Broom v Webster

DISRUPTION TO FAMILY ARRANGEMENTS

1. In 1991, the property known as Roseville Stud and Spelling Farm was resumed by the NSW government; the plaintiff and the first defendant incorporated the third defendant as a family company; a property at Penrith was purchased by the third defendant, with trust property, as a substitute residence for Bessie and the plaintiff in place of the resumed property; and the plaintiff and Bessie took up residence in the new property, land adjoining a parcel of land occupied by the first defendant and his family as their residence.
2. In September 1993 the second defendant, a daughter of the first defendant, became a director of the third defendant in place of her father and, within the understanding of the family, did so as his nominee.
3. She has played largely a supporting role in the current proceedings, endeavouring to protect the interests of her father.
4. All parties are agreed that the third defendant, the registered proprietor of all the parcels of land at Penrith (one of which, a development site, is described as "the Camden property" for reasons not presently material) the subject of these proceedings, holds that land on trust for the plaintiff and the first defendant arising out of their entitlements as beneficiaries of their late father's estate. The third defendant has filed a submitting appearance.
5. Since the death of their mother Bessie, the plaintiff and the first defendant have been unable to cooperate in administration of the trust arising out of their father's estate or in management of the affairs of the third defendant. They are stuck in a state of deadlock, fighting about their respective entitlements to live in their separate homes on the land at Penrith, and unable to buy one another out, or to pay a taxation liability, because "the Camden property", although valuable, has not yet been able to be sold in a timely way or at an acceptable price. The trust is asset rich, income poor, charged with accumulating liabilities.
6. In the current proceedings the plaintiff sues: (a) in her capacity as a trustee of her father's estate; (b) in her personal capacity as a beneficiary of that estate and the trust arising out of it; and (c) in her capacity, by virtue of a representative order of the Court, as the representative of the estate of Bessie. It is common ground that she is named as the sole executrix and beneficiary in Bessie's will and that Bessie died with no substantial property.
7. The plaintiff seeks orders designed, first, to resolve disputes as to the respective entitlements of the first defendant and herself to the Penrith land and, secondly, to facilitate a winding up of the trust by way of orders for the sale of trust property, the taking of accounts and the distribution of trust assets

THE OCTOBER 1993 DEED

1. On 19 October 1993 the three original trustees entered a deed, bearing that date, entitled "Agreement".
2. By that time the plaintiff and Bessie were residing on the parcel of land purchased by the third defendant next door to the two parcels of land occupied by the first defendant at Penrith.
3. Reflecting an intention to give practical expression to the rights of the plaintiff and Bessie under clause 3 of the deceased's will, clause 1 of the deed provided that "[the] parties hereto shall purchase a property [as it happens, the property already purchased for them by the third defendant at Penrith] which is acceptable to [Bessie and the plaintiff] for both [Bessie and the plaintiff] to reside in during their lifetimes or for so long as they wish to reside in such property.

THE NOVEMBER 1993 DEEDS

1. On 22 November 1993, with the third defendant, the three original trustees entered a deed, bearing that date and entitled "Deed of Appointment and Variation of Trust". At the same time the original trustees and interests associated with the first defendant entered a separate deed with the National Australia Bank.
2. The necessity for these deeds appears to have arisen, in large measure if not entirely, out of a need to relieve the first defendant and interests associated with him of indebtedness to the Bank. In substance, the estate of the late Mr Webster appears to have funded a payment of $830,000 to the Bank and, through the third defendant, acquired the two parcels of land occupied by the first defendant and his family at Penrith and the parcel of land owned by him, also at Penrith but described in these proceedings as "the Camden property".
3. By the terms of the Deed of Appointment and Variation of Trust, inter alia, the third defendant became an additional trustee of the trust created by Mr Webster's will; the trustees were empowered to invest in land acquired in the name of the third defendant; and the original trustees bound themselves, by agreement, to the restructured trust.

THE 2008 DEED

1. On 21 August 2008, by a deed bearing that date and entitled "Deed Creating Life Estate", the third defendant and Bessie endeavoured to "formalise" Bessie's interest in the property at Penrith where she and the plaintiff resided.
2. By the terms of this deed the third defendant granted to Bessie "a life estate" in the Penrith residence on terms that provided that she was not to be responsible for the payment of any rates, charges or expenses, all of which were to be paid by the third defendant "out of the estate funds" of the late Mr Webster.
3. Clause 4 of the deed provided as follows: "The parties acknowledge that during the term of the life estate hereby granted [the Penrith residence of Bessie and the plaintiff] may also be occupied by [the plaintiff] who is referred to in the Will of the deceased [the late Mr Webster] as having a right of residence together with [Bessie]."

THESE PROCEEDINGS

1. More than a year after the death of Bessie the plaintiff caused the first defendant and, subsequently, his wife (the fourth defendant) to be served with court process calling upon them to vacate the two parcels of land at Penrith that had been occupied by them (without payment, or demand, of rent) for about two decades after purchase by the third defendant with, I infer, the acquiescence of the plaintiff and Bessie, their nearest neighbours. One of the parcels was, and remains, occupied by the first and fourth defendants as a residence, the other by the fourth defendant as an office, for storage and for parking. The first defendant and his wife have resided in their home since 1962.
2. There is no utility in cataloguing the process by which the plaintiff and the first defendant became locked in each other's unyielding grip. Some relief might have come to them had they been able to effect a timely sale of the Camden property at an acceptable price. Absent that, the plaintiff seeks to evict the first defendant from his home; the first defendant is adamant that he has a moral entitlement to retain it for himself and his descendants; he disputes the plaintiff's right to continue in residence of her home, which she insists upon; he is prepared to have all three parcels of land at Penrith sold with financial adjustments made to accommodate the respective entitlements of the plaintiff and himself; but that is an arrangement she (presently) refuses to accommodate.
3. Although the plaintiff, initially, sought to have the first defendant removed as a trustee of the "estate" trust, on terms that would permit her alone (or in conjunction with a new trustee) to administer the trust, during the course of the hearing of these proceedings she acquiesced in the idea that all existing trustees should be replaced as trustees by an independent trustee.
4. This is in the best interests of the trust, its beneficiaries and the trust property: Miller v Cameron (1936) 54 CLR 572 at 580-581. The plaintiff's nominee, the solicitor for the third defendant, was ultimately agreed to by the first defendant and his family.
5. With some waxing and waning on the part of the first defendant (if not also the plaintiff), both he and the plaintiff ultimately declined to entertain any arrangement for trust property to be distributed to them in specie. Both are apparently reconciled to the reality that, absent some fresh agreement between them, steps must be taken towards a sale of all trust property and a distribution of sale proceeds under management of the process by the new trustee.
6. Contrary to an argument advanced by and on behalf of the first defendant, the 2008 deed (to which the plaintiff was not, in terms, a party) did nothing to detract from the right of residence the plaintiff has, courtesy of earlier family arrangements (principally the October 1993 deed), in the residence occupied by her (initially with Bessie) since 1991.
7. To deny the plaintiff a continuing right of residence "during her lifetime or for so long as she wishes to reside" in her home, would be to deny clause 1 of the October 1993 deed the operation it was intended by the original trustees (including the first defendant) to have, and to run counter to a settled family arrangement with a heritage dating back to the time of the deceased's will.
8. It must be remembered, though, that what the plaintiff has is a right of residence, not a life estate, and still less a right to keep the first defendant out of the benefits that could accrue to him (through the trust) by a sale of her residence, albeit subject to her right of residence. Her residence is no more immune from an order for sale than is the first defendants.
9. By the same token, although the plaintiff is correct in her contention that the first defendant has no indefeasible entitlement to remain in possession of the land he and his wife have long occupied as their home and surrounds, it is not open to the plaintiff to displace his occupation of those parcels of land or to demand what she described as an "occupation fee" without allowing him and his family a substantial period of notice. She, no less than their mother, has acquiesced in his continuing residence of the properties after the acquisition of them by the third defendant, a corporate vehicle of both siblings. She denies that she "consented" to his occupancy of the properties, and she may never have formally done so, but she appears to have gone along with it, if only to please her mother.
10. The evidence suggests that her first demand for the first defendant to vacate his home was not made until March 2014, a year after Bessie's death. Even then, she appears to have acquiesced in the first and fourth defendant's continued occupation of the land pending a determination of these proceedings, hoping against hope for a negotiated outcome and financial adjustments in the taking of accounts.
11. The first and fourth defendants have occupied their residence on terms which, I infer, allow that their right of occupation is determinable on, and only on, reasonable notice: Rudi's Enterprises Pty Ltd v Jay (1987) 10 NSWLR 568 at 575G-576B; Lucas v Mok (1983) 9 Fam LR 180 at 184-186.
12. Having regard to the duration of their occupancy, their age, the ill-health of the fourth defendant, and the circumstances surrounding administration of the trust arising out of the late Mr Webster's will (including their impecuniosity and the possibility that a sale of the Camden property, should a buyer materialise, could fund the first defendant's purchase of his home), a reasonable time for determination of the occupancy had not expired at the time (on 3 July 2014) these proceedings, including the plaintiff's application for orders for possession, were commenced. Moreover, a Notice to Occupier was not served on the fourth defendant until 17 November 2014. In a practical sense, the first defendant could not be "evicted" until process against his wife could be enforced. That could not be done until service upon her of a Notice to Occupier.
13. In my assessment, having regard to the course of events, the first and fourth defendants should be required to give up possession of the occupied land no later than six months hence or thereabouts, with no obligation to pay or allow any sum in the character of an "occupation fee" for approximately three months, expiring on the anniversary of the service of a Notice of Occupier on the fourth defendant. The first defendant is a pensioner, with a wife (the fourth defendant) uncontroversially said to be in very poor health.
14. Given that the first defendant is both a trustee and a beneficiary of the land, it is not entirely appropriate to speak of him paying an "occupation fee", damages or rent, for the occupation of his home and surrounds by him and his wife, albeit that they have occupied the land to the exclusion of others. The more accurate analysis is one that may require the first defendant to restore the trust estate, depleted by his denial of a rental return to it (Maguire v Makaronis (1997) 188 CLR 449 at 469); to make, in favour of the plaintiff, on the taking of accounts, an allowance for his and his wife's occupation (perhaps set off against the value of any improvements they may have made to the property): cf, Forgeard v Shanahan (1994) 35 NSWLR 205 at 233-224.

PROPOSED ORDERS

1. Accordingly, subject to allowing the parties an opportunity to be heard as to the form of the orders and notations and costs, I propose to make the following orders and notations: 1. DECLARE that the third defendant is a trustee of the estate of the late Robert William Webster ("the Webster estate") together with the plaintiff and the first defendant. 2. DECLARE that the third defendant holds the following properties as a trustee for the Webster estate: 1. the property at Penrith being the whole of the land described in Certificates of title 5/502474, A/414661 and B/414661; and 2. the property at Penrith being the whole of the land described in Certificate of Title 460/616419 and auto consol 9847-135. 1. DECLARE that the plaintiff has the right to reside at the property described in Certificate of Title 5/502474 for the term of her life or for so long as she may wish to reside there. 2. DECLARE that neither the first defendant nor the fourth defendant has any right, title or interest in the land being lots A and B in Deposited Plan 414661 separate from the entitlement of the first defendant as a beneficiary of the Webster estate. 3. ORDER that the plaintiff, the first defendant and the third defendant be removed as trustees of the Webster Trust. 4. ORDER that Phillip Thompson of the firm of Phillip Thompson and Associates, Solicitors, of Penrith be appointed as trustee of the Webster estate. 5. ORDER that the land described in the certificates of title 5/502474, A/414661, B/414661 and 460/616419 and auto consol 9847-135 vest in Phillip Thompson as trustee of the Webster estate. 6. ORDER, subject to further order, that Phillip Thompson be entitled to retain out of assets of the Webster estate remuneration for the performance of his services as trustee at a rate which is fair and reasonable for work done. 7. ORDER that the plaintiff, the first defendant and the third defendant deliver up to Phillip Thompson, as trustee for the Webster estate, all property and records of the estate in their possession, custody or control. 8. ORDER that the first and fourth defendants, no later than 12 February 2016 or such other date as may be appointed by the Court, deliver up to Phillip Thompson as trustee of the Webster estate vacant possession of the land described in certificates of title A/414661 and B/414661. 9. ORDER, subject to further order, that each parcel of land comprising property of the Webster estate (including the land described in Certificate of Title 5/502404, but subject to the plaintiff's right of residency in that land) be sold as soon as may be practicable, in an orderly manner, with Phillip Thompson as trustee of the estate authorised to defer a sale of the trust property or any part of the trust property if, in his opinion, it is in the best interests of the estate so to do. 10. ORDER, subject to further order, that, so far as practicable, the land described in Certificates of Title 5/502474 , A/414661 and B/414661 be offered for sale in one line, as well as separately, unless the plaintiff and the first defendant otherwise in writing agree. 11. ORDER, subject to further order and any necessary taking of accounts, the trust (the Webster estate) be wound up as soon as may be practicable. 12. ORDER, subject to further order, that each of the plaintiff and the first defendant be at liberty to purchase property of the Webster estate or any part thereof: 1. at, or incidentally to, a public auction; or 2. otherwise with the prior written consent of the other of them. 1. ORDER, subject to further order, that an account be taken of all moneys, or dealings with property, of the Webster estate received and expended by the plaintiff, the first defendant and the third defendant. 2. RESERVE to the plaintiff, the first defendant and the third defendant liberty to apply for directions regarding: 1. any accounting for dealings with property of the Webster estate; 2. calculation of any allowance to be made by the first defendant in favour of the Webster estate for any occupation by him of land of the Webster estate, to the exclusion of the plaintiff, should he or the fourth defendant remain in occupation of such land following 17 November 2015; or 3. otherwise working out or enforcing these orders. 1. ORDER that the costs of all parties to these proceedings be paid out of the Webster estate on the indemnity basis.

NOTE On 12 August 2015, after publication of these Reasons for Judgment, the parties advised the Court that they did not seek to be heard against proposed orders 1-16, which orders were then made. At the request of the parties, directions were given for the filing and service of written submissions on the question of costs (proposed order 17), by agreement to be determined in chambers unless otherwise directed.

ADDENDUM (1 September 2015)

1. Upon publication of the primary reasons for judgment, set out above, on 12 August 2015 counsel for the plaintiff requested that the parties be allowed an opportunity to make submissions on costs, in writing, with a view to my determination of the costs question in chambers. That request was acceded to, with a timetable for the filing of written submissions.
2. This addendum to the primary judgement deals with the question of costs.
3. Written submissions were filed by: the plaintiff, by counsel; the second defendant,, on behalf of herself and her parents (the first and fourth defendants); and the solicitor for the third defendant, now, by the orders made on 12 August 2015, trustee of the Webster Estate.
4. The third defendant's submitting appearance (filed on 19 November 2014) was expressed as a submission to orders of the Court "save as to costs". The third defendant did not, by filing a submitting appearance in those terms, abandon a right to be heard on the question of costs.
5. The plaintiff contended for orders to the following effect: 1. an order that the plaintiff's costs be paid out of the Webster Estate on the indemnity basis, but such costs be paid out of the residuary interest of the first defendant in the estate. 2. an order that the first, second and fourth defendants bear their own costs of the proceedings. 3. order that the costs of the third defendant be paid out of the estate on the indemnity basis.
6. In support of those orders the plaintiff submitted, inter alia, that: 1. although the proceedings relate to the administration of a trust, they are, for practical purposes, party and party litigation, the plaintiff and the first defendant being the sole beneficiaries of the residuary estate of their late father. 2. the plaintiff has been substantially successful in obtaining the relief sought by her in the proceedings. 3. in substance, the court should apply quote the usual rule unquote (embodied in rule 42.1 of the Uniform Civil Procedure Rules 2005 NSW) that "costs follow the event", modifying its formal application so as to ensure that the costs burden of the proceedings is borne principally by the first defendant. 4. Costs should not be paid out of the plaintiff's share of the estate, not only because the plaintiff was substantially successful in the proceedings, but also because the first defendant acted unreasonably in his opposition to her claims for relief.
7. On behalf of herself and her parents, but primarily in the interests of her parents, the second defendant submitted, inter alia, that: 1. the Court's judgment was not fully in favour of the plaintiff. 2. the first and fourth defendants are, in reality, impecunious, pensioners, but for the first defendant's unrealised interest in the Webster Estate. 3. the costs of all parties should be paid out of the estate or, alternatively, the parties should each pay their own costs.
8. The third defendant submitted that costs (limited to a total sum of $6,691.20 inclusive of GST, representing costs and disbursements of its solicitor in the sum of $4463.70 and fees of counsel in the sum of $2,227.50) should be allowed to it because, in moving towards the filing of a submitting appearance, costs will reasonably be incurred by it in an endeavour to secure the agreement of the deadlocked directors (representing the interests of the plaintiff and the first defendant respectively) and, pending that agreement, to monitor the progress of the proceedings.
9. Costs are within the discretion of the Court (Civil Procedure Act 2005 NSW, section 98), a discretion required to be exercised judicially.
10. An order that costs follow the event, which is the general rule for which UCPR rule 42.1 provides, does not lend itself to the justice, or outcome, of these proceedings without, at least, some modification. The general rule can, and must, accommodate the case. UCPR rule 42.1 allows this to be done. In terms, it provides that the Court should "order that the costs follow the event unless it appears to the court that some other order should be made as to the whole or any part of the costs."
11. In the result, neither side of the record has been wholly successful in the proceedings, though the plaintiff can understandably be characterised as having been substantially successful in breaking her deadlock with the first defendant in management of the Webster Estate. However, ultimately, there was agreement on a new trustee. Neither side acted with a monopoly on reasonableness. Of necessity, an element of give-and-take emerged during the course of the final hearing.
12. A key to resolution of the parties' competing submissions is characterisation of the proceedings as proceedings centrally concerned with the administration of a trust, in which there are but two beneficiaries (the plaintiff and the first defendant) who have allowed management of the trust to be stymied by their mutually antagonistic deadlock. To describe the proceedings simply in adversarial terms (as "party and party litigation") is to overlook the significance of them, as beneficiaries of the Webster Trust, being tied together in property but unable to agree upon its disposition.
13. In substance, the nature of the dispute between the parties is similar to a dispute between co-owners of land in which one applies (under the Conveyancing Act 1919 NSW, section 66G) for orders for the appointment of trustees for sale. A deadlock between co-owners can classically, in the equity tradition, be broken by an order that the property be sold, with each co-owner then able to go a separate way.
14. The usual order in section 66G cases is that the costs of both parties of approaching the Court for the purpose of having trustees the sale appointed be paid out of the proceeds of sale. In Kardos v Sarbutt (No 2) [2006] NSWCA 206 at [28]-[29] the Court of Appeal described the rationale for such an order as residing in the concept that the costs of an application for the appointment of trustees for sale are an incident of joint ownership.
15. As noticed in Botros v Frank [2013] NSWSC 712 [18]-[35] is, substantially the same point can be made by reference to AG Neville and AW Ashe, Equity Proceedings with Precedents (NSW) Butterworths, Sydney, 1981), paragraph [1020]: "The usual order in respect of costs [in section 66G proceedings] is that the costs of both parties of approaching the Court for the purpose of having trustees to sale appointed be paid out of the proceeds of sale. They are costs which are partly caused by the fact that the property is in joint ownership. It is not necessarily the fault of either party if they cannot agree as to the terms of sale or generally as to the sale of jointly owned property and either party has a right, given by section 66G, to approach the Court to have trustees appointed for that purpose. However, the costs payable out of the proceeds are party and party costs."
16. Although the current proceedings take the form of proceedings relating to administration of a trust rather than, simply, proceedings between co-owners of land they are, in substance, just that; and, rising above particular disputes that have occupied the attention of the parties, the natural outcome has been a regime of orders providing for trust property to be sold by an agreed (or, in the absence of agreement, independently appointed) trustee under a direction to sell, and distribute, all trust property.
17. Subject to one qualification, in my assessment the proper order of the costs is that the costs of all parties to the proceedings be paid out of the Webster Estate, not merely on the ordinary basis but on the indemnity basis. The trust property, without distinction between the plaintiff and the first defendant, should bear the burden of all costs incurred in the proceedings.
18. But for one circumstance, the appropriate order would be simply an order that the costs of all parties be paid out of the estate on the indemnity basis.
19. Having regard to the discrete, relatively modest quantum of costs claimed by the third defendant (and the need for clarity in the ongoing role of the solicitor for the third defendant in his new, independent capacity as trustee for the Webster Estate), it is appropriate, as well as convenient, that the order for costs made in favour of the third defendant be by way of an award of costs qualified in a lump sum.
20. Such an award is contemplated by CPA section 98 (4) (c). Although caution is required in a summary quantification of an award of lump sum costs (Hamod v State of New South Wales [2011] NSWCA 375 at [813]-[820]), the amount at issue in quantification of the third defendant's costs is not so large as to justify subjection of the parties to the costs of a formal assessment process or the likelihood of further disputation.
21. Accordingly, I make the following orders: 1. ORDER that the costs of all parties to these proceedings be paid out of the Webster Estate. 2. ORDER that the costs of the third defendant be fixed at $6,691.20, representing: 1. $4,463.70 payable to the solicitor for the third defendant; and 2. $2,227.50 payable to council retained by him on behalf of the third defendant. 1. Order three order that the costs of all other parties to the proceedings be assessed on the indemnity basis, if not agreed.

Amendments 02 September 2015 - Addendum 1 September 2015 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: 02 September 2015