Gee, What a Great Power! Section 66G of the Conveyancing Act 1919 is a neat and handy power. It should be earmarked in every property litigator’s toolkit. Already this year, the power has featured in close to 20 cases in NSW.
What does section 66G do?
Section 66G is a huge source of assistance to parties wanting to sell real property but who are faced with an uncooperative co-owner.
It enables the Court to appoint a trustee to hold the property on trust for sale (or partition). Once the property is sold, monies made from the sale are kept in trust and the proceeds of sale is distributed.
Discretionary Power
The Court’s power under section 66G is discretionary. The principles guiding the exercise of discretion are well established.
Generally, an order is made “of right”, unless, it would be “inequitable”. For example, if it is inconsistent with a proprietary right, or a contractual or fiduciary obligation.
But mere hardship or unfairness, in the sense that the sale will disadvantage the other co-owner, is not a basis for refusing the application.
To establish “inequitable” grounds is an extremely high bar. It is only in the minority of cases that a respondent is successful in resisting section 66G.
The principles were recently summarised by Ward CJ in Eq in Myers v Clark [2018] NSWSC 1029 at [81]-[91]. A copy is here.
This Week’s Case
The most recent 66G application in the Supreme Court of New South Wales is Groch v Knights [2018] NSWSC 1365 before Parker J. A copy is here.
Facts
The parties were formerly in a relationship. They were the registered proprietors (joint tenants in equal shares) of a rural property in Kyogle in northern New South Wales (it is close to a town called Geneva, but not the very beautiful one in Switzerland featuring a breathtaking alpine lake, a life time of chocolate and serene cows).
He was in jail…
The case contained some unusual factual elements which make it remarkable. They played into considerable procedural challenges. It also saw the Court adopting a flexible procedural approach to how the timing of orders under section 66G operate (see below).
What gave the matter heightened procedural complexity was the fact that Mr Knights was on remand in Cessnock Correctional Centre awaiting trial. He was unrepresented and appeared by video link from the Correctional Centre. Being incarcerated meant that Mr Knights had limited documents to hand. He did not seek to take advantage of ordinary litigation procedures such as subpoenas, discovery or notices to produce. He was urged to obtain a solicitor, but he did not.
Gymnastic Orders
That there was no basis upon which to properly resist orders under section 66G was relatively clear and straightforward.
But a potential difficulty arose in the execution of the orders. This was because the parties’ financial contributions were not entirely known. Usually, the beneficiaries’ interests in a trust are defined when the trust is first constituted and continue for the life of the trust. The Court was not in a position to deal finally with the question of proceeds at the time of hearing (partly as a result of Mr Knights’ predicament to accessing records; he being on remand at Cessnock jail).
The Court considered whether an order could be made for the sale of the property despite not reaching finality about the parties’ contributions. It concluded that it could. It examined the term, “statutory trust for sale” and considered that it makes the parties’ ultimate entitlements “subject to such powers and provisions as may be requisite for giving effect to the rights of the co-owners”. Those words build into the terms of the trust a power to determine incidental questions of entitlement after having made an order for sale.
The Court noted that certain equitable doctrines allow the Court to make orders determining entitlement to relief at a general level, with further (subsequent) directions made (as necessary) to carry the order into effect. An example is an order for specific performance, which may be followed by directions and other interlocutory orders to carry it into effect: Caird Seven Pty Ltd v Attia (2016) 92 NSWLR 457. In Coshott v Crouch [2018] NSWSC 853, His Honour Justice Parker suggested that section 66G orders could be seen as another order of this type.
Gee, I will take it home and introduce it to Mum!
- Section 66G applications, properly prepared, are usually fruitful. In only the minority of cases are they declined.
- The Court has flexibility with making orders under section 66G including taking a staggered approach in circumstances where at the time of application the parties’ financial contributions are not known.
- Geneva is a town in Northern NSW. It is also a beautiful city in Switzerland.
- 66G is a really great little power!