Supreme Court of WA|2010-11-30|Before: Mr J, Heenan J

GIACCI -v- GIACCI HOLDINGS PTY LTD [2010] WASC 349 (30 November 2010)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : GIACCI -v- GIACCI HOLDINGS PTY LTD [2010] WASC 349

Sale of property in lieu of partition - Rural land held by three parties as tenants in common in equal shares - Whether order for sale or an order for sale of claimant's interest at valuation - Significance of conflict of expert valuation evidence - Desire by defendants to have prior right to purchase at or above price offered by any would-be purchaser - Receipt of rents and profits by defendants - Claim for an inquiry and account - Claim for mesne profits, account or occupation rent - Statute of Anne - Ouster or exclusion from possession - Denial of title to land by pleading - Denial later withdrawn - Limitation Act 1935 - Applicable limitation period - Order for sale by private treaty with directions as to reserve price, failing which property to be sold at auction - Plaintiff to have conduct of sale - Orders for inquiry and account

Sale by private contract at or above reserve price to be set, failing which at auction

Attorney-General (Hong Kong) v Reid [1993] UKPC 2; [1994] 1 AC 324; [1994] 1 All ER 1 (PC)

Biviano v Natoli (1998) 43 NSWLR 695

Burton v Arcus [2006] WASCA 71; (2006) 32 WAR 366

Crocombe v Pine Forests of Australia Pty Ltd (No 3) [2007] NSWSC 217

Dale v McCullough (1988) ANZ Conv R 67

De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56

Forgeard v Shanahan (1994) 35 NSWLR 206

Garner v Wingrove [1905] 2 Ch 233

Holland Investments Pty Ltd v Motorways (1984) Pty Ltd (Unreported, WASC, Library No 920557, 4 November 1992)

Kennedy v De Trafford [1897] AC 180

Martin-Smith v Woodhead [1990] WAR 62

McMahon v AF Wade Pty Ltd [1983] WAR 152

McPherson v Hancock (Unreported, WASC, Library No 9173, 6 December 1991)

Metropolitan Bank v Heiron (1880) 5 Ex D 319 (CA)

Mitchell v Cullington [1997] ANZ Conv R 342

Nullagine Investments Pty Ltd v The Western Australian Club Inc (Unreported, WASC, Library No 8523, 3 October 1990)

Nullagine Investments Pty Ltd v The Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635

Orrman v Orrman [No 2] [2008] WASC 17

Polden v Rowling [1958] NZLR 31

Silvester v Sands [2004] WASC 266

Sword v Sword [2001] WASC 208

1 EM HEENAN J: The plaintiff and the two defendants are tenants in common in equal shares of an estate in fee simple of a block of partly-improved rural land known as lot 265 Ducane Road, Gelorup, which is slightly more than 39 ha in area (or a little over 98 acres). The property is to the south-east of the city of Bunbury, about 14.5 km by road distant from the central business district, or 11 km from there in a straight line. It is located in a region of semi-agricultural, pastoral and equestrian holdings within easy reach of the nearby city.

2 The formal description of the land is all that piece of land being lot 265 on deposited plan 232768 and being the whole of the land comprised in certificate of title vol 75 folio 160A. The certificate of title shows that the interest in the land held by the first defendant, Giacci Holdings Pty Ltd, is subject to a caveat, I361895, lodged on 22 January 2003 by the National Australia Bank Ltd, claiming an interest as an equitable mortgagee in the undivided one-third share held by the first defendant, pursuant to a debenture dated 28 March 2002 made between that company as mortgagor and the caveator as mortgagee.

3 This land had been owned by the first defendant or one or more of the members of the Giacci family for over 32 years. The land was originally registered in the name of Giacci Holdings Pty Ltd as the sole proprietor on 2 March 1978. On 29 August 1981, it was transferred into the names of the three brothers, Antonio Carmino Giacci, Mario Michele Giacci and Peter Louis Giacci as tenants in common in equal shares. They were born, respectively, in July 1933, May 1938 and October 1953. Then on 7 July 1994 the one undivided third share held by Peter Louis Giacci was transferred to Giacci Holdings Pty Ltd, with the result that from then on the registered proprietors became the three parties to this action, as tenants in common in equal shares.

4 The land is mostly cleared, boundary fenced and has a number of internal dividing fence lines. There are two relatively modern brick and tile homes on the property and a third small cottage with a timber frame, fibro-clad walls, timber floor, on stumps, with Decramastic roof tiles. In addition, there are two sets of stables for horses with a tack room and store and with exercise yards for horses. There is a circular horse track with a sandy bluemetal surface, partly fenced and railed.

5 One of the houses was erected by Peter Louis Giacci in about 1979. For many years, that house was occupied by Peter until it was acquired by the first defendant, which from then on let the property for most of the time to rent-paying third parties. Despite the first defendant paying for this first house, there was never any subdivision of the property, nor any transfer of an interest in the land upon which the house was built to the first defendant or to any other.

6 The stables and associated horse-training facilities were erected on the land in about 1982 or 1983 by Giacci Holdings Pty Ltd, which also purchased a transportable home erected on the land - and earlier referred to as the 'cottage'. Again, there was no subdivision of the land to provide any separate ownership of the horse-training facilities or the cottage so erected. Nor was there any transfer of any interest in the land for that reason made to the first defendant or the second defendant. From the early 1980s onwards, the second defendant, Mario Michele Giacci, had possession of the horse-training facilities and of the cottage and, on occasions, let these to third parties and received rent or other monetary consideration for them and for the use of the nearby land for agistment of horses.

7 The second house on the property was built in 1982 or 1983 and the second defendant, Mario Michele Giacci, moved in. He has continued to live there since but, again, there has been no subdivision of the land or any part of it to transfer that portion of the land to him.

8 At the present time, Peter and Mario control Giacci Holdings Pty Ltd and through that company also control its one undivided third share interest in the whole of the land.

9 The material history goes back to 1953, when the plaintiff, Antonio Carmino Giacci, began a trucking business in Bunbury. This led to the incorporation of Giacci Holdings Pty Ltd in 1968, with the plaintiff as director from then until 2006 and managing director for most of that time (March 1968 to about January 1997). Following the incorporation of the first defendant, shares in the company were also issued to the second defendant, Mario Michele Giacci, and then later also to Peter Louis Giacci. Those brothers became co-directors in 1968 and 1971 respectively.

10 For about 40 years after 1968 the business of Giacci Holdings Pty Ltd steadily developed and grew into a very large undertaking. It was engaged in many varieties of heavy transport, machinery work and associated activities, owning or operating a large fleet of heavy haulage trucks. It also ran a number of other associated properties. Eventually, however, the good working relationship between the three brothers deteriorated, and the plaintiff lost control of the company, and his role as managing director. He later brought an action for the winding up of the company on the grounds of oppression, naming his brothers, Peter and Mario as additional defendants (COR 298 of 2005).

11 The result of that litigation was that by an order of Martin CJ made in November 2006 Peter and Mario were ordered to purchase the plaintiff's shares in Giacci Holdings Pty Ltd for the sum of $8 million. That buy-out was eventually completed and Peter and Mario took over the control of the first defendant and are now its sole directors and principal shareholders. The plaintiff no longer has any interest in Giacci Holdings Pty Ltd and has not been a director of the company for several years.

12 Nevertheless, the plaintiff, his brother, Mario and Giacci Holdings Pty Ltd, now controlled by Peter and Mario, remain the three registered proprietors as tenants in common in equal shares in the land at Ducane Road, Gelorup. The poor relationship between the brothers, over recent years and at present, is such that the plaintiff claims he has been excluded from this land and that rents and other moneys paid by third persons for the first house, for the cottage, the stables and horse training facilities, as well as for occasional agistment of horses, has been received by one, or other, or both of the defendants without any accounting to him and without any share of those rents or profits being paid to him.

13 The evidence established that this, indeed, is the case, although none of the parties attempted at this trial to establish the precise amount of rents or profits paid or to whom. The position adopted by the plaintiff was that he sought to establish that moneys had been paid to one or other or both of the defendants for rent, agistment or other use of the land by third parties over a period commencing 12 years before the issue of the writ in this action on 21 April 2008, and that there had been no accounting for these revenues nor any payment of any part of them to him as co-owner. The plaintiff accepted that any such rents or profits derived by either or both of the defendants from the land earlier than 12 years before the issue of the writ would be time barred by reason of the Limitation Act 1935 (WA) and did not seek to pursue recovery of any such earlier payments. There is an issue over whether any limitation period is 12 years or six years but that will be addressed later. The submission of the plaintiff was that because there had been such payments and because of the failure to disclose these, this established his entitlement to an order for an inquiry to be conducted later into the extent of such payments, and for an order that the defendants' account to the plaintiff for one-third of the aggregate of those payments proved.

14 In ordinary circumstances, if there were to be an inquiry of this nature and an order for the defendants to account for part of the revenues or profits received, there might be scope for the account to be conducted on the basis that credit be given to the accounting parties for necessary expenditure which they may have incurred on the land such as for council rates, water rates, land taxes, if any, for electricity or other expenses incurred in servicing the house and cottage let from time to time and other associated expenditure incurred for the purpose of deriving the income obtained from the land and, if any, for expenditure on improvements, at least to the extent that such expenditure enhanced the market value of the land - see Silvester v Sands [2004] WASC 266 [139] - [141]. However, in this case, there was no plea made by either defendant for credit to be given for any expenditure of this kind, nor for any inquiry or account to be conducted on such a footing. I was informed by counsel for the plaintiff, and it was not contested, that several early attempts by the defendants to advance pleas of this kind were rejected or struck out because of lack of particularity, lack of discovery, or absence of any evidence to support the claims. Therefore, regardless of what might have been the position in other circumstances, this case does not involve any need to give attention to whether any credit should be given to the defendants in the account sought. The case has proceeded on the elementary basis that if there is to be an inquiry and an account, it should be in relation to all rents, profits or other revenues derived by the defendants from the land over the period from April 1996 until date, and that there should be an order that one-third of those receipts, profits or other revenues should be paid to the plaintiff.

15 Nevertheless, there is scope for other issues to arise on such an inquiry and account and, as these were not investigated in any detail at this trial, I consider that the prudent course to follow is to reserve further liberty to apply for directions as to the basis for the conduct of any such inquiry and account if and when any such entitlement is pursued.

16 All the parties are agreed that the current ownership of lot 265 Ducane Road, Gelorup must change. They are also agreed that the plaintiff should be able to realise and obtain one-third of the current market value of one-third of the total market value of the land. However, they are at issue over how this should be achieved and this trial has, therefore, been about how the realisation of the value of the plaintiff's interest in the land should be accomplished. No-one has asked for the land to be partitioned, nor has any evidence been led about whether this would be possible or, if so, about how any partition should be effected having regard to the nature and location of the various improvements.

17 Because the plaintiff has a one-third undivided share in the whole of the land, and not a half-share or upwards, he is not entitled to demand a sale and distribution of the proceeds under s 126(1) of the Property Law Act 1969 (WA). However, as both defendants between them hold two undivided third shares in the entire property, they are entitled to demand such a sale and distribution of the proceeds under that subsection. However, as the case progressed, it is evident that the defendants were not seeking such a sale and division of the proceeds. Rather, what they want is an order that they be permitted to purchase the plaintiff's interest in the land at a figure to be determined by the court on the basis of contested valuation evidence about the current market value of the entire property.

18 This means that the plaintiff's claim for relief rests upon s 126(2). The defendants contend that the court should follow a procedure said to be available under s 126(3), decline to direct that the land be sold but, rather, direct a sale of the plaintiff's interest to them at a valuation determined by the court on the contested expert evidence. However, this is not a form of relief contemplated by s 126(3).

19 Apart from evidence relating to the background history of the acquisition and changes in ownership of the land; events leading to the breakdown in relations between the three Giacci brothers; and relating to the current condition of the land and improvements, and the use of them by the defendants to the exclusion of the plaintiff, this trial was largely dominated by expert evidence from three valuers, experienced in the locality, about the current market value of the land.

20 The plaintiff called one expert valuer to give evidence of opinion about the market value of the land. The defendants called two such valuers.

21 The valuer for the plaintiff was Mr Glen William Franklin, who produced a report valuing the property as at 12 November 2008 at $1.853 million. The first valuer for the defendants was Mr David James Abel, who produced a report valuing the property as at 10 September 2009 at $1.325 million. The second valuer for the defendants was Mr Lee Harrison Martin, who produced a valuation report dated 14 November 2008, valuing the property at $1.270 million.

22 Pursuant to an order for directions made by Murphy J on 30 April 2010, there had been a conferral between two of the valuers, Messrs Franklin and Abel, with a view to preparing a memorandum of matters agreed by them or the basis of those issues remaining in controversy. The conferral took place on 18 May 2010. It did not include Mr Martin because, at that stage, it seems that the defendants did not intend to adduce evidence from him. There was controversy between the two valuers who did confer about what was to be signed and by whom it was to be prepared and, in the result, the proposed joint memorandum (exhibit 20) was not signed by Mr Abel. Mr Franklin did make some notes of the meeting which he says records matters of agreement, and these became exhibits 21A and 21B. For reasons which will appear, it is unnecessary to say more about this inconclusive conferral or the fact that the defendants proceeded to call a second valuer, who had not participated in the process.

23 Mr Franklin is a principal in the firm of G W Franklin & Associates, Valuers, of Bunbury. He has qualifications as a land economist and has been practising as a valuer in the Bunbury district from 1979 onwards. His method of valuation was to determine a value for the overall land on an area basis, based on what he regarded to be comparable sales in the general locality. To that figure, he added an allowance for the value of buildings and other improvements, based on his estimate of current building costs less allowances for depreciation. He was cross-examined by counsel for the defendants on the basis that the properties which he used as the basis for comparative sales values were not truly comparative; that the allowance for building construction costs was too high; and that there was insufficient allowance for depreciation of some of the improvements. He acknowledged that since his valuation in November 2008 there may have been a slight reduction in selling prices in the area because of the general decline in land prices due to current financial conditions and estimated that any such a reduction would be, at the most, in the vicinity of about 5%.

24 Mr David James Abel holds a Bachelor of Science degree with Honours, and is a certified practising valuer, and had been working in the Bunbury-Dunsborough area since May 2005. He adopted the same basic methodology for valuation as Mr Franklin but, in doing so, attributed lower land values derived from different comparative sales evidence and a lower value for improvements. He was cross-examined by counsel for the plaintiff in relation to whether or not the comparable sales evidence which he had selected was truly comparative and about the high levels of depreciation utilised when valuing improvements.

25 The second valuer called for the defendants, Mr Lee Harrison Martin, holds a degree of Bachelor of Commerce and is a certified practising valuer in the area, obtaining his licence in 2006. His approach to valuation was to utilise the direct comparison approach and to confirm this by the summation method utilised by the other two valuers. Again, he was cross-examined about the justification of his choices for comparable sales.

26 None of the valuers directly addressed the current market value of the land. In two cases (the valuations of Mr Franklin and Mr Martin) the opinions expressed related to dates of valuation in November 2008, that is, almost two years ago, whereas in the case of Mr Abel, his valuation in September 2009 was more than a year old. At times of stable prices or steady, stable rates of change, the lapse of such time may not be unduly significant. However, having regard to the influence of the global financial crisis originating in 2007/2008 and the widely reputed fluctuations in land prices since, the absence of evidence relating to contemporary market value leaves a cloud over all the valuations.

27 I also consider that the adoption of the methodology of summation, that is, choosing comparable sales to establish the land values and then adding to that by estimating the value of improvements by using a method of current building costs, later discounted by estimated depreciation, is open to question. As the cross-examination revealed, there were significant disparities between the figures adopted by the valuers for current building costs and for depreciation. Further, it seems that there is an unacknowledged assumption that the full (depreciated) value of improvements is an increment to be added to the value of the land based on comparative sales. This approach does not disclose whether or not the comparative sales included the value of improvements, if any, on those lands or, further, whether in a case like this with a relatively small rural holding of about 39 ha, or 98 acres, the presence of three houses on the property meant that the capital value fully includes the depreciated value of each of those homes or the improvements constitute an over-capitalisation of the land. That is not an issue which was explored.

28 Counsel made extensive criticisms of the methodologies adopted by the different valuers. The defendants submitted that the court should make a determination of the current value of the land based on this evidence as if it were the function of the court to determine the current market value of the land. However, I am satisfied that it is not the function of the court to make any such determination of value and that s 126 of the Property Law Act does not envisage that this would ever be done.

29 The history of the development of s 126 of the Property Law Act is helpfully summarised by Prof Peter Butt in his work Land Law (5th ed, 2006). There the learned author writes at [1495], and I accept this as being correct, that:

At common law, in the absence of unanimity between co-owners, no single co-owner, or even a majority of co-owners, could compel a partition of the property. A statutory right to compel partition by an action at common law was first conferred by the Partition Acts of 1539 and 1540. Later, courts of equity assumed a concurrent jurisdiction and permitted a suit in Chancery for a decree of partition. But these procedures did not always prove satisfactory, especially where a fair physical division of the property was difficult. The unfairness could be alleviated in equity (though not at common law) by ordering the payment of owelty money to equalise the partition. But both at common law and in equity the courts held that the Partition Acts gave them no discretion to refuse an application for partition, no matter how inconvenient and undesirable partition might be.

To overcome difficulties such as these, the remedy of sale was introduced. This was first done in England by the Partition Act 1868, and in New South Wales by the Partition Act 1878 (later replaced by the Partition Act 1900). This legislation empowered the court to order a sale of the property and a distribution of the proceeds, instead of a partition, whenever the court considered that course more beneficial. Indeed, the legislation made sale the preferred remedy, in the sense that if the co-owners entitled to one half or more of the property preferred sale to partition, then the court had to order a sale in the absence of 'good reason to the contrary'. (Citations omitted)

30 As I observed in Orrman v Orrman [No 2] [2008] WASC 17 [4], the Western Australian legislation was examined by the High Court in Nullagine Investments Pty Ltd v The Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635. That case concerned provisions in a deed between the co-owners preventing a sale by one, without a right of pre-emption, but not preventing partition. The court was divided over the effect of the provisions in that contract but Brennan J, in dissent, said on an issue which was not in any way in dispute (650):

The purpose of the first Partition Act in 1539 and of every subsequent Partition Act was the provision of a remedy for one co-tenant who, in the event of a dispute with another co-tenant, was without an adequate remedy to protect his share of interest in the land. The remedy of sale was first provided for by the Partition Act 1868 (UK). Both remedies terminate the co-ownership of land. The consequence of an order for either partition or sale is the termination of the existing co-ownership and the passing of full title to an owner who, without requiring the concurrence of a co-owner, can occupy and use the land as he sees fit or determine its further disposition. Sometimes this is effected by partition of the parcel of land, by purchase by continuing co-owners of the share or interest of a retiring co-owner, sometimes by sale of the entirety either to a third party or to one or more of the co-owners. However the consequence is effected, the remedies afforded by the Partition Acts to a co-owner of the land terminate the co-ownership and break any deadlock affecting its occupation and use of its disposition. That being the effect of the modern Partition Acts, their purpose can be stated. The purpose of such Acts is to provide a statutory mechanism for terminating the co-ownership of land when the co-owners fail themselves to agree on the manner in which the co-ownership shall be terminated. By affording the remedies provided by the Partition Acts, the legislature has facilitated the alienability of the land itself, and alienability of land is a policy which the law supports except where inalienability is required for the protection of a disadvantaged class. Co-owners having the capacity to deal with their respective shares or interests, are at liberty to agree the terms on which the land will be disposed of or the terms on which the shares or interests of one or more co-owners will be acquired by another or others or the manner in which the land in co-ownership shall be divided. (Citations omitted)

31 The long history of the early Partition Acts and their current equivalents such as s 126 of the Property Law Act lends no support for any approach, such as submitted by the defendants. This very point was decided by Templeman J in v Cullington [1997] ANZ ConvR 342 where his Honour said at [20] that he was satisfied that the plaintiffs had no power to compel the defendant to transfer her share in the subject land to them at a valuation. In that case, Templeman J traced the development of the statutory powers to order partition of land or sale in lieu of partition, commencing with the decision of De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56, where Jones J said (58):

Part XIV of the Property Law Act constitutes in effect a mini-code on the subject of partition. It reproduces substantially, although in an abbreviated and more modern form, the major provisions of the Partition Act 1882 which it repealed. That Act followed its English counterparts, Partition Acts 1868 and 1876. Prior to those Acts the court had had no discretion to refuse partition or to order sale in lieu of it. To get rid of the often inconvenient and sometimes absurd results of that rigid doctrine, the Partition Acts conferred on the court the powers by which the Property Law Act in this State it still has.

32 Templeman J also addressed the concept of 'benefit' as it appears within s 126(2) identifying that term as meaning economic benefit citing Pannizutti v Trask (1987) 10 NSWLR 531; [1988] ANZ Conv R 63, where Kirby P said in the Court of Appeal (540):

Such benefit is to be determined by the terms of s 66G(4) [the equivalent provision in New South Wales] not exclusively by the co-owners' wishes but by the assessment of the court. It is the court which must be 'satisfied' by the co-owners or any of them. What is 'beneficial' must be established according to an objective standard. The meaning of 'beneficial' has not, apparently, been elaborated. It would appear primarily to be addressed to economic benefits, having regard to the subject matter of the subsection. But the references in the cases, including in the passage from Lord Hatherley LC's speech in Pemberton, suggests that emotional and other considerations might be relevant to the discretion being exercised. Again, it is not necessary finally to determine this question in the present appeal.

33 On the question of whether or not the court is empowered under s 126(3) to order that an unwilling co-owner should sell his or her share to the other co-owners at a valuation, Templeman J cited the decisions of Martin-Smith v Woodhead [1990] WAR 62 and of the High Court of New Zealand in Dale v McCullough (1988) ANZ Conv R 67. In Martin-Smith v Woodhead Kennedy J referred, at page 68, to the view expressed by Lord Watson in Pitt v Jones (1880) 5 App Cas 651 where his Lordship said:

Section 5 [which is the equivalent of s 126(3)] is an independent clause giving an entirely new power to any party who is prepared to sell his own interest to insist for and obtain a decree of sale unless someone is willing to buy his share but not giving power to the court to compel any party interested to sell his share at a valuation.

34 Similarly, in Dale v McCullough, the New Zealand High Court said (69):

A party who requests the sale of the whole property under s 140(3) [the equivalent of s 126(3)] cannot be compelled to part with his share on a valuation if he does not wish to do so for the court has no jurisdiction to direct a valuation against the wishes of such party even though the other co-owners who hold the majority interest in the property are willing and undertake to purchase at such valuation.

35 The principle that s 126(3) of the Property Law Act does not allow the court to make an order to force a co-owner to accept a sale of his interest at a valuation has frequently been recognised. In Nullagine Investments Pty Ltd v The Western Australian Club Inc (Unreported, WASC, Library No 8523, 3 October 1990), the first instance decision of the case already mentioned, Rowland J said of s 126(3):

I mention the above propositions simply to show that s 126(3) is not regarded as a proviso to, nor does it inhibit, the powers of the court under s 126(1)...

If a party to an action undertakes to purchase the interest of another party, the court may, under s 126(3) Property Law Act, direct a valuation of the share of the party requesting the sale, but cannot force that party to sell his interest at that valuation - see Pitt v Jones [1885] AC 651 which was followed by Kennedy J in Martin-Smith v Woodhead [1990] WAR 62, in turn following Gray v Dawson [1912] 31 NZLR 101 where Cooper J found it impossible to distinguish the New Zealand provisions (which we have followed in Western Australia) from the English Partition Act 1868 (Imp).

37 These passages were referred to by White J in Holland Investments Pty Ltd v Motorways (1984) Pty Ltd (Unreported, WASC, Library No 920557, 4 November 1992) from where his Honour went on to observe (12):

At this stage it is sufficient to make the point that, if the court cannot compel a party to sell his interest at a valuation and if s 126(3) does not inhibit the power of the court under s 126(1), it is apparent that it can be no defence to an application for an order pursuant to s 126(1) that the other party interested in the land is willing to acquire the former's interest at a valuation.

38 An attempt to challenge those propositions was rejected by White J in Holland Investments Pty Ltd v Motorways (1984) Pty Ltd, with his Honour following Pitt v Jones (1880) 5 App Cas 651 and Polden v Rowling [1958] NZLR 31 and his own earlier judgment in McPherson v Hancock (Unreported, WASC, Library No 9173, 6 December 1991). In the particular case the fact that one of the defendants was willing to purchase the interest of the plaintiff at a valuation was not a defence to the plaintiff's claim. These cases have been considered and applied by Steytler J (as he then was) in Bailey v Pattinson (Unreported, SCWA, Library No 1566/94, 23 November 1994).

39 It was, nevertheless, submitted on behalf of the defendants that where a defendant gives an undertaking contemplated under s 126(3) the plaintiff is not still entitled to insist upon a sale under s 126(3) - Bailey v Pattinson (9) (Steytler J) and that such an undertaking is 'an effective check' on the court's power under s 126(3) and will prevent the order for sale being made - Perman v Maloney [1939] VicLawRp 54; [1939] VLR 376, 381. However, with respect, I do not consider that those authorities support that proposition. In Perman v Maloney (381) O'Bryan AJ said (of s 224 of the Property Law Act 1928 (Vic)):

In such a case, the section goes on to provide that the Court may, if it thinks fit, unless the other parties interested in the property, or some of them, undertake to purchase the share of the party requesting the sale, direct a sale of the property and give all necessary or proper consequential directions. If the undertaking is given, the Court may order a valuation to be made of the plaintiff's share. The section does not, however, compel the plaintiff to sell...

Apart from s 224, a party interested only to the extent of less than a moiety could not request a sale, unless he brought himself under the provisions of s 222. An effective check on an application made by a party interested in less than a moiety is that the other parties interested or some of them may prevent an order for sale being made, if they undertake to purchase the share of the party requesting the sale.

40 Steytler J in Bailey v Pattinson recognised this was so because, when referring to the observations of O'Bryan J in Perman v Maloney, Steytler J observed:

It is apparent that his Honour was saying no more than that a plaintiff under s 224 could, if he or she chose, retract an alternative offer of the kind referred to by Lord Watson in Pitt v Jones before any 'judicial contract' was completed, thereby depriving that plaintiff of the right to insist upon a sale under s 224 but, at the same time, leaving himself or herself free to seek a remedy under one of the other sections of the Act, if the plaintiff came within them, or a decree of partition.

41 In any event, neither of the defendants at the trial, or at any other time, offered any undertaking to purchase the share of the plaintiff at a valuation to be directed by the court. Quite the contrary, the defendants' position was that they were entitled to purchase the plaintiff's share in the land on the basis of the valuations which they had produced to the court or, alternatively, at such a figure as the court might determine to be the value of the land based on the evidence of the three contested estimates of current value put forward in evidence. That is not an undertaking to purchase the land at a valuation. It is an assertion of a right to purchase the interest at a figure fixed by the court upon contestable opinion evidence of value.

42 All this reflects the principle that the remedy of partition or sale in lieu contained in s 126 of the Property Law Act provides a means for the termination of the prior co-ownership and its replacement by, either, the sole proprietorship of portion of the land which has been partitioned from the whole; or alternatively, by sale or alienation of the land in a manner which will secure receipt by the claimant of the market value of his former undivided interest in the whole. The latter alternative of sale or alienation may be accomplished in one of two ways. Either the entire land will be sold and the claimant will be paid his share of the net proceeds of the sale according to his former interest, or one or more of the other co-owners may buy out the share of the claimant at a valuation or other figure agreed by the claimant. All these forms of alienation have as their object the realisation of the full market value of the claimant's interest in his or her undivided portion of the land. This is achieved by the availability of a sale into the general market where any potential purchaser may offer to purchase or to bid at any auction, thus ensuring the best prospects of realising full market value.

43 In a case like the present, if the court were to accede to the submissions of the defendants and attempt to determine current market value on contested valuation evidence even from experienced experts, the real contemporary market value of the land would not be ascertained as surely as it would be if there were to be a sale. The risk is that the valuation evidence might not be reliable, that the market value might have moved, or that the competition which should arise on a sale where all potential purchasers may offer or bid will produce a more objective determination of current value.

44 By making an application under s 126 the plaintiff is seeking that the court should order either partition or a sale in lieu and, even under s 126(3), a sale in lieu at a price to be set by valuation is possible only at the option of the claimant and then by a valuation to be directed by the court which would usually be subject to directions designed to ensure the best prospects of ascertaining the full contemporary market value. Contrary to the defendants' submission, I am satisfied that the plaintiff is entitled to insist that the sale be of the entire land, not merely of his undivided one-third share, and that it be at a sale which ensures the achievement of current market value.

45 After giving short reasons for my decision at the end of this trial, and indicating that these more detailed reasons would later follow, I directed the parties attempt to agree upon a minute of the proposed orders to give effect to the sale of the land upon which I had decided. The terms of the orders which are set out in full at the end of these reasons have been modelled on the details of the order for sale made by the High Court in Nullagine Investments Pty Ltd v The West Australian Club Inc. On one significant issue the parties could not agree and it was necessary for me to resolve that outstanding issue.

46 As well as the proposed order directing a sale of the entire land by private treaty or, failing that, by auction, at a reserve price to be set and by a licensed real estate agent engaged by the plaintiff, the defendants sought a further order that before any offer to purchase the land by any purchaser (including the plaintiff) could be accepted they should have the right to purchase the land at or above the price offered if they chose to do so. I rejected that submitted proposal on the basis that its acceptance would tend to distort the market and inhibit competition for the purchase of the land. Adoption of that proposal would mean that the defendants, who had plainly expressed their desire to acquire the land in order to preserve the homes in which Mario was living, need not make any initial bids for the land either at any private sale or auction, but could wait knowing that they had the right to pre-empt any purchaser at, or a little above, any price offered. Not only would that place the defendants in a position of considerable advantage, but such an order would be likely to discourage third party bidders. The object of the legislation, once an order for sale has been made, is to achieve the current market price, and I have no doubt that this is more likely to be obtained by a proposed sale at which all members of the public are able and entitled to make offers of purchase.

47 As noted, there is a caveat lodged against the title to land on behalf of the National Australia Bank Ltd claiming an interest as mortgagee/chargee against the interest of the first defendant. This does not constitute a registered interest by the caveator in the land but, rather, is notice of claim of the existence of an unregistered interest. Were any dealing to be lodged for registration, such as a transfer pursuant to a sale ordered by the court, it could not be registered until due notice had been given to the caveator, who would then have an opportunity to take steps to protect its claim. The caveat was not regarded by the parties as any impediment to an order for sale either of the whole land or of the plaintiff's interest. In the latter case, of course, the interest claimed by the caveator would not be affected or diminished by a transfer only of the plaintiff's interest but the plaintiff is seeking an order for the sale of the entire estate in the land and not merely his one undivided third share. Again, however, this relief sought by the plaintiff should not be impeded by the existence of a caveat.

48 As submitted by counsel for the defendants, any claim of an interest in the land against one or more of the registered proprietors will, in the event of an order for sale under s 126, be converted into a claim against the proceeds of sale payable to that particular proprietor: McMahon v AF Wade Pty Ltd [1983] WAR 152; Crocombe v Pine Forests of Australia Pty Ltd (No 3) [2007] NSWSC 217; and Burton v Arcus [2006] WASCA 71; (2006) 32 WAR 366, 402.

49 Accordingly, in the present case, an order for sale which results in an actual sale of the property will mean that of the share of the net proceeds payable to the first defendant, so much thereof as may be necessary to satisfy any admitted claim by the caveator should be paid to the caveator and that payment will, pro tanto, satisfy the entitlement of the first defendant to its share of the sale of proceeds. If the caveator's claim is not admitted by the first defendant, then it would be necessary to hear any applications by the first defendant, and the caveator, to determine the existence and extent of any such entitlement before determining upon a distribution of the first defendant's share of the sale proceeds and, pending that determination, the first defendant's share of the sale proceeds would need to be retained and held subject to the directions of the court.

50 There is, of course, the possibility that no issue about the satisfaction of the claim by the caveator may arise because the first defendant may retain its interest in the subject land and add to it if it were to be the sole successful purchaser or one of the successful purchasers of the entire land at the sale ordered by the court.

51 Compliance by the first defendant with whatever steps may be needed to deal suitably with the existence of the caveat and the caveator's claim will be part of the obligation of the first defendant to comply with the order for sale and can be enforced and implemented, if necessary, by further directions or orders pursuant to liberty to apply.

Claims for a share of rents and profits, allowances and/or mesne profits of the subject land

52 In the statement of claim and in his counsel's initial written submissions the plaintiff raised several special claims for money, allowances or mesne profits and for an account based on allegations that the defendants had unlawfully excluded him from the use of the land, and had used the land for their own advantage. He also pleaded that one or other or both of the defendants had received rents or profits from the land in the form of payments from tenants of one of the houses and of the cottage, for hiring expenses for the stables and horse training facilities, and from third parties for agistment of horses on part of the property.

53 The plaintiff also alleged that in 1985 Giacci Holdings Pty Ltd purchased the first house on the property for $200,000 and that no part of the proceeds of that sale were distributed to him, notwithstanding that, at the time, he had a one undivided share as tenant in common in the whole of the property. Mr Antonio Giacci also pleaded that between 1982 and 1983 Giacci Holdings Pty Ltd had erected a second house on the premises at a cost of between $75,000 and $78,000. The first defendant pleads that this was built at a cost of $120,000. Next the plaintiff pleaded that in 1982 and 1983 the first defendant purchased the transportable house, which became known as the cottage, for a price between $50,000 and $60,000. He also alleges that the second defendant, Mario Giacci, took possession of the transportable house and the horse training facilities and used them as his own, letting them to third parties for reward, without accounting to the plaintiff.

54 The plaintiff alleges that within the meaning of s 27 of the Administration of Justice Act 1705 (Imp) - the 'Statute of Anne' - and by the defendants' use of the land, each defendant has received more than his just share or portion as against the plaintiffs' one undivided third share and that each defendant is liable to account to him for such excessive benefit as the result of their use and occupation of the property. The plaintiff also alleges that because of the receipt of rents and profits by the defendants from the use of one of the houses and of the cottage, and the sole use of the first house by the second defendant, and by the agistment and other revenues derived from the use of the land, the defendants are obliged to account to him.

55 By their defence, the defendants plead agreements relating to the purchase of the first house by the first defendant for $250,000, and its subsequent use by the first defendant, but admit that the first house was let to tenants from time to time. The defence contains detailed particulars alleging that these arrangements were authorised by the first defendant at a time when the plaintiff was managing director of that company and otherwise occurred without his objection. So far as concerns accounting for rents, profits and other moneys derived, the defence assert that at various dates between 1 July 2002 and 22 November 2006 the plaintiff received dividends from the first defendant as trustee of the A C Giacci Family Trust and that these dividends included the revenues derived from some or all of the benefits of any letting of the house or other rentals.

56 Furthermore, by their defence, the defendants plead that any claim for an account of moneys received by the defendants prior to 30 May 2002 is barred by operation of s 38(1)(c)(iii) of the Limitation Act 1935, that any claim for mesne profits is similarly barred by s 38(1)(c)(vi) of the Limitation Act 1935 or, alternatively, by virtue of s 13 of the Limitation Act 2005. They defend any claim for mesne profits on the basis that the plaintiff was never excluded from possession.

57 It is evident that in earlier interlocutory stages of this litigation there were attempts by the defendants to introduce claims or set-offs for occupation expenses and for money expended on improving the property but, as mentioned before, these attempts did not survive the requirements for support by detailed particulars or by discovery and have not been pursued.

58 By the commencement of the trial, however, the parties by their counsel had reached some degree of common ground about these claims. By then the plaintiff accepted that limitation issues would prevent him from seeking an account or recovering any moneys in respect of the sale to the first defendant of the first house or in respect of other improvements. The plaintiff also accepted that other limitation issues would prevent any claim for rents or profits or accounts in respect of them for more than 12 years prior to the issue of the writ, but that claims to a third of all such revenues for the period commencing 12 years before the issue of the writ to date could be pursued and were being pursued.

59 The defendants' position, at the commencement of the trial, was to deny that there had been any rents or profits derived by either of them in respect of the land which had not been fully and appropriately shared with the plaintiff but if, despite that denial, it were proved that there were any such payments, then the defendants accepted that one-third of those gross payments would be payable to the plaintiff.

60 The approach adopted by the parties did not specifically include any reference to the question of whether or not any such account or payment for a one-third share of the gross receipts, if any, by the defendants to the plaintiff should be with or without interest but the claim for interest has been maintained by the plaintiff under s 32 of the Supreme Court Act 1935 (WA) and is, I am satisfied, open.

61 Again, as earlier stated, the parties conducted the trial on the footing that, as distinct from the plaintiff being obliged to prove that there had been some such payments as alleged, it would not be necessary to prove or quantify the nature and extent of all these payments or for the court to give judgment on the amount, if any, found to be due to the plaintiff. Rather, the common approach was that if the plaintiff was successful in establishing that there had been, even unquantified, payments of rent, hire, agistment fees or other similar income for which there had not been disclosure or accounting to the plaintiff, then the court should direct an inquiry before a Registrar and that an account be taken of the amounts involved and of the one-third share with or without interest which should be paid to the plaintiff.

62 Once the evidence at the trial began to be adduced, it quickly became evident that there had been such payments to the defendants over time and that some payments of rent were even now continuing. It also became very obvious that despite assertions that payments had been made to the first defendant, there was no evidence to support that any payments from the first defendant to the plaintiff (and none were actually proved) included his share of the rents, profits or other payments derived from the operation of these minor business activities on lot 265 Ducane Road, Gelorup.

Profits, rents and other payments from the land derived by the defendants

63 The evidence and conduct of the defendants in relation to moneys received by them in the post from the use of the land was unsatisfactory. In view of the allegations in the statement of claim by the plaintiff that, in various ways, they derived moneys or other revenue from the land to the exclusion of the plaintiff, any records relating to financial benefit derived by the defendants from the land were plainly discoverable. Accordingly, rent records, bank statements, financial accounts and the like dealing with these matters would be plainly relevant but, according to counsel for the plaintiff, no such discovery was given by the defendants. This proposition was not challenged by the defendants at the trial.

64 In the course of the valuation evidence it transpired that in information given by the second defendant, Mr Mario Giacci, to his valuer, Mr Martin, Mr Martin was instructed that the front house (the first house) was rented for $250 gross per week, that the horse stables and yards were rented for $250 gross per week, and the cottage was rented for $80 gross per week (exhibit 35, page 11). The valuation report for the defendants prepared by Mr David Abel (exhibit 34) also contains a reference (at page 22) that the first house and stables were then rented for a total of $330 per week.

65 Exhibit 18 (being a computerised printout from the letting agents engaged by the defendants covering the period from 2 January 2003 to 30 January 2009) shows regular receipts of rent for the property at Ducane Road, including cash payments for Ducane Cottage from an M Lewis.

66 In the course of his cross-examination the second defendant, Mario Giacci, conceded that he received cash payments for the rent or hire of the horse stables and training facilities from various users, which he treated as his own property. He said that he received $20 per horse box per week from the lady who rented the stables for periods when there was a horse or horses there. He also said that the third house, meaning the cottage, was rented at $50 per week and that the rent was paid to the first defendant, whose accountant would know the details. He also said that a Ms Freeman had lived in Peter's house (Peter Louis Giacci) the first house, for six months and had been paying rent.

67 According to Mario, the stables had been let out for two years, Michael Lewis had rented the cottage from 2004 and another lady had rented it before then. He said that he had no records relating to the money derived from the use of the stables. He always kept this and treated it as his money. He either banked it in an R & I Bank account (no discovery) or spent it.

68 On all aspects relating to disclosure of income derived from the land, and the nature and extent of such rents or other payments, I found the evidence of Mr Mario Giacci to be evasive, incomplete and unreliable. I am satisfied that he failed to discover records and materials in his possession or under his control relevant to those issues.

69 Similarly, the evidence of Mr Peter Louis Giacci on these issues was also evasive and bordering on the dismissive. In his evidence he did say that over the previous six months he had been involved in collecting rent from the house which he had previously occupied and which had been let for the last six months. The documentary evidence, however, reveals that he was personally involved in letting arrangements from much earlier than this. According to Mr Peter Giacci, all rent from that source, and other properties owned or controlled by Giacci Holdings Pty Ltd, was combined and put into one fund controlled by the first defendant, without any individual tabulation.

70 The solicitors for the plaintiff had issued a subpoena to a firm known as 'Professionals Capel & District Realty' at Capel to produce records held by that firm relating to rent or other revenues from this land which they had been managing for Giacci Holdings Pty Ltd. A compendious set of these documents comprises exhibit 30, which includes a summary statement showing that from January 2006 to December 2008 a total of $34,191.03 had been collected by the agents in relation to the property at lot 265B Ducane Road. These records included appointments of the agents as the exclusive management authority for the residential premises at the land over the period 3 May 2008 to 2 May 2010 and rent statements for moneys received from the premises dating back to 30 June 2003. The records also include a rent summary statement for the period from July 2005 to June 2006 showing gross rents received of $9,022.85 for that period and apparently paid to the first defendant. The records include correspondence between a tenant and Mr Peter Giacci in April 2007 relating to an increase in the rent being charged for the second house, which includes an acknowledgement by the tenant on 7 April 2007 that she had then been renting that property for five years and regularly paying rent. Also included is a letter from the first defendant signed by Mr Peter Giacci to the agents dated 12 June 2007, agreeing to an assignment of the lease for 12 months, and other like correspondence. Also included is a copy of a standard residential property lease for lot 265B Ducane Road for a 12-month period from 18 July 2007 to 17 July 2008 by Giacci Holdings Pty Ltd for $250 a week, and other corresponding leases for earlier periods dating back to 2 May 2003. The lease of that date was for 12 months at a rent of $170 per week to a Wendy Margaret Oliver, and again by Giacci Holdings Pty Ltd.

71 Other documentary evidence derived from The Professionals and from the defendants confirmed that parts of the property had been let with payments being made to Giacci Holdings Pty Ltd include exhibit 12 (letter from The Professionals to Giacci Holdings Pty Ltd, 22 March 2007), exhibits 13, 14, 15, 16. Exhibit 17 is a letter from The Professionals to the first defendant confirming that the property had been let through that agency since 2003 and that from August 2006 the tenancy details were: Wendy Oliver paying $185 per week; Shae and Jaimie Oliver $250 per week; Karen McPherson and Peter Ornby $250 per week, vacated 18 February 2009.

72 Again I am satisfied that the first defendant and its officer, Peter Louis Giacci, have failed, to a significant extent, to disclose relevant records relating to the revenues derived by the first defendant from the subject land and that Mr Peter Louis Giacci has been less than completely frank in acknowledging and disclosing income derived by the first defendant from the land over periods material to this action.

73 The documents which were produced at the trial and in response to the subpoena issued by the plaintiff and later discovery by the defendants on the eve of the trial show receipt of other rents dating back to 2000, but there is no evidence of what, if any, rents were received before then. In cross-examination, however, Mr Mario Giacci said that documents relating to rent receipts generally may be found at the premises of the first defendant in Picton (see ts 131) but these were not produced nor any explanation given why they were not discovered during the course of this action.

74 The implications of this documentary evidence were not fully explored at the trial because, as already noted, the plaintiff only set out to establish a basis upon which the court should order an inquiry and account to determine, later, what revenues were derived by the defendants from this land and how they should account to the plaintiff in respect of them. I am satisfied that the plaintiff has clearly established that the defendants were deriving income from the land and failed to account to him as co-owner reaching back to at least 2003 and probably to 2000 if not earlier. This provides the basis to order the inquiry and account sought.

75 This gives rise to questions about the basis upon which such inquiry and account should be conducted.

76 Because of ill-health, the plaintiff, Antonio Carmino Giacci, did not give evidence in person at this trial. He had, however, prepared a witness statement dated 10 December 2009 and he had given evidence at a de bene esse hearing before Master Sanderson on 17 December 2009, which was transcribed. That witnesses statement and the transcript of the examination became exhibits 2A and 2B, which were received as the plaintiff's evidence at this trial without objection. Counsel for the defendants indicated that he had no instructions to attempt any further cross-examination of the plaintiff.

77 From this evidence the historical narrative has been outlined. The cross-examination at the de bene esse hearing was devoted mainly to whether or not the plaintiff objected to the use of the lands made by the first and second defendants and whether or not in reality he had been excluded from possession as had been alleged in the pleadings. His answers were rather inconclusive but the gist is that the plaintiff largely complied with the arrangements which had been established by his brother Mario and did not attempt to enter or use the property because he felt that he was not wanted. From this I infer that at a time when there was already extensive animosity between the plaintiff and the defendants and his brother, Peter Louis Giacci, over the operations of the family company, the plaintiff took the decision to remain at a distance from the operations at lot 265 Ducane Road, Gelorup in order to avoid further acrimony. The history, such as it is, leads me to conclude that the plaintiff was not excluded from his right to possession of the subject land but, rather, declined to exercise that while still maintaining his title to his one-third undivided share.

Notional ouster from possession by denial of title

78 In addition to the allegations of exclusion from possession arising from the breakdown in the relationship between the brothers and the hostility shown to the plaintiff by the second defendant, which I have concluded do not amount to an actual ouster, the plaintiff submitted that he had been excluded or ousted from the property by the defendants' denial on the pleadings of his title (statement of claim dated 20 June 2008, par 22 , and defence and counterclaim 5 August 2008, par 14). However, by a second and further amended defence dated 23 November 2009, that denial disappeared and the new applicable paragraph (defence par 19) contained an admission of par 22 of the statement of claim and the plaintiff's allegation that he had an interest in the subject property to the extent of one undivided third share.

79 Nevertheless, the plaintiff submitted in his opening written submissions (pars 69 and 70) that the earlier denial of the plaintiff's title during the course of proceedings amounted to an express denial of his rights as co-tenant and as such constitutes an ouster: Pascoe v Swan [1859] EngR 961; (1859) 54 ER 201; (1859) 27 Beav 508, followed in Garner v Wingrove [1905] 2 Ch 233 and Biviano v Natoli (1998) 43 NSWLR 695 703.

80 In Biviano v Natoli the relevant passage is contained in the judgment of Beazley JA at 703 as follows:

The appellant filed a defence on 2 August 1995 in which she denied the respondent's interest in the property...

However, the appellant persisted in her denial of the respondent's title during the proceedings and up to the commencement of the hearing of the appeal, at which point she abandoned the grounds of appeal against the trial judge's finding that the respondent had a beneficial interest in the property.

In my opinion, the denial of the respondent's interest in the property amounted to an express denial of his rights as co-tenant and constituted an ouster. The appellant is thus liable to pay an occupation fee from the date of the filing of the defence.

81 Whether such a denial in a pleading may not constitute an ouster unless it sets up a rival claim to the estate or interest traversed is a major question which can wait until a later day. Such a modification to the old rule that denial in a pleading by a lessee of the landlord's title could lead to forfeiture of the lease was recognised in Warner v Simpson [1959] 1 QB 297; [1959] 1 All ER 120 and, even if the denial produced this effect by inadvertence, it could be cured by amendment - see Halsbury's Laws of England (4th ed Reissue) vol 27(1), 504 note 9.

82 There were no submissions by the parties in the present case about the significance of the abandonment of this denial by the defendants by the filing of their amended defence, nor any explanation given about the circumstances which led to the withdrawal of that denial. Certainly, the defendants did not maintain at the trial that the plaintiff was not, or ever had not been, a tenant in common of one undivided share in the whole of the land. The point of this alleged constructive ouster was not pursued by the plaintiff in further oral submissions or in closing. If there had been such an ouster at all, it would have lasted only from 5 August 2008 (the date of the original defence and counterclaim) until the amendment to that pleading on 23 November 2009. No attempt has been made by the plaintiff to adduce any evidence as to what would be an occupation fee for that intervening period, or at all, and it is, of course, the case that when an occupation fee is payable it is to be calculated with reference to the open market rental for the entire property - Biviano v Natoli (704).

83 In these circumstances, I am not satisfied that this alleged ouster gives rise to any entitlement to an occupation fee for any period. Certainly none was sought on this limited basis in the plaintiff's final submissions for relief.

84 The plaintiff presents his monetary claims in two categories. First, the rent claim, being a claim for an account of all moneys received by the defendants from third parties for the use of the property so as to lead to an order that the plaintiff should be paid one-third of those receipts. Second, is a claim for mesne profits based on the allegation that the defendants have excluded the plaintiff for possession and are therefore liable for a return to which the plaintiff's right of possession would otherwise have produced for him.

85 It is necessary to consider some of the principles which apply when one co-owner makes a money claim against the other co-owners arising from the use and occupation of the land or their disproportionate receipt of the rents, profits or other revenues derived from the property. Fortunately, I am spared the task of attempting a detailed analysis of these principles which have a long history in common law, equity and statute. In the propositions stated by Meagher JA in Forgeard v Shanahan (1994) 35 NSWLR 206 there is a comprehensive statement of those parts of the common law, equity and statute applicable and it is from Meagher JA's judgment (with which Mahoney JA agreed) that the following passages (with some abbreviation) have been taken (221 - 222):

Since both joint tenants and tenants in common had joint possession of the land in which they have the estate, it was a settled rule of law that the possession of any one of them was the possession of the other of them, so as (for example) to prevent the statutes of limitation from affecting them; nor did the bare receipt of all the rents and profits by one operate as an ouster of the other: Ford v Lord Grey (1703) 1 Salk 285; 91 ER 253; (1703) 6 Mod 44; 87 ER 807.
It follows that, when one co-owner is in occupation and the other not, but there has been no actual ouster or exclusion by the former of the latter, the law treats the latter simply as someone who has chosen not to exercise his legal right to occupy the land.
It also follows that a co-owner not in occupation was normally virtually without remedy. He could not sue in trespass unless there was an ouster: Cresswell v Hedges [1862] EngR 788; (1862) 1 H&C 421; 158 ER 950.

...

A co-owner out of occupation could not even recover his share of rents and profits if the co-owner in occupation appropriated them to himself: no action of account lay either at law or in equity: Henderson v Eason [1851] EngR 939; (1851) 17 QB 701 at 716 - 719; [1851] EngR 939; 117 ER 1451 at 1457 per Parke B.

Apart from statute, a co-owner out of occupation had remedies at law in two situations, and no more. If he had been ousted, he could bring ejectment and mesne profits: Goodtitle v Tombs [1770] EngR 9; (1770) 3 Wils KB 118; 95 ER 965; Luke v Luke (1936) 36 SR (NSW) 310; 53 WM (NSW) 101; Dennis v McDonald [1982] 1 All ER 590. If, on the other hand, his co-owner were in occupation by agreement that co-owner became an agent or bailiff and rendered himself liable in a common law action of account. In either case (that is, an ouster or occupation by agreement) he would be liable for rents actually received and possibly also for an occupation fee.
Apart from statute, in equity the plight of a co-owner not in occupation was little better. There did not seem to be any action which would render a co-owner in occupation liable to refund any rents received, much less liable for an occupation fee. It is true that there is a solitary and curious decision in 1685 which might suggest the contrary. That case is Strelley v Winson [1684] EngR 47; (1685) 1 Vern 297; 23 ER 480, an Admiralty case which seems to have wandered into the Chancery courts. In the course of the judgment the Lord Keeper said (at 297;480): 'And so where one tenant in common receives all the profits, he shall account in this court as bailiff to the other two for two-thirds', a proposition which has never been relied on, or even noticed, in any case decided since that date.
In 1705 things improved a bit with the Statute of Anne. That statute is properly cited as 4 & 5 Anne c3 s27, although - curiously - often referred to as 4 Anne c16 s27. Insofar as it is here relevant it provides:

'And... from and after the first day of Trinity term... shall and may be brought... by one joynt tenant, and tenant in common, his executors and administrators, against the other, as bailiff for receiving more than comes to his just share or proportion, and against the executor and administrator of such joynt tenant, or tenant in common...'

Thereafter, as far as rents actually received were concerned, a non-occupying co-owner had a statutory right of action both at law and in equity, which caused the courts no problem, subject to occasional disputation about what constituted and accountable 'rent': see eg Wheeler v Horne (1740) Willes 208; 125 ER 1135 and Squire v Rogers [1979] FCA 48; (1979) 39 FLR 106 at 121 - 122; [1979] FCA 48; 27 ALR 330 at 343...

86 At this point, Meagher JA diverted to lament that in New South Wales the Statute of Anne had been repealed by the Imperial Acts Application Act 1969 which, in his Honour's view, was a piece of legislation illustrating 'the havoc which can be wrought by high-minded but ignorant people, putting litigants in New South Wales back into the position they would have been in before 1705 in England'. Fortunately, that mordant reflection can be avoided in Western Australia because the Statute of Anne applies in this State having been extended to this jurisdiction by the Australian Courts Act 1828 UK Imp (9 George IV c 83 UK s 24) - see the Law Reform Commission of Western Australia Project 75 'United Kingdom Statutes In Force In Western Australia' October 1994 - Appendix 1 at 56 and 58. The Statute of Anne has also been displaced in Victoria and in Queensland as it has been in New South Wales but the prevailing view is that it is applicable in the other States - see Bradbrook & McCallum 'Australian Real Property Law' (1991) at 318.

87 Returning to the eighth proposition derived from the authorities by Meagher JA in Forgeard v Shahan his Honour said (223):

So much for rents actually received. Turning to the liability of a co-owner in occupation to pay an occupation fee, the position at law is fairly clear. He was not liable unless he excluded his co-owner, in which case he rendered himself liable in ejectment and for mesne profits, or if he constituted himself a bailiff, in which event he would be liable in an action of account, like any other bailiff: Re Tolman's Estate (1928) 23 Tas LR 29 at 31; Rees v Rees [1931] SASR 78 at 80 - 81. Indeed, the whole bias of law against making a co-owner in occupation liable to account is precisely based on the rationale that if such a liability were to exist a co-owner could, by abstaining from entering into occupation, turn his co-owner into an involuntary bailiff. As far as equity is concerned, an occupation fee will be exacted in at least two circumstances: first, in a partition suit (or related litigation): if there has been an exclusion, the tenant in occupation will be charged with an occupation fee (see, eg Pascoe v Swan [1859] EngR 961; (1859) 27 Beav 508; 54 ER 201); this is an example of equity following the law; and secondly, if the owner in occupation claims an allowance in respect of improvements effected by him, equity will permit such an allowance only on terms that he is accountable for an occupation fee - this is an example of he who comes to equity having to do equity: see Teasdale v Sanderson [1864] EngR 349; (1964) 33 Beav 534; 55 ER 476.

88 In Forgeard v Shanahan Meagher JA then proceeded to deal with the principles relating to entitlements arising from improvements and associated matters but it is unnecessary to refer to these on this occasion.

89 I have already concluded that the evidence does not support any finding that the defendants ousted the plaintiff from possession of this land but, rather, the position is that they exercised their rights of possession over the whole and discouraged the plaintiff from exercising his right of possession, a situation in which he acquiesced. From this position, they went on to receive rents, profits and other revenues derived from the use of the land and did not share those with the plaintiff or account to him for them. The result is that under the common law doctrines the defendants made themselves liable as bailiffs to account to the plaintiff for his share of those rents and profits. Also, they are liable to him under the Statute of Anne to the extent that their share in those rents and profits was disproportionate to their entitlement. Not having excluded the plaintiff from possession, neither defendant is liable for mesne profits.

90 The liability to account is only for rents and profits actually received and not for what might have been received had the defendants better managed or exploited the subject land: Thrift v Thrift (1975) 10 ALR 332, 339.

91 In these circumstances, it is open to consider whether or not, in addition to his right to an account of the rents and profits of the land and under the Statute of Anne, the plaintiff also has a right to an occupation fee on the principles stated. Indeed, such a claim has been advanced by the plaintiff in his pleadings and was developed in the plaintiff's opening written submissions but was not pursued in the conduct of the trial. No evidence was adduced on behalf of the plaintiff or otherwise as to what would amount to a fair occupation fee of the property as a whole, as distinct from rents or revenues actually received from the letting or hiring of the first house, the cottage and the stables and horse training facilities. Nor is there any evidence that the land was utilised by the defendants or others, or was capable of being so used, to produce revenues or to provide a utility which might indicate the nature and extent of a suitable occupation fee. It does not appear that, apart from the uses already mentioned, the land was turned to any income-producing purpose other than the occasional agistment of horses for which the second defendant received and kept payments. This being so, I do not consider that it is necessary to consider the claim for occupation fee further, nor to make any provision for such an allowance in the inquiry and account which are to be taken.

92 If there had been a live claim for an occupation fee, it might have been necessary to consider any offsetting claims for enhancement in the value of the land effected by improvements made by either defendant or to bring to account payments such as rates, if any, met by the defendants. It seems, however, that the state of record-keeping by the parties, in particular by the defendants, is so poor that there is no vitality in any such possible effects, and it also seems that, in the way the action has developed and the trial unfolded, that the plaintiff is content with his claim for an account at law, equity and under the Statute of Anne.

93 Accordingly, I am satisfied that the plaintiff is entitled to an inquiry and an account directed to the ascertainment of what rents, profits or other payments have been derived by the defendants arising from the letting of the first house, the cottage, the horse stables and associated horse training facilities and, upon ascertaining the extent of such receipts, an order that the defendants jointly and severally pay to the plaintiff one-third of the receipts so received plus interest. The limitation defences affect the period to be covered by this account as set out later in these reasons. It should further be directed that other than expenses or payments from such receipts deducted by the defendants' letting agents, such as for commissions or other like expenses, no other deduction shall be set off against those gross receipts on the basis that no claims for any such deductions or advances were pleaded by the defendants and that the introduction of any such issue will not now, at this final stage, be permitted.

94 Reference has already been made to the time limitation defences raised by the defendants to the claims for an account, mesne profits and other monetary relief and to the acknowledgement by counsel for the plaintiff that, to some extent, the plaintiff's claims are restricted by these limitation defences. To recapitulate, it is the defendants' position that the plaintiff's claim for an account for any period prior to 30 May 2002 is barred by the operation of s 38(1)(c)(iii) of the Limitation Act 1935 (defence par 22.2). They also plead that the claim for mesne profits is barred by s 38(1)(c)(vi) of the Limitation Act 1935 or by virtue of s 13 of the Limitation Act 2005 in that it accrued more than six years before the commencement of this action. In view of my finding that there has been no ouster of the plaintiff from possession and that there is, therefore, no basis for a claim for mesne profits, it is unnecessary to examine that second aspect of the limitation defence.

95 However, with respect to the limitation plea and defence to the claim for an account, the plaintiff submits that the relevant limitation period is 12 years and not six, by virtue of s 4 of the Limitation Act 1935.

96 The writ in this action was issued on 21 April 2008, thus meaning that liabilities accruing on and after 22 April 2002 remain enforceable if a six-year limitation period applies or, alternatively, that liabilities accruing on or after 22 April 1996 are enforceable if the 12-year period applies. Other than by these pleas and by those limited written submissions, the parties did not address the limitation defences further at the trial.

97 While it is the case that s 4 of the Limitation Act 1935 imposes a 12-year limitation period for recovery of possession of land or rent or to bring any action for such purpose, I do not consider that this applies to the present money claims. The plaintiff's claim is not for rent from some person presently or previously in occupation of the land from whom rent or other payment for the use of the land was ever due. This is not an action against a tenant or person in possession other than by right.

98 Such rents or payments due by the people in possession or using the land were paid, as and when they fell due, to the defendants but the defendants then failed to account for such payments to the plaintiff. The defendants are not tenants of the plaintiff, nor occupiers of the land other than by right and are not, therefore, liable for rent or mesne profits. Their liability is to account for money which came to their hands, in the old doctrine, as bailiffs for the plaintiff or under the Statute of Anne for the amount in excess of their own proportionate entitlement.

99 The accrual of the cause of action for an account occurs when the accounting party receives money or property in respect of which he is liable to account: Metropolitan Bank v Heiron (1880) 5 Ex D 319 (CA). See the application of this principle in Sword v Sword [2001] WASC 208.

100 While the rule relating to the accrual of the cause of action for account in Metropolitan Bank v Heiron may need to be adjusted when it comes to claims for an account against trustees who had possession of trust assets or against fiduciaries who have made dishonest and secret gains from their position, Attorney-General (Hong Kong) v Reid [1993] UKPC 2; [1994] 1 AC 324; [1994] 1 All ER 1 (PC), this need not be pursued on this occasion because the defendants are neither trustees nor fiduciaries in relation to the plaintiff, Kennedy v De Trafford [1897] AC 180, 186. Nor is there any allegation of dishonest concealment of their progressive receipts of rents, profits or other income from this land over the years.

101 Accordingly, I consider that the applicable limitation period is the six-year period imposed by s 38(1)(c)(iii), if indeed any limitation period at all applies. The reason for that hesitation is the observation of Meagher JA in the first set of propositions in Forgeard v Shanahan that the unity of possession between tenants in common prevents the statutes of limitation from affecting them. However, no such point was made on behalf of the plaintiff and it is therefore unnecessary to deal finally with that potential. It would only have the result that, in the absence of an ouster, such a co-tenant would never have been out of possession of the land, so that a limitation defence based on the other co-tenants being in exclusive possession from some particular date onwards could never arise. That would mean that an action to vindicate an aggrieved co-owner's possessory rights could not be defeated by any such limitation defence. It seems to be otherwise where, as here, there is a money claim which is not based on any exclusion from possession of the land but, rather, upon a failure to account where the obligation to account was accruing due again and again from time to time on each occasion when moneys were received by the defendants arising from the common ownership of the land. In these cases, the obligation to account arises on the occasion of each such payment and it is unaffected by the fact that, at law, the plaintiff remained entitled to possession of the lands despite the defendants' repeated failures to account.

102 Therefore, I consider that the applicable limitation period is six years. Because of the statutory definition of 'action' in s 3(1) of the Limitation Act 1935 this limitation period applies not merely to a cause of action founded on a liability at law to account but also to any equitable claim for an account founded on a liability in equity. Accordingly, even if the plaintiff's claim for an account arises as incidental to the claim for partition, the limitation period will be the same. See generally Meagher, Gummow & Lehane, Doctrines and Remedies (4th ed) at [25-655] and [34-030].

103 Consequently, the inquiry and account should be conducted on the footing that the defendants are liable to pay to the plaintiff one-third of the net amount of all receipts of rents, hirings, agistment fees and other like income received on or after 22 April 2002 to date.

104 Having by these reasons now determined the basis upon which the inquiry and the account which is to be ordered should be conducted, I will direct the parties to bring in a further minute of proposed orders relating to the conduct of such inquiries and accounts with a view to incorporating them in a supplementary order of the court. The parties should exchange minutes of proposed orders in the hope of reaching agreement and, failing agreement, there will be a further hearing on a date to be fixed to settle those terms.

105 It was for these reasons, therefore, that I ordered at the end of the trial that the entire land should be sold and that the net proceeds of the sale should be divided between the parties according to their equal shares. After receiving further submissions as to the terms of the orders, I ordered and directed:

That all that land, being the whole of the land in certificate of title vol 75 folio 160A known as lot 265 Ducane Road, Gelorup (the Land) owned by the plaintiff and the first and second defendants as tenants in common in equal shares, be sold on the basis of unencumbered vacant possession.
The plaintiff have the conduct of the sale of the land and for that purpose:

(a) the plaintiff as soon as practicable shall engage in the name of the plaintiff and the first and second defendants a qualified and certificated real estate agent carrying on business in the city of Bunbury and its surrounding districts to act on such sale;

• to recommend a reserve price for the sale of the land;

to adopt the reserve price recommended by the agent as a reserve for the sale of the land;
to market, advertise and otherwise offer the land for sale by way of private treaty;

(c) the plaintiff, upon being notified by the Agent of the recommended reserve, shall give notice to the first and second defendants by their solicitors of such reserve.

At any time within the period of three months from the date of the appointment of the Agent by the plaintiff, the Agent may recommend an alteration to the reserve price adopted for the sale of the land and upon such recommendation being made by the Agent in writing the plaintiff shall adopt the recommended altered reserve price as the reserve and give notice of the same to the first and second defendants in the manner hereinbefore specified.
The first and second defendants shall have liberty to apply to the court on three days' notice in respect of the reserve price.
If within three months of the date of retainer of the Agent by the plaintiff no acceptable offer is received by the Agent, the plaintiff shall request the Agent to provide recommendations in writing as to how the land is to be marketed by public auction, including the period of advertising, the form of advertising and a recommended auction reserve.
Thereafter the plaintiff shall cause the land to be offered at a public auction in accordance with the Agent's recommendations.
The first and second defendants shall have liberty to apply to the court on three day's notice in writing if the defendants seek any variation to either the reserve price or to the terms or date of such auction.
On any sale of the land made pursuant to the terms of this order:

(a) the plaintiff shall be authorised by this order to sign for and on behalf of himself and the first and second defendants any transfers, notice of appointment or agent or other documents necessary to give effect to the sale of the land;

(b) any sale shall be pursuant to the current applicable joint terms and conditions for the sale of real estate published by the Law Society of Western Australia and the Real Estate Institute of Western Australia (Inc) unless otherwise ordered by the court on application by any party.

Each party to the action will be at liberty to bid at auction or make offer by way of private treaty for the purchase of the land and the following orders shall apply:

(a) in the event that any party's offer in respect of the land is accepted, such party need not pay a deposit;

(b) the successful bidding party's interest in the land shall be treated on account of payment of the purchase price such that if any single party hereto being a tenant in common in equal shares is a successful bidder, then one-third of the purchase price (less any commission fees and expenses in respect of such sale) the subject of any contract will be deemed to have been paid on account of the purchase price and if two parties being both tenants in common then two-thirds of the purchase price (less any commission fees and expenses in respect of such sale) will be deemed to have been paid on account of the purchase price.

The parties have liberty to apply generally.
The first and second defendants co-operate fully with the agent appointed by the plaintiff in the sale process and without limiting the generality of the foregoing on reasonable notice of not less than one business day make available the land for inspections.
The following account be taken, that is to say:

(a) an account of any rentals, profits or income received by the first defendant in respect of the land or any part thereof as and from 22 April 2002;

(b) an account of any rentals, profits or income received by the second defendant in respect of the land or any part thereof as and from 22 April 2002.

The defendants pay to the plaintiff a sum equivalent to one-third of the sum determined by such account, together with interest as and from the dates such accounts determine the funds were received by the first and second defendants at the judgment rate applicable from time to time in this Honourable court.
The account be otherwise conducted pursuant to such further directions may be made by this Honourable court.
The operation of this judgment be suspended for a period of 21 days from 27 October 2010.
The costs of the action and of the taking of accounts be reserved.
The trial be otherwise adjourned to a date to be fixed for the delivery of further reasons for decision and for the making of any further orders or directions then sought by the parties.

Acts Application Act 1969

GIACCI -v- GIACCI HOLDINGS PTY LTD [2010] WASC 349 (30 November 2010)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (176 paragraphs)

GIACCI -v- GIACCI HOLDINGS PTY LTD [2010] WASC 349 (30 November 2010)

Profits, rents and other payments from the land derived by the defendants

Notional ouster from possession by denial of title

Legislation Cited (6)

Cases Cited (7)