TRAINOR -v- TRAINOR [2021] WASC 40 (18 February 2021)

Lord Watson accepted the view that s 5 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 (68).

1. In the same case his Honour also referred to the decision of Hargreaves v Fleming (1975) 1 NZLR 209 where Casey J said:

It is clear on an application under s 140 of the Property Law Act that the court's only alternatives are partition or sale; the act does not abrogate the rights of partition previously available ... section 140(1) declares that where a sale is requested by the applicant the court shall order it unless it sees good reason to the contrary. The only reasons advanced here are hardship to the defendant and her family, but this is the case equally on a sale or a partition. In either event, the result is that she will lose her home, but the court must order one or the other. Physical partition of the dwelling‑house is impracticable so that a sale is the only alternative (214).

1. In other words what s 126(1) anticipates is an order for sale or an order for partition of the property. There is no other alternative available. If a party wishes to partition a property then it would be necessary for evidence to be led that partition is available and can be ordered. It may well be such an order would only be made where the necessary planning approvals had been obtained and there was evidence to that effect. There appears to be no case within this jurisdiction where that has occurred. That means a sale will invariably be ordered.
2. Fourth, it may be possible for parties by contract to exclude their respective rights to seek partition under s 126(1). This was the gravamen of the decision of the Full Court of this court in The Western Australia Club Incorporated v Nullagine Investments Pty Ltd (1992) 6 WAR 441. That decision was reversed on appeal: see Nullagine Investments Pty Ltd v The Western Australian Club Incorporated [1993] HCA 45; (1993) 177 CLR 635. But, the High Court decision turned on the question of the effect of the lease agreement on the rights of the parties. It did not directly address the question dealt with by the Full Court. What can be said is if parties, by agreement attempt to contract out of the provision of s 126(1), such an agreement would be subject to the Statute of Frauds and could not offend the rule against perpetuities. In this case it is not suggested there was any agreement between the parties either in writing or otherwise that no application would be made under s 126(1).
3. Fifthly, s 126(1) does not specify what interest a party must hold to make an application. The reference in the section is to 'parties interested ... to the extent of a half share or upwards' in the land. It is arguable then that a party holding a half interest in equity would be entitled to make an application. Such a situation might arise where A and B are joint owners of Blackacre. B sells his interest in to C. The sale settles but B does not for one reason or another actually convey his half interest to C. There can be no doubt C has an equitable half interest. It would seem under s 126(1) that C could make an application and the fact he was not noted on the title as a registered proprietor would not affect his right to relief. In other words, the section has effect whether the half interest is owned in law or in equity.
4. Sixth, s 126(1) says nothing about the proceeds of sale. It may well be that although the parties own the property jointly, one has contributed more than the other, and is entitled to a greater share of the proceeds. For instance if A and B each own a half interest in Blackacre but A contributed 90% of the funds to facilitate the purchase, and the parties agreed that on sale 90% of the sale proceeds would pass to A then subject to the agreement satisfying the statute of frauds, there is no reason why the contractual rights should not apply to the distribution of the sale proceeds. Moreover, if there is no written agreement but there is some reason why in equity one of the co‑owners is due more of the proceeds than the other then equity will protect the interests of the party by a constructive trust. That position was recognised in Orrman v Orrman [No 2] [2008] WASC 17.
5. Finally, given the structure of s 126(1) and with only two alternatives available to the court, when the section is relied upon the summary judgment procedure of O 14 of the Rules of the Supreme Court 1971 (WA) is clearly proper and appropriate. Unless some agreement is alleged where the parties are said to have contracted out of the section an application for summary judgment is irresistible.
6. Turning then to this case, the plaintiff and the defendant are the registered proprietors of six farming lots the details of which are pleaded in paragraph 1 of the statement of claim filed 11 June 2020. They are tenants in common in equal shares. Really, that is the end of the matter. Both parties filed extensive affidavit material detailing how they came to be joint owners of the properties. None of that material is relevant to this application. What is relevant is that there was no evidence put before the court that subdivision of each or any of these properties was possible so that an order for partition could be made. That being so, there is no answer to the plaintiff's claim and he is entitled to summary judgment.
7. The defendant's claim is that he is entitled in equity to claim ownership of all of the land. This is not really disputed by the plaintiff. The plaintiff swore an affidavit dated 3 November 2020 in support of this application. At paragraph 140(a) he says 'I do not know what, if any equity I have in the properties'.
8. This comment was seized upon by the defendant. It was submitted this was an admission that the plaintiff did not have an equitable half interest in the properties and therefore he had no right under s 126(1) to seek a sale. With respect that is a misunderstanding of the rights afforded by the section.
9. The term 'equity' is used by the plaintiff in the conventional sense. Thus, if A pays $100,000 to purchase Blackacre and six months later Blackare is valued at $90,000 then A has no 'equity' in Blackacre. That is to say, if a sale is affected he will be out of pocket. But, A still has the legal and equitable interest in Blackacre. So the plaintiff is not in any sense expressing an opinion as to his position as the law of equity applies.
10. For the purposes of this application, it can be assumed that, on sale of the properties all of the proceeds will pass to the defendant. It may well be that at settlement half of the net proceeds will be paid to the plaintiff and half will be paid to the defendant. If that were to be the case the plaintiff's half share of the proceeds would be impressed with a constructive trust and the defendant would be entitled to claim those proceeds. What is relevant is that no matter how equity treats the proceeds the plaintiff has at law a half interest in the properties. Equity cannot stand in the way of a statutory right. That is what the defendant contends and his position is untenable.
11. The plaintiff is entitled to an order for summary judgment. Clearly the mechanism to give effect to these orders requires consideration by the parties. On publication of these reasons the matter will be re‑listed for a further hearing and at that hearing final orders will be made. The parties also should be prepared to deal with the question of costs.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.