Eva Joy Ambrus v Lee Ellen Buchanan

Supreme Court of NSW|2022-11-23|Before: Williams J

Solicitors: Wall and Company Lawyers (Plaintiff) PSD Lawyers (First to Twelfth Defendants) File Number(s): 2021/157163 Publication restriction: N/A

Introduction

These proceedings concern land at 193 Hidden Valley Road in Mount Warning (also known as Eugenella) in New South Wales, being the land in folio identifier 38/755754, which the Registry has divided into sub-folios 38/755754B, C and D (the Land).
The plaintiff and the twelve defendants are co-owners of the Land.
The plaintiff seeks an order under s 66G of the Conveyancing Act 1919 (NSW) appointing trustees to hold the whole of the Land on statutory trust for sale. The defendants oppose the Court making such an order and contend that the plaintiff is precluded from even applying for such an order by fiduciary duties allegedly owed to the defendants, by the doctrine of promissory estoppel and/or on the basis that the plaintiff would receive an "unconscionable benefit" if the Land were sold by trustees and the net sale proceeds distributed between co-owners in accordance with their respective interests in the Land. The defendants also contend that the sale of the Land by trustees appointed under s 66G would cause hardship to the defendants. They rely on this as a further ground of opposition to the plaintiff's application.

Salient facts

The Land is an area of approximately 120 hectares bordering on Mount Warning National Park.
The parties own the Land as tenants in common in the following proportions or shares: 1. Mr Ian McQueen [1] and Mr Michael McQueen [2] (as joint tenants between themselves) as to a 1/7th share of the Land; 2. Ms Lee Buchanan [3] as to a 1/7th share of the Land; 3. the following persons (as tenants in common between themselves) as to the remaining 5/7th share of the Land: 1. Mr Rudolf Thaesler [4] as to a 4/40th share of the 5/7th share; 2. Ms Erin Donkin [5] as to a 4/40th share of the 5/7th share; 3. Ms Sharon Boyd [6] as to a 4/40th share of the 5/7th share; 4. Ms Willow Hallgren [7] as to a 4/40th share of the 5/7th share; 5. Ms Eva Ambrus [8] as to a 1/40th share of the 5/7th share; 6. Mr Michael Donkin [9] as to a 3/40th share of the 5/7th share; 7. Ms Courtney Donkin [10] as to a 4/40th share of the 5/7th share; 8. Earthwands Pty Ltd [11] as to an 8/40th share of the 5/7th share; 9. Ms Caitlin Donkin [12] as to a 4/40th share of the 5/7th share; and 10. Ms Barbara Straker [13] as to a 4/40th share of the 5/7th share.
Ms Ambrus is the plaintiff in these proceedings. The other co-owners referred to above are the defendants.
Ms Ambrus acquired her interest in the Land from the seventh defendant, Mr Donkin, in November 2011. That interest, being the 1/40th share in a 5/7th share described above, is equivalent to an interest in the Land as tenant in common as to a 1/56th share.
The Land is used by the co-owners for "multiple occupancy" purposes. Whilst each of the co-owners has a right to possess the whole of the Land, they have adopted a practice of each confining their possession to a particular area of the Land designated as their "sphere of influence". Some co-owners have constructed dwelling houses and other improvements on their "sphere of influence". Co-owners have also made financial and non-financial contributions to the construction and maintenance of internal roads on the Land. The co-owners refer to the Land by the name "Derrilin". They refer to themselves as "shareholders" and sometimes refer to themselves collectively as "the Derrilin community" or simply "the community". The only "shares" owned by the co-owners are their interests in the Land as tenants in common in the shares set out above. No corporation was established for the purpose of or in connection with the co-owners' arrangements for their occupation of the Land.
There is no dispute that the Land was used for multiple occupancy purposes in the manner that I have described above for many years before Ms Ambrus acquired her interest in the Land. It continues to be used in that manner today.
It is common ground that the use of the Land for multiple occupancy is contrary to the current zoning of the Land and is unsupported by any planning approval. It is also common ground that there are no planning or development approvals supporting the improvements that co-owners have constructed on the Land, including the eight dwelling houses that have been erected on the Land at various times since 1982.
Mr Donkin gave evidence that it has been the "common ambition" of the "shareholders" since 1982 to have the Land approved as a multiple occupancy or some other form of rural land sharing arrangement to apply for all of the existing dwellings to be approved by the Tweed Shire Council. A zoning change affecting the Land in the mid to late 1980s thwarted that ambition, but at least some of the co-owners remain hopeful of ultimately achieving approval for a multiple occupancy. There is no evidence of any basis for that hope. The Tweed Shire Council has characterised the Land as a "deferred matter" since that zoning change in the mid-late 1980s.
The defendants refer to their use of the Land as an "aspiring multiple occupancy", but do not seek by that terminology to obfuscate the fact that their use of the Land and the existence of the improvements on the Land is contrary to applicable planning laws, regulations and policies.
Mr Donkin first acquired an interest in the Land as a tenant in common in 1982. At that time, Mr David Butler gave Mr Donkin a copy of the "Derrilin Policies". Mr Donkin describes Mr Butler as "one of the original tenants in common". The fourth defendant, Ms Sharon Boyd, was another of the early co-owners and was involved in the drafting of the "Derrilin Policies" together with her former partner and with Mr Butler. According to Ms Boyd's evidence, they intended at the time that the "Derrilin Policies" would be "a guiding principle and for our security of tenure in the property and to bind all the shareholders who purchased shares on this property". As will become apparent, there is no evidence that any steps were in fact taken over the years to "bind" incoming co-owners to the "Derrilin Policies".
Immediately after acquiring his interest, Mr Donkin built a dwelling on his "sphere of influence" in which he lived until about 2000. I will refer to this as Mr Donkin's dwelling.
The "Derrilin Policies" are a five page document entitled "'DERRILIN' POLICIES. APRIL 1982" and a one page document entitled "POLICIES".
The "'DERRILIN' POLICIES. APRIL 1982" document states that "Derrilin will be owned as a freehold tenancy in common" and that "[n]o sub-division or separate free-hold titles will be allowed". The document describes the tenants in common as "owners" and as "shareholders".
The "'DERRILIN' POLICIES. APRIL 1982" document commences with a section entitled "Decision-making procedures" which provides: "Each person entitled on the ownership deed is given one vote. Voting-rights will be suspended in the event of failure to pay shire rates and charges annually. Persons may include two original owners of each share and any persons unanimously invited to become voters."
The document is silent about the process by which persons other than "original owners" of each share may be "unanimously invited" to become voters. The document does not identify the body that must issue any such invitation unanimously.
The "Decision-making procedures" section continues: "Any owner with voting rights may call for an owners' meeting at any time. At least 48 hours' notice should be given, in normal circumstances. Attendance by all owners in residence is compulsory. Regular full meetings are not necessary and should be kept to a minimum."
The "Decision-making procedures" section then states: "Policies will be implemented, cancelled and waived only by unanimous consent."
No evidence was adduced in these proceedings of any resolution of some or all of the co-owners to implement, cancel or waive any particular policies. Mr Donkin gave evidence that "we weren't ever going to - never going to vote on the policies. They were in place."
The next section of the "'DERRILIN' POLICIES. APRIL 1982" document is entitled "Financial matters" and is directed principally to the costs of maintaining the portion of the public road access to the Land for which the local council is not responsible and the cost of establishing and maintaining internal roads. This is followed by a section entitled "Land Management".
The final sections of the "'DERRILIN' POLICIES. APRIL 1982" document are entitled "Division of Shares" and "Sale of Shares". It is convenient to set those sections out in full: "Division of Shares: No sub-division or separate free-hold [sic] titles will be allowed. When a couple, equally sharing one share, dissolve their partnership, and both persons wish to remain on Derrilin, each person must establish a sphere of influence within the original S.O.I. In the event of one person staying and the other person leaving, there can be no claim, financial or otherwise, on other members of the community. A sphere of influence split once, may not be split again. Sale of Shares: Derrilin will be owned as a freehold tenancy in common. Sale of the entire property must have the unanimous consent of all owners. The sale price of improved shares will be determined as a seventh of the total current market value of Derrilin, excluding buildings and improvements, plus the value of improvements made on the S.O.I., (if funded by the outgoing shareholder). If the latter is the case, the value is to be determined by the vendor."
The term "Sphere of Influence" is defined in the document as: "An area to be marked on the aerial photo, over which a shareholder has first option in respect of land use. Unused land which is suited to a congenial use not pursued by the relevant shareholder, should be made available to the community for such use."
The "POLICIES" document that Mr Donkin identified as part of the "Derrilin Policies" contains six numbered paragraphs, including the following: "1) SHARE TRANSACTIONS: Shares cannot change hands without the agreement of the existing shareholders. Prospective newcomers need to meet the existing shareholders before buying a share, to get a feel for Derrillin [sic] as a community. 2) SPHERES OF INFLUENCE: These are areas designated on the areal [sic] map and recognised by all shareholders. The owners can treat their sphere of influence as they like, except on policy matters. The rest of the land is common ground and can be enjoyed by all. The responsibility to maintain and conserve the common ground is also shared by all."
Mr Donkin gave evidence that the "Derrilin Policies" were "looked after" by various "shareholders" at different times. It is plain from the evidence of other co-owners and former co-owners adduced by the defendants that co-owners did not each have their own copy of the "Derrilin Policies" and that the document was held by various different co-owners during various vaguely described or unspecified time periods. The evidence disclosed no reason for the document changing hands between co-owners. As counsel for the plaintiff submitted, the evidence does not reveal anything even remotely resembling a chain of custody in respect of the "Derrilin Policies". It was not until 2018 that a digital copy of the "Derrilin Policies" and other documents relevant to the Land (which he refers to collectively as the "MO documents") was made and circulated to co-owners.
In his affidavit affirmed on 6 September 2021, Mr Donkin deposed that, on the basis of the "Derrilin Policies", he assumed that the sale of the entire Land must have the unanimous consent of all owners and that a "shareholder" could sell only his or her own share for a value determined by that "shareholder", which included the value of the improvements made on their "sphere of influence". The second of those assumptions is inconsistent with the "Derrilin Policies", which stated that shares cannot be sold without the agreement of existing "shareholders" and imposed some constraints on the price for which shares could be sold.
In his 6 September 2021 affidavit, Mr Donkin deposed that he also assumed or expected that, if a "shareholder" wished to dispose of their share, there would be no impediment for them to sell, transfer or otherwise deal with their shares. Mr Donkin described that assumption or expectation as one that he held "[i]n addition to the Derrilin Policy". However, that assumption or expectation formed by Mr Donkin is directly contrary to the restriction on "splitting" a "sphere of influence" more than once referred to at [24] above and the statement in paragraph 1 of the "POLICIES" document that shares cannot be sold without the agreement of existing "shareholders".
In cross-examination, Mr Donkin accepted that the "Derrilin Policies" was merely a set of guiding principles that Mr Butler thought in 1982 might form the basis for a community of people living together. Mr Donkin initially maintained that the "Derrilin Policies" were at the centre of the community relationship and that co-owners lived by the policies. After being reminded that he acted contrary to the "Derrilin Policies" by selling part of his interest to Ms Ambrus in November 2011 without obtaining the agreement of the then existing "shareholders", Mr Donkin downgraded the role of the "Derrilin Policies" to something that is "not lived by in total". Mr Donkin said: "there's parts of that, like the sale, that have to be adhered to, but in realistically living, we do our best". Asked about the "lived practice" of how the policies were adhered to or ignored, Mr Donkin said that people applied "common-sense and decency". Expanding on this later, Mr Donkin said: "A. … they're more guidelines, we all hope to adhere to them and we try our best because we've got everyone's interest, and but some of them out of common-sense, or never get the chance to practiced, but not to the detriment of our community. And with the share transactions … lot of the owners aren't - don't live on the premises, they're away, some are overseas, to contact them it's not a practicality or even a reality a lot of the time. So we had a policy of unrestricted freehold movement to buy and share [sic - sell] using our best interests of our community. Q. Is this some unwritten notion that you have? A. We discuss that all the time in meetings. In - we have - we'd have annual meetings. We call them road fund meetings, but any issue that was current was always discussed, and the sale of shares was one that we had an understanding about."
Mr Donkin later described the absence of restrictions on any co-owner selling their shares and who those shares could be sold to was a "position that evolved" by about 2002. He acknowledged that it was inconsistent with the terms of the "Derrilin Policies".
Mr Donkin also gave evidence that the "Derrilin Policies" that precluded a "sphere of influence" from being "split" more than once had been abandoned by some of the co-owners. Mr Donkin said: "It's human frailty, isn't it. … people do things. It's not a legal document. It's a guideline. We call it policy for want of a better term."
It was put to Mr Donkin that a reasonable bystander would look at Derrilin and say that "really, you make it up as you go along". Mr Donkin answered: "Some people do, yes". It was then put to Mr Donkin that, "within your community … you take the rules when they suit you and you leave them aside when they don't". Mr Donkin answered: "It's common everywhere". He added that the key rules were "preserving the environment", "not restricting anyone's movement" and "not getting into anyone's private business". Mr Donkin also gave evidence that the community "isn't cohesive" and said that "there's no living arrangement". He described "kids, roads and dogs" as the three issues that cause trouble in communities such as Derrilin and said that roads were the most contentious issue within the Derrilin community. Mr Donkin then described the practices in place for maintaining roads on the Land, which bear no resemblance to the statement in the "Derrilin Policies" that internal roads would be on a "established and maintained on a user-pays basis". Mr Donkin said: "You've got to understand that Mr Butler in the early days, he had a list of things that were from the original mob of occupancies in the area, and they were - they were a set of guidelines, you call them policies or whatever, they were a set of guidelines and policies that - that we read before we bought in, and were happy to do so, and happy to oblige by. Whether it affected us or not. As a user pay basis, was never going to happen in our place."
The defendants read affidavits of other co-owners and former co-owners which establish that those persons were not provided with or informed about the "Derrilin Polices" before they "bought in". Contrary to Ms Boyd's intention in 1982, none of the co-owners were asked to agree to adopt or to be "bound" by the "Derrilin Policies" before acquiring their interests in the Land.
The second defendant, Mr Rudolf Thaesler, purchased his interest in the Land in 1989. He described "the Derrilin Policy" as part of a "bundle of MO documents" which had been "circulated amongst shareholders over the years". Mr Thaesler could not recall when he first saw the "Derrilin Policy". He does not claim to have agreed to be bound by its contents or to have understood that he or other co-owners were so bound. Rather, he describes the "Derrilin Policy" as setting out a "common sense approach". Mr Thaesler gave evidence that "sale by unanimous shareholder agreement" had been "mentioned in meetings" over the years, but he could not recall any details of those discussions and his evidence sheds no light on when they occurred as who was present.
Mr Gopala Krishna and his wife purchased an interest in the Land in 1990. Mr Krishna gave evidence that they learned about the "general policies of the community" after they moved onto the Land "through conversations and information we got from the other owners living on the community". Mr Krishna did not refer to ever having received, been told about or asked to adhere to the "Derrilin Policies". Mr Krishna did give evidence that: "There was never an understanding that one or more shareholders could force the other shareholders to sell their shares or be sold up against their will". However, Mr Krishna gave no evidence explaining how or when he came to the view that this was "never the understanding". Mr Krishna and his wife sold their interest in the Land to the first defendant, Ms Lee Buchanan, in 2020.
The eleventh defendant, Mr Ian McQueen, purchased his interest jointly with his brother in November 2003. He deposed that "several of the shareholders" explained to him and his brother their responsibilities, their financial obligations and the location and boundaries of their sphere of influence, and that Mr Donkin and Mr Krishna explained to them the "Derrilin Policies". Mr McQueen also gave evidence that Mr Donkin and Mr Krishna told him that they "could sell their share whenever [they] like and that no-one could sell the whole property without all shareholders agreeing". Mr McQueen gave evidence that he had "discussed over the years with each of the shareholders these basic principles." It is not clear from Mr McQueen's evidence whether his conversations with Mr Donkin and Mr Krishna occurred before or after he and his brother purchased their interest in the Land. Mr McQueen does not refer to having been provided with a copy of the "Derrilin Policies". Mr McQueen's affidavit is devoid of any details of the conversations that he refers to with other "shareholders".
Mr David Marks is the director of the eighth defendant, Earthwands Pty Ltd, which acquired its interest in the Land in October 2013. Mr Marks gave evidence that "as soon as I saw the property I wanted it". He does not depose to having received any documents or information about the "Derrilin Policies" or any other arrangements or expectations between the co-owners prior to Earthwands' acquisition of its interest. According to Mr Marks, Mr Thaesler invited him to dinner after he arrived to live at Derrilin and explained to him "the general history of Derrilin and the community expectations", including that "no one could sell my share and that Derrilin could only be sold if all shareholders agreed". Inconsistently with his evidence that his conversation with Mr Thaesler occurred only after he had moved to Derrilin, Mr Marks claims to have relied on "this information and understanding between the shareholders" when he "purchased my shares". Mr Marks does not identify the basis on which he apparently assumed that Mr Thaesler spoke to him in some representative capacity for all co-owners. Mr Marks does not depose to having ever received the "Derrilin Policies".
The fifth defendant, Ms Willow Hallgren, gave evidence that she first received a copy of the "Derrilin Policies" after she inherited part of her late mother's interest in the Land. Ms Hallgren later purchased from her siblings the interests that they had inherited from their mother. Ms Hallgren described the "Derrilin Policies" as "the basis of my trust in fellow shareholders". That is a curious description, having regard to Mr Donkin's evidence referred to above that many aspects of the "Derrilin Policies" were not observed in practice. Ms Hallgren also deposed: "That the property could only be sold by the unanimous consent of all shareholders I believed was always a universally held, fundamental assumption of all shareholders." Ms Hallgren did not identify any basis for that belief, other than the policy documents themselves which she read in 2013 and some unspecified conversations with her mother, Mr Thaesler and Ms Boyd. Ms Hallgren gave no evidence of any discussions that she had with other co-owners that let her to believe that all co-owners regarded those documents prepared in 1982 as "universally held" and "fundamental" in 2013.
The tenth defendant, Ms Barbara Straker, purchased her interest in the Land in 2016. According to Ms Straker's evidence, she did not receive a copy of or any information about the "Derrilin Policies" until after her purchase, when Ms Boyd gave her "a bundle of old MO documents that had been kept from around 1982". Ms Straker gave evidence that she has "learnt the community expectations through reading the Derrilin Policies, the minutes of previous meetings and discussion with other shareholders over the years including Michael, Sharon, Willow, David and Rudi." The "expectations" that Ms Straker describes having learned about include that "[s]hareholders may sell or gift their share as they see fit" and that she has "the right to sell [her] share without any prior approval from the other shareholders". Those "expectations" are consistent with Mr Donkin's evidence, but contrary to the "Derrilin Policies". Ms Straker described the "expectations" that she had learned about as also including "an implied promise to only sell one's share, not to sell or in any way jeopardize the other shareholders' right to enjoy their homes and curtilages". Ms Straker also gave evidence that she was aware that it "has been our policy since the beginning of our group occupation of the property" that "[w]e can buy and sell our own shares but we can't sell the whole property unless everyone agrees". Ms Straker gave no evidence identifying the source of her understanding of the "implied promise" or "our policy".
The first defendant, Ms Lee Buchanan, acquired her interest in the Land from Mr and Mrs Krishna in 2020. Ms Buchanan gave evidence that she met with them before her purchase and they explained to her that her "share purchase would be 1/7th of a tenants in common property". They also explained that Ms Buchanan's purchase included the house, carport and meditation hut on the "sphere of influence" and provided her with information about the water supply, hot water system, solar system, back-up generator, road fund and meetings. They informed Ms Buchanan that Ms Straker managed rates and levies and that details of meetings and the history of Derrilin could be obtained from Ms Straker. Ms Buchanan gives no evidence of the vendors mentioning the "Derrilin Policies" or any matters addressed by those documents. Ms Buchanan gave evidence that Ms Straker emailed her a bundle of historical documents, including the "Derrilin Policies" after her purchase from Mr and Mrs Krishna. Referring to the statement in the "Derrilin Policies" that "sale of the entire property must have the unanimous consent of all owners", Ms Buchanan deposed that she "believed all shareholders observed this". The sole basis that Ms Buchanan identifies for her belief is "this policy" itself.
Two of Mr Donkin's daughters, Ms Erin Harvey (nee Donkin) and Ms Courtney Donkin, each received their interest in the Land by transfer from their father in about 2008 or 2009. Both of them gave evidence to the effect that their father told them about what they describe as the "Derrilin Policies". However, the substance of what they describe Mr Donkin saying to them is inconsistent in some respects with the documents comprising the "Derrilin Policies". Ms Harvey and Ms Donkin do not refer to having received a copy of those documents. Neither of them claim to have had conversations about co-owners' rights and obligations with any person other than their father.
I now turn to the background to the transaction by which Ms Ambrus acquired her interest in the Land from Mr Donkin in November 2011.
Ms Ambrus and Mr Donkin were in a relationship during the period from about 1993 to 2001. Ms Ambrus periodically visited Mr Donkin at Derrilin during this time. In cross-examination, Ms Ambrus gave evidence that she visited Mr Donkin at Derrilin about once every four to six weeks. During those visits, she occasionally met other people who she understood were Derrilin community residents.
Ms Ambrus and Mr Donkin stayed in touch after their relationship ended in about 2001.
Ms Ambrus resided in Mr Donkin's dwelling from about December 2007 for a period of almost four years before she purchased part of his interest in the Land in November 2011. Mr Donkin himself resided elsewhere at the time, although he would occasionally come to Derrilin and stay in the dwelling. The issues raised by these proceedings do not call for the Court to determine the precise terms of the arrangement under which Ms Ambrus occupied the dwelling during that four year period. While living in Mr Donkin's dwelling, Ms Ambrus became aware that the houses on the Land had been built without any approval from the local council and that people were improving those houses or "increasing their footprint" on their "spheres of influence". Ms Ambrus did not have conversations with "shareholders" about their intentions for the future, nor did she turn her mind to what their intentions might be. Ms Ambrus was aware that one couple had sold their share but was not aware of any of the details of that transaction.
Mr Donkin gave evidence that he told Ms Ambrus "[a]t one stage between around 1996 to 2010" that: "All the Derrilin Community information is there in the box". According to Mr Donkin, he was referring to a box that was stored in his dwelling for the entire time that Ms Ambrus resided there.
Ms Ambrus purchased her interest in the Land from Mr Donkin in about November 2011 and paid Mr Donkin the sum of $60,000 in that transaction (the 2011 transaction).
Ms Ambrus gave the following evidence in cross-examination: "Q. Ms Ambrus, when you purchased your share, would you have purchased your share on the understanding or with the knowledge that at a later stage one of the shareholders could force you to sell your share? Did you consider that at the time of your purchase? A. I was not - I did not have any knowledge of that. Q. Was it your understanding that when you purchased your share that you were purchasing a permanent right of occupation if you built your cabin? A. I believe so, yes. Q. And that obviously you would have the right to leave that cabin to your daughter? A. Yes. … Q. When you bought your share your assumption was that you had a permanent right of occupation of your sphere of influence? A. Yes. Q. Was it your assumption that your fellow shareholders would not interfere with that right of permanent occupation of your sphere of influence? A. Hopefully. Q. You knew that there were eight or so other shareholders residing there as tenants in common? A. Yes. Q. In your brief meetings with those shareholders none of them ever mentioned anything about forcing you to sell your interest in the property? A. No. Q. No one said, 'Look, if I want to, I can make you sell your share to your sphere of influence'? You never heard that, did you? A. No. … Q. You heard those words, "MO", multiple occupancy? A. Yes, I heard those words. Q. And you knew that the community was aspiring to be a legitimate one? A. No, I did not know that. Q. Did you know that they were, in effect, not approved for multiple occupancy? A. I understood that they were not legally approved of. Q. … Did you know that they were trying to become legally approved? A. No, because that had never come up in any conversation I'd had with anyone. Q. But you assumed that no-one would be able to tell you to sell your share in the property? A. I had never thought of it, to be honest."
Mr Donkin's version of the negotiation of the 2011 transaction is set out in his affidavit affirmed on 6 September 2021. Mr Donkin deposed that "at one point I handed [Ms Ambrus] my copy of the 'Derrilin Policies' document when she wanted to buy the share." According to Mr Donkin, he told Ms Ambrus when he handed her the document that "you can see no major events can occur unless by unanimous consent". Mr Donkin deposed that he saw Ms Ambrus look at the "Derrilin Policies" document.
Ms Ambrus gave evidence denying that Mr Donkin ever told her that "the Derrilin Community information" was in a box and denying that he had ever provided or shown the "Derrilin Policies" to her. Ms Ambrus acknowledged in cross-examination that a number of boxes of material were stored in Mr Donkin's dwelling during the years that she resided there but said that she did not look in those boxes as they contained his personal materials. It was not put to Ms Ambrus that Mr Donkin had handed her a copy of the "Derrilin Policies" at some time during their negotiation of the 2011 transaction. Ms Ambrus was asked in cross-examination whether she had made any inquiries prior to or at the time of the 2011 transaction about whether there were any "community documents" to read. She said that she had not done so because "it had never come up in discussion".
Ms Ambrus gave the following evidence in cross-examination: "Q. I put it to you … that you knew that there was a community policy that if the whole of the property was to be sold, all of the tenants in common or shareholders had to agree. You knew that. A. No, I did not. Q. So, you entered into a purchase of shares not knowing that. Is that your evidence? A. I did not know it. Q. I put it to you that is not the truth of it, you knew. A. I did not. Q. So, is it your evidence that without knowing that, you intended to build a cabin? A. Yes, I intended to build a cabin. Q. And without knowing that, you considered that you would live there and have a permanent right of occupation? A. If I ever built a cabin. Q. And without knowing that, you planned to leave your cabin and interest to your daughter? A. Yes. Q. And without knowing that, you regarded you had a permanent right to occupy your sphere of influence? A. I believe so."
It was put to Mr Donkin in cross-examination that he had never discussed the "Derrilin Policies" with Ms Ambrus. Mr Donkin answered: "There was - there certainly was. I disagree. In fact, the whole correlation of policies, in fact, as far as the most important ones out of the policies."
It also put to Mr Donkin that: "… what's happened here is that, in the preparation for this hearing, you and the other defendants have dusted off this document and sought to hang your defence on one sentence in that policy document."
Mr Donkin did not accept that proposition.
It is common ground that Mr Donkin and Ms Ambrus sought advice together in early November 2011 from Mr Paul Brown, solicitor, concerning their proposed transaction and their wills. The "Derrilin Policies" were not discussed at their meeting with Mr Brown. Mr Donkin gave evidence that, in the context of his discussions with Ms Ambrus about their wills, he said to her: "You're [sic] share is secure. Nobody can take it away now that you have it. The only way you be [sic] forced off the property now is if every shareholder agrees to sell the property, which they won't." According to Mr Donkin, Ms Ambrus replied: "OK".
Ms Ambrus was an impressive witness who gave evidence in a clear, calm and forthright manner and made appropriate concessions without appearing to consider the effect of such concessions on her prospects of success in these proceedings. None of those concessions involved any material departure from her evidence in chief. I reject the defendants' vague submission that Ms Ambrus sought to "minimise" matters in her evidence. A witness does not "minimise" or "downplay" something merely by declining to accept the cross-examiner's proposition about it. The submission was not made good by reference to any objective or other credible evidence suggesting that Ms Ambrus' evidence was inaccurate or untrue.
By contrast, Mr Donkin sought in his affidavits and in the early stages of his cross-examination to elevate the "Derrilin Policies" to the central document governing the Derrilin community and something that all co-owners lived by. That was plainly untrue, as revealed by the evidence that emerged as his cross-examination progressed.
I reject Mr Donkin's evidence referred to at [47] above that he told Ms Ambrus "[a]t one stage between around 1996 and 2010" that "all the Derrilin community information" was stored in a box in his house. That evidence is so vague that I feel no sense of persuasion that any such conversation actually occurred. Even if Mr Donkin had said that to Ms Ambrus at some time during that 14 year period, it would not have alerted Ms Ambrus to the existence of the "Derrilin Policies". Nor would it have caused her to go searching through the box at the time of the 2011 transaction. Ms Ambrus' evidence that she did not search through the boxes containing Mr Donkin's personal papers and belongings is inherently plausible.
I also reject Mr Donkin's evidence that he gave Ms Ambrus his copy of the "Derrilin Policies" document "at one point … when she wanted to buy the share". I accept Ms Ambrus' evidence that Mr Donkin did not give her those documents. It is inherently improbable that Mr Donkin would have given those documents to Ms Ambrus because, by 2011, the documents bore little resemblance to the way in which co-owners in fact dealt with their interests in the Land and with one another. That is clear from Mr Donkin's evidence in cross-examination.
As I have already mentioned, Mr Donkin did not seek or obtain the agreement of all of the co-owners in November 2011 for the sale of part of his interest in the Land to Ms Ambrus. In her affidavit affirmed on 6 October 2021, Ms Ambrus deposed that Mr Donkin told her at the time of the 2011 transaction: "Do not tell anyone that you have purchased part of my share". Mr Donkin affirmed an affidavit on 5 November 2021 in which he responded to Ms Ambrus' affidavit affirmed on 6 October 2021. Mr Donkin took no issue with that aspect of Ms Ambrus' evidence. In cross-examination, Mr Donkin denied for the first time that he had asked Ms Ambrus not to tell the other co-owners that she had purchased part of his share. Mr Donkin also asserted for the first time that he had told some of the other co-owners about the sale, but he did not identify those co-owners and did not claim to have sought or obtained their agreement to the transaction.
In 2012, Ms Ambrus and Mr Donkin fell into dispute about whether their 2011 transaction had included the grant of a life interest by Mr Donkin to Ms Ambrose in Mr Donkin's share or dwelling. The solicitors acting for Ms Ambrus wrote to Mr Donkin on 17 May 2012 offering to resolve that dispute on terms that included Ms Ambrus transferring the interest in the Land back to Mr Donkin. The letter otherwise expressly reserved Ms Ambrus' "rights to make an application to the Supreme Court of New South Wales for the Appointment of Trustees for Sale of the entire property".
The dispute was continuing in December 2012. Mr Donkin sent an email to some or all of the other co-owners on 12 December 2012 stating: "I feel I have something important to tell you all and some legal advice of interest as well." The email then disclosed that Mr Donkin had sold one quarter of his interest in the Land to Ms Ambrus and described the nature of the dispute that they were then embroiled in. The email continued: "… suffice it to say, there is an important issue for us all here ….. We never drew up a 'Partition Agreement' on our so called 'Spheres of Influence' so our security is not absolute to the extent that we as tenants in common do own shares in each other…..So as long as you don't allow another coowner [sic] to be involved with your spheres/assets then maybe it's ok. Of course this is what we do and respect BUT it can legally be challenged….so maybe a 'partition agreement' is a good idea. As we have unrestricted freehold movement of our shareholding, we would hope everyone else is considerate, etc…What I did was a mistake especially now that eva changed her mind and wanted out and instead of trying to sell her share to some third party unknown to us all, (which is best), she has put her demands on me. I will sort it out but…get this !!..(.like we all could under certain circumstances).. eva could subpoena us all to the Supreme Court to demand her money… but without explaining all of the nuances here..it won't happen. She looks like trying to sue me for breach of contract now….another desperate attempt but costly for me and another stress time. Please don't get wrapped up in trying to solve this or worry….it's a difficult and convoluted mess….I will see her leave eventually and the share returned to me and a good lesson learned. There was no greed or avarice initially but oh how things can change…. .So, there may be a legal situation arise [sic] soon whereby I may have to ask you all to sign an affidavit to enable me to buy her out and have the share returned to me….this would basically be you only acknowledging that my house IS my house built in 1984 and where it is situated with respect to each of our coownerships. With a 'Partition agreement' this would not be necessary…so hence something we should probably do to protect any future unforseens [sic] by any of us."
Mr Donkin was asked in cross-examination about the legal advice and partition agreement referred to in his email. Mr Donkin said that he could "vaguely remember there was a talk about partitioning our property and shares … but it never eventuated". Mr Donkin also said that "people wanted to feel secure". He accepted, when he stated in his email that "it can legally be challenged so maybe a partition agreement is a good idea", he was referring to a challenge in the nature of these proceedings. Mr Donkin identified that this was the very kind of challenge that had been foreshadowed in the letter from Ms Ambrus' solicitors referred to at [62] above. Mr Donkin then said: "So, maybe that was, in my - maybe I got some legal advice that if you could partition your property off, those who - it would give you some sort of safety. I don't understand the legalities of it …".
It was put to Mr Donkin that a partition agreement came under discussion in December 2012 because the notion that a sale of the entire Land required unanimous consent was nothing more than a document gathering dust in somebody's home. Mr Donkin denied that, maintaining: "That was known from day 1. You buy into this community here, it'll never be sold up for you unless it's by unanimous consent." I reject that evidence of Mr Donkin. It is highly improbable that the unanimous consent notion was known and understood between co-owners as he claims yet was not mentioned in his email to co-owners informing them of his dispute with Ms Ambrus and identifying a partition agreement as the only way out of the predicament that he had created for them.
Aspects of the 2012 dispute between Ms Ambrus and Mr Donkin were the subject of proceedings in the Local Court at Murwillumbah and in the Consumer Trader and Tenancy Tribunal. Both of those proceedings were settled in early 2013 by Ms Ambrus vacating Mr Donkin's dwelling in consideration for a payment of $50,000 from Mr Donkin.
Ms Ambrus has not returned to the Land since vacating the dwelling in 2013. She continues to own the interest in the Land that she acquired from Mr Donkin. She has not constructed any dwelling or other improvements on her "sphere of influence", which is currently inaccessible except by using Mr Donkin's driveway on his "sphere of influence".
Ms Kathleen Tepana, who is a friend of Mr Donkin, contacted Ms Ambrus in June 2020 expressing an interest in purchasing Ms Ambrus' share in the Land. Ms Ambrus was interested in selling and would have been prepared to accept $40,000 at that time. However, Ms Ambrus did not know the market value of her share and she engaged real estate agent Mr Paul Stobbie in August 2020 to provide an appraisal. Mr Stobbie was familiar with Derrilin, having sold several shares in that Land.
Mr Stobbie gave evidence in chief that Mr Donkin approached him when he attended Derrilin in August 2020 to carry out the appraisal for Ms Ambrus. Mr Stobbie gave evidence that, when he explained to Mr Donkin that he was undertaking an appraisal for Ms Ambrus, he "seemed a little agitated by that, and basically told me that whatever appraisal I gave her probably wouldn't match his expectations" because "he wouldn't provide her access to the property through his property, he would certainly complain and that possibly other shareholders there would complain." Mr Dobbie added: "He just seemed really agitated about why I was there".
It was put to Mr Stobbie in cross-examination that Mr Donkin had merely said to him that there was a high potential that other shareholders would complain against any building on Ms Ambrus' "sphere of influence" and that Mr Donkin had not said that he himself would complain. Mr Stobbie said that he remembered Mr Donkin saying that he personally would complain, and that he responded by telling Mr Donkin that this would be "counterproductive" to his own interests because "council here really only get involved in illegal type shares or shareholders if there is a complaint".
Mr Donkin gave a different account of his conversation with Mr Stobbie, in which he told Mr Stobbie that "neighbours are against upsetting Council" but did not indicate that he would complain to Council about any building on Ms Ambrus' "sphere of influence".
In an email sent to Ms Ambrus on 17 August 2020, Mr Stobbie wrote: "Hi Eva I got out to the property on Friday and met Michael. It is indeed a nice block of land and would attract many buyers IF You had registered access and were able to build there. If that was the case then I would expect a price around 150k The problem for me as an agent is currently there is no registered access and Michael assures me he will not allow access through his share. The second problem is that according to Michael other shareholders would complain about any building there and even they didn't he assures me that he would and of course council will act on complaints. It is a shame Eva as it is a lovely patch but having a hostile, very near neighbour would make it nearly impossible to sell from my perspective. Perhaps you could negotiate a better price with the person who has offered you the 16k as it is worth much more than that."
I prefer the evidence of Mr Stobbie to the evidence of Mr Donkin in relation to their conversation at Derrilin in August 2020. Mr Stobbie was independent of Ms Ambrus and Mr Donkin in the sense that he had declined to provide an affidavit to any party in these proceedings and only gave his evidence orally after being subpoenaed by the plaintiff. He had provided appraisals for both Ms Ambrus and Mr Donkin prior to the hearing and had no apparent interest in whether his evidence would assist or hinder either of them in these proceedings. Moreover, Mr Stobbie's evidence of his conversation with Mr Donkin is broadly consistent with Mr Donkin's evidence in cross-examination that he considers Ms Ambrus' "sphere of influence" as his own backyard that he wants to "buy back". Mr Stobbie's evidence is also entirely consistent with his contemporaneous email to Ms Ambrus. He had no reason to give Ms Ambrus an inaccurate account of his interaction with Mr Donkin in that email.
Ms Ambrus gave evidence that, on the basis of Mr Stobbie's advice, she formed the view that actively marketing her interest in the Land for sale on the open market would be futile.
Although she had decided not to actively market her share, Ms Ambrus did send an email to Ms Tepana on 24 August 2020 stating that she would consider offers of $80,000 or above. She did not receive any response from Ms Tepana prior to commencing these proceedings on 1 June 2021 seeking an order for the appointment of trustees to hold the Land on statutory trust for sale pursuant to s 66G of the Conveyancing Act. Ms Tepana made one further offer of $25,000 shortly after the proceedings were commenced.
On 3 August 2021, Mr Donkin's solicitor wrote to the solicitor for Ms Ambrus enclosing the "Derrilin Policies first drawn in 1982" and stating: "Please note the promise all tenants in common made to each other under the 'Sale of Shares'. The section reads, 'Derrilin will be owned as a freehold in common. Sale of the entire property must have the unanimous consent of all owners.' Needless to say, the remaining shareholders in the property do not consent to the sale of the property or the appointment of trustees to do the same. Your client is bound by that promise."
I note that the letter misquotes the "Derrilin Policies". The document states that the Land will be "owned as a freehold tenancy in common". I also note, whilst the letter asserts that the misquoted extract is a "promise" that "all tenants in common made to each other" and asserts that Ms Ambrus is "bound by that promise", the letter makes no claim that that the "Derrilin Policies" were shown to Ms Ambrus or otherwise drawn to her attention at any time prior to the letter.
The letter concluded by conveying an offer of $40,000 for Ms Ambrus' share in the Land if she refused or failed to sell her share on the open market.
In cross-examining Ms Ambrus and in his closing submissions, counsel for the defendants directed sustained criticism at Ms Ambrus for persisting in her application for the appointment of trustees for sale under s 66G rather than accepting the $40,000 offer or any subsequent offers made by Mr Donkin and/or the defendants, including an offer to facilitate a sale by auction of Ms Ambrus' share in the Land. Ms Ambrus was criticised for maintaining a position that she would consider offers above $80,000 for her share, and for hoping that any sale of the whole of the Land by trustees appointed pursuant to s 66G would result in her receiving as her share of those sale proceeds an amount in excess of $18,000. As referred to below, $18,000 is the value attributed to Ms Ambrus' interest on the basis of the opinion of valuer Ms Diane Hunt that the unimproved value of the whole of the Land is $995,000. Those criticisms lack substance having regard to the advice that Ms Ambrus received from Mr Stobbie and the shortcomings in Ms Hunt's report referred to below. As explained later in these reasons, the criticisms are also irrelevant to the issues to be determined in these proceedings.
The plaintiff and defendants each relied on evidence of a registered valuer. Ms Hunt was called by the defendants and Mr Tony Andrews was called by the plaintiff. Their oral evidence was given concurrently.
Ms Hunt's valuation of Ms Ambrus' share of the Land at $18,000 was calculated as 1/56th of Ms Hunt's estimated value of the Land as a whole (excluding the value of any improvements) as $995,000 as at August 2021. Ms Hunt's estimate of the Land value was based on evidence of other property sales during the period from September 2020 to April 2021. Mr Andrews did not express an opinion about the value of the Land, but did make some criticisms of Ms Hunt's valuation as failing to take into account increasing market prices and some sales evidence in the period between April 2021 and the date of her report in August 2021 that Mr Andrews considered were either relevant comparable sales evidence or demonstrated the rising market. I do not find it necessary to address this evidence in any detail because the issues raised by these proceedings do not require the Court to determine the value of the Land, as counsel for the defendants ultimately conceded. Had it been necessary to determine the value of the Land, I would not have accepted Ms Hunt's opinion given the paucity of the reasoning supporting it and the issues raised by Mr Andrews' criticisms which I regard as well founded.
During the hearing, Ms Hunt and Mr Andrews were asked in general terms about whether the unapproved dwellings and other improvements on the Land enhanced the market value of the Land. Both Ms Hunt and Mr Andrews gave evidence that, in any sale of the Land as a whole, the existence of the eight unapproved dwellings on the Land would add something to the value of the Land in the market. However, Ms Hunt described the increase in the market value of the Land attributable to the unapproved dwellings as "a slight increase" or "nominal amount" because council have the right to require the dwellings to be demolished, insurance companies do not insure unapproved dwellings and the Land and dwellings are subject to "a big bushfire risk which would greatly reduce their added value". Mr Andrews agreed with that aspect of Ms Hunt's evidence. Ms Hunt added that "unimproved dwellings are treated by the market as sheds, and normally a nominal amount of money is added to the land value for a shed. So, if there's one shed you'd get maybe $5,000 extra and for eight sheds you'd get maybe 40,000 extra." The defendants did not seek to challenge or explore this evidence further with either Ms Hunt or Mr Andrews.

Principles applicable to applications under s 66G

Section 66G of the Conveyancing Act confers a discretion on the Court to make an order appointing trustees for sale. It is well established that the grounds on which the Court will ordinarily decline to make an order are limited. Those grounds include where the order would be inconsistent with a proprietary right, or a contractual or fiduciary obligation or an equitable or conventional estoppel against the application. There is no general jurisdiction to refuse to grant an order under s 66G on the basis of hardship or unfairness. It is for this reason that the discretion under s 66G is described as a "limited discretion": Williams v Legg (1993) 29 NSWLR 687 at 691-693 (Handley, Sheller and Cripps JJA); Hogan v Baseden (1997) 8 BPR 15,723 at 15,723 (Mason P) and 15,726 (Beazley P, as Her Excellency then was); Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 at [36]-[43] (Tobias AJA, Bergin CJ in Eq agreeing) and [71] (Emmett AJA); Foundas v Arambatzis [2020] NSWCA 47 at [62]-[63] (White JA, with the concurrence of Bell P, as the Chief Justice then was, and Basten JA). It is for a co-owner who opposes the making of an order under s 66G to establish a reason why the order should not be made: Woodson (Sales) Pty Ltd v Woodson (Australia) Pty Ltd (1996) 7 BPR 14,685 at 14,701 (Santow J, as his Honour then was); Vacation Club Ltd v A GG Properties Pty Ltd (2019) 19 BPR 39,799; [2019] NSWSC 1357 at [33] (Darke J); see also Pascoe v Dyason [2011] NSWSC 1217 at [7] (Black J), which was cited with approval in Ferella at [36].
The defendants submitted that the Court's discretion is not limited in the manner explained above where the applicant for an order under s 66G is a minority co-owner of the property in question. Alternatively, the defendants submitted that the discretion is not so limited in the present case in which the plaintiff is a tenant in common as to a 1/56th share of the Land and all other co-owners oppose the appointment of trustees for sale. The defendants submitted that, in the circumstances of this case, the Court can decline to exercise the discretion to make an order under s 66G on the basis of the hardship that they will suffer if the order is made. The defendants characterised the situation as involving "extreme hardship" to them because they will lose their homes if the Court appoints trustees for the sale of the Land. The defendants submitted that the plaintiff "bears the onus of adducing evidence that justifies the court exercising its discretion under s 66G" in this case.
I reject the defendants' submissions referred to immediately above. The submissions were supported only by extracts comprising a sentence or two taken out of context from a handful of cases. Those cases, read as a whole, do not support the defendants' submissions. In closing submissions, I pressed counsel for the defendants to articulate any principle or rationale underlying his submissions. Regrettably, no such principle or rationale emerged. Counsel merely repeated ad nauseum that the plaintiff had only a 1/56th "share" in the Land and submitted that "there is room for expansion of … reasons why orders may not be made" without articulating any reason why hardship and unfairness should be included in those reasons but only to the extent that this would aid majority co-owners opposing a s 66G application. Counsel said of his submission that he would "throw" it into "the mix" for the Court's consideration "because of the very nature of this case" involving a "1/56th shareholder".
The defendants' contention that the exercise of the Court's discretion under s 66G may be informed by considerations of hardship and unfairness, but only where hardship and unfairness may be occasioned to majority co-owners opposing the application, is arbitrary and unprincipled. It would result in s 66G operating in a different manner depending on whether the relevant property is the subject of a joint tenancy or a tenancy in common and, in cases of tenancy in common, depending on where the majority interests lie. That finds no support in the language of s 66G which provides in sub-section (1) that it applies where "any property" is "held in co-ownership". Section 66F defines "co-ownership" as meaning "ownership … by two or more persons as joint tenants or tenants in common". More importantly, the defendants' contention is contrary to the long line of authority referred to at [83] above, which is binding on this Court. The Court does not engage in an exercise of balancing up the ledgers of fairness or hardship between co-owners in determining any application under s 66G. The Court's discretion is a limited one, as established by those authorities. It matters not whether a tenant in common applying for an order appointing trustees for sale owns a majority interest, an equal interest, a minority interest somewhat less than 50 per cent or a minority interest significantly less than 50 per cent of the property in question.

Defendants' grounds of opposition to the plaintiff's application

The defendants opposed the Court appointing trustees for sale on the following grounds: 1. an order under s 66G would be "manifestly unjust" for various reasons, including that: 1. the plaintiff is a tenant in common of the Land as to a 1/56th (or 1.79 per cent) share; 2. the order is opposed by the defendants, who collectively own 98.21 per cent of the Land; 3. the plaintiff has not visited the Land since 2012; 4. the plaintiff's application under s 66G is "inconsistent with the paramount principle of the MO arrangement that the entire Property can only be sold with the unanimous consent of all owners; each owner is provided with a secure permanent residential occupation opportunity within their agreed sphere of influence; and each owner respects and does not interfere with the other owners' right to occupy their respective spheres of influence until such time as they sell, pass on or gift their respective shares"; 1. the plaintiff has breached a fiduciary duty owed to the defendants by making the s 66G application; 2. the doctrine of promissory estoppel precludes the plaintiff from making the s 66G application; and 3. if an order is made for the appointment of trustees for sale of the Land "the plaintiff is likely to receive an unconscionable benefit namely a higher than the market value payout for her share as she may be entitled to a share in the increased value of the property resultant from the improvements others have made to their spheres of influence and to the common areas of the property".
The defendants abandoned other pleaded grounds of defence in opening submissions and during the course of the hearing. The abandoned grounds included breach of contract and proprietary estoppel.

Ground 1 - "manifestly unjust"

This ground does not rise above alleged unfairness and hardship. For the reasons that I have already explained, unfairness and hardship are not a basis for refusal of an order under s 66G. Ground 1 of the defendants' opposition to the plaintiff's application therefore fails.

Ground 2 - Alleged breach of fiduciary duty

As emphasised by Mason J in Hospital Products Ltd v United States Surgical Corporation (1984) 156 CLR 41; [1984] HCA 64 (Hospital Products) and by the High Court in John Alexander's Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1; [2010] HCA 19 (White City), the "critical feature" of a fiduciary relationship is that: [14] "… the fiduciary undertakes or agrees to act for on behalf of or in the interests of another person in the exercise of a power or discretion which will affect the interests of that other person in a legal or practical sense. The relationship between the parties is therefore one which gives the fiduciary a special opportunity to exercise the power or discretion to the detriment of that other person who is accordingly vulnerable to abuse by the fiduciary of his position. The expressions 'for', 'on behalf of' and 'in the interests of' signify that the fiduciary acts in a 'representative' character in the exercise of his responsibility … It is partly because the fiduciary's exercise of the power or discretion can adversely affect the interests of the person to whom the duty is owed and because the latter is at the mercy of the former that the fiduciary comes under a duty to exercise his power or discretion in the interests of the person to whom it is owed."
Referring to extra-judicial writing of Justice Lehane, the High Court confirmed in White City that references in this context to an undertaking or agreement to act "for and on behalf of" or "in the interests of" another person: [15] "… must be understood in a reasonably strict sense, lest the criterion they formulate become circular... No doubt undertaking to act in this way is inherent in the position of trustee administering a trust, director participating in the control and management of a company, partner acting in the conduct of the partnership business and employee acting in the course of the business of the employer, for example. Further, such an undertaking may be found in the facts of a particular case."
Descriptions of fiduciary relationships as involving trust and confidence, dependence or vulnerability must not be permitted to divert attention from the critical question whether the alleged fiduciary has agreed or undertaken to act for, on behalf of or in the interests of another person (in the reasonably strict sense referred to in White City) in the exercise of a power or discretion that will affect the interests of that other person in a legal or practical sense. Trust, confidence, dependence, vulnerability and influence are important only to the extent that they evidence a relationship suggesting that agreement or undertaking by the alleged fiduciary and a corresponding entitlement for the other party to the relationship to expect that the alleged fiduciary will act in that other party's interests: Eaton v Rare Nominees Pty Ltd (2019) 2 Qd R 222; (2019) 373 ALR 386; [2019] QCA 190 at [62] (Philippides JA, McMurdo JA and Davis J agreeing), referring to extra-judicial writing of Justice Gageler (in turn referencing the work of Professor Finn) in "Expansion of the Fiduciary Paradigm into Commercial Relationships: The Australian Experience" in P Devonshire and R Havelock (eds), The Impact of Equity and Restitution in Commerce (Hart Publishing, Oxford, 2018), 173-174.
The defendants' submissions initially focussed exclusively on what they described as their "legitimate expectation" that the Land would not be sold without the unanimous consent of co-owners and that a co-owner would not interfere with another co-owner's right to permanent occupation of their "sphere of influence". The defendants submitted that their "legitimate expectation" gave rise to a fiduciary relationship between all co-owners, in which each co-owner owed a fiduciary duty to each other co-owner not to depart from that expectation.
During the defendants' closing address on the third and final day of the hearing, I pressed counsel for the defendants to identify the promise or undertaking allegedly made by the plaintiff to act for or on behalf of the interests of the defendants in the exercise of a power or discretion.
After taking that question on notice over the luncheon adjournment, counsel for the defendants submitted that, by "the act of understanding the nature of the community" and "the action of buying the shares and buying into that community", the plaintiff had undertaken to "act in the interests of not the other person but the shareholders" in relation to the exercise of "the discretion or power … to bring about an action that causes the sale of a property as a whole". Counsel submitted that "you'd agree that the discretion you have to make an application to the Court under s 66G is a discretion available to a shareholder in the tenancy in common." Counsel submitted that there was therefore a duty to exercise that "discretion" in the interests of the co-owners, and this duty required in substance that the plaintiff "stick to the community plan or community policy".
I reject those submissions for the following reasons.
The plaintiff did not buy into "the community". She purchased an interest in Land as tenant in common. The plaintiff was not informed about the non-legally binding partly written and partly unwritten guiding principles that other co-owners assumed applied but appear to have departed from when it suited them to do so. The co-owners lived separately on agreed areas of the Land that they owned as tenants in common, dividing the costs of council rates and roads between them. Neither the guiding principles nor the hopes held by some co-owners of achieving planning permission for multiple occupancy use of the Land elevated the relationship between members of "the community" into anything more than co-owners of the Land as tenants in common. Each co-owner's right to an order under s 66G, absent a basis for the Court to exercise its limited discretion to refuse the order, is an incident of that co-ownership relationship: Williams v Legg (1993) 29 NSWLR 687 at 691-693 (Handley, Sheller and Cripps JJA). Parties do not stand in a fiduciary relationship merely because they are co-owners of land: Tory v Tory [2007] NSWSC 1078 at [66] (White J, as his Honour then was).
By acquiring her interest in the Land as tenant in common, the plaintiff did not agree or undertake to exercise her right under s 66G on behalf of or in the interests of the other co-owners. Nor did she agree or undertake to exercise that right on behalf of or in the interests of herself and the other co-owners collectively, as counsel for the defendants submitted. The notion that the right to make an application under s 66G could be exercised by a co-owner on behalf of and in the interests of themselves and all other co-owners is misconceived. Each co-owner has the same statutory right, which is conferred on each of them individually for the purpose of being exercised in a situation where their own interests diverge from the interests of their co-owners in relation to whether their co-owned property should be sold. Absent such a divergence of interests, there is no occasion for any co-owner to make an application under s 66G. As counsel for the plaintiff submitted, s 66G is not a power or discretion that attracts fiduciary duties.
As referred to above, the defendants formulate the alleged fiduciary duty as a positive duty to "stick to the community plan or community policy". Such a positive obligation travels well beyond the proscriptive duties that a fiduciary owes to their beneficiaries not to obtain an unauthorised benefit and not to be in a position of conflict. The defendants' prescriptive formulation of the alleged duty is an ill-conceived attempt to throw a fiduciary mantle over the "community policy" that they accept was not legally binding, as an alternative means of enforcing that "policy".
In the final minutes of his closing address, counsel for the defendants submitted for the first time that the relationship between co-owners was in fact "a partnership to enable all of the shareholders to enjoy permanent occupation of the land within their specific spheres of influence", and that "we do fit into the definition of fiduciary relationship" and that counsel would "hang the hat on the peg of partnership". I have described the relationship between the co-owners at [97] above. The co-owners were not carrying on any business on the Land in common with a view to profit. Nor were they sharing in any profits or losses derived from activities on the Land. I reject the submission that the relationship was a partnership.
For those reasons, the defendants have failed to demonstrate that the plaintiff owed any fiduciary duty to the defendants, let alone a duty that precluded her from exercising her right to apply to the Court under s 66G of the Conveyancing Act for the appointment of trustees for sale. Ground 2 of the defendants' opposition to the plaintiff's application fails.

Ground 3 - Promissory estoppel

In order to make out this ground of opposition, the defendants must demonstrate that: [16] 1. they assumed that a particular legal relationship then existed between them and the plaintiff; 2. the plaintiff induced the defendants to adopt that assumption or acquiesced in the defendants adopting that assumption; 3. the defendants acted or abstained from acting in reliance on the assumption; 4. the plaintiff knew or intended the defendants to do so; 5. the defendants' action or inaction will occasion detriment if the assumption is not fulfilled; and 6. the plaintiff has failed to act to avoid that detriment, by fulfilling the assumption or otherwise.
As counsel for the plaintiff submitted, the grounds of defence filed by the defendants did not identify matters capable of satisfying any of these elements. The defendants' evidence summarised at [14]-[42] above was particularised in the grounds of defence. As counsel for the plaintiff submitted, that evidence does not rise above a "circularity of sentiment" within the ranks of the defendants that any sale of the Land would be by unanimous consent of co-owners. It does not reveal any representation or other conduct on the part of the plaintiff that induced the defendants to make that assumption or that could be characterised as acquiescence in the defendants' assumption.
In his closing address, counsel for the defendants submitted that it was the plaintiff's conduct in purchasing an interest in the Land that induced the defendants to make the assumption that the Land could not be sold except with the consent of all co-owners. The basis of that submission was that it would be irrational for any person to purchase a share in an approved or "aspiring" multiple occupancy if any single co-owner could "force a sale". It was submitted that: "The assumption is that won't happen, that's why you get the money out of your pocket, you buy your share, and with confidence you build your house with the intention … to stay there, live there, enjoy your permanent right of occupation". In other words, the defendants contend that the plaintiff's purchase of her interest in the Land induced them to make the assumption because the only rational conclusion to be drawn from the plaintiff's conduct in buying her interest was that she had made that assumption. The defendants who had purchased their interests prior to the plaintiff contend that they relied on the plaintiff's purchase in improving their "spheres of influence". The defendants who purchased their interests after the plaintiff contend that they relied on the plaintiff's status as a co-owner in purchasing their interests in the Land and, in some instances, improving their "spheres of influence".
I reject the defendants' submissions.
As counsel for the plaintiff submitted, the evidence summarised at [14]-[42] above establishes that many of the defendants purchased their shares before they had any information about any policy to the effect that the whole of the Land could only be sold with the unanimous consent of co-owners. The evidence does not support the defendants' submission that the purchase of an interest in the Land necessarily represents to existing co-owners (and future incoming co-owners) that the purchaser assumes and accepts that unanimous consent is required for any sale of the whole of the Land.
Contrary to the submission made by counsel for the defendants, it was not even put to the plaintiff that she made that assumption when she purchased her interest in the Land in November 2011. Counsel for the defendants put to the plaintiff the different proposition that she acquired her interest in the Land on the assumption or understanding that no other co-owner could force her to sell her interest. The plaintiff said that she had never thought of that. [17] Contrary to the defendants' submissions, the fact that the plaintiff had never thought about the possibility of being singled out in that way by other co-owners provides no support for an inference that the plaintiff assumed and accepted that the Land as a whole could not be sold without the unanimous consent of all co-owners. I have accepted the plaintiff's evidence that the "Derrilin Policies" containing the statement to that effect were not provided or otherwise disclosed to her. The defendants submitted that the plaintiff would have discovered the "Derrilin Policies" if she had made reasonable inquiries. Even assuming that to be so, a failure to make such inquiries does not amount to inducing the defendants to make any assumption that the plaintiff accepted or adopted any specific statement in the "Derrilin Policies". That is particularly so in circumstances where most of the statements in the "Derrilin Policies" had been abandoned in practice by the time the plaintiff acquired her interest in the Land.
The defendants relied on Mr Donkin's evidence that he told the plaintiff when they were discussing their wills in 2011 that: "You're [sic] share is secure. Nobody can take it away now that you have it. The only way you be forced off the property now is if every shareholder agrees to sell the property, which they won't." [18] That evidence of Mr Donkin conveying his personal view to the plaintiff does not support a finding that the plaintiff acquiesced in, much less induced, an assumption by the defendants that this was a policy that all co-owners (including the plaintiff) would adhere to.
I reject the defendants' submission that the Court should infer from the fact that the plaintiff resided in Mr Donkin's dwelling on the Land for a total period of five years that she had conversations with other co-owners in which she became aware that they assumed the Land could not be sold without unanimous consent. Any such inference would be impermissible speculation. Even if there were a proper basis for drawing the inference, it would not establish that the plaintiff induced or acquiesced in that assumption.
The references throughout the evidence to the co-owners assuming or understanding that they had "permanent" rights of occupation are references to the exclusivity of occupation that they each enjoyed in respect of their "sphere of influence" by mutual arrangement, for so long as they remained co-owners. Contrary to the defendants' submissions, an assumption or expectation of "permanent occupation" says nothing about whether or in what circumstances the co-ownership could be terminated by sale of the whole of the Land.
A further fundamental difficulty with the defendants' submissions is that many co-owners did not become aware that the plaintiff had purchased an interest in the Land until they received Mr Donkin's email on 12 December 2012. [19] By that time, the plaintiff had expressly reserved her rights to commence proceedings in this Court for the appointment of trustees for the sale of the whole of the Land. [20] Mr Donkin's email informed the co-owners that his dispute with the plaintiff had put their "security" at risk. I fail to see how any co-owner reading that email could have been induced to assume that the plaintiff accepted that the whole of the Land could not be sold without the consent of all co-owners. If any co-owner did make that assumption, it was a mistaken assumption induced by Mr Donkin's failure to convey the plaintiff's position in clear and succinct terms. It was not an assumption induced by any conduct of the plaintiff.
I reject the defendants' submission that the plaintiff's delay in exercising her right to apply to this Court under s 66G of the Conveyancing Act for some eight years after reserving her right to do so constituted acquiescence by the plaintiff in the defendants' assumption that the Land could not be sold without their unanimous consent. For the reasons I have already explained, the plaintiff was not even aware of the defendants' assumptions. The plaintiff was free to exercise her right to invoke s 66G at any time, irrespective of whether or when she had expressly reserved that right.
For those reasons, the defendants have failed to establish an equitable estoppel against the plaintiff's application for the appointment of trustees to hold the Land on the statutory trust for sale. I do not find it necessary to address the remaining elements referred to at [102] above.

Ground 4 - Unconscionable benefit

As referred to at [87] above, the defendants contend that, if the Court makes the order sought by the plaintiff under s 66G, the plaintiff is likely to receive an "unconscionable benefit" because she stands to receive out of the proceeds of sale of the whole of the Land an amount that is partly attributable to improvements made to the Land by other co-owners that have enhanced the value of the Land.
In the defendants' closing submissions, this contention was at times reduced to a proposition that it was unconscionable for the plaintiff to seek an order under s 66G in the hope of receiving anything more than the sum of $18,000 attributed to her interest in the Land on the basis of Ms Hunt's valuation in circumstances where the plaintiff has not adduced any evidence that her interest has a value in excess of $18,000. I reject that proposition. The exercise of the Court's limited discretion under s 66G does not turn on the value of the Land or the value of the plaintiff's interest in the Land, as the defendants had accepted earlier in their submissions. If it had been necessary for the Court to determine those values, I would not have accepted Ms Hunt's opinion as I have said at [81] above.
Notwithstanding the evidence of Ms Hunt and Mr Andrews that improvements would increase the value of the Land only slightly, [21] the plaintiff has disclaimed any desire to benefit from any enhanced value of the Land flowing from improvements that have been made by the defendants. Counsel for the plaintiff acknowledged that, in a suit for sale or partition under s 66G, a co-owner who has made improvements or repairs to the co-owned property may make a claim against the other co-owners for the lesser of (a) the amount by which the value of the property has been increased by those works and (b) the amount of the first co-owner's expenditure on those works. The claim is a claim for contribution in equity between co-owners. Contribution becomes available upon the termination of the co-ownership relationship by an order made under s 66G: Forgeard v Shanahan (1994) 35 NSWLR 206 at 219-220 (Mahoney JA) and 223-224 (Meagher JA); Ryan v Dries (2002) 10 BPR 19,497; [2002] NSWCA 3 at [66]-[67] (Hodgson JA, Sheller JA agreeing); Maio v Sacco (2009) 14 BPR 27,591; [2009] NSWSC 413 at [5]-[6] and [9] (White J, as his Honour then was); Foundas v Arambatzis [2020] NSWCA 47 at [92]-[93] (White JA, with the agreement of Bell P, as the Chief Justice then was, and Basten JA).
The form of orders proposed by the plaintiff to be made under s 66G include an order requiring the trustees to "conduct an inquiry in respect of any claims made by any party for an allowance, out of the proceeds of sale, for any increase in the value of the Property, attributable to improvements and lasting repairs effected by that party, such amount not to exceed the amount expended by that party in effecting those improvements and lasting repairs." The plaintiff's proposed orders would require the trustees to distribute any allowances determined by the trustees after undertaking that inquiry before distributing the balance of the net proceeds of sale in accordance with each party's interest in the Land.
The defendants contend that orders in those terms would nevertheless result in the plaintiff receiving an "unconscionable benefit" because the plaintiff would benefit from any value added to the Land by improvements made not by the defendants themselves but by the defendants' predecessors in title. The defendants contend that they each paid for the improvements made by their predecessors in the price they paid to purchase their interests in the Land. The defendants submitted that they should each receive out of the proceeds of the sale of the whole of the Land an amount that accounts for any value added to the Land by improvements made by them and their predecessors in title. However, the defendants submitted that it will be impossible or near impossible to determine the extent by which the present value of the Land is enhanced by all of those improvements made at different times by different former co-owners of interests in the Land over many years. The defendants submitted that the Court should therefore decline to make any order under s 66G rather than make orders that would result in the plaintiff receiving the allegedly "unconscionable benefit" of sharing in any increased value of the Land flowing from those historical improvements.
The plaintiff submitted that any value added to the Land by improvements and repairs effected by the defendants' predecessors in title stands to be shared by all co-owners in proportion to their respective interests in the Land and falls outside the scope of contribution claims that can be made on the termination of the plaintiff and the defendants' co-ownership of the Land.
I accept the plaintiff's submission. The claim for contribution that is available between co-owners is for improvements that have been made by one co-owner at his or her cost that have benefitted all co-owners by improving the value of the Land. No claim for contribution is available in respect of the price paid by one co-owner in order to acquire his or her interest in the Land. That was a payment made by the co-owner to his or her predecessor in title, which did not improve the value of the Land or confer any benefit on the other co-owners in their capacity as such.
To the extent that the proceeds of sale of the whole of the Land by trustees appointed pursuant to s 66G are derived from value added by historical improvements, each of the co-owners will benefit from that proportionately to his or her interest in the Land. I accept the plaintiff's submission that her share of any such benefit cannot be singled out as "unconscionable". Any such benefits flowing to each co-owner proportionately are not the result of any co-owner being at a special disadvantage vis-à-vis any other co-owner. There is no evidence that each co-owner's ability to make a judgment about their own best interests was adversely affected in any relevant way when they decided to purchase an interest in the Land as tenants in common with the other co-owners. As I have said earlier in these reasons, each co-owner has the same statutory right as the others to apply for the appointment of statutory trustees for the sale of the whole of the Land, subject only to the Court's limited discretion to refuse such an order. Contrary to the defendants' submissions, the possibility that one co-owner may exercise that right does not represent a special disadvantage to the other co-owners in the requisite sense: Stubbings v James 2 Pty Ltd (2022) 399 ALR 409; [2022] HCA 6 at [40] (Kiefel CJ, Keane and Gleeson JJ). If the present value of the Land is enhanced by historical improvements, each co-owner's entitlement to a proportionate share of that enhanced value upon sale of the whole of the Land flows from their interests in the Land and the statutory trust for sale and is not unconscionable.
I accept that the inclusion of a power for the trustees to determine claims by co-owners in respect of any improvements made by any of them, along the lines proposed by the plaintiff set out at [117] above, is an appropriate means of addressing rights of contribution between co-owners in respect of any improvements made by each co-owner. Such a power will facilitate adjustments to give effect to the rights of co-owners in their capacity as such, as determined by the trustees in discharging their fiduciary obligations under the statutory trust for sale: see s 66F(2)(a) of the Conveyancing Act; O'Dea v O'Dea [2019] NSWSC 1560, especially at [20]-[22] (Darke J) and the authorities there referred to.

Conclusion and orders

For all of the reasons above, orders will be made under s 66G of the Conveyancing Act in substantially the terms sought by the plaintiff in her Further Amended Summons.
It remains to consider the identity of the trustees.
The plaintiff proposed that Mr Terry Psarakis, a public accountant, and Mr Alan Nicholls, a chartered accountant, be appointed as trustees of the Land on the statutory trust for sale. Both Mr Psarakis and Mr Nicholls practice in Tamworth. Both of them have been in practice since the late 1980s. Since the early 1990s, Mr Nicholls has been a trustee in bankruptcy. Neither of them claim to have experience in the sale of property as trustees pursuant to s 66G of the Conveyancing Act. Mr Nicholls' hourly rate is $516 and Mr Psarakis' hourly rate is $240.
The defendants submitted that, if orders are to be made under s 66G, the Court should appoint chartered accountant Mr David Keep and solicitor Mr John Maxwell. Mr Keep practices in Goonellabah and Mr Maxwell practices in Lismore. Mr Maxwell's hourly rate is $400 per hour and Mr Keep's hourly rate is $300 per hour. Mr Maxwell has submitted a resume which claims substantial experience in acting as a trustee for sale under s 66G of the Conveyancing Act and also as an administrator of deceased estates. As a solicitor, he has acted in relation to transactions involving the sale and purchase of properties and businesses.
Neither party submitted that the other's proposed trustees were not fit to act as trustees if appointed or had any conflict of interest. The defendants submitted that their proposed appointees were cheaper. However, there is very little difference between the average hourly rates when both trustees' hourly rates are taken into account. The defendants also submitted, and I accept, that Mr Keep and Mr Maxwell are based a relatively short distance from Mount Warning, whereas Mr Psarakis and Mr Nicholls are based in Tamworth. According to my understanding, travelling from Tamworth to Mount Warning would involve about a half day journey. It is not clear to me that the trustees will need to attend the Land in order to discharge their duties, but it is possible that this will be necessary or at least convenient at some point. It will be less costly for Mr Keep and Mr Maxwell to make such journeys as may prove necessary. I consider that Mr Maxwell's experience places him in a somewhat better position to discharge the obligations of trustee than Mr Psarakis and Mr Nichollas, neither of whom claim to have experience in acting as trustee for the sale of land.
For those reasons, I have decided that Mr Keep and Mr Maxwell should be appointed as the trustees. For the reasons already explained above, the terms of the trust on which they are appointed will include a term to the effect that they are to determine any claims in respect of improvements to the Land made by co-owners.
The costs of proceedings under s 66G for the appointment of trustees for sale of land are usually paid out of the proceeds of sale, the rationale being that the costs of such an application are an incident of joint ownership: Kardos v Sarbutt (No. 2) [2006] NSWCA 206 at [28]; Thistleton v Thistleton [2022] NSWSC 101 at [29]. If any party seeks a different costs order in this case, including in relation to the reserved costs of the defendants' unsuccessful application for leave to amend made during the final hearing or the reserved costs thrown away by reason of the defendants' late abandonment of several grounds of opposition to the orders sought by the plaintiff, submissions may be made in writing and the question of costs will be determined on the papers.
For all of the reasons above, the orders of the Court are as follows: 1. Order that John Hamilton Maxwell of 158 Molesworth Street, Lismore, New South Wales and David Graham Keep of 20 Palmvale Drive, Goonellabah, New South Wales (the Trustees) be appointed pursuant to s 66G of the Conveyancing Act 1919 (NSW) (the Act) as trustees for sale of the land shown in folio identifier 38/755754B, 38/755754C and 38/755754D and known as 193 Hidden Valley Road, Mount Warning, NSW (the Property) on the statutory trust for sale as defined in s 66F(2)(a) of the Act and with power to determine any claims made by any party for an allowance, out of the proceeds of sale of the Property, for any increase in the value of the Property attributable to improvements and repairs effected by that party, such amount not to exceed the amount expended by that party in effecting those improvements and repairs (Claims). 2. Order that the Property be vested in the Trustees subject to any encumbrances affecting the entirety of the Property but free from encumbrances (if any) affecting any undivided share or shares therein to be held by the Trustees upon the trust referred to in order 1 above. 3. Order that any of the parties is entitled to purchase the Property, whether at auction or by private treaty. 4. Order that, in the event that any of the parties is purchaser, whether at auction or by private treaty, then upon settlement of the sale the purchase price is to be set off or reduced by that party's entitlement to the net proceeds of sale. 5. Order that any sale by the Trustees may be made to any of the parties, whether at auction or by private treaty, without the requirement for payment of a deposit and on such terms as to the payment for the balance of the purchase price as to the Trustees appears appropriate. 6. Order that the Trustees: 1. deduct the costs of the sale of the Property, including fees and disbursements, from the proceeds of sale of the Property; 2. pay from the proceeds of sale of the Property such costs of these proceedings (if any) as this Court orders to be paid out of those sale proceeds; 3. distribute to each party who has made a Claim any amount determined by the Trustees to be allowed to that party in respect of that Claim in accordance with order 1 above; and 4. distribute the balance of the proceeds of sale in accordance with each party's interest in the Property. 1. An order that, if any party contends for an order as to the costs of these proceedings other than an order that the parties' costs be paid out of the proceeds of sale, that party is to file and serve within 7 days a document of no more than 3 pages setting out the terms of the costs order sought and that party's submissions in support of the costs order sought. 2. An order that any party wishing to respond to submissions filed and served in accordance with order 7 above shall file and serve their written submissions in response of no more than 3 pages within 7 days after filing and service of the submission responded to.

Endnotes

The eleventh defendant in these proceedings.
The twelfth defendant.
The first defendant.
The second defendant.
The third defendant.
The fourth defendant.
The fifth defendant.
The plaintiff.
The seventh defendant.
The sixth defendant.
The eighth defendant.
The ninth defendant.
The tenth defendant.
Hospital Products at 96-97; see also White City at [87].
White City at [88].
Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387 at 428-429 (Brennan J).
See [49] above.
See [56] above.
See [63] above.
See [62] above.
See [82] above. 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. Decision last updated: 29 November 2022

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