Supreme Court of WA|2008-01-30|Before: Heenan J

ORRMAN -v- ORRMAN [No 2] [2008] WASC 17 (30 January 2008)

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA

CITATION : ORRMAN -v- ORRMAN [No 2] [2008] WASC 17

Real property - Partition - Sale in lieu - Tenants in common in equal shares

Order for sale with directions as to mode of sale and distribution of proceeds

1 EM HEENAN J: The case before me today is a claim by Mrs Yvonne Orrman for an order, pursuant to s 126 of the Property Law Act 1969 (WA), for the sale of certain land situated at 44 Hammad Street, Palmyra. The evidence establishes that the land in question is a portion of Cockburn Sound location 8 and is Lot 8 on diagram 8683 and the whole of the land comprised in Certificate of Title Volume 1580 Folio 386.

2 The registered proprietors of that land are the plaintiff Yvonne Orrman, and the defendant Evild Hendrick Orrman, as tenants in common in equal shares. That being the case, as a person interested to the extent of a half-share or upwards in the land to which the action relates, Mrs Orrman is entitled to apply for an order for partition of the land, or for an order for the compulsory sale and division of the proceeds pursuant to s 126 of the Act.

3 I should say a little about the law relating to partition. I read from Professor Peter Butt's work, Land Law (4th ed, 2001). Professor Butt writes - 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 court had to order a sale in the absence of 'good reason to the contrary' [1470]. (citations omitted)

4 This legislation has long been in existence in Western Australia. It was originally contained in the Partition Act 1878 (WA), but that was repealed and replaced by s 126 of the Property Law Act 1969 (WA), to which reference has already been made. Nullagine Investments Pty Ltd v The Western Australian Club Inc [1993] HCA 45; (1993) 177 CLR 635 is a case concerning claims for partition of city land where the provisions of the Property Law Act were directly under examination. The 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 this contract. However Brennan J in dissent, said, on an issue which was not in any way in dispute:

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 or 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 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 (650). (citations omitted)

5 This is enough to demonstrate that Mrs Orrman has proved the existence of facts which would entitle her to an order under s 126 of the Property Law Act. I must come to deal with the defence raised by the defendant, the other co-owner, and his counterclaim.

6 Before doing so, I must describe a little of the history and background of this land. This particular block of land has been in the ownership of various members of the Orrman family for a long time. It was originally the family home of the defendant's parents. Following the death of the defendant's father, it came into ownership of the defendant's mother.

7 When Mrs Orrman (senior) died, it was devised under her will to the defendant, Evild Orrman and to his brother Carl Orrman, as tenants in common in equal shares. Carl Orrman died on 20 August 2001, leaving a will dated 21 March 1996, in which he left his real and personal estate to his widow, the plaintiff, Yvonne Orrman. That will was admitted to probate on 12 October 2001, and must therefore be treated by me as the valid and effective will of the deceased, Carl Orrman.

8 Pursuant to the administration of Carl's estate, in accordance with that will, Carl's share of the property was transferred to the plaintiff on 7 November 2001. That is how she came to be one of the two tenants in common of equal shares on the title of the property.

9 The evidence shows that there has been a history of disagreement between the defendant, Mr Orrman, and his sister-in-law, Mrs Yvonne Orrman, about the ownership of this land. This seems to be more pointed on Mr Orrman's side, and it stems from his deeply-held belief that for a variety of reasons, which I will canvass in a moment, he is, or should be, treated as the owner of the whole of the property, and that Mrs Orrman, despite her claims and her presence on the title as a co-tenant in common in equal shares, has no just claim to the land.

10 The result of this attitude, which I am satisfied amounts to a degree of quite strong animosity and antipathy by Mr Orrman towards his sister-in-law - not that that makes any difference to anything which I am about to say - means that since Carl's death in August 2001, there has been virtually no co-operation between the co-owners over the management or use of the property.

11 There is a dispute between them over who paid rates and taxes, or contributed to the payment of rates and taxes, before Carl's death. There has been at least one effort by Mrs Orrman to contribute to rates on the property since Carl's death, but that has been rejected and the cheque which she proffered in contribution to the payment was returned on behalf of Mr Orrman, apparently on the basis that he would recognise no claim which Mrs Orrman had towards the land.

12 There have been other incidents concerning prosecution of Mr Orrman in relation to the land. Such incidents include, the failure to install firebreaks, the use of the land by Mr Orrman's sons and the use of the land to store old vehicles and other equipment belonging to Mr Orrman. None of that history affects the essential issues which require decision in this case.

13 More significantly, Mr Evild Orrman asserts and counterclaims in this action, for an order that Carl's share of the property, as he calls it, should be transferred to him and that all steps should be taken to effect such a transfer; or failing that, Mrs Orrman should pay to him the value of Carl's share or such other sum as the court should think fit; and thirdly, as an alternative to either of those possibilities, that the property should be partitioned - that is, physically divided - pursuant to the Property Law Act rather than be sold so as to allow one section of the land to be retained by the defendant.

14 The basis for this counterclaim is set out in the pleadings which have been filed. It is asserted on Mr Orrman's behalf that from a date in March 1998 it was the common intention of himself and his brother Carl that he would receive Carl's share of the property on his death. This pleading alleges that on a date in March 1998, Carl agreed with Evild that should Carl predecease the defendant, the defendant would receive Carl's share; secondly, that Carl would execute a will to give effect to this intention; and thirdly, that he, Evild, would pay all of the outgoings on the property.

15 The pleading asserts that on this date in March 1998 Carl executed a document in which he recorded his intention to leave Carl's share to Evild. This is referred to in the pleadings as 'the 1998 document'. According to the pleadings, from March 1998 onwards until Carl's death, and in reliance on this alleged common intention, and to his detriment, the defendant expended his personal labour on the upkeep of the property and paid all outgoings on the property in their entirety.

16 Following Carl's death on 20 August 2001, again in reliance on the alleged common intention and to his detriment, and in the belief that Carl's share would be transferred to the defendant, Mr Evild Orrman pleads that he expended his personal labour upon the upkeep of the property, paid all outgoings on the property in their entirety, and that following Carl's death he gave to Mrs Yvonne Orrman the 1998 document; that is the document recording the alleged common intention and the intention to make the will leaving the property to Evild.

17 Mr Orrman, the defendant and counterclaiming plaintiff, then pleads that on 7 November 2001, notwithstanding the alleged common intention, Carl's share was transferred to Mrs Yvonne Orrman. It is true that it was transferred on that date.

18 He says that he subsequently discovered that Carl's share had been transferred to the plaintiff, notwithstanding the alleged common intention. He pleads that by taking Carl's share with knowledge of this common intention, Mrs Orrman holds Carl's share on trust for him, or alternatively that she is liable to account to him for an amount equivalent to the value of Carl's share.

19 The basis for this in the pleading is that Carl's share was subject to a constructive trust in favour of the defendant, and that Mrs Orrman knowingly and in breach of the trust took the property with knowledge that it was being transferred in breach of this constructive trust.

20 The pleading then goes on to seek, as an alternative to a declaration or order as to the absolute ownership of the land in favour of the defendant, the physical partition of the land and subdivision. The pleading relies again essentially upon the history which I have already narrated.

21 Let me now come to the evidence which has been adduced in this case and upon which I must make my findings. Firstly, Mrs Yvonne Orrman said in evidence that she has no knowledge whatever, and has never had any knowledge, of any intention, arrangement or other understanding by which her husband was to give, or arrange to have transferred, to his brother Evild his own half share in the property. She denies that a document was prepared in March 1998 to set out Carl's alleged intention to transfer by will the half interest to the defendant, and says that she has never seen or heard of such a document.

22 It is to be noted that in the pleading, and in the case which the plaintiff has come to court to address, the allegation is not that Carl made a will in favour of the defendant to leave his half share of the property to him, but rather that he executed a document in which he recorded his intention to do so. That is significant in the light of the evidence which has been given by Mr Orrman.

23 Mr Orrman's evidence in this regard is that in March 1998 he and his brother obtained a will form on which Carl wrote out a testament which provided for Carl's half interest in the property to be left to the defendant Evild, and that having done so, they both took the document to Fremantle where they met, by arrangement, two Justices of the Peace who formally witnessed this document as the last will of the deceased.

24 According to Mr Orrman, this alleged will of 1998 was placed with the title deeds to the property and kept with them until Carl's death, and upon Carl's death it was handed, together with some other documents, to Mrs Orrman.

25 According to Mr Evild Orrman, that is the last occasion on which he saw this will. He alleges that the will was destroyed, lost or sequestered and that Mrs Orrman has proved some other will in which Carl's half-interest in the property was to be left to her. This does not conform to the outline of events as pleaded. It has not been pleaded that Mr Orrman took a half-interest in this land pursuant to any will of his deceased brother Carl, let alone a last valid will.

26 Secondly, Mr Orrman, by his solicitors in the defence and counterclaim which was lodged on his behalf and dated 4 August 2006, expressly admits in paragraph 2, that his brother Carl died on 20 August 2001; that upon his death he left a will dated 21 March 1996 in which he left his real and personal property to the plaintiff; that this will was admitted to probate on 12 October 2001 and that pursuant to the administration of Carl's estate, in accordance with that will, Carl's share of the property was transferred to the plaintiff on 7 November 2001.

27 The copy of the will admitted to probate of the deceased, Carl Sigfrid Orrman, dated 21 March is exhibit 7 in these proceedings. The grant of probate has not been tendered as evidence and when I raised this with counsel for the plaintiff, counsel submitted, in my view correctly, that it was not necessary in view of the admission that probate of this will was granted by this court on 12 October 2001.

28 I am satisfied that that submission is correct and should be acted upon. The significance of the grant of probate on 12 October 2001 (even if a grant in common form as this probably was) is that it is a judgment of the court that that testament is the last valid will of the deceased. I can only act and any other court can only act, on the validity and conclusiveness of that grant of probate. This is, it seems to me, an insuperable obstacle to Mr Evild Orrman's contention that he derived an entitlement to the whole of this property through some other will of his deceased brother, made in March 1998.

29 No will of March 1998 has been produced in evidence before me. No copy of such a will has been produced. No written instructions, no notes or manuscript indicating an intention to make a will, in those or other terms, has been tendered. The Justices of the Peace who are referred to as witnesses of the will have not been identified, let alone called. Apart from Mr Evild Orrman's own testimony, there is simply nothing to prove the existence of such a will of March 1998.

30 Even if such a will of March 1998 had been produced, it would not have been open for me to act on it so long as the grant of probate of 12 October 2001 stands. If some later will, alleged to be valid, is discovered after a grant of probate in common form, the appropriate course is for any person wishing to propound that later will, or to take benefits under it, to apply for a revocation to the grant of probate and seek probate instead of the later will.

31 This has never been done or attempted in this litigation and although Mr Orrman is unrepresented and obviously has only the most limited knowledge of legal doctrine and procedure, it is not as if he has gone unadvised throughout the duration of this litigation, which commenced in 2006. The record shows that a number of solicitors have acted for him during the currency of this litigation and in relation to the grant of probate of Carl's will of 12 October 2001, the admission was formally made after and upon legal advice.

32 That being the case, I can only assume that it has never occurred to anyone that there is any reason whatever to challenge the grant of probate of the March 1996 will. As I have said, as long as it stands, I must give effect to it. Mr Orrman, when giving evidence, did not support his pleaded case that, rather than some will of March 1998, there was some other document as pleaded.

33 His evidence now is that the document in question was a will. That being so, I have no alternative but to accept that Mrs Orrman's present registered estate in the subject land as a tenant in common in equal shares, came to her through the disposition contained in the last will of her husband, the defendant's brother, which was proved and admitted to probate in a regular form in this court. Furthermore, as a co-registered proprietor of the land, Mrs Orrman is entitled to apply for and obtain relief under s 126 of the Property Law Act, without regard to the antecedents which preceded her registration as a co-proprietor.

34 This is one of the aspects of interfeasability arising from the Torrens System of registration. Were it to be alleged that there was some other valid will, under which Mr Orrman took his brother's interest in this land, not only would it be necessary for him to have the grant of probate set aside and a new grant of probate for the later will propounded, but it would also be necessary for him to apply for the rectification of the register, kept under the Transfer of Land Act 1893 (WA), and for Mrs Orrman's estate or interest to be removed from the register book.

35 Again, that has never been attempted. It seems to me, therefore, that the only conclusion which is possible for me to reach on the evidence is that Mrs Orrman is validly and properly entitled to the benefit of a registered estate as a tenant in common of one undivided share in the subject land as recorded on the certificate of title. That being the case, the principal reason advanced by Mr Orrman to defend this action and to promote his counterclaim disappears.

36 I am still left, however, with the pleaded alternative of the claim for physical partition or subdivision in lieu of sale and equal distribution of the proceeds. However, no evidence was adduced by Mr Orrman or from any other quarter in favour of such a proposal. Mr Orrman himself indicated, unmistakably, that he did not want that to occur and that it would be awkward and inconvenient and obstructive, having regard to the property on the land and other factors. He did not pursue that alternative.

37 There is no evidence before me upon which I could make a finding that the land is eligible for subdivision, or that any particular subdivision would be suitable, or give approximate recognition to the equal interests in the land which the proprietors have by virtue of their tenancy in common. Therefore, I reject the possibility of a partition by physical division, subdivision or otherwise of the land.

38 That leaves an order for sale in lieu of partition and as the law as I described at the beginning of these reasons indicates, once it is established that there is an entitlement to relief under the section, the court is obliged to give the order unless there is some good reason to the contrary. There is authority to suggest that the discretion to refuse an order under s 126, because of good reason to the contrary, is not a justification to refuse relief absolutely but is only a justification to order physical partition in lieu of sale. I consider that to be the correct interpretation of the section. There is no good reason in the present case to order physical partition or subdivision of the land. None of the parties wish it. There is no evidence to support it and therefore, I am obliged to direct the sale accordingly. The order of the court therefore, which I think the plaintiff is entitled to obtain, is as follows:

(1) That the land referred to in par 1 of the statement of claim, being all that piece of land described as lot 8 on diagram 8683, and being the whole of the land described in Certificate of Title Volume 1580 Folio 386, be sold.

(2) That the plaintiff, Yvonne Orrman, be appointed as the person who is to have the conduct of the sale.

(3) Either party shall have liberty on 48 hours' notice to apply to this court for such further directions, as this court thinks fit, for the purpose of effecting the sale, including directions:

(a) fixing the manner of sale, whether by auction or private treaty;

(d) for settling the particulars and conditions of sale;

(f) to fix the remuneration to be allowed to any auctioneer, real estate agent or other person;

(g) fixing an amount which a party to this action who buys the land may set off against purchase price (other than the deposit), from its share of the proceeds of the sale.

(4) Each of the parties, that is Mrs Yvonne Orrman and Mr Evild Hendrick Orrman, shall have liberty to bid at the auction or to offer to purchase at any other form of sale.

(5) The net proceeds of the sale after payment of what shall be due to any encumbrancer or encumbrancers according to their priorities, and of all other proper costs, charges and expenses of the sale, be paid into court to the credit of this action to abide further order.

(6) There be liberty to apply generally in relation to any other matters arising from or in connection with the proposed sale.

ORRMAN -v- ORRMAN [No 2] [2008] WASC 17 (30 January 2008)

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Judgment (57 paragraphs)

ORRMAN -v- ORRMAN [No 2] [2008] WASC 17 (30 January 2008)

Legislation Cited (2)

Cases Cited (1)