Georgios Vasilios Sotiropoulos as executor of the estate of the late Maria Sotiropoulos v Vlasios Vasilios Sotiropoulos

Amendment of the plaintiff' summons

1. After a short delay, and discussions between the legal representatives for the parties, it was agreed that the plaintiff should file an amended summons, which sought substantive declarations to decide the rights of the plaintiff and the defendant on the issues that had previously only been the subject of the judicial advice sought by the plaintiff. It is the proper course, where an application for judicial advice is transformed into an application for substantive relief that will bind all interested parties, to ensure that the proceedings are reconstituted by joining the necessary parties, and by re-formulating the originating process: see RL v NSW Trustee and Guardian [2012] NSWCA 39; (2012) 84 NSWLR 263 at [58] (Campbell JA).
2. The defendant did not oppose the filing of the amended summons, although, as I understand it, he maintained his objection to the Court's providing any judicial advice to the plaintiff. I granted leave for the amended summons to be filed. The parties indicated to the Court that they were ready to proceed, and they did so. The case has proceeded on the basis that the defendant will be bound by the orders that are made.
3. I will not deal with the plaintiff's application for judicial advice that remains in the amended summons. I will only deal with his application for declarations as to the substantive rights of the parties.
4. I will now set out the substantive relief claimed by the plaintiff in the amended summons: 3A. Further and/or alternatively a declaration that the Deed of Forbearance dated 20 October 2011, as executed by the NSW Trustee on behalf of Maria Sotiropoulos and on behalf of National Australia Bank Ltd ("NAB") contained a relevant contrary intention for the purposes of section 145 of the Conveyancing Act 1919 (NSW), namely an intention that the real property known as 38 Lincoln Avenue, Collaroy, NSW (Folio identifier 27/242932) or its net proceeds of sale be applied for the purposes of the administration of the Estate of the late Maria Sotiropoulos in its/their entirety towards a reduction in the mortgage debt owed to NAB and repayment of which was otherwise secured against the properties known as 676 Military Road, Mosman (folio identifier 2/716239), 684 Pittwater Road, Brookvale (folio identifier 3/518364), and 5 Edgecliff Boulevard, Collaroy (folio identifier 18/438628). 3B. Further and/or alternatively, a declaration that by reason of the Deed of Forbearance dated 20 October 2011, the property known as 38 Lincoln Avenue, Collaroy became subject to an equitable charge in favour of NAB as security for the debts owed to NAB, such a charge being a relevant charge for the purposes of section 145 of the Conveyancing Act 1919 (NSW).

The relevant facts up to the appointment of the NSW Trustee

1. On 6 August 2010, the Guardianship Tribunal made a financial management order concerning the affairs of Mrs Sotiropoulos in favour of the NSW Trustee and Guardian (the NSW Trustee) in the following terms: 1. The estate of Mrs Maria Sotiropoulos is subject to management under the NSW Trustee and Guardian Act 2009. 2. The management of the estate of Mrs Maria Sotiropoulos is committed to the NSW Trustee.
2. At the date the financial management order was made Mrs Sotiropoulos was the registered proprietor of the following properties: 1. 676 Military Road, Mosman, contained in certificate of title folio identifier 2/716239 (the Military Road property). 2. 680-682 Pittwater Road, Brookvale, contained in certificate of title folio identifier 2/509980 (the 680-682 Pittwater Road property). 3. 684 Pittwater Road, Brookvale, contained in certificate of title folio identifier 2/518364 (684 Pittwater Road property). 4. 686 Pittwater Road, Brookvale, contained in certificate of title folio identifier 3/518364 (the 686 Pittwater Road property). 5. 5 Edgecliffe Boulevard, Collaroy, contained in certificate of title folio identifier 18/838628 (the Edgecliffe Boulevard property). 6. 38 Lincoln Avenue, Collaroy, contained in certificate of title folio identifier 27/242932 (the Lincoln Avenue property).
3. Three of the properties were subject to mortgages in favour of the Bank, being the 684 Pittwater Road property, the Military Road property, and the Edgecliffe Boulevard property.
4. The mortgages secured Mrs Sotiropoulos' indebtedness to the Bank under three separate facilities, which at the date of Mrs Sotiropoulos' death amounted to $3,010,595.42.
5. By her will, Mrs Sotiropoulos devised the Military Road property and the Edgecliffe Boulevard property to the plaintiff.
6. By a statement of reasons for dispositions in will prepared by Mrs Sotiropoulos on the same date as her will, Mrs Sotiropoulos explained that she had devised the Military Road property to the plaintiff alone because of his actions in managing the family's affairs after the death of her husband. She also explained that she held the title to the Edgecliffe Boulevard property on trust for the plaintiff. The defendant has accepted that the plaintiff is entitled to the beneficial ownership of the Edgecliffe Boulevard property.
7. At the date of Mrs Sotiropoulos' death, a part of her indebtedness to the Bank was attributable to the purchase of the Edgecliffe Boulevard property. As I understand it, the original borrowing concerning this property was $498,500. The plaintiff has accepted that he was personally responsible for the repayment of the part of Mrs Sotiropoulos' debt to the Bank that was attributable to this borrowing, and he has paid that amount to the Bank.
8. The Lincoln Avenue property, the 680-682 Pittwater Road Property, and the 684 Pittwater Road property formed part of the residuary estate of Mrs Sotiropoulos under her will, which is to be shared equally by the plaintiff and the defendant.
9. In circumstances that will be explained below, the Lincoln Avenue property was sold by the NSW Trustee before the date of Mrs Sotiropoulos' death. The net proceeds of the sale also formed part of the residuary estate.
10. The position therefore is that, of the properties owned by Mrs Sotiropoulos at the time of the appointment of the NSW Trustee, three were mortgaged to the Bank, of which two were devised to the plaintiff, and one formed part of the residuary estate.

Section 145 of the Conveyancing Act

1. The plaintiff seeks the substantive relief in his amended summons because of the effect of s 145 of the Conveyancing Act 1919 (NSW), which relevantly provides: (1) Where a person dies after the commencement of the Conveyancing (Amendment) Act 1930 possessed of or entitled to, or, under a general power of appointment by his or her will disposes of: (a) property, which at the time of his or her death is charged with the payment of money, whether by way of legal mortgage, equitable charge, or otherwise (including a lien for unpaid purchase money), or … and the deceased has not by will, deed, or other document signified a contrary or other intention, the property so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the charge; and every part of the property, according to its value, shall bear a proportionate part of the charge on the whole thereof. (2) Such contrary or other intention shall not be deemed to be signified: (a) by a general direction for the payment of debts or of all the debts of the testator out of the testator's personal estate or the testator's residuary real and personal estate, or the testator's residuary real estate, or (b) by a charge of debts upon any such estate, unless such intention is further signified by words expressly or by necessary implication referring to all or some part of the charge…
2. Section 145 will have the effect that the two properties that Mrs Sotiropoulos owned beneficially will be primarily liable for the repayment of Mrs Sotiropoulos' indebtedness to the Bank (excluding that part of the indebtedness owed in respect of the property beneficially owned by the plaintiff) unless Mrs Sotiropoulos "by will, deed or other document signified a contrary or other intention". In the absence of a contrary intention, the proportion of the total indebtedness for which Mrs Sotiropoulos was personally responsible will be borne in proportion to value by the Military Road property (devised solely to the plaintiff) and the 684 Pittwater Road property (shared equally between the plaintiff and the defendant as part of the residuary estate): see Williams, Mortimer and Sunnucks, Executors, Administrators and Probate at [51-12].
3. The gravamen of the plaintiff's case is that the NSW Trustee, acting as manager of Mrs Sotiropoulos' estate, by deed or other document signified a contrary intention for the purposes of s 145, being that the proceeds of sale of the Lincoln Avenue property (of some $1,500,000 net of expenses) was to be applied to the repayment of Mrs Sotiropoulos' personal indebtedness to the Bank. If that claim is upheld, then the Military Road property and the 684 Pittwater Road property will only have to bear rateably the balance of the debt personally owed by Mrs Sotiropoulos, after the net proceeds of sale of the Lincoln Avenue property have been applied in repayment of that debt.
4. That course would be of advantage to the plaintiff, because the defendant's half share of the net proceeds of sale of the Lincoln Avenue property would be applied in repayment of Mrs Sotiropoulos' personal indebtedness to the Bank, which would reduce the proportion of the debt that would otherwise have been born by the Military Road property, which was devised to the plaintiff alone.

The issues

1. The amended summons seeks declarations on the basis that a deed of forbearance dated 20 October 2011 had one or both of the effects described in the declarations that the Court has been asked to make. It is evident from the submissions that the plaintiff delivered to the Court before the amendment was made, and also from the submissions made at the hearing, that the plaintiff intended to argue that the deed of forbearance alone had one or both of the effects claimed; but if it did not, in the alternative, the deed taken together with certain correspondence had those consequences. It is probable that the plaintiff's omission to refer to the significance of the correspondence in his amended summons was an inadvertent consequence of the haste in which it was necessary for the amended summons to be prepared.
2. The primary issues are, therefore, whether the deed of forbearance, either alone or in combination with parts of the correspondence, signified a contrary intention by Mrs Sotiropoulos for the purposes of s 145, and whether those matters gave rise to the creation of an equitable charge over the Lincoln Avenue property in favour of the Bank to secure Mrs Sotiropoulos' indebtedness to the Bank.
3. The first question that will arise in relation to each of these alternative possibilities is whether or not, in fact, the NSW Trustee, in the course of managing Mrs Sotiropoulos' affairs, intended, in a legally relevant way, to signify a contrary intention, or to create a charge. The question framed in that way assumes that the actions and the formation of the requisite intention by the NSW Trustee will have the same legal effect as if Mrs Sotiropoulos had remained of full capacity, and had taken the same steps and formed the same intention as the NSW Trustee took and formed.
4. If it is found in relation to either alternative that the NSW Trustee did act in a manner that would constitute the formation of a contrary intention, or an intention to create a charge, it will then be necessary to consider questions as to whether the NSW Trustee's conduct had the same legal effect as if Mrs Sotiropoulos had acted the same way with full legal capacity. It may also be necessary to consider the operation of s 83 of the NSW Trustee and Guardian Act 2009 (NSW), which contains provisions that are intended to protect the interests in property of beneficiaries as a consequence of actions taken by the NSW Trustee.

The facts up to the date of the deed of forbearance

1. I will first set out the relevant facts, as I infer them to be from the evidence. The evidence is limited, and consists primarily of the deed of forbearance and internal memoranda and correspondence issued by or received by the NSW Trustee.
2. Most of the evidence concerning the actions of the NSW Trustee consisted of documents which it produced in answer to a subpoena, and which became part of Exhibit A in the proceedings.
3. There is very little evidence concerning the position of the Bank, and it is limited to the occasional piece of correspondence that emanated from the Bank.
4. The issue of whether the NSW Trustee granted a charge to the Bank must be determined without the participation of either of those parties.
5. On 1 February 2011, the Bank send a notice of default to Mrs Sotiropoulos c/-the NSW Trustee, in which it stated that the amount owing was $2,085,349.72, and demanded repayment within 31 days. This demand did not relate to the whole of the amount that Mrs Sotiropoulos owed to the Bank at that time.
6. On 24 March 2011, the NSW Trustee received an email from the Bank, which contained an expression of the Bank's view of the net level of debt that was serviceable by Mrs Sotiropoulos. That amount was $1,500,000. That would require a repayment of $945,000, plus any outstanding excess balances.
7. An internal memorandum was prepared by officers of the NSW Trustee on 7 April 2011, concerning the "clear" need for "asset sale/s … to occur now to meet at a minimum, a $500,000 bond to RSL ANZAC Village… and repay as a base figure $945,000 … to NAB". The use of the expression "sale/s" suggests that the NSW Trustee was open-minded about whether one or more asset sales were needed.
8. The memorandum contains the following relevant information. The 676 Military Road property was a dental surgery occupied by the plaintiff, who was not paying any rent. The Edgecliffe Boulevard property was a residential property that had been occupied by Mrs Sotiropoulos before she entered care. The plaintiff had claimed that the property was held on a constructive trust for him (correctly, as the evidence now establishes). The 684 Pittwater Road property was commercial premises that were under lease to a third party. The Lincoln Avenue Property was a residential property occupied by the plaintiff pending construction of his family home at 7 Edgecliffe Boulevard, Collaroy, (which apparently adjoins the Edgecliffe Boulevard property). The 680-682 Pittwater Road property was occupied as to 680 by the defendant as his dental surgery, without payment of rent, and the balance was either rented to third parties, or in the course of being so rented. The 686 Pittwater Road property was also rented commercially.
9. The memorandum notes that the plaintiff and the defendant favoured the sale of a residential property over commercial assets. The writer of the memorandum approved the sale of the Lincoln Avenue property, because the expected sale price was great enough to yield the $1,645,000 that the writer thought may be necessary to be raised, and would involve the sale of only one property. The writer rejected the defendant's preference that the Edgecliff Boulevard property be sold, because the price likely to be received was not sufficient to cover Mrs Sotiropoulos' needs.
10. The memorandum establishes that the NSW Trustee's objective was to raise the necessary funds as soon as possible, and it was indifferent as to what property was sold, save that it was inclined to defer to the preference of the parties to these proceedings that a residential property be sold, and the Lincoln Avenue property selected itself, so to speak, because it was the only residential property that was expected to generate the necessary return through a single sale.
11. On 12 April 2011, the NSW Guardian received a further notice of default, dated 8 April 2011, in which the Bank gave Mrs Sotiropoulos a further seven days to pay the amount of $2,094,244.64, failing which the Bank may sell any of the mortgaged properties.
12. In an internal NSW Trustee memorandum dated 14 April 2011, the writer noted that revaluations had been received for the two residential properties, being the Lincoln Avenue property ($1.7 to $2.2 million) and the Edgecliffe Boulevard property ($1.8 to $2.0 million), but even though the valuation for the latter was now sufficient to suggest that its sale would yield the necessary proceeds, it was still preferable to sell the Lincoln Avenue property, because there was no issue about the beneficial ownership of that property.
13. The NSW Trustee wrote to the defendant on 14 April 2011 to inform him that it had decided to sell the Lincoln Avenue property and to lease the Edgecliffe Boulevard property. Detailed reasons for that decision were set out. The letter required the defendant to bring his unpaid rent up to date.
14. An internal memorandum of the NSW Trustee dated 14 April 2011 noted that, from the proceeds of sale of the property, the bond of $500,000 for Mrs Sotiropoulos' accommodation would be paid, and $945,000 would be repaid to the Bank. Various other payments to the plaintiff, to the defendant, to the accountant and for land tax would be paid, making up a total of $1,716,000.
15. The NSW Trustee received a valuation of the Lincoln Avenue property of $1,800,000 dated 18 May 2011.
16. The Bank issued a further demand to Mrs Sotiropoulos, the plaintiff and the defendant on 27 May 2011 for $237,478.85 in respect of their liability as guarantors.
17. The defendant made a request for an internal review of the NSW Trustee's decision to sell the Lincoln Avenue property and lease the Edgecliffe Boulevard property. The results of the internal review are recorded in an internal memorandum dated 14 June 2011. The reviewer affirmed the earlier decision. Relevantly, the memorandum records that the NSW Trustee was informed by the Bank in October 2010 that it would commence legal action to recover amounts owed by Mrs Sotiropoulos. On 1 March 2011, the Bank advised that, because the current loans were in default, the interest rate charged would climb from around 7% pa to 18% pa, or from $182,000 pa to in excess of $440,000 pa. The reasons for the earlier decision to sell the Lincoln Avenue property were recorded in par 1.13 as follows:

• That both sons favour the sale of residential property over the commercial properties. However both sons are in dispute over which of the residential properties…should be sold.
• The property at Edgecliffe Boulevard may not generate sufficient net value to meet all major expenses and as such should now be rented. This property could be sold at a future date if the client is in need of additional capital. Also there is CGT payable on this property and the claim that there is a Constructive Trust attaching to it.
• The client, at a minimum, needs to meet bank and other debts totalling $1,634,000. In addition, there may be a claim by the son, [the plaintiff], for an additional $200,000 for repairs to the Lincoln Avenue property.
• That 38 Lincoln Avenue is not subject to CGT.

1. This memorandum supports the conclusion that the NSW Trustee decided to sell the Lincoln Avenue property because of the pressing financial need of Mrs Sotiropoulos' estate, the sale price was thought to be sufficient to achieve the necessary financial result by a single sale, the plaintiff and the defendant preferred the sale of a residential property, there was an issue as to who was the beneficial owner of the Edgecliffe Boulevard property, and the sale of that property would be subject to CGT, while the sale of the Lincoln Avenue property would not.
2. There is no evidence to this point that the relevant officers of the NSW Trustee gave any thought at all to the possibility that any act of the NSW Trustee might signify a contrary intention for the purposes of s 145 of the Conveyancing Act.
3. On 5 August 2011, the Bank informed the NSW Trustee by email that it had almost finished its preparations to gain possession of the mortgaged properties, but asked for a formal meeting with the NSW Trustee before it proceeded further. There is no evidence as to whether this meeting took place, and if so, what occurred at it.

The deed of forbearance

1. The NSW Trustee and the Bank subsequently executed a deed of forbearance, but the available evidence says nothing about the circumstances in which that deed was negotiated.
2. The deed of forbearance was executed on 20 October 2011 by the Bank and the NSW Trustee on behalf of Mrs Sotiropoulos.
3. The deed recited the provision of the financial accommodation by the Bank to Mrs Sotiropoulos, the fact that the Bank held the securities, a default had occurred, and the Bank had issued enforcement notices. Recital E provided: NAB has agreed on the terms set out in this document to forbear from exercising its right to possession of the Secured Properties until the Settlement Date to allow Mrs Sotiropoulos an opportunity to reduce the Amount Owing to NAB to $1,500,000, and provide a proposal for the restructure of the Facilities.
4. The Settlement Date was defined to be 18 January 2012. The period of forbearance was therefore intended to be about three months. The agreement reflected in this recital involved a reduction in the amount of the indebtedness of Mrs Sotiropoulos to the Bank to $1,500,000, but did not contemplate any particular steps that would be taken to achieve that result.
5. By clause 3(h) Mrs Sotiropoulos acknowledged that, as at 28 September 2012, she was indebted to the Bank for a total of $2,656,084.13.
6. Clause 4 contained an agreement by the Bank to forbear from commencing proceedings or seeking to enforce repayment of the amount of the indebtedness until the Settlement Date. The Bank agreed to consider any proposal submitted by Mrs Sotiropoulos for a restructure of the facilities that were in place.
7. Clause 5 provided for the sale of the Lincoln Avenue property, in the following material terms: 5.1 Mrs Sotiropoulos agrees to reduce the Amount Owing to $1,500,000 on or before the Settlement Date. 5.2 If Mrs Sotiropoulos intends to reduce the Amount Owing to $1,500,000 by selling the Lincoln Avenue Property, then Mrs Sotiropoulos agrees that: (a) by no later than 6 December 2011 Mrs Sotiropoulos will exchange unconditional contracts for the sale of the Lincoln Avenue Property on terms acceptable to NAB and in accordance with clause 5.2(d)… (c) by no later than the Settlement Date, Mrs Sotiropoulos will complete the sale of the Lincoln Avenue Property in accordance with clause 5.2(d); (d) in selling the Lincoln Avenue property, Mrs Sotiropoulos will comply with the following conditions… (vi) at the settlement of the sale of the Lincoln Avenue Property, NAB will receive an amount from the sale proceeds sufficient to reduce the Amount Owing to $1,500,000, less any deduction consented to by NAB… (e) If Mrs Sotiropoulos fails to comply with subclauses 5.2(a)-(d) of this deed by the Settlement Date, Mrs Sotiropoulos will provide vacant possession of the Edgecliffe Boulevard Property to NAB be within 3 Business Days so that NAB can proceed to sell the Edgecliffe Boulevard Property as mortgagee in possession.
8. The obligation that Mrs Sotiropoulos accepted under clause 5.1 was only to reduce the amount of her indebtedness to $1,500,000 by 18 January 2012. She did not promise to sell the Lincoln Avenue property. Clause 5.2 only established a regime that was to apply if Mrs Sotiropoulos chose to perform her obligation by selling the Lincoln Avenue property. That must be the effect of the expression "If Mrs Sotiropoulos intends…"
9. Clause 5.2(e) provided, as an alternative, that if Mrs Sotiropoulos either chose not to sell the Lincoln Avenue property, or was unable to settle a sale of that property by 18 January 2012, she was bound to give vacant possession of the Edgecliffe Boulevard property to the Bank, so that the Bank could sell the property as mortgagee in possession.
10. Clause 9 of the deed of forbearance set out the consequences of default in the following terms: If a Default occurs after the date of this document, NAB is entitled to immediately and without further notice: (a) enforce any Security to obtain full payment of the Amount Owing, including commencing the Proceedings; (b) at its discretion, give notice to Mrs Sotiropoulos requiring Mrs Sotiropoulos to give NAB vacant possession of each of (sic) the Edgecliffe Boulevard Property within 3 Business Days of receiving notice from NAB; and (c) Mrs Sotiropoulos acknowledges that upon receiving notice to vacate the Edgecliff Boulevard Property, Mrs Sotiropoulos will give vacant possession of the Edgecliff Boulevard Property to NAB in good order and condition including…
11. It should be noted that the deed of forbearance did not by its express terms give the Bank a right to sue Mrs Sotiropoulos for the amount of the net proceeds of the sale of the Lincoln Avenue property, if she did not comply with clause 5.2(d)(vi). Nor did the deed give the Bank any express right to have resort to the Lincoln Avenue property to recover the debt if Mrs Sotiropoulos defaulted under the deed. The deed allowed Mrs Sotiropoulos to decide whether or not to sell the Lincoln Avenue property. If she decided to do so, then she was required to settle the sale before the Settlement Date. If she succeeded in doing that, she was required to apply the net proceeds in reducing her debt to $1.5 million. If she failed to do that, then clause 5.2(e) and clause 9 would apply. The deed appears to proceed upon the basis of recognising that the Bank's securities were over other properties, and the steps that the Bank was authorised to take upon default concerned the realisation of the securities over the other properties. The deed facilitated the enforcement of the Bank's mortgage over the Edgecliffe Boulevard property, by requiring vacant possession to be given to the Bank. While I have not set them out, the deed contained a number of provisions apparently intended to facilitate the Bank's ability to enforce the mortgages that it had (such as the acknowledgements made by Mrs Sotiropoulos in clause 3).
12. The deed of forbearance, considered in isolation, could not be the signification of a contrary intention for the purposes of s 145. It did not bind Mrs Sotiropoulos to sell that property, and it left it open to her not to put the property on the market at all, or even if she did contract to sell the property, and was able to settle the sale by 18 January 2012, on the proper construction of the deed of forbearance Mrs Sotiropoulos could have reduced the amount of her indebtedness to $1,500,000 by the sale of any of the other properties, and she could have retained the proceeds of sale of the Lincoln Avenue property for her own purposes.

The facts after the date of the deed of forbearance

1. The NSW Trustee produced, in answer to the subpoena, an undated internal memorandum that concerned a request for approval to sell the 684 Pittwater Road property. The apparent reason was that the Lincoln Avenue property was put to auction on 3 December 2011, but passed in at $1.2 million. Offers of around $1.2 million had been received.
2. On 2 February 2012 the NSW Trustee wrote to the Bank to advise it of the failed auction; to inform it that the NSW Trustee would propose to the plaintiff that the 684 Pittwater Road property be sold; and asked the Bank to defer the enforcement of the deed of foreclosure while the NSW Trustee pursued the sale of the two properties. Thus, although the NSW Trustee attempted to sell the Lincoln Avenue property, it was unable to do so before the period of forbearance under the deed expired.
3. The decision of the NSW Trustee to attempt, in the alternative to the sale of the Lincoln Avenue property, to sell the 684 Pittwater Road property tends to support the conclusion that it was agnostic as to which property was sold, provided the pressing need to satisfy the Bank, and Mrs Sotiropoulos' other financial requirements, were met.
4. The NSW Trustee advised the plaintiff, by letter dated the 2 March 2012, that it had decided to sell the 684 Pittwater Road property. The letter advised that this property had been selected as the next most appropriate property to sell, after the Lincoln Avenue property, "on the basis that neither you or your brother operate a business from these premises, it is not subject to any specific claims by you or your brother and it is in fact one of the assets held by NAB as security on the loans".
5. On 11 April 2012, the NSW Trustee wrote to the Bank to advise it, among other things, that the decision to sell the 684 Pittwater Road property was currently under review following an appeal by the plaintiff. The basis of the appeal was that the property was in the middle of a line of adjoining properties owned by Mrs Sotiropoulos, and selling it would take away the potential for future redevelopment. The plaintiff had proposed that the 686 Pittwater Road property be sold instead. The NSW Trustee again asked for the indulgence of the Bank.
6. On 19 June 2012, the NSW Trustee advised the Bank, among other things, that the decision to sell the 684 Pittwater Road property had been affirmed on review. It requested the Bank "to show leniency". The letter contained the statement: "This office is already selling an unsecured asset in 38 Lincoln Avenue". The writer evidently did not understand that the deed of forbearance created a charge over the Lincoln Avenue property.
7. The NSW Trustee advised the plaintiff, by letter dated 3 July 2012, that it had decided to accept an offer of $1,575,000 for the sale of the Lincoln Avenue property. The reason given was that it was "necessary to meet immediate financial demands on your mother's estate particularly the level of debt with NAB that is accruing interest at around $31,000 per month".
8. The contract for the sale of the Lincoln Avenue property is not in evidence.
9. By the time when the NSW Trustee entered into the contract for sale, it was plainly too late for Mrs Sotiropoulos to comply with so much of clause 5.2 of the deed of forbearance that required her to take steps by, or before, the Settlement Date, being 18 January 2012. There were other provisions of clause 5.2, which could nonetheless have been complied with by Mrs Sotiropoulos, but which, on the evidence, were apparently not complied with. There is no evidence that Mrs Sotiropoulos ensured that the terms of the contract of sale were acceptable to the Bank (clause 5.2(a)); that a complete copy of the contract of sale was provided to the Bank (clause 5.2(b)); that Mrs Sotiropoulos obtained the Bank's approval to the reserve price (clause 5.2(d)(i)); or that Mrs Sotiropoulos provided an authority to the real estate agent to provide information to the Bank (clause 5.2(d)(v)).
10. The Bank wrote to the NSW Trustee on 18 July 20212. It noted that contracts for the sale of the Lincoln Avenue property had been exchanged, and that settlement would occur on about 15 August 2012. It asked for confirmation that the Bank would receive the full proceeds of sale on settlement. It said: "Without prejudice to any of its rights, provided that … (b) NAB receives full proceeds of sale of the Lincoln Avenue Property at settlement" the Bank would consider reviewing the rate of interest and a proposal to lease the Edgecliffe Boulevard Property.
11. This letter was not written in terms that the Bank had an enforceable right under the deed of forbearance to be paid the net proceeds of sale on settlement. It asked for confirmation that the Bank would receive that money, and made an offer that the Bank would consider certain matters "provided that" the payment was made.
12. The NSW Trustee wrote to the Bank on 2 August 2012 to try to persuade the Bank to act with patience and cooperation in response to the attempts to sell the two properties. The letter stated: We understand that the total amount owing to the NAB is under $3,000,000 and that the NAB requires this office to pay the whole of the net proceeds of the sale of the Collaroy property to the NAB to reduce the total amount owing to the NAB to $1,500,000 in accordance with the Deed of Forbearance dated 20 October 2011. The letter, at a latter point, referred to "the fact that the NAB's security position will be improved by any sum of money that Mrs Sotiropoulos may pay to the NAB from the proceeds of sale of the Collaroy property…"
13. By transfer dated 15 August 2012, Mrs Sotiropoulos' interest in the Lincoln Avenue property was transferred to the purchasers for $1,500,000. In his affidavit, the plaintiff deposed to the NSW Trustee receiving $1,219,705.93 of the sale price on 17 August 2012, and the balance of the deposit of $130,747.50 on 24 August 2012.
14. There is no evidence that the NSW Trustee retained either amount received from the proceeds of sale of the Lincoln Avenue property as a separate fund. In the absence of evidence to the contrary, I would not infer that the NSW Trustee holds all funds that it receives on behalf of its clients in separate accounts. That would be administratively complex, costly and wasteful. It is more likely that the NSW Trustee pays funds that it receives into one or more mixed accounts, and keeps track of the funds that it holds for different clients by appropriate accounting measures.
15. None of these monies were paid by the NSW Trustee to the Bank in accordance with the requirements of clause 5.2(d)(vi) of the deed of forbearance. There is no evidence as to why the NSW Trustee did not comply with the deed. As the Lincoln Avenue property was not the subject of a mortgage in favour of the Bank, the Bank would not have held the certificate of title to the property, and would not have been in a position to prevent settlement of the contract, or to require payment of the proceeds of sale to the Bank (at least without taking proceedings to enforce the deed). However, the Bank was aware that completion of the contract was imminent, and it apparently did not take any steps to ensure that it had a representative at the settlement to receive the net proceeds of sale.
16. As it appears that the Bank was still charging interest at the default rate on Mrs Sotiropoulos' debt to the Bank, it is not clear why the proceeds of sale were not used by the NSW Trustee to reduce her indebtedness.
17. As I have noted above, Mrs Sotiropoulos died on 23 August 2012. Accordingly, on that date the NSW Trustee ceased to have the management of Mrs Sotiropoulos' estate. The plaintiff's solicitors informed the NSW Trustee of the grant of probate to him on 2 October 2012,
18. The plaintiff gave evidence that, on 15 April 2013, the Bank closed the facilities that had earlier been extended to Mrs Sotiropoulos. A new facility was extended to him as executor of his mother's estate, supported by mortgages over the Edgecliff Boulevard property, the Military Road property and the 684 Pittwater Road property. The three Pittwater Road properties were sold for $3,700,000, by contract of sale exchanged on 26 August 2013. Settlement of the sale took place on 8 October 2013. The estate paid $2,515,801 to the Bank to discharge the mortgages. The plaintiff paid $1,217,850.44, as his contribution as at the date of payment to the repayment made to the Bank, in respect of the property for which the plaintiff was the beneficial owner. It is not necessary to consider the detail of these payments for the purpose of determining the issues in dispute in these proceedings.

Did Mrs Sotiropoulos signify a contrary intention?

1. The first question is whether the evidence establishes that Mrs Sotiropoulos by will, deed or other document, signified an intention contrary to the two properties, that were mortgaged to the Bank, being primarily liable for the payment of Mrs Sotiropoulos' personal indebtedness to the Bank at the time of her death, in proportion to the value of each of the properties.
2. The parties did not, in their submissions, address in any detail the nature of the intention that must be established; whether subjective or objective; or the evidence to which the Court may have regard in determining whether the relevant intention was signified.
3. In the present case, there is no suggestion that the intention was signified in Mrs Sotiropoulos' will, so there is no need to consider the rules governing the proper interpretation of wills. The plaintiff does claim that the intention was signified in the deed of forbearance, but that claim must fail. As I have observed above, the deed obliged Mrs Sotiropoulos to reduce the amount of her indebtedness to the Bank to $1.5 million by a specified date, and provided for a regime that required the net proceeds of sale of the Lincoln Avenue property to be paid to the Bank on settlement, but only if Mrs Sotiropoulos, by her manager the NSW Trustee, decided to sell that property to achieve the required reduction in her indebtedness. On any view, proof that Mrs Sotiropoulos signified the relevant intention would require some evidence of her formation of the intention in addition to, and outside the terms of, the deed of forbearance.
4. The expression "by will, deed, or other document" requires that the signification of the intention appear from one or more documents. The reference to "document" in the singular must include the plural: s 8(b) Interpretation Act 1987 (NSW). Section 145 of the Conveyancing Act should not, in my view, be interpreted in a manner that requires that the relevant intention must be signified in a single document, whether it be a will, deed or some other individual document. The section should be capable of being satisfied if the relevant intention is signified in a number of documents, when read together. However, for the reasons that appear below, even if this interpretation of s 145 is adopted, it does not avail the plaintiff. The position is the same in relation to the issue of how the individual documents should be construed, for the purpose of identifying whether they signify the relevant intention. While the intention must be signified by document, the better view is that the meaning of the documents may be gleaned having regard to the surrounding circumstances that bear upon the proper meaning of the words used.
5. Even if it be assumed that the actions of the NSW Trustee, in the management of Mrs Sotiropoulos' financial affairs, are capable of creating the requisite intention on her behalf, the evidence does not establish that the NSW Trustee formed that intention, and in fact is inconsistent with such an intention having been formed.
6. I have considered the various steps that the NSW Trustee took, and the reasons for its actions above. I would observe, with respect, that the NSW Trustee appears to have acted conscientiously in performing its duties as the manager of Mrs Sotiropoulos' estate, and in particular has diligently recorded the reasons for its various actions. It is not necessary to have regard to the surrounding circumstances in which the various documents were produced by the NSW Trustee, to determine the meaning of the documents, because the meaning appears clearly from the documents.
7. If the Court has regard to all, or any combination of, the documents produced by the NSW Trustee, including the deed of forbearance, the only relevant intention that emerges is that the NSW Trustee acted to sell the Lincoln Avenue property to use the proceeds of sale to reduce Mrs Sotiropoulos' indebtedness to the Bank, to a level of debt insisted upon by the Bank, and also a level that the Bank had calculated could be serviced by Mrs Sotiropoulos' remaining assets; and also to meet a number of other pressing financial obligations. The NSW Trustee selected the Lincoln Avenue property because it was one of the two residential properties that the plaintiff and the defendant preferred be sold. The Lincoln Avenue property was chosen because it was most likely to generate the necessary funds from the sale of one property, and it was not subject to dispute as to beneficial ownership. Furthermore, its sale would not attract a capital gains tax liability.
8. There is no evidence that the relevant officers of the NSW Trustee turned their minds to the operation of s 145, or to how the properties owned by Mrs Sotiropoulos at her death would be liable for the payment of the debt owed to the Bank. In considering whether the evidence justifies a finding that a person formed a particular intention, it is likely to be relevant to know whether or not the person had in mind the particular end to which the formation of the intention was relevant. There is nothing in the present case that suggests the NSW Trustee gave any thought at all to changing the way Mrs Sotiropoulos' properties would be required to bear the repayment of her indebtedness to the Bank after her death.
9. It is true that the NSW Trustee did enter into a contract for the sale of the Lincoln Avenue property in mid-2012; it advised the Bank that it had decided to sell the property; and it completed the sale. It did not pay the proceeds of sale to the Bank on completion. All of these acts are consistent with the purpose for which the NSW Trustee originally decided to sell the Lincoln Avenue property, and evidence no more than an intention to achieve that purpose.
10. Although the NSW Trustee took steps that were designed to enable Mrs Sotiropoulos' debt to the Bank to be reduced to $1.5 million, by means of the sale of the Lincoln Avenue property, those steps fall short of signifying a contrary intention for the purposes of s 145, for similar reasons to those that moved the courts in Nicholson v Boulton (1923) WN 251 and Re Wakefield [1943] 2 All ER 29. The relevant principle of law is as stated by Richmond J in Re Horton (deceased) [1969] NZLR 598 at 601. His Honour adopted as correct the following editorial note to the report of Re Wakefield: A devisee takes property subject to the charges upon it unless the testator has expressed a contrary intention. In order that a contrary intention may be shown, it is not enough that the testator has clearly earmarked certain money for that payment in his life. That shows no intention how he intended the charge to be born after his death as between the specific devisors and his residuary estate. The facts which are relied upon as showing a contrary intention must specifically refer to the manner in which the charge has to be born after his death and as between the parties entitled under his will.
11. Nothing done by the NSW Trustee in the present case referred in any way to the manner in which the properties should bear the mortgage debt after the death of Mrs Sotiropoulos.
12. It follows that the plaintiff is not entitled to the declaration that he seeks in par 3A of his amended summons.

Authority of the NSW Trustee to signify a contrary intention

1. It is therefore not necessary for the Court to determine whether, had the NSW Trustee purported to signify a contrary intention for the purposes of s 145 of the Conveyancing Act, its actions would have bound Mrs Sotiropoulos' estate. As in my view, the present is a clear case where there is no evidence of the formation of such an intention, it is not an appropriate case to determine whether or not there may be some cases where the actions of the NSW Trustee, in purporting to signify the relevant intention on behalf of a person whose estate is under management, might be effective.
2. I would observe, however, that in my view it is unlikely that the NSW Trustee could validly signify a contrary intention for the purposes of s 145. The NSW Trustee and Guardian Act does not appear to confer power on the NSW Trustee to act in a manner that has the direct effect of altering the managed person's will, or the manner in which the will operates after the death of the managed person, such as by forming a contrary intention on behalf of the managed person for the purposes of s 145. Section 56(a) states that "the NSW Trustee has, and may exercise, in respect of the estate of a managed person… all functions necessary and incidental to its management and care". The formation of a contrary intention for the purposes of s 145 of the Conveyancing Act does not appear to be necessary or incidental to the management of Mrs Sotiropoulos' estate. Under s 57, the NSW Trustee has all the functions of the managed person "for the purposes of its protective capacities". Forming the intention contemplated by s 145 is entirely unnecessary for the purpose of protecting Mrs Sotiropoulos. The fact that s 93 provides that the management of the estate of the managed person is terminated on the death of the person, suggests that it is unlikely that the NSW Trustee was intended to be vested with power to take steps on behalf of the managed person that would only have effect after the managed person's death.
3. These observations are perfectly consistent with the proposition that there are all manner of steps that the NSW Trustee may properly take during the course of managing the managed person's estate, which in practical terms have significant consequences after the death of the managed person, in relation to how that person's will may operate: see generally the discussion by Campbell JA in RL v NSW Trustee and Guardian (above).

Did Mrs Sotiropoulos create a charge?

1. The second question is whether the actions of the NSW Trustee created a charge over the Lincoln Avenue property, and its proceeds of sale, in favour of the Bank.
2. A charge may be created over real property by a charge or direction in a settlement, will or other instrument, whereby the property is expressly or constructively made liable or specifically appropriated to the discharge of a debt: Fisher & Lightwood's Law of Mortgage (Australian edition) [2.2].
3. In Jackson v Richards [2005] NSWSC 630; (2005) 12 BPR 23,091 White J said: [17] The critical question is whether it should be inferred that the parties intended that if the Drummoyne property were to be sold, the defendant's share of the proceeds of sale were to be kept separate from his other assets, and the costs paid from that separate fund. [18] An agreement between a debtor and his creditor that the debt owing shall be paid out of a specific fund coming to the debtor will create a valid equitable charge upon the fund and operate as an equitable assignment of it. (Rodick v Gandell (1852) 1 De GM & G 763 at 777, 778; 42 ER 749 at 754). However, for this principle to apply, there must be a specific fund from which the debt owing is to be paid. In Swiss Bank Corporation v Lloyds Bank Ltd [1982] AC 584, Buckley LJ said (at 595): If the debtor undertakes to segregate a particular fund or asset and to pay the debt out of that fund or asset, the inference may be drawn, in the absence of any contra indication, that the parties' intention is that the creditor should have such a proprietary interest in the segregated fund or asset as will enable him to realise out of it the amount owed to him by the debtor. [19] For such a charge to be created by an agreement to pay a debt out of a fund to come to the debtor, the parties must have agreed that the debtor would keep the fund separate from his other assets. (Moseley v Cressey's Co (1865) LR 1 Eq 405 at 409).
4. See also Halsted (Bankrupt) v The Official Trustee in Bankruptcy, in the matter of Halsted (Bankrupt) [2011] FCA 1242.
5. As I have observed above, the deed of forbearance did not immediately create any charge over the Lincoln Avenue property to secure repayment of any part of Mrs Sotiropoulos' indebtedness to the Bank. However, it did oblige Mrs Sotiropoulos to reduce the debt to $1.5 million by 18 January 2012. It imposed upon Mrs Sotiropoulos a regime that would govern the process of sale, and what would be done with the sale proceeds, if Mrs Sotiropoulos chose to effect the agreed reduction in her indebtedness by selling the Lincoln Avenue property. That included that Mrs Sotiropoulos would exchange contracts by no later than 6 December 2011, and would pay the sale proceeds to the Bank on settlement, which was to occur on or before the Settlement Date.
6. The NSW Trustee, on behalf of Mrs Sotiropoulos, put the property to auction on 3 December 2011, but it was passed in. The NSW Trustee then struggled over many months with the need to sell one of Mrs Sotiropoulos' properties, in a manner that was impeded by its need to comply with internal review processes. So far as the Lincoln Avenue property was concerned, it was only after the NSW Trustee obtained a revaluation and an offer that was greater than the new valuation that it could act properly in accordance with its duties as Mrs Sotiropoulos' manager to enter into a contract to sell the property. The detail of the circumstances that led to the delay are not material. The NSW Trustee did not meet the deadline stipulated in the deed of forbearance, but the Bank continued to forbear at its request. In mid-2012 the NSW Trustee finally committed Mrs Sotiropoulos by entering into a contract of sale.
7. The question remains, however, as to whether the terms of the deed of forbearance should be construed as creating a charge over the Lincoln Avenue property, after the contingencies contemplated by the deed were satisfied.
8. As I have noted above in recounting the relevant facts, in a significant number of ways, after the Settlement Date passed without Mrs Sotiropoulos having implemented the deed of forbearance, neither party acted as if the deed continued to bind Mrs Sotiropoulos. The NSW Trustee did not comply on her behalf with the terms in clause 5.2 that remained capable of performance in relation to the involvement of the Bank in the preparation of the contract of sale, and the conduct of the sale. More significantly, the Bank took no steps to ensure that it received the net proceeds of sale on settlement. Nor did the NSW Trustee pay the net proceeds of sale to the Bank, notwithstanding that s 96 of the NSW Trustee and Guardian Act authorised the NSW Trustee to complete the transaction notwithstanding the death of Mrs Sotiropoulos. However, the majority of the High Court in Agricultural & Rural Finance Pty Ltd v Gardiner [2008] HCA 57; (2008) 238 CLR 570 at [35] (Gummow, Hayne and Kiefel JJ) said that "it is not legitimate to use as an aid in construction of [a] contract anything which the parties said or did after it was made". Accordingly, I cannot take into account the fact that the parties did not act consistently with the deed of forbearance having created a charge over the Lincoln Avenue property, or its proceeds of sale, for the purpose of construing the deed.
9. It follows from the authorities considered above that a charge will only be created where there is an agreement between the debtor and creditor, even if implicit, that the creditor will be paid out of the particular asset, and the creditor will have a proprietary right in the asset in the nature of a right to cause it or its value to be applied in reduction of the debt.
10. I have set out the relevant terms of the deed of forbearance above. The terms of clause 5.2(d)(vi), considered in isolation from the balance of the deed, would tend to suggest that a charge was granted to the Bank over the Lincoln Avenue property, because Mrs Sotiropoulos agreed to pay the net proceeds of sale of the property to the Bank.
11. However, Mrs Sotiropoulos' primary obligation was to reduce her debt to $1.5 million by the Settlement Date. She was given a choice whether to do that by selling the Lincoln Avenue property. To exercise that choice she had to enter into a contract of sale by 6 December 2011, and complete the sale by the Settlement Date. If she failed to achieve this result then she would not have effectively formed the intention to reduce her debt by selling the Lincoln Avenue property. There would be no proceeds of sale to pay to the Bank under clause 5.1(d)(iv). The Bank could enforce its rights on default (including after Mrs Sotiropoulos' failing to exchange contacts by 6 December 2011).
12. If Mrs Sotiropoulos had succeeded in exchanging contracts for the sale of the Lincoln Avenue property before the Settlement Date (probably even if after 6 December 2011, Clause 5.2 of the deed of forbearance may have been enlivened, and clause 5.2(d)(iv) may have created a charge over the property.
13. But Mrs Sotiropoulos did not contract to sell the Lincoln Avenue property within the forbearance period. Clause 5.2 was not enlivened, and the Bank's rights were governed by the default provisions in the deed.
14. The terms in the deed dealing with default support this construction of the deed. First, clause 5.2(e) (which immediately follows clause 5.2(d)(vi)) contains an express provision for what was to happen if Mrs Sotiropoulos failed to comply with clause 5.2(a) to (d). She was to provide vacant possession of the Edgecliffe Boulevard property within three business days, so that the Bank could proceed to sell that property as mortgagee in possession. The absence of any reference to the Bank having any remedy in respect of the Lincoln Avenue property suggests that it was intended that the Bank was not to have one. Otherwise, it would be expected that clause 5.2 would contain the terms of that right.
15. Furthermore, as has been noted above, clause 9 sets out the Bank's rights upon default by Mrs Sotiropoulos. Again, no right is given in relation to the Lincoln Avenue property, or its proceeds of sale.
16. If Mrs Sotiropoulos defaulted under the deed, the agreement, therefore, was that the Bank could recover its debt immediately by exercising its powers under its existing mortgages. If at some later time Mrs Sotiropoulos succeeded in finding a purchaser for the Lincoln Avenue property, clause 5.2 of the deed would no longer in terms apply, and clause 5.2(d)(iv) would not cause an additional security, being a charge over the property, to spring into existence in favour of the Bank.
17. The better construction of the deed of forbearance is, therefore, that it required Mrs Sotiropoulos to reduce her debt to $1.5 million by the Settlement Date. If she decided to sell the Lincoln Avenue property and settled that sale within the three months forbearance period, she was required to pay the proceeds of sale to the Bank (if she could not reduce her debt to $1.5 million by some other means). If she could not achieve settlement of the sale of the property by the Settlement Date, the Bank could immediately enforce its three mortgages. It could not exercise any security right against the Lincoln Avenue property, if it remained unsold at the Settlement Date. If the property was sold after that date, the Bank might demand payment of the net purchase price on settlement, but that would not be in performance of the deed. It would instead be a matter of a creditor calling for repayment of a debt due and payable out of an available source for payment.
18. If that outcome be thought unusual, a reflection on the fact that, in the case of the debt owed by Mrs Sotiropoulos, the Bank had substantial security, her total assets gave the Bank substantial comfort, the Bank had express mortgages over three properties, and the Bank was enjoying an entitlement to receive 18% interest in circumstances of total safety, will make it more understandable that the deed of forbearance was a bespoke arrangement that was intended to have effect in accordance with its express terms.
19. Additionally, the deed of forbearance did not contain any obligation upon Mrs Sotiropoulos to retain the proceeds of sale of the Lincoln Avenue property as a discrete fund, to be available to pay part of her debt to the Bank, if the net proceeds of sale were not paid to the Bank on settlement. I have found on the evidence that the NSW Trustee did not retain the proceeds of sale as a separate fund. Accordingly, the requirement for the existence of a charge articulated in the authority set out above, that the funds be kept separate from the other assets of the debtor, is not satisfied.
20. The plaintiff is not entitled to the declaration that he seeks in par 3B of his amended summons.

Application of s 83 of the NSW Trustee and Guardian Act

1. As I have declined to grant either of the declarations that the plaintiff has sought, it is not strictly necessary to deal with the application of s 83 of the NSW Trustee and Guardian Act. The two properties that were beneficially owned by Mrs Sotiropoulos at her death, that were mortgaged to the Bank, must bear in proportion to their value the part of the total indebtedness to the Bank that was owed by Mrs Sotiropoulos personally. The net proceeds of sale of the Lincoln Avenue property will simply fall into the residuary estate.
2. However, if I am wrong in my conclusion that the NSW Trustee did not create a charge in favour of the Bank, then it may be necessary to consider whether s 83 has any effect on the proper way in which the assets in the estate should be applied.
3. Section 83 of the NSW Trustee and Guardian Act relevantly provides: (1) Any managed person and any beneficiary of a managed person has the same interest in any surplus money or other property arising from any sale, mortgage or disposition of any property or other dealing with property under this Act as the managed person or beneficiary would have had in the property the subject of the sale, mortgage, disposition or dealing, if no sale, mortgage, disposition or dealing had been made. (2) The surplus money or other property arising as referred to in subsection (1) is taken to be of the same nature as the property sold, mortgaged, disposed of or dealt with… (5) The Court may make such orders as it thinks fit to give effect to this section.
4. In the present case, on the assumption that a charge was created, the NSW Trustee relevantly effected two dispositions of the Lincoln Avenue property. First, it charged the property, and secondly it sold the property. The sale led to the receipt of the proceeds of sale, which were not paid by the NSW Trustee to the Bank, either on settlement of the sale, or at all, before the death of Mrs Sotiropoulos.
5. This gives rise to a question concerning the interplay between s 145 of the Conveyancing Act and s 83 of the NSW Trustee and Guardian Act.
6. Section 145 would require the Lincoln Avenue property, or its proceeds of sale, to be primarily liable for payment of part of Mrs Sotiropoulos' indebtedness to the Bank, in proportion to its value, together with the two other properties that were beneficially owned by Mrs Sotiropoulos, and were mortgaged to the Bank.
7. So far as s 83 is concerned, the plaintiff submits that it has no application that is relevant to the rights of the residuary beneficiaries, because those beneficiaries were not given any specific interest in any property that forms part of the residuary estate, but they only have a right to oblige the executor to properly execute the will.
8. As a practical matter, before the NSW Trustee and Guardian sold the property, the Lincoln Avenue property formed part of the residuary estate of Mrs Sotiropoulos, and after the completion of the sale, the whole of the net proceeds of sale formed part of the residuary estate. The sale of the property by the NSW Trustee did not in any material way affect the interests of any person under Mrs Sotiropoulos' will. The beneficiaries entitled to share in the residuary estate will simply share in the net proceeds of sale rather than in the ownership of the property. Section 83 is not needed to protect any beneficiary against a change in his interest in the estate brought about by a disposition effected by the NSW Trustee that causes the nature of the property to change.
9. The material change brought about by the activities of the NSW Trustee was the creation of the charge, which, in the absence of a contrary intention being signified, will lead to the Lincoln Avenue property being subject to the operation of s 145 of the Conveyancing Act in addition to the two properties that were already mortgaged to the Bank.
10. In my view, if a charge was created over the Lincoln Avenue property, s 145 of the Conveyancing Act would have the result (there being no contrary intention) that it would bear the burden of Mrs Sotiropoulos' personal share of her debt to the Bank proportionally with the other two properties that were mortgaged to the Bank. Section 83 of the NSW Trustee and Guardian Act would not affect the position.

Orders

1. As this is not an appropriate case for the Court to give the plaintiff judicial advice, the result is that I should dismiss the whole of the plaintiff's amended summons.
2. As, in substance, these proceedings have raised a legitimate question about the proper administration of Mrs Sotiropoulos' estate, and as alternative views could reasonably be taken as to the correct answer to the question, I am inclined to the view that the appropriate costs order is that the plaintiff pay the costs of both parties out of the residuary estate. There is no basis for treating the plaintiff, as executor, differently to the defendant, as the contest has in substance been between two interested beneficiaries with conflicting interests. The costs of each party should probably be paid on the indemnity basis. However, I will give the parties an opportunity to make submissions, if they wish, in support of a different costs order.
3. At this stage, I will make the following orders: 1. Order that the plaintiff's amended summons be dismissed. 2. Direct the parties to deliver submissions on the costs order that should be made to the associate to Robb J within 7 days. 3. Order that any exhibits and any documents produced on subpoena may be returned forthwith in accordance with the Rules.

Amendments 02 July 2015 - Correction to spelling error; Counsel for the plaintiff Bderossian to Bedrossian 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 July 2015