Rovere v Rovere

Consideration

The applicable legal principles are not in doubt and may be shortly stated. Trustees are not entitled to remuneration for their time and trouble in executing a trust except by agreement or by court order in the exercise of its inherent jurisdiction over trusts, an example of which is the Court's order made here on 29 July 2020 appointing the trustees: cf Anson v Anson [2004] NSWSC 766 at [75]. The trustees have a general law right to reimbursement for costs not improperly incurred, or costs that are reasonably as well as honestly incurred: In re Beddoe; Downes v Cottam [1893] 1 Ch 547. Unless it be shown that some kind of impropriety has occurred to deprive trustees for sale of their right to take their costs out of the trust fund, trustees for sale are entitled as of right to be recouped everything that they have expended properly in their character as trustees: Perpetual Trustee Co Ltd v Attorney General (NSW) [2018] NSWSC 1456 at [122 - [128]. Where trustees for sale are required to deal with threats of litigation against themselves or among co-owners, it is likely the trustees will incur levels of expense that would not be incurred in the ordinary case: James v James (No 2) [2019] NSWSC 116.
The principal dispute between these parties relates to the trustees' remuneration and expenses since 1 September 2021, after distribution of the sum of $235,992.69 to the plaintiffs. The defendant's demand for the same sum as the plaintiffs have received can be taken as acceptance on his part that the trustees' cost incurred up to that date were reasonable. Moreover, those costs have not been questioned by the plaintiffs and appear to the Court to be inherently reasonable for the sale of the property.
But the trustees appear to take the position that their costs incurred up to 1 September 2021 do not need the Court's approval, because of the orders made on 29 July 2020 authorising the incurring of such costs. They contended the Court only need approve costs incurred after 1 September 2021. But as will be seen below when the defendant's contentions are analysed, he is complaining about the trustees' conduct of the sale prior to 1 September 2021. The defendant has therefore put in issue the trustees' incurring of those earlier costs and the present decision must at least implicitly involve either approval or disapproval of all the trustees' costs, including costs incurred prior to 1 September 2021.
In this respect the position that the trustees take is too simplistic. The Court's consideration of the defendant's complaints will require approval of all the trustees' costs incurred prior to 1 September 2021. But that approval will not involve close examination of the quantum of those costs, which for the reasons stated in the previous paragraph can be taken as reasonable. Rather, an assessment of the trustees' conduct in the time periods prior to and after 1 September 2021 is required.
The trustees claim to have performed tasks between 1 September 2021 and 30 June 2023 for which they propose to change remuneration $11,774.30. The trustees have provided detailed time records in relation to those tasks. Examination of the trustees' time records and the correspondence during this period between the defendant and the trustees readily demonstrates that their claim for remuneration is reasonable and could even be characterised as modest in the circumstances. Moreover, the Court accepts the trustees' evidence that they have not charged for the substantial amounts of time they spent in attempting to resolve the defendant's complaints.
The trustees claim to have incurred legal costs and disbursements for the period between 1 September 2021 to 30 June 2023 totalling $48,061.45. These disbursements were principally incurred on account of trustees' engagement of solicitors to deal with the defendant's complaints, including costs associated with bringing the present motion.
It was reasonable for the trustees to engage solicitors after 1 September 2021. This is so for several reasons. The defendant was raising issues about the professional conduct of the trustees. Once those issues were raised it was likely that the trustees would need to bring before the Court a motion for the approval of their costs dealing in detail with the matters the defendant had raised. The trustees needed to make difficult decisions requiring legal advice, as to whether to negotiate with or litigate against the defendant. The trustees needed legal advice to assess the merits of the defendant's claims and to formulate adequate releases.
The Court does not have to assess the reasonableness of disbursements such as the $48,061.45 provided the engagement of the solicitors was itself reasonable. The defendant is not without remedy to question these legal costs of $48,061.45. Under the Legal Profession Uniform Law 2014, ss 171 and 198, the defendant may seek an assessment of those costs in his capacity as a third-party payer.
These reasons will now deal with samples of the issues which the defendant raises, which are representative of all the issues he raises. The trustees categorise the defendant's complaints into two broad groups, which these reasons will describe for convenience as follows: "time entry issues" involving the defendant's complaints about individual or classes of the trustees' time entry charges, and "conduct issues" involving the defendant's complaints about aspects of the trustees' conduct of the sale process.
Time Entry Issues. The defendant takes issue with many of the trustees' time entries. In a detailed schedule in their evidence the trustees have responded to each of the time entry issues that the defendant has raised. The Court accepts the detailed answers that trustees have provided in their schedule. The schedule shows that the trustees have taken detailed file notes of their conduct of their task. Some of the more significant representative issues are dealt with here. The others should be dealt with the same way. 1. Travel to and from the site - 20 October 2020. The defendant questioned what this travel was for. The trustees have explained that the charges relate to holding various meetings at Sawtell/Coffs Harbour including with the former solicitors for the plaintiff and with Ms Katrina Rogan. The Court accepts that such local enquiries are a necessary part of the trustees' work. 2. Arrange insurance changes and taking stock for meetings in Coffs Harbour - 21 October 2020. The defendant questioned this time claim and stated that no meeting happened on 21 October 2020. The trustees conceded that no meeting happened on that day. But the Court accepts that the entry related to reviewing the outcomes of the meeting the previous day and working out the next steps forward, a necessary part of the trustees' work. 3. Liaise with parties in the sale process - 6 April 2021. The defendant submits that no meeting took place on this day with himself or Ms Rogan. The trustees agree that no meeting took place on this day but the Court accepts that the trustees liaised with other parties and real estate agents. 4. Communications with two persons - 10 and 14 May 2021. The defendant questioned the purpose of communications between the trustees and two persons on these dates. But the persons were real estate agents, and the Court accepts that communications with them was a justifiable part of their work. The trustees have explained several other communications with real estate agents and similar professional persons. The trustees also satisfactorily answer a question posed by the defendant "how many times do you need to liaise with agents and valuers" by explaining that at least four appraisals of the Coffs Harbour property were necessary, and contact was needed several times with each of the appraisers. 5. Review and Amend the Contract - 21 May 2021. The defendant submitted that no amendments to the contract were required. The contract had originally been drafted by the solicitors for the plaintiff but not for a sale by the trustees. Amendments were clearly required. 6. Contract finalisation and liaise with parties - 25 May 2021. The defendant complains that he and Katrina Rogan were not advised and did not attend any meeting on this day. The trustees agree there were no meetings but there was email correspondence on that day to finalise the contract. The Court accepts that this work was necessary and that it was useful notwithstanding there were no meetings. Similar criticisms in respect of work on 24 June 2021 is answered by the trustees the same way and accepted by the Court. The defendant questions as 'improperly incurred work charged by the trustees', that does not involve face-to-face contact, with third parties or his direct involvement. But the Court accepts that such work was a necessary part of the trustees' efficient execution of their tasks. The defendant does not always have to be present for the trustees' work to be reasonably justifiable. 7. Arranging Insurance - 1 September and 9 October 2020. The trustees have raised specific charges for arranging insurance which the defendant says has nothing to do with him. But the trustees explained that insurance policies would cover the risks associated with the Coffs Harbour property during their appointment. The trustees are authorised by Trustee Act 1925, s 41 to arrange insurance on the Coffs Harbour property, a provision designed to put beyond doubt the trustees' entitlement to take out such insurance. Similarly, the trustees contact with the insurance agent was necessary work. The defendant questioned whether insurance should have been taken out to cover the plaintiffs volunteering to clean up the yard of the Coffs Harbour property, saying "I am not paying for volunteers' insurance". But in the Court's view such insurance was clearly necessary. The evidence demonstrates that all the necessary insurance and no unnecessary insurance was in fact taken out. 8. Liaise with external lawyer and with the plaintiffs - 17 November 2020. The defendant does not accept that the trustees' dealings with the plaintiffs have anything to do with him. But the trustees were entitled to liaise with the plaintiffs with a view to preparing the property for sale. 9. Dispute Correspondence with Katrina Rogan - 13 January 2021. The defendant questions the trustees' dealings with Katrina Rogan. But the defendant appointed Katrina Rogan as his attorney whilst he was incarcerated, and it was necessary for the trustees to deal with her concerning the Coffs Harbour property when the defendant was unavailable for day-to-day communication. 10. Liaise with Council officer concerning the back fence of the property - 3 February 2021. The defendant says the property was to be sold "as is" and that it was therefore not necessary for the trustees to become involved in any work concerning its fences. But the trustees explained, and the Court accepts, that the local council approached the trustees to fix the back fence and the trustees did so. This was reasonable as it avoided the potential for further Council action, which may have impaired the sale process. 11. Contact with the plaintiff concerning various issues including cleaning up the yard of the Coffs Harbour property - 2 November 2020, 4 January 2021, 9 February 2021, 8 March 2021, 28 April 2021, 28 April 2021. The defendant questioned the necessity for contact between the trustees and the plaintiffs and why he or Ms Katrina Rogan were not contacted. The trustees have given a reasonable explanation for contact solely with the plaintiff's, namely that they had volunteered to clean up the property and to assist the trustees with that task. In the Court's view the trustees took a reasonable course in taking up this offer of voluntary assistance by the plaintiffs, which was for the benefit of all the co-owners of the property because it assisted the sale. Some of this contact took place with a partner of one of the plaintiffs, Mr John Rovere, but the trustees explained to the Court's satisfaction that that was because there were communication difficulties with that plaintiff. The defendant also questions why charges for organising the cleaning up the rubbish should be allowed when he says he had to clean up his own rubbish on the property. But the Court accepts the trustees were entitled as part of their functions to accept the offer of voluntary assistance by the plaintiffs to clean up the property and that they should be indemnified for their time in organising execution of that task by the plaintiffs and that their expenses in arranging skip bins should be allowed. The fact the plaintiff may have executed that task imperfectly, so that the defendant had to remove some of his own rubbish, does not detract from the trustees' reasonable conduct in entering this arrangement. Moreover, the trustees explained that attempts were made to try and liaise with the defendant's former solicitors regarding the sale of the property, but the defendant's attorney indicated the defendant's solicitors were no longer retained and that the trustee should contact the defendant, but his contact details were obscure. 12. Authority Arrangements for Title - 3 November 2020. The trustees needed to liaise with the plaintiffs to gain authority to obtain the certificate of title to the Coffs Harbour property prior to settlement. This was questioned by the defendant. He also questioned the trustees not liaising with Ms Katrina Rogan on that subject. But the trustees explained, and the Court accepts, that they only needed to liaise with the plaintiffs to obtain the certificate of title.
Conduct Issues. The defendant raises many issues about the trustees' conduct of the sale. These complaints are set out not only in correspondence but in bundles of documents given by the defendant to the trustees. The bundles are somewhat haphazard collections of material. Mr Gumbelton's evidence puts the material into categories which are convenient for present analysis. The trustees have responded through Mr Gumbelton's evidence to each of the issues that the defendant has raised. Once again, it is only necessary for the Court to deal with the main issues. The Court's findings are the same in respect of the lesser issues raised. The analysis below is based upon the categories identified in Mr Gumbelton's evidence. 1. The agreement to clean up the property. The defendant criticises the trustee for coming to an arrangement with the plaintiffs to clean up the property. But the Court accepts that at the time of the trustees' appointment they ascertained that the property was not in a marketable condition and needed to be cleaned up. It was a reasonable course for the trustees to take and it was in the interests of both the plaintiffs and the defendants for the trustees to accept the plaintiff's offer of cleaning of the property at no charge. Whilst it can be accepted that in making this arrangement there was a risk that the plaintiffs might not do this work as efficiently as an independent contractor and may be less solicitous of the preservation of the property of the defendant, the course was nevertheless reasonable, partly because an independent contractor may have made even more mistakes in preserving the property of the plaintiffs and the defendant. 2. The trustees allowing the plaintiffs to sell two cars left by the defendant at the property. The defendant complains that the plaintiffs sold two cars left by him at the property. The defendant was ordered as part of the Court's orders on 29 July 2020 to take all steps necessary to remove all of his chattels from the property at his own expense and to give possession of the property to the trustees no later than 30 October 2020. The trustees attempted to contact the defendant through his attorney Katrina Rogan to request removal of his and her belongings from the property. When this had not occurred by 20 October Mr Gumbelton met Ms Rogan and requested her to remove the remaining chattels urgently. But two old cars remained on the property. Ms Rogan sent Mr Gumbelton a text message on 23 October 2020 which gave Mr Gumbelton the impression that Ms Rogan was arranging for the plaintiffs to pick up the cars. That was a reasonable interpretation of Ms Rogan's communication, apparently on behalf of the defendant. The trustees were not required thereafter to further enquire about what had happened to the cars, particularly as the defendant, not the trustees, always had responsibility for their removal under the Court's orders. 3. Allegations trustees breached their fiduciary duties and engaged in professional misconduct. These highly generalised allegations of the defendant take the matter no further than the other specific allegations and can be ignored as a separate category. 4. And to the extent they can be defined the defendant's allegation of breach of fiduciary duty are speculative and without foundation. Much of the documentary material that the defendant relies on to allege that the trustees breached their fiduciary duties contains hearsay evidence on which the Court cannot reliably act and which ultimately points to disputes between the defendant and the plaintiffs rather than between the trustees and the defendant. One example of this is the defendant's undated handwritten statement explaining how he "first became concerned about the trustees on 3.1.2021", which includes the following: "I rang Katrin Rogan's phone [telephone number not published] at approx.7pm, Aaron Rogan answered her phone. I ask Aaron, "Why are you answering the phone?" He replied, "because mum is in hospital". I asked what happened. He replied "your brothers beat the crap out of her at your house & now she is in hospital". A couple of days later I rang Katrina's phone again & ask her what happened. She told me that she asked Tim Gumbleton if she could clean the property and take my belongings. He refused her. He then allowed my brothers Steve & John Rovere to clean the property and to keep or sell whatever belongings they did not want. They made a deal with Tim Gumbleton & David Kerr to clean the property and to keep or sell any of my property. Eg. Cars etc conservatively valued $100,000.00. I did not receive any money for this. Nor did Tim Gumbleton advise me of this deal with my brothers. It was apparent to me when Katrina told me the story, that there was questionable practise going on regarding Gumbleton & Kerr. The RSM employees did not follow Fudiciary (stet) Duty, which tells me this is professional misconduct, if not criminal misconduct. As we are yet to determine if Gumbleton & Kerr received any money from the property by the two brothers John & Steve Rovere. It was very clear they did not have my best interest at heart from day one." 1. This is also a good example of the defendant's reasoning about his allegations of breaches of fiduciary duty. The incident described above in the defendant's own words is partly accurate to the extent that it reflects that the trustees asked the plaintiffs to clean up the property on a voluntary basis. But it speculates about a conspiracy between the trustees and the plaintiffs directed against the defendant, when he says that the "deal" between the plaintiffs and the trustees included "to keep or sell any of my property." There is no evidence that the trustees made any agreement with the plaintiffs to allow the plaintiffs sell his property and pocket the proceeds, which appears to be the defendant's concern. 2. At best, the evidence supports the conclusion that the trustees may have been put on notice that the plaintiffs were selling some of the materials recovered by them from the property. And the evidence further supports the inference that the defendant told the trustees that he claimed that the movable property being sold by the plaintiffs was his, the defendant's. But it was not the trustees' responsibility to arbitrate this dispute between the plaintiffs and the defendant. The trustees were entitled to expect that the defendant would maintain directly against the plaintiffs his legal rights to protect his chattels, and to prevent their conversion. As a party to these proceedings the defendant had access to the this Court and could have sought that relief, if properly advised. This is not a matter in which the trustees bore any special additional responsibility, especially as the trustees had no prior notice that such an issue would raise countervailing consideration of who would bear the costs of resolving the disputes between the plaintiffs and the defendant. The trustees may have faced opposition in justifying the cost of arbitrating between the plaintiffs and the defendant about chattels as an incidental expense of their execution of their duties as trustees for sale, when the dispute was more efficiently resolved directly between the plaintiffs and the defendant. 3. The defendant's allegations of breach of fiduciary duty by the trustees, also included a contention that the trustees met with the plaintiffs to conspire to keep Ms Rogan away from the Coffs Harbour property, after she no longer occupied the property. The Court asked the defendant what was his "best evidence that there was a conspiracy to keep Ms Rogan off the property." The defendant pointed to records of interview between the police and the plaintiffs about an incident in which Ms Rogan sought to access the property, a copy which is contained in the material provided by the defendant to the trustees and attached as an exhibit to the trustees' affidavits. Analysis of the records of interview show that the police were merely investigating with the plaintiffs an incident which Ms Rogan entered the property after which an altercation occurred. The plaintiffs say that the altercation occurred when Ms Rogan sought to take electrical fuses out of the fuse box on the property and they tried to restrain her, resulting in a physical struggle between them. 4. The Court has read these records of interview. Nothing within them justifies the conclusion that there was any conspiracy between the plaintiffs and the trustees to keep Ms Rogan off the property. The statement of the police officer investigating the matter indicates that the trustees had given the plaintiffs permission to enter the property to clean it up, but they had not recently either been approached by or given permission to Ms Rogan to enter the property. There is no suggestion in this material that there was an agreement to exclude her from the property. The correct position appears to be that the trustees' view was that it was open to Ms Rogan to apply to them to re-enter the property if she needed to retrieve any of her goods. 5. The trustees' costs and disbursements in relation to the insurance policies. The defendant is critical of the trustees arranging house and contents and voluntary workers insurance for the Coffs Harbour property during the period of their trusteeship. There is no merit in this criticism which is discussed above. The trustees would have been open to criticism if they had not taken out such insurance pending sale. This is standard practice for trustees for sale. 6. Complaints about the trustees' disbursements removing rubbish and a truck tyre. The defendant complains that the trustees only charged him for removing rubbish and a truck tyre from the premises. But the evidence establishes that this cost was charged to all three parties. 7. The defendant also complains generally about the costs the trustees incurred in removing the tyre and other rubbish from the Coffs Harbour property. He submitted orally that the property was not secure so anyone who dumped their rubbish there after the main clean-up, meant that he would have to pay for its removal. But the trustees needed to have vacant possession before the sale, and they needed to clean the property up before sale. They also needed to make the property attractive to potential purchasers. That meant that it could not be surrounded by an unsightly security wire fence. The cost of permanent security guards would probably have been prohibitive. The defendant's submission does not have regard to the various competing considerations that the trustees needed to balance in deciding not to fence the property. Leaving the property open to the slight risk the parties might dump rubbish there was probably an unavoidable risk associated with advancing the trustees' overall objective of maximising the proceeds of sale of the property. 8. The trustees not providing the defendant with the breakdown of the trustees' costs and payments, including to the plaintiffs. The defendant complains that he has not been provided with a breakdown of all the payments made to the plaintiffs and all the trustees own expenses. The answer to this is that the Court is satisfied on the evidence that the trustees provided a detailed breakdown of their costs and expenses on 7 December 2021 and various emails from Hegarty Legal thereafter. And the extensive affidavit evidence on the present motion itemises all the invoices upon which the trustees rely. 9. Trustees not paying the electricity bill for the property issued in the defendant's name. This is a minor dispute about an electricity bill in the sum of $83.26. The trustees accept that they did not reimburse the defendant for the two thirds of the electricity bill issued for that amount in his name (and a similar water bill in his name in the sum of $12.53) as Ms Rogan requested on 20 May 2021. The trustees dispute his entitlement to reimbursement apparently on the basis that he probably consumed electricity. But given the small amounts involved they have taken a commercial view and have offered, at their own expense, to add two thirds of those two amounts to what is otherwise calculated by these reasons to be due to the defendant. But in the Court's view the better course is simply to ignore this amount in the final calculations of what is due to the trustees. This is because the trustees offered at the conclusion of the proceedings not to charge for their professional time and for costs after 30 June 2023, in circumstances where significant professional time and legal costs have been expended after that date. There is already a substantial compromising what they are offering to the defendant and further adjustments of this kind are not necessary. The compromises discussed here are referred to later in these reasons under the paragraph heading "Quantification of the Trustees' Claim". 10. The trustees not providing the defendant with a breakdown of work done and fees charged by the law firm, Robson & Oliver. The defendant alleges that the trustees did not provide him with a breakdown of work done and fees charged by the firm Robson and Oliver, who acted on the sale of the Coffs Harbour property. But the Court accepts that invoices were supplied in a timely way. But in any event they were all supplied again by being exhibited to Mr Gumbelton's principal affidavit on the motion of 17 May 2023. 11. Trustees did not provide the defendant with invoices for marketing and rubbish removal. The defendant alleges that the trustees did not provide him with invoices for marketing the Coffs Harbour property and rubbish removal. This material was sent to him in November 2021 and is also exhibited to Mr Gumbelton's principal affidavit on the motion of 17 May 2023. 12. The trustees requested that the defendant provide a release in their favour. The defendant complains about the trustees' request to him to provide them with the release from liability, describing it as "bullying and intimidation". But the wide-ranging allegations made by the defendant of misconduct by the trustees demonstrate that he is contending that they acted outside their proper authority as trustees although they deny that. In that circumstance it is not improper for trustees to request a release as a condition of distributing trust funds to the defendant, although whether they are entitled to a release is debatable. Mr Gumbleton not unreasonably says, and the Court accepts, that he was personally concerned that the defendant would sue the trustees in respect of the exercise of their functions as trustees and that they would need to seek indemnity from the trust funds to deal with any such claim. The Court accepts his explanation that it was for this reason that he sought a release in exchange for (a) reducing their claim for remuneration and disbursements in (b) distributing the remaining trust funds to the defendant and therefore in a practical sense losing their ability to seek ready indemnity from the trust fund. The Court does not have to decide the question of whether a release would have been granted, merely whether asking for it was improper, and that should be answered in the negative. 13. Hegarty Legal not providing the defendant with information and denying the defendant the right to the information he was requesting. The defendant contends that Hegarty Legal have denied him information and engaged in threatening conduct, intimidation, and bullying. The emails from Ms Natalia Ben of Hegarty Legal do not demonstrate any of these characteristics. Contrary to the defendant's characterisation, the Hegarty Legal correspondence was conducted at a high level of civility and courtesy towards the defendant. The correspondence is consistent with that firm attempting to stop the defendant from harassing their clients, the trustees for sale. One example of this, which is typical of the tone of their correspondence, is Ms Natalya Ben's email of 26 July 2022 addressed to the defendant and Ms Rogan, as follows: "Thank you for your email below and your email sent to me yesterday, 25 July 2022 at 5:31 PM. We reiterate our request that you cease making any direct communication with employees or partners of RSM Australia Pty Ltd including attending at any of their offices. You can collect the paperwork from our office. Our address is below what our office hours are 9 AM to 5 PM. Before you decide to attend our office and collect the paperwork, we recommend that you review the attached documents which were emailed to you by Mr Gable turn on 25 May 2022 in response to your request for the trustees' calculations and invoices for the distribution process."
The trustees have completed their duties which they have discharged reasonably, diligently, and honestly. None of the defendant's contentions are made out. The trustees should now be permitted to retire from their role as trustees for the sale of the Coffs Harbour property. Here the defendant will not give a formal discharge to the trustees on a settled account, so they are entitled to have one taken by the Court: Chadwick v Heatley (1845) 2 Coll137; [1845] 63 ER 671. That is what in substance has happened here by the full and detailed accounting which the trustees have provided on the motion.
Placing the Costs Burden on the Defendant's Share. The defendant's share of the proceeds of sale should bear the trustees' costs incurred since 1 September 2021. This is an appropriate outcome, which is permitted by law.
When the Court is giving effect to trustees' right of indemnity out of trust assets in respect of costs incurred in litigation with one class of beneficiaries, the Court may adjust the burden of the costs of that litigation so that the class of beneficiaries responsible for bringing the litigation is the first to bear those costs: National Trustees Executors and Agency Co-of Australasia Limited v Barnes (1941) 64 CLR 268, at 280 per Williams J, Rich ACJ agreeing, and In re Allen (1889) WN 132.
The plaintiffs bear no responsibility for the trustees' costs incurred since 1 September 2021. All those costs have been occasioned by the defendant's conduct, as can be seen from the exchanges of correspondence between the defendant and the trustees and the solicitors for the trustees. The orders below provide for the trustees' costs to be paid out of the defendant's share of the proceeds of sale and they may be deducted by the trustees from the defendant share had before its distribution to him.
Quantifying the trustees claim. The trustees have offered to compromise their claim for their professional time and legal costs by capping their claim and costs incurred up to 30 June 2023. This significantly simplifies their claim both by providing certainty to it and making clear that it involves such a significant reduction on actual costs that the inference that the trustees' charges are reasonable is greatly strengthened. The capped claim includes the costs of preparing the 19 May 2023 motion in the principal affidavit in support but do not include all the hearing costs.
In a letter dated 19 July 2023 Hegarty Legal offered to the defendant to compromise his dispute with them. The trustees recounted the history of the dealings between the defendant and themselves including that on 7 December 2021 the trustees had offered, and the defendant had declined to receive the final net sum of $235,992.69. This sum involved a deduction from the defendant's share of expenses incurred by the trustees only up to 1 September 2021 and therefore included a compromise of approximately three months of their fees until 7 December 2021. The letter recounted that the defendant had rejected that offer and that only on 12 August 2020 he had first requested the trustees to pay the same sum to him.
The trustees then summarised their costs incurred from December 2021 up to 30 June 2023, which costs the Court is satisfied are established by the evidence which the trustees have filed in support of their motion. The quantification of costs up to this point in time is important because the trustees have now offered to cap their costs up to this time. The Court accepts the trustees have incurred the following categories of costs from December 2021 up to 30 June 2023. 1. Trustees' costs and disbursements (including the costs and disbursements from 1 September 2021 to 7 December 2021) - $13,168.99. 2. Hegarty Legal fees billed to date - $7,305.62. 3. Legal costs incurred but not yet billed (which include part costs of and incidental to the motion) - $35,307.61. 4. Counsel's fees (which are costs of and incidental to the motion) - $7,590. 5. Total of the trustees' claim for remuneration and expenses up to 30 June 2023 set out in (1) to (4) - $63,372.22.
To avoid a contested hearing, their letter of 19 July 2023 the trustees offered to the defendant to reduce their claim for remuneration and expenses to deduct only $43,710.38 from his share of the proceeds of sale, a reduction of $19,667.84 from their actual claim for remuneration and expenses of $63,372.22. Had this offer been accepted the defendant would have received a net amount of $192,282.31 (being $235,992.69 less $43,710.38).
The forensic position which the trustees have now taken is that they wish to be authorised by the Court to deduct their remuneration and expenses of $63,372.22 from the proceeds of sale otherwise distributable to the defendant of $235,992.69 and then to distribute the balance to him of $172,620.47.
The trustees claim that they are entitled to far more than this in the court is satisfied that they are and that this represents a significant compromise of the total claim form remuneration expenses. For example, the Court is satisfied that in relation to item (3) above, the legal costs incurred but not yet billed at the time of the hearing totalled approximately $79,000, more than double the figure of $35,307.61 incurred up to 30 June 20. And in relation to item 4, counsel's fees, the sum of $7,590 is now of the order of $14,000. In addition to that sum of $2,270 in disbursements has been incurred in preparing and delivering court books to the defendant. The compromises in these figures involved substantial write-offs for the trustees and their legal advisers. It is clear to the Court that substantial costs of this order been incurred since 30 June 2023.
Not only do the claim for remuneration and expenses up to 30 June 2023 appear to the Court to be reasonable, the trustees' abandonment of claims for remuneration and expenses since that date confirmed the reasonableness of the trustees' claim. Accordingly, the Court will authorise the trustees to deduct expenses of $63,372.22 from the proceeds of sale otherwise distributable to the defendant of $235,992.69 and then to distribute the balance to him of $172,620.47 and thereafter to retire from their office as trustees. The orders made below reflect this result.
If the Court has misunderstood any aspect of the compromise which the trustees have offered, then trustees have liberty to apply for 14 days to make any adjustments. Otherwise, the trustees should proceed to finalise the administration of this trust in accordance with the orders made below

At a glance

Court

Decision date

Before

Source

Judgment (5 paragraphs)

Parties

Cases Cited (4)