The Estate of Wendy Gwynne Price; Lanigan v Price [2020] NSWSC 1518 | Case summary

Supreme Court of NSW|2019-12-18|Before: Slattery J

Judgment

This is the Court's second judgment in these proceedings. The Court gave its first judgment on 23 June 2020: The Estate of Wendy Gwynne Price [2020] NSWSC 782. In that judgment the Court declined to extend an injunction that had restrained the plaintiffs, the executors of an estate, from selling certain real property.
On 22 October 2018, in what was thought to be a settlement concluding all outstanding disputes about the administration of this estate, the defendant, an estate beneficiary, was given an opportunity to purchase that real property. This judgment deals with issues arising out of the parties' various attempts to perform the 22 October 2018 terms of settlement. This judgment should be read with the Court's first judgment. Events, persons and matters are referred to in both judgments in the same way.
These issues were the subject of evidence and argument on 10 and 18 December 2019 and 20 March 2020. The parties were given an opportunity thereafter to file written submissions, which they finalised on 9 June 2020. Mr M. Foran of counsel appeared for the plaintiffs/executors on 10 December 2019, instructed by Mr M. Coffey of Gells Lawyers. Mr Coffey appeared without counsel on 20 March 2020. On these various hearing days Mr C. Hodgson of counsel, instructed by Ms M. Ross-Maranik of Key Point Law appeared for the defendant, Mr Price. On 8 July 2020 a Notice of Change of Solicitor was filed for Mr Price. Mr Duncan Grant McCartney of Simmons & McCartney Lawyers now appears for the defendant/cross-claimant.
After the parties concluded their written submissions in the proceedings the Court was asked not to deliver judgment so the parties could continue with settlement negotiations. As the settlement negotiations recently failed the Court was asked to deliver judgment but not to make orders in the proceedings.

Prior to the October 2018 Settlement

The original contest between these parties before the October 2018 settlement may be shortly described. Wendy Gwynne Price ("the deceased") died on 29 December 2014. The plaintiffs, Ms Kerrie-Anne Lanigan and Mr Ian Barry Smart, who were appointed as the executors of the deceased's estate under a will dated 28 July 2014, brought these proceedings for a grant of probate of that will. In his Cross-Claim, the defendant, Mr Matthew Price, propounded an earlier will. He also cross-claimed for further provision out of the deceased's estate under Succession Act 2006, s 59 and for other relief declaring his entitlement to certain property that the executors had claimed was part of the estate.
Ms Lanigan is the daughter of the deceased. Mr Smart is the deceased's brother. The defendant, Mr Price, is the deceased's son. He is a beneficiary of the estate under the July 2014 will, together with the deceased's grandchildren.
By the deceased's last will of 28 July 2014 she appointed the plaintiffs, Ms Lanigan and Mr Smart, as her executors. She made specific gifts of various chattels and other personal effects to a Mr Noel Rieusset, Ms Lanigan and to Mr Price (clause 6). Then she gave the residue of her estate to be held equally on trust for her four named grandchildren (clause 7). The will granted powers of sale, investment, appropriation, borrowing and advancement to the executors and permitted them to charge professional fees and claim executors' commission.
The bulk of the deceased's estate comprised two parcels of real estate situated in northern New South Wales. The first was a rural property ("the Farm property"), which as its name implies, was partially used for agricultural purposes. It was also where the deceased had lived for many years before her death. The other major item of contested real estate in the deceased's estate ("the Riverside Drive property") was situated on a road along the riverbank of one of the major rivers in northern New South Wales.
By his Cross-Claim, Mr Price contested the plaintiffs' entitlement to probate of the 28 July 2014 will. But the estate still needed to be administered during these proceedings. On 31 January 2017, the Court appointed Mr Smart, as administrator ad litem of the deceased's estate for "the limited purpose of preserving and maintaining estate assets, noting that the grant does not include any capacity in the administrator to deal with the real estate claimed to be in the estate". Ms Lanigan and Mr Smart did not receive a full grant of probate to administer the estate until the October 2018 settlement.

The October 2018 Settlement

The Claim and Cross-Claim were originally listed before the Court for hearing in October 2018. But the proceedings resolved. On 22 October 2018 the parties entered into detailed terms of settlement, which became orders of the Court.
The October 2018 terms of settlement granted probate of the deceased's July 2014 will to the plaintiffs and gave Mr Price half the proceeds of sale of the Farm property, and gave him the proceeds of sale of the Riverside Drive property and the opportunity to purchase it. The full October 2018 terms of settlement are as follows: "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 property at 100 Riverside Drive, Tumbulgum NSW; and b) ½ of the net proceeds of sale of the property at 885 Dulguigan Road, North Tumbulgum NSW. 4. Orders that in the event that the Defendant/Cross-Claimant discharges the mortgage registered on the title to 100 Riverside Drive, Tumbulgum NSW at any time up to 30 days after settlement of the sale of 885 Dulguigan Road, North Tumbulgum NSW, 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 100 Riverside Drive, Tumbulgum NSW. 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. 8. Orders that all previous costs orders be vacated. 9. Notes the agreement of the parties that they intend to resolve all claims currently in dispute between them and that: a) The Plaintiffs/Cross-Defendants (both in their personal capacity and in their capacity as executors of the deceased's estate), jointly and severally, release the Defendant/Cross-Claimant (in his personal capacity, and in his capacity as executor of the estate of the late Michael Price) from any claim arising out of or in relation to the estate of Michael Price or the management of his affairs, the estate of Wendy Price or the management of her affairs, any matter the subject of these proceedings, or any other claim arising directly or indirectly from the administration of Wendy Price's estate, and the Plaintiffs/Cross-Defendants will forthwith remove/withdraw all caveats against a grant in respect of Michael Price's estate (including in Queensland). b) The Defendant/Cross-Claimant (in his personal capacity, his capacity as executor of the estate of the late Michael Price) releases, jointly and severally, the Plaintiffs/Cross-Defendants (both in their personal capacity and in their capacity as executors and administrators of the deceased's estate) from any claim against Wendy Price arising out of or in relation to the estate of Wendy Price or the management of her affairs, any matter the subject of these proceedings, or any other claim arising directly or indirectly from the administration of Wendy Price's estate. c) The Defendant/Cross-Claimant in his capacity as officeholder/member of ACN 002 513 055 Pty Ltd (formerly known as Prosource Pty Limited) releases the Plaintiffs/Cross-Defendants (both in their personal capacity and in their capacity as executors of the deceased's estate), jointly and severally, from any claim that it has or may have in relation to the estate of Wendy Price. d) The Defendant/Cross-Claimant in his capacity as officeholder/member of Prosource Consultants Pte Ltd releases the Plaintiffs/Cross-Defendants (both in their personal capacity and in their capacity as executors of the deceased's estate), jointly and severally, from any claim that it has or may have in relation to the estate of Wendy Price. e) the releases in (a) - (d) above relate to any current claims, whether known or unknown. 10. Notes the agreement of the parties that: a) They will each do all things reasonably necessary to ensure the due and proper administration of the estate; and b) Apart from acts in the course of the proper administration of the estate, and the exercise of any legal right, no party will take any action that reasonably can be foreseen to be likely to have the effect of hindering or delaying the due and proper administration of the estate. c) The Plaintiffs/Cross-Defendants will not take any action to encourage, or which is likely to cause, a third party to seek to have 100 Riverside Drive, Tumbulgum NSW sold. d) If any third party gives notice, in writing or otherwise, of an intention to sell 100 Riverside Drive, Tumbulgum NSW, the Plaintiffs/Cross-Defendants will forthwith give notice of that in writing to the Defendant/Cross-Claimant's solicitors. 11. Order that the Amended Cross-Claim otherwise be dismissed. 12. Liberty is granted to any party to apply, in these proceedings, for consequential and ancillary orders, for the purpose of, or in respect to, giving effect to or implementing these orders."
The parties' attempt to resolve the proceedings this way turned out to be less than perfect. Continued bitter differences between them led to what has so far been almost two more years of disputes about performing the October 2018 terms of settlement. Some of that history is set out in the Court's first judgment (at [3] to [9]).
Each party blamed the other for that outcome. The terms of settlement granted liberty to apply. Mr Price availed himself of that liberty. The proceedings were first brought back before me on 10 April 2019. In a series of directions hearings between then and December 2019 the Court sought to progress the administration of the estate and to define the remaining issues that the parties needed to have resolved so the estate could be administered to finality.
The parties indicated to the Court that they needed to have eight issues determined. These issues were listed for hearing on 10 December 2019. Mr Smart was to be cross-examined that day but he was not able to be physically present at that hearing. So it was adjourned part-heard to 20 March 2020.
In the meantime, the many directions that the Court had given to progress the administration of the estate had finally resulted in the sale of the Farm property. The October 2018 terms of settlement entitled Mr Price to half the proceeds of sale of the Farm property. This better positioned him to fund the acquisition of the Riverside Drive property. Mr Price made several attempts to obtain finance to acquire the Riverside Drive property and to arrange a settlement.
But as the Court's first judgment recounts, these various attempts were unsuccessful. This led to the listing of the proceedings on 18 and 19 December 2019, in a final attempt to effect a settlement of Mr Price's acquisition of the Riverside Drive property in accordance with the October 2018 terms of settlement. The Court made detailed directions to try and facilitate such a settlement.
But as the Court's first judgment shows, Mr Price was not in the financial position to acquire the Riverside Drive property, despite the settlement structure created by the Court. A further opportunity for Mr Price to acquire the Riverside Drive property was afforded him around 20 March 2020. But as the Court's first judgment also shows, Mr Price was not able to take advantage of the additional opportunities given to him to acquire the Riverside Drive property. The Court eventually decided in the first judgment that restraints on the executors selling the property to a third party could no longer reasonably be continued and the injunction incorporating those restraints was dissolved.
Since then the position has not improved. Mr Price has now changed his lawyers. His new lawyers initially indicated on his behalf that he had gained fresh finance approval from a private lender to enable him to acquire the Riverside Drive property. But the lender in question later indicated that this offer of finance had been withdrawn.
The Court has seen the number of offers of finance that Mr Price has been able to obtain to fund his acquisition of the Riverside Drive property. They show that his acquisition of the property is unlikely to result in his long-term stable ownership of the property. The offers of finance are generally structured on an interest-only basis for 12 months at relatively high interest rates. Mr Price is not employed and would have difficulty in satisfying a financial institution of his capacity to service regular mortgage payments. These offers of finance point to the possibility that even had Mr Price acquired the Riversdale Drive property from the estate, there were significant risks that he would default on the mortgage after 12 months and would then face his mortgagee exercising a power of sale over the property.
Some of the questions now posed for the Court's consideration are relevant to the potential sale of the Riverside Drive property to Mr Price. But many of them are also relevant to the allocation of estate expenses in the event the Riverside Drive property is sold to a third party and the executors are required to assess what expenses associated with the property should be borne by the estate and what expenses should be to Mr Price's account.
In the circumstances that have now occurred, the executors may never sell that property to Mr Price. They may end up selling it to a third party. A sale process inviting expressions of interest from the wider market is already well underway. But there is a bare possibility that Mr Price may be yet able to acquire the property, so the questions relevant to that subject are still useful. And a number of the other issues are relevant, whether or not Mr Price acquires the property.
The eight issues were put forward by both sides and comprised all issues they wished to raise. On 29 October 2019, the Court directed the parties to file and exchange statement of facts, matters and contentions by 12 November 2019 in relation to the contested issues. Mr Price, who promoted issues 2, 3, 4, 5, 7 and 8 was directed to put on his statement first on those issues. And the executors, who were propounding issues 1 to 6, were directed to put on their submissions on those issues first.
The proceedings were then set down for hearing on 10 December 2019 to determine these eight issues: "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 at Dulguigan Road. 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 contest about a number of these issues has gone away. Issues 5 and 6 were largely overtaken by events. As to issue 6 the parties ultimately agreed upon a drafting mechanism to fix some of the difficulties in the operation of Order 4 of the orders made on 22 October 2018. And as to issue 5, Mr Price indicated he was ready to attempt to complete the sale of the Riverside Drive property and the plaintiffs indicated that Mr Price's share of the proceeds of the Farm property would be able to be used for that purpose.

Applicable Legal Principles

Argument upon these eight issues engaged a range of legal principles which it is useful to elucidate first in these reasons.
The Court's Power to Intervene. The Court has power to vary the orders made pursuant to the terms of settlement of 22 October 2018. Mr Price argued that the Court could interfere in aspects of these orders on the basis of unilateral mistake induced by the executors: Taylor v. Johnson (1983) 151 CLR 422; (1983) 45 ALR 265; (1983) ALJR 197; [1983] HCA 5 at 432-433. Alternately, Mr Price contended stated that the Court has inherent discretion to set aside a consent order: Mohamed v Farah [2004] NSWSC 482 at [55]-[67] especially in the case of a unilateral mistake, if the interests of justice require such a remedy. The executors said that the terms of settlement could not be set aside without adequate notice to the minor beneficiaries who would be affected by the grant of such a remedy. There is some merit in this contention by the executors.
But it is not necessary to call upon such doctrines in this case. The orders of 22 October 2018 settled proceedings for family provision that had been brought under Succession Act, Chapter 3. Upon the making of orders for provision out of an estate under Succession Act, Chapter 3, the Court has very broad additional powers to make consequential and ancillary orders pursuant to Succession Act, s 66(1). The 22 October 2018 orders specifically contemplated (in Order 12) the exercise of this jurisdiction. Liberty to apply was granted "for the purpose of…giving effect to or implementing these orders". On the issues before the Court, both sides accepted that the 22 October 2018 orders were binding but that they needed interpretation as to their scope and may need some adjustment in light of difficulties that had emerged in performing them.
The executors submitted that the Court should not readily depart from the strict terms of the 22 October 2018 settlement, including the releases, in circumstances where the terms of settlement were approved by the Court after being constructed with the assistance of legal advice and after careful deliberation. Rather, the executors submitted the terms of settlement should be carefully construed and given effect before they are supplemented, or varied, under Succession Act, s 66. This submission does highlight a relevant consideration in the Court's approach to the exercise of its power under Succession Act, s 66.
Conduct of the Executors. Many of the contests within these questions involve Mr Price alleging maladministration of the estate by the executors. Before analysing those allegations, it is worthwhile to keep in mind some applicable legal principles about the powers and liabilities of executors in estate management.
It is well established that trustees and executors may be indemnified out of the estate for liabilities properly incurred in the performance of their duties: National Trustees Executors & Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268; [1941] ALR 58; [1941] VLR 133; Vacuum Oil Co Pty Ltd v Wiltshire (1945) 72 CLR 319; [1946] ALR 50; (1945) 19 ALJR 380; [1945] HCA 37; Re Beddoe [1893] 1 Ch 547, 558 (Lindley LJ); Re Jones; Christmas v Jones [1897] 2 Ch 190 ("Re Jones"); GE Dal Point, Equity and Trusts in Australia (Thomson Reuters, 7th ed, 2019) 682-3 [23.135].
It is common practice for an executor to act concurrently in the role of trustee, an executor need not also be a trustee to be indemnified. In Nobarani v Mariconte (No 2) (2018) 360 ALR 390; [2018] HCA 49, the High Court stated at [2]: "The general rule concerning executors, like that concerning trustees, is that costs properly and reasonably incurred by the executor in connection with the administration of the estate are payable from the estate. These costs can include litigation expenses. Some examples of recoverable litigation expenses are: where an executor has a reasonable and bona fide belief in the validity of the will albeit one that is found to be incorrect; where an executor is unsuccessful in reasonably defending an action brought by legatees; or where an executor unsuccessfully, but reasonably, seeks to uphold a grant of probate on appeal."
The rationale behind this principle is helpfully summarised by Austin J in Drummond v Drummond [1999] NSWSC 923 ("Drummond v Drummond") at [43] - [45]: "[43] In Miller v Cameron (1936) 54 CLR 572, 578, Latham CJ explained that 'as a rule, a trustee is allowed his costs out of the trust estate if his conduct has been honest, even though it may have been mistaken.' In Re Weall; Andrews v Weall (1889) 42 Ch D 674, 677, Kekewich J spoke of the 'tenderness which the Court is anxious to exhibit towards trustees honestly exercising discretion in discharge of their duties, often difficult and still more often thankless.' In Re Jones; Christmas v Jones [1897] 2 Ch 190, 197 the same judge said that 'a man who fulfils the difficult duties of an administrator, executor or trustee is, in common sense and common justice, entitled to be recouped to the very last penny everything that he has expended properly - that is to say, without impropriety - in his character of administrator, executor or trustee ...'. Thus it is normally the case that an executor who commences or defends an action in the capacity of executor is entitled to be indemnified out of the estate for the costs incurred in doing so, even if the litigation is unsuccessful, the executor's conduct is found to have been mistaken, and the other party in the litigation is held to be entitled to an order for costs. [44] This exception to the normal rule that costs follow the event, which permits an executor to recover costs from the estate, is itself subject to some exceptions, as is plain from Latham CJ's reference to honest conduct and Kekewich J's reference to impropriety. There are two sub-exceptions' which are arguably relevant to the present case. [45] The first is the sub-exception for impropriety'. As Kekewich J made clear in Re Jones, cases of impropriety include an executor taking or defending proceedings in breach of trust, or conducting the proceedings in such a way that the Court, on a general view of the case, regards the executor's conduct as not honestly brought forward' ([1897] 2 Ch 190, 198). Additionally, recourse to the estate may be denied to an executor where the claim is of monstrous character, that is, one which no reasonable man could say ought to have been put forward' (at 198). In Re Weall the trustees allowed a solicitor to deduct fees which were not properly chargeable to the life tenant from the rental income of the estate. Kekewich J observed that while mistakes or errors in judgment would not disentitle the trustees to an indemnity, the beneficiaries were entitled to expect `reasonable prudence' of the trustees (42 ChD at 678-9)."
But executors will not recover expenses from the estate where they have acted with dishonesty or with impropriety, or something more than the making of a mere mistake: Re Jones at 197; Mason & Handler, Succession Law and Practice NSW (LexisNexis, 2020) at [6089], citing Drummond v Drummond and Glenda Phillips v James Phillips; John Matthew Phillips by his Tutor NSW Trustee & Guardian v James Phillips (No 3) [2017] NSWSC 409.
The authorities emphasise the necessity for examining the conduct of the executor and the circumstances in which each of the expenses being questioned were incurred, before deciding whether indemnity in respect of those expenses will be denied. As Ormiston JA stated in Nolan v Collie [2003] 7 VR 287; [2003] VSCA 39 at [53]: "Naturally the vast majority of costs and expenses will not arise out of any breach of trust but will be merely incurred in the ordinary day to day management of it, but some will arise out of breaches of trust many of which will lead to a denial of indemnification because the relevant breach of duty will be characterised as having been improperly incurred. There will remain, nevertheless, some breaches of duty giving rise to expenses and liabilities about which that cannot be said automatically, so that one must examine those particular breaches individually in the context of the stated duty or power. […] The negative test is the relevant test that is to allow indemnification for what has not been shown to have been improperly incurred."
Mr Price raises issues of what expenses should be borne by the estate and what expenses should be to his account. But of the expenses that are not to his account, he says that some of them should be borne by the executors personally in accordance with these principles.
The Releases. The parties are at issue about the construction of the releases in clause 9 of the terms of settlement. The law is clear in the construction of releases that where general words of release are used they are limited always to those things which were especially in the contemplation of the parties at the time when the release was given. And a releasee must not use general words of release as a means of escaping the fulfilment of obligations falling outside the true purpose of the transaction, as ascertained from the nature of the instrument and the surrounding circumstances, including the state of knowledge of the respective parties concerning the existence, character and extent of the liability in question and the actual intention of the releasor: Grant v John Grant & Sons Pty Ltd (1954) 91 CLR 112; [1954] ALR 517; (1954) 28 ALJR 217 ("Grant") and Marinchek v Cabport Pty Ltd [2010] NSWCA 334.

Analysis of the Issues

The agreed issues can now be determined based upon these principles and these findings and supplementary findings of fact set out below that are relevant to each of the issues.

(1) The Riverside Drive Outgoings

The first issue is who bears the burden of the outgoings incurred in respect of the Riverside Drive property from the date of the deceased's death until the transfer of that property by the estate. This issue was framed upon the basis that the Riverside Drive property would probably be transferred to Mr Price. This is still a possibility, but the question is also relevant if the Riverside Drive property sold to a third party and deductions from the proceeds of sale are being considered by the executors.
Since the death of the deceased on 29 December 2014, the executors have paid for council rates, water rates and insurance in respect of the Riverside Drive property. From 29 December 2014 until May 2017, the defendant, Mr Price, was either in occupation of the Riverside Drive Property or had control of who occupied the property. The executors allege that when Mr Price gave possession of the Riverside Drive Property to them in 2017, it was not in a fit state to be let out to a tenant.
At the time of the October 2018 terms of settlement, the Riverside Drive property was mortgaged to the Southern Cross Credit Union and the property was also subject to various statutory charges for council and water rates; and to an equitable charge for insurance premiums paid in respect of the property. The executors had made no payments on the mortgage since the deceased's death but had allowed the mortgage sum to accumulate so that the payout figure on 22 October 2018 was $356,916.52.
The Executors' Submissions. The executors contend that if Mr Price were to receive the Riverside Drive property by transfer or he were to receive the proceeds of sale of the Riverside Drive property, he would receive those benefits subject to that mortgage and subject to those charges. The plaintiffs contend that this follows from an application of Conveyancing Act 1919, s 145, which provides as follows: "145 CHARGES ON PROPERTY OF DECEASED TO BE PAID PRIMARILY OUT OF THE PROPERTY CHARGED "(1) Where a person dies after the commencement of the Conveyancing (Amendment) Act 1930 possessed of or entitled to, or, under a general power of appointment by his or her will disposes of-- (a) property, which at the time of his or her death is charged with the payment of money, whether by way of legal mortgage, equitable charge, or otherwise (including a lien for unpaid purchase money), or (b) land in respect of which there is owing at the time of his or her death any money under a contract of purchase whether from the Crown or not, and the deceased has not by will, deed, or other document signified a contrary or other intention, the property so charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the charge; and every part of the property, according to its value, shall bear a proportionate part of the charge on the whole thereof. (2) Such contrary or other intention shall not be deemed to be signified-- (a) by a general direction for the payment of debts or of all the debts of the testator out of the testator's personal estate or the testator's residuary real and personal estate, or the testator's residuary real estate, or (b) by a charge of debts upon any such estate, unless such intention is further signified by words expressly or by necessary implication referring to all or some part of the charge. (3) Nothing in this section affects the right of a person entitled to the charge to obtain payment or satisfaction thereof either out of the other assets of the deceased or otherwise."
The executors submit that Conveyancing Act, s 145 renders the Riverside Drive property, as the charged property, primarily liable for all these charges and that it would be exonerated from that liability only to the extent that a "contrary or other" intention is shown. The executors submit that no contrary intention is shown in the October 2018 terms of settlement and that therefore these charges must first be deducted before any transfer of the Riverside Drive property to the plaintiff can be completed. They also contend that if the Riverside Drive property were to be sold to a third party that the net proceeds of the sale of the property should be ascertained by first deducting those charges.
Further, the executors contend that if Mr Price has any entitlement to rental proceeds from the Riverside Drive property, or that losses have been incurred by any failure of the executors to rent the Riverside Drive property, such amounts must be set-off against the amount of the charges. The executors deny any failure to rent the property.
Finally, the executors submit that whether Mr Price were to have the Riverside Drive property transferred to him, or whether he receives the net proceeds of its sale, they (as trustees of the Riverside Drive property) have a right of indemnity out of that trust property and an additional right to proceed against the defendant, Mr Price, as the beneficiary of that trust property, personally to recoup all Riverside Drive property outgoings paid by the plaintiffs prior to the transfer or sale.
The executors ultimately submitted that the Court's resolution of this issue will turn on the final mechanism used to transfer the Riverside Drive property to Mr Price. They contend that there may be limited utility in construing Orders 3(a) and 4 against Conveyancing Act, s 145 in circumstances where amendments are proposed to the mechanism by which he would take the property.
Mr Price's Submissions. Mr Price submits that on their proper construction, Orders 3(a) and 4 of the orders made on 22 October 2018 do not enliven Conveyancing Act, s 145. Mr Price contends that these orders do not provide a gift in absolute terms of the Riverside Drive property. Instead, Mr Price says that he is entitled to receive the net proceeds of sale of the property (under Order 3(a)) but with an additional right (conferred by Order 4), upon the discharging of the mortgage over the property to have it transferred to him "in specie in full satisfaction of the provision in 3(a))". Mr Price contends that Order 4, and by implication Order 3(a), does not envisage that he will bear the cost of payment of outgoings such as council and water rates or insurance premiums.
Alternatively, Mr Price contends that Orders 3(a) and 4 show a contrary intention within Conveyancing Act, s 145 in relation to council and water rates and insurance for the period up to 22 October 2018: that is, the intention that council and water rates and insurance for the period up to 22 October 2018 do not fall for payment by Mr Price and that only the balance of the mortgage (including unpaid mortgage instalments due prior to 22 October 2018) would either be taken out of the sale proceeds, or paid by him if the property was to be transferred to him under Order 4.
Analysis. Firstly, Conveyancing Act, s 145(1) commands that in the administration of the estate that property such as the Riverside Drive property when "charged shall, as between the different persons claiming through the deceased, be primarily liable for the payment of the charge". Subject to finding any contrary intention, this means that as between Mr Price and the other beneficiaries, the Riverside Drive property is "primarily liable" for satisfying the estate's obligations to the Southern Cross Credit Union. Conveyancing Act, s 145(1) has this effect, whether or not Mr Price elects to take advantage of the right to take a transfer the property to himself under Order 4.
But does a will, deed or other document signify a contrary intention? In the Court's view, nothing in Orders 3(a) or (4) of the 22 October 2018 orders indicates a contrary intention. Neither order mentions the mortgage over the property or the other charges. The Court is not going to vary these orders. Order 3(a)'s reference to the "net proceeds of sale" of the property rather indicates that there will be deductions from the gross proceeds, which deductions could well include the mortgage and these other charges. Mr Price does not rely upon any other document to infer a contrary intention.
This means that the estate may deduct all mortgage and other charges accrued over the Riverside Drive property, or from its proceeds of sale, up to 22 October 2018 before any transfer to Mr Price. And for mortgage and other charges after 22 October 2018, the estate may do the same, subject to consideration of issue (3) below.

(2) The Riverside Drive Repair Adjustments

The second question asked is what adjustments, if any, should be made in favour of Mr Price by reason of the state of repair of the Riverside Drive property. Mr Price makes two claims in respect of this issue. 1. Property Damage Claim. He makes a property damage claim of several parts for repairs to the Riverside Drive property itself: being $29,980 for rectification works, $3,500 for the removal of rubbish and a further $15,000 - $20,000 to cover the cost of executing certain structural work that may be required to the property, as is indicated by the expert report of Mr Shane Fraser of 24 October 2019. 2. Chattels Claim. Mr Price also makes a claim for loss and damage to various chattels of his, namely his personal possessions that he says were damaged by a water leak (water damage and mould damage) from the ensuite bathroom to the main bedroom on the first floor of the Riverside Drive property. The precise value of the claim to these chattels has not been articulated.
These reasons will deal with each of these claims in turn. But two preliminary issues should be considered. The first is whether Mr Price's claims for loss and damage prior to 22 October 2018 are barred by the terms of settlement of that date. The second preliminary issue is the effect of clause 4 of the terms of settlement that if Mr Price took a transfer of the Riverside Drive property that he takes "that property in its present state of repair".
The Two Preliminary Issues. On the first preliminary issue, the executors contend that any claim Mr Price had against the estate, either to repair damage to the Riverside Drive property or in respect of damage to or loss of his chattels, falls within the scope of the releases in the terms of settlement. On the evidence, the executors submit that any damage to the property or to Mr Price's chattels must have occurred prior to the settlement. But leaving aside that factual question, the executors' submissions raise the question of the scope of the releases.
By notation 9(b) of the terms of settlement, Mr Price relevantly released the estate and the executors from "any other claim arising directly or indirectly from the administration of Wendy Price's estate". That is wide enough to cover any allegation of maladministration of the estate by the executors before 22 October 2018, or any decision before that date by the executors about the allocation of the repair costs of estate properties.
Mr Price submits that the release in notation 9(b) should be read in the light of notations 10(a) and (b) of the 22 October 2018 orders. By those notations the parties each agreed to do all things reasonably necessary to ensure the due and proper administration of the estate and not to take action that might reasonably be foreseen to be likely to have the effect of hindering or delaying the due and proper administration of the estate. But if anything notations 10(a) and (b) really only tend to emphasise that the executors liability after 22 October 2018 is not covered by the releases.
The Court can therefore now only consider loss and damage after 22 October 2018. All claims for such loss and damage against the executors before that date are barred by the terms of settlement.
The second preliminary issue is the effect of clause 4 of the terms of settlement: what does it mean that if Mr Price took a transfer of the Riverside Drive property that he take "that property in its present state of repair".
Mr Price submits that if the damage at the Riverside Drive property was caused by events occurring after 22 October 2018, that the provision in Order 4 of the orders of that date - that the Defendant take Riverside Drive "in its present state of repair" - does not require Mr Price to bear the cost of repairs of the damage. He submits that the executors are responsible for damage arising after 22 October 2018 and the Court can order that the cost of remedying the damage caused by the water leaks be paid out of the estate, or by the executors and should not come out of Mr Price's entitlements from the estate.
But this submission does not get to grips with the subtleties of Order 4 of the 22 October 2018 orders. Order 4 only applies to circumstances in which Mr Price elects to take a transfer of the Riverside Drive property, rather than just receiving its net proceeds of sale, as is provided for in Order 3(a). Order 4 is a limited mechanism to facilitate the transfer of the property to Mr Price by reducing argument about who is responsible for repairing the Riverside Drive property, as between him and the estate. Order 4 does not generally allocate the cost of repairs to the Riverside Drive property absent its transfer to Mr Price.
But properly construed, if Mr Price were, even now, to take a transfer of the Riverside Drive property, Order 4 means that the estate does not have to bear the expense of repairing the property to bring it up to an acceptable standard from the state that it was in on 22 October 2018. But "present state of repair" means as at the date of the terms of settlement. This means that if the property were to fall further into disrepair after 22 October 2018, Mr Price would not lose such rights as he would otherwise had to take the property free of debris, rubbish and that further disrepair.
And if Mr Price does not take a conveyance of the Riverside Drive property pursuant to Order 4, then the executors will have to authorise work to put the property in a sufficient state of debris-free repair and cleanliness to enable it to be sold on the open market to a third party. The estate will initially have to bear the cost of that cleaning and repair work as one of the costs of readying the property for sale to realise its value.
But the executors have made a concession which considerably reduces argument about these issues. They concede that the estate should bear the cost of repairing the leak and the damage that has arisen from the leak. It is really up to the Court to assess the extent of the damage caused by the leak and to ascertain when the damage occurred. If the leak-related damage all occurred prior to 22 October 2018, then the cost of repairs must be borne by Mr Price. If some of it occurred after 22 October 2018, then the estate must bear that part of it.
It is convenient to deal first with Mr Price's property damage claim, about repairing damage to the Riverside Drive property and secondly with his chattels claim, about damage to his chattels.
The Property Damage Claim after 22 October 2018. The parties were strongly at issue about the state of repair of the Riverside Drive property as at 22 October 2018. Mr Price contends that all the damage observed at the Riverside Drive property was caused by water leaks that occurred after the terms of settlement were signed on 22 October 2018.
Mr Price had access to or controlled the occupation of the Riverside Drive Property from the deceased's death on 29 December 2014 until April 2017, when Mr Ian Smart changed the locks. The executors contend that the Riverside Drive property was not tenantable when Mr Smart took it back over in April 2017. Mr Price disputes this. But its state of repair at 22 October 2018 is more relevant.
Mr Price says that the executors failed to preserve the assets of the estate by failing to arrange repairs to a water leak from the master bedroom ensuite bathroom. Mr Price submits that it is unlikely that the water leak dates as far back as 22 October 2018 and that this can be inferred from the nature of the water leakage observed.
The estate's concession that it should bear the cost of repairing the leak is qualified by contention that only a minimal amount of damage was caused by the leak after 22 October 2018.
The facts relevant to this claim may be shortly outlined. Some of the Court's findings depend upon the credibility of the witnesses who gave evidence on 10 December 2019 and 20 March 2020.
Mr Price was a rather angry witness was resentful about the way the executors had treated him. But he was mostly truthful and was able to give a reasonable account of how the Riverside Drive house looked when he left in March/April 2017.
The administrator ad litem and one of the executors, Mr Ian Smart, impressed the Court as a reliable and honest witness who took his duties as an executor seriously and tried to make reasonable and fair judgments about the administration of the estate. In contrast, Mr Sam Smart was a somewhat cavalier witness about his and his friends' occupation of the Riverside Drive property whose evidence was approached with more caution.
The Court ordered on 30 May 2019 and 1 July 2019 that Ms Sage, as an independent solicitor and as a court expert, should attend the Riverside Drive property to determine the respective ownership of chattels at the property. She did so on 1 July 2019 and identified that chattels were packed in boxes that made it difficult for her to go through them, that the tiled ground floor area was wet, slippery and unsafe and that there were active water leaks into the ground floor, including onto electrical wiring.
The parties accordingly asked Mr Shane Fraser, a licensed builder, to enter the property and make it safe and remove electrical and water hazards and provide a report to the Court about the cost of repairs. Mr Fraser's evidence was read without objection and he was not cross-examined. His report appears to the Court to be careful, comprehensive and fit for purpose. The Court accepts Mr Fraser's findings and conclusions.
Mr Fraser attended the property on 24 September 2019. He assessed the cause, extent and repair costs of several classes of damage as follows. 1. Water Leaks. Several water leaks came from the master bedroom ensuite on the first floor. The leaks were caused by the age of the plastic pipes and drainpipes including their crimp fittings. Mr Fraser does not believe a flood which occurred in late March 2017 could have caused the leaks to occur. The leaks required repairs to be undertaken to the first-floor drainage, the ground floor ceiling, electrical work, timber frame repairs together with extensive repainting. Mr Fraser said the leak was apparent to the naked eye and the damage consequent upon it could have been avoided had it been fixed when it first arose. The failure to fix it had compounded the damage and increased the problems that were required to be rectified. He estimates, and the Court accepts, the total repair costs for these leaks were $24,780 inclusive of GST. 2. Graffiti. As had been observed in Ms Sage's visit, Mr Fraser also observed graffiti in the master bedroom on the walls. Although coated over it was still quite visible to him. He estimated, and the Court accepts, the total cost of $1,200 inclusive of GST to repaint and repair the master bedroom. 3. Removal of Flood Damaged Furniture. As already stated, the Riverside Drive property was flooded in late March 2017. The garage of the property which was full of furniture and other belongings has not been cleared since then. Mr Fraser was of the view that access to the ground floor area, where the repairs needed to be done, was not possible without the furniture part of the way being removed. The furniture removal was required to make the property safe so the other water leak repair work could be done. He estimated the furniture and debris removal and related works would cost $3,500 inclusive of GST.
These costs total $29,480. In the Court's view, the damage in (1) and (3) can be considered together, as the damage in (1) cannot be repaired without incurring the additional required costs in (3). The graffiti in (2) can be considered separately, but the Court accepts that it was not put there by Mr Price. It is unlikely to have been put there by Mr Sam Smart. But someone who he allowed into the property and did not adequately supervise probably applied the graffiti. It is obviously cost-effective to fix the graffiti whilst builders and painters are on-site fixing the water leak and related issues.
Mr Price's Submissions - property damage claim. Mr Price says that unlike the executors, he is not in a position to call direct evidence in relation to the issue as he did not have access to the Riverside Drive property after March 2017. He points out that the executors have failed to call evidence, so an inference should be drawn that any evidence would not have assisted them. And Mr Price submits that to the extent that he is required to establish that the leaks did not exist prior to 22 October 2018, the executors bear an evidential burden to adduce evidence about that matter which they have not discharged: Apollo Shower Screens Pty Ltd v. Building and Construction Industry Long Service Payments Corporation (1985) 1 NSWLR 561; (1985) 10 IR 88.
Mr Price submits that none of the correspondence between the parties prior to 22 October 2018 raises damage about water leaks and that the focus is on unrelated flood damage. Mr Price understands that the executors accept that the flood damage to the Riverside Drive property could not have caused the water leaks in the ceiling of the ground floor level. Indeed, in his 24 July 2018 affidavit, Mr Coffey stated that the top two levels of the property were then liveable but the same could not be said about the ground floor and that the property, in particular the ground floor, was in need of professional cleaning to bring it back into a liveable state at an estimated cost of $3,000 to $4,000.
Nor were water leaks or associated damage mentioned in Mr Ian Smart's administrator's affidavit of 10 October 2018. Mr Price says that if the water leaks existed prior to 22 October 2018, the executors did not put him on notice of them and now he had no access to Riverside Drive to ascertain the damage for himself.
Mr Price says the executors had an obligation to maintain and preserve the Riverside Drive property and by their conduct, in allowing the leaks to occur, were in breach of that duty. No notice was provided to the defendant of the water leaks at all, until they were found when the property was inspected with Ms Sage on 1 July 2019. Mr Price submits the costs of remedying the water leaks should either be paid out of the estate or by the executors themselves and should not be to Mr Price's account.
Executors' Submissions - Property Damage Claim. The executors say that despite the Court inviting Mr Price to show that the water damage from the leak occurred before 22 October 2018 that Mr Price could not do so. Rather the executors submit the water damage probably occurred sometime between April 2017 and June 2019.
They submit Mr Price cannot now complain that he was not notified of, and had no way of knowing, whether the damage occurred prior to 22 October 2018. He had legal advice at the time he agreed to the terms of settlement which he does not contend are not binding. They submit that the Court cannot rely on Mr Fraser's opinion about the cause of the damage to the property because he did not make observations of the Riverside Drive property prior to 2019.
The executors further submit that the Court should not be satisfied that the damage occurred after 22 October, 2018. They submit much points to the damage having occurred before that date: for example, the numerous references in the pre-settlement correspondence to "damage" to the property and to "repairs" needing to be done; the generally poor state of repair of the property in April 2017 (for example from Exhibit IBS-1); and, that Order 4 of the terms of settlement required Mr Price to take the property in its "present state of repair".
But as earlier indicated, the executors accept that: a current water leak exists at the property; that it needs repair; and that it may have caused damage after 22 October 2018. The executors therefore accept that the estate should bear the burden of repairing the water leak and should bear a proportion of the damage that arises from the water leak after 22 October 2018. But they contend that the proportion of the damage occurring after that date would be minimal.
Analysis. What proportion of the leak-related damage occurred before and after 22 October 2018? The Court has little to go on to determine this question. The Court accepts the leak was not there when Mr Price left the property in April 2017. Mr Fraser said the leak was most likely the product of "wear and tear" rather than a single catastrophic event. The leak is probably therefore likely to have developed slowly. Mr Fraser's opinion was that damage from the leak would have compounded and worsened over time due to neglect. In the Courts view, the damage that occurred in the first 12 to 18 months was likely to have been fairly minor. Therefore, doing the best the Court can on the available materials, the Court assesses that 75% of the leak-related damage occurred after 22 October 2018 and 25% before that date.
The walls of the Riverside Drive property still display much graffiti. The Court accepts that was not there when Mr Price left the property and but may have been put there during Mr Sam Smart's occupation. It has not yet been removed. Mr Fraser noted in his report of 24 October 2019 that only ineffective attempts to remove the graffiti had been made. Ms Sage's video shows that the graffiti remains in several locations.
Mr Sam Smart was not particularly observant about the state of the premises and he and his friends seemed to be increasingly casual and disrespectful about the premises over time. It is not obvious that the graffiti was placed on the walls on one occasion. It was probably applied on several occasions. For these reasons, although quite a separate event to the water leak, the graffiti damage could reasonably be assessed as having occurred in much the same timeframe as the water leak damage: 25% before 22 October 2018 and 75% after. The estate has not conceded responsibility for the graffiti damage. But in the Court's view, as 75% of it probably occurred after the releases, the estate should also bear that proportion of its cost of repair.
That means that the estate is responsible to meet 75% of Mr Fraser's total estimated costs of rectification at the Riversdale Drive property of $29,480, namely $22,110 and Mr Price will bear $7,370.
The Chattels Claim After 22 October 2018. The executors point out that the chattels claim does not appear in Mr Price's Schedule of Defaults but is put against the estate as a claim for compensation for damage to Mr Price's personal possessions. The executors submit there is no legal basis for an order of compensation against the estate for damage to the chattels, as they were not estate property and Mr Price has not articulated a claim in detinue or conversion. The Court will deal with the claim, because these proceedings were conducted on the basis that the claim could be advanced and defended by both sides at this hearing.
The locks were changed in April 2017 and, as Mr Price was excluded from the Riverside Drive property, his chattels were left behind throughout the property. The Court accepts that Mr Ian Smart caused the chattels to be moved from the upper floors onto the ground floor. They were then damaged by a flood which penetrated the ground floor level of the property.
Mr Price contends, and the Court accepts, that there were sufficient funds in the estate for the chattels to be moved away from the Riverside Drive property in 2017, for example to the Farm property before they were damaged by the flood. Mr Price's lack of financial capacity to fund that move himself at the time is undoubted. But it did not take place before the damage occurred.
And as previously indicated, the Court accepts Mr Fraser's opinion that damage to the chattels occurred due to an unconstrained water leak from the ensuite bathroom area in the first floor down onto the ground floor level, the same process that caused water damage to the ground floor ceiling.
In contrast, the correspondence shows that the executors made numerous attempts to have Mr Price remove his chattels, including even the threat of a motion under the Uncollected Goods Act 1995. But this really just lead to a stand-off in which Mr Price rebuffed the estate's attempts to have him move the goods. Instead he kept demanding that the estate either store his chattels at the Farm property or pay for commercial storage.
Analysis - Chattels Claim. Mr Price's chattels claim faces a number of threshold difficulties.
First, the release in notation 9(b) of the 22 October 2018 orders must apply to his present claim for chattels. By the time he executed the terms of settlement he had left the property and had claims for his chattels that had been left behind. By 22 October 2018, any claim in detinue or conversion that he had against the estate in respect of those chattels was complete. Some substantial damage to the chattels was likely to have occurred before 22 October 2018, at least because of the flooding to the property in March 2017. And there are numerous references in the correspondence between the parties in 2017 that refer to flood damage at the Riverside Drive property accompanied by assertions that the chattels were of no value as a result.
Mr Price's claim to these chattels is within the terms of the notation 9(b) release either because it related to the subject matter of the proceedings being settled, or because it was a claim arising directly or indirectly from the administration of the estate.
Second, Mr Price has not adduced any evidence of the value of the chattels in question. The Court made every effort to give Mr Price a fair opportunity for an inspection to take place of these chattels in the property, for the taking of photographs and for Mr Price to undertake investigations that might allow him to put on evidence about the value of these items. Due to safety issues in Ms Sage entering the property those investigations could not proceed very far. But even in the absence of those inspections, it was possible for some valuation evidence to be put on, based on descriptions of the chattels in question. No such evidence has been tendered.
Mr Price also claims damage to particular chattels said to be of value, a Canon photocopier (purchased in 2012) and a fridge (said to have been purchased in 2014), which he says were on the ground floor and were damaged. But for reasons of personal safety, Ms Sage could not undertake a full ground floor inspection including these items. Mr Price suggested that they could be examined and valued later after repairs have been performed at the Riverside Drive property in order to make it safe to access them.
But this estate administration must be brought to an end. Such a determination of the value of individual items like this was simply not feasible before trial because of the difficulties of conducting an inspection. The Court is not satisfied on the evidence as to the value of these chattels. To attempt to attribute value to them would only be speculative.
And the Court is very cautious about attributing any value to these chattels. The Court has seen quite detailed video and photographic evidence showing the chattels in situ. The photographs attached to Mr Fraser's report are particularly helpful. They appear to show an undifferentiated mass of ordinary household goods and furniture items. None of them appear to be very new or of exceptional quality. In the Court's view, they were not likely to have had much value before damage either from the flood or from water pipe leakage.
The Court accepts that Mr Price was personally quite attached to these items. But that does not give them market value for which he should be compensated.
Third, the executors submit that once these chattels came into their possession their only obligation was to make arrangements with Mr Price so that he could collect his personal property. The executors repeatedly made offers to Mr Price for him to make arrangements to collect the property. It was reasonable on their part merely to offer their return and to refuse Mr Price's request to store them elsewhere at the estate's expense.
This part of Mr Price's claim fails.

(3) The Estate's Liability for Mortgage Payments for the Riverside Drive Property

The third question is the extent, if any, that the estate is liable for any increase in the mortgaged amount secured on the Riverside Drive property, by reason of the executors' alleged delay in selling the Farm property since 22 October 2018.
Mr Price's Submissions. Mr Price contends that the mortgage amount secured over the Riverside Drive property has increased since 22 October 2018 because mortgage payments were not made. The payout figure on 22 October 2018 was $356,916.52 and the payout figure as at 5 November 2019 was $362,750.68. On 2 April 2019 Mr Price made one mortgage payment of $1,850.95. He claims this was to stop the mortgagee taking recovery action. Mr Price contends that the executors' conduct caused delay in preparing and realising the Farm property for sale resulting in significant delays in its sale. Therefore, the estate should be responsible for all mortgage repayments falling due after 30 June 2019 and Mr Price's share of the estate should not bear the burden of such payments.
The Estate's Submissions. The executors put submissions on the basis that Mr Price is only claiming that the estate should bear mortgage repayments to the Southern Cross Credit Union falling due after 22 October 2018. The executors submit that the effect of the terms of settlement of 22 October 2018 was that the estate would not make mortgage repayments. They say that this was apparent from the inclusion of notation 10(d) of the terms of the settlement, which appears to contemplate what action will occur in the event of the mortgagee taking action upon default on the mortgage. The executors submit that such a term would not have been included in the settlement had the estate assumed responsibility for those repayments.
Further, the executors submit that the estate should not be liable for mortgage payments after 22 October 2018, as it is was inevitable that it would have taken some time to sell the Farm property, as with any property transaction. And the executors say that there were good reasons for the delay in selling the Farm property (set out in paragraph 29 of Mr Smart's affidavit) which included Mr Price's lodgement of caveats over the Farm property preventing its sale.
The executors further submit that the Farm property was sold in the manner contemplated by the Court's orders dated 30 May 2019 and the proceeds were paid into Court. They contend that they should not be held liable for mortgage repayments during the period in which the proceeds of sale from the Farm property have been held by the Court.
Analysis. This analysis of issue (3) also takes into account the reply submissions filed on behalf of Mr Price.
Southern Cross Credit Union was finally paid out in December 2019. It is useful to analyse the allegations of delay by reference to two periods. The first period is the time between the terms of settlement on 22 October 2018 up to the relisting on 10 April 2019. The second period is from 10 April 2019 until payment out of the Southern Cross Credit Union on 23 December 2019. It is useful to analyse the delay that has occurred by reference to these two periods of time.
During the first period, the executors were involved in obtaining probate, which was not granted to them until November 2018. It is very difficult to attribute delays in the sale of the Farm property to the executors until perhaps the end of January 2019. But by then Mr Price's lodgement of the caveats over the title to the Farm property and the Riverside Drive property come into play.
Caveats on both properties were lodged by Mr Price on 23 October 2018 and were not ultimately removed until the relisting of the matter on 10 April 2019. This was a period of a little over five months. There was never a proper basis for these caveats to be filed. Mr Price filed them of his own initiative in breach of the 22 October 2018 orders. As soon as the caveats were drawn to the Court's attention (and even shortly before), upon legal advice Mr Price took steps to remove them. The caveats were removed on or about 10 April 2019. And on 10 April 2019 the Court made orders against Mr Price that he should bear the cost of their removal from his share of the estate.
The executors were entitled to Mr Price's cooperation. They asked for the caveats to be removed but they were not immediately removed before 10 April 2019. Mr Price points out that the Farm property could have been prepared for sale and placed with an agent, notwithstanding that Mr Price's caveat was on the title of the Farm property and whilst efforts were being made to remove it from title. Mr Price says that a lapsing notice, or an application to the Court, would have seen to its rapid removal.
But it lies ill in Mr Price's mouth now to complain of delay by the executors in remedying his own wrongful acts in lodging caveats. It was not unreasonable for the executors to request during February and March 2019 that Mr Price remove those caveats. And in light of them not receiving immediate cooperation from Mr Price about removing the caveats, it was also not unreasonable of them to be cautious about taking steps to press forward with the sale of the Farm property.
But during the second period after 10 April 2019 it is equally difficult to attribute unreasonable and improper delay to the executors in breach of their duties to administer the estate. In October 2018, the Farm property was in a substantial state of disrepair and there was conflict between the parties about how to prepare it for sale. The disputes between the parties between 10 April and 30 May about how best to prepare the Farm property for sale was itself a cause of further delay. And once again, because of this conflict, the executors are not to be held as behaving unreasonably when being cautious about what steps they were taking to prepare the Farm property for sale during those six weeks. The matter was further complicated by a very substantial dispute about the ownership of chattels distributed across both the Farm property and the Riverside Drive property. For practical reasons, it was difficult to finally prepare the Farm property for sale until that dispute about chattels was resolved and they were removed.
No agreement having been reached between the parties, on 30 May 2019 the Court made exceptionally detailed orders to prepare the Farm property for sale in early August. The orders also directed steps to be taken in June 2019 to resolve all issues about the disputed chattels on both properties.
There was some slippage in relation to the timetable for preparing the Farm property for sale and resolving the dispute about the chattels. But in an atmosphere of hostility, it is difficult to lay the blame for that further delay at the door of the executors. And these orders were complex involving the engagement of Ms Sage and Mr Fraser. On 1 July 2019, further orders were made to finalise particular improvement works on the Farm property and for the removal of the disputed chattels on an agreed basis. Supplementary orders of a similar character were made on 16 July. As was not entirely surprising in relation to a rural property, the Farm property took longer to sell than originally anticipated. Directions hearings in August 2019 were vacated pending the sale taking place and the proceeds of the sale were not paid into Court until 30 September.
Once the proceeds of sale were in Court, other disputes between these parties came into play to occasion further delay, so that the Southern Cross Credit Union was not finally paid out until 23 December 2019. Between 30 September and 23 December, the stand-alone issue of paying out the Southern Cross Credit Union took second place to trying to settle the transfer of the Riverside Drive property to Mr Price, in the course of which the mortgagee would need to be paid out anyway. It was only in December 2019, when it looked as though the sale of the Riverside Drive property would not proceed for reasons detailed in the Court's first judgment (at [26] to [32]), that the Court directed on 19 December that the Southern Cross Credit Union be paid out, notwithstanding that the sale to Mr Price could not be completed.
The delay during this period was caused by many disputes about the terms (particularly as to the sum for payment into Court) on which Mr Price would take a transfer to him of the Riverside Drive property, about the undertaking of repairs at the property and the exact amount that the Southern Cross Credit Union required to pay out the mortgaged amount at settlement, to name but a few. Any delay occasioned by these disputes was not the result of any improper conduct on the part of the executors. These were very difficult disputes that took time to resolve and were only resolved after many directions hearings and the making of orders and directions by the Court.
There is no reason therefore to order that the estate or the executors bear liability for any part of the mortgage payments incurred to the Southern Cross Credit Union after 22 October 2018. They should be to Mr Price's account like the mortgage payments that accrued before that date.
In conclusion, the executors' submission that Mr Price's prosecution of this issue is barred by the release in notation 9(b) of the 22 October 2018 settlement terms should be briefly mentioned. This submission need not be considered in light of the Court's other conclusions on issue (3). But it is not a persuasive submission in any event. Construed in accordance with the principles stated in Grant above, the 22 October 2018 terms of settlement only bind the parties to releases of the claims in contemplation at that time. The terms of settlement cannot be construed to absolve the executors from liability for their alleged failure to take future steps to implement the terms of settlement or to continue to properly administer the estate. Such future failures could not have been evident to the parties on 22 October 2018. Indeed, this conclusion is fortified by notation 10(a), which expressly contemplates that the parties will continue to "do all things necessary to ensure the due and proper administration of the estate". It is also fortified by notation 9(e) which indicates that the releases "relate to any current claims, whether known or unknown".

(4) The Estate's Liability for Failure to Rent the Riverside Drive Property

The next question is the extent, if any, that the estate is liable for any losses by reason of the estate's failure to rent out the Riverside Drive property before its sale.
Additional Findings. The facts may be shortly stated. The Court accepts the evidence that the damage to the Riverside Drive property identified in Mr Fraser's reports was not present the last time Mr Price had access to the property in March 2017. The property was probably lettable in the condition in which Mr Price left it. The video taken on 24 April 2017 is a limited basis for comparison with the video that Ms Sage took on 1 July 2019 to infer this, together with the photographs Mr Price took on 1 July 2019. The water leaks resulting in water damage at the property were not present on 24 April 2017.
The Court finds that the top two levels of the Riverside Drive property have been occupied virtually continuously since August/September 2017. The Court does not accept the evidence that the Riverside Drive property was only occupied on a short-term basis.
There was little evidence as to the quantum of the rent of the Riverside Drive property that had been forgone by the executors. The Court gives little weight to the affidavit evidence of the agent, Mr Gary Ties, regarding the potential rental return of the property, which was adduced on behalf of Mr Price. He only inspected it in early 2017, prior to the flooding in March of that year and much changed at the property after that.
Mr Price's Submissions. Mr Price says that at the last time he had access to the Riverside Drive property in March 2017 the damage to the property outlined in Mr Fraser's report was not present. He submits that Mr Ian Smart did not take any steps to rent the Riverside Drive property at least until about mid-2018 and even then he made inadequate arrangements to rent the property.
In about mid-2018, Mr Ian Smart's son Mr Sam Smart, together with other persons, commenced occupation of the property and lived there continuously until at least the time of Ms Sage's inspection of the property in July 2019. Mr Price submits that one of the occupants of the property advised Mr Price that occupants of the property paid Mr Sam Smart $150 per week each so they could live at the property and that, as at 19 October 2018, there were four such occupants of the property. But the Court does not accept this happened.
Mr Price contends that the executors, in the proper discharge of their duties, should have rented the property and that the rent should have been applied to reduce the mortgage debt and outgoings of the Riverside Drive property. Mr Price contends that the executors should either account for the rent paid to Mr Sam Smart in respect of the Riverside Drive property, or pay, from the estate, the mortgage repayments and outgoings on the Riverside Drive property from 1 July 2018 or such other date as the Court determines.
Mr Price contends that Mr Smart has provided a valuable benefit to his son: namely, rent-free accommodation for a period of over two years and continuing up to the time of trial. Mr Price further contends that the executors' case that Mr Sam Smart was at the Riverside Drive property as a caretaker is contradicted by his conduct: that conduct includes the untidy and damaged state of the property, the graffiti on the walls and long-term tolerance of water leaks.
Mr Price contends the estate should have obtained an occupation fee from Mr Sam Smart and the other occupants as compensation and there should now be an accounting to Mr Price for the income received, or foregone, by the estate. Or alternatively, he submits the estate should bear the mortgage repayments and outgoings for the Riverside Drive property for the period Mr Sam Smart and his friends occupied.
The Estate's Submissions. The estate first submits that any failure to rent the property prior to 22 October 2018 is barred by the releases in the terms of settlement, as "any other claim arising directly or indirectly from the administration of Wendy Price's Estate" and should fail on that ground.
As to the executors' alleged failure to rent the property after 22 October 2018, the estate submits that it was not in a condition to be rented and there were many countervailing reasons why the property could not be rented that must be weighed in the balance. They submit that any expenditure on the property would necessarily have been the expense of the grandchildren, the residuary beneficiaries, and that it should not be undertaken without considering their interests.
Analysis. This analysis of issue (4) also takes into account the reply submissions filed on behalf of Mr Price.
The notation 9(b) release in the terms of settlement is a complete answer to Mr Price's claims of the executors' failure to rent the Riverside Drive property prior to 22 October 2018. The claim is one that was current at the time of the settlement and arose "directly or indirectly from the administration of Wendy Price's Estate".
The claim against the executors for their failure to rent the property after 22 October 2018 fails on several grounds.
First, it was reasonable for the executors to be cautious about expending the substantial cost of cleaning up the property for rental. The photographs, the video evidence and the costs outlined in Mr Fraser's reports all show that extensive work was required to remove rubbish, renovate and repair the Riverside Drive property before it would be lettable. The expenditure required to put it in a fit state for letting is difficult to estimate. But the Court infers that it was at least the amount in Mr Fraser's report and probably more to tidy up the property and present it to its best advantage. The Court does not accept Mr Price's case that only a superficial cleaning-up of the flood damage and a basic level of cleaning on the upper two floors was required.
The only funds the executors had available to them to undertake this expenditure were funds that would otherwise been a part of estate residue, to which the deceased's grandchildren were entitled. To undertake the expenditure suggested would, upon the transfer of the Riverside Drive property, have advantaged one beneficiary over others and would therefore not have been lightly undertaken and, because it was likely to be contentious, should not have been undertaken without the executors seeking judicial advice under Trustee Act 1925, s 63.
Second, the Riverside Drive property could not have been let without removing all the flood damaged goods claimed by Mr Price that were situated on the ground floor. The executors could not have simply removed and destroyed those goods without Mr Price's consent. Otherwise the executors risked incurring liability to him for their disposal. And if the goods were removed with his consent, but not destroyed, the ownership of the goods would still have had to be determined. This meant that the estate would have had to incur open-ended storage costs until their ownership was determined or Mr Price agreed to arrange for them to be taken off the executors hands. The course of these proceedings allows the Court to infer that had the executors sought to do anything to dispose of these goods, they could reasonably have anticipated difficulty in obtaining Mr Price's consent to any disposition of the goods and any cooperation about their ultimate storage and disposal.
Third, Mr Price alleges that the executors should have made an insurance claim. It is unclear when, on the Defendant's case, the insurance claim should have been lodged. But the flooding at the property was prior to 22 October 2018. So the failure to make a claim would fall within the scope of the settlement release.
Fourth, even if Mr Price could overcome all these other obstacles to the success of this claim, he must accept the dilemma that the executors faced: if the property was not to be let, it needed to be protected. When allowing Mr Smart and his friends into the property. Even though the property could not be let to tenants, leaving it vacant was not risk free. An attractively situated property on a riverfront could well have attracted squatters and risked further damage. Mr Sam Smart and his friends were certainly less than perfect caretakers, causing or allowing graffiti and other damage to the property. But their presence at the property was an important benefit to the estate in preventing potentially worse damage, a factor more than offsetting any minimal occupation fee the estate might have earned for allowing them into untidy, rubbish-filled and flood-damaged premises.
In summary, Mr Price's claim against the executors for failure to rent the Riverside Drive property fails.

(5) Applying Mr Price's Share of the Farm Property Proceeds of Sale

The fifth question asks when the executors should pay to Mr Price his share of the proceeds of sale of the Farm property. The Farm property was sold on 7 August 2019. The net proceeds of sale of the Farm property after expenses, agent's commission and conveyancing costs were $803,020.07. Subject to any necessary adjustments arising from these reasons, or from other estate administration, Mr Price's half share in this sum would be $401,510.03.
The sum of $750,834.07 ($803,020.07 less $52,186.00) was paid into Court on 30 September 2019. The sum of $52,186.00 was paid to the ATO as security for the levying of CGT on the sale, because Ms Lanigan is an overseas resident. This sum is likely to be refunded to the estate once a tax return has been lodged on behalf of the estate.
The executors will undoubtedly in due course file a tax return and the $52,186.00 can be restored to the estate. Mr Price is entitled to half of this sum. He has sought that the executors attend to its recovery from the ATO expeditiously and that should be done if it has not already been done.
Mr Price has not come up with a viable proposal that can be executed for him to acquire Riverside Drive property. Should that remain the case, it is likely that as the adjustments that will flow from the net financial effect of this judgment are being dealt with in the course of the further administration of the estate, the executors will apply to withdraw the funds in Court. Until that happens the funds will remain in Court. Their payment out would probably be accelerated if Mr Price decided that he no longer seeks a transfer of the Riversdale Drive property to him.

(6) Variations to Order 4 of the Terms of Settlement

The sixth question is the extent to which the terms of settlement of 22 October 2018 (Order 4) should be varied to better conserve Mr Price's right to elect to take a transfer of the Riverside Drive property instead of the proceeds of sale of that property.
The executors accept that Mr Price requires the proceeds of sale of the Farm property to complete the acquisition of the Riverside Drive property, should he be in a position to advance that objective. But the executors submit that on the proper construction of Order 4, Mr Price's right to have the Riverside Drive property transferred to him has already expired. Strictly, Order 4 makes that right contingent upon Mr Price discharging the mortgage of the Riverside Drive property within 30 days of settlement of the sale of the Farm property. So defined the contingency assumes Mr Price would have had immediate access to the proceeds of sale of the Farm property, upon the settlement of its sale. But the executors acknowledge Mr Price was not given those funds within 30 days of the settlement of the Farm property. The executors submit that Order 4 would be made more workable if the contingency were based on a 30 day period from the time that Mr Price actually received the proceeds of sale of the Farm property, rather than the time that the sale settled.
To preserve the reasonable operation of Order 4, the executors proposed the following (underlined) amendments to Order 4 of the Settlement Orders: "Orders that in the event that the Defendant/Cross Claimant discharges the mortgage registered on the title of [the Riverside Drive property] at any time up to 30 days after receipt of the net proceeds of the sale of [the Farm property] in accordance with order 3(b), and subject to the Defendant/Cross Claimant taking the 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]."
Mr Price's submissions largely agree with these changes. And indeed the executors have conducted themselves on the basis that Order 4 would not be enforced strictly in terms against Mr Price. So the Court will make the requested changes. But without Mr Price being in a position to take a transfer of the Riversdale Drive property these changes will be academic.

(7) Costs of the Expert, Ms Debbie Sage

The seventh question is who should pay the costs of the Court appointed expert, Ms Sage. Ms Sage has issued an invoice for $5,384.98 for services and a supplementary invoice for $2,157.30.
Ms Sage attended the Farm property and the Riverside Drive property on 1 July 2019 to act as an expert, to provide independent information to the Court and to resolve a dispute over chattels at those properties that Mr Price had claimed. The executors' attorney provided Mr Price with a list of chattels at the Farm property and agreement was soon reached as to which of these chattels Mr Price could remove from the Farm property.
Agreement could not be reached about two chattels at the Farm property. Mr Price claimed an interest in stereo sound amplifier equipment and a ride-on mower. Ms Sage attended to resolve issues about these two items, which were ultimately given to Mr Price.
Mr Price alleges: that the executors could have attended the Farm to inspect and more accurately identify these two disputed items; and that had the plaintiffs disclosed all the information available to them, the Court would not have had to direct that Ms Sage be engaged at all.
Mr Price also alleges that, because of their familiarity with the Riverside Drive property, the executors either knew or ought to have known that his chattels at the Riverside Drive property would not be able to be safely inspected and were significantly water damaged, mouldy and had no real value due to their damage. He contends that it was likely that nothing beneficial would come from the inspection and attendance with the expert.
This argument is not persuasive. It fails to recognise why the Court appointed Ms Sage. There was so little agreement about facts and such little cooperation between the parties about anything to do with inspecting these properties and the chattels on them that the Court set up this regime to provide the Court with some objective facts rather than assertion and counter assertion.
Moreover, a contest of evidence in the courtroom about potentially low value items such as the chattels in dispute in this case was never likely to be a cost-effective or efficient way of resolving issues about the chattels. So the Court, of its own motion, imposed this solution to give effect to the objectives of the Civil Procedure Act 2005 for the just quick and cheap determination of the real issues between these parties. And the Court cannot now determine whether one or other party was being unreasonable in claiming or resisting a claim to particular chattels. In the circumstances, the appropriate order for the Court to make is the one that the executors propose: that Mr Price will bear half Ms Sage's fees as an expert and the estate will bear the other half.

(8) Costs of the Court Expert, Mr Shane Fraser

The last question is who should pay the costs of the Court appointed expert, Mr Fraser. Mr Fraser attended the Riverside Drive property to conduct an inspection under the Court's direction of what repairs needed to be undertaken. He provided a quote and a more detailed explanation. But at the time of this judgment, Mr Fraser's final fees are yet to be ascertained.
Mr Price contends that Mr Fraser's invoices should be paid from the estate and should not be borne by his share of the estate. Mr Price contends that the need for Mr Price's inspection resulted from the executors' failure to preserve the Riverside Drive property in a reasonable state of repair and to act on known issues relating to the water leaks.
The estate contends that Mr Fraser's fee should be borne in the same proportions as the Court allocates the cost of the repairs that are required to be undertaken.
The estate's submissions are persuasive on this issue. It is true that, as was the case with Ms Sage, the Court of its own motion imposed the solution on the parties of engaging Mr Fraser as a Court expert. It was wholly inefficient for the parties to each incur legal fees to engage in a contest about expending relatively small amounts of money on repairs. And each party bears a degree of responsibility for the stand-off that occurred on the issue of repairs that needed Mr Fraser's intervention to be resolved.
But the Court has determined that the estate must pay more than a minimal amount of those repairs, as assessed by Mr Fraser and the executors failed to act on known issues in relation to water leaks at the Riverside Drive property. In the circumstances, the appropriate order for the Court to make is that the estate will bear 75% of Mr Fraser's fees and Mr Price will bear 25%.

Conclusions and Orders

The Court will leave it to the parties to propose a form of short minutes of order to give effect to these reasons other than the making of limited amendments to the orders of 22 October 2018 and other orders provided for below. The parties may wish to submit to the Court draft orders or declarations to record the Court's various determinations in these reasons.
That leaves the issue of costs. Both sides have had a measure of success in the proceedings. If the parties do not wish to argue about costs, the Court will make an order that Mr Price and the estate will each bear its own costs of this contest. If the parties do wish to argue about costs they should each file submissions of no more than three pages on the issue within 14 days. The Court will then make costs orders in chambers, if they are required.
The Court has been asked not to make orders and for that reason the Court will only direct the parties to bring in Short Minutes of Order to give effect to these reasons. But it may assist the parties to know that had that request not been made what orders the Court would have been minded to make. And those orders in draft are set out in the next paragraph.
The following orders and directions, if agreed to by the parties, would give effect to these reasons: 1. The defendant/Mr Price and the plaintiffs/executors will each bear one half of the fees of the Court appointed expert, Ms Sage. 2. The defendant/Mr Price and the plaintiffs/executors will each bear the fees of the Court appointed expert, Mr Fraser, in the ratio 25:75. 3. Amend order (4) of the orders made on 22 October 2018 by inserting the words "receipt of the net proceeds" immediately after the words "30 days after" and by inserting the words "in accordance with order 3(b)" before the words "and subject to". 4. Otherwise direct the parties to bring in agreed short minutes of order to give effect to these reasons within 21 days, that is by Friday, 2 October 2020 and if agreement is not possible, short minutes of order with marked up areas of disagreement should be supplied to the Court. 5. Note that after 14 days the Court will order that each party bear its own costs of the various contests leading to this judgment, unless before then one or other party files a submission of no more than three pages putting costs in issue, and if so the other party should file a reply of no more than three pages within a further seven days. 6. Grant liberty to apply.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 30 October 2020

The Estate of Wendy Gwynne Price; Lanigan v Price

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