Orders sought when appointing statutory trustees to sell a disputed jointly-owned property must be carefully worded to avoid unintended consequences and costs.
Section 31(3) of the Trusts Act 1973 states:
“A statutory trustee shall not, except with the sanction of the court, exercise any of the powers conferred by section 32(1), other than the power conferred by section 32(1)(d), or by section 45.”
Section 32(1)(a) of the Trusts Act 1973 contains the statutory power to sell trust property. The statutory trustees' power to sell trust property is sanctioned by the Court in the appointing Orders. Accordingly, any limits contained in those Orders can potentially undermine the trustees' power.
For example, if the Orders:
set a minimum sale price for the property;
prescribe a time period after, or within, which a property must be sold; or
require the statutory trustees to use a specified real estate agent to sell the property,
the statutory trustees have no authority to sell the property outside of these prescribed limits (whether reasonable or not) without returning to the Court to have the initial Orders varied.
The need for formal Court sanction arises given it is not a matter of a simple amendment of a Court Order, which might ordinarily be achieved by agreement between the parties, but is an amendment of the terms and powers of a statutory trust.
In practice we see issues arising when certain matters are discovered or arise with respect to the property after the making of the Orders (for example, a termite infestation devaluing the property below a minimum sale price or a time limit denying the trustee the ability to sell to a willing buyer).
These types of issues can result in significant additional expense in both time and money to achieve the sale of the property.
Accordingly, it is critical to ensure that orders sought under a Section 38 Property Law Act application are drafted sufficiently robustly to deal with likely, and unlikely, circumstances, to deliver the best outcome for the feuding co-owners, their representatives and the appointed statutory trustees.
Further reading on this topic:
3 Critical Considerations When Drafting Section 38 PLA Applications
Our Legal Practitioner Director, Simon LaBlack, is one of only 29 Accredited Specialists in Property Law in Queensland. He acts as a Court-appointed statutory trustee for sale and consults to other law firms on complex property related matters. He has extensive experience in Property Law in Queensland having personally handled thousands of Property Law matters. He has led multiple teams consisting of lawyers and paralegals, with a specific focus on the training of legal staff and the implementation of effective systems and processes to improve outcomes for both his clients and his team.
Important Disclaimer: The material contained in this publication is of a general nature only and is based on the law as at the date of publication. It is not, nor is it intended to be, legal advice. If you wish to take any action based on the content of this publication, we recommend that you seek professional advice.