I do not think it is necessary for the Court to review in precise detail the relatively extensive correspondence between the parties concerning the implementation of orders 5(a) and 6 of the settlement orders. It is clear, in my view, that the defendant's submission that it was the plaintiff rather than her that was dilatory is entirely unsustainable. An unjustifiable number of communications from the plaintiff's solicitor to the defendant's solicitor were either not responded to or were responded to after considerable delay. That delay is not, however, particularly material, save that it in part was responsible for the delay in the defendant paying the $550,000 to Arcare, which may have the effect of increasing the amount of interest payable by the defendant under order 9 of the settlement orders.
After the elapse of some time, it became apparent from the defendant's solicitor's correspondence with the plaintiff's solicitor that the defendant had discovered that Arcare was not willing to repay the amount of the $550,000 RAD directly to the defendant in the event of the plaintiff's death while residing at its aged care facility. On 9 June 2023, the defendant's solicitor advised the plaintiff's solicitor that the defendant was liaising directly with Arcare to negotiate an arrangement satisfactory to herself.
This was in the context that, starting on 24 March 2023, the defendant's solicitor advised the plaintiff's solicitor that letters of administration had been granted to the defendant, and that the defendant's intention was to comply strictly with the settlement orders. The plaintiff's solicitors nominated Arcare on 24 March 2023 and provided account details for the payment of the $550,000.
Commencing in about April 2023, there appear to have been negotiations between the parties' solicitors as to the terms of a deed of loan to be executed by the parties. The Court cannot be sure when this correspondence began, because the earliest correspondence on the subject, an email from the plaintiff's solicitor to the defendant's solicitor dated 20 April 2023, simply says: "Please see attached for your review", with the attachment not being in evidence. It is sufficient to note that, on 30 May 2023, the plaintiff's solicitor provided the defendant's solicitor with a deed of loan signed by the plaintiff. The draft deed in clause 3 effectively acknowledged order 7(e)(ii) of the settlement orders, and clause 4 acknowledged that neither the plaintiff nor his estate had a legal right to receive or retain the $550,000. Clause 6 obliged the parties to provide a copy of the deed of loan to Arcare.
It was following the provision of this signed draft deed to the defendant that the defendant's solicitor advised the plaintiff's solicitor that the defendant was liaising directly with Arcare.
Importantly, the plaintiff moved into the Arcare aged care facility on 19 June 2023, and became subject to his residential care agreement with Arcare. On my calculation, as the letters of administration were granted to the defendant on 15 March 2023, the 90 day period for the payment of the $550,000 lump sum expired on 14 June 2023.
On 20 June 2023, Arcare advised the plaintiff's daughters that the RAD had not been paid, so that the plaintiff was incurring a legislated interest obligation of 7.46% per annum, and therefore a daily accommodation payment of $173.73 would be charged.
On 22 June 2023, Arcare asked the plaintiff's daughters to "act on this urgently as we need to advise our accounts department".
On the same day, the plaintiff's solicitor forwarded the emails that had been received from Arcare to the defendant's solicitor, advising that interest would be payable under order 9 of the settlement orders, and that if the RAD was not paid promptly, the defendant would be required to sell the property in accordance with order 13 of the settlement orders.
On 23 June 2023, the defendant sent an email to the relevant employee of Arcare. Among other things, the defendant stated her understanding that the full $550,000 would be refunded to the defendant directly, without any deduction for the plaintiff's daily fee or any other fees, and added: "4. This is an agreement between Arcare & Myself, and I will assume this will not be disclosed with any third-party."
Arcare advised the defendant on 28 June 2023 that her email had been sent to its finance and legal departments with a copy of the settlement orders and the proposed deed between the plaintiff and the defendant, and that "they have advised that there is no agreement between Arcare and yourself, our agreement is between our client George Baggaley and Arcare Pty Ltd." In essence, this email added that it was Arcare's position that when the plaintiff passed away: "Probate will still be required before the funds will be released to the Estate. The Deed will then come into effect as part of his Estate." The email asked for payment of the RAD by 29 June 2023 and noted that the plaintiff was incurring interest at the rate of 7.46% per annum.
Considerable correspondence then ensued between the parties' solicitors that does not require detailed analysis.
By email dated 31 July 2023, Arcare's Group General Counsel advised the defendant (with copies to the plaintiff's daughters):
I am instructed that the $550,000 lump sum payment to be paid from the Estate by you for the benefit of George Baggaley to Arcare as a RAD, remains outstanding.
I note that the Orders made for proceeding 2021/00291331-001 required that payment be made together with a further payment of $80,000 to George Baggaley absolutely.
Given that Mr Baggaley has lived with us for over a month, the RAD is immediately due and payable. If it is not paid to us by 4:00pm on Wednesday 2 August 2023, I will be required to seek instructions to approach the Court to obtain enforcement orders concerning the Orders noted above.
We look forward to hearing from you.
On 2 August 2023, the defendant's solicitor responded to Arcare's Group General Counsel, to advise that the defendant was taking steps to bring the matter back before this Court to seek clarity as to the meaning of the settlement orders.
As noted, in fact, the plaintiff filed his notice of motion on 10 August 2023.
[2]
Consideration
I am satisfied that the settlement orders were sufficiently clear for them to be complied with by the defendant in accordance with their terms. The effect of orders 5(a) and 6 was that the defendant was required to pay the $550,000 to Arcare within 90 days of the grant of letters of administration, which occurred on 15 March 2023.
I am satisfied that, by means of the draft deed of loan signed by the plaintiff, the plaintiff had adequately complied with order 7(d).
Had the defendant complied with orders 5(a) and 6, the plaintiff, or the plaintiff's estate, as the case may be, would have been required to repay the $550,000 to the defendant within a reasonable period after the plaintiff permanently ceased to occupy an aged care facility that required the payment of a RAD.
I do not accept that there was in any strict sense a lacuna in the settlement orders, in that some order was missing that was essential to the settlement orders as a whole operating effectively.
I do accept that there may have been a misunderstanding when the parties agreed to the settlement orders, and they may have assumed that any aged care facility nominated by the plaintiff would comply with the plaintiff's direction given in accordance with order 7(d), and repay the $550,000 directly to the defendant.
Insofar as the defendant has submitted that the settlement orders may not have been effective because the plaintiff's nominated executors, who I take to be his daughters, may not have sought a grant of probate, it must be noted that the defendant, as a creditor of the plaintiff, would have had standing to apply for letters of administration with his will annexed: see s 63(d) of the Probate and Administration Act. I accept that this would have been inconvenient to the defendant, and would justify an argument that, even though the settlement orders may have been effective, they would have operated in an inconvenient way that the parties did not expect.
As the settlement orders as made were capable of operation in accordance with their terms, it was, in my view, a matter for the defendant to have promptly exercised the leave granted by order 14 of the settlement orders to approach the Court for appropriate orders varying the settlement orders, if that is the result that the defendant sought to achieve. It was not appropriate for the defendant to have let the 90 day period for payment of the lump sum to expire without first having exercised the leave in a timely way. The defendant was not entitled unilaterally to decide not to comply with the letter of the Court's order, simply because of its inconvenience.
The Court cannot now be sure what, if any, variation orders the Court may have made if the defendant had exercised the leave in a timely way. That may have depended upon whether there was evidence of an alternative aged care facility that was equally suitable for the plaintiff's purposes to the facility provided by Arcare that would agree to be bound to repay the RAD directly to the defendant. In the absence of such evidence, I consider that it is probable that the Court would, at most, have made additional orders to protect the defendant's entitlement to receive repayment of the lump sum from the plaintiff or the plaintiff's estate. It is unlikely that the Court, having made order 5(a) of the settlement orders in the first place, would have made additional orders that jeopardised the plaintiff's ability to reside at an aged care facility of his reasonable choice. I cannot see how the Court would have made an order that bound Arcare to repay the RAD directly to the defendant.
I consider that it is extremely doubtful that the Court would have denied the plaintiff the benefit of the settlement orders unless the plaintiff's daughters volunteered to make themselves personally liable for the repayment of the lump sum directly to the defendant, immediately upon the plaintiff ceasing to need the money for the payment of a RAD. The Court would definitely not have had jurisdiction to impose personal liability on the plaintiff's daughters involuntarily.
While it is clear that the defendant was the 'winner' in the dispute as a result of achieving the agreement of the plaintiff's daughters to accept personal liability in the terms imposed upon them by the deed, it does not at all follow that the defendant should be treated as being vindicated as to the position she adopted in her dispute with the plaintiff. In my view, the defendant was not vindicated at all. Rather, by her unilateral refusal to comply with the settlement orders and to pay the RAD to Arcare, even though the plaintiff had gone into occupation of the aged care facility after the expiration of the 90 day period, the defendant had the plaintiff and his daughters, as it were, over a barrel. In particular, the plaintiff's daughters were in the position where their father's entitlement to reside in the aged care facility was put in jeopardy, and he was incurring interest payments at a rate that was in excess of the rate of interest payable by the defendant under order 9 of the settlement orders. The proper way for the Court to characterise the plaintiff's daughters' agreement to execute the deed was that, out of filial affection or duty, they acted to protect their father by granting the defendant rights that she was clearly not entitled to under the settlement orders.
In these circumstances, the proper order for costs is an order that the defendant pay the plaintiff's costs of the dispute, which should extend both to the strict costs of the notice of motion and the consequences of the defendant not having complied with the settlement orders in accordance with their terms.
Quite independently of the costs order that is appropriate, an order should be made that the defendant pay to the plaintiff interest in accordance with order 9 of the settlement orders. Order 9 has effect in accordance with its terms. None of the events related above would justify the defendant being released from the requirement to comply with order 9. Even compliance with that order will not fully compensate the plaintiff for the interest liability that he has incurred to Arcare as a consequence of the defendant's failure to pay the RAD to Arcare in accordance with order 9.
[3]
Orders
The Court's orders are:
1. Order the defendant to pay to the plaintiff $4,841.55 in compliance with order 9 made by the Court in these proceedings on 25 May 2022.
2. Order the defendant to pay the plaintiff's costs of securing compliance by the defendant with orders 5(a) and 6 made by the Court on 25 May 2022, as well as his costs of the notice of motion filed on 10 August 2023.
[4]
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 26 October 2023
The plaintiff relied on submissions dated 29 August 2023, and the affidavit in support of the notice of motion made by the plaintiff's solicitor on 9 August 2023.
The defendant relied on submissions dated 5 September 2023, and the defendant's solicitor's affidavit made on 14 August 2023. The defendant also relied upon a receipt that established that she had paid the $550,000 to the aged care facility nominated by the plaintiff, Arcare Glenhaven (Arcare) on 17 August 2023. The defendant also provided to the Court a copy of the deed signed by the parties.
In essence, the plaintiff submitted that the Court should order the defendant to pay to him interest in accordance with the relevant order in the settlement orders, and that it should also order the defendant to pay the plaintiff's costs of the notice of motion. The plaintiff submitted that his entitlement to both of those orders simply flowed from the fact that the defendant had contravened the orders by not making the loan by the time specified in the orders that was necessary to enable the plaintiff to satisfy his obligation to Arcare to pay the RAD.
The defendant's submissions were slightly more complex. The defendant submitted that she had acted with promptness at all relevant times and tried to resolve the issue created by Arcare's position, but that the same could not be said of the plaintiff. The defendant submitted that the plaintiff should be ordered to pay her costs, and that she should not be ordered to pay any interest. In the alternative, the defendant submitted, the Court should not make any order for costs on the basis that each of the parties should be required to bear their own costs.
The defendant relied upon a submission that an analysis of the terms of the deed executed by the parties demonstrated that the defendant had substantially succeeded in responding to the plaintiff's notice of motion, and that that outcome demonstrated that the defendant was the successful party, so she should be awarded an order for costs in her favour.
Relying upon the judgment of McHugh J in Re Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624; [1997] HCA 6, the defendants submitted that, even though the plaintiff's notice of motion was compromised by the parties, the Court retained the ability to award costs, and that an order for costs should be made in her favour because she would almost certainly have succeeded if the matter had proceeded to the determination by the Court of the notice of motion. That was because the terms of the compromise of the notice of motion essentially vindicated the case advanced by the defendant: see Edwards Madigan Torzillo Briggs Pty Ltd v Stack [2003] NSWCA 302 at [5] per Davies AJA (Mason P and Meagher JA agreeing). The defendant submitted that she had succeeded in obtaining a substantial victory and the plaintiff had suffered a substantial loss. I will return to consider further aspects of the defendant's submissions on the issue of costs after I have considered the factual matters relevant to the dispute.
On the issue of the plaintiff's claim for interest, the defendant submitted there should be no order for interest, on the basis that the loan of the $550,000 was to be interest-free, the delay in payment of 61 days was explained by what the defendant described as a lacuna in the settlement orders, and the need for the parties to resolve the lacuna. Finally, the defendants submitted that s 84A of the Probate and Administration Act 1898 (NSW), on which the order for interest was based, does not apply because it only applies to legacies or annuities, and not the $550,000 loan.