McPaul v Massignani[2023] QSC 98

SUPREME COURT OF QUEENSLAND

1. [1]
   The applicant, Ms McPaul, and the respondent, Mrs Massignani, are sisters.  The other respondent, Mr Enzo Massignani, is the husband of Mrs Massignani.  In March 2022, the parties bought a 20 hectare property located at Numinbah Valley together.  They are co-owners of the property, as tenants in common, with a half interest owned by each of Ms McPaul, on the one hand, and Mr and Mrs Massignani, on the other.
2. [2]
   Ms McPaul’s expectations as to what could be done with (and on) the property were later thwarted, when she learned that there were zoning restrictions prohibiting subdivision, and construction on parts, of the property.  Consequently, she wishes to sell the property, or at least her interest in it.
3. [3]
   As the parties have been unable to reach an agreement about this, Ms McPaul has brought an application under s 38 of the Property Law Act 1974 (Qld) for the appointment of a statutory trustee to sell the property.
4. [4]
   The applicant proposes that Mr Bryan Mitchell, a solicitor, be appointed as the statutory trustee.  He is willing to do so.  
5. [5]
   Mr and Mrs Massignani oppose the making of the order, on the basis that Ms McPaul is estopped from bringing the application under s 38.  They also contend the application was “defective” from the outset, because it contemplates the appointment of only one trustee, when two are required.  Ms McPaul sought to answer the latter argument by proposing, at the hearing, a second trustee, Ms Kate Muller, a solicitor employed in Mr Mitchell’s firm.  The Massignanis do not accept that either trustee is appropriate, having regard to their limited experience and the fact that Ms Muller is not independent of Mr Mitchell.

Background

6. [6]
   Ms McPaul and Mr and Mrs Massignani signed the contract for the purchase of the property on 18 January 2022.  The purchase price was $2,600,000.  
7. [7]
   The sisters financed the majority of their respective shares of the purchase price from money they inherited from their aunt, who died in September 2021.  They have each received $1,200,000 from that estate, which was put into the purchase of the property.  There remain residuary assets of the estate (mainly shares) to be distributed, valued at just under $700,000.
8. [8]
   Mr and Mrs Massignani contributed $1,200,000 to the purchase; and Ms McPaul contributed $1,536,478.83 (including the stamp duty and other purchase costs).  There is an issue about how the additional money contributed by Ms McPaul should be dealt with.  Despite the different contributions, as already noted, upon the completion of the purchase, the parties were registered as owners as tenants in common in equal shares.
9. [9]
   Ms McPaul says that the “main reason I purchased the property with Louisa and Enzo was to build a house and art studio on the property, where I intended to live and work”.  She says, and Mrs Massignani does not dispute, that when they inspected the property in December 2021, Mrs Massignani said “[t]he land is so big.  You can build your dream house and art studio at the back of the property with the view”.  
10. [10]
    Having acquired the property in March 2022, in August 2022 Ms McPaul and Mr and Mrs Massignani sought advice regarding the potential subdivision of the property, and other alternatives to deal with their interests in the property upon their respective deaths.  It was in this context that they learned that the property could not be further subdivided and also that the options for further development on the property were limited (at best, it was said, “a Secondary Dwelling (ie granny flat/family accommodation) could be developed; however, such must remain on the same title as the primary dwelling”).^[1]
11. [11]
    Ms McPaul was disappointed about this, as it meant she could not build her house and art studio, as had been the plan.  She has considered various other options, but ultimately decided that she wanted to sell her interest in the property.
12. [12]
    It was only in the context of being told the land could not be subdivided that advice was obtained in relation to options for formalising their co-ownership.  There was no such agreement reached prior to acquiring the property, nor has one been entered into subsequently.  The material goes no further than the emailed advice from a solicitor, in September 2022.^[2]
13. [13]
    Mrs Massignani also says that, when she and her sister were looking for a property to buy with their inheritance, their aim was “to find a property that suited all of us, as Amanda was an artist and wanted a property and place to live that would inspire her art, and Enzo and I were involved with horses and could operate a horse agistment business on the property”.
14. [14]
    Mrs Massignani’s evidence is that, after inspecting the property in December 2021:

3. “Amanda, Enzo and I had many conversations (as we were all living at Enzo and my family home at Mudgeeraba) and we all stated to each other that the Property was perfect including words, or words to the effect, that the Property would be:

3. (a)
   a family home for Amanda and Enzo and me for the future during our lifetimes;

3. (b)
   a property for everybody from Amanda’s family, and from Enzo and my family, to come to;

3. (c)
   a long-term residence for Amanda and for Enzo and me, where Amanda would conduct her art business and Enzo and I would conduct a horse agistment business;

3. (d)
   Enzo, our daughter, Amanda and I would live in the existing house and that Amanda would use the granny flat as a bedroom and private retreat until we built a house on the rear of the Property that was to be jointly funded;

3. (e)
   a property held for an extended period for our lifetimes with Amanda’s 50% interest to be left to Amanda’s children and for Enzo and my 50% interest to be left to our children;

3. (f)
   a property that all our respective children could keep and enjoy for future generations.

3. …

3. As a result of the conversations above, Amanda, Enzo and I decided to try to buy the Property.”^[3]

15. [15]
    In relation to the contributions to the purchase price of $2.6 million, Mrs Massignani says:

3. “As Enzo and I did not have more than the $1.2m available from the inheritance from the Estate for our contribution to the purchase price at that stage:

3. (a)
   Amanda said words [or] words to the effect that she would pay the additional purchase price and we said to Amanda that Enzo and I would repay that money (which now totals $168,239.42) from the proceeds of sale or distribution of the shares remaining in the Estate to be distributed to Amanda and me;

3. (b)
   Amanda said, words or words to the effect that yes that’s fine we’ll sort it out later;

3. (c)
   in accordance with this arrangement, Enzo, Amanda and I proceeded on the understanding that this arrangement would enable us to fund the increased price for the Property and to allow for repayment to Amanda in the future once the balance of the estate had been distributed including from the sale of shares.”^[4]

16. [16]
    Ms McPaul confirms an amount of $168,239.42 as owing to her.^[5]
17. [17]
    Mrs Massignani says that, whilst she and Mr Massignani and their daughter were all looking forward to moving to the new property, doing so did involve major change and disruption to their lives, including a change of school for their daughter and changes to their employment arrangements.  She says that, if Amanda had said from the outset that the property was only being purchased for the “short-term”, or that she “could or would unilaterally seek to sell the Property”, she and Mr Massignani would not have agreed to the purchase.
18. [18]
    Ms McPaul moved away from the property in January 2023 and, sadly, things have deteriorated between her and her sister as a result of this dispute.
19. [19]
    Mr and Mrs Massignani oppose the making of the order appointing a statutory trustee to sell the property.  They have indicated a willingness to purchase Ms McPaul’s share of the property, although the parties have not been able to arrive at a price that is agreeable to them all. 
20. [20]
    I propose to deal first with the question whether an order should be made under s 38 and then to deal with the trustee issue.

Should an order for appointment of statutory trustees be made?

21. [21]
    Section 38 of the Property Law Act relevantly  provides:

22. [22]
    As to what happens when property is held on statutory trust for sale, s 37A of the Act provides:

3. “37A
   Property held on statutory trust for sale

3. Property held upon the statutory trust for sale shall be held upon trust to sell the same and to stand possessed of the net proceeds of sale, after payment of costs and expenses, and of the net income until sale after payment of costs, expenses, and outgoings, and in the case of land of rates, taxes, costs of insurance, repairs properly payable out of income, and other outgoings upon such trusts, and subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners.”

23. [23]
    A co-owner can bid on, or otherwise purchase, the (other interest in the) property when it is sold under a statutory power of sale.  In this regard, s 40 of the Act provides:

3. “40
   Right of co-owners to bid at sale under statutory power of sale

3. (1)
   On any sale under a statutory trust for sale the court may allow any of the co-owners of the property to purchase whether at auction or otherwise on such terms as to non-payment of deposit, or as to setting off or accounting for the purchase money or any part of the purchase money instead of paying the same, or as to any other matters as to the court seems reasonable.

3. (2)
   A co-owner, with a right to purchase shall not, without the leave of the court, be entitled to act as trustee in connection with the sale.”

24. [24]
    The purpose of orders for sale by statutory trust is “to provide a statutory mechanism for terminating the co-ownership of land when the co-owners fail themselves to agree on the manner in which the co-ownership shall be terminated”.^[7]  As Wilson J (with the agreement of Muir and Gotterson JJA) said in Bunnings Group Ltd v Asden Developments Pty Ltd [2014] 1 Qd R 493 at [45]:

3. “The statutory scheme for the appointment of statutory trustees for sale reflects the commercial reality that it is generally easier to sell the entirety than it is to sell a fractional interest, let alone a fractional interest that is encumbered.”

25. [25]
    Whilst it has been confirmed that the power to appoint a statutory trustee under s 38 is discretionary,^[8] the circumstances in which that discretion would be exercised against the making of an order, when one is sought by a co-owner, are very limited.
26. [26]
    As McMurdo JA said in Wilson v Strzelcykowski [2016] QCA 227 at 2-3:

3. “The nature of a court’s discretion under s 38(1) of the Property Law Act 1974 is confined in that ordinarily the discretion will be ordered in favour of the appointment of trustees for sale, essentially because the remedy under s 38 is a valuable ingredient of a co-owner’s proprietary interest.”

27. [27]
    His Honour referred to the statement made in Goodwin v Goodwin [2004] QCA 50, by McPherson JA with the agreement of Williams JA and McMurdo J (as his Honour then was), that “[i]t is well settled that, to an application under s 38 of the Property Law Act… there is practically speaking no defence”.  That is because the statutory right conferred by s 38 is an incident of the property of a co-owner.^[9] 
28. [28]
    In relation to the New South Wales equivalent,^[10] in Foundas v Arambatzis [2020] NSWCA 47 at [63] the Court of Appeal of New South Wales (White JA, Bell P and Basten JA agreeing) said:

3. “Although an order under s 66G is discretionary, such an order is almost as of right, unless on settled principles it would be inequitable to make the order.  An order may be refused if the appointment of trustees for sale would be inconsistent with a proprietary right, or the applicant for the order is acting in breach of contract or fiduciary duty, or is estopped from seeking or obtaining the order …  Hardship or general unfairness is not a sufficient ground for declining relief under s 66G …”^[11]

29. [29]
    Re Permanent Trustee Nominees (Canberra) Ltd v Coral Sea Resort Motel Pty Ltd [1989] 1 Qd R 314 is an example of a case in which a contractual provision (by which co-owners agreed that neither of them would, except after twelve months’ prior notice to the other, make application to the court under s 38 of the Property Law Act) was held effective to defeat an application for appointment of statutory trustees for sale.^[12]
30. [30]
    In the present case, Mr and Mrs Massignani do not contend there was any contractual arrangement between them which would prevent Ms McPaul from making this application.  They contend that Ms McPaul is estopped from making this application, in circumstances where, as set out in the submissions for the respondents, the evidence establishes:

3. (1)
   the respondents assumed and expected that a relationship as co-owners would continue to exist with Ms McPaul for the terms of their natural life and that Ms McPaul would not be free to withdraw from that assumption and expectation by forcing a sale of the property within a little more than a year of purchasing the property;

3. (2)
   Ms McPaul by her conduct and representations to the respondents induced the respondents to adopt that assumption and expectation;

3. (3)
   the respondents acted in reliance on the assumption and expectation by moving out of their Mudgeeraba residence and moving to the property with all of the attendant upheavals in terms of moving, requiring their daughter to change school and associated changes to their life;

3. (4)
   Ms McPaul knew and intended the respondents to so move and acquire their interest in the property as co-owners with Ms McPaul;

3. (5)
   Ms McPaul’s action in unilaterally resiling from the assumption and expectation and seeking to force a sale of the property will occasion detriment to the respondents as outlined above;

3. (6)
   Ms McPaul has failed to act to avoid that detriment by refusing to negotiate an orderly sale of her interest in the property and by instead seeking to force a sale of the property by resort to s 38 of the Property Law Act.^[13]

31. [31]
    The respondents’ assumption and expectation is said to have arisen as a consequence of “numerous discussions and representations” between the parties referred to in paragraph 23 of Mrs Massignani’s affidavit (set out at paragraph [14] above).^[14]
32. [32]
    The respondents acknowledge the limited discretion under s 38, but submit that, on the basis of Mrs Massignani’s evidence, Ms McPaul is estopped from seeking or obtaining an order under s 38.  However, as appears from the respondents’ submissions, the respondents do not contend Ms McPaul is prevented entirely from disposing of her interest in the property – only that she is prevented from doing so by an application under s 38.
33. [33]
    For their estoppel argument, the respondents rely upon the well-established principles, articulated by Brennan J in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429.
34. [34]
    Relevantly, in summarising the principles, the Victorian Court of Appeal in Barport Pty Ltd v Baum [2019] VSCA 167, said:

3. “109
   In general terms, promissory estoppel and estoppel by representation involve a promise that the relevant party will not rely on or enforce a legal right, or a representation that a given state of fact exists.

3. 110
   It has long been recognised that for a representation to found an estoppel it must be clear.^[15]  Where the conduct consists of a spoken representation, the words used must be able to be understood in a particular sense by the person to whom the words are addressed.  Those words provide the basis for the assumption or expectation upon which the person acts.^[16]  The representation must be such as to be able to create the assumption or expectation in question.^[17]

3. 111
   The requirement for certainty in the representation ensures that the representation can be reasonably understood in the particular sense required and does not operate to underwrite ‘unrealistic expectations or wishful thinking’.^[18]  Certainty is a reflection of the requirement that the person against whom the estoppel operates must have played such a part in creating the assumption or expectation that it would be unconscionable to depart from it.^[19]

3. 112
   It follows that, in order to assess whether a communication has sufficient clarity to carry the claimed representation, it will be necessary to have regard first and foremost to the words that are used, but also to matters of context, including the nature of the legal right that the assumption holds will not be enforced, in order to determine whether the representation was reasonably capable of inducing the relevant assumption.”

35. [35]
    Returning to the particular context here, the case of Tory v Tory [2007] NSWSC 1078 has some similarities to the present.  In that case, the defendant opposed the plaintiff’s application for an order appointing statutory trustees for sale of land co-owned by them, on the basis that any such order should be on terms that she first have the opportunity to purchase the plaintiff’s interest at a particular valuation, because to do otherwise “would defeat an expectation that she was induced to adopt, and on which she acted to her detriment, that the land would be held for rezoning and development” (at [3]-[4]).  The plaintiff originally co-owned the land with his brother.  The brother’s share was later transferred to his ex-wife (the defendant).  The evidence in the case included that, at some stage, with the defendant’s agreement, the plaintiff arranged a loan of money for his benefit, which was secured by a mortgage over the co-owned property.  In securing the defendant’s agreement to that arrangement:

3. “… the plaintiff represented to the defendant that the loan would only be for twelve months.  He said ‘we will get the rezoning in twelve months time and the loan will be discharged.  After the development we will be making millions’.  He also said ‘I need the moneys to cover my share of developing the property.  We will get a favourable outcome on rezoning and then we can develop the property.  Once the property is developed then the loan will be paid out.  It’s only going to take us twelve months anyway’.

3. The defendant assumed that the $60,000 to be borrowed from Equititrust would be used by the plaintiff in paying for the expenses of the development of the property, that the loan would be paid out of the plaintiff’s share of the profits after the property had been rezoned and sold or developed, and that the plaintiff would do nothing to prevent them both from seeking the rezoning and developing of the property.”^[20]

36. [36]
    There were delays in relation to the development of the land, and further moneys loaned by the plaintiff – again secured by mortgage over the property – which the plaintiff was unable to repay.  Under pressure from the mortgagee, and suffering financial difficulties, the plaintiff wanted to sell the property to obtain his share of the proceeds.  The defendant opposed the making of the order for sale.
37. [37]
    The grounds of opposition to making the order were rejected.  After referring to the general principles applicable to s 66G of the Conveyancing Act 1919 (NSW), White J said, in relation to the argument that the plaintiff was estopped from making the application:

3. “[43]
   There was no challenge to the defendant’s evidence that, as a result of the statements made to her in November 2002 and June 2003, she assumed that the loan advances would be applied by the defendant towards meeting expenses of the development of the property; that she assumed that the loan would be re paid out of the plaintiff’s share of the profits after the property had been rezoned and sold; and that she assumed that the plaintiff would do nothing to prevent them both from seeking the rezoning of the property and developing it.

3. [44]
   However, to found an estoppel based on a representation, the representation must be clear and unequivocal (Legione v Hateley (1983) 152 CLR 406 at 435-437).  There was no express representation that the plaintiff would do nothing to prevent him and the defendant from seeking the rezoning and developing of the land.

3. [45]
   Counsel for the defendant submitted that such a representation was conveyed by the plaintiff’s statements that the loans would be paid out once the property was developed, and his acceptance that the loans would be paid out of his share of the profits.

3. [46]
   Those statements were made in the context of the plaintiff’s projecting that the rezoning would be concluded within a year of November 2002 or within a ‘short time’ of June 2003.  The plaintiff’s statements could not reasonably have been understood as conveying that, no matter how long the rezoning decision might be delayed, and irrespective of the costs that might be incurred in pursuing rezoning of the land to a residential zoning, and irrespective of his financial circumstances, the plaintiff would not take any steps to prevent them both pursuing the rezoning and development of the property.

3. [47]
   There was no express agreement that neither would seek an order for the appointment of trustees for sale.  Nor would such an agreement be implied, let alone clearly and unequivocally implied.

3. [48]
   Circumstances have changed since the representations relied on by the defendant as giving rise to the estoppel were made.  The land has not been rezoned within the time frame then contemplated.  An independent report recommends against the zoning that the parties sought.

3. [49]
   The plaintiff does not seek to resile from his representation that the mortgage will be paid from his share of the proceeds of sale of the property.

3. [50]
   I also consider that the refusal of an order for the appointment of trustees would go beyond what is required for conscientious conduct on the part of the plaintiff (Giumelli v Giumelli (1999) 196 CLR 101 at 125 [50], 127–128 [64]).” [emphasis added]

38. [38]
    Hogan v Baseden (1997) 8 BPR 15,723 is another relevant example.  In this case, the respondent was the registered proprietor of certain land.  She had initially owned the land with her husband but, by the relevant time, was the sole owner of it.  Her nephew, the first appellant, had lived with her for a long time and the respondent, having no children, had made a will leaving the whole of her estate to him.  At some stage, the nephew, who by now was in a relationship with the second appellant, suggested to the respondent that they build a new floor on the upstairs of the home, as a place for the appellants to live.  The respondent did not object.  The second appellant sold her home and used the proceeds, together with an amount loaned from a bank, to pay for the building work. After the building work was completed, the relationship deteriorated and legal proceedings were commenced by the appellants, seeking declaratory relief (in terms of the appellants having an interest in the property, by reason of their contribution to the improvement of it) and an order for the appointment of a statutory trustee for sale. 
39. [39]
    At first instance, a declaration was made that the appellants and the respondent held the property as tenants in common in equal shares, but the court ordered that the property should not be sold without the written consent of the respondent.  The latter order was made on the basis of a finding that:

3. “I am conscious that the [respondent] has limited means and she is a pensioner.  In the circumstances, bearing in mind that she had lived in the house for so many years, it would not be appropriate for her house to be sold unless that was the wish of the [respondent].  Quite clearly upon the evidence each of the [appellants] intended, at the time of expenditure upon the property, that the [respondent] would continue to reside in the house in her lifetime and that the [appellants] would, essentially, occupy the first level.  The [respondent] held the same belief and it arose out of the circumstance, which appears to still be valid, that the parties do not have any mon[ie]s to live elsewhere. In my view that arrangement should bind the parties….”^[21]

40. [40]
    On appeal, the order preventing the sale without the respondent’s consent was set aside.
41. [41]
    After referring to the relevant principles, and the limited discretion conferred by s 66G, Beazley JA (with whom Mason P and Stein JA agreed) said, quite simply, that “the findings of fact upon which Order 4 was based (set out in [39] above) were not, or at least by themselves were not, findings which would give rise to the exercise of discretion under s 66G in favour of the respondent”.  However, because the relevant principles had not been fully canvassed at first instance, and therefore it was not apparent that the parties had directed their evidence to the issues relevant to the application (to appoint a statutory trustee for sale), nor were the necessary procedural requirements addressed, her Honour did not consider it appropriate for the Court on appeal to make the order for sale.  The appeal was allowed, and the order (preventing sale) was set aside, leaving the parties “to make such application as they see fit in respect of the declared co-tenancy”.
42. [42]
    After expressing his agreement with the reasons of Beazley JA, Mason P added the following comments:

3. “It would not be a proper exercise of the power to decline relief under s 66G of the Conveyancing Act to refuse an application on grounds of hardship or general unfairness: see Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068; Ngatoa v Ford (1990) 19 NSWLR 72 at 75.  It follows that in the unhappy event that the parties are unable to settle their differences then the making of an order appointing trustees for sale seems inevitable unless the respondent could establish a legally binding agreement not to put her out of occupation of her home, or circumstances that would ground some estoppel to similar effect.  On either issue the court would need to address at least four questions: first, whether anything that was said on the particular topic was intended to have legal effect; second, whether any arrangement or understanding (if legally effective) was intended to apply in the circumstances which happened following the breakdown of amicable relations between the parties; third, whether any agreement or understanding was subject to a condition that the respondent would dispose of her remaining interest in the property in any particular way upon her death; fourth, whether the rights (if any) of occupancy reserved to the respondent under such arrangement (if it existed) were in the nature of a life estate or a right of residence terminable upon the respondent vacating occupancy for any reason.”

43. [43]
    His Honour went on to say that, despite the use of the word “arrangement” (in the finding at first instance set out above), he did not read that as a finding that addressed or satisfied the principles referred to.
44. [44]
    In this case, the estoppel is said to arise from Mrs Massignani’s evidence, in paragraph 23 of her affidavit (set out at [14] above).  Even taking that at its highest, it reflects no more than aspirational statements – that all three parties considered the property to be “perfect” for their needs, hoped that they would live there for a long time and that it could benefit their children as well.
45. [45]
    There is no statement attributed to Ms McPaul which either expressly, or by implication, could be taken as a representation by Ms McPaul that she would not exercise a right to seek the appointment of a trustee for sale, if the need arose.  In fact, there are no words attributed to Ms McPaul at all – rather, what is relied upon are “many conversations”, in which all three expressed their enthusiasm for the property, and what it could provide in the future.  Ms McPaul does not disagree with that – she agrees that she hoped to build a house and art studio on the property, and intended to live and work there, presumably for a long time to come.  
46. [46]
    In a perfect world, the parties would have obtained advice prior to acquiring the property, to ensure they could achieve what they hoped.  As it happens, they did not – and their hopes, or at least Ms McPaul’s hopes, have been subsequently thwarted, upon learning that they cannot subdivide the property, or build a house elsewhere on the property. 
47. [47]
    But that fact only serves to emphasise that what Mrs Massignani outlines in paragraph 23 of her affidavit is not such as to support an equitable estoppel, which could have the effect of imposing a restriction or limitation on Ms McPaul’s proprietary right as a co-owner – the inability to call in aid s 38 of the Property Law Act.  It is not realistic to assume that one’s present hopes or aspirations will not change, regardless of the circumstances.  The idea that the parties would live and work on this property for the remainder of their natural lives is wishful thinking.  That Mr and Mrs Massignani say that is the basis on which they decided to purchase the property is all well and good.  But their evidence does not support a finding that they did so, on the basis of anything said or done by Ms McPaul, of such a kind that the law of equity would intervene, as a matter of conscience, to prevent her from exercising a right which is an incident of her co-ownership of the property.  Far more clear and unequivocal language would be required in order to achieve such an outcome. 
48. [48]
    I do not accept that anything that was said by the parties, prior to the purchase of the property, in so far as it concerned the length of time that they would own the property, was intended to have legal effect – in the sense of preventing any of the co-owners from exercising the right under s 38 of the Property Law Act, should the need arise due to their circumstances.
49. [49]
    Nor do I accept that the fact the parties sought advice about a co-ownership agreement, in August 2022 – around the time they received the disappointing information about zoning – supports the respondents’ argument.  If anything, it has the opposite effect, because it demonstrates that there was no formal arrangement between the parties, prior to this.
50. [50]
    No circumstance supporting the refusal to exercise the discretion under s 38 of the Property Law Act arises on the evidence. 
51. [51]
    It is apparent from the respondents’ submissions that they do not, ultimately, contend that Ms McPaul cannot exercise the right to sell her interest in the property; they simply contend that she cannot do it using s 38.  The respondents want to be able to buy Ms McPaul’s interest on their terms. 
52. [52]
    Returning to the policy underpinning a provision such as s 38 – its purpose is to provide a statutory mechanism for terminating co-ownership of land when the co-owners fail themselves to agree on the manner in which this should occur.  In circumstances where one party seeks to call in aid the statutory mechanism created by s 38, the co-owners having been unable to agree upon the manner in which Ms McPaul should be able to terminate her co-ownership, it is appropriate that an order be made under s 38(1) for the appointment of trustees to sell the property.

Should two trustees be appointed?

53. [53]
    As to the number of trustees, I accept, having regard to s 38(1) and (3) of the Property Law Act, that where individuals are concerned, there must be “2 or more individuals” appointed to be the trustees.^[22] 
54. [54]
    As to the identity of the trustees, the respondents raise concerns about the lack of experience of Mr Mitchell, a solicitor, in acting as a trustee for sale, and submit that “under the terms of the proposed orders for appointment the trustee is entitled to act in a quasi-judicial capacity in determining the entitlements to the proceeds of sale”.  I reject that submission, as no order having that effect would be made.  I can see no reason why a solicitor is not suitably qualified to act as a trustee for the sale of the property.  There is no necessary qualification for such a trustee.  In many of the cases, the trustee(s) is an accountant.  The person simply needs to understand their role – and be responsible for undertaking in a diligent way the role of effecting the sale of the property, in accordance with the court’s order.  Where there is a dispute about the entitlements to the proceeds of sale, the appropriate course would be for the proceeds (less the trustee’s expenses and other sale costs) to be paid into court, and for the dispute to be litigated in the court.
55. [55]
    Here, the only dispute seems to be in relation to the $168,239.42 owed to Ms McPaul.  The parties are each entitled to a half interest in the property, in accordance with their registered interests.  In so far as Ms McPaul contributed a greater amount to the purchase costs, with a balance owing to her of $168,239.42, I accept on the evidence of Mrs Massignani (there being no evidence from Ms McPaul inconsistent with that) that there was an agreement between the parties that that money would be repaid to (or recovered by) Ms McPaul, from the proceeds of sale or distribution of the shares remaining in their aunt’s estate, rather than on the basis of an adjustment of their ownership interest in the property.  That agreement is consistent with the parties being registered as tenants in common, each holding a 50 per cent interest in the property, despite the difference in the amounts they contributed to the purchase price.  For completeness, I note that Ms McPaul is the executor of the aunt’s estate, that the evidence is that under the aunt’s will, Ms McPaul and Mrs Massignani are equally entitled to the proceeds of sale of the shares; and that as at the grant of probate (December 2021) the shares were valued at just under $700,000 – so there are sufficient funds for Ms McPaul to be repaid this money from such proceeds.
56. [56]
    As to whether Ms Muller is an appropriate second trustee, as the point has been taken by the respondents, that Ms Muller is not independent of Mr Mitchell, I consider it would be appropriate for another person to be nominated.  But I do not accept that either Mr Mitchell or Ms Muller are inadequately qualified to perform the task.  I will hear further from the parties as to this at the time of delivering judgment.

Conclusions

57. [57]
    For those reasons, I propose to allow the application, and make an order under s 38(1) of the Property Law Act, appointing two named persons as trustees of the property, to be held by them on statutory trust for sale, with the proceeds (after the trustees’ costs and any costs of sale or other encumbrance on the property) to be distributed equally to Ms McPaul, on the one hand, and Mr and Mrs Massignani, on the other.
58. [58]
    I will hear further from the parties as to:

    1. (a)
       the identity of the two named persons to be appointed as trustees;
    2. (b)
       whether any provision should be made in the order for the respondents to have the first right to purchase Ms McPaul’s interest, before any other form of sale is undertaken;
    3. (c)
       whether the operation of the order should be stayed for a period of time, to give effect to (b), without incurring the costs of the trustees – for example, the order could be stayed for 30 days, to allow an independent valuation to be obtained and an offer made;
    4. (c)
       any other practical matters in relation to the order; and
    5. (e)
       costs.