Property co-ownership and your rights when things go wrong

Can you no longer deal with your fellow co-owner(s) of land? Section 66G of the Conveyancing Act 1919 has long provided a mechanism for appointing a trustee for the sale or partition of the land, but the NSWCA has recently interpreted the legislation as favouring sale over partition. 

As a starting off point, it is often more prudent to simply reach an out-of-court agreement with the other co-owners to bring your relationship to an end.

However, if this course of action is neither a feasible nor practical option, you can turn to the Supreme Court of NSW for assistance.

Under s 66G of the Conveyancing Act 1919, the Supreme Court can:

“(1) ... on the application of any one or more of the co-owners, appoint trustees ... [for the property] to be held by them on the statutory trust for sale or on the statutory trust for partition.

This power is qualified by the s66G(4), which provides:

(4) If, on an application for the appointment of trustees on the statutory trust for sale, any of the co-owners satisfies the court that partition of the property would be more beneficial for the co-owners interested to the extent of upwards of a moiety in value than sale, the court may ... appoint trustees of the property on the statutory trust for partition...”

In the first instance decision of Barel v Segal [2011] NSWSC 1181, His Honour Pembroke J held that it is "not ... entirely accurate to say that the legislation makes sale the 'preferred' remedy." His Honour then contrasted his opinion to that of the famed Professor Peter Butt, whereby Professor Butt, at pages 265-266 of the 6th edition of his great treatise Land Law, commented that under s 66G, sale is the "primary remedy" with partition being only awarded in special circumstances. To prop up his premise, Professor Butt cited Re Condingley (1948) 48 SR (NSW) 248 at 250.

With all due respect to His Honour, disagreeing with Professor Butt on a matter of land law should have sent off alarm bells when writing the judgment.

On appeal, the decision at first instance was overturned in Segal v Barel [2013] NSWCA 92.

The primary basis for the appeal was founded on the fact that Pembroke J took into account irrelevant considerations when applying the 'more beneficial' test. His Honour, according to the NSW Court of Appeal, should have limited his considerations to pecuniary matters.
Notably, however, the NSW Court of Appeal also sought to clarify the law. In doing so, the Court sought to distance itself from the "preferred remedy" terminology, and to clearly demarcate how the statute actually works.

Here, Barrett JA, with whom McColl JA and Preston CJ of LEC agreed, found that:

1. Where the applicant is seeking an order for sale, and the respondent is simply resisting, the only question which needs to be asked is: "should the court make an order for sale?" No question of partition as an alternate remedy arises.
2. Where the applicant is seeking an order for partition, and the respondent is simply resisting, the only question which needs to be asked is: "should the court make an order for partition?" No question of sale as an alternate remedy arises.
3. Where, however, the applicant is seeking sale or partition, and the respondent is counter-claiming the opposite remedy, the onus is on the party seeking partition to prove that it is "more beneficial" than an order for sale.

Accordingly, the dispute between the two remedies only arises where one party is claiming one remedy and the other party is claiming the alternate remedy.

In this case, the party seeking partition has the onus of proving that partition is more beneficial than sale.

If you co-own property and need advice on your interests, please call us on 9682 3777.