New South Wales Supreme Court CITATION : Waddington v Dillon [2005] NSWSC 732 HEARING DATE(S) : 15 July 2005 JUDGMENT DATE : 15 July 2005 JURISDICTION : Equity JUDGMENT OF : Hamilton J DECISION : Trustees for sale appointed under s 66G of the Conveyancing Act 1919. CATCHWORDS : REAL PROPERTY [315] - Partition of land - Statutory trust for sale or partition - New South Wales - Contract between co owners for sale of land and division of proceeds - Contract not carried out - Whether trustees for sale should be appointed. LEGISLATION CITED : Conveyancing Act 1919 s 66G Judith Maria Waddington (P) PARTIES : Lucy Bernadette Dillon (D) FILE NUMBER(S) : SC 2010/05 J E Thomson (P) COUNSEL : C A Marlow (D) Mullane & Lindsay (P) SOLICITORS : Borthwick Wilson & Mitchell (D) LOWER COURT JURISDICTION : IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION HAMILTON J FRIDAY, 15 JULY 2005 2010/05 JUDITH MARIA WADDINGTON v LUCY BERNADETTE DILLON JUDGMENT 1 HIS HONOUR: The proceedings that I am dealing with contain a claim and a cross claim between two sisters. The sisters sensibly agreed on a regime for the sale of a rural property co owned by them and the division of the proceeds. They did this without the necessity for the commencement of any proceedings. 2 The agreement provided a detailed mechanism for the sale of the property through the appointment of an agent by each of them. The intention of the appointment of an agent by each of them was that those agents should act jointly in the sale of the property. Unfortunately, after this very sensible beginning, the matter has fallen into abeyance for some 16 or 17 months. The agents have not been able to agree on basic matters such as the appropriate rate of commission, or the arrangements that should be made for selling the property. 3 The property is a difficult property to sell because it is in fairly rough country outside Dungog and, in essence, is divided into two blocks, one of which does not have road access. Considerable difficulties arise as to whether they should be sold together or separately and, if the latter, in what order. These issues are all canvassed in a well prepared formal valuation by Mr Wayne Brorson of Dungog, which has been laid before the Court by the defendant. 4 The agent of the plaintiff does not appear to have played a very active role. An active role in looking for purchasers has been played by the agent nominated by the defendant. That agent is Mr Paddy Dillon, who is the brother of both the plaintiff and the defendant. Relations between the plaintiff and her brother do not appear to be good and the plaintiff appears to be doubly suspicious of him, because of a conflict of interest that she says that he has, although I cannot perceive it. However, it seems likely that the feeling between the sister and brother may have played some part in the failure of agreement in the carrying out of the stipulated mechanism of sale. 5 One thing that particularly produces alarm at the delay is the view of Mr Brorson that the property market generally and the market for properties of this sort are at present in a state of decline. It would be unfortunate, from the point of view of both the plaintiff and the defendant, if further delay allowed this decline to continue. I should add that Mr Dillon is more optimistic about the state of the market, in that he says that he has sold a number of rural properties in the district recently, but I cannot ignore what Mr Brorson says about the general trend. I should add that I have not formed any view adverse to Mr Dillon on the material before me. I shall say something later in this judgment arising from that. 6 The plaintiff's claim is that the trustees for sale of the property under s 66G of the Conveyancing Act 1919 ought now be appointed. She has nominated a solicitor and a chartered accountant from the Hunter region who are willing to act. The solicitor, particularly, has experience in managing large funds and in the sale of properties. Each has indicated his or her consent to act. Nothing is said against the suitability of those persons. If I accede to the plaintiff's claim, I propose to appoint them as trustees for sale. They have both deposed to their independence of the parties. 7 The cross claim asks for detailed directions as to how the transaction of sale should be carried out without the appointment of trustees. Ms Marlow, of counsel for the defendant, has argued earnestly that Mr Dillon's evidence shows that he is at present negotiating with a number of potential purchasers, including at least one neighbour who may be interested in buying the back block. The advantage of a neighbour as a purchaser is that the neighbour will not be concerned about problems of access to that block. Ms Marlow has pressed, again earnestly, that before appointing trustees for sale I should allow an adjournment of some two months to see if the sale can be brought to fruition through Mr Dillon. 8 This course is not without some advantages. However, so much time has passed already and one difficulty with the sale being effected through Mr Dillon is that there is no agreement between the parties as to what would be an appropriate rate of commission should Mr Dillon effect a sale. Relations between the sisters since their happy agreement in February 2004 have simply been crippled and a state of inertia has been reached. It seems to me that, if a sale is to be effected, it must be under the control of trustees, who can independently assess the market and deal with Mr Dillon or any other agent that they may deem appropriate in relation to a sale. 9 Whilst I emphasise that the relevant discretion as to any of those matters should be that of the trustees appointed to exercise the function, it does seem to me that it would be appropriate for them, in the first instance, to explore with Mr Dillon the state of his negotiations with respect to purchasers who may be available for the property. They will be in a position, if some purchaser is available through Mr Dillon, to agree with him concerning the appropriate rate of commission in all the circumstances. 10 I, therefore, propose to make an order appointing the persons nominated by the plaintiff as trustees for the sale of the property under s 66G and to vest the property in them for that purpose. That deals with the substantive question. 11 Ms Marlow has also pressed on me that there is an agreement between the parties as to the mode of sale which should be left to operate. Mr J E Thomson, of counsel for the plaintiff, would submit, if necessary, that the contract, or that portion of the contract, was frustrated by what has occurred. Whether that is so or not I am far from certain. I do not think it is necessary to enter into the complicated area of the frustration of contracts. Even if the contract is in force, it is simply not being carried out, at a time when it is to the advantage of the co owners for the property to be sold. The existence of the agreement, in my view, cannot and does not oust the jurisdiction of the Court to make an order under s 66G while the property remains in co ownership. I do not propose to allow those considerations to prevent my making the order that I have indicated. 12 The parties are co owners as tenants in common in equal shares. The agreement provides for a division of the proceeds of sale other than simply a division in halves. That is because the agreement settled disputes between the sisters arising from other transactions between them concerning the property. However, whilst this summons prays for an order that the trustees hold the proceeds in accordance with the terms of the agreement, there may be some complication in this. The agreement does not seem to take account of the extant mortgage originally securing the sum of $70,000. The mortgage was given by both sisters over the property to Westpac but both agreed in their evidence that the borrowing was a borrowing of the plaintiff alone, who was then conducting a grazing business on the property, rather than being in any part a borrowing of the defendant, who was not engaged in that business. 13 It would certainly be wise if the parties between now and when short minutes are brought in had some discussions to see whether it can be agreed at this stage what should be done about the discharge of that mortgage. In particular, it should be established how much is still owing under it, which does not appear in the evidence before me. In view of the possible complications in the sale and the possibility of complications as to distribution of the funds, the orders should incorporate liberty both to the parties and to the trustees to apply to the Court on short notice. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.