DISTRICT COURT OF QUEENSLAND

1. [1]
   This is an application for the appointment of trustees pursuant to the provisions of s 38 of the Property Law Act 1974 (“the Act”).

2. [2]
   The applicant and respondent are the owners, as tenants in common, of a 52.5 ha property at Austin Road, Crows Nest. David Haskings is a director of the applicant company and brother of the respondent, Paul Haskings.

3. [3]
   The applicant and respondent conducted a flower growing business in partnership on the property until later 2008. Thereafter the applicant and Damien Haskings, the respondent’s son, continued the flower growing until January 2012. The subject property was not partnership property and the partnership agreement did not restrict the sale of the property.

4. [4]
   The applicant continued using the property for flower growing until September 2013. The respondent currently resides in a house on the property.

5. [5]
   The applicant seeks the appointment of trustees for sale, arguing that the parties cannot cooperate to the extent required to sell the property in an expeditious and cost-effective manner.

6. [6]
   The respondent opposes the application on the following grounds:

1. (a)
   The order sought will fetter the discretion of the trustees;
2. (b)
   The application is vexatious as the property is already listed for sale, the applicant company has not taken basic steps to promote the sale and the respondent has not resisted the sale; and
3. (c)
   The relief sought may affect existing contractual obligations to Elders, the real estate agent currently engaged by the co-owners to sell the property.

7. [7]
   The respondent asked the court to refuse the application under s 38 of the Act to appoint trustees for sale in the exercise of the discretion.

8. [8]
   Section 38(1) provides:

“Where any property (other than chattels personal) is held in co-ownership the court may, on the application of any 1 or more of the co-owners, and despite any other Act, appoint trustees of the property and vest the same in such trustees, subject to encumbrances affecting the entirety, but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale or on the statutory trust for partition.”

9. [9]
   Cases support the contention that the right to sale is generally seen as “an incident of the property of a co-owner”.^[1]  The limited scope of the discretion provided in s 38 was the subject of the following statement by MacPherson J in Ex parte Einbart Pty Ltd:

“In such cases (where co-ownership of land subsists in law), where there is no trust or perhaps other fiduciary obligation, it is difficult to conceive of circumstances in which the discretion, if any, conferred by the word ‘may’ in s 38(1) of the Property Law Act or its New South Wales equivalent would ever be exercised against the appointment of statutory trustees.”^[2]

10. [10]
    Confirmation of that principle is to be found in the words of Connolly J in Re Permanent Trustee Nominees (Canberra) Ltd:

“It may be seen therefore that in modern times there are few defences to partition proceedings based merely on the circumstances of the parties. To say therefore that the exercise of the jurisdiction is virtually mandatory is an adequate statement for most cases but it is, in my opinion, not strictly the law and should be avoided.”^[3]

11. [11]
    Nevertheless, it remains clear that the court retains a discretion to refuse relief in appropriate but constrained circumstances. For example, an order for sale may be refused where the order “would be inconsistent with some proprietary right, or some contractual or fiduciary obligation”.^[4]The respondent bears a forensic onus to show why the order should be refused.^[5]

12. [12]
    The respondent submits that the present case is to be distinguished from cases where a party is resisting sale of the property. It is submitted that the property is currently listed for sale and there is no “substantial or undisputed evidence” that the respondent is hindering the sale. The respondent asserts he “has always been and remains willing and able to sell the property” even by auction.^[6]  Furthermore it is submitted that the applicant has failed to take “basic steps” to promote the sale or auctioning of the property.

13. [13]
    The respondent’s primary objection to the application appears to be the cost of engaging trustees:

“… the appointment of a statutory trustee is not necessary or appropriate and that such an appointment would be wasteful, and merely serve to reduce the net proceeds to each of the parties.”^[7]

14. [14]
    The respondent says that after the cessation of the commercial flower growing operation the brothers discussed sale of the property and the applicant suggested a statutory trustee be appointed. This proposal, which must have occurred prior to 1 July 2012, was rejected by the respondent. After cross-offers to sell were rejected, agreement was reached in September 2012 to list the property with a real estate agent for sale. The property remains unsold over a year later, no offers to buy having been received.

15. [15]
    On 23 January 2013 Elders recommended the property be auctioned after work to improve presentation of the property, house and surrounds. On 13 February 2013 the applicant by solicitors’ letter proposed a sale by auction after the suggested work was carried out. The respondent replied on 20 February 2013 agreeing “in broad terms” to the auction proposed subject to agreement as to a reasonable reserve. The respondent also agreed to carry out certain cleanup work in and around the house.

16. [16]
    The auction proposal has not progressed since February. Each party claims the other has not taken necessary steps to place the property for auction. The evidence is in conflict as to the extent to which each acted or failed to act to advance listing for auction. The impediments appear to be the need to agree on a reserve price and the need to clean up and prepare the house, grounds and access for marketing. However, both assert they are willing to offer the property for sale by auction.

17. [17]
    On an objective assessment of the evidence I am satisfied that a lack of mutual trust between the applicant and respondent, their unwillingness to adequately communicate with each other and their inability to agree on the terms upon which the property may be offered for sale by way of auction has impeded the timely and effective marketing of the property and its placement for auction with a view to achieving a suitable and expeditious sale.

18. [18]
    While the court may exercise its discretion to refuse relief, the discretion is a limited one and in the circumstances of this case I am not persuaded that the fact that the engagement of trustees will incur additional expense constitutes a sufficient basis for denying the applicant the order sought.

19. [19]
    The respondent raises two further objections. Firstly, it is submitted that granting the relief sought may conflict with an existing contractual obligation to Elders. The agency agreement is exhibited to the affidavit of Errol James Luck. It is clear from the agreement that since 31 December 2012 there has only been an open listing with the agent. That appointment can be ended by the co-owners at any time. In my view, that agreement does not constitute an impediment to my making an order under s 38.

20. [20]
    Secondly, the respondent submits the orders sought “go beyond the general scope of the provision and will fetter the discretion of a trustee, which is inconsistent with her or his duty”. It seems to me that this submission has more merit. The applicant seeks an order specifying that the trustee sell the property by public auction. It is not immediately apparent why the court would choose to dictate the mode of sale when the trustees are given under the statute wide powers to determine such matters having regard to the general interest of the trust. Section 37A of the Act states the obligations of trustees in respect of property held upon a statutory trust for sale. Section 39(1) of the Act provides for the trustees to consult with the co‑owners. These provisions give trustees ample power to act in the best interests of the trust. The trustees will be in a better position than the court to investigate and fully inform themselves in order to determine the best course for sale of the property.

21. [21]
    In all the circumstances, I am persuaded I should make an order under s 38 of the Act but I do not propose to include a clause directing that the property be sold by auction.

22. [22]
    Accordingly, the orders of the court will be:

1. Pursuant to section 38 of the Property Law Act 1974, Christopher Wyatt Neville and Brooke Pugh be appointed trustees of the land and improvements situated at 42 Austin Road, Crows Nest in the State of Queensland, more particularly described as Lot 2 on Survey Plan 195550, County of Cavendish, Parish of Djuan, Title Reference 5065696;
2. The said property vest in Christopher Wyatt Neville and Brooke Pugh subject to encumbrances affecting the entirety, but free from encumbrances affecting any individual shares, to be held by them on statutory trust for sale on the terms set out in section 37A of the Property Law Act 1974;
3. Either party is at liberty to bid for or purchase the property whether at auction or otherwise on such terms, as are appropriate, as to setting off or accounting for the purchase money or any part of the purchase money instead of paying the same;
4. I will hear the parties as to costs.