Introduction

The recent decision in Genders v Synergia Health Pty Ltd [2024] WASC 223 provides valuable guidance on the application of section 126(1) of the Property Law Act 1969 (WA), particularly regarding which party should have conduct of sale and the appropriate terms for such sales. In this case, Master Russell considered an application by Warren Gilbert Genders for summary judgment seeking the sale of two strata units in Beldon, Western Australia, which he owned as tenant in common with Synergia Health Pty Ltd in equal shares (paragraph 1). While the parties agreed the properties should be sold, they disputed who should conduct the sale and on what terms (paragraph 7).

The Statutory Framework

Section 126(1) of the Property Law Act 1969 (WA) provides that where parties holding at least a half share in land request the court to direct a sale and distribution of proceeds instead of partition, "the Court shall, unless it sees good reason to the contrary, direct a sale accordingly" (paragraph 33). The purpose of this provision is to provide a remedy for joint tenants or tenants in common who may otherwise lack adequate remedies to protect their interests in the event of disputes with co-tenants (Nullagine Investments Pty Ltd v Western Australian Club Inc (1993) 177 CLR 635 at 650, 656-657, cited at paragraph 34).

Importantly, as Master Sanderson observed in Trainor v Trainor [2021] WASC 40 at paragraphs 4-6, section 126(1) "does not embody a broad discretion in the court to grant or refuse an order for sale" (paragraph 35). The court's choice is limited to ordering either sale or partition, with no other alternatives available.

Determining Who Should Have Conduct of Sale

The Court's Discretion

The court possesses "a complete discretion as to who it will appoint to conduct a sale ordered under s 126(1) of the Act" (Bombara v Bombara [2010] WASC 314 at paragraph 80, cited at paragraph 38). While ordinarily the conduct of sale is given to the plaintiff as a matter of practice (Bombara v Bombara at paragraph 80, citing Dixon v Pyner (1850) 68 ER 135; Dale v Hamilton (1853) 68 ER 1116; and Murray v Geoffroy (1918) 18 SR (NSW) 259), this is not an inflexible rule (paragraph 39).

In exercising this discretion, the court must consider a broad range of factors, and good reasons might displace the ordinary course (Gray v Gray [2023] WASC 70 at paragraph 37, cited at paragraph 39). The overriding consideration is that any party having conduct must "act in good faith and in the interests of both parties in the conduct of the sale" (paragraph 64).

When Joint Conduct Is Inappropriate

The Genders decision provides clear guidance on when joint conduct of sale is unsuitable. Master Russell noted that where court determination of sale terms is necessary, "it is clear the parties are in dispute and there will likely be lack of cooperation, disagreement, and further dispute between the parties after the sale order is made" (paragraph 51, citing Manifis v Mouzalidis [2021] WASC 454 at paragraph 3).

Critical factors suggesting joint conduct is inappropriate include:

Absence of positive evidence that parties can work together (paragraph 54)
A broken-down relationship between the parties (paragraph 55)
Risk that joint decision-making requirements will cause further disputes and delays (paragraph 57)

In Genders, Master Russell concluded that orders requiring both parties to agree on critical matters "would likely result in further dispute between them" with inevitable delays and increased costs (paragraph 57).

Factors Affecting Sole Conduct

When determining whether the plaintiff should have sole conduct, the court will consider any conduct that might disqualify them. In Genders, Synergia raised two objections: first, that Mr Genders might seek to acquire the property at undervalue (based on a three-year-old offer), and second, that he had withheld rent payments (paragraphs 45-46). Master Russell found neither reason sufficient to disqualify the plaintiff, noting his clear statement that he had no intention to purchase the properties and finding he was not responsible for loan defaults (paragraphs 61-62).

Terms of Sale

Method of Sale

The court has broad discretion in determining sale methods. Master Russell emphasized that orders under section 126 "are for the sale of property. They are not orders for sale at the best possible price" (Manifis v Mouzalidis [2021] WASC 454 at paragraph 8, cited at paragraph 74). While price is relevant and must be reasonable, it is not the sole consideration.

The appropriate approach is for the party with conduct to "tak[e] into account the agent's advice and recommendations, acting reasonably, as to which method or methods of sale are likely to result in the best outcome in terms of price, and achieving a completed sale as expeditiously as possible" (paragraph 75).

Protective Mechanisms

To protect the interests of the party not having conduct, courts typically include several safeguards:

Notice requirements: The conducting party must notify the other of key decisions, including chosen sale method and reasons for any changes (paragraph 65)
Information sharing: Real estate agents must provide copies of engagement agreements, offers received, signed contracts, and cost summaries to both parties simultaneously (proposed order 4(f), discussed at paragraph 66)
Acceptance restrictions: For sales other than by auction, the non-conducting party typically receives three days' notice before any offer is accepted (paragraph 67)
Reserve price protection: Sales below an agreed reserve may require consent or agent recommendation depending on timing (paragraphs 67-68)
Restrictions on self-dealing: To address concerns about conflicts of interest, courts may prohibit the conducting party from bidding during an initial period (paragraph 80)

Distribution of Proceeds

The net proceeds after deduction of sale costs are typically distributed according to the parties' ownership shares. Where secured debts exist, as with the Bank of Queensland loan in Genders, amounts owing are deducted from the responsible party's share to discharge registered mortgages (paragraph 76).

Conclusion

The Genders decision reinforces that while courts have broad discretion in appointing who conducts sales under section 126(1), this discretion must be exercised with regard to practical realities. Where relationships have broken down and cooperation is unlikely, joint conduct is inappropriate. The primary consideration remains achieving an effective sale that protects both parties' interests through appropriate safeguards and oversight mechanisms, rather than pursuing the theoretical best price at the cost of prolonged disputes and delays.