Nevin v The Beneficiaries of the Peppermint Beach Estate Trust
[2002] WASC 300
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: NEVIN & ANOR -v- THE BENEFICIARIES OF THE PEPPERMINT BEACH ESTATE TRUST & ORS [2002] WASC 300
CORAM: ROBERTS-SMITH J
HEARD: 21 NOVEMBER 2002
DELIVERED : 9 DECEMBER 2002
FILE NO/S: CIV 2013 of 2001
BETWEEN: PAULINE JEAN NEVIN
First Plaintiff
WEST COAST WATERFRONT INVESTMENTS PTY LTD (ACN 008 757 471)
Second PlaintiffAND
THE BENEFICIARIES OF THE PEPPERMINT BEACH ESTATE TRUST
First DefendantJOHN BERTONIE
WARREN JOHN CAREY
LINDA JANE CAREY
JACQUELINE THERESA DIXON
DAVID EBERT
ALISON GUEST
RAYMOND FAINT
LYNNE BEARD
GARDINER RIVER PROJECTS PTY LTD
STEVEN MARK HARRISON
JIRA PHAN HAWKES
LEONARD ANTHONY HENZELL
GAIL HENZELL
LOEDWYK HOEK
JOAN PAMELA HOEK
WILLIAM CHARLES KENNEDY
ROBERT ARTHUR KNOX
GEORGINA SHEILA KNOX
STEVEN JOSEPH KNOX
BARRY JAMES LAWSON
SLAWOMIR MAKULA
JOSEPH GERARD MELANIE
MARIA JACQUELINE RENNE MELANIE
ALAN MUSA
MOLLIE MUSA
NANCY JEAN McKINNON
OWEN RIOLINO
DINO RIOLINO
CARMEL ROWE
ALEX SIBIR
LEE JOHN TEAGUE
RODNEY JOHN WALKER
MICHELLE DIANA WALKER
JANNACE MARGARET WOOLSTON
RUSSELL JAMES WOOLSTON
STUART NOLAN WOOLSTON
WILLIAM HERBERT WOOLSTON
Second Defendants
Catchwords:
Trustees - Power of sale under s 27(1)(a) and s 89(1) of the Trustees Act 1962 (WA) - Directions of Court sought with respect to exercise of power vested in trustee - 2,745 undivided shares - Some coowners opposing sale - Status of management committee advising trustee - Conflict between coowners
Property law - Claim for sale of land - 2,745th undivided shares - Approximately 862 coowners - Some coowners obtaining certificates of title - Many coowners unable to be found - Whether sale for the benefit of parties interested - Meaning of "benefit"
Evidence - document - Document purporting to be deed - Copy document unsigned, undated and unstamped - Whether admissible
Legislation:
Property Law Act 1969 (WA), s 126
Stamp Act 1921 (WA), s 27
Trustees Act 1962 (WA), s 92
Result:
Order for sale made
Category: A
Representation:
Counsel:
First Plaintiff : Mr R A C Cullen
Second Plaintiff : Mr R A C Cullen
First Defendant : No appearance
Second Defendants : Mr M Levitan
Solicitors:
First Plaintiff : Dwyer Durack
Second Plaintiff : Dwyer Durack
First Defendant : No appearance
Second Defendants : Melvin Levitan
Case(s) referred to in judgment(s):
Cryer v Ossher (1997) 8 BPR 15,831
De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56
Dent v Moore (1919) 26 CLR 316
Mitchell & Anor v Cullington, unreported; SCt of WA (Templeman J); Library No 970136; 24 March 1997
Nevin & Anor v The Beneficiaries of the Bremer Bay Estate Trust [2002] WASC 24
Nullagine Investments Pty Ltd v Western Australian Club Inc (1992‑1993) 177 CLR 635
Pannizutti v Trask (1987) 10 NSWLR 531
Pemberton v Barnes (1871) LR 6 Ch App 685
Re Darby [1999] 2 Qd R 350
Squire v Rogers (1979) 27 ALR 330
Case(s) also cited:
Harrison, Jones & Devlin Ltd v Union Bank of Australia (1909) 10 SR (NSW) 266
ROBERTS-SMITH J: This case has made a tortuous progress to this point.
It began with an originating summons filed on 17 July 2001 in which there was one named defendant, the Beneficiaries of the Peppermint Beach Estate Trust.
The summons was supported by an affidavit of the first plaintiff ("Mrs Nevin") and of Mr Peter Michael Melsom, both sworn 6 August 2001.
The first and second plaintiffs sought orders that the Peppermint Beach Estate Trust ("the Trust") be wound up, that service on the beneficiaries be dispensed with, that the plaintiffs be authorised to do all things necessary for the sale of the land known as the Peppermint Beach Estate at Bremer Bay, Western Australia ("the Land") and any other directions "appropriate to bring the trust to an end".
The summons came before Miller J on 8 August 2001. An affidavit by Mrs Nevin sworn 21 September was filed on 25 September 2001.
His Honour ordered that formal notice be given to Ronald Fowler, Norman Sydney McCleary, Lou Hoek and Frederick Long, referred the matter to mediation and the summons was otherwise adjourned sine die with liberty to re‑list.
On that occasion Mr McCleary appeared representing himself, as a beneficiary of the Trust. He "vehemently" opposed the making of the orders sought. He expressed a range of complaints about the proposed sale and the management of the Trust and claimed to be a member of the management committee for the co‑owners (or a group of them). He said he wanted an investigation into the conduct of the Trustee, which he claimed was attempting to manipulate the sale of the Land and an adjoining parcel held under a similar trust, for interests of or associated with Mrs Nevin. From the bar table Mr McCleary foreshadowed a proposal that a separate holding company be established by the co‑owners, the Trustee vest the Land in the holding company, that the co‑owners be the company shareholders in the same ratio as their undivided shares in the Land and the company then either put the Land to an income‑producing use, such as the growing of maritime pines, or subdivide and sell it.
On 17 October 2001 the summons came on before Hasluck J. Mr McCleary again appeared in person. His Honour ordered that a statement of claim directed to the nature of the trust and the relief sought, together with any further affidavit required in support of the plaintiffs' claim be filed and served within 14 days and served upon Mr McCleary and Vickery Holdings Pty Ltd ("Vickery Holdings"). He further ordered that they, and any other beneficiary who wished to be heard have liberty to file a statement of defence and affidavit within 14 days. The matter was otherwise adjourned sine die with liberty to apply.
A proposed statement of claim and further affidavit of Mrs Nevin sworn 3 December 2001 were filed on that date, which was also the date upon which the matter again came before Miller J. He ordered it be adjourned sine die with liberty to re‑list either in general chambers or on a special appointment.
The matter came before Pullin J on 12 February 2002. Mr McCleary again appeared in person. On that occasion, counsel for the plaintiffs, Mr Cullen, advised that the application was one for the court to make an order for sale under s 126(2) of the Property Law Act 1969 (WA) as well as an order under s 92 of the Trustees Act 1962 (WA). That had become necessary because of the fact that there are co‑owners of the Land who hold certificates of title.
Pullin J gave further directions as to the filing and service of affidavits and further adjourned the application.
The matter was again before Pullin J on 6 and 12 June 2002. On the latter date, His Honour gave leave to the plaintiffs to amend the originating summons. The amendments were to add the holders of certificates of title as second defendants and to seek an order that the land owned by the second plaintiff and the second defendants at the Peppermint Beach Estate at Bremer Bay be sold pursuant to s 126 of the Property Law Act.
When the matter came before Pullin J on 28 August 2002, Mr Levitan appeared on behalf of Mr McCleary and Mr Lou Hoek (one of the second defendants). Further orders were made in relation to the provision of documentation to Mr Levitan upon the provision of an undertaking by his clients that they would not communicate with the beneficiaries without first obtaining leave of the court.
It subsequently became apparent that Pullin J may have had a potential conflict of interest in dealing with this matter and accordingly it came before me on 21 November 2002.
The Land is one of two parcels of land on which similar applications were made by the plaintiffs. Pullin J made an order for sale and consequent directions under s 92 of the Trustees Act in respect of the other property, described as the "Bremer Bay Estate land". I acknowledge that in the following recitation of the facts, I have drawn on his Honour's reasons for decision in that matter (Nevin & Anor v The Beneficiaries of the Bremer Bay Estate Trust [2002] WASC 24).
The second plaintiff was incorporated by Maxwell Peter Lenegan in 1972. He died in 1975. The first plaintiff is his widow. The first plaintiff's children are beneficiaries of the estate. Mrs Nevin was at all relevant times, a director of the second plaintiff.
About 1972, Lenegan, who was a chartered accountant and land developer, together with Mr Fowler, arranged for the second plaintiff ("WCW Investments") to purchase the Land, which is in Bremer Bay, being Kent locations 1306 and 1325, comprising the whole of the land in certificate of title, volume 1358, folio 041. Mrs Nevin believes that a price of $20 per acre was paid for the Land. It is 2,745 acres in size.
From 1973 onwards, numerous undivided 2,745th shares in the Land were sold to various members of the public, many of whom were (and still are) resident in New South Wales.
Mrs Nevin had very little to do with the sale of the shares as she was fully occupied with bringing up her children and her husband did not communicate much to her about the progress of the sales. She is accordingly unaware of exactly how many shares in the Land were sold, but on the basis of information from an accountant, William Dunstan, who has helped manage the affairs of the Peppermint Beach Estate Trust over the years, she believes there are approximately 862 co‑owners in addition to Lenegan's estate, which holds 278 undivided 2,745th shares in the Land.
At the same time that Lenegan and Fowler were promoting the sale of shares in the Peppermint Beach Estate land, Lenegan was also promoting a similar venture in relation to an adjoining parcel of land, that being the Bremer Bay Estate land. That comprised 1,000 acres. Undivided 1,000th shares were likewise sold to members of the public, many, if not most of whom were also resident in New South Wales, at that time.
Lenegan died in a boating accident on 12 September 1975.
The administrator of his estate is Peter Michael Melsom, a chartered accountant of Melsom Robson & Co.
The first plaintiff still had little to do with the Trust after her husband's death. On some occasions she did seek legal and financial advice as apparently did Melsom, but the estimated cost of taking further legal action on behalf of the estate was beyond the capacity of the estate to fund it. There were personal reasons as well why the first plaintiff (who later remarried) was unable to devote much attention to the Trust.
The sale of undivided shares in the Land was effected by written contract. The plaintiffs say the terms of those contracts constituted a trust or trust whereby WCW Investments became trustee for the beneficiary owners of the Land or that alternatively, the Trust was constituted by implication from the terms of those contracts.
The contracts (an example of which is annexure PJN.14 to Mrs Nevin's affidavit of 3 December 2001), were between named purchasers and WCW Investments as vendor. The parties agreed to the sale and purchase of an estate in fee simple of a specified number of undivided 2,745th shares in the Land. They acknowledged that the Land was rural unimproved land. There was no express trust created.
Vickery Holdings is described by Mrs Nevin as "Mr Fowler's company". No company search in respect of Vickery Holdings has been put in evidence. Mrs Nevin deposes that as at 1994 Vickery Holdings held 278 undivided shares in the Land. From that time approximately 115 of those shares were sold by Vickery Holdings to other natural persons or companies. A number of those purchasers have obtained their own duplicate certificates of title.
The Trust is said by the plaintiffs to arise from the facts that:
(a)the second plaintiff held the duplicate certificate of title to the Peppermint Beach Estate Land for and on behalf of all the defendants until about 1994 and thereafter on behalf of defendants representing 2,467 out of 2,745 undivided interests;
(b)the second plaintiff paid substantial rates to the Jerramungup Shire in the years between 1972 and 2001;
(c)the second plaintiff remained the legal owner of all the shares in the Peppermint Beach Estate Land until 1994 and thereafter for 2,467 out of 2,745 undivided interests.
A Management Committee was set up in 1992, apparently on the initiative of Mrs Nevin.
About the same time, a deed ("the deed") was prepared and executed by a number (Mrs Nevin deposes that she believes it to be a majority) of the co‑owners, which appointed her and the four other named persons who constitute the Management Committee and authorising the Committee to make further enquiries to assist in the development and sale of the Land. What she says is a copy of the deed (but which copy is undated, unsigned and unstamped) is annexure PJN.16 to Mrs Nevin's affidavit of 3 December 2001.
The deed purports to be between WCW Investments as first party, Mrs Nevin, Maxwell Keith Gillies, Zelma June Talbot, Alec Anthony Baxter and William James Hurst (collectively referred to as "the Management Committee") as the second party and the co‑owners listed in the first schedule to the deed, collectively as the third party ("the deed co‑owners"). There were 51 co‑owners listed by name in the first schedule to the deed, annexure PJM.16, shown as holding between them 149 undivided shares in the Land. It is apparent the list is not complete: it is one page which includes only names beginning with A and B. Mr McCleary annexes to his affidavit sworn 7 March 2003 (as annexure "N3") what he says is a copy of the deed. That is a roneoed copy of the same document as PJN.16. It is likewise unsigned, undated and unstamped. It has manuscript notations and markings on it. On this document however, the First Schedule runs to 14 pages of names of beneficiaries. There are 828 names, shown as holding 2,726 equal undivided 2745th shares in the Land.
There are fundamental problems with the evidence from both Mrs Nevin and Mr McCleary with respect to the deed. First, the document is unsigned and undated, yet it is sought to be put forward as a written agreement. It is not admissible in that form. But it falls at the threshold in any event because it is not stamped. It cannot therefore be pleaded, given in evidence or admitted to be good, useful, or available in law or equity unless it falls within one of the exceptions to s 27 of the Stamp Act 1921 (WA). In this case that would require me to be satisfied that the deed had been lodged with the Commissioner of State Taxation for assessment. There is no suggestion that such has been done. Section 27 therefore renders the deed inadmissible in evidence. This also means that nor may secondary evidence of the deed be admitted - and it would make no difference even were the deed not being sued upon nor sought to be enforced in these proceedings (Dent v Moore (1919) 26 CLR 316, 327). I therefore put the deed aside.
Mrs Nevin deposes that she wrote on behalf of the Management Committee to all or most co‑owners requesting payment of $73 per undivided share. Approximately $70,000 was received in response to that request.
In 1999 the Shire of Jerramungup issued a summons against the first plaintiff in respect of the Land, seeking to examine Mrs Nevin as to the ability of the second plaintiff to pay outstanding rates to the shire. At that time the rates outstanding amounted to approximately $34,000, not including rates for the 2001/2002 year. The first plaintiff made a payment of $6,679.34 to the Shire about 3 August 2001.
At the end of May 2001 or shortly thereafter, Mrs Nevin's solicitors wrote to all of the co‑owners whose names and addresses she was given by Mr Dunstan.
The letter set out the history and background of the trust. She pointed out that in the last few years there had not been sufficient funds to pay the land rates and the Shire had issued legal proceedings seeking payment of arrears and current rates totalling approximately $30,000.
She explained the formation of the Management Committee to assist the co‑owners of the Land to rationalise their interests in it and to enable it to be re‑sold or subdivided. She wrote that she and the Management Committee considered it was time the Land was sold. The Shire had advised that it would, on application, consider granting approval for subdivision into rural residential blocks, subject to the preparation of a comprehensive rural strategy confirming that the Land is capable of sustaining subdivision in that way. However, an experienced town planner who had previously prepared a report on a development of the Land did not consider it is likely that such a subdivision would be approved by the Environmental Protection Authority or the State Government because of the sensitive nature of the Land and the likelihood that the EPA and bodies such as the Conservation Council of Western Australia would object to the subdivision.
Mrs Nevin wrote that even if a comprehensive rural strategy could be prepared and subdivision approved, the cost of actually carrying it out, including the provision of roads, deep sewerage and electricity, would be prohibitive for the co‑owners.
She advised that the Management Committee was supporting the application to this Court for an order that the Trustee be empowered to proceed with the sale of the Land. She warned that if action was not taken by the co‑owners in that regard, the Shire would sell the Land for the best price that it could obtain so as to recover its outstanding rates.
The letter then advised that the Management Committee was seeking the views of all co‑owners on recommendations that the Trustee apply to the court for an order authorising sale and in the meantime asking for a contribution of $100 per share from the co‑owners to enable the rates to be paid and to cover significant legal, accounting and administrative costs which had accrued over the years and which would accrue in relation to the sale.
A total of 862 letters were sent. 288 written responses were received and 190 letters were returned unclaimed.
According to Mrs Nevin, almost all of those who replied (including others who telephoned her solicitors but did not provide a written response) were in favour of a sale. An amount of $39,500 was received pursuant to the letter and further contributions were still coming as at 6 August 2001.
The estate is the most significant co‑owner in support of a sale with 278 undivided shares. Melsom deposes that all of the beneficiaries of the estate are strongly in favour of selling the Land. One important factor from that point of view is that Lenegan died in September 1975 and the beneficiaries are anxious to finalise the estate.
The duplicate certificate of title to the Peppermint Beach Estate Land is held by Melsom for WCW Investments.
Rates and other expenses associated with the Land were paid by the second plaintiff until its funds were exhausted in the early 1990s. Thereafter, until about 1997, those expenses were paid from the original $70,000 raised from contributions by co‑owners.
Other costs had been paid by the estate and further legal costs will be paid from the funds received from co‑owners as a result of the letter of 31 May 2001. It is intended that the estate and the contributing co‑owners be reimbursed from the sale of the Land.
There has apparently been nothing done to, or with respect to the Land, since it was purchased by the second plaintiff in 1972.
The first plaintiff has obtained a sworn valuation based on its continued rural use. The valuation is $320,000. The first plaintiff's solicitor has also sought town planning advice from Mr P J Goff as to whether or not there was any potential to subdivide the Land into smaller lots. Mr Goff's advice was that subdivision into small parcels of five to 10 acres would be unlikely to be approved.
The first plaintiff points out that one of the major problems is that the second plaintiff does not have any funds to develop the Land and given that it is virtually impossible to communicate with all co‑owners, let alone get unanimous or near unanimous agreement from them about any development option, the present proceedings are the only practical way to proceed.
The first plaintiff is aware of one potential purchaser of the Land, who, she deposes, has expressed an interest in purchasing the Land, not in a definite amount, but for substantially more than the sworn valuation.
The application is opposed by Mr McCleary and Mr Hoek.
In mid‑May 2001, Mr McCleary wrote to the Management Committee giving notice that 14 named co‑owners were calling an extraordinary meeting to be held on Sunday 17 June to discuss and pass resolutions concerning the governance and future of the Land. The meeting was attended by Mrs Nevin's solicitors, however, Mr McCleary adjourned it to the following week. It was only when Mrs Nevin's solicitor, Mr Cullen, attended the meeting that he was informed by Mr McCleary that the purpose of calling it was to replace the Management Committee with another group of co‑owners.
Mr Cullen, Mrs Nevin, Mr Dunstan and Mrs Talbot attended the further meeting on 24 June 2001 which was also attended by Mr McCleary and about 15 other co‑owners. Certain resolutions were passed by the co‑owners who were present, critical of the Management Committee, seeking to change certain parts of the deed by which it had originally been established and also seeking to appoint a new management committee.
It is not necessary to go into the detail of subsequent events about this, beyond observing that as a consequence Mr McCleary contends that the Management Committee no longer has any legal authority nor role with respect to the Land but that the committee of which he is a member now does.
McCleary's position is explained in his affidavit sworn 7 March 2002. He deposes to being:
"the proprietor of two undivided units in the Peppermint Beach Estate Trust and … the beneficiary of a Constructive Trust over two purple titles held on [his] behalf by Ron Fowler in the Peppermint Beach Estate Trust."
There is no other evidence of this.
He makes certain complaints about the Management Committee. He then deposes that from enquiries he has made of the Department of Conservation and Land Management ("CALM") he has ascertained that the Land could be put to the use of growing maritime pines for which CALM would pay $200 per hectare during each year that the trees were growing. He annexes a CALM brochure "CALM Sharefarms - Maritime Pine". He further expresses a belief that the Land could be put to other uses, such as a rural subdivision, or that alternatively it could be exchanged as part of a "land swap" with the State Government which:
"… would like to see the [land] incorporated into the Fitzgerald River National Park."
Mr McCleary refers to correspondence from the "new" committee to the first plaintiff's solicitors advising they had no authority to act on behalf of the "new" management committee and to Mr Dunstan to similar effect but also requesting copies of any accounts pending and "a complete up‑dated list of Co-owners and addresses". He deposes that neither replied to that correspondence. In his affidavit ([18]) he requests that the Court:
"… make orders that the First and Second Plaintiffs do provide all the documentation, accounts, banking records, banking authorities relating to the Peppermint Beach Estate Trust to enable the new Committee to take the necessary steps to develop a business plan for the Peppermint Beach Estate Land for the benefit of the Beneficiaries."
There is no formal application for such orders.
Much of Mr McCleary's affidavit is devoted to the meetings and actions of the "new" management committee, or is merely argumentative.
Apart from that, he deposes that by letter to Mr Melsom dated 16 December 1999 he offered to purchase the 278 shares held by the estate of Mr Lenegan. The offer was repeated in August 2000. He received no response.
Finally, he annexes a copy of Shire Council minutes of a meeting on 20 April 1999 and a letter from the Shire of Jerramungup dated 10 May 1999 concerning his request for Council support for a rural subdivision of the Land with a one hectare minimum lot area density. The Reporting Officer wrote that up to that time Council had consistently advised it would only support lot sizes of 2.5 to 5 hectares for the area and noted it is in an environmentally sensitive region in which Council had in the past consistently sought to limit potential development to minimal density. The resolution adopted by Council was that:
"Council upon application, may consider granting approval for subdivision of the land into 'Rural Residential' lots, subject to the preparation of a comprehensive limited Rural Strategy confirming that the land is capable of sustaining subdivision into 5 to 10 acre (2.5 to 5 hectare) lots."
This, of course, is no more than an indication that Council might consider such an application, if made. It is certainly no assurance that such an application might (much less would) be approved.
On 17 April 2001 Mrs Nevin filed an affidavit sworn that day, in reply to that of Mr McCleary. Again, much of it was in the nature of argument and much was directed to the activities of the Management Committee.
By affidavit sworn and filed 6 June 2002, Mrs Nevin deposes that at [2] to [6] that:
"2.My solicitors Dwyer Durack have recently obtained a copy of the letter dated 22 August 1994 addressed from McKinnon & Penny Settlement Agents to the Registrar of Titles on behalf of Gairdner River Projects Pty Ltd, a company owned or controlled by Ronald Fowler, one of the original promoters of the sale of the undivided 2745 shares in the Peppermint Beach Estate Land.
3.Annexed hereto and marked "PJN1" is a copy of the said letter written on behalf of a Gairdner River Projects.
4.I understand from enquires made at the Department of Land Administration that it is open to Gairdner River Projects to sell some or all of the 217 shares which it presently owns in a similar way.
5.I am informed by my solicitor Richard Cullen and verily believe that some of the further titles originally issued as separate titles to Gairdner River Projects Pty Ltd have been sold for prices of $3,000.00, $5,000.00 and $8,000.00 per undivided single share. Their real value at present, if the valuation conducted last year on behalf of the plaintiffs by Grant Solomon is used for calculation purposes, is approximately $117.00 per share.
6.I am concerned that further titles may be issued by Gairdner River and either sold or onsold to members of the public at prices significantly in excess of their true value."
The letter, annexure PJN.1, relevantly reads:
"We attach herewith a Transfer of Land from West Coast Water Front Investments Pty Ltd to Gairdner River Projects Pty Ltd of 278 Undivided two thousand seven hundred and fortyfifth shares in the property comprised in Certificate of Title Volume 1358 Folio 041.
Our clients, Gairdner River Projects Pty Ltd, have requested that 30 separate Purple Titles of one undivided two thousand seven hundred and fortyfifth shares each issue from the 2789 undivided shares to be transferred to the Company. A further Title for 248 undivided two thousand seven hundred and fortyfifth shares will issue thereafter we assume. We enclose our cheque in the sum of $1,922.00 being the registration fee on the Transfer of Land plus $62.00 per separate Purple Title to issue.
Our client is currently negotiating to sell the Purple Title shares to parties in the Eastern States. The prospective purchasers however are not happy to sign a Contract until such time as they are able to view the Purple Title and it would therefore be appreciated if issue of the Titles could be expedited."
There is no evidence of a company search of Gairdner River Projects Pty Ltd, nor what relationship, if any, that entity has with Vickery Holdings Pty Ltd.
It appears from a further affidavit of Mrs Nevin sworn 29 and filed on 30 May 2002 that in response to a letter from her solicitors to the Shire seeking an extension of time within which to arrange a sale of the Land and a deferral of sale action by the Shire for arrears of rates in the meantime, the Shire has advised that daily penalty and interest has been accruing since 6 November 2001 on the rates outstanding since 6 September 2001 and that will continue until the account is paid in full. The Shire's Chief Executive Officer has advised that in relation to the action being taken by Council to sell the land for unpaid rates, Council will be implementing the provisions of the Local Government Act 1995 (WA) making the owner(s) of the Land liable for any associated legal costs so incurred.
An affidavit of Melvyn Levitan in opposition to the application for sale was affirmed and filed on 20 November 2002. Copy correspondence annexed to that affidavit shows that on 18 October 2002 Mr Levitan wrote to Dwyer Durack requesting an explanation of why the Trustee has not paid the outstanding rates and taxes from the amount of $38,390 received by way of contributions from co‑owners, asking whether the directors and shareholders had had a meeting approving the sale of the Land, requesting an elaboration of the circumstances giving rise to the indication from its minutes that the Management Committee was seeking an order for sale "to provide some sort of protection" and asking when boxes of the Trustee's documents held by Mr Dunstan could be inspected.
By letter dated 23 October 2002 Dwyer Durack advised that part of the rates had been paid but further rates had accrued since then. In addition, portion of the Trustee's legal costs had been paid and the balance of the funds were being retained towards rates, costs and expenses which might be incurred in a sale of the Land.
As to whether there had been a meeting of the directors or shareholders of the Trustee to approve a sale of the Land, the solicitors said they did not consider that necessary.
In response to the query about "protection" Dwyer Durack advised that the plaintiffs are seeking authorisation of the Court to proceed with a sale and would apply to strike out any later proceedings for any alleged breach of trust on the basis that would have been dealt with in the current action.
I make no comment about that other than to observe that I am not here dealing with any alleged breach of trust.
Further correspondence concerned Mr McCleary's requests for documents relating to the past management of the Land.
Finally, annexure "ML8" was a draft letter from Mr McCleary to co‑owners of the Land, dated 18 November 2002. My leave was sought for that to be sent, pursuant to the order made by Pullin J on 28 August 2002. Mr Levitan also applied for the hearing to be further adjourned for that purpose and also to enable formal applications to be made for (it was suggested) an order substituting Mr McCleary as trustee of the Trust and for a declaration that the "new" management committee is the Management Committee under the deed.
The draft letter was argumentative and asserted as fact matters which would undoubtedly be seriously disputed by the plaintiffs. It went far beyond the stated purpose of being a simple enquiry of the co‑owners whether or not they approved sale of the Land. In any event, whilst I am prepared to accept the views of the co‑owners are relevant to the exercise of the statutory discretion both under s 92 of the Trustees Act and s 126 of the Property Law Act, they are certainly not determinative. Furthermore, their views had already been sought and there is no reason to think another letter at this stage would get any better response. I accordingly refused leave for the draft letter to be sent. I also refused the application for the adjournment.
I turn now to the plaintiff's application under s 92 of the Trustees Act.
That section authorises any trustee to apply to the Court for directions concerning any property subject to a trust, or respecting the management or administration of it, or the exercise of any power or discretion vested in the trustee.
Every trustee in whom trust property is vested, may (inter alia) sell the property or dispose of it by way of exchange (Trustees Act, s 27(1)(a) and (b); s 28(1)). Where the trust property includes land, the trustee must exercise the power to sell if so required in writing by all the persons at that time beneficially entitled to an interest in possession under the trust (Trustees Act, s 27(4)).
Here the Land, excluding the undivided shares of the holders of purple titles, is vested in MCW Investments, which holds it on trust for the co‑owners. The trustee would be bound to sell the Land if all the co‑owners so required in writing, but as at least 190 of them cannot be located, that is unlikely. In such a situation in any event, the Land as such could not be sold without the agreement and participation of all the holders of purple titles.
The plaintiff's application seems to me one essentially seeking directions of the Court pursuant to s 92(1) of the Trustees Act as to the exercise of the power of sale vested in the Trustee by s 27(1)(a) of that Act. For the reasons which follow, I would be prepared to make directions of the nature sought. I would also be prepared to do so even on the more particular requirements of s 89(1) of the Trustees Act.
By s 89(1) the Court may order a sale of any property vested in a trustee. That section provides that:
"(1)Where in the opinion of the Court any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, retention, expenditure or other transaction is expedient in the management or administration of any property vested in a trustee, or would be in the best interest of the persons, or the majority of the persons, beneficially interested under the trust, but it is inexpedient or difficult or impracticable to effect the disposition or transaction without the assistance of the Court, or it or they cannot be effected by reason of the absence of any power for that purpose vested in the trustee by the trust instrument (if any) or by law, the Court may by order confer upon the trustee, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions (if any) as the Court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne, and as to the incidence thereof between capital and income."
Such an order may be made if the sale is:
(a)expedient in the administration of the trust property, or
(b)in the best interest of the beneficiaries, or the majority of them,
and if
(c)it is inexpedient or difficult or impractical to effect a disposition or transaction without the assistance of the Court.
Although the evidence before me is in many respects incomplete and unsatisfactory, it is sufficient to satisfy me that the proposed sale is expedient in the administration of the Land.
There is a very real prospect that the Shire will exercise its statutory powers to sell the Land to recover arrears of rates and costs associated with the sale. A sale on that basis would not be likely to achieve the best possible return for the co‑owner beneficiaries. Whilst the plaintiffs' solicitors hold some funds, I am told they amount to approximately $10,000 whereas the arrears of rates are about $34,000. Mr Cullen informed me from the bar table that the Shire would probably not take action if two years' arrears (about $12,000) was paid. However, the Land is not generating any income and that would only postpone the problem. Moreover, the funds would be required either now or later for expenses involved in marketing and sale of the Land.
It is of concern that the Land has been held on what is clearly an entirely impractical basis since 1973, now almost 30 years.
The proposals advanced by Mr McCleary in respect of the administration of the Land are entirely speculative. Those proposals are variously for the Land to be developed, or subdivided, or planted with maritime pines to produce an income in conjunction with CALM, or be exchanged for other land.
There is no particular proposal for development or subdivision. Both would require rezoning, which on the evidence before me would be extremely unlikely to be forthcoming and going through that process alone would likely cost in excess of $30,000 and take two to three years before the outcome would be known (see eg the valuation report of Albany Valuation Services dated 14 November 2000 under "Town Planning and Zoning", annexure "PJN.5" to Mrs Nevin's affidavit of 6 August 2001 and the letters dated 16 and 27 March 2000 respectively from Mr P M Goff, annexure "PJN.6" to that affidavit). Even in the unlikely event the necessary approvals for development or subdivision were forthcoming, there would then be the prospect of extremely substantial costs for roads, power, deep sewerage and amenities.
The planting of maritime pines is a theoretical possibility but has not yet been the subject of any specific examination.
There is no evidence that an exchange or "swap" of the Land for other land is a realistic prospect.
I am also satisfied that the proposed sale is in the best interests of the beneficiaries. I have taken into account the fact that some of the beneficiaries (those who support Mr McCleary) oppose the proposed sale - presumably because they consider it will not be in their best interest. I consider a forced sale by the Shire would not be in the best interests of the beneficiaries but that a properly promoted, marketed and conducted sale by the Trustee would. A trustee sale would in my opinion also be more in their interest at this point than any further delay, potential expense and continuing stagnation likely to be involved with the alternative proposals to which I have referred.
That brings me to the next discrete requirement to be met under s 89(1) of the Trustees Act.
The evidence clearly shows that it would be inexpedient and difficult for the Trustee to effect a disposition of the Land without the assistance of the Court. The Trustee has the power to do so (s 27(1) Trustees Act) but it would be inexpedient and difficult to exercise that power without a direction from this Court where a number of co‑owners hold their own certificates of title in respect of their undivided shares, there are so many co‑owners (and so many who cannot be located), some co‑owners strongly oppose the sale, there is uncertainty about the role and authority (if any) of the Management Committee and a claim that whatever that role and authority are, they now fall upon a differently constituted "new" management committee.
I would accordingly make an order for sale under s 92(1) and s 89(1) of the Trustees Act.
The plaintiffs seek an order for sale in respect of the second defendants pursuant to s 126 of the Property Law Act. So far as it is presently relevant, that section provides:
"126. In action for partition Court may direct land to be sold
(1)Where in an action for partition the party or parties interested, individually or collectively, to the extent of a half share or upwards in the land to which the action relates request the Court to direct a sale of the land and a distribution of the proceeds, instead of a division of the land between or among the parties interested, the Court shall, unless it sees good reason to the contrary, direct a sale accordingly.
(2)The Court may, if it thinks fit, on the request of any party interested, and notwithstanding the dissent or disability of any other party, direct a sale in any case where it appears to the Court that, by reason of the nature of the land, or of the number of the parties interested or presumptively interested therein, or of the absence or disability of any of those parties, or of any other circumstance, a sale of the land would be for the benefit of the parties interested.
(3)The Court may also, if it thinks fit, on the request of any party interested, direct that the land be sold, unless the other parties interested, or some of them, undertake to purchase the share of the party requesting sale; and, on such an undertaking being given, may direct a valuation of the share of the party requesting a sale.
(4)On directing a sale or valuation to be made under subsection (3) the Court may give also all necessary or proper consequential directions.
(5)…
(6)On any sale under this section the Court may allow any of the parties interested in the land to bid at the sale, on such terms as the Court deems reasonable as to non‑payment of deposit, or as to setting off or accounting for the purchase money or any part thereof instead of paying the same, or as to any other matters."
The background to and purpose of this provision was explained by Jones J in De Campo Holdings Pty Ltd v Cianciullo [1977] WAR 56 at 58:
"Part XIV of the Property Law Act constitutes in effect a mini‑code on the subject of partition. It reproduces substantially, although in an abbreviated and more modern form, the major provisions of the Partition Act 1882, which it repealed. That Act had followed its English counterparts, the Partition Acts 1868 and 1876. Prior to those Acts the Court had had no discretion to refuse partition or to order sale in lieu of it. To get rid of the often inconvenient and sometimes absurd results of that rigid doctrine the Partition Acts conferred on the Court the powers which by the Property Law Act in this State it still has. Further, the Court has not only the power, but in certain circumstances the obligation, to order sale in lieu of partition if a party so requests: if the party so requesting is interested to the extent of a half‑share or upwards the Court shall order a sale unless it sees good reason to the contrary: Property Law Act s 126(1). Nevertheless, sale is still an alternative to partition. The matter was considered by Sir Adrian Knox CJ in Bray v Bray (1926) 38 CLR 542 at 545. That was an extempore decision, but a strong Court (Isaacs, Higgins, Powers, and Rich JJ) agreed with the Chief Justice. He said: 'So far as I can see, the object of the Act [the Partition Act 1909 (NSW)] was to provide an alternative remedy to partition. Recognizing the absolute right of a tenant to partition, and seeing that it might be disastrous for all parties to have a partition, Parliament provided … that if parties interested to the extent of a moiety or upwards should request the Court to direct a sale instead of a division of the property, the Court should, unless it saw good reason to the contrary, order a sale accordingly … I think it is clear that under [the Act] what the Court has to consider is which is the better course for all parties between two alternatives, namely, is it better that there should be a partition or that there should be a sale, and the onus of showing that partition is better … is upon the person opposing a sale.' Higgins J added: '…I regard a sale as an alternative to a partition and not to the status quo. Partition is a right, however inconvenient, unless the provisions of [the section] are applicable ….' These statements of principle, may I say with respect, seem to be clearly right."
Partition of land legislation reflects that public policy which puts its face against inalienability. In Nullagine Investments Pty Ltd v Western Australian Club Inc (1992‑1993) 177 CLR 635, Brennan J (as he then was) explained (at 650):
"The purpose of the first Partition Act in 1539 (as appears from the preamble to 31 Hen. VIII c. 1) 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) (31 & 32 Vict. c. 40). 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, sometimes by purchase by continuing co‑owners of the share or interest of a retiring co‑owner (see s 126(3)), 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 or 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 (see In re Ridley; Buckton v Hay (1879), 11 Ch 645, at pp 648‑649, per Jessel MR)."
His Honour was in dissent in that case, but the majority said nothing in conflict with that passage. Deane J also explained the history of this legislation in Squire v Rogers (1979) 27 ALR 330.
The plaintiffs put their case under s 126(2). In an action for partition where s 126(1) applies, the court must direct a sale "unless it sees good reason to the contrary." Under s 126(2) however, the court has a discretion to order a sale on the request of any party interested, if satisfied that by reason of the nature of the land, the number of parties with an interest in it, the absence or disability of any of the interested parties, or any other circumstance, a sale would be for the benefit of the interested parties. Those last words emphasise the width of the court's discretion. The controlling consideration applicable to all of the reasons set out in the section, is a satisfaction that sale would be for the benefit of those interested.
The onus is upon the plaintiffs to satisfy me it would be of benefit to the co‑owners to have a sale. It would only be then that my discretion to order a sale would arise (Mitchell & Anor v Cullington, unreported; SCt of WA (Templeman J); Library No 970136; 24 March 1997, at 13).
In Mitchell, Templeman J took the view that "benefit" in this context primarily means economic benefit, but is not confined to that. His Honour referred to Pannizutti v Trask (1987) 10 NSWLR 531, where Kirby P said (at 540):
"Such benefit is to be determined by the terms of s66G(4) (the equivalent provision in New South Wales) not exclusively by the co- owners' wishes but by the assessment of the court. It is the court which must be 'satisfied' by the co-owners or any of them. What is 'beneficial' must be established according to an objective standard. The meaning of 'beneficial' has not, apparently, been elaborated. It would appear primarily to be addressed to economic benefits, having regard to the subject matter of the subsection. But the references in the cases, including in the passage from Lord Hatherley LC's speech in Pemberton, suggest that emotional and other considerations might be relevant to the discretion being exercised. Again, it is not necessary finally to determine this question in the present appeal."
(The reference was to Pemberton v Barnes (1871) LR 6 Ch App 685, 693).
In Re Darby [1999] 2 Qd R 350 at [15] White J referred to the judgment of Kirby P in Pannizutti v Trask and cited Pemberton for the proposition that what is "beneficial" appears primarily to be addressed to economic benefits but emotional and other considerations might be relevant.
A more restrictive view was taken by Young J in Cryer v Ossher (1997) 8 BPR 15,831. That case concerned a cross‑claim seeking partition in lieu of sale, pursuant to s 66G(4) of the Conveyancing Act 1919 (NSW), which was the statutory provision under consideration in Pannizutti. On this point Young J said (at 3-4):
"'Beneficial' in the old English Act was construed by the courts as meaning beneficial in a pecuniary sense; see Walker on the Partition Acts (2nd edition, Stevens, London, 1882) p28, which, I think, is the most recent text on the Partition Acts apart from the present standard text, Mitra's Co‑ownership and Partition (7th ed, Eastern Law House, Calcutta, 1994). The leading case on what is 'beneficial' in s66G(4) or its predecessor is Drinkwater v Ratcliffe (1885) LR 20 Eq 528 where Jessel MR said:
'I am to direct a sale if I am of opinion that the sale would be more beneficial for the parties interested. What does that mean? It means in a pecuniary sense. I cannot go into questions of sentiment, I must look merely to the monetary results.'
That opinion has been acted on, as far as I can see, ever since. In Rogers v Squire (1978) 23 ALR 111 at 121, Gallop J, when a judge of the Supreme Court of the Northern Territory, considered that the only matters that he needed to look at were financial matters, following Drinkwater's case, though he also took into account the fact that there would be expense involved in getting the Minister's consent and that on the evidence before him, the circumstances militated against the parties being able to get the Minister's consent. The point is not considered when the Full Federal Court dismissed the appeal from Gallop J, Squire v Rogers (1979) 27 ALR 330. In Panizutti, the point was not actually argued, though Needham AJA said at p542 that he considered that the benefit referred to was a financial one; Kirby P was not quite so sure, see p540. I think, however, if one looks at 540, what Kirby P was saying was that when one is exercising the discretion that may be imported by the word 'may' later in the section, one can look at emotional factors as well."
Whilst I respectfully agree with what his Honour says in that passage, that does not necessarily determine the question for the purposes of s 126 of the Property Law Act. It is important to bear in mind that the views expressed in the authorities are as to the construction of particular statutory provisions - and they are not the same.
In Pannizutti and Cryer the words of the relevant subsection were:
"If … any of the co‑owners satisfies the court that partition of the property would be more beneficial for the co‑owners … than sale, the court may … appoint trustees of the property on the statutory trust for partition."
In Re Darby, the relevant provision was s 38(4) of the Property Law Act 1974 (Qld), which was in similar terms to s 66G(4) of the Conveyancing Act 1919 (NSW).
The terms of s 126 of the Property Law Act are quite different. The express statutory reasons by which the question whether a sale would be for the benefit of the parties interested is to be determined, suggest considerations which would certainly encompass those which are purely economic or financial, but which would not be confined to them. In my view that is the correct approach to take.
I have already adverted to the nature of the Land, the number of parties with interests in it and the fact that a large number of co‑owners are absent and cannot be located. What I have already said also bears on the application of s 126(2) and in my view leads to the conclusion that a sale would be for the benefit of the co‑owners.
There is nothing to show any of the courses suggested by Mr McCleary would be likely to produce any better economic result for the co‑owners than sale - and indeed the prospects are that the potential financial outcome would be worse if substantial costs were incurred in the meantime. There is also, of course, the likelihood of the Shire forcing a sale.
The same considerations militate in favour of exercising my discretion to order a sale.
Conclusion
I am satisfied that as between the plaintiffs and the first defendant I should direct that the second plaintiff, as Trustee, should exercise the power of sale conferred on it by s 27(1) of the Trustees Act, provided that is done in a manner calculated to achieve the highest reasonable price for the Land.
I am further satisfied that as between the plaintiffs and the second defendant, I should also make an order for sale similarly, pursuant to s 126(2) of the Property Law Act.
Orders
There will be the following orders:
(1)The plaintiffs' claim for an order pursuant to s 27(1) of the Property Law Act 1969 (WA) be taken as properly made by way of originating summons;
(2)The first and second defendants vest any interest they hold in the Peppermint Beach Estate Land, being the whole of the land comprised in Kent locations 1306 and 1325 in the second plaintiff free of encumbrance and the second plaintiff hold the said interests on trust for the first and second defendants;
(3)The second plaintiff hold all other assets presently held in the name of the second plaintiff on trust for the first defendants.
(4)The second defendants do, within 14 days of this order, deliver possession of any duplicate certificates of title that relate to the Peppermint Beach Estate Land to the second plaintiff's solicitors, Dwyer Durack;
(5)If any of the second defendants cannot, or will not, provide the said duplicate certificates of title, the plaintiffs may apply to the Commissioner of Titles pursuant to s 77 of the Transfer of Land Act 1893 (WA);
(6)The second plaintiff exercise the power of sale of the Peppermint Beach Estate Land conferred on it under s 27(1)(a) of the Trustees Act 1962 (WA) and by this order under s 126(2) of the Property Law Act 1969 (WA) according to the following directions:
(I)an advertisement in a form approved by the Court be placed in the Australian, the West Australian, the Sydney Morning Herald and the Brisbane Courier Mail newspapers;
(ii)the method of sale and the marketing and advertising of the Peppermint Beach Estate Land be approved by the Court;
(iii)the plaintiffs file and advertisement referred to in sub‑par (1) hereof in draft form;
(iv)the plaintiffs file an affidavit exhibiting the advice of a reputable real estate agent as to the method of sale and the marketing strategy and the proposed advertisement to be placed before the sale takes place;
(v)the sale be conducted by a real estate agent appointed by the plaintiffs;
(vi)the plaintiffs be authorised to sell the Peppermint Beach Estate Land by public tender or public auction;
(vii)the Peppermint Beach Estate Land be advertised for sale for not less than 30 days prior to being open for tender or auction;
(viii)the defendants be at liberty to tender or bid for the Peppermint Beach Estate Land.
(7)In the event that the Peppermint Beach Estate Land is not sold by tender or auction or in the event of any dispute to uncertainty as to the successful tender then the plaintiffs have liberty to apply to the Court for further directions in relation to the sale;
(8)Upon settlement of the sale, the proceeds of sale are to be applied in the following order:
(i)to the costs associated with the sale of the Peppermint Beach Estate Land, including any real estate agent's commission;
(ii)to payment of all outstanding debts in relation to the Peppermint Beach Estate Land, including legal costs, valuation costs, rates and taxes and any other debts lawfully incurred by the plaintiffs in relation to the Trust property or on behalf of the defendants, and
(iii)the balance of the proceeds of the sale to be placed in an interest bearing account styled "Peppermint Beach Estate Beneficiaries' Fund" ("the Beneficiaries' Account").
(9)The total sum held in the Beneficiaries' Account to be divided among the defendants in such a manner as the Court shall order;
(10)The second plaintiff have liberty to apply to the Court for reasonable remuneration in respect of the Peppermint Beach Estate Trust and the sale and distribution of the proceeds of the Peppermint Beach estate Land;
(11)The parties have liberty to apply generally;
(12)The taxed costs of the parties be paid out of the Beneficiaries' Account;
(13)The originating summons otherwise be adjourned sine die.
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