“We need trustees for sale because you changed your house!” ___ P and D owned land as 50/50 TiCs. P applied to have s 66G trustees appointed to sell it: [1] D resisted, claiming this breached an oral agreement: [2] P’s claimed $1M in damages to be paid from D’s share. D XC’d around $350K: [4] – [9] P and D bought the land to build 2 dwellings of the same value for their respective families: [10] – [11], [99] They agreed on how the development would go: [8], [12] D, who controlled a building company, would cause the work to be done: [13], [14] An architect was engaged by D before commencement: [22] Following a QS estimate, D’s firm issued a quote for $985K to build based on the plans: [25] P and D faced challenges obtaining finance: [31] In May 2017 D, having opposed pulling out of the arrangement, sold their home to finance the project: [34] D changed the construction materials in D’s house, increasing costs (and, we infer, building quality). P did not agree: [35], [95] P and D entered into a new contract with D’s building company to do the same work, but for $860K…: [38] The changed price was to show serviceability to possible lenders: [39] Construction progressed but the finances were exhausted before completion. P suspected D spent the money on other projects D’s company was working on: [43] In 2019, further money was borrowed: [44], [45] Later in 2021 further finance was obtained, and an OC issued: [47], [48] The land was subdivided: [50] Negotiations for apportioning costs failed: [49], [52] P commenced these proceedings and brought defect proceedings: [53] The Court reviewed the principles relating to the making of s 66G orders: [54] – [58] A s 66G order might not be made where a contract stands in the way. 4 questions arise, including whether there’s an agreed “exit strategy”: [57], [58] D said there was an agreement for one subdivided property to pass to each of P and D on completion, with an accounting for costs to follow – this exit strategy, D said, prevented a s 66G order: [65], [66] No term explicitly prohibited appointment of s 66G trustees: [92] The Court found the “exit strategy” D contended for would only apply if construction proceeded pursuant to the plans. As D amended their home (with the use of different construction materials) construction did not proceed pursuant to the plans, and so the exit strategy failed: [93], [94], [95] Regarding onus: it was not for P to prove entitlement to a s 66G, but for D to disprove. D failed: [98] – [100] After dealing with issues flowing from P putting forward 1 (and not the required 2) trustees, and for seeking unusually generous compensation, the orders were made: [106], [107] D failed to establish entitlement to any additional funds: [109] Trustees were appointed, with an account to follow, with costs to be paid from the corpus. D’s XC was dismissed with costs: [135], [136] ___ Please follow James d'Apice, Coffee and a Case Note, and Gravamen on your favourite platform! www.gravamen.com.au
