Ellens v Fleming & Anor

Supreme Court of NSW|2017-12-13|Before: Slattery J

Judgment

This is the Court's second judgment in these proceedings. It is the second dispute arising out of a settlement of these proceedings, which the parties reached on 2 September 2016. The Court's first judgment on 15 May 2017 solved other issues concerning the administration of the estates of the plaintiff's parents: Ellens v Fleming & Anor [2017] NSWSC 607.
The intent of the Court's consent orders of 2 September 2016 ("the September 2016 orders") was to set up a mechanism by which the continued administration of the estates of each of the plaintiff's parents would permit him, under certain conditions, to receive a legacy of the house in which he had been living for many years. Despite solving the first set of disputes arising out of the September 2016 orders in May this year, further disputes have now caused a stalemate which has prevented the house being transferred to the plaintiff or it being sold at public auction.
It came to the Court's attention in September this year that these further disputes had arisen. The Court heard more detailed argument about these remaining issues on 11 December 2017. Mr Pesman SC appeared for the plaintiff and Mr S. Meehan for the First Defendant. The Court made orders on 19 December 2017. This judgment is published on 22 December 2017 and represents the reasons for the making of the orders on 19 December 2017.

The Shift in the market Value of the Randwick Property

Had the agreement reflected in the September 2016 orders, Orders 6-10 been given effect, it could have been anticipated that the Randwick Property would have been transferred to the plaintiff by about December 2016, or with some administrative delay, perhaps by January - February 2017. But 12 months later neither a transfer from the first defendant to the plaintiff, nor a sale of the Randwick Property by auction had been completed.
Property values in Sydney have changed in the meantime. The Court has had the advantage of two valuations of the Randwick Property from the same valuer, Mr Philip Edmonds of Edmonds Associates - Valuers. The first valuation was as at 15 September 2016, and given under instructions from the Real Estate Institute of New South Wales, as was contemplated by Order 8 of the September 2016 orders. It valued the Randwick Property as at 15 September 2016 at $2 million.
The issues being debated in December 2017 required an update to the September 2016 valuation. The Court directed the parties to jointly engage Mr Edmonds again to provide a valuation of the Randwick Property, this time as at 11 December 2017, the date of the hearing. Mr Edmonds reached a valuation as at that date of $2,300,000, an increase of $300,000 in 15 months. He was appointed by the Court for the December 2016 valuation. Neither party was in a position to dispute these figures. Neither party did. The differential between these two valuations became a relevant consideration in the Court's calculation of what should be done to solve the present disputes.

Performing the September 2016 Orders - September 2016 to December 2017

The plaintiff paid the $50,000 by 15 September 2016 (Order 6). The first valuation was then commissioned. The plaintiff was then required to pay the first defendant, representing Arthur Ellens' estate, 30% of the value of the Randwick Property within 90 days of the receipt of the valuation (but crediting the amount of $50,000 paid pursuant to Order 6 as a part payment towards that 30%). The logic of that payment seems to have been, in part, a figure to pay out to the first defendant any claim that Gertrude may have had to Arthur's share in the Randwick Property.
The first Edmonds valuation, at $2 million, was received on 4 November 2016. Thus, the period of 90 days for payment provided for by Order 10 ended on or about 2 February 2017. Given 30% of $2 million is $600,000, the performance of Order 10 required the payment to the first defendant of a further $550,000 ($600,000 less a credit for the $50,000 already paid).
The plaintiff claims it was implicit (it is certainly not explicit), in the September 2016 orders that both the first and second defendants had to be in a position to give good title to the plaintiff in exchange for the money so provided.
The plaintiff applied for, and received, an offer of loan finance from the proposed lender, Latrobe Finance on 31 January 2017. The plaintiff signed various loan documents on 1 February 2017 and returned them to the solicitors for Latrobe Finance. Supplementary documents were returned to Latrobe Finance on 10 February 2017.
The plaintiff claims that by 23 February 2017 he was ready, willing and able to settle in accordance with Order 10. But on 23 February 2017, the first defendant's solicitor was demanding that the property be placed on the market and sold by auction.
But the letter from Harris Friedman, the solicitor for the first defendant, of 23 February 2017 requiring the Randwick Property to be sold, insisted on that outcome on the basis which (as these reasons show) represented a misunderstanding of the way that the September 2016 orders work. Messrs Harris Friedman on 23 February 2017 were insisting that there was an election available to the plaintiff in the September 2016 orders and that the plaintiff had not made the election and that therefore the first defendant was entitled now to require the property to be sold by auction. In my view that insistence was erroneous in law for the reasons explained below. But thereafter, Messrs Harris Friedman continued to insist on that position right up to the hearing on 11 December 2017, when it was articulated by Mr Meehan of counsel. That represented in my view a misunderstanding of the correct operation of the Court's September 2016 orders. Thus, from February 2017 onwards, the first defendant's apparent disquiet that the plaintiff was not co-operating with the intent of the September 2016 orders, was not sound and was based on a misunderstanding.
This may indeed be the explanation why the first defendant then simply failed to itself take steps to ready itself for a transfer to the plaintiff: because she thought that there would be sufficient time for the first defendant to put its own title in order, before giving instructions for a public auction.
An impasse had been reached. The first defendant was contending the plaintiff had not been ready, willing and able to settle on 4 February 2017, as he was without the finance to settle. The plaintiff has later contended that the first defendant was not ready, willing and able to settle on 4 February 2017, as she was not in a position to give title to the Randwick Property in exchange for $550,000.
Both of the contentions were correct. The plaintiff's finance was not available for over a fortnight after 4 February 2017. But the first defendant was also many months short of being in a position to settle, which on the Coutr's construction of the September 2016 orders she needed to be ready for when she received the $550,000.
The Randwick Property is still registered in the name of Arthur Ellens and Ethel Ellens as tenants in common in equal shares. In order for the first defendant (as the ultimate legal personal representative of the estate of Arthur Ellens) to be ready to settle with the plaintiff, it would be necessary for her to procure the transfer of the title from Arthur Ellens to Gertrude Abbott Ellens and then from Gertrude Abbott Ellens to Rita Joan Fleming as the surviving executor of the estate of the late Gertrude Abbott Ellens. Finally, a transfer from Rita Joan Fleming to Hugh Arthur Ellens is needed.
It may have been possible to cut through all of this conveyancing by making declarations based on the performance of the 1975 Deed that the estate now holds Arthur's half share of the Randwick Property on constructive trust for the plaintiff. Alternatively, it might be declared that all the first defendant's rights to deal with the Randwick Property are held on constructive trust for the plaintiff. Consequential direct orders might have the title transferred straight into the plaintiff's name. The Court may also, for example, have been able to exercise its power to make ancillary orders under Real Property Act 1900, s 138(1), in this case to cancel the old certificate of title and issue a new one in the plaintiff's name: see also Bull v Wimble (2004) 12 BPR 22,223; [2004] NSWSC 528. But in order to secure such an order, the parties would in any event have had to prove the uncontroversial facts about the deaths of Arthur, Ethel and Gertrude.
Whatever difficulties are yet encountered by the parties in the mechanics of achieving settlement, in accordance with the orders made with these reasons, these and the other potential solutions under the Family Provision Act and Succession Act explained below should be borne in mind.
Since the Court resolved the disputes with the second defendant in the first judgment in May, the second defendant has been in a position to transfer Ethel Ellens' other half share in the Randwick Property directly to the plaintiff, upon payment of the liabilities owed to her.
On 21 March 2017 Harris Friedman requested the proceedings be listed for directions because the plaintiff had failed to vacate the Randwick Property. But by this time despite a reminder that the plaintiff had still not replied to the Harris Friedman letter of 23 February 2017. This was a beginning of a pattern of conduct on the plaintiff's side of not responding to the first defendant's correspondence, which in my view did not assist the orderly resolution of the differences between these parties.
There was considerable correspondence between the parties leading up to the re-listing of the matter on 27 April 2017. In order to secure co-operation towards settlement in about May 2016, and given the plaintiff accepted he did not have the finance to settle in February 2017, he agreed to pay $10,000 in costs plus interest from 27 February 2017 to the first defendant as part of any delayed settlement arrangement.
But this result was reasonably generous to the first defendant, because the Court does not accept the first defendant's argument (as will be seen below) that in February 2017 the plaintiff was obliged by the September 2016 orders to give the first defendant $550,000 and wait when the plaintiff was ultimately ready to receive in exchange for that sum the certificate of title to the Randwick Property.
The first defendant began to rectify her title deficiency. On 23 May 2017 the solicitor for the first defendant wrote to the plaintiff's solicitors indicating that she had made application to the Supreme Court for exemplification of the grant of probate in respect of the estates of the late Arthur Ellens and Gertrude Ellens, so as to procure transmission applications for the conveyances to the plaintiff.
But it was not until 14 July 2017 that these processes were complete and the first defendant declared herself ready to give effect to the transfer of the Property. Copies of stamped or signed documents have not yet been provided to the plaintiff. But the Court accepts that these documents are available and the first defendant was ready to settle from 14 July. The plaintiff says that whatever be the position with its own documentation and financing, the first defendant was not in a position to settle before 14 July 2017. That contention is correct. Harris Friedman's letter of 14 July 2017 to the solicitor for the plaintiff proposing settlement was not the subject of a reply.
But the plaintiff's finance from Latrobe Finance had expired by 14 July 2017. He had re-applied for finance by the time of the hearing on 11 December 2017. But his efforts in this direction were slow.
On 28 August 2017, Harris Friedman made contact with my acting Associate seeking to have the matter re-listed. The re-listing took place on 11 October 2017. But in the meantime the plaintiff had made no contact with Harris Friedman between 28 August 2017 and 11 October 2017.
But in the background the plaintiff was seeking to rectify the problem which had occurred with the lapsing in his finance from Latrobe Finance. The plaintiff was advised by Latrobe Finance on 10 August 2017 that his finance had expired in June 2017 and that he would need to re-apply for finance. No satisfactory explanation has been given as to why the plaintiff did not apply for an extension to the finance before it expired in June 2017. The Court accepts that the plaintiff resubmitted updated financials and documents required by Latrobe Finance on 19 September 2017 and obtained a further order of finance on 19 October 2017. The Court further accepts that the plaintiff has now executed further mortgage documents on 27 October 2017 and that the plaintiff is ready, willing and able to settle with the first defendant.
In my view, had the plaintiff's finance not lapsed in June 2017 there was a real prospect that settlement of this transaction could have occurred within a few months of the first defendant becoming ready, willing and able to settle on 14 July 2017. But the delays which the Court has identified in the plaintiff obtaining finance ultimately pushed the possibility of settling into December, a situation exacerbated by the plaintiff's failure to reply to correspondence. But it must also be said, looking at the correspondence, that fractious relations between the lawyers in the case by this stage would explain to a degree why a minimalist view of correspondence was at least partly appropriate in the circumstances.

The First Defendant's Contentions

The first defendant argues that on these facts this Court cannot now interfere with the September 2016 orders. The first defendant identifies two possible jurisdictional avenues by which the Court might alter those orders and contends that neither of them is now open.
The first avenue is to exploit the liberty to apply granted in order 3. The first defendant points to well-known authority as to the limits upon the use of a grant of liberty to apply. A reservation of liberty to apply to parties is directed essentially to questions of machinery which may arise in the implementation of the Court's orders, they include cases where a court may need to supervise the enforcement of orders after they have been made: Australian Hardboards Limited v Hudson Investment Group Ltd (2007) 70 NSWLR 201; [2007] NSWCA 104 at [50] - [54]. Liberty to apply cannot be used to alter the substance of an order already made: Clark Equipment Credit of Australia Ltd v Como Factors Pty Limited [1988] 14 NSWLR 552 at 559. Liberty to apply can vary an order to the extent necessary to work out the actual terms of the order, so as to make it more efficacious in matters of detail, but does not entitle an application to vary the orders in question: Fylas Pty Limited v Vynal Pty Limited [1992] 2 Qd R 593, at 598.
The first defendant contends that the Court may make orders to secure the sale of the Randwick property, after the plaintiff did not take up what the first defendant says is an election within order 10 of the September 2016 orders.
But the Court need not consider this argument. The Court has ample power to vary the September 2016 orders under the second avenue, by an exercise of the powers available under Family Provision Act, s 15 and Succession Act, s 66, to which these reasons now turn, starting with the background and then restating the first defendant's contentions.
The Court's jurisdiction under Family Provision Act, s 15(1) was engaged when the Court made the September 2016 orders. In those orders the Court extended time for the plaintiff to make an application for provision out of his parents' estates: Arthur's estate pursuant to Family Provision Act, s 16 (Order 1) and Ethel's estate pursuant to Succession Act, s 58(2) (Order 29). Then in exercise of the Court's jurisdiction under the Family Provision Act and the Succession Act, the Court made orders for provision for the plaintiff. The consensual order for provision out of Arthur's estate (Order 2) and the consensual order for provision that was made out of Ethel's estate (Order 30) were both framed around the provision of value to the plaintiff measured either by the market value of, or by the actual interest of each deceased in the Randwick Property.
In the September 2016 orders the Court was exercising jurisdiction under the Family Provision Act and the Succession Act. Indeed, the Court only made the orders on the basis it was satisfied that it could exercise that jurisdiction, even though the orders were by consent of the parties. On 2 September 2016, before the consent orders were made, Mr Pesman SC (as the Court's file orders record) read in court the affidavits of the plaintiff of 31 August 2016 and 2 September 2016. The legal representatives of the first and second defendants each read affidavits in relation to their respective estates. This took the first 20 minutes of the hearing between 10am and 10.19am that day. The Court then adjourned to read the affidavits in chambers, resumed at 10.56am and made the orders at 11.03am. The Court was satisfied as a result of taking this evidence that the exercise of the jurisdiction was objectively warranted on the available evidence. This was not a case where the Court merely recorded an agreement of the parties by consent. Rather, the Court exercised its jurisdiction after holding a hearing of approximately one hour and was then satisfied to make the orders which the parties proposed.
The consequence of that exercise of jurisdiction in relation to Mr Arthur Ellens' estate is that Family Provision Act, s 15(1)) may potentially now be engaged "to enable effect to be given to an order for provision out of the estate".
Family Provision Act, s 15(1), (2) and (3) provides as follows: "15 Consequential and ancillary orders (1) To enable effect to be given to an order for provision out of the estate or notional estate of a deceased person (whether or not an order made in favour of an eligible person), the Court may: (a) make orders for or with respect to all or any of the following matters: (i) the transferring of property in the estate or notional estate directly to the person in whose favour the order for provision is made or to any other person as trustee for that person, (ii) the constituting of a person by whom property in the estate or notional estate is held as a trustee of that property, (iii) the appointing of a trustee of property in the estate or notional estate, (iv) the powers and duties of any trustee of property in the estate or notional estate, (v) the vesting in any person of property in the estate or notional estate, (vi) the exercising of a right or power to obtain property for the estate or notional estate, (vii) the selling of, or other dealing with, property in the estate or notional estate, (viii) the disposing of the proceeds of any sale or other realising of property in the estate or notional estate, (ix) the securing, either wholly or partially, of the due performance of an order under this section, (x) the managing of property in the estate or notional estate, (xi) the executing of any necessary conveyance, document or instrument, the producing of such documents of title or the doing of such other things as the Court thinks necessary in relation to the performance of an order, and (b) make such other orders with respect to such other matters as the Court thinks necessary. (2) The provisions of section 78 (except subsection (1)) and 79 of the Trustee Act 1925 apply to and in relation to an order under subsection (1) for the vesting of the property in a person in the same way as they apply to and in relation to a vesting order referred to in those provisions and, in the case of section 78 (2) of that Act, as if the provisions of subsection (1) and the other provisions of this Act relating to the making of orders under this Act were contained in Part 3 of that Act. (3) Where an order under subsection (1) provides for the payment of money, interest is not payable unless the Court specifically provides that the money shall bear interest."
The September 2016 orders also meant that the equivalent provision about consequential and ancillary orders under the Succession Act, namely Succession Act, s 66, was also engaged with respect to Ethel's estate, "for the purpose of giving effect to the family provision order": Succession Act, s 66 is in slightly different terms from Family Provision Act, s 15, differences that do not appear to be material for present purposes.
Succession Act, s 66 provides as follows: "66 Consequential and ancillary orders (cf FPA 15 (1), 34) (1) The Court may, in addition to, or as part of, a family provision order, make orders for or with respect to all or any of the following matters for the purpose of giving effect to the family provision order: (a) the transfer of property of the estate directly to the eligible person in whose favour the order is made, or to any other person as trustee for that person, (b) where property is to be held on trust, the purpose of the trust and the way in which it is to be constituted, (c) the appointment of a trustee of property of the estate, (d) the powers and duties of a trustee of property of the estate, including any trustee constituted or appointed under this section, (e) the vesting in any person of property of the estate, (f) the exercise of a right or power to obtain property for the estate, (g) the sale of or dealing with property of the estate, (h) the disposal of the proceeds of any sale or other realising of property of the estate, (i) the securing, either wholly or partially, of the due performance of an order under this Part, (j) the management of the property of the estate, (k) the execution of any necessary conveyance, document or instrument, the production of documents of title or the doing of such other things as the Court thinks necessary in relation to the performance of the family provision order, (l) any other matter the Court thinks necessary. (2) The Court may make such additional orders as it considers necessary to adjust the interests of any person affected by a family provision order and to be just and equitable to all persons affected by the order. (3) The execution of an instrument relating to property in the notional estate of a deceased person pursuant to an order under this section is not liable to duty under the Duties Act 1997."
The first defendant does not dispute that this Court may now exercise jurisdiction under Family Provision Act, s 15 but contends not for the purpose of now allowing a sale of the Randwick Property to proceed on terms other than those agreed in the September 2016 orders. Citing Gould v Purtle [2014] NSWSC 493 ("Gould") at [43] per Hallen J, the first defendant argues that the powers under s 15 may only be used for the purposes of dealing with a matter involved in or arising in the course of, or working out final orders, by making more specific provision for their implementation and for giving effect to the family provision order. The first defendant argues that she is seeking an order for the selling of the Randwick Property and the disposition of the proceeds of sale in respect of the September 2016 orders, Orders 11-24, and orders to secure the due performance of that order for sale. But the first defendant submits that the September 2016 orders do not go beyond giving effect to the selling of the Randwick Property by auction and the disposition of the proceeds of sale in accordance with Orders 11-24, because the plaintiff has not complied with Orders 6 -11. The first defendant says that in the absence of compliance with Orders 6-10, the September 2016 orders do not confer on the plaintiff any right to have the deceased's interest in the Randwick Property transferred to him by the first defendant.
The first defendant's further contention is that upon the payment of the $50,000 to the first defendant in accordance with Order 6, the plaintiff then had a right to elect to pay the first defendant the further amount of $550,000 (in the circumstances that occurred) in accordance with Order 10 and upon that election and the receipt of those monies in conformity with Order 10, and only in those circumstances, would the plaintiff become entitled to the provision out of Arthur's estate contemplated by Order 2.
The first defendant submits that the September 2016 orders revealed a clear intention of the 90 day period in Order 10 for payment of 30% of the valuation amount was to be "essential". The defendant submits that the conclusion that Order 10 was essential can be inferred from other surrounding parts of the agreement. These indicators that the 90 days was essential are said to be recorded in the September 2016 orders, namely the following provisions: when the plaintiff was to vacate the Randwick Property if he failed to make the payment in Order 10 (Order 11); when the selling agent and conveyancer were to be appointed (Orders 12 and 16); when the Randwick Property was to be offered for sale by public auction (Order 14); and when the plaintiff was to have done all things necessary to remove the caveat from the Randwick Property (Order 18).
The first defendant's submission was that the setting of these specific dates demonstrates objectively that the Order 10 agreement in substance was only designed to confer an option upon the plaintiff, which could be exercised strictly within 90 days of receipt of the valuation and if not exercise within 90 days of receipt of the valuation would set in train a specific timetable (under Orders 11 -24) for the sale by auction of the Randwick Property and the distribution of the net proceeds of sale. The first defendant submits that this conclusion is further reinforced by the fact that the September 2016 orders did not provide for the plaintiff to pay the first defendant any interest if the plaintiff did not make the payment of $550,000. The first defendant says that the non-payment of interest is explicable in circumstances where the plaintiff only had an option, but not an obligation, to make the payment, and stands in contradistinction to Order 7 which provided for the payment of interest if the plaintiff failed to pay the first defendant the $50,000 by 15 September 2016, as required by Order 6.
The first defendant further submits that her construction is consistent with the facts: that the September 2016 orders do not assign any priority to the plaintiff in obtaining an interest in the Randwick Property over him obtaining a share of the net proceeds of sale; and that there is no evidence that the plaintiff would need to obtain finance in order to make the election to purchase the Randwick Property; and that the property itself might be needed as security to give rise to an inference that time for the payment was not intended to be essential.
The first defendant concludes her submissions by saying that as the plaintiff failed strictly to comply with the time limits set for the making of his election, he now has no right under the September 2016 orders to obtain the transfer of any interest in the Randwick Property.
Moreover, the first defendant argues that the plaintiff has no ground to pursue relief against the first defendant, which is inconsistent with the terms of the September 2016 orders, as the plaintiff has released the first defendant from all his claims and rights in relation to the property and against the deceased's estate out of the Family Provision Act.
The Court does not find the first defendant's contentions persuasive. The next section of these reasons deals with Court's analysis of the first defendant's submissions, informed by the plaintiff's contentions in reply.

Analysis of the First Defendant's Arguments

The first defendant's argument fails at several levels. First, it cannot establish that Order 10 embodies an option which the plaintiff must strictly observe before becoming entitled to a transfer of the Randwick Property. Secondly, even if Order 10 did provide for an option, in the circumstances which have occurred, the Court has available statutory jurisdiction under Family Provision Act, s 15 and Succession Act, s 66 to vary the September 2016 orders to give an extended opportunity to the plaintiff to exercise the option. This section of these reasons reaches those conclusions. The next section then examines whether the court should exercise the discretion that is available to it under Family Provision Act, s 15 and Succession Act, s 66 and if so how it should be exercised.
The Order 10 Option Argument. Order 10 does not embody an option with which the plaintiff must strictly comply. Order 10 makes no provision for the plaintiff's entitlements upon his payment of the "amount equal to $50,000 less than 30% of the valuation amount" within 90 days of receipt of the valuation. Order 10 is therefore a most unlikely candidate to be an option that should be strictly construed as is contended.
All that Order 10 does is to provide that upon receipt of cleared funds, the first defendant "will accept payment in full discharge and satisfaction of the agreement recorded in paragraphs 6 to 9 and 11 to 24." Order 10 does not require the first defendant to transfer to the plaintiff the half share of the Randwick Property, which she holds as a tenant in common with the second defendant. One would expect that if the plaintiff were to be strictly held to the time limit provided for in Order 10 as a component of an option, that the order would contain a precise promise of what the plaintiff would receive once the option was exercised.
Perhaps the reason that a precise promise was not made as to what the plaintiff would receive, and when the plaintiff would receive it, is the fact that for the plaintiff to receive a conveyance from the first defendant of Arthur's legal interest in the Randwick property, this would still require the cooperation of the second defendant, the executrix of Ethel's estate. Moreover, the parties all understood the various steps that they thought needed to be taken to convey Arthur's legal's interest in the property to Gertrude's estate and then to Ms Fleming. All of those conveyances would presumably have taken time and may not necessarily have been ready exactly 90 days after receipt of the valuation. And it may be inferred from the known history that the preliminaries for those conveyances had not been undertaken before the September 2016 orders.
A more apt construction of the September 2016 orders is that the primary order defining the plaintiff's interest in relation to Arthur's estate is contained in order 2, which is that the plaintiff was "to receive provision equal to the market value of the deceased interest in [the Randwick property]". But this was "subject to the following agreement, to the intent that implementation of the agreement constitutes such provision". Thus, orders 3 to 26 were all orders in agreed implementation of the order for provision, Order 2.
If there is any option created by the September 2016 orders in the plaintiff's favour, it is the payment of the $50,000 (Order 6) which is a precondition to the setting up of the valuation process by which the Valuation Amount was reached, so that the balance of the consideration could be fixed. That may have been a time essential term. But if it were, the plaintiff complied with it. Upon that compliance the plaintiff was entitled to proffer the Valuation Amount (which turned out upon valuation to be $550,000) in exchange for which it was implicit that he would receive what Order 2 had promised but in specie. But when exactly that would be due would have to correspond with when the two estates were ready to convey the Randwick property. The 90 days specified in Order 10 is merely a period when settlement was expected, not a mandatory period for payment. The payment of $50,000 diverted the implementation of Order 2 away from the joint sale by auction contemplated by orders 11 to 26.
This construction of the September 2016 orders is reinforced by reference to Order 30 which in relation to Ethel's estate contemplated that the plaintiff would receive "the devise from the estate of the whole of the interest of the deceased [Bethel]'s in the [Randwick property]". The plaintiff's order for provision in relation to Ethel's estate was always contemplated to be satisfied by an actual conveyance in specie of the property. But that could not be achieved without conveyance of Arthur's other half share at the same time. A construction of the plaintiff's and the first defendant's mutual obligations under the September 2016 orders must therefore be sufficiently flexible that it will not impair the plaintiff's right to receive his provision in specie from Ethel's estate. The first defendant's strict option-model construction does not permit that kind of flexibility.
The effect of this construction is that the plaintiff must be ready to tender the $550,000 in exchange for the conveyance of Arthur's legal interest in the estate. The first defendant was not a position to perform her side of this bargain until 14 July 2017 at the very earliest. But due to the parties' various misunderstandings of their obligations and the positions that they took under the September 2016 orders, and the separate position of the second defendant, they have not yet found themselves in a position to exchange the $550,000 for the Randwick Property held by both the first defendant and the second defendant.
The Family Provision and Successions Acts arguments. But the Court has ample jurisdiction under Family Provision Act, s 15 and Succession Act, s 66 to vary the September 2016 orders, to give the plaintiff a reasonable opportunity to proffer funds to the first defendant and to receive in exchange the certificate of title to the Randwick property.
The plaintiff was seeking to "enable effect to be given" to an order for provision out of Arthur's estate (Order 2) and the order for provision out of Ethel's estate (Order 30) at the same time. His application is well within the jurisdiction conferred by Family Provision Act, s 15. Due to mutual misunderstanding the machinery of clause 10 has failed, so that the opportunity that the plaintiff could have achieved by paying $50,000 to gain a transfer of Arthur's interest in the Randwick Property has not been effective. This then attracts s 15 jurisdiction "to enable effect to be given" to the order for provision, Order 2. In doing so the Court is doing little different from what Justice Hallen did in Gould at [41] - [43]; the Court here is dealing with a matter involved in or arising in the course of, working out the final order, by making more specific provision for their implementation and for giving effect to the family provision order" as Hallen J explained in Gould.
One of the advantages of the power under Family Provision Act, s 15(1)(a)(i) is that it can solve one of the practical problems which has arisen in this case and which is exactly what the s 15 jurisdiction was designed for. The provision allows the Court to make orders for the transferring of "property in the estate…directly to the person in whose favour the order for provision is made or to any other person as trustee for that person" [Emphasis added]. Much of the delay in dealing with Arthur's share of the Randwick Property has been the conveyancing difficulties associated with transferring it through two names before transfer to the plaintiff. Section 15(1)(a)(i) permits the Court to order a direct transfer to the plaintiff or to the first defendant in trust for the plaintiff. The need to cut through the conveyancing complications within Arthur's estate alone is a sufficient basis to attract the operation of s15 here.
But jurisdiction to consider extending time for the plaintiff here can also be supported because of the co-ordinate agreement made between the plaintiff and the second defendant on 2 September 2016. This may be justified under Succession Act, s 66(1)(a). In order to transfer the property of Ethel's estate directly to the plaintiff, orders may be made under s 66 "in addition to" the existing family provision order. Importantly in Succession Act, s 66(2) the Court may make additional orders "to adjust the interest of any person affected by a family provision order and to be just and equitable to all persons affected by the order". In this case, in order to give effect to the agreement between the plaintiff and the second defendant (order 30) to transfer Ethel's share of the Randwick Property in specie, it may be necessary as an incidental matter to adjust the respective interests in dealing with the other shore, as between the plaintiff and the first defendant. In so doing, the Court is obliged to be "just and equitable to all persons affected by the order". In my view, because of the interdependence of the obligations in the settlement of this matter, jurisdiction may be justified on this basis as well.
But Family Provision Act, s 15(1) and Succession Act, s 66(1) should be construed in a practical broad way. Machinery orders will always involve some degree of greater definition to implement of existing family provision orders, which will commonly involve decisions being made about the timing of transactions. For example, in Succession Act, s 66(1)(g) the power to make additional orders in relation to "the sale of or dealing with property of the estate" will frequently involve a decision about the timing of such a sale. That in turn will raise questions about who will bear the monetary burden of any delay associated with adjusted sale timing. The decision which is to be made in this case is not much different from decisions that would ordinarily have to be made under these facultative provisions.

The Exercise of the Court's Discretion

This section examines whether the Court should exercise the discretion that is available to it under Family Provision Act, s 15 and Succession Act, s 66 to extend time to the plaintiff to exercise his rights are under Order 10, and if so, how it should exercise that jurisdiction in this case.
In summary, although there was a delay on the plaintiff's part in obtaining finance in a timely way by February this year, that delay was not on a critical path causing the ultimate delay in settlement until December this year. The second defendant was not in a position to settle with the plaintiff before the quantum dispute with the plaintiff was resolved in the Court's first judgment in mid-May 2017. The first defendant, herself, was not in a position to settle with the plaintiff before mid-July 2017. But in my view those delays between September 2016 and July 2017 were as much the product of the complexity of the conveyancing from these estates, of natural disagreement about issues of costs, and of mutual misunderstanding of one another's positions, that they cannot be said just to be the fault of the first and second defendants. Responsibility for the delay in the period from September 2016 to July 2017 should be equally apportioned between the defendants and the plaintiff.
But between July and December 2017, the plaintiff has been somewhat more responsible for the overall delay. First, the plaintiff's delays in failing to anticipate that finance approval would run out in June 2017 are not readily explicable. Second, in failing to promptly obtain finance thereafter and in failing to correspond regularly and with dispatch with the first defendant, the plaintiff contributed in my view to a degree the six months' delay between July and December 2017. The Court's unavailability and the need for a mediation were other neutral factors which caused delay in this period and cannot be attributed to any party.
Those conclusions have important implications for the discretionary course which the Court should now chart. The period from early September 2016 to late December 2017 is a term of 16 months. The delay in the first 10 months of that period is the fault of neither side and has also been the product of mutual misunderstanding, and with neither side being in a position to insist on specific performance of the September 2016 orders by the other, because of the first party's lack of readiness, willingness and ability to settle. So much of the 16 months is delays explicable on this ground that it does not seem just that the plaintiff should be deprived of the opportunity to purchase the Randwick Property that he was afforded under the Court's September 2016 orders. This is particularly so where the plaintiff's need for accommodation in a familiar environment is taken into account; a matter that were brought to the Court's attention through the plaintiff's affidavit evidence at the hearing on 2 September 2016.
But equally the first defendant has suffered detriment in the delay of receipt of the consideration of $550,000 that she could have expected, had settlement occurred in or soon after February 2017.
In my view the appropriate course in the circumstances is: (1) to extend more time to the plaintiff for him to take advantage of the finance he has secured until 19 January 2018; and (2) to compensate the first defendant for the delay which has occurred between probable settlement and receipt of $550,000 in the ordinary course sometime in February 2017 and the date of valuation in December 2017.
The plaintiff contended that the first defendant should be compensated merely by lost interest on the $550,000 for the period of a delay since settlement in February, which interest is said to be about $25,000. But in my view the first defendant's contention, that she should obtain some share of the increase in property value represented by her share of the Randwick Property, is more persuasive. This is rational because she had at least a default entitlement to insist upon realising some of that increase in value on her share, by utilising Orders 11 to 24 of the September orders and the Court has not afforded her that entitlement.
But how should this loss to her be calculated? The increase in value in the whole property for the 16 month period was $300,000. The increase in value of the first defendant's 30% share over that period was $90,000. But in my view the first defendant is only entitled to the increase in value for the part of the delay after the date when settlement would otherwise have occurred, whether or not the subsequent delay was occasioned by mutual fault or due to the plaintiff's fault, provided it was not occasioned by the first defendant's own fault. Settlement would have occurred in the ordinary course in February 2017. The first defendant should be compensated in my view for the delay between March and December 2017, which is a period of 10/16 months, which is as a proportion of the $90,000 is $56,250.
But for the sake of certainty it is also important that the pre-existing costs orders for $10,000 already made in the first defendant's favour should not be forgotten and should be included in any final orders that are made, so that they can be recovered from the plaintiff without further argument. Those costs orders were made in February this year. A round number of a further $750 in interest should be allowed upon that sum since then.
This brings the total due to the first defendant as $67,000 (being $56,250 plus $10,750). But the Court must now consider questions of costs.

Costs

The period of overall delay has been slightly more the fault of the plaintiff, so it would be reasonable to anticipate some argument on that ground would take place about costs. But the Court is now faced with the peculiar problem that certainty is required at this time of the year before the Court goes into the vacation period, so that the plaintiff can take advantage of his finance. An argument in the new year about costs is going to defeat the whole purpose of any relief which is now being afforded to the plaintiff. But there must be fairness to the first defendant who has been disadvantaged by delay, some of which is the fault of the plaintiff, and thereby forced to be involved in court applications.
So the Court will do the best that it can in these unusual circumstances. The Court does not have before it evidence about the costs of either side. But in the end this has only been an argument about $56,250, and both parties have had the benefit of the Court's directions about the planning of what was required for settlement.
The Court would not in any circumstances be inclined on grounds of proportionality to make a general order for costs in favour of the first defendant, which would permit the first defendant to recover a substantial amount in costs given that recovery was only $56,250. Maintaining the proportionality of costs is an important requirement of the conduct of civil litigation under the Civil Procedure Act 2005, s 60 ("CPA"). And the Court has power to fix costs by way of specific gross sum: CPA, s 98(4)(c). Moreover, the Court has ample power in under the Family Provision Act, s 33 and the Succession Act, s 66 to cap the costs of the parties. This Court has recently fully discussed the several well-established sources of this power in Wilson v Porada; The Estate of Peter Wolfgang Porada, late of Pericoe (No. 2) [2017] NSWSC 1362 at [33] to [40].
In my view in these special circumstances the Court should simply fix a sum for costs in the first defendant's favour, a sum which is reasonably proportionate to the sum recovered. From the evidence that the Court has seen in the several applications before it and in the events which that evidence shows have occurred, the Court has little doubt that that costs incurred on each side of this case since September 2016 would be of the order of $30,000 to $40,000 or more. But proportionality indicates that figure in the order of $5,000 to $15,000 (on top of the $10,000 already ordered from 27 February to the re-listing in April 2017) is all that should be allowed to the first defendant for costs. This means that the first defendant's total costs compensation will be $18,000 (being $10,000 plus $8,000). The Court will allow $18,000 on this account. Although this is less than what the first defendant would have wanted, she has the advantage it is going to be paid on settlement without any further arguments about or costs of assessment, a very considerable saving in the practical world of litigation.
Thus, the total amount due to the first defendant in addition to the $550,000 is a total sum of $75,000, made up of these three amounts ($56,250 plus $10,750 plus $8,000). This is the overall compensation on all counts to the first defendant for the delay which has occurred in her receipt of the sum of $550,000. Thus the total amount payable on settlement by the plaintiff to the first defendant will be $625,000.
To allow some leeway the possibility of an a few weeks delay in the settlement the Court will permit settlement on these terms to occur up until 2 February 2018. This $625,000 is calculated the same way it in which the $550,000 was calculated: it is net of the $50,000 payment made under Order 2 of the September 2016 orders.

Conclusion and Orders

Accordingly, the Court makes the following orders and directions: Pursuant to Family Provision Act 1982, s 15 and so as to enable further effect to be given to the Court's orders of 2 September 2016 ("the September 2016 orders") and to facilitate the sale of the Property (as defined in the September 2016 orders) to the plaintiff as was contemplated in the September 2016 orders, the Court makes the following orders: 1. The plaintiff may now satisfy and will be treated as having fully satisfied the September 2016 orders 6 to 10 inclusive and 11 to 24 inclusive, if upon the settlement of the Property at any time on or before 2 February 2018 the Plaintiff proffers to the First Defendant the sum of $625,000, which sum shall be inclusive of the amount of costs of $10,000 and interest from 27 February 2017 the subject of prior agreement between the parties, plus a further $8,000 allowed to the first defendant. 2. Upon the receipt by the First Defendant of cleared funds of $625,000 in accordance with Order 1 hereof the First Defendant will accept the payment in full discharge and satisfaction of the agreement recorded in Orders 6 to 10 inclusive and 11 to 24 inclusive of the September 2016 orders. 3. Order that as between the plaintiff and the first defendant each party shall pay his or her own costs of all applications concerning the enforcement or variation of the September 2016 orders. 4. Grant liberty to apply until 26 February 2018 in relation to the implementation of these orders.

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: 17 April 2018

Family Provision Act 1982(NSW)

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