By a Summons filed on 20 September 2021, the plaintiff, Kaye Thistleton, seeks relief under s 66G of the Conveyancing Act 1919 (NSW) for the sale of a property at Greendale (near Bega) that she owns with the defendant, Janelle Thistleton. The plaintiff and the defendant are sisters. They inherited the property from their late father in 2011. They hold the property, which consists of two lots contained in a single certificate of title, as tenants in common in equal shares.
The property, which is sometimes referred to as "Lachlans" or "Brogo", was originally purchased by the parents of the parties around 1954. It is located in a bush setting, and has an area of about 65ha. At the time of the original purchase there were no structures on the land. Later, an old shed was erected. In 1989, the defendant, with her father's consent, purchased a house and had it transported to the property where it was placed upon foundations. The defendant then added a water tank and a system of water pipes to service the house. It is not clear on the evidence whether the house became a fixture and thus part of the land. It seems likely that it did, but in any case nothing seems to turn on this.
The sale of the property is resisted by the defendant. Her principal contention is that the conduct of the plaintiff in seeking the relief is inequitable and contrary to an estoppel which operates against the plaintiff. The estoppel is said to arise by statements made by the plaintiff to the defendant at around the time the sisters became the owners of the property. The statements concern the plaintiff's intention in relation to a sale of the property, and whether she would ever make a claim on the house.
The defendant deposed:
The plaintiff and I each inherited a half share of the property in 2011. As we walked to our cars following the completion of the estate dealings with the solicitor I asked the plaintiff if she wanted to sell the property. She replied vehemently in the negative. I believe her words included "it was Mum and Dad's piece of paradise and our family's heritage. No way would I sell it."
There is also evidence of statements made by the plaintiff to the effect that she would make no claim on the house or the infrastructure associated with it. Statements to that effect were made after the death of the father, and the defendant says that they were repeated on numerous occasions since. The evidence, in this regard, includes the content of certain letters sent by the plaintiff to the defendant in early 2019 after she had informed the defendant of her intention to sell her share of the property.
By a letter dated 29 January 2019, the plaintiff stated that she wanted to offer her share of the property first to the defendant, and suggested that the property be valued. The defendant, by her email reply dated 20 February 2019, stated that she was not in a position to purchase the plaintiff's share of the property. She continued:
I believe it timely, and it would be remiss of me, if I didn't use this opportunity to put in writing what we have discussed previously. At the time of Dad making his will in 1981, there was not the infrastructure on the property that there is now. By that I mean the house, the foundations, and the water scheme, including but not limited to the pump, pipes, and tank.
I respectfully suggest that said infrastructure not be included in the valuation as it was purchased solely by me.
Kaye, I'm sure this process will be equitable and fair, and I therefore believe, as you do, that we can all benefit from the outcome.
The plaintiff's email in response, dated 11 March 2019, included the following:
…please rest assured, as I stated to you after our father passed away, that I will make no claim on the house you have at Lachlans, and by extension, make no claim on any of the infrastructure that you have provided for your house.
A further email sent by the plaintiff, dated 17 April 2019, included the following:
After Dad died I did say I would make no claim on your house, and of course that extends to all you have paid for out at Brogo. Please be reassured that that will not change.
The defendant submits that by seeking the sale of the whole property pursuant to s 66G, the plaintiff is acting contrary to the abovementioned statements. The plaintiff, for her part, apparently accepts that by reason of the statements she has made about not making any claim on the house on the property, any orders for sale pursuant to s 66G should recognise that the co-owners' entitlements to the proceeds of sale ought be subject to an adjustment in favour of the defendant in order to reflect the contribution to such proceeds made by the house and the associated infrastructure installed by the defendant.
It should be noted that since about late-2012 the house on the property has been occupied by the plaintiff's son/defendant's nephew, Mr Clay Thistleton. The occupancy arrangements were made between Mr Thistleton and the defendant. It was agreed that he would assume responsibility for all of the charges for the property, such as Council rates and land services charges, but not any insurance premiums. The defendant continued to pay the premiums for the insurance "on the house, outbuildings and infrastructure", as she had been doing since 1989. It seems that the plaintiff at least became aware that her son was in occupation and paying the rates and charges for the property. Indeed, after he went into occupation she ceased making payments of half of the amounts due.
In February 2019, after Mr Thistleton became aware of the plaintiff's intention to sell her share of the property, he informed his mother that he would no longer pay her share of the property charges (see his letter dated 22 February 2019). The plaintiff thereupon recommenced making payments for her share of the rates and charges.
The principles that apply on an application for the appointment of trustees for sale under s 66G of the Conveyancing Act are well settled. They were summarised by White JA (with whom Bell P and Basten JA agreed) in Foundas v Arambatzis [2020] NSWCA 47 at [63] as follows:
Although an order under s 66G is discretionary, such an order is almost as of right, unless on settled principles it would be inequitable to make the order. An order may be refused if the appointment of trustees for sale would be inconsistent with a proprietary right, or the applicant for the order is acting in breach of contract or fiduciary duty, or is estopped from seeking or obtaining the order (Re McNamara and the Conveyancing Act (1961) 78 WN (NSW) 1068 at 1068; Ngatoa v Ford (1990) 19 NSWLR 72 at 77; Williams v Legg (1993) 29 NSWLR 687 at 693; Hogan v Baseden (1997) 8 BPR 15,723 at 15,726-15,727; Tory v Tory at [42]). Hardship or general unfairness is not a sufficient ground for declining relief under s 66G (Hogan v Baseden (1997) 8 BPR 15,723 at 723; Ferella v Official Trustee in Bankruptcy at [36]-[40]).
(See also Ferella v Official Trustee in Bankruptcy [2015] NSWCA 411 at [36]-[42]; Tory v Tory [2007] NSWSC 1078 at [42]; and Hogan v Baseden (1997) 8 BPR 15,723 at 15,726-7).
I accept that, in 2011, in response to a query from the defendant about whether the plaintiff wanted to sell the property, the plaintiff said words to the effect that she did not want to sell it and that there was no way she would do so. I further accept that at around that time, the plaintiff told the defendant that she would not make any claim on the house the defendant had placed on the property. I think it is likely that these latter statements were repeated on subsequent occasions, as claimed by the defendant. The first question to consider is whether these statements have given rise to any estoppel against the plaintiff that would preclude her from seeking or obtaining an order for sale under s 66G.
The estoppel alleged by the defendant appears to be in the nature of an equitable promissory estoppel. In essence, the defendant alleges that the plaintiff's conduct in seeking the sale of the property is contrary to promises or assurances made by her in 2011 and thereafter, and is unconscionable (see, for example, the defendant's written submissions at paragraphs 6-8).
It is necessary to consider the content of the statements made by the plaintiff that are said to found the estoppel. The statements seem to me to fall into two categories being: first, the statement about not selling the property; and second, the statements about making no claim on the house.
As to the first, the statement was made as the sisters walked to their cars after leaving their solicitor's office upon completion of the dealings concerning their father's estate. The statement was made in response to a query about whether the plaintiff wanted to sell the property. The terms of the statement, as recalled by the defendant, were that there was no way the plaintiff would sell the property. There is no evidence that the matter was further discussed at that time. I do not think that the statement could reasonably be taken as a clear assurance that the plaintiff would never seek to sell the property in the future. It was not expressed in those terms, and, viewed in its context, should reasonably be regarded as an expression of the plaintiff's state of mind at the time that she wanted to retain the property.
As to the second category, the statements are fairly clear in their terms, and in the circumstances can reasonably be regarded as assurances that the plaintiff (even though a co-owner of the property) would not seek to claim any benefit from the house which the defendant placed on the property. As is reflected in the terms of the plaintiff's emails of 11 March 2019 and 17 April 2019, the assurances could reasonably be regarded as extending to the infrastructure installed by the defendant in association with the house (such as the water tank, pump and pipes).
There is little evidence of any particular reliance by the defendant upon the statements made by the plaintiff. In her affidavit of 12 November 2021 (of 17 paragraphs), the defendant states that she believed what the plaintiff said, put trust in her words and her promises and "went on to spend more money on the house and property". This expenditure was not further specified or quantified, although there is a reference to making arrangements in 2020 to have some fallen trees cleared and unsafe trees felled following bushfires in the area. As already mentioned, in the period from about late-2012 to early-2019, all of the expenses for the property, apart from the insurance premiums, were paid by Clay Thistleton. It can be seen, in a general sense, that the defendant, by entering into the arrangement with Mr Thistleton and by continuing to meet all of the insurance premiums, was acting consistently with the notion that the house on the property was her own property, rather than property owned equally with her sister. The defendant did not explicitly state in her evidence that in so acting she was relying upon the statements made by the plaintiff. I note, however, that in her Statement of Grounds of Opposition, she stated (in paragraph 6) that all of her actions in terms of the property since 2011 have been predicated on the assumption that the plaintiff would never attempt to make any claim on the house.
I am prepared to accept that from about 2011 the defendant has held the assumption that the plaintiff, even though a co-owner of the property, would not make any claim on the house on the property. I accept that the assumption arose from the plaintiff's statements to the defendant to that effect. However, I do not accept that the defendant has held an assumption that the plaintiff would never seek to sell the property. The existence of an assumption of that character is not supported by the evidence, and in any case, even if she did hold such an assumption, it would not have been reasonable for the defendant to do so based on any of the statements made by the plaintiff.
In these circumstances, and leaving aside the question of reliance, the plaintiff's conduct could give rise to an estoppel that precludes her from resiling from her statements or assurances about not making any claim on the house.
An estoppel to that effect could prevent the plaintiff from seeking an order for sale under s 66G if the relief sought included orders that the proceeds of sale of the property (including the house) be divided equally between the co-owners. That is to say, divided in accordance with their interests in the property as tenants in common in equal shares, without regard to the contribution made to those proceeds that is attributable to the house. To proceed in that fashion could be regarded as the making of a claim by the plaintiff on the house. She would, in substance, be claiming an entitlement to half of the entire property, including the house.
However, the plaintiff accepts that any orders for sale pursuant to s 66G should recognise an entitlement in the defendant to an adjustment in her favour in respect of the proceeds of sale in order to reflect the contribution that is attributable to the house and the associated infrastructure installed by the defendant. It is my opinion that, in these circumstances, no estoppel that could arise from the plaintiff's conduct would operate to preclude her from seeking a sale pursuant to s 66G. To seek a sale whilst recognising the defendant's entitlement to an adjustment of the nature described above, would not in my view involve the plaintiff making any claim on the house. She has effectively conceded that the contribution to the value of the property (and hence the proceeds of its sale) made by the house and the associated infrastructure should be to the benefit of the defendant alone. She does not assert any claim to that contribution for herself. I am unable to accept the defendant's submission that the plaintiff is making a claim on the house "by trying to sell it out from under me". The plaintiff's conduct affects the house, but it involves no claim on it. The plaintiff is not resiling from her statements or assurances about not making any claim on the house.
Accordingly, and even if the defendant relied upon the plaintiff's statements to the extent described earlier, I do not think that any estoppel precludes the plaintiff from proceeding to seek the orders for sale under s 66G.
The defendant also submitted that the plaintiff's statements to her gave rise to contractual obligations, and that seeking the sale of the property would be contrary to such. She submitted that there was an agreement limiting the way the property could be disposed of. I do not accept these submissions. I am not satisfied that any binding contract was entered into. Amongst other reasons, there was no exchange of promises and hence no consideration provided by the defendant.
I am also unable to accept the defendant's submissions to the effect that the plaintiff's request for orders for sale are inconsistent with contractual (and even fiduciary) obligations said to arise from the arrangements concerning Mr Thistleton's occupation. I am not satisfied that the plaintiff became bound by any such obligations, whether because she had knowledge of the arrangements which were made between the defendant and Mr Thistleton, or otherwise. The present case is not one where the appointment of trustees for sale would be inequitable because the plaintiff would be acting in breach of contract or fiduciary duty.
The final matter to consider is whether the defendant has satisfied the Court that partition of the property would be more beneficial for the co-owners (see s 66G(4)). The relevant enquiry here is whether partition would be more beneficial in a financial sense (see Segal v Barel (2013) 84 NSWLR 193; [2013] NSWCA 92 at [67]-[68] per Barrett JA). The defendant suggested that both she and the plaintiff would be financially better off if there were a partition. It was not entirely clear what partition is envisaged, but it may be one along the lines of the boundary between the two lots that together comprise the co-owned property (namely Lot 1 and Lot 180). Lot 1 is larger than Lot 180, and the house is upon Lot 1. The evidence suggests that, due to its small size, Lot 180 would not have an entitlement for a dwelling to be erected upon it. There was no evidence directed to the values of the lots if partitioned. In these circumstances, the Court cannot be satisfied on the evidence that partition would be more financially beneficial for the co-owners.
It follows from the above that no grounds have been established that would warrant the Court exercising its discretion to decline the relief sought by the plaintiff. Relief will be granted under s 66G for the property to be sold. The orders will provide that the defendant is entitled to an adjustment in her favour in respect of the proceeds of sale to reflect the contribution that is attributable to the house and the associated infrastructure.
At present, the plaintiff has nominated only one person to be appointed as trustee for sale, namely, Mr Gary Pearce, an accountant. The defendant does not object to his appointment if relief is granted over her objections. Of course, it is normally the case that two persons are appointed as trustees for sale pursuant to s 66G. Unless both parties indicate that they would prefer that only Mr Pearce be appointed, it will be necessary for the plaintiff to propose a second person to be appointed. The parties will be directed to confer on this matter, and also as to an appropriate form of orders to give effect to these reasons.
As for costs, I consider that the appropriate order to make is that the plaintiff's costs be paid out of the proceeds of sale. (There are no relevant costs for the defendant, who has been self-represented throughout the proceedings.) It is usual in proceedings of this kind to order that the costs be paid out of the proceeds of sale, the rationale being that the costs of such an application are an incident of joint ownership (see Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28]). The plaintiff submitted that the defendant's opposition to the application was unreasonable and baseless, and that this warranted a costs order against her on an indemnity basis. There is no doubt that unreasonable conduct by a party may be a basis to conclude that a departure from the usual costs order is appropriate (see, for example, Lewin v Lewin [2019] NSWSC 380 at [30]-[45]).
The plaintiff pointed to a letter sent by the defendant to the plaintiff's solicitor some months prior to the commencement of proceedings. The letter referred to the defendant having received legal advice that she "cannot possibly win against your client", but that she would be "going against this legal advice" and if she has to spend the rest of her life paying off court costs "then so be it". The plaintiff submitted that the letter showed the defendant knew that she had no chance of defending the proceedings.
It is true that the defendant, despite having received pessimistic advice, chose to defend the proceedings. She did so principally on the ground of the alleged estoppel. In my view, the asserted estoppel was reasonably arguable, and it was not until the hearing itself that the plaintiff made it entirely clear that she was prepared to recognise an entitlement in the defendant to an adjustment in her favour in relation to the contribution to the proceeds of sale that is attributable to the house on the property. It was that recognition by the plaintiff which supported the conclusion that she was not resiling from the statements or assurances which she had given about not making any claim on the house. I would add that the raising of the estoppel and other issues by the defendant did not cause the plaintiff's costs to be significantly increased. In the absence of agreement between the parties, there was always a need for the proceedings to be brought, and I note that the plaintiff did not file any affidavits in answer to the defendant's evidence. The hearing was conducted efficiently (by telephone), and took only about two hours. Taking into account all of the circumstances, I do not consider that the defendant has acted unreasonably such that a costs order should be made against her, let alone an order on an indemnity basis.
I direct that the parties confer as to whether a second trustee should be appointed, and as to an appropriate form of orders to give effect to these reasons. Consideration will need to be made to the mechanism for quantifying the amount of the adjustment to be made in the defendant's favour. I direct that the parties inform the Court of their positions in relation to trustees, and submit proposed orders, within 21 days.
[2]
Amendments
15 February 2022 - Typographical error amended in [15].
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Decision last updated: 15 February 2022