Authority is cited.
22 Thus, had the matter proceeded in the orthodox way, the defendant would have filed accounts, the plaintiff then would have cross-examined the defendant on those accounts and then filed surcharges and falsifications and so raised discrete issues. Alternatively, those discrete issues would have been formulated by some informal process. However, the plaintiff did not do that even though she was overseas. This led to her problems which were pressed before the Associate Judge by the defendant, but from which he survived with an order for costs made against her.
23 On or about 26 April 2007, the defendant agreed that a new trustee should be appointed of the estate or a new executor appointed of the estate whichever was appropriate, and put up the Public Trustee. The defendant says that this is all the plaintiff really wanted, he was prepared to concede that in April 2007. In his submissions of March 2009, defendant's counsel submitted that accordingly, the plaintiff should get her costs up to 7 May 2007 (the date on the cross-claim that was filed on 9 May 2007) and he should get his costs on the indemnity basis thereafter.
24 Whilst there is some validity in this point, the real truth of the matter is that the case has not yet been decided. The plaintiff sought to remove the executor on the basis of some sort of conflict of interest. The cases show that this is ordinarily insufficient because the testator is assumed to have taken possible conflicts into account when making his appointment and his appointment as executor should not lightly be set aside; see Vyse v Foster (1874) LR 7 HL 318, 332; Hordern v Hordern [1910] AC 465, 475; Morgan v MacRae [2001] NSWSC 1017 at [25]-[26]; Upton v Downie [2007] NSWSC 1095 at [48]-[49] and Rutter v McCusker [2008] NSWSC 1289 at [24]-[25].
25 Thus, to succeed, the plaintiff would have had to go a lot further than showing a mere conflict.
26 The real point between the parties is yet to be decided. What will happen now, hopefully, is that the former trustee will have to account to the new trustee for his administration and, in this way, or in some other way in which he renders an account, the plaintiff will be in a position of knowing which item she challenges.
27 The high point, however, of the plaintiff's case would appear to be that the defendant sold some of the estate's real estate to himself.
28 There is a firm principle of equity that the sale by a trustee to himself is voidable at the suit of a beneficiary. The basal principle was laid down over the centuries. It matters not that the sale was for full value. The only defence appears to be acquiescence.
29 However, more recently, it has been held in England (see Holder v Holder [1968] Ch 353) that the Court has a discretion as to whether or not it will apply the general principle. That suggestion was adopted by Austin J in Re One.tel Networks Holdings Pty Ltd (2001) 40 ACSR 83. However, it has not found favour with most of the leading Australian textbooks and was emphatically rejected recently in New Zealand in Chellew v Excell [2009] 1 NZLR 711.
30 The inventory of property made out by the defendant for probate purposes, shows that the deceased owned a number of pieces of real estate including 60 Hawksview Street, Guildford, and units 1, 2, 3 and 4, 14 O'Neill Street, Guildford. Hawksview Street was allegedly held as tenant in common with Sourara Alwan in equal shares and the four units in O'Neill Street a half share with Sajih Alwan, the executor.
31 The defendant's solicitors' letters to the plaintiff's solicitors of 10 June 2004 say that the defendant and Sourara Alwan performed numerous extensions to the property at 60 Hawksview Street. Furthermore, they had given monies to the deceased at no interest and paid many of his expenses over 45 years and the deceased's interest in the property was transferred to the defendant "in full satisfaction of the debt owed to the deceased."
32 This transaction must be considered to be able to be attacked by the plaintiff unless a defence such as laches and acquiescence is successful.
33 Accordingly, the probabilities would be that the plaintiff will at least succeed eventually in this litigation to the extent of setting aside the sale from the executor to himself, or alternatively, receiving equitable compensation.
34 Both parties seek some order for costs.
35 The summons was filed on 27 November 2006. It seeks an order that the defendant be removed "as trustee of the estate of Wajih Antonios Alwan … [and] that the assets of the deceased vest in the new trustees". It was amended in February 2007 to use the expression "executor and trustee". There was a cross-claim filed on 9 May 2007 seeking that the Public Trustee be appointed. The defendant has said that at all times after 26 April 2007 he was content to have the Public Trustee appointed a neutral administrator of the estate and that the plaintiff should pay the costs after 7 May 2007 because that is all that has happened so far.
36 The plaintiff quarrels with this. She says that before Associate Justice McLaughlin the cross-claim was abandoned. I must confess there is some hint in the transcript of this, but there is nothing very definite. At page 5 of the transcript the Associate Judge noted that there was a cross-claim, Mr Jobson of counsel for the defendant said that, yes, "an offer [was made] to remove the executor from the estate and [for] the Public Trustee to be appointed", but nothing was done. His Honour then asked whether a defence had been filed to the cross-claim and was told "No". Ms Obrart, for the plaintiff, then said: "My understanding … is that that cross claim is no longer instant [because the Public Trustee declined to act]." That is virtually as far as it went. I do not consider that that was an abandonment of the cross-claim.
37 All this makes me think that, apart from dealing with costs up to 7 May 2007, which appear to be the subject of concession, it is wiser not to make any order for costs other than to reserve them at the present stage because of the factors which I have outlined, particularly the factor that the real point in the case is still yet to be decided.
38 It will be, in due course, unfortunately, a very difficult job for a costs assessor to consider what costs accumulated by the solicitors on each side were proper costs chargeable to the other party, or indeed, to the client. A surface look at what has happened in this case tends to show that a lot of the work that appears to have been done on both sides has been unnecessary and out of ignorance as to how properly to proceed. It may be that this comment on deeper consideration will be seen to appear to be erroneous, but all the indications are there that either a judge of the Equity Division will, in due course, need to give specific directions to the costs assessor, or alternatively, the costs assessor will himself or herself have to make some very hard decisions.
39 As far as I can see, formal orders have not yet been made.
40 It is still unclear to me whether the estate has been fully administered other than the distribution and the review of the sale by the executor to himself if that be the case. The defendant's original position was that he has distributed everything except what is due to the plaintiff and the plaintiff will not accept that because she says it is too little. However, in response to a recent query that I raised with counsel I received a joint memorandum from them of 12 May 2009. This says:
"The position of both the Plaintiff and the Defendant is that the estate has not been administered."
41 This is rather Delphic. The note does not say fully administered. As there is still the matter of the sale of a property to the executor and the final accounting to the plaintiff and matters of administration expenses outstanding, counsels' statement is probably correct.
42 Thus it is necessary to recall the grant of probate to the defendant.
43 It needs to be noted that the Public Trustee has never appeared, despite what I would have thought were invitations issued through the parties and he has said that he has never been served with any orders. That latter point is correct because no orders have been made.
44 My Associate informs me that a solicitor telephoned her and asked "where are the orders because the Public Trustee had not been served". The solicitor was told that it was a matter for the parties to serve the orders not the court and it was no wonder the Public Trustee had received no orders, as none had been made.
45 The Public Trustee still must either consent to administer the estate even reluctantly, or alternatively, some other person must be found.
46 The matter remains in an unsatisfactory state. I am not prepared to make any orders for costs other than the ones I have indicated and it seems to me that, apart from making the following orders, I should merely stand the matter over for a judge who is still sitting in the Equity Division to take the case the next step forward.
47 My Associate recently asked counsel for their submissions on the form of the orders that should now be made. In response, I was informed in counsels' joint memorandum that the plaintiff proposes the orders which were delivered with the plaintiff's submissions on costs dated 18 March 2009 and that the defendant does not propose orders and submits that the Public Trustee should formulate the orders.
48 With respect, this was not helpful. It seems to me that the orders that should be made are as follows: