Citation: Scheibl v Radig [2018] NSWSC 1900
Court: Supreme Court of New South Wales
Date: 6 December 2018
Judge(s): Emmett AJA
Background
The plaintiff and the defendant purchased a strata property in Concord together in December 1996, while in a de facto relationship. They financed the purchase partly through a National Australia Bank loan and partly through personal contributions of roughly equal size. The property was originally held as joint tenants, but the plaintiff later severed the joint tenancy so that both parties became registered as tenants in common in equal shares.
The relationship ended around 1998 or 1999. Since then, each party has at various times occupied the property rent-free, and the property was let to third parties for a period, with rental income applied to reduce the NAB debt. The plaintiff, now unable to work due to a medical condition and reliant on a Navy retirement benefit and disability pension, sought a sale to discharge the mortgage and acquire unencumbered accommodation.
Despite multiple attempts by the plaintiff to obtain the defendant's agreement to sell, no agreement was reached. The defendant at times asserted that money was owed to her, but provided no supporting material. The plaintiff filed a summons in May 2018 seeking the appointment of trustees for sale under s 66G of the Conveyancing Act 1919 (NSW).
Legal Issues
- Whether the court should appoint trustees for sale of co-owned property under s 66G of the Conveyancing Act 1919 (NSW), in circumstances where one co-owner is unwilling to agree to a sale
- Whether it was appropriate to proceed to a final determination in the defendant's absence
- How the proceeds of sale should be distributed, including reimbursement of loan repayments and outgoings paid by the plaintiff
Decision
Issue 1: Proceeding in the defendant's absence
Emmett AJA was satisfied that the defendant had been properly served with the summons and affidavit in July 2018 and had received extensive notice of each subsequent court date through email correspondence from the plaintiff's solicitors (at [7]-[11]). The defendant had communicated directly with those solicitors and was plainly aware of the proceedings. The court was satisfied there was no proper reason to delay a final determination (at [12]).
Issue 2: Appointment of trustees for sale
The court was satisfied that orders appointing trustees for sale should be made in accordance with the prayers for relief in the summons (at [14]). Two proposed trustees were identified: an experienced local real estate agent and a retired solicitor with substantial experience in court-ordered property sales and estate administration. Both had consented to act (at [13]). The plaintiff abandoned his earlier claim for reimbursement of repair costs, and the court noted that departure from the original prayers for relief (at [14]).
Issue 3: Distribution of proceeds
The court ordered that, after selling costs, statutory outgoings, and trustee remuneration, the plaintiff would be reimbursed one half of the amounts he had paid toward loan repayments and property outgoings (rates and utilities from May 2017 to the date of sale). The remaining balance would then be divided equally between both parties.
Orders Made
- Two named trustees appointed for sale of the Concord property, with the property vesting in them on the statutory trust for sale under Division 6 of Part 4 of the Conveyancing Act 1919 (NSW)
- Trustees empowered to sell by public auction (with a reserve price), to engage a real estate agent, auctioneer, solicitor or conveyancer, and other necessary persons
- Trustees authorised to charge reasonable remuneration and indemnified from the trust for properly incurred expenses
- Sale proceeds to be distributed in this order: selling costs and disbursements; council rates, water rates, utilities, Capital Gains Tax, Land Tax, and GST; trustee remuneration and expenses; one half of amounts paid by the plaintiff toward the NAB loan and rates/utilities from May 2017 to sale; then the remaining balance divided equally between the parties
- Liberty to apply reserved for both parties and the trustees on 5 days' notice
- The plaintiff's motion filed 16 November 2018 dismissed with no order as to costs
- The defendant to pay the plaintiff's costs of the proceedings (excluding the dismissed motion), as assessed or agreed
Key Takeaways
- Under s 66G of the Conveyancing Act 1919 (NSW), a court may appoint trustees for sale of co-owned property on the application of one co-owner alone, without requiring the consent of the other (at [1]).
- A final hearing may proceed in a co-owner's absence where that party has received proper service and repeated notice of proceedings and hearing dates, and has demonstrated awareness of the proceedings through direct communications (at [12]).
- The statutory trust for sale does not confine distribution to a simple equal split: the court ordered a priority reimbursement to account for one party's disproportionate contribution to loan repayments and outgoings, before the remaining balance was divided equally (at [15], Order 6).
- Proposed trustees under s 66G need not have prior formal trustee experience; the court accepted an experienced local real estate agent alongside a retired solicitor with relevant property and estate administration experience as appropriate appointees (at [13]).
- A defendant who fails to appear but remains evidently aware of proceedings remains subject to final orders, though the court noted that such a party retains the ability to apply to have those orders set aside (at [12]).
Legislation and Cases Referenced
Legislation
- Conveyancing Act 1919 (NSW)
- Real Property Act 1900 (NSW)
Cases
- Not stated