Section 66G is the key to ending disputes between co-owners of real estate

Section 66G of the Conveyancing Act 1919 (NSW) was enacted to help resolve disputes between co-owners, one wanting to sell, the other wanting to keep, a property.

Section 66G Applications

Under section 66G, a co-owner can apply to the court to appoint trustees to hold the property on a trust for sale. Normally, the trustees will appoint a sales agent to sell the property by public auction and will apply the proceeds of sale to property sale expenses, repay any secured loans and distribute the balance to the co-owners.

Over the years since section 66G was enacted in 1930, the Supreme Court of New South Wales has been kept busy with section 66G applications. The latest is Hogden v Hogden [2023] NSWSC 1149 (22 September 2023) (Peden J).

Hogden’s Case provides a good example of how a co-owners dispute can arise, arguments that are used to oppose the appointment of a trustee for sale, and the court orders for how the proceeds of sale are to be applied. This is a case note.

Acquisition of the Property

In October 2009, father (Allan) and son (Gregory) purchased a property at Big Jacks Creek, which is approximately 90km south-west-south of Tamworth NSW.

They purchased the property in their names and were recorded on the title as tenants in common in equal shares. The purchase price was $1,450,000.

The purchase price was sourced in equal amounts from the proceeds of sale of their jointly owned property (the Old Farm). Each had contributed approximately half of the purchase price of the Old Farm when it was purchased in June 2001. Their names were recorded on the title of Old Farm as tenants in common in equal shares.

The father (Allan) died in February 2019. The Supreme Court proceedings were instituted by Suzanne, the executrix of her father’s will. She wanted to sell her father’s interest in the property at Big Jacks Creek to provide funds for distributions in accordance with the will.

Gregory had negotiated to purchase the estate’s half interest in the property, at an agreed price. But Gregory was unable to obtain finance. The relationship between Suzanne and Gregory soured, as is evident in the last line of this email from Gregory:

May the devil watch your every step, and snap that rotten board beneath it.

Gregory refused to sell the property.

Was there a common intention constructive trust?

Suzanne made a section 66G Application to appoint trustees for sale.

Gregory filed a Cross-summons. Gregory asserted that he and his father had a common intention that the property would be held by them as joint tenants, and that such intention ought to be recognised by a declaration of a “common intention constructive trust”.

If the property were held as joint tenants, then Gregory would receive his father’s interest in the property, by right of survivorship, on his father’s death. No purchase would be necessary. The title would be transferred on production of a death certificate.

And the property would not form part of the father’s estate, and so the section 66G Application would fail.

The Court dismissed Gregory’s Cross-summons for these reasons:

The evidence of common intention consisted of uncorroborated conversations between Gregory and his father: that his father had said: “We own the farm 50/50. If either of us dies, their share in the farm will go to the survivor”. There was nothing in writing to corroborate this evidence.
There was no assertion of a common intention of ownership on a joint tenancy basis when Gregory was communicating with his siblings about purchase of the father’s interest. The Court found that the communication about purchasing the interest was inconsistent with his assertions of ownership on a joint tenancy basis.
Evidence of a conversation with the solicitor who acted on the purchase about buying as ‘joint tenants’ was rejected. The standard form Contract for sale provides for ‘joint tenants’ as the default option, and if ‘tenants in common’ is to apply, that box needs to be ticked. The box must have been ticked because the title was as tenants in common. No evidence was provided from the solicitor’s firm that had acted on the purchase to shed more light.

Court orders for sale of the property

The Court accepted the trustees nominated by Suzanne as being ‘fit and proper persons to act as trustees for sale and … have the necessary skill and experience to do so.’

The Court noted that Gregory had not proposed ‘a delay of the sale process to allow him to purchase the deceased’s half interest’ in the property.

As to costs of the proceedings, the Court considered that Gregory’s conduct in walking away from his agreement to buy the father’s interest in the property was unreasonable and had caused Suzanne (as executrix of the estate) to incur legal costs of the proceedings. Therefore, the Court made an order that Gregory pay the estate’s costs on an indemnity basis.

The orders made are set out in full:

Pursuant to s 66G of the Conveyancing Act 1919 (NSW), appoint David Graham Martin and John Stanbridge Boyd as trustees (Trustees) for the sale of the property located at 292 Big Jacks Creek Road, Big Jacks Creek, NSW, 2339 (folio identifier 1/119702 and 60/751016) (Property).
The Property is vested in the Trustees subject to any incumbrances affecting the entirety of the Property, but free from incumbrances, if any, affecting any undivided share or shares in the Property, to be held by the Trustees upon the statutory trust for sale under Division 6 of Part 4 of the Conveyancing Act 1919 (NSW).
On completion of the sale of the Property pursuant to Order 2, the Trustees distribute the proceeds in the following manner:
1. In payment of all rates, taxes and insurances and other outgoings on the Property;
2. In payment of the other costs of sale including, but not limited to legal costs, advertising costs and agent’s commission;
3. In payment of the Trustees’ fees for time in attendance up to completion of the sale on an indemnity basis;
4. In payment of the expenses incurred by the Trustees for the purpose of bringing the Property up to a reasonable condition that would facilitate the sale;
5. In payment of the plaintiff’s costs of the proceedings on the indemnity basis; and
6. The balance one-half each to the plaintiff and the defendant.
Cross-summons dismissed.
Cross-claimant/defendant to pay the plaintiff’s costs on an indemnity basis.

Conclusions

Section 66G puts into place a formal process for the sale of a property which takes it out of the hands of disputatious co-owners.

The threat of a section 66G Application is often the key to ending disputes between co-owners of real estate. It could make the co-owners agree to sell and agree upon the means of sale. Alternatively, it could make one co-owner offer a fair price to buy out the other.

In co-ownership arrangements where the co-owners are tenants in common and where the Family Law Act does not apply, a co-ownership agreement is highly recommended. Also called a joint venture agreement, it should contain a sale / buyout process and an agreement as to the way the proceeds of sale are to be distributed.