Eathorne v Araya-Marvin [2011] NSWSC 782

This is an application under section 66G of the Conveyancing Act 1919 (NSW) for an order appointing trustees for the sale of property by the owners of 2/3 of the property. The order was opposed by the remaining owner on the basis that it conflicts with the parties’ agreement for the development and subdivision of the land and the remaining owners entitlements to certain land post subdivision. Development and partition of the property had not been completed and given the parties protracted disagreements, it was unclear when it would be completed. The owner borrowers defaulted on their mortgage and the bank demanded payment of the outstanding debt, failing which it would sell the property.

Principles in relation to a Section 66G application
Such an order, though discreationary, is almost as of right unless it would be inequitable or to make the order would be inconsistent with a proprietary right or a contractual or fiduciary obligation. The party opposing sale has the onus of dissuading the Court from ordering a trust for sale.

The court ordered the appointment of trustees for the sale of the property because it did not find any conflict with the parties agreement unless and until the partition transfer had been registered which it had not. The court found that the parties had reached an impasse in their relationship preventing completion of the development and property entitlements arising. No present entitlement to property exists or is enforceable. The court also found it highly unlikely that completion would take place before the Bank recovers possession. The court noted that in the absence of an order, detriment to all parties would be suffered because default under the mortgage would continue with interest accruing plus additional liability will be incurred to the bank for its costs in relation to recovering possession and selling the property. 

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