 1919 (the Act)."
the property for the best price that is reasonably
obtainable. They must also sell as expeditiously
as possible but in accordance with their duty to
achieve the best price. A trustee should obtain
a valuation, advertise adequately and engage
competent agents.
The Court may allow another co-owner to purchase
the property at auction or otherwise and on such
terms as the Court deems reasonable. However,
that co-owner cannot be appointed as trustee for
the sale.
Once the property has been sold, the money is
then to be held by the statutory trustee for sale
and distributed in accordance with any orders
of the Court, which would normally pay out any
mortgage and charges on the property as well as
the costs and expenses of the statutory trustee
for sale, legal fees and an agent’s commission.
The legal rights of any exiting lessee or tenant
must be respected.
The sale proceeds will be distributed in
accordance with the title as indicated by the
certificate of title.
Available defences
A defence to an application is to show that the
plaintiff only holds a bare legal title and that
the defendant has an absolute beneficial title.
The proceedings then become an Equity case
concerning the establishment of a resulting or
constructive trust.
T h e Tr e s s C o x E s t a t e s & Tr u s t s N e w s l e t t e r
The only other real dispute could concern the
proportions in which the net proceeds of sale should
be divided where it is alleged that the beneficial title
is held in different proportions from that shown on
the certificate of title.
"In reality, the proceedings are
generally not resisted. They are usually
brought to confront a reluctant coowner with the realities of his or her
position. As it is much cheaper for the
co-owners to co-operate, a properly
advised co-owner will, upon service
of proceedings, co-operate with the
plaintiff in the sale of the land and the
distribution of the proceeds."
Further, a Court may refuse an application under
special circumstances. For example, if all the owners
had previously agreed not to sell the property unless
all owners agreed to it or if there are contractual or
fiduciary obligations which the Court finds should be
honoured.
A party opposing a sale or partition has the onus of
dissuading the Court from ordering a sale or partition,
whichever is sought. The Court cannot refuse an
application simply on the grounds of hardship or
unfairness.
In reality, the proceedings are generally not resisted.
They are usually brought to confront a reluctant coowner with the realities of his or her position. As it
is much cheaper for the co-owners to co-operate,
a properly advised co-owner will, upon service of
proceedings, co-operate with the plaintiff in the sale
of the land and the distribution of the proceeds.
Wherever possible, parties should be advised to
agree on a regime for the marketing and sale of the
property in order to minimise costs which will include
the costs of the trustees (usually accountants)
charged with the sale of the property.
Costs
In the case of MacDonald v MacDonald [2009]
NSWSC 794, the Court stated:
“The usual order that is made concerning costs of
an application… is that the costs of the parties be
paid out of the proceeds of sale, and where there
is unsuccessful opposition by one or more of the
co-owners, that the costs of the successful plaintiff
be paid out of the share to which the opposing coowners would be entitled”.
If the other co-owners decide not to contest the
matter, then is it likely that the Court will order that
each party pay their own costs from their own share
of the sale proceeds. However, if the application is
contested and the other co-owners are unsuccessful,
the Court will likely make an order requiring the
co-owners to pay a portion of the plaintiff’s costs
(referred to as your costs on a party and party basis)
from their own share of the sale proceeds.
Prior to commencing proceedings, a person would be
best placed to write to the co-owners first threatening
to make such an application to the Court. The matter
may also resolve without the need for commencing
proceedings. An alternative outcome could be that
the other co-owners might offer to buy the aggrieved
person’s share of the property.
If you find yourself in a scenario like the ones
described above, you may wish to apply to the Court
seeking orders for the appointment of a statutory
trustee for sale or partition. Our Wills & Estates
Team would be happy to assist you with such an
application.
Luke Friedman - Associate
Phone: +61 2 9228 9373
Luke_Friedman@@tresscox.com.au
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www.tresscox.com.au
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Estate & Trusts Team
Contacts
Michael Henley - Partner
Accredited Specialist Wills & Estates Law
Phone +61 2 9228 9206
Michael_Henley@tresscox.com.au
Matthew Payne
Partner
Phone +61 2 9228 9276
Matthew_Payne@tresscox.com.au
Ron Heinrich AM
Senior Consultant - General Counsel
Phone +61 2 9228 9209
Ron_Heinrich@tresscox.com.au
Christine McPhillips - Special Counsel
Accredited Specialist Wills & Estates Law
Phone +61 2 9228 9210
Christine_McPhillips@tresscox.com.au
Graham Englefield
Special Counsel
Phone +61 2 9228 9205
Graham_Englefield@tresscox.com.au
Paul de Silva
Special Counsel
Phone +61 7 3004 3520
Paul_de_silva@tresscox.com.au
Linda Goldsmith
Consultant
Phone +61 3 9602 9738
Linda_Goldsmith@tresscox.com.au
Luke Friedman
Associate
Phone +61 2 9228 9373
Luke_Friedman@tresscox.com.au
Nicole McOwn
Paralegal
Phone +61 3 9602 9449
Nicole_McOwen@tresscox.com.au
www.tresscox.com.au
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