Key Takeaways
Section 66G of the Conveyancing Act 1919 (NSW) is a powerful mechanism available to co-owners of real properties in NSW with similar provisions provided for in other jurisdictions.
Amongst other benefits:
- section 66G trustees once appointed will be empowered to take control and sell co-owned properties;
- a section 66G process can also be used to effect a partition of co-owned property albeit that trustees for partition do not occur as frequently as trustees for sale; and
- the co-owners can participate in a sale process being conducted by a trustee for sale which may allow one of the co-owners to end up purchasing the property. Section 66G applications can accordingly be used as a buyout mechanism for the parties.
The key downside is that section 66G application still requires an application to Court.
Introduction
When two or more people own property together, disputes can sometimes arise over what should happen to the property. This commonly occurs following the breakdown of a domestic relationship, or where one owner wants to sell the property while the other wishes to keep it. Similar disputes can also arise between business partners who jointly own the land and operate a business which uses the land or where they are otherwise seeking to develop the land together.
Vincent Young has recently acted for a number of clients who have made applications to the Supreme Court of NSW under section 66G to seek the appointment of trustees for sale or trustees for partition. These applications have succeeded in progressing settlement discussions and dealing with properties that were otherwise stagnating and unable to be realised.
Importantly, an owner is not required to hold an interest beyond a minimum share of the property to make an application. Any co-owner of real property, regardless of how small their interest is, may apply to the Court for an order under section 66G[1].
Partition vs Sale
Section 66G provides the Court with power to appoint a trustee to either:
- sell the property; or
- partition the property.
A partition involves the subdivision of a property into two or more parts. It is different to an ordinary subdivision where the owners of the unsubdivided lot become the joint owners of the subdivided properties. Rather, a partition will work so as to provide for A and B (being the co-owners) of X Property to become individual owners of the subdivided portions so that once X Property is apportioned, A will own one of the partitioned properties and B the other. Under section 66G, a trustee for partition is appointed to implement the steps required to achieve the partition.
The default position is usually for the Court to order the sale of the property unless a co-owner seeking partition can satisfy the Court that partition will be ‘more beneficial’ than a sale. This is not an easy threshold to satisfy. The Court has made it clear that emotional, sentimental or psychological factors are not relevant to this assessment, and the inquiry is primarily confined to financial considerations[2].
In addition, even if the co-owner can satisfy the Court that the partition is more beneficial in this sense, it will not automatically compel the Court to order a partition. The Court retains a discretion to determine whether a partition is appropriate, having regard to all the circumstances of the case and the interests of justice.
In practice, the Court will generally not order a partition where the property, particularly a residential property, cannot be fairly or practically divided. Interestingly, even where physical division is possible, the Court may still refuse a partition order if it would significantly reduce the property’s value or create ongoing practical or management difficulties.
As a result, partition is generally regarded as an exceptional remedy, while the appointment of a trustee for sale is the usual outcome of most section 66G applications.
When will the Court refuse to order a Sale?
It is often said that a section 66G application is an “as of right” remedy available to co-owners.
This is said because the Court only has a very limited discretion to refuse to appoint a trustee for sale under section 66G. The Supreme Court of New South Wales recently reaffirmed this in Vo v Nguyen [2026] NSWSC 692, confirming that an application to appoint a trustee for sale will generally be granted unless there is a recognised legal basis for refusing it.
The Court may refuse to appoint a trustee for sale where doing so would be inconsistent with a proprietary right, contractual or fiduciary obligation, or where a relevant estoppel operates. The Court has also made it clear that hardship, inconvenience or general unfairness, each on their own, are not sufficient reasons to refuse a section 66G application. The onus is on the party opposing the application to establish a proper legal basis for the Court to refuse the order.
Examples of circumstances in which the Court may refuse a section 66G application include:
- Contractual restrictions – where there is a contractual limitation on the exercise of the right to seek a sale for a particular period or in certain circumstances (Ngatoa v Ford (1990) 19 NSWLR 72);
- Existing proprietary rights – where the co-owner’s interests in the property is subject to another person’s right of residence or similar proprietary interest, and a sale would defeat that right (Williams v Legg (1993) 29 NSWLR 687);
- Fiduciary obligations – where ordering a sale would conflict with fiduciary duties deliberately undertaken by a co-owner when acquiring or holding the property (Tory v Tory [2007] NSWSC 1078); or
- Equitable estoppel – where one party has relied on an equitable estoppel that the property would not be sold, and it would be unconscionable to allow the sale (Stone v Stone (2014) 17 BPR 33,443).
Interaction with the mortgagee’s power of sale
It is common that the real properties subject to the section 66G application are encumbered by one or more mortgages. In this circumstance, the lender, as the mortgagee, retains their powers to appoint a receiver over the mortgaged property in the Event of Default. Such rights are not abrogated simply because a section 66G proceeding is commenced by a co-owner.
Under section 66G(1), the Court may appoint trustees for sale, with the property vesting in the trustees subject to encumbrances. Practically this will mean that the trustee will need to obtain the approval of the mortgagee before they can sell. Because of this, it is relatively uncommon, but not unheard of, for a mortgagee to appoint its own receiver where there is already a section 66G application on foot or a trustee appointed. However, the mortgagee remains entitled to do so, particularly where it wishes to assume greater control over the sale process, particularly in large development sites, where there are multiple mortgagees on title, competing claims, crossclaims or concerns about protecting its security during the section 66G proceedings or the secured creditor takes issue with the trustees nominated by the section 66G applicant.
There is no mandatory requirement under the legislation or common law for a co-owner applying for a section 66G order to join the mortgagee as a party to the proceedings. However, as a matter of best practice, the mortgagee should be notified of the application and, where possible, joined to the proceedings. It is also recommended to nominate trustees that are known to the secured creditor. This helps to mitigate the risk of the secured creditor appointing receivers over the top of the Court appointed trustees for sale.
Any trustee appointed should approach a secured creditor to have their proposed costs of acting approved by the secured creditor before they are incurred to ensure they obtain the benefit of the principles set out in Re Universal Distributing Co Ltd (in liq) (1933) 48 CLR 171.
Section 66I
Once appointed, the section 66G trustee will proceed to sell the property they are appointed over. Whilst a trustee for sale is not subject to section 428 of Corporations Act 2001 (Cth), they do have fiduciary obligations to the owners and must act for proper purpose to avoid disputes and potential censure by the Court.
Section 66I provides that a co-owner can participate in a sale process conducted by a trustee and can emerge as the purchaser of the property.
Care needs to be taken in effecting such a buyout to ensure the trustee follows a thorough sale process, obtained valuations and obtained the consent of the mortgagee (if any) before the trustee sells the property to one of the co-owners.
Vincent Young can assist should you be interested in the section 66G process. If you would like to discuss this article with us, please contact David Greenberg, Partner, and Emanuel Poulos, Partner on (02) 9261 5900.
This article was drafted by Mengting Wang, Senior Associate, and Adele Phillips, Graduate Lawyer, under the supervision of David Greenberg.
[1] Ambrus v Buchanan (2022) 20 BPR 42,833
[2] Segal v Barel (2013) 84 NSWLR 193