McPaul v Massignani & Anor

This case concerned an application under s 38 Property Law Act 1974 to appoint statutory trustees to sell a property co-owned as tenants in common. One of the parties wished to sell after discovering planning restrictions on what they could do with the property. Chief Justice Bowskill considered that it was appropriate to grant the application, and rejected an argument that the applicant was estopped from making the application.

Bowskill CJ

11 May 2023

Background

Ms McPaul and Mrs Massignani are sisters. [1]. In March 2022 they, and Mrs Massignani’s husband, decided to purchase a property in the Numinbah valley together. [1]. They are tenants in common, with Ms McPaul having a half interest, and Mrs Massignani and her husband having the other half interest. [1].

Unfortunately, they bought the property without being aware of limitations on its usage. Ms McPaul had hoped to build a house and art studio at the back of the property. However, they subsequently learned that the property could not be further subdivided and that “the options for further development … were limited”. [10].

Consequently, Ms McPaul now wishes to sell the property, or at least her interest in it. [2]. As the parties have been unable to reach an agreement, Ms McPaul brought an application under s 38 Property Law Act 1974 for the appointment of statutory trustees to sell the property. [3]. However, Mr and Mrs Massignani contended that she is estopped from making such an application, on the basis of certain representations. [30].

Order for an appointment of statutory trustees for sale

Section 38 Property Law Act 1974 (“the Act”) provides that the Court may, on application by a co-owner, “appoint trustees of the property … to be held by them on the statutory trust for sale”. [21]. According to s 37A, property held in this way shall be held “upon trust to sell the same and to stand possessed of the net proceeds of sale” after payment of various costs and expenses. [22].

The purpose of the provision 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” (quoting Nullagine investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635, 650). [24]. It reflects a recognition that it is “generally easier to sell the entirety than it is to sell a fractional interest” (quoting Bunnings Group Ltd v Asden Developments [2014] 1 Qd R 493, [45]). [24].

Chief Justice Bowskill observed that while the power is discretionary, 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”. [25]. Ordinarily an order will be made because “the statutory right conferred by s 38 is an incident of the property of a co-owner”. [27]. Circumstances in which an order might not be made include where there is contractual agreement that such an application would not be made. [29].

In this case, Mr and Mrs Massignani did not contend there was any contractual agreement that would prevent Ms McPaul from making the application. [30]. However, they alleged that she was estopped from doing so. [30].

Whether the application was estopped due to representations

Mr and Mrs Massignani contended that the application was estopped by reason of representations allegedly made by Ms McPaul. The representations, supposedly based on “numerous discussions”, were allegedly to the effect, or induced the expectation, that the parties would spend the rest of their lives as co-owners of the property. [30]. The respondents say they acted in reliance on that assumption by purchasing and moving to the property – with all the attendant upheavals that involved. [30].

Her Honour considered that, taking the alleged representations at their highest, they were “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”. [44]. There was no statement by Ms McPaul, expressly or by implication, that could be taken as a representation that she would not seek an order under s 38 of the Act. [45]. Accordingly, no estoppel arose to prevent the application. [47].

Conclusion

Her Honour made an order to appoint statutory trustees to sell the property, with the proceeds (after costs and expenses) to be distributed equally to Ms McPaul and Mr and Mrs Massignani. [52], [57].

Her Honour said she would hear further from the parties as to whether any provision should be made in the order to allow the respondents to have a first right to purchase Ms McPaul’s interest, before any sale was undertaken, and as to the identity of the trustees. [58].

W Isdale of Counsel