Baird v Logan - Middleton Estate

LEGISLATION CITED : Protected Estates Act 1983 (NSW) - s 20A

CASES CITED : Mavrideros v Mack [1998] NSWCA 286; (1998) 45 NSWLR 80

PARTIES : Jennifer Joan Baird (Plaintiff) Pamela Clare Logan (Defendant)

COUNSEL : A.R. Gee (Plaintiff) In person (Defendant)

SOLICITORS : King-Christopher Carpenter (Plaintiff) In person (Defendant)

1 The Plaintiff, Mrs Baird, and the Defendant, Mrs Logan, are the co-executrixes of the estate of their mother, Kathleen Ellen Joan Middleton, who died on 8 November 2006 leaving a will dated 30 November 1989 and a codicil dated 6 March 1997. Probate of the will and codicil was granted to Mrs Baird and Mrs Logan on 26 September 2007. 2 Mrs Baird seeks orders revoking the grant of probate to herself and Mrs Logan, removing Mrs Logan as trustee of their mother's estate and granting probate of the estate to her alone. Mrs Logan is, according to Mrs Baird, impeding and delaying the due administration of the estate by refusing to sign, as co-executrix, a discharge of a mortgage dated 20 May 1980 between two of the deceased's children, Terence Middleton and Anthony Middleton, as mortgagors, and the deceased as mortgagee. The mortgage secured a loan of $50,000 together with interest of 10% per annum and was due for repayment on 1 April 1990. 3 Mrs Logan says that she is justified in refusing to execute a discharge of that mortgage, for reasons to which I will come shortly. 4 The mortgage secured a debt outstanding by Terence and Anthony to the deceased which arose in the course of the transaction whereby Terence and Anthony purchased the family property. The mortgage was not repaid in 1990 when it was due for repayment. The evidence is that Terence and Anthony continued to pay interest on the principal sum and certain expenses on behalf of their mother during the 1990s. 5 On 5 December 1997, the Office of the Protective Commissioner became the manager of the deceased's affairs pursuant to a management order under s 20A of the Protected Estates Act 1983 (NSW). 6 On 1 June 1998, the Protective Commissioner wrote to Terence and Anthony noting that the mortgage was outstanding and requiring evidence of any payments made under it. A detailed response to that letter was provided by the solicitor engaged by Terence and Anthony on 16 July 1998. 7 On 23 September 1998, the Protective Commissioner, having taken legal advice, accepted that a sum of $33,750 was still owing under the mortgage. He agreed that Terence and Anthony could pay off the mortgage at the rate of $2,500 per annum. Terence and Anthony made periodic, though not always regular, payments in conformity with this agreement. 8 By 2001, Mrs Logan had developed a number of concerns about her mother's affairs. She queried several matters with the Protective Commissioner. In particular, Mrs Logan was concerned about how the mortgage had come into existence in the first place. She was concerned that Terence and Anthony may have taken advantage of her mother. The Protective Commissioner investigated these complaints, and on 15 June 2001 he wrote to Mrs Logan as follows: "We also note that you are unhappy with the how [sic] your father's estate was administered and consider that your mother was taken advantage of. This however is a matter that occurred over twenty years ago when your mother capacity to make decisions was not impaired. We also note that at the time she received her own legal advice. Despite this we referred the matter to Tebbutt and Sons for independent legal advice. After due consideration Tebbutt & Sons advised the following:

1. That we accept the late husband's estate has been fully administered;

2. We accept that our client is entitled to $33,750 being the balance of the mortgage outstanding at that time;

3. We decide whether we wish to require payment of the balance outright or agree to accept annual payments of $2,500 from the mortgagors in reduction of the principal sum.

This advice was discussed with your mother in August 1998 who advised us that she wished for the annual payment of $2,500 to continue. This Office therefore made arrangements with Mr Terrence Middleton and Mr Anthony Middleton for quarterly payments of $625 to be paid into your mother's trust account at this Office. The payments are up to date.

Apart from ensuring that regular repayments are received from Mr Terrence Middleton and Mr Anthony Middleton we consider that this matter is closed." 9 Mrs Logan has not been able to accept this conclusion. It has become very clear, in the course of the trial today, that Mrs Logan harbours deep distrust of, and animosity towards, certain members of her family, particularly Terence and Anthony. 10 The Protective Commissioner has, of course, kept a record of payments received from Terence and Anthony in reduction of the mortgage. The records show that, as at the date of deceased's death in November 2006, payments made by Terence and Anthony and received by the Commissioner had reduced the balance outstanding under the mortgage to $13,100. 11 Mr Lewis, the principal of Dormers Legal, was engaged as solicitor for the estate. On 13 November 2007 Mr Lewis wrote to the solicitors for Terence and Anthony requesting that arrangements be made for discharge of the mortgage. On 19 December 2007 the solicitors for Terence and Anthony responded that $13,100 was held in trust to discharge the mortgage and they requested arrangements be made for the discharge. 12 Mrs Baird has been endeavouring to procure the discharge of the mortgage since that time. Mr Lewis could no longer act for the estate from February 2008 onwards because he was going overseas. He arranged for the file to be taken over by another solicitor, Mr File. Mr File has had a number of meetings with Mrs Logan and Mrs Baird, attempting to secure instructions from both of them to discharge the mortgage. Mrs Baird has been willing. Mrs Logan has made it very clear that she refuses to sign any discharge. 13 On 28 May 2008, Terence entered into a contract to sell a part of the property which is subject to the mortgage. On that date his solicitor wrote to Mrs Logan requesting that the mortgage be discharged. In June 2008, Mr File advised Mrs Logan that the mortgage should be discharged. Mrs Logan refused to accept that advice and she refused to accept further advice from Mr File. Mr File was of the view that he could do nothing further in the matter. 14 In June and July 2009, the solicitors for Terence and Anthony repeatedly requested discharge of the mortgage. Mrs Logan refused to discharge the mortgage and she continues to refuse. 15 I now come to Mrs Logan's reasons for her position. Mrs Logan has repeatedly told me that she is awaiting documentary confirmation of the payments made under the mortgage by Terence and Anthony, that she requires documentary confirmation as to how the balance outstanding under the mortgage was achieved and calculated and, most of all, that she awaits confirmation as to how the transaction was engaged in, in the first place, between her mother and her brothers. Mrs Logan says that she does not have any evidence that the mortgage was procured by duress on the part of the mortgagors. She has not produced any evidence which might cast any doubt over the propriety of the transaction which resulted in the mortgage. She has not cross examined her brother, Terence, who has filed an affidavit explaining how the mortgage came about. She does not query the accuracy of the records kept by the Protective Commissioner, recording receipts from Terence and Anthony. Mrs Logan simply states that, as co-executrix, she is entitled to be satisfied that it is proper to discharge the mortgage and that she is not satisfied. 16 It is difficult to understand what rational reason Mrs Logan has for refusing to discharge the mortgage and what rational suspicions she can have regarding the propriety of the mortgage and the correctness of the amount necessary to discharge it. 17 In my observation of Mrs Logan in the course of this trial, it has become clear that Mrs Logan is deeply emotionally involved in the family relationship and such hostilities as may exist, and she is not able to undertake her duties as executrix of her mother's will in a calm, rational and detached manner. I say this with regret, because it is clear that Mrs Logan had a deep and loving relationship with her mother and that she feels that she is protecting her mother's interest by taking the position that she does. However, there is no basis in evidence for the continuing refusal of Mrs Logan to discharge the mortgage on the ground that in some way or other, undefined, the mortgage transaction is tainted or the calculation of the balance required to discharge it is deficient. It seems to me clear that there is no way in which Mrs Logan will ever be satisfied that it is proper to execute the discharge of mortgage. 18 I have regard to a number of other matters which make it clear that a proper remedy in this case is not merely an order compelling Mrs Logan to execute a discharge, or an order permitting someone else to do so on her behalf, but rather the proper order is for Mrs Logan's removal as co-executrix and as trustee. Those matters relate essentially to the obduracy with which Mrs Logan refused to accept legal advice both from the Protective Commissioner and from Mr File, and the obduracy she displayed in refusing to facilitate a transfer of funds of the estate from the trust account of Mr Lewis to another trust account when Mr Lewis was no longer able to act. I have regard also to her obduracy in relation to a matter of storage of furniture of the deceased. It is not necessary to go into detail in those matters or to endeavour to work out the rights and the wrongs. What is perfectly obvious is that Mrs Logan is completely unable to bring herself to co-operate with Mrs Baird in the administration of this estate on any matter, large or small. 19 It seems to me that in those circumstances that to avoid a further wastage of assets of the estate in litigation, the best course is to order the removal of Mrs Logan as executrix and trustee. The basis for doing so is well established in law. The Court may revoke the grant of probate to an executor who is shown to be guilty of inexcusable delay or who otherwise impedes the due administration of the estate. An obdurate refusal to do something necessary for the administration of the estate without sufficient reason for that refusal is a circumstance in which the Court can use its power: see Mavrideros v Mack [1998] NSWCA 286; (1998) 45 NSWLR 80. 20 In those circumstances I make orders in terms of paragraphs 1, 2, 3, 4, 5, and 6 of the Amended Summons. 21 I direct that the orders be passed and entered forthwith. 22 The Plaintiff seeks costs on an indemnity basis. It is clear to me that Mrs Logan is emotionally unable to accept advice which has been given to her on a number of occasions by the Protective Commissioner and by solicitors engaged on behalf of the estate, and remains of the view that her actions were entirely reasonable. While I sympathise with Mrs Logan - no doubt there is a great deal of family history behind this unfortunate litigation - nevertheless, I am compelled to act only upon the basis of legal principle and the facts as they have emerged in this Court. 23 It seems to me that, rationally and objectively assessed, the conduct of Mrs Logan has been such as to warrant an indemnity costs order. The estate should not be burdened with any part of these costs. If other members of Mrs Logan's family support her, emotionally or in principle, in these proceedings, although they have offered no evidence, they are always at liberty to make private arrangements with Mrs Logan. But as matters presently stand, it seems to me that I must assess the conduct of Mrs Logan by reference to objective standards, and in view of the advice which she has been repeatedly given and which she has consistently refused to follow, I think I should make an indemnity costs order. 24 The Defendant will pay the Plaintiff's costs on the indemnity basis. To the extent that the Plaintiff is unable to recover a judgment debt for costs against the Defendant, after making reasonable endeavours to do so, the Plaintiff will be entitled to recover her costs of the suit out of the estate on the common fund basis. - oOo -

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