Resolving Property Disputes – the State of Play?

In our previous article, we provided details about the process for appointing a Statutory Trustee in Queensland and outlined the benefits, as well as the key actions they perform in undertaking their duties. In this article we explore how the various States deal with resolving property disputes.

To recap, a Statutory Trustee is a person or persons appointed by the Court for the purpose of facilitating the sale of real property where there is a dispute between one or more of the co-owners, to aid in the fair and equitable distribution of proceeds to stakeholders.

In general, an order will be made “of right”, unless it would be “inequitable” to do so. For example, if it is inconsistent with a proprietary right, or a contractual or fiduciary obligation. Mere hardship or unfairness, in the sense of a disadvantage to another owner, may be an insufficient basis of refusing an application for the appointment of a Statutory Trustee.

State of Origin

Whilst there are mechanisms in each State for addressing property disputes, there are only two states in Australia that currently provide for the direct appointment of an independent Statutory Trustee, pursuant to the following legislation:

• Queensland - Section 38 of the Property Law Act 1974 (QLD)

• New South Wales – Section 66G of the Conveyancing Act 1919 (NSW)

In both QLD and NSW, once the Court orders are made, ownership of the subject property immediately vests with the Trustee(s) who are appointed by the Court for the purpose of selling the property. One might say it’s the only thing QLD and NSW can agree on!

Once the property is sold, the sale proceeds are generally distributed between the owners, after payment of the mortgages (if applicable), trustee’s fees and costs, real estate agent fees, and legal fees relating to the conveyance of the property (which is different to a normal conveyance). In the alternative proceeds may be held on Trust or otherwise paid into Court pending resolution of other matters that may be set out in the original orders.

While sale of the property may typically be viewed as the best option, there is also the option to seek a partition, usually when separate values of the divided property are worth more than the whole property. For example, a larger development site that could practically be subdivided in to equal (or other) lots for the parties.

What do other States do?

There are similarities in other States in terms of the power of the courts, although there are currently no provisions in the other States’ legislation that explicitly provide for the appointment of independent Statutory Trustees to handle the sale of a property. A brief, high level summary of the position for the other major Australian states is outlined below.

South Australia- Section 69 of the Law of Property Act 1936

In South Australia, the Court has the power to order a partition (i.e. physical division of the property between owners), and if this is not feasible, a sale of a property.

The Court may give all necessary or proper consequential directions, including the terms for engagement with a real estate agent and conveyancer and the distribution of the proceeds. The Court is the body directing the process and it appears that process requires a significantly higher level of involvement of lawyers given the potential orders about the process and the consultants to be engaged.

Victoria- Part IV of the Property Law Act 1958

In Victoria, property disputes between co-owners were traditionally handled by the Court, that is until the introduction of the Property (Co-Ownership) Act in 2005.  Disputes are now generally resolved by the Victorian Civil and Administrative Tribunal (VCAT).

VCAT has the power to make various orders in relation to the sale or division of the property, or a combination of both. In making these orders, VCAT can include a broad range of directions, including directing the distribution of funds, timing and terms of the sale, and whether it should be an auction or private sale.  Similar to Queensland and New South Wales, VCAT may also order the appointment or removal of trustees to carry out the sale of property if it thinks this is necessary or desirable.

VCAT can provide direction to the trustee as to the terms and conditions of the sale as well as direct the distribution of any proceeds. Whilst similar outcomes can be achieved in terms of the ability to appoint an independent party to sell Property, in Victoria it is a discretionary measure.

Western Australia- Section 126 of the Property Law Act 1969

In Western Australia, the Court can direct a sale or partition of the property on application by a co-owner (or group of co-owners) with the arguably unusual stipulation that the applicant(s) hold 50 percent or more of the title.  If the co-owner owns less than half of the title, then the Court may, but is not obligated to make an order to force a sale under this section.

Pursuant to Section 126 of the Property Law Act 1969, the Court may also, if it thinks fit, appoint a trustee to receive and distribute funds from the sale. 

Similar to South Australia, the Court is the body directing the process and it appears that process requires a significantly higher level of involvement of lawyers given the potential orders about the process and the consultants to be engaged.

How can QSAS help?

Wherever you’re located, the QSAS team can help you find the right solution to resolve yours or your client’s property dispute. Contact us today to find out more about the options that might be available and for a confidential, no-obligation consultation.