CONDITION OF RELIEF
45 Orders made by the primary judge which provided for a trust in favour of Therese of Olivia's interests in the four properties and in the stud were not made subject to a life interest in Olivia, as had been claimed in the Statement of Claim. Although this was not made a ground of appeal, it was conceded by Mr. Sexton that those orders should have been made subject to Olivia's life interest.
46 Mr. McInnes submitted that it was not appropriate that the only benefit going to Olivia from that life interest should be a right to reside at and be supported at "Coleraine II" (along with one-half of the profits of the stud) when, due to the breakdown of the relationship between Olivia and Therese, Olivia did not wish to return to live there. Furthermore, the associated requirement of support for Olivia was one which was impossible for the Court to supervise. Mr. McInnes submitted that it was reasonable for Olivia to want a return from her assets during her lifetime and a fair distribution to her children on her death. There was an obligation on Therese, in seeking equity, to do equity. In the result, Mr. McInnes submitted, that relief either should be denied, or should be granted subject to a condition appropriate to do equity to Olivia, such as a payment of a fair rental for Olivia's interests.
47 There was some question whether these submissions fell within the grounds of appeal, but the Court in the course of argument indicated a view that it fell within the grounds 14, 15, 20 and 21. In any event, no prejudice was suggested by Mr. Sexton in relation to these submissions.
48 Mr. Sexton submitted that the primary judge had appropriately addressed considerations as to what was required for equity to be done to Olivia. He submitted that it was not apparent until the hearing that Olivia claimed to be firm in her resolve not to return to "Coleraine II", and that the primary judge was entitled to conclude that reconciliation was a realistic expectation. The conditions imposed were appropriate. Mr. Sexton referred to Flinn v. Flinn [1999] 3 VR 712. He submitted also that that case showed that a condition of support and maintenance was one which could appropriately be imposed. Mr. Sexton submitted that the Court should not let the tail wag the dog, and refuse relief because of difficulty in relation to the conditions to be imposed.
49 In case the Court took a different view, Mr. Sexton indicated that he had instructions to offer, in order to do equity in relation to Olivia's half interests, $25,000.00 per annum by equal monthly instalments. $25,000.00 had previously been discussed in argument before this Court as a figure given by applying an annual rate of five percent to assets of capital value of $500,000.00.
50 In my opinion, there was a plain error in the form of the declarations, in that they did not make the trust in favour of Therese subject to a life interest in favour of Olivia, as had been claimed in the Statement of Claim. I make no criticism of the primary judge for this: there was ample opportunity given to Olivia to make submissions as to the form of orders, and this error was not drawn to the primary judge's attention.
51 In my opinion, the question of Therese doing equity in relation to Olivia's life interest was not adequately addressed at the primary hearing, the focus of that hearing being the principal dispute as to whether the facts were such as to justify the finding of a trust.
52 In my opinion, it should have been part of Therese's case to offer to do equity and prove willingness to do so: see Sander v. Twigg (1887) 13 VLR 765 at 785, 795; Malton v. Black, Young J, 26/5/86; Constanton v. Permanent Trustee Australia Limited, Young J, 13/6/91, and Nieborak v. Piper, Young J, 11/12/90. Therese was plainly seeking that she and Colin be permitted to continue in possession and control of the properties and the stud, even though, on their case, Olivia had a life interest in half-interests in the properties and a life interest in the stud. In those circumstances, doing equity would involve ensuring that Olivia received appropriate benefits in return for her life interests, in circumstances where Therese was to have possession and control of these assets and Olivia could not apply under s.66G of the Conveyancing Act to realise her share. No such offer was made in the Statement of Claim, and no evidence of such offer or of willingness to do equity was provided in the affidavits.
53 There were some submissions before the primary judge pertinent to this, giving rise to the conditions actually imposed by the primary judge, but it would seem that in those submissions and in the primary judge's consideration of the problem, Olivia's life interest was lost sight of: there was no consideration of why the conditions imposed were adequate, even though they would not benefit Olivia unless Olivia chose to move back to "Coleraine II", apart from her Honour's view that reconciliation was a possibility. These matters were not adequately dealt with, it seems, in submissions to the primary judge, but, in circumstances where the requirement to do equity should actually have been part of Therese's case, I think the matter can and should be addressed by this Court.
54 Mr. Sexton submitted that the condition actually imposed was appropriate, because it was precisely the benefit to Olivia contemplated by the arrangement made between the parties; and it would fail to benefit Olivia only by reason of a breakdown in the relationship caused by Olivia wrongly denying Therese's equity. There is some force in those submissions, but I think courts should generally avoid attributing all blame to one party in relation to the breakdown of personal relationships.
55 In this case, even though the primary judge has found facts in favour of Therese on the balance of probabilities, giving rise to a cut-and-dried view as to what happened, this is necessarily an over-simplification of the whole dynamics of the personal relationships between Therese and Olivia. It is appropriate also to take a wider view of the relationship. Therese has been given land for which Olivia and/or her husband paid $126,000.00 in 1986, $160,000.00 in 1989, $340,000.00 in 1990, and $380,000.00 in 1997. Leaving out of account the effects of inflation and variations in value, this totals about $1 million. One half of this was conveyed to Therese absolutely in May 1997 and May 1998, and the other half is to go to Therese on her death. Also, Olivia has given Therese a right to succeed to a stud worth between 200,000.00 and $400,000.00 on her death. Plainly, and arguably not unreasonably, Olivia formed the view in 1999 that this was unfair to her other children, and sought to bring about a fairer distribution of her whole estate.
56 Even though, on the primary judge's findings which have not been successfully challenged, Olivia could not do this by preventing Therese succeeding to these properties, her objective of somehow promoting fairness between her children was arguably a reasonable one, and one which Therese as a daughter whose mother had given her probably at least $1.2 million worth of property ($500,000.00 outright and at least $700,000.00 subject to a life interest) could arguably, as a matter of daughterly affection, respect and gratitude, have been expected to co-operate. It might reasonably be thought that her initial refusal to mediate and unwillingness even to discuss a proposal whereby she pay $340,000.00 to Robert contributed to the breakdown of her relationship with Olivia.
57 For these reasons, in this case as in many cases the wise and correct course is not to attribute blame to one party, and in my opinion it would be wrong to look at the rift between Therese and Olivia as being entirely Olivia's fault. Accordingly, it would in my opinion be wrong to take the view that if Olivia is not prepared to live on "Coleraine II", she should in effect receive no benefit. In my opinion, the question should be approached on the basis that there has been a breakdown in the relationship between Therese and Olivia, without attempting to attribute fault for this breakdown, and to consider what Therese should be required to do in order to ensure that, in those circumstances, Olivia receives an appropriate benefit from her life interests.
58 I would wish to avoid, so far as possible, an expensive further hearing on what would be an appropriate benefit. It seems that Olivia's life interests in real estate relate to interests of the value of about $500,000.00, and her life interest in the stud relates to property in the region of $200,000.00 to $400,000.00. There are severe potential difficulties in relation to a right to one-half of the profits of the stud, having regard to the different ways in which these profits could be calculated. In my opinion, a fair and practical approach would be to omit the condition about half of the profits of the stud, but to require a payment of five percent per annum calculated on the capital of value of all the property in which Olivia has a life interest as at 1st September 1999, such payments to be made as from 1st September 1999. This I believe is a modest and appropriate rate, whether regarded as interest on the value of the relevant property or rent to be paid for such property.
59 I would order that, pending agreement as to this value or determination of it, $35,000.00 per annum be paid on account (this being five percent of a capital value of $700,000.00). I would propose that the instalments up to 30th August 2001 be set off against Olivia's liability for costs at first instance; but that payments from 1st September 2001 onwards should be made without any set-off or deduction.
60 I would propose that the costs order below stand. As regards the costs of appeal, I note that the question of conditions and doing equity was not properly argued below, nor clearly raised in the grounds of appeal. On balance, I think the appropriate order as to the costs of the appeal is that each party bear its own costs.
61 These orders leave outstanding the determination of the value of the relevant assets as at 1st September 1999 and the quantification of the costs order at first instance. These questions are ones which, in my opinion, could very usefully be mediated between the parties, and one could even hope that agreement as to these matters might provide a basis on which there could be some reconciliation between the opposing factions of the family. I would expect that the orders could be given effect to so as to provide a benefit to Robert in some tax-effective way, if Olivia wished. If there is not agreement on the valuation question, then provided the valuers engaged by the parties are reminded of the Court guidelines for expert evidence, any further court hearing should be quite short.
62 The orders I propose are:
1. Appeal allowed in part.
2. Amend declarations 1 and 3 below by adding the words at the end "subject to a life interest in favour of the first defendant".
3. Set aside declarations 2 and 4 below.
4. Order as a condition of orders 8 and 9 below that the plaintiff pay to the first defendant, in satisfaction of the first defendant's said life interests, 5% per annum of the value of the property referred to in declarations 1 and 3 below as at 1st September 1999, quarterly in advance as from 1st September 1999 until the death of the first defendant.
5. Order that, pending agreement or determination as to the value of the property referred to in the previous order, the plaintiff pay to the first defendant $35,000.00 per annum quarterly in advance on account of the payments referred to in the previous order, provided that the instalments of such payments for the period 1st September 1999 to 30th August 2001 may be retained as a provisional set-off against the first defendant's liability for costs at first instance.
6. Liberty to either party to apply within twelve months in the Equity Division for a determination of the value of the said property.
7. Appeal otherwise dismissed.
8. Each party to bear its own costs of the appeal, and the respondents to have a suitors' fund certificate in respect of their costs if otherwise entitled.
*************