More Beneficial in Fact
25The defendant's more substantial grounds of opposition relate to whether partition is more beneficial than sale and even if so, whether my discretion should be exercised in favour of partition. I have already observed that, having regard to the physical features of the property, strata subdivision is an overwhelmingly obvious and logical choice. It is conceivable that there may be some buyer willing to pay a premium price for the single block, with its two separate dwellings. But it is more probable than not, that on a strata subdivision, the value of the individual lots will exceed that of the single block. This was assumed to be self evident during submissions. The defendant called no valuation evidence and made no submission to suggest otherwise. His contentions as to why partition was not more beneficial raised different issues.
26In order to respond to the defendant's contentions, I should expand on the history of the development of the land and the mutual intention of the parties. As I mentioned, both the plaintiff and the defendant commenced on the path to strata subdivision in 1997. They had obtained building approval (BA893/96) in 1996 for the construction of separate dwellings on the land. On 30 October 1997 a preliminary strata subdivision plan was submitted to Council. On 16 December 1997 the Council granted development consent to strata subdivide the proposed dwellings on the basis of the preliminary strata subdivision plan. The plan contemplated that the material of the walls and roofs would form part of each lot so that there would be a minimum amount of common property.
27In 1998 the parties digressed. They decided to change strategy and to attempt to obtain approval to a Torrens title subdivision. This was never likely given that the area of the site is less than 1,000 square metres and it was impossible to comply with the Council's minimum allotment requirements. The application was duly rejected. The only possible form of subdivision was that which the parties had originally intended, namely strata subdivision.
28In the meantime, the plaintiff and the defendant continued with the construction of their separate dwellings on the land. Over time there were some modifications to the plans for each of the dwellings - which the Council approved. The initial course of dealing between the plaintiff and the defendant was that they contributed equally to the construction costs. For some time the defendant was closely involved, attending on site and liaising with architects and engineers. The plaintiff instructed tradesmen and obtained materials. He kept records and presented invoices to the defendant. They met on site on a weekly basis. Periodically they balanced the expenditure. They now disagree on their relative contributions.
29In 2002 the relationship between the plaintiff and the defendant deteriorated. The progress of the construction work was slow. Neither house was complete although the lower house was closer to lock-up stage than the upper house. The strata subdivision was stalled. They bickered. There was and still is, a disagreement about what seems to be an excessive number of garages demanded by the defendant. The plaintiff wanted to be independent of the defendant. But they needed more money to complete the works. They came to an arrangement that the plaintiff would work on his house on Lot 1 and would also assist the defendant with the house on Lot 2. For some time the defendant paid the plaintiff $1,000 per week for his assistance. In February 2003 the defendant organised a joint loan from the Commonwealth Bank for $1.3 million. In January 2004, the Commonwealth Bank granted each of them an additional line of credit - $300,000 for the plaintiff and $200,000 for the defendant.
30In September 2005 the plaintiff and his family commenced occupation of the lower house on Lot 1. The defendant now says that he did not agree to the plaintiff's occupation. I regard this unqualified statement as dissembling. The position was not so straightforward. Certainly however, the defendant was uncooperative and difficult and the mutual trust and confidence between them had diminished. Despite numerous requests, the defendant has since refused to sign any plan of subdivision.
31In 2007 the plaintiff instructed Mr Saxon's firm Clement & Reid to prepare another preliminary strata plan. This was done. It reflected the envelope of the buildings as constructed. A re-definition plan was also prepared in accordance with the policy of the Land and Property Management Authority (LPMA). In 2009 Mr Saxon again inspected the site. In December Mr Reid, a fellow director of Mr Saxon, also inspected the site together with Len Robinson (a former Strata Commissioner) and Graham Davies. Mr Robinson and Mr Davies were retained to prepare the by-laws for the strata plan. They were joined by John Arthur a team leader from the Strata Plan Section of the LPMA. The primary purpose of the inspection was to facilitate an understanding of the issues that officers of the LPMA would have to consider on presentation of the final strata plan.
32In February 2011 Mr Saxon prepared a final strata plan. He certified that it complied with each of the requirements of Schedule 1A of the Strata Schemes (Freehold Development) Act 1975. He said that, following an inspection of the site to discuss registration of the strata plan, officers of the LPMA raised no queries. It is clear, he said, that the building is at a stage where a strata plan can be registered. Nonetheless the defendant will not sign the strata plan. He refuses to be part of the process. In early 2011, Mr Saxon submitted the strata plan to the Department of Lands for pre-examination to determine whether the plan was registrable. The pre-examination elicited a list of requisitions each of which Mr Saxon says can be accommodated. In his opinion, the pre-examination process did not reveal any issue that will prevent the plan from being registered, once he has attended to the requisitions.
33That history raises a number of issues. Foremost is that, by his intransigence, the defendant has manufactured the disputes and objections on which he relies to justify his refusal to sign the plan of strata subdivision. I do not mean to suggest that his objections are not genuinely held. But as I mentioned, strata subdivision is the obvious and logical choice. The defendant knows this. He told me that he was not opposed to strata subdivision - just the plaintiff's strata subdivision. He is inflexible. I have formed the view that there is no prospect of him agreeing with the plaintiff. That is why, if partition is ordered, it will be necessary to have recourse to the experience and judgment of the proposed trustee. It may also be necessary for me to rule on objections by the defendant pursuant to Section 66G(5)(a). But above all it will be necessary to submit the plan to Council, to ascertain whether it has any objections, whether it will impose any conditions and whether it will be necessary for the plaintiff to give effect to his undertaking referred to in paragraph [4]. This can only be done by a trustee appointed by the court. The unwillingness of the defendant to agree with the plaintiff, and the grounds of objection that he has raised to the plaintiff's strata plan, do not by themselves compel me to prefer sale to partition. The flexibility inherent in Section 66G(4), (5) and (6) will ensure that a reasonable outcome is achieved.
34It is obvious that partition will be more beneficial to the plaintiff. It will enable him to remain in the home where he has lived with his family since 2005. He has invested considerable monetary and emotional capital, not to mention fifteen years of his life, in the project. The real question is whether it is appropriate to characterise partition as more beneficial than sale for the defendant. For both plaintiff and defendant partition will provide certainty and security of title in accordance with their original objective. It will enable each of them to re-finance on a separate basis their current joint indebtedness to the Commonwealth Bank. It will remove the source of their disputation. The defendant will become the registered proprietor of Lot 2. It will be more saleable than his current half share of the undivided land. He will have the choice of completing the fitting-out of Lot 2 or selling it in its current state. If he chooses to complete the construction, he will no longer have to deal with the plaintiff as if he were the co-owner that he once was. For both parties, the bank's proceedings for possession of the jointly owned property should be resolved. The prospect of a mortgagee sale over their jointly owned property will be averted. Each will be responsible for his own property and his own indebtedness. Above all, partition, if ordered, will result in the defendant having what was intended to be his - before he set his face against co-operation.
35But there are unresolved and complex financial considerations. They go to the question of what is more beneficial for the defendant and which way the discretion should be exercised. The complexity arises because of the dispute between the parties as to the amounts of money paid towards the project by each of them. To the extent, if any, that the defendant has made monetary contributions for the benefit of the plaintiff towards the construction of the dwelling on Lot 1, or in an amount that reflects more than the cost of the existing construction on Lot 2, it may be possible to provide a mechanism to ensure that there is an adjustment in the defendant's favour for which he will have security pending payment. But the working out of any adjustment cannot be determined until these amounts have been ascertained.
36I made clear during the hearing, and both parties welcomed the fact, that I will appoint a referee to determine as soon as possible the remaining issues including the competing contentions between them as to their respective financial contributions and the quantification of any adjustment that should be made in the defendant's favour, if at all. Whether there should be any equality money, and if so how much, will also need to be considered: Section 66F(3)(b). The finalisation of those matters will enable me to determine whether I should continue to prefer partition.
37I acknowledge of course that the remedy of sale, just like partition, will permit the parties to disentangle their affairs and their lives. But as is partition, it is a discretionary remedy. Given the history that I have recounted, and the matters to which I referred in paragraphs [3] and [4] above, I am reluctant to order a sale unless it is necessary to do so. Taken as a whole, and subject to hearing further when the amounts of the parties' contributions have been determined, I regard partition as more appropriate and consistent with the parties' earlier objective. And I am quite confident that any scheme of partition that is arrived at, and any strata subdivision that I expect will follow, will be objectively reasonable to both parties.
38The defendant's submissions emphasised the disputes between the parties concerning their respective financial contributions. They also relied on an allegation by the defendant that the plaintiff holds some undefined part of his share of the land on trust for the plaintiff. The evidence relating to this matter has not yet been addressed. The defendant's submissions also relied on the bank's proceedings for possession. As I have now made clear, the considerations that arise from those issues are best addressed when the accounting between the parties has been finalised, when it is clear whether the bank consents to partition, when the remaining issues have been resolved and when submissions have been addressed to the question of any monetary adjustment or any equality money that may be necessary in the light of the proved facts. Naturally I will only order partition if I am satisfied that it will produce a just outcome for both parties.