The Estate of Wendy Gwynne Price [2020] NSWSC 782

A Settlement Fails and Proceedings Are Relisted - October 2018 to March 2020

What the Court should do in response to the present application cannot be considered without a proper understanding of the events of the last 14 months. During that period, this litigation has been conducted with low levels of cooperation between the parties. The Court has constantly requested the parties to work together to reduce the costs being incurred. But the Court's requests have largely fallen on deaf ears. Mr Price on the one side and the executors, Ms Lanigan and Mr Smart, on the other side have given each other no quarter in this contest. Objectively speaking, the conduct of this litigation on both sides has been irrational and does little credit to anyone involved in it.
The Court's response to this situation has been over the last 14 months, between April 2019 and June this year, to attempt of its own motion to fashion detailed orders to reduce the hostility between the parties and allow mechanisms for them to try and perform the orders of 22 October 2018, often with the intervention of third parties to assist them to work past their differences.
The best way to understand the entrenched nature of this contest between a brother on one side and a sister and an uncle on the other, is for the Court to take the unusual course of simply setting out the unsuccessful history of the detailed orders that have been made to try and help these parties to resolve their differences over the last 14 months. Those orders tell their own story and make clear what should happen now.
The deceased's estate principally comprised two properties, a farming property ("the Farm property") in northern New South Wales, the Riverside Drive property in the same area, together with some cash. The Court made orders by consent on 22 October 2018 dealing with both those properties. The Court made the following orders on that occasion, dealing with both those properties: "1 Orders that probate of the will dated 28 July 2014 of Wendy Gwynne Price be granted in solemn form to the First and Second Plaintiffs, Kerrie-Anne Lanigan and Ian Smart. 2 The proceedings be remitted to the Registrar to complete the grant. 3 Orders pursuant to s. 59 of the Succession Act that, in addition to the provision that the Defendant/Cross-Claimant, Matthew Ian Price, receives under the will of the late Wendy Gwynne Price (the "deceased") dated 28 July 2014, he receive, at his direction, the following provision out of the estate of the deceased: a) The net proceeds of sale of [the Riverside Drive property]; and b) ½ of the net proceeds of sale of [the Farm property]. 4 Orders that in the event that the Defendant/Cross-Claimant discharges the mortgage registered on the title to [the Riverside Drive property] at any time up to 30 days after settlement of the sale of [the Farm property], and subject to the Defendant/Cross-Claimant taking that property in its present state of repair, that property may be transferred to him, or as he directs, in specie in full satisfaction of the provision in 3(a), but that the Plaintiffs/Cross-Defendants will not be in breach of this order in the event that any third party takes steps to sell [the Riverside Drive property]. 5 Notes the agreement of the parties that, in the event that the Defendant/Cross-Claimant seeks to discharge the mortgage in accordance with paragraph 4 of these orders, he must communicate that intention to the solicitor for the deceased's estate and not to the executors personally. 6 Orders that the costs of the Defendant/Cross-Claimant, agreed in the sum of $130,000, be paid out of the deceased's estate, such payment to be made as soon as possible following the issuing of the grant of probate and collection of funds from ANZ Bank and Bank of Queensland, such payment to be made no later than the date on which the Plaintiffs/Cross-Defendants' costs are paid pursuant to Order 7, and no interest is to accrue if paid in accordance with this Order. 7 Orders that the costs of the Plaintiffs/Cross-Defendants, calculated on the indemnity basis, be paid out of the deceased's estate."
The deceased's grandchildren were entitled under the deceased's will to the other half of the net proceeds of sale of the Farm property. The terms of settlement also provided for mutual releases by the defendant, including in various capacities, including as executor of the estate of the late Michael Price and as an officer of a company, Prosource Pty Ltd. The parties also agreed to do all things necessary to ensure the due and proper administration of the estate. And the plaintiffs agreed not to do anything to encourage third parties to sell the Riverside Drive property; this provision appears to have been aimed at the mortgagee of the Riverside Drive property, the Southern Cross Credit Union.
It is not necessary to go through all the defaults in performance of these orders and the allegations and counter-allegations of breach that led to the matter being relisted on 10 April 2019. But the monthly mortgage payments to the Southern Cross Credit Union remained unpaid and the defendant had, without any proper authority, lodged caveats on estate properties. Moreover, few steps had been taken to attempt to sell the Farm property, a sale which was designed to realise money that might give Mr Price an opportunity to acquire the Riverside Drive property.
The Court was sufficiently concerned as to what happened between October 2018 and April 2019 that it made the following detailed orders on 10 April 2019, commencing in paragraph 2 with a note about the "highly unsatisfactory" state of the administration of the estate's affairs up to that date: "2. The Court notes that the current picture of the administration of this estate presented by these affidavits is highly unsatisfactory, and as a result the Court will be taking a close interest in completing the estate's administration as soon as reasonably possible. 3. The Court further notes that the conduct demonstrated by the affidavits is a basis for a contention that the Court's orders have been breached in this matter, so the Court directs the solicitors on behalf of each party to inform their clients that if the Court detects evidence of breaches of its orders, it may seek to remedy breaches at least by: (a) the making of costs orders against parties, which orders may be deducted from that party's share of the estate; or (b) taking the administration of the estate out of the hands of the current executors and placing it in the hands of an independent administrator, which will be at the cost of the parties. 4. The Court orders that the question of who will ultimately bear the burden of the making of mortgage payments to the Southern Cross Credit Union in respect of the Riverside Drive property after the date of the Court's orders made on 22 October 2018 ("the Southern Cross mortgage payments") is reserved for further consideration. 5. Pending determination of who will finally bear the burden of the Southern Cross mortgage payments, the plaintiffs are directed until further order (a) to pay those mortgage repayments to the Southern Cross Credit Union; (b) to apply any rent from the Riverside Drive property to the Southern Cross mortgage payments; and (c) if no rent is available for that purpose to explain on affidavit within 14 days to the Court why the Riverside Drive property is not currently earning income. 6. The defendant is required by 4pm on Friday, 12 April 2019, to provide to the plaintiffs a property search showing the Certificate of Title to the Riverside Drive property and the Farm property (as defined in the affidavit of Ms Ross-Maranik) free of the caveats which were lodged by the defendant either for himself or as the director of Prosource Consultants Pte Ltd. 7. Direct the solicitors for the plaintiffs to provide to the solicitors for the defendant notice of when the solicitors for the plaintiffs have provided to the ANZ Bank and the Bank of Queensland documents which the solicitors for the estate regard as satisfactory for authorising the distribution to the estate solicitors of moneys in accounts held by the estate with those banks. 8. The plaintiffs are ordered to engage conveyancers or solicitors to prepare a Contract for Sale for the sale of the Farm property and to enter into an agency agreement with a listing real estate agent and otherwise to do all things necessary to list the Farm property for sale by public auction within 70 days of the date of these orders, that is by Wednesday, 19 June 2019. 9. Direct the plaintiffs to keep the defendant informed, through the defendant's solicitors, of all steps being taken from time to time in relation to the preparation of the Farm for sale, the engagement of conveyancers and agents, the listing and marketing of the Farm and all other matters incidental thereto by providing information to the defendant at reasonable intervals, no less than 2 weeks apart. 10. Order the defendant, by his servants and agents, is restrained from filing any caveats either in his own name, or as agent on behalf of any other entity, over the Farm or the Riverside Drive properties. 11. Order the defendant, by himself, his servants or agents, is restrained from corresponding for himself or on behalf of any other party, with the plaintiffs to make any financial or other claim against the estate or otherwise to commence proceedings against the estate except for the purpose of enforcing these orders or the Court's orders of 22 October 2018. 12. Direct the estate by 4.00pm on 18 April 2019 to provide an invoice to the solicitors for the defendant, isolating in that invoice the reasonable costs caused to the estate by (a) of the defendant, of his own motion filing on or about 23 October 2018, the caveat over the Riverside Drive property and all the estate's costs associated with the removal and dealing with the removal of that caveat, and (b) in dealing with and responding to the letter of 13 November 2018 initiated by the defendant on behalf of Prosource Consultants Pte Ltd. 13. The Court notes that if there is no issue about the quantum of the costs notified to the estate by 26 April 2019 the subject of the invoice the subject of Order 12, that the amount of those costs will be deducted from any distributions to the defendant from the estate. 14. Direct that the plaintiffs provide by 18 April 2019 a response in detail to each of the 19 items of property the subject of the claim in the defendant's solicitors letter of 27 November 2018 to the plaintiffs' solicitor explaining in respect of each item, whether it is accepted or disputed that such item: (a) is at the Farm property or in a location otherwise know to the executors of the estate; or (b) is the property of the defendant or the estate of the late Michael Price; or (c) the property of any company controlled by the defendant. 15. Upon receipt of the response by the defendant directed by (14), the parties are to communicate via their solicitors and genuinely endeavour to resolve a mechanism by which the defendant's property claimed in the letter of 27 November 2018 (the disputed chattels) can be returned to him. 16. In respect of disputed chattels, the parties are directed to agree upon the engagement of an independent solicitor to accompany the defendant at reasonable times to inspect the Farm property or any other place they may be located with a view to the defendant identifying and collecting the items on the list. 17. The plaintiffs are restrained from removing from the Farm property any chattels or other property which they have reason to believe is the disputed property or other property of the defendant or of the estate of the late Michael John Price or of Prosource Pty Limited. 18. The plaintiffs are restrained from removing any chattels from the Riverside Drive property without first giving 7 days' prior notice to the solicitor for the defendant, accompanied by a photograph of the chattel proposed to be removed. 19. Reserve the costs of the parties' preparations for today, including the preparation of affidavits, and the costs of appearing today and of any future relisting and the Court will determine, if agreement is not reached, which party will bear those costs out of that party's share of the estate. 20. The plaintiffs are ordered by Friday, 3 May 2019 to provide to the defendant reasonably detailed inventory of the deceased's personal effects, furniture other chattels of personal domestic, household or garden use that the plaintiffs propose to divide in their discretion between the first plaintiff and the defendant pursuant to clause 6(c) of the will, showing which items are to be given to which party."
The proceedings were relisted on 21 May 2019. The Court was on that date not satisfied with the progress that had been made in giving effect to the Court's 10 April orders. The Court made strong comments to that effect, which the Court directed to be forwarded by the respective legal representatives to each party.
When the matter returned to Court on 30 May 2019, there appeared to be a continuing stalemate about the sale of the Farm property and the removal of the defendant's chattels from the Farm property before its sale. So little cooperation was evident between the parties that the Court instituted a detailed regime involving the engagement of an independent solicitor to supervise the identification and removal of the chattels. Detailed directions were made for the sale of the Farm property.
It is rare for the kind of prescriptive orders that were made in this case to be made to give effect to consent orders such as those that were made on 22 October 2018. But the hostility between the parties and the need to achieve some kind of ordered progress in the administration of the estate meant that a high level of prescription was necessary. And orders such as these were legally justified on the basis that the October 2018 settlement was of proceedings brought under Succession Act, Chapter 3 and the Court has powers under Succession Act, s 66 to make ancillary orders to give effect to orders made under Succession Act, Chapter 3.
In order to facilitate the sale of the as yet unsold Farm property, and to enable the chattels claimed by the defendant to be isolated from both the Riverside Drive property and the Farm property using the services of an independent solicitor, the Court made the following orders on 30 May 2019: "The Sale of the Farm Property 1. The Plaintiffs to appoint and enter into an agency agreement within 7 days from the date of these orders with Brad Franks of Ray White ("the Agent") to sell the Farm by auction, and, in the event that the property does not sell by auction, then by private treaty. 2. The Plaintiffs to engage the solicitors Messrs Robbins Watson, within 24 hours of the date of these orders, to provide to the Agent a contract for Sale of the Farm, upon terms that the contract for sale of land for the Farm be provided to the Agent no later than 5pm on 7 June 2019. 3. The Plaintiffs to undertake works on the Farm, either themselves or by engaging contractors, in order to prepare the Farm for sale by doing the following specific works to, or in relation to, the Farm property, namely: (a) to clean and chemically balance the pool within 21 days of the date of these orders; (b) Within 28 days of the date of these orders, undertake and complete the following external work, in accordance with good horticultural practice and to a standard that renders the farm for the purpose of presentation for sale: (i) Prune the trees in the garden; (ii) Spray the weeds; (iii) Mow the lawns (including any whipper snippering); (iv) Tidy up the gardens; (v) Spray the weeds along the driveway, fence lines and drains; (vi) Spray the paddock on the right hand side of the driveway; (vii) Spray the weeds in the mango paddock; (viii) Generally tidy the garden, lawns and paddocks (including any rubbish removal); and (ix) Generally remove any weeds in the gardens; (c) Within 28 days of the date of these orders, to pressure wash the house, the shed, all paths (including around the pool area) and driveway to make it fit for presentation for sale; (d) Within 28 days of the date of these orders, to declutter and clean the house and shed to make it fit for presentation for sale; (e) Unless the solicitors for the parties agree within 7 days that NSW swimming pool legislation ("the applicable legislation") does not require the erection of a swimming pool fence in relation to the swimming pool on the Farm, then within 14 days of the date of these orders, to engage contractors to erect a pool fence compliant with the applicable legislation around the swimming pool on terms that the pool fence is so erected within 35 days of the date of these orders, and, upon completion of the said pool fence, the Plaintiffs shall thereafter engage an authorised inspector and obtain before the sale of the Farm a certificate of compliance that the pool fence complies with the applicable legislation; and (f) The Plaintiffs are to do all acts reasonably necessary to cause the existing tenant, or licencee, to vacate the Farm within 14 days of the date of these orders. 4. List the proceedings before me for further directions on Monday, 1 July 2019. 5. By 5 July 2019, the Plaintiffs shall list the Farm for sale with Agent for sale by public auction with: (a) the auction to take place by 6 August 2019, unless upon the Agent's recommendation, the auction should be deferred for a period of no more than a further 3 weeks; and (b) the reserve price at such auction shall be such price as is agreed between the Plaintiffs and Defendant or, in default of agreement, is fixed by the Court. 6. In the event that contracts for the sale of the Farm are not exchanged by private treaty, at a price agreed between the Plaintiffs and Defendant or, in default of agreement, that is fixed by the Court. 7. The Plaintiffs are to pay, from funds of the Estate, all insurance premiums for the Farm and the Riverside Drive Property and to ensure that both the Farm and Riverside Drive Property remain insured until transfer by the Estate. 8. The Plaintiffs must pay from funds of the Estate to the Agent the sum of $4,000.00 for the marketing of the Farm for sale. 9. The Plaintiffs must apply, from the funds of the Estate, all monies reasonably necessary to be paid to third parties to comply with these orders, including to prepare the Farm for sale. 10. Until the sale of the Farm Property, the Plaintiffs shall continue to pay from the funds of the Estate as they fall due, all regular instalments of council and water rates in respect of the Farm and the Riverside Drive Property. 11. Upon no less than 7 days advance notice to the Defendant, the proceeds of the sale of the Farm shall be disbursed on settlement as follows: (a) In payment of any unpaid fees of the Independent Solicitor; (b) In payment of the Agent's commission and advertising expenses that have not already been met by the Estate out of Estate funds; (c) In payment of the conveyancing expenses of the sale; and (d) In payment of the balance into Court, which sum may only be disbursed in accordance with the further orders of the Court. 12. If the funds of the Estate are not sufficient to pay all the sums ordered above and ordered on 10 April 2019, whereby a shortfall arises before settlement ("the shortfall"), then the priority of payment from the Estate's available funds shall be in the following order, until settlement of the sale of the Farm releases funds to meet these expenses: (a) the professional fees, costs and disbursements of the Independent Solicitor; (b) the insurance premiums for the two properties; (c) Agent's fees and marketing expenses for the sale of the Farm Property; (d) expenses to prepare the Farm Property for sale; (e) payment of money accruing under the mortgage of the Riverside Drive property; and (f) council and water rates for the properties. The Chattels of the Estate or Chattels on the Riverside Drive and the Farm Properties 13. Unless there is an agreement between the parties about chattels on the Farm and Riverside Drive Property within 7 days of the date of these orders, then: (a) The Defendant and the Independent Solicitor shall attend the Farm Property and the Riverside Drive property in the company of a nominee of the Plaintiffs on or before 19 June 2019 at such reasonable time as agreed by the parties and the Independent Solicitor ("inspection"). The Defendant shall identify during such inspection all chattels that the Defendant claims are owned either by the Defendant, the Estate of Michael Price or Prosource Consultants Pte Ltd (a company controlled by the Defendant). (b) The Plaintiffs and Defendant will use their best endeavours to resolve by agreement the distribution of such chattels at the inspection (including chattels of the estate), with the objective that the Defendant will be permitted to remove the chattels identified and agreed at the inspection (or for bulky items, within 48 hours of the inspection); (c) The Plaintiffs' nominee and Defendant shall at such inspection shall separately identify the balance of the chattels located at the Riverside Drive property and the Farm the ownership of which cannot be agreed ("the disputed chattels"); (d) In respect of the disputed chattels, the Independent Solicitor will act in the capacity of a Court Expert under Uniform Civil Procedure Rules 2005 ("UCPR"), r 31.46 to determine the ownership of the disputed chattels on the evidence available and supplied to her on or before that day and to immediately return them to their owners in accordance with the Independent Solicitor's determination, or if unable to determine their ownership, the Independent Solicitor is authorised by this order to arrange to place the chattels in storage at the Estate's expense for which she will be fully indemnified; (e) The parties should provide to the Independent Solicitor within 14 days a full list of the disputed chattels each party claims and evidence in support, to assist the Independent Solicitor to make a determination as a Court Expert as to their ownership and, otherwise the conduct of the Independent Solicitor's determination will be within her direction and discretion, subject only, as required by the Independent Solicitor, for the seeking of any necessary directions from the Court; and (f) The Independent Solicitor acting as Court Expert is directed to provide a short report to the Court as to her determinations as to ownership of the disputed chattels in accordance with UCPR, r 31.49, within 14 days of making her determination. Other Orders and Notations 14. The Plaintiffs shall instruct the Agent to provide at 7 day intervals a copy of all progress reports, progress updates and marketing details to both the Plaintiffs and the Defendant, from the time the Farm is first listed for sale and for the duration of its listing for sale until it is sold. 15. Order that the Defendant not communicate personally with the Agent until further order. 16. The parties shall do all acts and things and give all consents and made herein. 17. Each party has liberty to apply on two days' notice to the duty judge before 24 June and to Slattery J after 24 June 2019. 18. Note that these orders are intended to replace Orders 8, 15 and 16 made on 10 April 2019, but that the balance of the orders made on 10 April 2019 remain in place. 19. Order that the parties to these proceedings shall, both in their representative capacity and in their personal capacity, jointly and severally be responsible for the whole of the legal fees of the Independent Solicitor, which should be paid to the Independent Solicitor strictly within the terms of the Independent Solicitor's memoranda of fees and any liability of the parties to the Independent Solicitor for such fees will be a charge on both the Farm and the Riverside Drive Property which may be enforced by the Independent Solicitor by caveat. 20. The Court expects these orders to be strictly complied with by all parties. In the event there is non-compliance with these orders the parties are on notice the Court may make personal costs orders against the parties and may consider the removal of the Plaintiffs as executors of the Estate, and in the event either of these matters occurring, the Court will publish its reasons for decision including about the conduct of the parties and their legal representatives. 21. The solicitors for each party must serve a copy of these orders and today's transcript on their clients by 5.00pm on 31 May 2019."
The matter returned to Court on 1 July 2019. By then not all the work to prepare the Farm property for sale had been done. Orders were made for the plaintiffs to cooperate with the agent in attending to the completion of the work at the Farm property and to pay the agent. Further detailed orders were made in relation to the defendant collecting listed chattels from the Farm property. Orders were also made for the parties to attend at the Riverside Drive property with a Court appointed expert to resolve any dispute regarding the selection of chattels located at that property, which were directed to be dealt with in accordance with order 13 of the orders made on 30 May 2019.
The Riverside Drive property has been the subject of flooding on the ground floor, where many of the chattels which the defendant claims are his were stored. There was also graffiti on parts of the property. There was no agreement about responsibility for removing chattels or fixing the graffiti. Nor was there any agreement about a building expert who could be engaged to make an assessment of what work was required to rectify the property.
An objective inspection by a jointly retained building expert was required at the Riverside Drive property, so at the next directions hearing on 16 July 2019 the Court made the following further notations and orders: "The Court Notes: 1. The purpose of the orders and notations is to enable the parties to make an informed decision about work to be undertaken to the property at the Riverside Drive property to enable Ms Sage to then complete her inspection and discharge the orders previously made by His Honour concerning the further attendance at the ground floor and garage at the Property. 2. The parties intend to appoint an agreed joint person to attend and inspect the Riverside Drive property ("joint person"). 3. The Joint Person will consider and report on work to be undertaken to the Property to enable Ms Sage to then complete her inspection at ground floor and garage at the Property and discharge the orders previously made by the Court concerning her role. 4. The Joint person be either a qualified licensed builder or quantity surveyor. The parties consent to Michael Coffey, the solicitor for the Plaintiffs providing these proposed orders to Brad Franks and invite him to suggest a joint person that is either a licensed builder or quantity surveyor for consideration by the parties. 5. The Defendant will suggest 3 joint persons, the first of whom is Shane Fraser (who is a licensed builder and who did building work on the property previously. 6. The Estate to pay costs of joint person in the first instance without admission of liability, but the determination as to who meets costs of joint expert to be considered and determined by the Court in the final determination. 7. These orders are otherwise made without admission by any party ORDERS:- 8. The Defendant will provide to the Plaintiffs the names and addresses of 3 joint persons by 5pm on Wednesday 17/7/19 including their Curriculum Vitae. 9. The Plaintiffs to select one of the joint persons nominated by the Defendant by 5pm on Friday 19/7/19. 10. The Plaintiffs and Defendant jointly engage the joint person by letter by 26/7/19. 11. The Estate to pay costs of joint person in the first instance without admission of liability, but the determination as to who meets costs of joint expert to be considered and determined by the Court in the final determination. 12. The joint person to provide their report to both parties. 13. Within 14 days of provision of the report to the parties by the joint person, the parties either:- a. Provide to the Court agreed orders to resolve the issues regarding the Property and so that Ms Sage, the court appointed expert, can attend the ground floor and garage at the Property and discharge the earlier orders with respect to chattels at the Property. b. Provide to the Court competing orders to resolve the issues regarding the Property so that Ms Sage, the court appointed expert, can attend the ground floor and garage at the Property and discharge the earlier orders with respect to chattels at the Property."
The Farm property was sold pursuant to these orders. And the proceeds of sale of the Farm property were paid into Court. On 29 October 2019. Further directions were made for the filing of evidence and submissions in relation to the isolation of the remaining issues to be resolved in the estate administration. These remaining issues were identified in Schedule A to the orders of that date. "Schedule A 1. Who bears the burden of the outgoings in respect of the Riverside Drive property from the date of death until the date of transfer. 2. What adjustments, if any, should be made in favour of Matthew Price by reason of the state of repair of the Riverside Drive property. 3. To what extent, if any, is the Estate liable for any increase in the mortgage secured on the Riverside Drive property by reason of delay in selling the Farm property. 4. To what extent, if any, is the Estate liable for any loss by reason of the failure to rent the Riverside Drive property. 5. When should the Plaintiffs pay to the Defendant his share of the proceeds of the sale of the Farm property. 6. How should order 4 made 22 October, 2018 be varied concerning Matthew Price electing to taking a transfer of the Riverside Drive property. 7. Who should pay the costs of the court expert Debbie Sage. 8. Who should pay the costs of the court expert Shane Fraser."
The remaining issues in the proceedings were heard on 9 and 10 December 2019. But the hearing could not be completed because Mr Smart was not available to give evidence. For that reason, the hearing was adjourned part-heard until March 2020. But it became evident before the time of this hearing that the monthly mortgage payments due to the Southern Cross Credit Union on its mortgage over the Riverside Drive property had not been paid. The estate remained in default under that mortgage raising the possibility that the Southern Cross Credit Union might exercise its power of sale of the property. It therefore appeared reasonable to attempt to accelerate the transfer of the Riverside Drive property to the defendant, who had indicated that he had made arrangements to borrow funds to acquire the property.
But there was a dispute about whether the estate or Mr Price was liable to pay out the mortgage over the Riverside Drive property to Southern Cross Credit Union. The Court determined that issue could be resolved later. But in the meantime, that the Southern Cross Credit Union mortgage could be paid out of the funds available after the sale of the Farm property. But there was no agreement about how much was due to Southern Cross Credit Union. And the estate was concerned that if the Riverside Drive property were transferred that all the executors' administration costs may not be able to be paid out of what was left in the estate. So the Court made orders that, as a condition of the transfer of the Riverside Drive property to Mr Price, he should pay $130,000 into Court as security to cover those expected estate expenses.
To facilitate the overall objective of transferring the Riverside Drive property to Mr Price, the Court made the following further orders on 10 December 2019 and the proceedings were adjourned to March this year: "1. The Court makes these orders in furtherance of Orders 3 and 4 of the Court's Orders made on 22 October 2018, pursuant to Succession Act 2006, s 59 and the Court's ancillary power under Succession Act, s 66, because the mechanism provided for in the orders of 22 October 2018 has proved to be inefficient to achieve the parties' objectives in those orders. 2. Order the Plaintiffs take all steps necessary to discharge the first mortgage to the Southern Cross Credit Union, the mortgagee over the property at 100 Riverside Drive, Tumbulgum ("the property") by Friday 17 January 2020. 3. Order that upon the Defendant paying into Court the sum of $130,000, clear of any payments required by the ATO on the transfer, the Plaintiffs will transfer ("the transfer") the title of the Riverside Drive property to the Defendant by Friday, 14 February 2020. 4. Order the Plaintiffs to grant reasonable access to the property without any hindrance or obstruction for any proposed mortgagee of the Defendant or to any valuer or other person engaged by the mortgagee for the purposes of taking steps to value or appraise the property for the transfer, provide at least five (5) working day' notice of the requirement for access is provided to the Plaintiffs. 5. Order the Plaintiffs to provide the Defendant with access to the property to inspect the property prior to the transfer, provided such access is not exercised by the Defendant in person but is exercised by Mr Brad Franks (or other agreed person), who is authorised at such inspection to take any photographs, make any non-invasive tests or take other reasonable steps as in Mr Franks' judgment are necessary to ascertain the true state of repair of the property at the time of inspection and provided Mr Franks supplies copies of his photographs and other material findings about the state of repair of the property to both parties. 6. The Defendant by its servants and agents is restrained before the transfer from bringing or allowing to be brought on the property any goods or chattels. 7. The transfer will be effected upon condition that the Plaintiffs will have no obligation arising out of these orders to execute any of the structural repairs, repairs to the water leak or renovations to the property presently the subject of these proceedings, but the estate is required at its own expense and from estate funds to remove rubbish from the property before the transfer. 8. Order that the Plaintiffs will provide vacant possession of the Riverside Drive property to the Defendant as at the date of the transfer, excluding such items that the Defendant agrees can remain at the property, which shall be identified by the Defendant in a list to be provided to the Plaintiffs by 31 January 2020. 9. The transfer may be transacted through PEXA, with the intention that the PEXA requirements to effect a transfer of the property to the Defendant and the payment of the sum of $130,000 occur simultaneously through PEXA. 10. Note that all the above orders are without prejudice to the rights of each party to maintain all existing contentions in these proceedings and to seek contribution from any other party or parties in relation to the payment of the mortgage over the Riverside Drive property. 11. Grant liberty to apply. 12. Direct the parties to consult with one another and Southern Cross Credit Union with a view to reaching either: (a) a figure for the discharge of the mortgage which is acceptable to Southern Cross Credit Union; or, in the alternative, (b) a figure that the parties agree will cover what is what the parties' expect will be the payout figure required by Southern Cross Credit Union, with a view of the discharge of the mortgage by 17 January 2020 and to provide such figures to my Associate by Wednesday, 18 December 2019 at 4pm. 13. Matter listed on 20 March 2020 at 10 am."
These orders, seeking to facilitate the sale of the Riverside Drive property to the defendant, were crafted on the basis that there did not appear to be any utility in the plaintiffs carrying out any repairs to the property or to remove rubbish, all of which would otherwise have had to have taken place at the estate's expense. Moreover the plaintiffs were not claiming any items of value in the Riverside Drive property. So the Court fashioned these orders to permit settlement to occur with the chattels and debris left at the property. Once settlement occurred, the defendant would be able to sort through the material on-site in his own time and at his own expense and retain any items of value and discard the rest himself. The orders also included inspection and photographing orders so that evidence could be preserved of the state of repair of the Riverside Drive property for the determination of the remaining issues.
But although the orders of 10 December 2019 had set up the possibility of the Riverside Drive property being transferred by the estate to Mr Price and the Southern Cross Credit Union being paid out, none of that occurred by 18 December. The Court regarded it as desirable, whatever happened with the sale of the Riverside Drive property, to stop unpaid mortgage obligations accruing to the Southern Cross Credit Union. But the parties were unable to cooperate to obtain a payout figure to the Southern Cross Credit Union before the end of 2019. So at the initiative of the defendant, the matter was relisted on 18 December 2019 and the following further orders were made with a view to the matter being brought back the following day: "1. The Court notes that the defendant has applied to vary Order 2 of the orders made on 10 December 2019 to permit the discharge of the first mortgage of the Southern Cross Credit Union in the amount of $363,210.44 this Friday 20 December 2019 but the representatives of the plaintiff are not present in Court today so the application will be adjourned for hearing tomorrow. 2. The Court directs the defendant to supply by 5pm today the solicitors for the plaintiff with the following documents: (a) a copy of these orders; (b) a copy of Exhibits 8, 9 and 10; (c) the exact form of orders which the defendant will be contending the Court should make at the adjourned hearing tomorrow; (d) a copy of today's transcript; and (d) any affidavit that the defendant will seek to read at tomorrow's hearing. 3. Adjourn these proceedings before me for mention at 12.00 tomorrow, 19 December 2019. 4. Liberty to apply."
The matter returned to court on 19 December when the Court ordered that the sum of $363,364.47 be paid by 23 December from the funds paid into Court from the proceeds of sale Farm property, to discharge the first mortgage to the Southern Cross Credit Union over Riverside Drive property. The mortgage to the Southern Cross Credit Union was paid out pursuant to these orders.
On 19 March 2020, the Court was told there was a delay in settling the transfer of the Riverside Drive property to Mr Price because of a delay in the issuing of a new certificate of title after the discharge of the mortgage to the Southern Cross Credit Union. But Mr Price had not complied with the 10 December 2019 orders providing a list of the chattels to be retained at the Riverside Drive property. Mr Price's counsel indicated that he had not been able to get to the property to do this. If the Court's orders had become unworkable, the matter should have been relisted for the purpose of the orders being varied pursuant to the liberty to apply. But this was not done. The Court pointed out: that time was running out; that "the shutters are coming down" on the Court facilitating settlement; that the Court would not be ordering any more inspections of the property on the basis that any conveyance to Mr Price would be without the estate having to remove anything from the property.
By the time the matter resumed on 20 March 2020, COVID-19 restrictions had already prevented interstate travel and restricted the numbers of persons available in courtrooms. Mr Smart was in Queensland and was not readily able to travel to New South Wales for the hearing. So he and his son were cross-examined by video-link pursuant to arrangements organised at the directions hearing on 19 March.
The hearing on 20 March revealed a new problem with the proposed settlement regime for the Riverside Drive property. The 10 December 2019 orders were structured so that Mr Price would pay $130,000 of his own money into Court, which would become a fund available to meet any shortfall in the event that costs or other orders against him exceeded his share of estate funds in the hands of the executors. It was envisaged to be a form of security for the executors to substitute for the estate asset which they were surrendering by transferring the Riverside Drive property. The impression given to the Court before 10 March was that Mr Price was going to use an incoming first mortgagee, Ingwersen & Lansdown Securities Limited, to borrow money himself on the security of the Riverside Drive property to pay the $130,000 into Court.
But it emerged on 20 March that Mr Price would not be the borrower but the borrower would be a company, Priceless Commodities Pty Ltd ("Priceless Commodities"), of which he was sole director and sole shareholder, but the shares of which he did not own beneficially, and he would be the guarantor of the borrowings of that company. He set up the structure in an attempt to avoid his former de-facto partner making a claim on the asset of the Riverside Drive property. It appeared that the money paid into Court would be money of the borrower, Priceless Commodities, and not Mr Price. This raised the question whether there may be other competing claimants on the fund in the form of creditors of Priceless Commodities.
A deed of priority dated 17 March 2020 between the proposed first mortgagee, Ingwersen & Lansdown Securities Limited, the proposed second mortgagee Keypoint Law Pty Ltd, a company associated with the solicitors for Mr Price, and the borrower Priceless Commodities, indicated that there were, or were to be, interests over Mr Price's property registered on the Personal Property Securities Register ("PPSR"). It was not made clear to the Court that these security interests would not include interests over any money that was proposed to be paid into Court. The Court made clear on 20 March that these complications had to be resolved before the transfer of the Riverside Drive property could proceed. Any funds paid into Court needed to be funds that would be available to the executors without the possibility of competition from any other creditor. The Court clearly indicated it was not prepared to contemplate that, as result of the transfer the Riversdale Drive property, the estate and the executors could be left at risk of not having Mr Price's liabilities to them satisfied. But the Court suggested that the structure of this transaction could perhaps be made less complicated.
In response to the Court's concerns, Mr Hodgson said "we need to get some instructions and put on materials", presumably to satisfy the Court's doubts about the structure of the transaction. The Court then suggested in the alternative that Mr Price may be able to "renegotiate this". The Court explained "you will have to go back to the mortgagee and your solicitors can think about it".
In the end, on 20 March 2020 the Court gave the defendant a further final opportunity to complete the sale and made orders restraining the plaintiffs until 16 April 2020 from marketing the Riverside Drive property. But before doing so, the Court gave a very clear warning that the injunction it was giving that day restraining the plaintiffs from dealing with the Riverside Drive property until 16 April (varied from an initial proposal of 9 April) was the last opportunity for the defendant to get his house in order and to do whatever was required to complete the transfer of the property to him. Otherwise the original idea of the 22 October 2018 settlement, of him receiving the proceeds of sale of the Riverside Drive property, would follow. The following is the exchange between the bench and Mr Hodgson on this subject: "HIS HONOUR: I will make an order restraining the executors from selling the property until 9 April. If this does not work, Mr Hodgson, it is goodbye to the property and your client will get some money and that's it. I am not going to bend over backwards any more for anybody in this case. HODGSON: The message will be passed on. HIS HONOUR: If you don't come up with a proposition, it's goodbye. I have adjourned this so many times to make this happen, it's just not going to happen anymore. HODGSON: The message is clear. HIS HONOUR: It has to be clear and simple and in accordance with the intent I have made. HODGSON: Liberty to apply, your Honour? HIS HONOUR: Liberty to apply on reasonable notice. Better get your skates on. Communicate all of that to your client and it can be put on the market. That's the duty of the executors. If they put it on the market and it falls over because you have not got a deal, I will make orders for removal of what's in the property and you will argue about who pays the costs. HODGSON: I understand that."
The Court returned to this subject before adjourning. The Court again suggested that to facilitate settlement, to move past the issues that had arisen about the defendant's failure to inspect the property, and to identify the chattels that were the defendant's, that settlement could occur merely by leaving all the chattels and the debris at the Riverside Drive property. Mr Price could then be responsible after settlement for sorting out what he wanted to keep of all this material.
Just before adjourning on 20 March, the Court said the following to the parties: "HIS HONOUR: You have got what I have said about removal of rubbish. You come up with the words, something sensible that will work. Are there any other agreements about the machinery? COFFEY: No, your Honour. HIS HONOUR: Okay. You just need to put on your overalls and get out the spanners and rework the agreement. The stay on sale; unless someone applies, it will just run out. HODGSON: Someone will have to come back. HIS HONOUR: You will have to come back before the 9th. If you won't come back well before the 9th, you will have to get an extension. I just want to get rid of this. HODGSON: I am wondering if we have to come back before the 9th would - which would be the 16th. We could come back on the 9th, which would be well before the date. HIS HONOUR: All right. I will make it the 16th. HODGSON: Okay. HIS HONOUR: Be careful. I don't know whether we are all going to be here on the 16th. The court may close down. I don't know what's going to happen. HODGSON: We are all in that boat, your Honour. HIS HONOUR: That's why I am saying you better get on with it. HODGSON: Yes. HIS HONOUR: I will send you the published orders and send them to everyone."
The Court expected that, as a result of these exchanges, Mr Price would rapidly do whatever it took to propose, and make all necessary adjustments to his proposal, to acquire the Riverside Drive property. And any further adjustments that were required to the Court's orders, to restructure Mr Price's borrowing arrangements to secure the settlement, could have been renegotiated followed by the matter being relisted pursuant to the liberty to apply. But that did not happen. Instead the Court was approached on 3 June with the present application over six weeks after the restraint order had run out.
Whilst COVID-19 certainly affected face-to-face hearings before the Court, I have been sitting in online courts throughout April and May this year, although I went on leave in early June. There is no reason why Mr Price could not have relisted the matter to make such adjustments as were required to restructure his borrowings and to seek supplementary orders achieve settlement. Instead the present application was made in which, as will be seen, Mr Price somewhat shifted his ground by saying that settlement should now await the Court's determination of all the other issues and other unexpected problems emerged.

Analysis

The Court's primary concerns are the efficient and timely administration of the deceased's estate and the giving effect to the orders originally made on 22 October 2018. After weighing the parties' arguments the Court has decided not to renew any restraint against the plaintiffs selling the Riverside Drive property. That is so for the following principal reasons.
First, the constant struggle to attempt to give effect to Order 4 of the orders made on 22 October 2018 is proving very expensive for the estate. As each day goes by the current contest become more financially irrational. Were the Court now to extend the expired restraints even for a short period that would only invite more expensive interlocutory contests at least some of the costs of which will be borne out of the defendant's own share in the estate.
Second, the uncertain financial consequences of renewing the restraints on the plaintiffs selling Riverside Drive property are exacerbated in this case where Mr Price does not have any present offer of finance to settle the acquisition of the property and cannot point to any likelihood of him being offered that finance. Moreover, given his unfortunate employment and health circumstances and given the recent history creditor action against Priceless Commodities, the chances of him being able to obtain a satisfactory offer of finance do not look promising. In short if the restraints are reimposed, when Mr Price might be able to acquire the Riverside Drive property is completely uncertain and implies a further open-ended period of delay in the final administration of this estate.
Third, the Court has again and again tried to set up a framework which will allow Order 4 of the 22 October 2018 orders to be performed. Although he is not the only one at fault for the delay which has occurred, one of the substantial reasons why those efforts have failed so far is that Mr Price wanted to create a borrowing structure which to attempt to insulate him from claims that might be brought against him by his former de facto wife. Had he not sought to introduce his creature company, Priceless Commodities, into the borrowing mix he may well have been able to achieve the transfer and settlement of the Riverside Drive property to himself before the end of last year.
Fourth, the Court made very clear on 20 March 2020 that Mr Price was being given a last chance to get his house into order receive he could achieve settlement of the property. The Court's warnings were forceful and direct about the likely consequences of Mr Price failing to achieve settlement before 16 April. They followed period in 2019 where there had been regrettable delay on the plaintiffs side in selling the Farm property. Unless circumstances have changed, the Court should follow through what it foreshadowed. Relevant circumstances have not changed. The pandemic has taken hold since 20 March 2020. But on 20 March 2020 a lockdown was imminent. And the reason that Mr Price was not able to settle the purchase of the Riverside Drive property had nothing to do with the pandemic. Rather the collapse of his offer of finance was the product of his own decision to try and defeat the possible claims of his former de facto wife by involving Priceless Commodities in his borrowing structure.
Fifth, given the serious nature of Mr Price's own health concerns, further delay in the administration of this estate is not in his own interests. Mr Price says that there will be no prejudice from further delay. That is not correct. As the estate points out further delay will prejudice the rights of the deceased's minor grandchildren.
Sixth, Mr Price's argument that the sale of the property can be deferred until the Court makes final orders at which time he is more likely to know whether he can finance the acquisition of the property, is not persuasive. Now the parties' final submissions have been filed the Court will attempt to give its final decision as quickly as possible. In the meantime the plaintiffs can get on with preparing the property for sale. If the Court's decision means the defendant is able to secure finance to acquire the Riverside Drive property, then he will still be in a position to put an amended offer to the plaintiffs if he wishes. If the offer is a viable proposal and if the property has not already been sold it can still be considered by the plaintiffs. But there is no assurance that the defendant will be any better off once a Court has made its decision.
Seventh, the argument that the sale of the Riverside Drive property should be deferred, in any event, because the market price of the property is likely to be depressed, because of the Covid 19 pandemic, is not persuasive. This argument invites an indefinite deferral. The health and economic effects of the Covid 19 pandemic may well last for years. The executors cannot be expected to wait indefinitely. They have a duty to administer the estate whatever the current economic circumstances. Their duty is to get the best price for the property by appropriately marketing it in prevailing market conditions. They can take the advice of a competent real estate agent as to the best way to market property in these circumstances.
Eighth, the safety concerns associated with the Riverside Drive property and the need for repairs at the property counsel the executors acting to sell the property sooner rather than later. It is a potential fire hazard and its poor insurance status has been often mentioned in submissions. The executors may be criticised if they do not get on with a sale.
Ninth, the Court can make adequate directions to allow the defendant to remove his belongings from the Riverside Drive property and will do so. One way or another, separation out from the water damaged material on the ground floor of the Riverside Drive property of the chattels that the defendant regards as valuable is his responsibility if he wants his chattels back. Someone must do it, either the defendant or the plaintiffs. The Court was prepared to defer that and leave it to the defendant to do, whilst he was likely to purchase the property. But as he is no longer in a position to purchase the property, he can be accommodated with an opportunity to identify and take away his own goods.
Tenth, it is to be remembered that the settlement agreement made on 22 October 2018 provides in Order 3 for the defendant to receive the proceeds of sale of the Riverside Drive property. Order 4 which provides for Mr Price to purchase the Riverside Drive property is only one way of giving effect to the settlement agreement. If the restraints are not reimposed, the course that the Court is now taking is giving effect to Order 3.
For these reasons no further orders will be made against the plaintiffs restraining them from dealing with the Riverside Drive property. Instead, the Court will fashion orders that allow the plaintiffs to get on with the sale of the property. But the orders will also endeavour to preserve a short opportunity to the defendant to retrieve his goods from Riverside Drive property. The defendant will be given four weeks from today to achieve that removal. During that four week period when removal is being arranged it seems to the Court that it will be practically impossible for any agent to market the property. At the same time the plaintiffs will need an opportunity to make decisions about cleaning up the graffiti and other damage to the property before placing it on the market.
The Court will permit the plaintiffs to engage an agent as soon as they wish. But a decision to engage an agent during the next four weeks, and for the estate therefore probably to incur the sales commission associated with an agency agreement, will in a practical sense add a financial burden to the estate which will probably foreclose any opportunity for the defendant to put forward a proposal to acquire the Riverside Drive property that is compliant with the framework of the Court's existing orders.
Because of these considerations, the Court would be surprised if the decision to engage an agent by the executors acting fairly and objectively in the interests of the beneficiaries really needed to be made within the next four weeks. There may therefore perhaps be a sliver of an opportunity for the defendant to get his financial house into order and to present a well-structured proposal to acquire the Riverside Drive property to the plaintiffs before they incur selling agent's expenses.
The defendant has requested a final opportunity to remove his chattels from the Riverside Drive property. He should have that opportunity and he may need a few days to go through everything at the Riverside Drive property. But the removal should be exercised wholly at the defendant's own expense. The estate does not have the financial responsibility to remove a beneficiary's chattels from estate property such as the Riverside Drive property. If Mr Price claims them he can remove them at his own expense. But the estate is authorised to meet that expense out of Mr Price's share of the estate. The orders will reflect this.

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Cited By (2)