Bombara v Bombara - [2010] WASC 314

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL

CITATION: BOMBARA -v- BOMBARA [2010] WASC 314

CORAM: ALLANSON J

HEARD: 9, 10 & 14 SEPTEMBER 2010

DELIVERED : 4 NOVEMBER 2010

FILE NO/S: CIV 2966 of 2009

BETWEEN: ALFREDO BOMBARA
MARK BOMBARA
Plaintiffs
AND
HUGO JOSEPH BOMBARA
MARIANNE VERHEGGEN
Defendants

Catchwords:

Real property - Sale in lieu of partition - Which party to have conduct of sale - Turns on own facts

Legislation:

Property Law Act 1969 (WA), s 126
Real Estate and Business Agents Act 1978 (WA)

Result:

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

Category: B

Representation:

Counsel:

Plaintiffs: Mr M J Hawkins
Defendants: Mr J G Hanly

Solicitors:

Plaintiffs: CWS Lawyers
Defendants: Hotchkin Hanly Lawyers

Case(s) referred to in judgment(s):

Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46
Bray v Bray [1926] HCA 40; (1926) 38 CLR 542
Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151
Dale v Hamilton (1853) 68 ER 1116
Dixon v Pyner (1850) 68 ER 135
Hankinson as Executrix of the Estate of Gary William Same v Brookview Holdings Pty Ltd [2004] WASCA 279
Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305
Murray v Geoffroy (1918) 18 SR (NSW) 259
Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72
Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165
Settlement Agents Supervisory Board v Property Settlement Services Pty Ltd [2009] WASCA 143

ALLANSON J: The plaintiffs and the defendants jointly own a piece of land in the suburb of Bertram, south of Perth. The plaintiffs collectively hold two‑thirds of the interests in the land.
The plaintiffs seek an order under s 126(1) of the Property Law Act 1969 (WA) for the sale of the land. The defendants agree the land should be sold. The parties have not, however, been able to agree on how the land should be marketed and sold.
Under s 126(4) of the Property Law Act, on directing a sale, the court may also give all necessary or proper consequential directions. The primary issue at trial has been whether the plaintiffs or the defendants should conduct the sale, and the consequential directions the court should make in relation to the sale.

The land

The land is two contiguous lots: portion of Peel Estate lot 125 and being lot 4 on diagram 80680, more particularly described as all that land the subject of Certificate of Title, vol 1926 folio 262; and portion of Peel Estate lot 1199 and being lot 67 of diagram 93093, more particularly described as all that land the subject of Certificate of Title, vol 2161 folio 297.
The land is approximately 30 km from the Perth central business district. It is bounded by Kwinana Freeway to the east and Johnson Road to the west. Part of the northern boundary of lot 67 fronts Thomas Road. The two lots are approximately 4.8 hectares in area. They are vacant. The current zoning is for mixed use business. There are residential areas approximately one kilometre to the west - the nearest suburb being Orelia.
The parties purchased the land in 1988. It was part of a larger parcel; the Bombara family acquired the estate in fee simple in the whole of Peel Estate lots 125 and 650, as well as portion of Peel Estate lot 1199. In about 1993, lot 67 was subdivided and the north western corner sold for a service station. In about 2002, part of the larger parcel of land was resumed for the Kwinana Freeway, and lot 4 and lot 67 are now separated by the freeway from the other land acquired at the same time. The land east of the freeway is still jointly owned by the Bombara family. It is undeveloped.
The plaintiffs and defendants hold an estate in fee simple in the land as tenants in common. Each plaintiff holds two undivided sixth shares. Each defendant holds one undivided sixth share. No party claimed that there were any other interests in relation to the land to which the court should have regard.

The parties

For convenience and clarity, the parties are referred to in these reasons by their first names.
Alfredo is the father of Mark and Hugo, and the father-in-law of Marianne. He has been buying, selling, and developing land in Western Australia for many years. Since 1960 he has been involved in 61 developments. Some of those developments have been carried out with members of his family and through family companies. Some have been carried out with persons outside the family. He currently has an interest in many properties, including developments at Bridgetown, Pemberton, and Boyup Brook.
Mark is a property developer. Since 1987 he has been involved in the acquisition, development and sale of rural and urban land, including 38 of the developments carried out by the family. He is experienced in purchasing broad‑acre land and causing it to be rezoned, developed and sold. Mark is qualified as a valuer and has worked as a trainee valuer and as a valuer in the Valuer General's Office in Perth. He currently holds a licence under the Land Valuers Licensing Act 1978 (WA).
The defendants, Hugo and Marianne, are married. Marianne is named in the heading to the action and on the title to the property as Marianne Verheggen, but prefers to use the name Marianne Bombara.
Hugo describes himself as a developer, and he also is qualified and has worked as a valuer. He did not say whether he is currently licensed. In about 2006 or 2007, Hugo resigned directorships in two of the family companies and followed his own business interests outside the family land development business. He became involved in the family business again in about September 2009. The evidence did not disclose what other business interests Hugo had been pursuing.
Marianne is a business administrator. There was no evidence about the field of business in which she works.

The proceedings

The proceedings were commenced on 18 November 2009 by writ of summons.
In a statement of claim dated 16 November 2009 the plaintiffs plead that they and the defendants are the registered proprietors of the land, and the shares in which they hold the land. The plaintiffs, being interested collectively to the extent of more than a half share, request the court to direct the sale of the land and the distribution of the proceeds. The plaintiffs seek an order that they have the conduct of the sale of the land 'in such manner as they think fit.'
The defence filed on 12 February 2009 admitted the facts relating to the ownership of the land, but opposed sale. The defendants denied that a sale of the land would be for the benefit of the parties interested as required by s 126(2) of the Property Law Act. That plea was misconceived: Martin‑Smith v Woodhead [1990] WAR 62, 69 ‑ 70. Further, the defendants pleaded that the institution of the proceedings was an abuse of process. They sought orders that the claim be dismissed with costs.
The defence filed does not reflect the defendants' case. The defendants do not oppose the sale of the land, but seek orders that are the mirror image of those sought by the plaintiffs, that is, that they have the conduct of the sale and authority to act without the compulsion to consult the plaintiffs.

The value of the land

The Bombara family have received three offers to purchase the land. The most recent was in July 2010. Each of them is subject to conditions. They lie in the range of $7.2 to $7.3 million for an en globo sale.
Neither party called expert evidence as to the value of the land. The defendants' position is that the value of the land can only be determined after a marketing campaign.
Mark gave evidence, without objection, that in his opinion the land was worth $4.5 million as a residential development site and $5.5 million as a mixed business development site, and that the offers received were good offers. While I recognise his experience and qualifications, the necessary facts for the reception of his opinion as an expert opinion as to the value of the land were not established: see Makita (Australia) Pty Ltd v Sprowles [2001] NSWCA 305; (2001) 52 NSWLR 705, 743 ‑ 744 [85]. Mark's opinion of the value is admissible on another basis. The defendants have put in issue the plaintiffs' conduct in wanting to negotiate on the offers received. Mark's opinion of the value of the land is relevant to understanding why the plaintiffs wished to negotiate with a potential purchaser offering $7.2 million, and whether they were then acting prudently and in the best interests of the co‑owners.
The parties also put into evidence, as attachments to affidavits, assessments of value contained in marketing proposals from three agents: Knight Frank (Australia) Pty Ltd, Jones Lang LaSalle (WA) Pty Ltd, and Vend Properties Pty Ltd. Those assessments are evidence of what the parties were told the land could be sold for. They are not expert evidence of the value of the land.
The earliest assessment of value is by Jones Lang LaSalle in a document titled 'Sales Advice for the Disposal of Lots', and dated August 2009. Jones Lang LaSalle advised that the land could achieve $320 to $350 per square metre on the basis of a sale of subdivided lots. For an en globo sale, they estimated $125 to $150 per square metre, that is a value of $6 million to $7.2 million.
They added the following comments:
Given the current difficulty in securing finance for all types of property, Jones Lang LaSalle are of the view it is likely that the owners may have to consider various funding options, including Vendor terms, joint ventures or delayed settlement.
Clearly our preference is for a 'clean' transaction, however in order to maximise the selling price, we suggest an 'open mind' approach to the various purchase options outlined above.
No witness from Jones Lang LaSalle was called by either party.
In September 2009, Knight Frank presented a proposal to be appointed as sales and marketing agent for the land. Based on the potential to develop the site in accordance with the existing approval for mixed business use, Knight Frank advised that it had a residual value of $4.35 million to $4.85 million, with potential to achieve a premium from an owner occupier. The Knight Frank proposal continued:
If underpinned by Bulky Good retail, based on comparable sales evidence the site could achieve a price in the range of say $120 to 130 per square metre providing a total value of say $5.8 million ‑ $6.3 million.
Bulky Good users in this location may be difficult to identify in the current market.
The most recent assessment is in the marketing proposal by Vend Property in April 2010. No witness from Vend Property was called. Without a witness to explain the basis of the opinions expressed in the document, I found it difficult to follow, and remain unsure whether the estimate of value was based on a sale of the undeveloped land, or sale after subdivision and some development. Further, within the same document, the estimated land value is assessed as falling within a range of $290 to $340 per square metre, and as in the range $230 to $290 a square metre.

The evidence

The plaintiffs filed two affidavits by Alfredo, including an affidavit in reply. They also rely on an affidavit by Mark; and an affidavit by Mr Jarrad Grierson, Director of Industrial Property for Knight Frank.
Each defendant swore an affidavit. The defendants also rely on the affidavit of Mr Ross Allan Hughes, valuer. The defendants propose to appoint Mr Hughes on a consultancy basis to assist in marketing if they are appointed to sell the land.
Each of the witnesses who swore an affidavit gave oral evidence and was cross‑examined.
Despite the fact that orders had been made for the trial to proceed on affidavit evidence, there was extensive oral evidence and many additional documents were produced in evidence. Little of it was contested.

Factual background

The land was purchased in 1988 as part of a larger parcel. The defendants say that they identified the land as a development prospect, and Hugo approached his father to fund the purchase. Alfredo agreed to provide funding, with the requirement that Mark be included.
Marianne testified that the funding was by a fully drawn down loan of $300,000 from the Commonwealth Bank of Australia, secured by mortgage over the land in the names of the plaintiffs and the defendants. She produced a letter from the bank, dated 7 December 1988, approving a loan on that security. Alfredo denies there was a mortgage, and says he paid out the $300,000 loan. No mortgage was registered on either certificate of title. I accept that Alfredo funded the purchase, and there was no mortgage.
The outgoings on the land were also largely paid by Alfredo, or by the company A Bombara Holdings Pty Ltd, which acted as the banker for the family businesses. Each of Mark and Hugo has equal shareholding (100 shares) in A Bombara Holdings. Alfredo, however, holds an A Class share, and controls the company by reason of the rights attached to that share.
Alfredo advised the other parties in October 2009 that he was unwilling to continue to fund outgoings on the land through A Bombara Holdings. The Bombara family business has a large land‑holding throughout the State. There are substantial annual holding costs. The market has been depressed, and sales in subdivisions developed by the family in Bridgetown and Boyup Brook have been slow. Alfredo said of the subject land:
This particular parcel of land is a saleable parcel here and now, and would generate considerable income for the reduction of debts and for the holding costs for the remainder of the property for future times.
The Bombara family decided in about August or September of 2009, to sell the land at Bertram. All family members agreed that Alfredo was to seek appraisals. The defendants now dispute the extent of his authority. I deal with that dispute later.
Alfredo approached the agents Knight Frank, Jones Lang LaSalle and Burgess Rawson. The agents were given a package of information about the property, including planning information and a flora survey for the two lots, dated December 2008.
Knight Frank and Jones Lang LaSalle produced marketing proposals. The Knight Frank proposal nominated an Associate Director, Mr Mark Swales, and Mr Grierson as the employees who would market the property.
Mr Grierson met Alfredo when he presented the marketing proposal in September. He advised Alfredo that, in his opinion, due to the attributes of the site and the prevailing market conditions, there would be a limited buyer market.
Mr Grierson contacted Alfredo again, in early September. On this occasion he told him that there was a buyer in the market who might look at the land. Alfredo consented to Mr Grierson approaching the prospective buyer with some property details to 'just gauge if there was some interest.' Mr Grierson and Alfredo also discussed the appointment of Knight Frank as agent, and the terms of that appointment. Mr Grierson says they reached a verbal agreement on those terms.
Alfredo told Mr Grierson that he was interested in selling. He also told him 'there are two other parties to this property and you would have to contact us as a group to further discuss this if there was someone interested.' Mr Grierson knew that he needed to obtain a written authority signed by, or on behalf of, each of the owners appointing Knight Frank as agent for the sale.
Mr Grierson presented the property to the potential buyer, identified at trial as Woolworths. On 17 September 2009, he attended a meeting of the family. Before attending he picked up an offer to purchase the land from the offices of Pride Projects, who, Mr Grierson said, 'act as project manager for Woolworths, for their expansion in Western Australia.' The offer was in the name of Hydrox Nominees Pty Ltd. It was in writing but not signed.
The purpose of the meeting, as far as Mr Grierson was concerned, was to explain the offer, to provide some background on who the buyer was, and what its strategy was, and to discuss the conditions of the offer and the timeframes involved. He described it as walking the family through the proposal. He also wished to obtain a signed authority to act as agent on behalf of the Bombara family in the terms discussed with Alfredo. Without a valid written appointment to act as agent, he would not be entitled to receive commission: Real Estate and Business Agents Act 1978 (WA), s 60.
At the request of the representatives of the proposed buyer, Mr Grierson brought to the meeting a non-disclosure agreement which the buyer wanted the family to sign. He informed those at the meeting that he had signed a non-disclosure agreement with the buyer.
The meeting did not go well. What is not clear is why. All agree that Hugo said that he had problems with the nondisclosure agreement, and with Mr Grierson asking them to sign the authority appointing Knight Frank as agent. Either at the meeting, or soon afterwards, Hugo also questioned whether Mr Grierson said he had a signed offer, when he did not.
In the following days, Hugo sent various emails to Knight Frank, and met Mr Gary Ryan, its managing director. He expressed his concern about the non-disclosure agreement, and also about whether the 'offer' Mr Grierson brought to the meeting was an offer or a heads of agreement. At some stage he also questioned Mr Grierson's conduct in disclosing to the family that Woolworths had made the offer, when that was a breach of his non-disclosure agreement.
On 8 October 2009, Hugo informed Knight Frank and his family by email that he would not sign a listing authority for Knight Frank to act.
There were many emails between the parties, and not all of them were put before the court. From those that are in evidence, the following emerges. In early October, the plaintiffs were questioning whether Hugo had changed his mind about selling the land. On 15 October, Mark emailed Hugo in these terms:
Following our conversation a few minutes ago where you confirmed you would not be responding to my recent e-mails below, I would like you to know the following in regard to all the properties in Kwinana we jointly hold:
1.I have done everything possible to accommodate your interests and requirements in the business of holding and developing the property.
2.You are unable or unwilling to cooperate in the continuation of the business.
3.The latest episode demonstrates you are unable to make what could well be the most important decision in relation to this property and to the benefit of all the owners.
4.I have serious concerns about your wellbeing due to your lack of capacity to face these issues.
5.Your actions and inactions have significant financial ramifications for all of us and our families.
On this basis I require that you be removed from the decision-making process. You can either do it voluntarily by informing me immediately or I will be pursuing action in a Court of the appropriate jurisdiction.
Hugo still refused to authorise Knight Frank and, it appears, now left it to Marianne to communicate with the other members of his family.
On 22 October, Mark suggested the family sign a 30 day listing authority with Knight Frank, on the basis that they could go elsewhere if they did not get a satisfactory offer that way within 30 days. Alfredo, Mark and Marianne signed a 30 day listing authority for Knight Frank. Hugo still refused. He did he not put forward any alternative strategy for selling the land. He had spoken to an agent from Jones Lang LaSalle, but made no definite proposal that he be appointed.
Eventually, on 9 November, Mark sent an email to his brother in these terms:
I asked whether you'd signed the listing form attached. You haven't and according to your conversation this morning with Dad, you won't. The plan was to see whether an offer would be forthcoming from Knight Frank within the 30 day listing period, then if not ask Jones Lang to take a listing based on their appraisal.
On 15 October 2009 I stated that I require you to be removed from the decision making process and I detailed the reasons I believe you are not acting in the best interests of the owners. On 18 October 2009, Dad stated that he would no longer subsidise the owners and he would take all steps available to effect sales.
I don't want to proceed on the following basis but unfortunately you leave me no alternative. Before the end of the week, unless you agree to sign the attached listing form in the first instance then proceed as outlined, or hand over your responsibilities, I will be arranging to have you served with a Supreme Court Writ to enable us to proceed. Dad and I concur with this course of action.

On 18 November 2009 the writ was issued. After the proceedings had commenced, the parties attended mediation. There were attempts to identify other potential agents or methods of proceeding acceptable to both parties. On 9 July 2010 a further offer to buy the land was received through Vend Property. It was in the same general price range as the offer presented by Mr Grierson in September 2009. The proceedings, however, could not be resolved by agreement.

The meeting of 17 September 2009

The submissions that were made on behalf of the defendants make it necessary to make findings about the meeting on 17 September 2009 and the period up to the issue of the writ, and, in particular, about the position of Mr Grierson and Knight Frank.
Alfredo says that on 17 September 2009 Mr Grierson attended the family meeting and told them that he had a confidentiality agreement and an authority to sell, both of which he wanted them to sign. At that point Hugo took exception and 'the whole situation just seemed to crumble'. In cross‑examination, Alfredo said, 'I think Hugo took a dislike to Mr Grierson'.
In the weeks after the meeting, Alfredo did not suggest that another agent be appointed because he believed, from his discussions with Hugo, 'that Hugo's frame of mind wasn't compatible at that stage to appointing someone else.'
When it was suggested to Mark that what happened at the meeting with Mr Grierson derailed the process, Mark said this:
It was the excuse. I can't give you a definitive answer to that because I don't know why there's a problem here. I actually still can't understand to this day while there's a problem here, because we did all agree to sell in the beginning. That would have been in September or August. We did all agree that dad would have the conduct of sale back in those days - well, at that time. He would go out and speak to agents, get appraisals and get the process up and running, and I can't understand why it fell in a heap. At the meeting on 17 September in Hugo's office, there was a disagreement between Hugo and Jarrad Grierson. I can never quite understand why.
Mr Grierson said that his impression was that Hugo had a problem before he even got there. He sensed that there was an issue of some type which he was not even aware of.
Marianne later signed a listing authority appointing Knight Frank. She said that she did not fully understand why her husband would not sign the authority, although she understood that Hugo's problem was with whether Mr Grierson would act in their best interests.
Hugo's evidence about that meeting is in these terms:
At that meeting it was important, or very important, for me to acquire some information from Mr Grierson and the information in respect - the reason why I understood we were having this meeting is to discuss the property to discuss his appraisal to go through his recommendations and that was a very important document for me. It came along with a statement that he had an offer and at that point there's a conflicting arrangement immediately. In the first instance him having an offer and not having been appointed as our agent indicated to me that he wasn't representing us and he was presumably a buyer's agent and that was very inconsistent with his request that we sign a listing authority and then there were some considerable concerns about - in requesting us to sign a confidentiality agreement and then also the fact when he revealed that he indeed has signed a confidentiality agreement.
A short time later in his evidence, Hugo stated that his concerns were primarily directed towards Mr Grierson having signed a confidentiality agreement.
I am unable to make any finding as to why Hugo opposed the appointment of Mr Grierson as the agent to market the property in September 2009. The primary reason he gave - that Mr Grierson brought an offer to the meeting when he had not yet been appointed as the family's agent - could have been resolved at the time by a quite simple question to his father.
There are suggestions in the evidence that Hugo may have changed his mind and no longer wanted to sell the land, at least not as an en globo site. Around that time, Hugo and Marianne expressed the view to other family members that the land may be developed as a high density residential site; that remained Marianne's view at trial. The evidence also supports an inference that Hugo did not want to hand the marketing of the land to an agent, but wanted a more hands‑on role for himself in devising and implementing a marketing programme. The role he sees for himself, if now given conduct of the sale, is to 'go out and procure offers with agents … maybe do the grunt work and go out and procure the offers where the owners could then consider those offers and make their decisions.'
Whatever the reason, Hugo was unmovable in his opposition to Mr Grierson and Knight Frank.
That position remained at trial. Both in cross‑examination and submissions, the defendants questioned whether Mr Grierson was disqualified from acting by a conflict of interest. In his evidence, Mr Grierson denied that he had any conflict of interest in acting for the buyer. He denied that he now had, or had ever had, any arrangement or understanding with Pride Projects or Woolworths; that he had any written agreement with them; that he had received any payments from them; or that he had ever been retained by either of them.
The defendants led no evidence contradicting Mr Griersons' denial. When specifically asked if the defendants had any evidence to put to the witness that contradicted his answers, counsel for the defendants said 'no'.
Despite this, in closing, the defendants maintained that the court could draw an inference that Mr Grierson had a conflict of interest. It was said to arise from the fact that he knows that he would act for the Bombara family on one occasion only, whereas there may well be future opportunities for him to do business by selling land to people such as Woolworths or Pride Projects. This was described in submissions as a conflict of interest arising from 'his historical allegiance to associates.'
Counsel put forward no authority for finding a conflict of interest arising from such facts. In my view, the submission does not fit within the established principles.
It is not controversial that the relationship between an agent and its principle is a fiduciary relationship. Generally, a fiduciary owes a duty of undivided loyalty to its principal which requires the fiduciary to avoid a conflict of duty and interest, and a conflict of duty and duty. The test of whether there is a conflict, or real and substantial possibility of a conflict, is objective: see Boardman v Phipps [1966] UKHL 2; [1967] 2 AC 46, 124; Pilmer v The Duke Group Ltd (in liq) [2001] HCA 31; (2001) 207 CLR 165; Settlement Agents Supervisory Board v Property Settlement Services Pty Ltd [2009] WASCA 143 [68] ‑ [76].
There was no evidence before the court from which it could find a conflict of interest. In particular, the fact that Mr Grierson, or his company, may have acted in the past in dealings where Pride Projects or Woolworths was involved, and may do so again, does not raise a real and sensible possibility of such a conflict: Pilmer v Duke Group Ltd (200 ‑ 201) [83].
The consequences of Hugo's actions are clear. Although all co‑owners had agreed that the land be sold, Hugo prevented his co‑owners from entering into negotiations with a potential purchaser, whose first offer was at a good price having regard to the estimated value of the land. He did not obstruct the sale because of concerns about the potential purchaser, or the price, or the conditions of the offer. The reasons he expressed were to do with his concerns about the conduct of Mr Grierson. He allowed those concerns to override both the wishes of his co-owners and, on my view of the evidence, their best interests. He rejected Knight Frank but offered the family no alternative for the sale of the land.

The evidence of Mr Grierson and Mr Hughes

Each party called a witness to speak of the approach that should be taken to marketing the property so as to achieve the best result for the co‑owners. The plaintiffs called Mr Grierson, and the defendants called Mr Hughes.
Each of the witnesses was a witness of fact: Mr Grierson as to the events leading up to and following the meeting of 17 September 2009; Mr Hughes as to the type of marketing campaign that the defendants would undertake, in consultation with him, should they have the carriage of the sale.
Each of them was also asked to give his opinion on issues including the most effective way to market the land, and the scope of the market. Mr Grierson could, from his day to day involvement in this sector of the real estate market in Western Australia, give useful evidence about the state of the market, although it is often difficult to separate his observations from his opinions and conclusions. The witnesses were, at least to some extent, regarded by the parties as giving expert evidence. There was no objection raised to any of the evidence of the witnesses' opinions.
Neither party, however, led evidence of the facts necessary to provide a proper foundation for the opinions expressed. This leaves some uncertainty about the proper use of the evidence: see generally, Heydon J D, Cross on Evidence (8th Aust ed, 2010) [1645] ‑ [1680]. In the end, neither party objecting to the evidence, I consider that each has waived the rules relating to admissibility. The evidence is (at least in part) relevant, and there are no considerations of public policy that require its rejection: see Hankinson as Executrix of the Estate of Gary William Same v Brookview Holdings Pty Ltd [2004] WASCA 279 [44] (EM Heenan J). I have taken it into account as set out below.
Mr Hughes recommends a marketing campaign that is preceded by extensive preparation, including the obtaining of reports such as ecological reports, geotechnical reports, engineers reports, town planning reports, and perhaps architectural sketches. The aim is to present the land to the broadest possible market, and ensure that 'once the property is exposed to the market any genuine inquirer is left as little as possible to do by way of their own research.' He said that a selling agent would only be in a good position to suggest a value range for the land after the property had been marketed and there was feed back from 30 or 40 inquiries.
In contrast, Mr Grierson said that the subject land has a very limited market for the following reasons: it is a non-income producing development site; finance has not been as readily available to developers following the global financial crisis; the rate of sales in comparable developments in other suburbs has been very slow; and the location of the land means that there are long time frames associated with a viable development of the site. Mr Grierson also anticipates that the potential buyers for a site of this type would want to do their own due diligence, so that reports from the range of consultants contemplated by Mr Hughes would add little value.
Specifically, in response to evidence of Mr Hughes about establishing value through feed back from 30 to 40 inquires, Mr Grierson said:
I would doubt that there would be 30 or 40 inquiries for a property worth more than three or four million dollars, particularly if it's a non‑income producing property… you just wouldn't get that level of interest. You'd be struggling to get half a dozen inquiries, to be honest.
I accept Mr Grierson has practical knowledge of the state of the market for this type of land, and I also accept his opinion that there is a very limited market for the site.
Both witnesses agreed that any marketing program should attempt to accommodate the offers that had already been received (if they remain current), while recognising that a better offer could come. The plaintiffs, through counsel, suggested that the three offers that had come forward established at least a base value for the site. Mr Hughes' response was that 'there would be a nagging uncertainty that there could well be a fourth or fifth party out there.' In my opinion, on the evidence of the limited number of potential buyers for this site, a prudent seller would not be constrained from negotiating on the existing offers by such a nagging uncertainty.

The relevant factors

Section 126 of the Property Law Act provides an alternative remedy to partition. In an action for partition, if a party or parties interested to the extent of a half share or more requests the court to direct a sale of the land and a distribution of the proceeds 'the court shall, unless it sees good reason to the contrary, direct a sale accordingly': s 126(1); and see Bray v Bray [1926] HCA 40; (1926) 38 CLR 542, 545 (Knox CJ); Martin‑Smith v Woodhead.
The court has a complete discretion as to who it will appoint to conduct a sale: Crocombe v Pine Forests of Australia Pty Ltd [2005] NSWSC 151 [88]. As a matter of practice, ordinarily the conduct of the sale is given to the plaintiff: Crocombe v Pine Forests of Australia Pty Ltd [88] citing Dixon v Pyner(1850) 68 ER 135; Dale v Hamilton(1853) 68 ER 1116 and Murray v Geoffroy (1918) 18 SR (NSW) 259.
In exercising such a discretion, the court must have regard to matters which are consistent with the objects of the Act. In Oshlack v Richmond River Council [1998] HCA 11; (1998) 193 CLR 72 [22], speaking of the discretion to award costs, Gaudron and Gummow JJ said:
The power conferred by the section is to be exercised judicially, that is to say not arbitrarily, capriciously or so as to frustrate the legislative intent. However, subject to such considerations, the discretion conferred is, to adapt the words of Dixon J, unconfined except in so far as 'the subject matter and the scope and purpose' of the legislation may enable an appellate court to pronounce the reasons given by the primary judge to be 'definitely extraneous to any objects the legislature could have had in view'.

The factors put forward by the parties

The plaintiffs, in written submissions, put forward the following factors in support of their claim that Alfredo should have the conduct of the sale:
(a)Alfredo funded the purchase and almost all of the annual outgoings and holding costs of the land (including the larger parcel);
(b)the plaintiffs collectively hold two‑thirds of the land;
(c)the experience of both plaintiffs in buying and selling land over a period of many years;
(d)Mark supports the appointment of Alfredo to conduct the sale;
(e)as patriarch of the family, Alfredo may be better able to make decisions.
The essence of their case at trial was that, as Mark said in his evidence, because of his father's experience, the conduct of the sale by Alfredo would be 'better, quicker … and much more satisfactory by a large margin.'
In written submissions lodged before trial, the defendants propose that they be appointed for reasons that:
(a)they have the time to devote to the project;
(b)they have the expertise to devote to the project;
(c)they propose to use the services of Mr Hughes to assist with the marketing strategy of the property;
(d)Hugo has recently been appointed by the plaintiffs to be solely responsible for the marketing of other property owned, managed or under the control of the plaintiffs;
(e)they will ensure that there is a complete transparency and a documented trail of marketing to ensure that all parties are satisfied that all reasonable steps have been taken to properly market and sell the property at the best price and on the best terms reasonably obtainable in the marketplace;
(f)they will act in the best interest of the parties.
The defendants also put forward a negative case, asserting that Alfredo was not appropriate to be 'the trustee for the sale of the property' because:
(a)he wants to accept the proposal received through Mr Grierson;
(b)he does not have a genuine interest in the marketing the property;
(c)he has a lack of concern about the issues concerning Mr Grierson's involvement in obtaining the first offer and his involvement with one of the buyers;
(d)he has not conducted any business transactions by himself on his own for at least 10 years;
(e)he would not be willing to travel if necessary to meet the representatives of large corporations such as Bunnings or Woolworths;
(f)he would not appreciate his responsibilities as a trustee for all parties;
(g)he would not appreciate his exposure to liability as a trustee acting on behalf of all parties.
None of the matters set out in pars (d), (e), (f) and (g), were put to either Alfredo or Mark in their evidence, and the defence did not press them. Further, Alfredo is an experienced and successful businessman in the buying and selling of land. On the evidence, there is no reason to doubt that Alfredo would act as a prudent business man in relation to the sale of this land (of which he owns a third).

Consideration of the factors

It is common ground, and supported by the evidence, that it is not appropriate to auction the land having regard to the characteristics of the land and the potential market. Sale by private treaty is both appropriate and preferred by both parties.
There are some matters on which the parties rely, but which do not assist in differentiating them.
First, I am satisfied on the evidence that both parties have the time to devote to negotiating the sale.
Second, both parties have the same interest in getting the best price that can be obtained within a reasonable time.
Third, 'transparency' in the marketing process is not a factor in favour of either party. Directions made by the court for the sale of the land will require the party with conduct of the sale to engage a licensed real estate agent. Real estate agents in Western Australia are subject to legislative controls, including a Code of Conduct made under the Real Estate and Business Agents Act 1978. Pursuant to the Act and the Code of Conduct, agents are required to act with skill, care and diligence, and are subject to a range of specific duties designed to ensure that the agent's principal is properly informed during the sale process.
Fourth, the plaintiffs contended that there was a financial imperative to sell the land because of the escalating holding costs for the land (including the other land east of the Kwinana Freeway), the slow market affecting sales in other family owned developments, and the need to preserve cash reserves in A Bombara Holdings. Both parties, however, now agree that the land should be sold. The time difference in their competing proposals is a matter of weeks.
Fifth, the defendants say the court should have regard to the family's recent appointment of Hugo to market property in the family owned subdivision development at Bridgetown. The plaintiffs point to the very limited role given to Hugo - confined to liaison with the agents appointed to market the lots. They also question his performance in that role. Those questions raised further collateral issues, in particular about communications between Mark and Hugo, which it is not fruitful to pursue. The present sale is so different from the ongoing marketing of lots in the Bridgetown subdivision that the evidence about the Bridgetown project does not bear on who should have conduct of the sale of the land at Bertram.
The defendants also submit that the court should take into account what they say are errors of judgment by Alfredo: first, in authorising Mr Grierson to show the land to a prospective buyer and present the offer at a family meeting, without the consent of the other family members; and second, in his inability to resolve the deadlock that arose without commencing proceedings. Those errors, the defendants submit, create problems for him being now appointed to have the carriage of the sale: a price expectation has been set by the offer of $7.2 million; Mr Grierson (the defendants say) has a conflict of interest; and Alfredo may have an allegiance, or at least feel a moral obligation, to appoint Knight Frank.

The evidence does not, however, support a finding that there was an error of judgment by Alfredo. It was not put to him that he had exceeded his authority by authorising Knight Frank to show the property. There is little evidence about the course of dealings within the family business. Mark, however, said that in September or August they all agreed 'that dad would have the conduct of sale … He would go out and speak to agents, get appraisals and get the process up and running.' When he was specifically challenged as to whether his father's authority went that far, and whether anybody had said that Alfredo had the conduct of the sale, he replied:
To me it just goes without saying but to some people it wouldn't I suppose. We don't have signed contracts between each other in terms of 'you do this job, you do that job.'
The written agreement in July 2010 that appointed Hugo in marketing the Bridgetown properties was the first time that had been done in the family business.
Further, when Alfredo authorised Mr Grierson to show the property to a potential buyer, it was on the basis that Mr Grierson would have to discuss the proposed sale with the family as a group.
I am also satisfied that the plaintiffs do not regard themselves as under an obligation to Mr Grierson, or 'locked in' to an agency arrangement with Knight Frank. Alfredo denied any such obligation, although he said that he had not excluded Knight Frank. Further, he was not committed to the offer presented by Mr Grierson. He said, ' I would never accept the first offer made by anybody. I do due diligence and look at the market.' Alfredo said that if he was given the conduct of the sale, he would 'test the market.' I accept that evidence.
I have already set out my findings on the alleged conflict of interest.
The defendants also say that I should take into account the conduct of the plaintiffs in bringing these proceedings. It is unfortunate the proceedings were considered necessary; but they have proceeded to trial despite attempts at mediation. I would also need to balance the defendants' conduct in defending the proceedings by opposing the sale of the property and claiming that the plaintiffs' action was an abuse of process.
I now turn to the factors that the parties put forward and which, in my opinion, enable a decision between them. Each party says it will act in the best interests of all of the co-owners. Each party contends that it will achieve the best result.
Although the court need not appoint a trustee for the sale, the party appointed to conduct the sale will be acting on behalf of all co-owners, and in my opinion will be subject to the same standards of conduct as a trustee. A trustee must exercise the same degree of diligence and prudence as a prudent business person would exercise if the property were his or her own: Permanent Building Society v Wheeler (1994) 11 WAR 187, 235 (Ipp J).
On the evidence, all parties are experienced business people. On the issue of who will achieve the best result, the balance favours the plaintiffs. Alfredo has more experience than either of his sons in buying, selling and developing land. His record as a developer shows him to be both successful and experienced in this area.
Mark also has been involved in over 30 land developments.
While the plaintiffs did not deny that Hugo has experience, the evidence of Hugo's experience in property development and sale is scant. Further, in 2009, Hugo was getting back into the land development business after three years of pursuing his own interests. The evidence did not reveal what those interests were. The evidence also does not reveal the area of business in which Marianne works.
The plaintiffs propose to put the matter into the hands of at least two competent agents, to instruct a competent solicitor and accountants, and to negotiate on offers brought in by those agents.
At least in the period leading up to the institution of proceedings, the plaintiffs wished to pursue the offer brought to them by Mr Grierson and negotiate with Woolworths. There have since been two other offers in the same general price range as the original offer. The plaintiffs may be more likely than the defendants to pursue negotiations with one or more of the potential purchasers already identified, and to see if that may result in a satisfactory outcome. Having regard to the appraisals they have received from two leading agents, to Mark's own assessment of the value of the land, and to the limited market for this site, I am satisfied that was, and still is, a prudent course to follow.
The defendants have expressed their intention to start afresh; as Hugo said, 'to have a new agent and say that all of that that's gone on before wasn't really a proper process.' The defendants put forward a proposal for more vigorous marketing of the property in the attempt to ascertain a broader market than that already identified, and realise the best price obtainable. The evidence, however, does not enable the court to have any confidence that the defendants' proposed marketing program would identify a market at a better price for this land.
The plaintiffs, as experienced and successful developers, are well placed to make any necessary decisions. Having regard to the experience and capacity of the parties and their ability to achieve a sale at the best reasonable price, the evidence favours the plaintiffs.
I am also satisfied that the plaintiffs will act in the best interests of all co-owners in achieving a sale. They hold two-thirds of the land between them, and their conduct to date has been consistent with those best interests. On the other hand, the conduct of Hugo on and after 17 September 2009 is difficult to reconcile with the pursuit of the best interests of all the co-owners.
If it were necessary to tip the balance, I would also have regard to the fact that the plaintiffs hold two‑thirds of the land and have requested the sale. I do not regard that as determinative, but as a relevant factor.

Conclusion

The following orders should be made:
(1)That the land referred to in par [1] of the statement of claim, being portion of Peel Estate lot 125 and being lot 4 on diagram 80680, more particularly described as all that land the subject of Certificate of Title, vol 1926 folio 262; and portion of Peel Estate lot 1199 and being lot 67 of diagram 93093, more particularly described as all that land the subject of Certificate of Title, vol 2161 folio 297, be sold.
(2)That the sale be by private treaty.
(3)That the plaintiffs have the conduct of the sale.
(4) That the plaintiffs appoint one or more agents licensed under the Real Estate and Business Agents Act 1978 (WA) to act on behalf of the owners in the sale of the land.
(5)The net proceeds of the sale after payment of all proper costs, charges and expenses of the sale, be distributed to the parties in accordance with their respective interests.
I will hear the parties further as to any further orders for the conduct of the sale, and the costs of the action.