Darby, Re [1998] QSC 241 [1999] 2 Qd R 350

IN THE SUPREME COURT OF QUEENSLAND No. 8750 of 1998 IN THE MATTER of the Property Law Act 1974 - and - IN THE MATTER of an Application by PAMELA ELAINE DARBY for the appointment of statutory trustees for partition REASONS FOR JUDGMENT - WHITE J Delivered the Fourth day of November 1998 CATCHWORDS: Partition or sale - s.38 Property Law Act 1974 - rural land. Counsel: Mr P Morrow for the applicant Mr C Newton for the respondent Solicitors: Tunns Lawyers as town agent for Linda Phelps & Company for applicant Corrs Chambers Westgarth as town agent for C B Darvall & Darvall Hearing Date: 2 November, 1998 -- 1 of 8 -- IN THE SUPREME COURT OF QUEENSLAND No. 8750 of 1998 IN THE MATTER of the Property Law Act 1974 - and - IN THE MATTER of an Application by PAMELA ELAINE DARBY for the appointment Of statutory trustees for partition REASONS FOR JUDGMENT - WHITE J Delivered the Fourth day of November 1998 1 The applicant and the respondent are mother and daughter. The applicant, Mrs Pamela Darby, seeks the appointment of trustees of real property of which she and her mother are co- owners to vest in them to be held on the statutory trust for partition. The respondent, Mrs Dawn Miller, opposes the land being partitioned and applies to the court for the land to be held on the statutory trust for sale. 2 Mrs Darby is the owner of 3 / 10 of the property and Mrs Miller the owner of 7/ 10 . The property is rural land located at Wild Cattle Creek in the Moogerah Valley adjacent to Main Ridge National Park 33 kilometres south west of Boonah. The total area is 761.2 hectares or 1,881 acres. It is used for fattening cattle. 3 The land was purchased by Mrs Miller’s father in 1974 and devised by his will at his death in 1978 to Mrs Miller’s two sons, Cameron and Neale. Neale was, at the date of his grandfather’s death, aged 15 years and his mother, Mrs Miller, acted as his trustee and carried on the cattle grazing business in partnership with her older son. Cameron wished to dispose of -- 2 of 8 -- 2 his interest in the property and in 1985 Mrs Miller purchased part of his interest in the land. She and her son Neale were registered as tenants in common in the shares of 2 /5 and 3 / 5 respectively of the property. 4 On 9 April 1988 Neale died by his own hand and by his will devised his 3 /5 interest in the land to his mother and sister in equal shares. Accordingly Mrs Miller has a 7 / 10 interest in the land and Mrs Darby a 3/ 10 interest. It is not disputed that until that time Mrs Darby had no real contact with these lands. 5 Mrs Miller is also the registered proprietor of other freehold land in the district of about 1400 acres on which she operates a separate grazing business. That land does not adjoin the subject land. Mrs Miller is a registered nurse, as is her daughter, and she commenced her own grazing interests when she received land from her father’s estate in 1978 and managed her sons’ land. 6 After the death of Neale in 1988 Mrs Miller and Mrs Darby commenced to operate a grazing partnership on the subject land. It operated until 1994 when the relationship between them deteriorated and, at the request of Mrs Darby, communication took place only through their respective solicitors. Since then, through the good offices of their solicitors, the parties have proposed solutions to problems arising from their co-ownership. From what appears in the material, in the oral evidence and the conduct which I observed in court I took this to be an intractable problem. All the cattle belonging to the partnership have been sold and since 1995 the land has been used for agistment for Mrs Miller’s cattle. 7 Initially Mrs Miller was not adverse to the notion of partition and the parties’ valuers met to discuss the property. Mrs Darby’s proposal was that Mrs Miller should take 199.556 hectares (493.1 acres) of the land comprising Lots 260, 261, 262 and 84 which is the lower land and that she, Mrs Darby, would take Lots 259, 263, 300 and 179 with an area of 561.84 hectares (1,388.3 -- 3 of 8 -- 3 acres) of more heavily timbered back land abutting the National Park. This method of apportionment would obviate any need to subdivide with its attendant costs. This proposal was rejected in correspondence as unsuitable by Mrs Miller since it did not take account of Mrs Miller’s use of the land or the need for Mrs Darby to access the land she proposed taking through Mrs Miller’s land. 8 The parties have continued to communicate through their solicitors until it became clear that no resolution could be reached and this application was brought by Mrs Darby. A slightly different partition proposal has now been advanced by Mrs Darby relying on a report of Mr R B Farren, a valuer retained by her, whereby Lot 263 of 64.75 hectares would be added to the lands to be apportioned to Mrs Miller. Mr Farren has approached his task by comparing the quality of the blocks having regard to the use of the whole land as grazing land, the access to the lands, the availability of water and the improvements on the blocks. He noted that as a complete property the different lots compliment one another. He selected what he considered the most superior and viable of the lots as comprising the bulk of the grazing land for Mrs Miller. He attributed an apportioned value of $145,250 at an average value of $550 per hectare plus 7/ 10 of the value of improvements (a small hut, a set of timber yards, concrete dip and a water tank and damn) giving a total of $162,750 representing 7/ 10 of the whole property value. 9 In his opinion, the balance consisted of mainly poor country with limited access and water and no improvements “except for the questionable bore on Lot 300". The area of 497 hectares represents, in Mr Farren’s opinion, 3/ 10 of the whole property to which he gave an apportioned value of $69,750 at an average price of $140.35¢ per hectare including a percentage of the improvements on Lot 260. 10 Mr R Bartholomew, the valuer retained by Mrs Miller, noted that the blocks were worked as one unit, although of variable quality, for cattle grazing for which the land is best suited. He -- 4 of 8 -- 4 concluded that there was no way of creating a fair division of the land whereby the property interests of both parties could be: “genuinely protected and the seven tenths owner could independently run a seven tenth share of 133 head of cattle, have adequate permanent natural water for this number, retain her share of standing timber and not be disadvantaged by the possibility of having to provide access to the remaining land thereby losing control of the passage of people through her land. Neither do I feel similar rights of the three tenth owner could be protected.” This is also the opinion of Mrs Miller. The main concerns canvassed with Mrs Miller in the course of a lengthy cross examination were questions of water, access and viability of the grazing land apportioned to her by Mr Farren in his proposal. As is well known, a serious drought has prevailed through this area for many years. No one can say on which lot the present bore is located. There are springs scattered through the land of indifferent reliability and a damn on Lot 260. Mrs Miller denied that reliable damns could be constructed which would provide sufficient water for stocking numbers which she expects to carry on her land. Presently the whole of the land can run about 200 head of cattle although Mrs Miller keeps it at about 190. She maintains that her success revolves around the use of the land in its different manifestations using the sparse high country and its big timber as a shady refuge for the cattle in the heat of summer and as a warm place in the winter. If she were confined to the lower grazing country she could not maintain a stock capacity of 133 head (7 /10 of the stocking capacity of the land) or anything like it. 11 The timber on the back land is a valuable asset some of which has been milled in recent years but was ceased on Mrs Darby’s order. It is not clear that Mr Farren took the value of this timber into account in his valuation although he makes reference to it and the difficulty of extracting some of it. -- 5 of 8 -- 5 12 Access to the back land would have to be through Mrs Miller’s partitioned land or by arrangements with other neighbours. There is a dedicated road which is not presently used or, it seems, known, and would in all probability need to be resurveyed. 13 Mrs Darby has sentimental attachment to the land bought by her grandfather 24 years ago and wishes to retain a portion of it. She proposes to run some cattle on it, grow wild flowers for sale, establish walking trails and build huts for hang glider enthusiasts. She presently lives at Currumbin with her husband and has 2 adult sons. 14 Whatever may have been the position in earlier times, the preeminent statutory remedy to resolve disputes between co-owners is a direction for sale of the property and distribution of the proceeds, s.38(4) Property Law Act 1974. Subsection 4 provides: “If, on an application for the appointments of trustees on the statutory trust for sale, any of the co-owners satisfies the Court that partition of the property would be more beneficial for the co-owners interested to the extent of upwards of a moiety in value than sale, the Court may, with the consent of the encumbrancee of the entirety (if any) appoint trustees of the property on the statutory trust for partition ...” There are 2 mortgages over the subject lands held by the National Australia Bank and the amount outstanding under the mortgages is nil. The Bank consents to orders for partition or sale of the property subject to the terms of the mortgages. 15 As Kirby P (as his Honour then was) observed in Pannizutti v Trask (1987) 10 NSWLR 531 at p.540 when considering the New South Wales analogue of s.38(4), the subsection directs attention to what is beneficial to a majority of the co-owners and is to be determined not exclusively by the co-owners’ wishes but by the assessment of the court. What is “beneficial” appears primarily to be addressed to economic benefits but emotional and other considerations might be relevant, Pemberton v Barnes (1871) LR 6 Ch App 685 at p. 693. -- 6 of 8 -- 6 16 Mr Morrow for Mrs Darby submitted that vindictiveness on the part of a party opposing partition is a factor which might influence the court. He referred to Schnytzer v Wielunski [1978] VR 418. The statutory provision there under consideration required a sale unless the party desiring partition established “good reason to the contrary” of sale, s.223 of the Property Law Act 1958 (Vict). This is broader in its effect than s.38(4). Even allowing some scope for such a consideration I was by no means satisfied that Mrs Miller had any such motive for seeking sale over partition. 17 There are allegations and denials between the parties which it would take many days to canvass in evidence. It is unnecessary and undesirable to do so. It is sufficient that personal co- operation has not been forthcoming and refusal to communicate except through solicitors makes any reliance upon consensual access through the other’s property unwise. I accept Mrs Miller’s evidence that if the land is partitioned in the way proposed by Mr Farren, irrespective of the personal difficulties between the parties, she will not obtain a sufficient balance of the land to enable her to run her cattle and she will be disadvantaged. This is supported by Mr Bartholomew’s opinion. Any other more equitable partition would involve considerable expenditure referred to by Mr Farren and is, in the overall interests of the parties, to be avoided. 18 I am not satisfied that partition would be more beneficial for Mrs Miller than sale. If there is any residual discretion which Mr Morrow seemed to suggest, I would not exercise it in favour of partition. This is a co-ownership which calls to be severed by sale and not partition. 19 Mrs Miller offered to purchase her daughter’s interest in the lands in May 1996 at $250 per acre. She no longer wishes to do so but to purchase at market value. I accept that in the absence of agreement that is the appropriate course. The parties may bid at auction. 20 Mrs Miller is content that the statutory trustees proposed by Mrs Darby be the trustees for sale. -- 7 of 8 -- 7 21 Accordingly I appoint Ross Calvert and Patrick Crowley as trustees for the property more particularly described in the summons and vest the same in them subject to encumbrances affecting the entirety but free from encumbrances affecting any undivided shares to be held by them on the statutory trust for sale. 22 I further order that the property be offered for sale by public auction or private treaty with the parties being at liberty to bid. Either party, if successful, may have deducted from the purchase price the value of that party’s interest in the land. 23 I will hear orders as to costs. -- 8 of 8 --