Trustees’ Duty to Consult Under Section 66H When Appointed Under Section 66G
When the Supreme Court appoints statutory trustees for sale under section 66G of the Conveyancing Act 1919 (NSW) (“the Act”), those trustees assume the ordinary fiduciary duties of trustees toward the co-owner beneficiaries. One key obligation is the trustees’ duty to consult under section 66H, which requires trustees to engage with beneficiaries about the proposed sale. Co-owner beneficiaries are those who held an interest in the property, either legally or equitably, prior to the Court’s appointment of trustees for sale. They receive a share of the proceeds based on their former ownership.
The statutory trustee’s paramount duty is to obtain a fair market price for the property. They must also properly account for the proceeds. Section 66G does not expressly require trustees to disclose valuations, consult with beneficiaries, or provide documents before the sale. Any such obligation must arise under general trust law or another statutory provision. Section 66H is one such provision. It imposes a qualified duty on trustees to consult with beneficiaries about the sale
Consultation with Beneficiaries – Section 66H
Section 66H of the Act imposes a duty on section 66G trustees to consult with the beneficiaries regarding the sale. It provides that, so far as practicable, statutory trustees must consult the persons entitled to the property’s income until sale. Trustees must also give effect to their wishes, or the majority’s wishes by value, if consistent with the trust’s general interests. This means trustees should inform beneficiaries about key decisions. These key decisions can include the method of sale, timing, and price expectations, and consider their views.
In practice, this consultation duty would usually entail sharing relevant information. This includes obtained valuations or appraisals so that co-owners can meaningfully express their views. Trustees typically obtain independent valuations at the outset and engage agents to guide the sale campaign. They should communicate with the co-owners about these steps. However, section 66H stops short of mandating full disclosure of every document. The trustees’ obligation is to consult and consider the beneficiaries’ views so far as practicable. The trustees retain discretion to act in accordance with their other fiduciary duties if, for example, beneficiaries’ wishes would undermine an optimal sale outcome.
The duty of statutory trustees to consult under section 66H has been expressed in qualified terms. In Goldberg v Goldberg [2000] NSWSC 3999 at [8], the Court held that while trustees must act prudently and obtain expert advice where appropriate and that the obligation to consult beneficiaries is part of that broader fiduciary duty. This limitation was articulated in NSW Trustee & Guardian as Executor of the Will of Michael Robert Walsh (deceased) v Gregory [2012] NSWSC 681; 18 BPR 35,153, where Hallen AsJ confirmed that trustees must consult adult beneficiaries unless legally incapacitated, but are not required to give effect to their views if doing so would be inconsistent with the general interests of the trust.
That approach follows Harb v Harb [2010] NSWSC 1251 at [14], in which Brereton J emphasised that the obligation to give effect to the wishes of beneficiaries under section 66H is qualified by the requirement that those wishes must align with proper trust administration. Trustees therefore retain discretion to depart from beneficiaries’ preferences where necessary to fulfil their fiduciary duties.
However, there is case law confirming that the statutory duty to consult under section 66H requires a meaningful process. This means that it is not a mere formality. In Dixon v Roy (1991) 5 BPR 97,390 at 3, Young J stated that consultation involves “the giving of information by one party, the response to that information by the other party, and the consideration by the first party of that response.” This view was quoted approvingly by the Federal Court in Coshott v Coshott [2017] FCA 1239. Moreover, in George v McDonald (1992) 5 BPR 11,659, the Court made clear that a trustee cannot avoid the obligation to consult simply because a beneficiary appears uncooperative.
More recently, the Court has clarified that while the consultation obligation is enforceable, it is subject to practical limits. In Angius v Salier; Angius v Angius [2017] NSWSC 198, Slattery J cited the previous authorities of Dixon and George but held that although the duty under section 66H is enforceable, it is context-dependent and does not apply where the beneficiary’s position is already clear and unambiguous. In that case, the plaintiff, John Angius, made written offers to purchase the property, but the trustees did not accept them. Slattery J concluded that the circumstances did not require further consultation because the offers left no room for misunderstanding.
The statutory trustees misstated their obligation by claiming they were merely “entitled” to consult. However, this mischaracterisation had no legal effect. The judgment confirms that section 66H does not require repeated or purposeless consultation with beneficiaries. The statutory trustee’s duty to consult is situational. Trustees must decide whether to share a document, such as a valuation, based on what is necessary for meaningful consultation. They must balance this decision against their fiduciary duties.
Conclusion: Balancing Consultation and Getting the Best Price
Section 66G trustees are not under a strict legal duty to give beneficiaries copies of valuations before a sale. However, they should keep co-owner beneficiaries informed and consulted where this aligns with their fiduciary obligations. The consultation duty under section 66H requires trustees to discuss the sale arrangements with beneficiaries. This encourages some transparency about the property’s value and the sale strategy. Trustees may still withhold certain pricing details, such as the reserve price or valuation, until after the sale. This may be necessary to protect the beneficiaries’ overall financial interests.
Trustees must balance these duties. Trustees cannot ignore the beneficiaries’ interests or exclude them from the process. However, they must not take steps that could jeopardise the outcome of the sale. The duty to consult must be balanced with the obligation to secure the best possible result for all beneficiaries. Statutory trustees must act honestly and prudently. Trustees owe a duty of loyalty to all beneficiaries and must consult them about the proposed sale. They must account for all monies received and use judgment to decide what information to share and when, depending on the circumstances.
Jake McKinley notes that this article is written for the purpose of providing generalised information and not to provide specialised legal advice. If you require qualified legal advice on anything mentioned in this article, our experienced team of solicitors at Jake McKinley are here to help. Please get in touch with us on 02 9232 8033 today to make an enquiry.
