In the recent decision of Perkins v Carey [2023] NSWSC 210 the Supreme Court of New South Wales considered the circumstances where independent trustees might be appointed to sell a property when the property’s co-owners couldn’t get along. The facts illustrate the importance of getting a co-ownership agreement in writing rather than risking leaving the matter in the Court’s hands.
From its purchase in 2010 the Plaintiff and the Defendant were registered 50-50 co-owners of a warehouse in Western Sydney. The Plaintiff was the Defendant’s parent. The Plaintff had borrowed the money to buy the property. The Defendant operated a business from the property until 2012 when it become non-viable.
From 2017 the property was leased with all rental proceeds being paid to the Defendant. The Plaintiff (who was suffering from Alzheimer’s and needed a representative) commenced Court proceedings seeking orders that the Defendant held their 50% share for them, that s66G trustees be appointed, and that the Defendant repay 50% of the rental proceeds they had received.
By way of background the Defendant’s father – who was also the Plaintiff’s former spouse – died in 1990. The estate passed unequally, and in large part to the Defendant’s siblings (with none to the Plaintiff). The Defendant suggested this unequal distribution was what motivate the Plaintiff to buy the warehouse as a gift for them, at least in part.
There was a difficult, however, as there was very little admissible evidence for the Court to consider. The Defendant said that the Plaintiff had “always” said they would bequeath the property to the Defendant in their will. This was not accepted by the Court.
Over the years the Defendant had brought various investment opportunities to the Plaintiff, which they sometimes invested in, including (unsuccessfully) a Kenyan gold mine. Various letters prepared by the Plaintiff were tendered. Ultimately these did not assist due to uncertainty about the Plaintiff’s mental capacity at the time they were prepared. The Plaintiff was unable to demonstrate that the Defendant held their 50% share on trust for them.
The Court considered, on the balance of probabilities, it was more likely that the Plaintiff intended to assist the Defendant by purchasing the property and making him 50% owner. While other possibilities might arise, the Court considered that: “(t)here is simply a dearth of evidence and speculation does not assist”.
The Defendant said that the Plaintiff had gifted them the rental income from 2017 to 2022. This was not accepted. The Plaintiff was in a difficult financial position, suffering from Alzheimer’s, and a number of requests were made for the Plaintiff’s share of the rent. This stood in the way of the Court finding the rent was gifted to the Defendant. It was ordered that the Defendant had to pay to the Plaintiff 50% of the rent they had collected.
The Plaintiff sought appointment of s66G trustees. The Defendant resisted on irrelevant bases. The Court noted hardship or unfairness was not a barrier and so appointed the s66G trustees. Regarding costs – s66G costs are normally paid out of the trust corpus. However, noting the Plaintiff succeeded in their rental income claim and failed in their resulting trust claim, the Court ordered that only 50% of their costs be paid from the proceeds of the property’s sale. The complexity and expense of this matter shows the value of obtaining expert advice before entering into a co-ownership arrangement.
If you have any questions, or require any assistance with a dispute or litigation for a corporate entity, please contact Stipe Vuleta of Chamberlains Law Firm on 02 9264 9111