Field & Kingston: Sale of Property After Orders by Consent

The matter of Field & Kingston (No.3) [2021] FamCA 167 centred around issues with the sale of a property after orders had been made by consent. The wife applied to be appointed as trustee for sale for a property owned solely by the husband. The wife was concerned that the husband would interfere with the auction and not obtain the best price.

Background in Field & Kingston

Final property orders were made by consent in February 2021. Those orders provided for how the sale of a property was to be carried out – including preparing the property for sale and the terms of the sale.

The wife sought to be appointed as trustee for the sale of the property, despite detailed orders for how the sale was to be carried out. The wife feared that the husband would not sell the property on favourable terms and therefore not obtain the best price.

The terms of the sale

The consent orders provided for several terms in relation to the contract including:

1. The parties were to do all things necessary to ensure the property was presentable for sale, including following the reasonable directions of the listing agent.
2. The parties were required to follow the directions of the listing agent – particularly in relation to providing notice to the tenant to vacate.
3. That the reserve price was to be agreed between the parties, but failing agreement, the reserve price or list price will be the average as recommended in writing by three nominated real estate agencies.

Of note to the court was that the date for the agreement of the reserve price was not specified. The wife’s application was brought in advance of the auction because she alleged that the mechanism for the reserve price was not acted on by the husband.

The wife alleged three reasons for why she sought to be appointed as trustee for sale:

1. That there was evidence that the husband had indicated he would not agree to a 5% deposit in his discussions with prospective purchasers.
2. That the husband was not agreeable to the procedure set out for ascertaining a reserve price where there was no agreement between the husband and wife.
3. That the husband will make his own bid at the auction to purchase the property which will “thwart the process of sale because the price will be unrealistically high, something in the order of $5 million.” [para 10].

The court found that there was insufficient evidence to support the allegations of the wife. In respect of the above reasons, the court found:

1. Reason 1 – 5% deposit – the contract did not state a refusal of a 5% deposit. There was insufficient material to determine that the husband would refuse a 5% deposit.
2. Reason 2 – reserve price procedure – there was no deadline for a date for the reserve price to be agreed, and it may have been that the reserve price would have been determined on the auction date. The court considered that the wife had been pre-emptive in assuming that the husband would thwart the sale as there was still time for an agreement between the parties, or for the default provisions to operate.
3. Reason 3 – that the husband would bid unrealistically high at the auction and scare off potential bidders – the auction contract specifically provided for the making of only one vendor bid and the process of how that would operate. The court referred to the test for granting an injunction –that “the applicant must demonstrate to the court the existence of a serious issue to be tried and that the balance of convenience favours the granting of the injunction” [para 17]. The court was not convinced that the wife had met that threshold, other than pointing to the provisions in the contract which allowed the husband to make the vendor bid.

The husband’s counsel further raised that a trustee must not place themselves in a position where their duty and interest conflict. The court considered that there was a risk of that conflict arising if the wife were appointed trustee, as there was a “substantial risk” that she might accept any price advanced at the auction [para 19].

The court dismissed the wife’s application to be appointed as trustee for sale and reserved the husband’s costs.

Conclusion in Field & Kingston

The case of Field and Kingston (No.3) is a timely reminder of the relevant test for the making of the injunction – and having sufficient evidence to justify the injunction other than mere possibilities. There must be sufficient evidence available to establish a serious issue to be tried and that the balance of convenience favours the injunction. An application must also not be pre-emptive of what “might” happen based on past conduct, or what is possible but not necessarily probable.

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