Turner v O'Bryan-Turner

Terms of charge

1. Alternative versions of the proposed terms of charge over the remaining three Trundle properties (Woolharinga, Nellyvale and Sunrise) were proffered by the respective sides. Also proffered was a form of undertaking to the Court by David and Karl.
2. The principal difference in the proposed terms of charge about which there was debate concerned paragraph 1. The version proffered by the David/Karl interests was that the charge be expressed to be "to the extent of 50%", whereas in the version proffered by the Nick interests the charge was expressed simply to be over "the Land", without any such limitation.
3. In oral submissions, it was accepted by Counsel for the Nick interests that the proposed charge that I had contemplated in the principal reasons would be a charge only over the interest of Wendy's estate in the land (that being a 50% interest). Hence, it appeared to me that there was no real issue as to the version of paragraph 1 put forward by the David/Karl interests. However, Senior Counsel for the David/Karl interests indicated that their version of the charge had been drafted on the basis that Wendy's interest in the respective parcels of land could be transferred under the terms of her Will to Karl (which it was accepted presupposed that there was a variation to the injunctive regime presently in place which would permit this). This led to debate as to the complexities of moving the title across to Karl without Wendy's estate retaining an interest in the three Trundle properties out of which assets any liability for costs in favour of the Nick interests could be met.
4. The position of the Nick interests was that any charge to be ordered should be imposed over the 50% interest in the three properties held by Wendy's estate, and that Wendy's interest in those properties should only be transmitted to Karl once the estate was fully administered (including the satisfaction of any costs liabilities) and once the Court could be satisfied that John's interests were fully protected if title was transferred to Karl (T 7.40-45).
5. I will return shortly to the issue as to the position in relation to the estate's costs liabilities. As to the terms of the charge, I see no reason unduly to complicate the position. What I had in mind at the time of my principal judgment was (see at [525]) a charge in order to make good John's estate "by way of orders that ensure that his financial needs are met and his testamentary intentions are honoured": … namely, that there be a charge on the three Trundle Properties in which Wendy's estate retains an interest (Woolharinga, Nellyvale and Sunrise) to secure the necessary funds and for the Court to accept the undertaking by David and Karl that they will provide for their father's needs during his lifetime and will honour his bequest to Sara.
6. I also there noted that the charge would have to be subordinate to NAB's interest as registered mortgagee.
7. In those circumstances, and failing agreement between the parties as to the terms of charge, I consider that the following terms of charge (an amalgam of the two versions proffered), inserting the particular title description for each parcel of land, will adequately meet the requirements I originally had in mind (and I will so order): 1. Pursuant to order of the Supreme Court of New South Wales dated 8 April 2021 [Insert title description] (The Land) is charged to the extent of the 50% interest therein which is presently held by the executrix of the late Wendy O'Bryan Turner. 2. The charge is subordinate to dealing AK993623 registered on the Land. 3. The Land is hereby charged to secure: (a) the necessary funds required to ensure that Owen John Turner's financial needs are met during his lifetime; and (b) payment of the legacy (of $200,000) due to Sara Jane Gorman (nee Turner) under the Will dated 9 October 2015 of Owen John Turner, a copy of which Will is annexed hereto marked "A". 4. The charge is discharged on the death of Owen John Turner and the payment to Sara Jane Turner of the legacy referred to in 3(b). 5. Note that, to the extent that Owen John Turner becomes eligible for Centrelink or other benefits in respect of the payment of nursing home fees, recourse may be had to those benefits before recourse to the secured Land for payment of those nursing fees.
8. I note that it is apparently intended (see the proposed terms of charge proffered by the David/Karl interests) that David and Karl will meet John's financial needs out of such net cash income (net of reasonable expenses incurred in earning that income) as is derived from the use of the Land and will have recourse to any Centrelink benefits to which John may become eligible from 5 January 2022 for that purpose. I also note that it is intended that the legacy to Sara will be paid within twelve months of the death of John.
9. As to the legacy to Sara, the proposed terms of charge put forward by the David/Karl interests suggest that each of the three parcels of land secure one-third of the legacy amount. I have not framed the terms of charge that way because it may be that not all of the properties are, or will have to be, sold to meet that legacy.
10. As to the remaining differences between the proposed terms of charge, these seem largely to reflect additional details as to the matters I have noted as being the intentions of the David/Karl interests (or the manner in which the charge may be discharged) and I do not consider it necessary to specify those in the terms of charge.
11. To the extent that it may be necessary to avoid future disputes, I note that it is the intent of these orders that (subject to the variation of the injunctive regime presently in place), the imposition of the charge over the 50% interest held by Wendy's estate in respect of the three Trundle properties in question should not preclude the transmission to Karl (subject to the charge) of that 50% interest in accordance with the terms of John's Will.
12. I also note that I accept the undertaking to the Court proffered by David and Karl, the text of which is set out in the schedule to these reasons.

Discharge or variation of the injunctive regime

1. Relevantly, orders were made by Sackar J on 7 April 2017 and entered on 11 April 2017 (the 2017 Orders) in the following terms: 3. Until further order of the Court each of the First, Second, Third and Fourth Defendants, by himself or herself or any agent or servant on his or her behalf, be restrained from dealing in any way (including but not limited to assigning, selling, transferring, further leasing, licensing, encumbering or further encumbering, lodging or recording any dealing on the register at Land and Property Information ("LPI") save for a dealing which records this order) with: (a) The real property known as Garden Vale, which is near the rural town of Trundle, having title particulars Lot 15 in Deposited Plan 665275, Lot 1 in Deposited Plan 171930, Lot 16 in Deposited Plan 752121 and Lot 169 in Deposited Plan 752121; (b) The real property known as Allawah, which is near the rural town of Trundle, having title particulars Lot 168 in Deposited Plan 752121 and Lot 170 in Deposited Plan 752121; (c) The real property known as Woolharinga, which is near the rural town of Trundle, having title particulars Lot 3 in Deposited Plan 752121; (d) The real property known as Nellyvale, which is near the rural town of Trundle, having title particulars Lot 83 in Deposited Plan 752075, Lot 84 in Deposited Plan 752075 and Lot 85 in Deposited Plan 752075; (e) The real property known as Sunrise, which is near the rural town of Trundle, having title particulars Lot 2 in Deposited Plan 828545; (f) The real property known as Sunnycroft, which is near the rural town of Trundle, having title particulars Lot 167 in Deposited Plan 752121, ("the Properties"). 4. Until further order of the Court each of the First, Second and Third Defendants, by himself or herself or any agent or servant on his or her behalf, be restrained from dealing in any way (including but not limited to assigning, selling, transferring, leasing, licensing, encumbering or further encumbering) with any farm machinery, farm equipment, plant and equipment or other personalty located on any of the Properties or any motor vehicle usually garaged on any of the Properties or owned by or registered in the name of the First Plaintiff. In this order dealing does not encompass using in the ordinary course of the farming business and farming operations carried on or conducted upon any of the Properties. 5. Until further order of the Court each of the First, Second, Third Defendants, by himself or herself or any agent or servant on his or her behalf, be restrained from: (a) carrying on or conducting any farming business and farming operations upon any of the Properties (including but not limited to the sowing, growing and harvesting of crops, the raising or shearing of stock, including cattle and sheep, and the shearing of wool) other than in the ordinary and usual course of such farming business and farming operations, unless in accordance with the advice of an agronomist; (b) assigning, selling, transferring or encumbering or further encumbering any crops, produce, wool and stock (including cattle and sheep) sewn, grown, harvested, grazed, raised or shorn on any of the Properties ("Properties' Produce") other than by a sale to an arm's length purchaser at the market prices prevailing at the time of such sale of any Properties' Produce; (c) applying the proceeds of sale of any Properties Produce other than in paying any agency, broker or sales commission and then depositing the net proceeds into a bank account(s) at the National Australia Bank ("NAB") in the names of one or more of the First, Second and Third Defendants or into the Farm Working Account in the names of and/or operated by the Second and Third Defendants held at the Commonwealth Bank of Australia ("CBA") and thereafter applying such moneys in any such NAB account or CBA account in paying interest and other fees and charges to NAB or the CBA, paying the care, medical and living expenses, including aged care facility fees and expenses, of the First Plaintiff, paying the reasonable living expenses and legal costs of the First, Second and Third Defendants, paying the care and medical expenses of the First Defendant and paying the expenses incurred in the ordinary course of the First Defendant's business, and the farming business and farming operations carried on or conducted upon any of the Properties.
2. Orders 3(a), (b) and (f) of the 2017 Orders have now been discharged by consent.

David/Karl interests' submissions

1. At the time of their submissions as to costs, the David/Karl interests sought the discharge of orders 3-5(b) inclusive of the 2017 Orders. They submitted that if order 5(c) were to remain, with the variation they have suggested, this would protect John's interests pending registration of the proposed charge or further order.
2. It is noted that the effect of order 3 made by Sackar J was to restrain the David/Karl interests (and the fourth defendant, the Registrar-General) from dealing in any way with the Trundle properties. The David/Karl interests submit that this injunction has prevented the leasing out of some of the land in the past to other farmers, and has thus fettered the ability of David and Karl to generate income from the property and to service the debt to NAB and John's care costs. It is said that this has also prevented David and Karl from exploring the option of selling one of the parcels of land in order to service both the NAB debt and John's care costs. The David/Karl interests say that, having de-stocked during the drought, they have no financial resources to re-stock the land in order to generate income.
3. It is submitted by the David/Karl interests that John's interests would be protected by order 5(c) being varied to add, immediately after the words "Properties Produce" in the first line of order 5(c), the words: or the land identified in Order 3(c), (d) and (e) [i.e. Woolharinga, Nellyvale and Sunrise]
4. The David/Karl interests noted in their previous submissions that the discharge of orders 3-5(b) would allow for the transfer of Wendy's interest in Woolharinga, Nellyvale and Sunrise to Karl in accordance with her Will dated 9 March 2017, which they submitted would simplify the dealings with NAB and the drafting of the charge. Again, it was said that John would still be protected by order 5(c) (as proposed to be varied) if that were to occur.
5. It was also submitted (as noted in my costs reasons) that, if these orders were to be discharged, David and Karl would have the time prior to the farm debt mediation to explore options to deal with the land in such a way as to satisfy NAB's concerns and to provide for John's care costs without NAB exercising its powers of sale. (Whether that is now the case is a moot point. However, it seems to me that it is in the interests of maximising the prospects of success of the farm debt mediation that the position in relation to the charge over the properties - and the ability to transfer those properties if necessary - be clarified before the mediation.)
6. The Nick interests sought additional time to respond to the additional submissions raised by the David/Karl interests in relation to the variation of the injunctive regime then in place but made clear that they opposed any variation to Sackar J's orders until costs issues were determined. It was said that, to the extent there were costs against Wendy's estate, Wendy's estate might be required to satisfy that order before property was "gifted" under the terms of her Will. Additionally, they submitted that the charge to be imposed ought to include John's liability for costs (and noted the concern raised as to David and Karl's ability to satisfy the charge and undertaking). It was also said that the submissions of the David/Karl interests on the issue of costs indicated that they might not have the capacity to support John from the Trundle properties.

Nick interests' submissions

1. The submissions subsequently filed by the Nick interests on the issue as to any variation of the injunctive regime put in place by Sackar J in April 2017 maintained their objection to any such variation other than the removal of the unencumbered properties (Garden Vale, Allawah and Sunnycroft) from the injunctive regime (i.e., orders 3(a), (b) and (f)).
2. In essence, the opposition to the variation of the regime turns on the concern that the Nick interests would be exposed to the risk that if the properties are transferred to Karl (or even if the properties remained in the estate but were to be leased or licensed) then the estate might be insolvent (and unable to discharge its costs liabilities).
3. The Nick interests note that in the proceedings three costs orders were made against Wendy, and the parties agreed upon costs of one interlocutory matter, as follows: 1. the parties agreed upon costs for Turner v O'Bryan-Turner [2018] NSWSC 1140 to be paid by the applicants (being Wendy, David and Karl) on a standard basis to be agreed or as assessed; 2. Wendy, David and Karl were ordered to pay costs on an indemnity basis in Turner v O'Bryan-Turner [2019] NSWSC 258; 3. Wendy, David and Karl were ordered to pay costs thrown away in Turner v O'Bryan-Turner (No 2) [2019] NSWSC 1774; and 4. Wendy's estate was ordered to pay 20% of the Nick interests' costs of the 2017 Proceeding, so far as they are identifiably referable to the claims brought against Wendy.
4. It is noted that the three properties to be the subject of the charge (Woolharinga, Nellyvale and Sunrise) comprise the only assets in Wendy's estate which are capable of discharging costs liabilities. It is said that Karl cannot take his interest under the Will until Wendy's estate's liabilities have been dealt with. Hence, it is submitted that the injunction should not be discharged until such costs liabilities are quantified and discharged, or there is agreement as to discharge between the parties.
5. Further, it is said that there is no evidence regarding any negotiations with NAB in the context of the farm debt mediation, such as: when negotiations started; the nature of the negotiations; whether proposals have been discussed and/or rejected (including an explanation as to why NAB would not accept mortgages over the unencumbered properties which, it is said from the Opteon Valuation, make up almost 60% of the value of the entire property holdings and include the homestead); the terms which NAB may have put forward as to an acceptable solution so that the David/Karl interests could "explore" options to deal with the properties; what NAB's "concerns" are.
6. Pausing here, this last submission is made in advance of the farm debt mediation having occurred. True it is that there has been no evidence of what position NAB has taken to date in relation to the outstanding debt. However, that seems to me to beg the issue. What appears not to be disputed is that there is a farm debt mediation that is scheduled soon to take place.
7. The Nick interests say that there is nothing within the terms of the orders made by Sackar J which prohibits or restricts the David/Karl interests from carrying on the farming business in the usual course and applying sale proceeds of any "Properties Produce" (as defined in the orders) to usual costs (NAB or CBA costs, John's care costs, reasonable living expenses of the David/Karl interests) and to continue carrying on the farming business.
8. It is also submitted that there is nothing preventing the David/Karl interests from putting forward a suitable proposal for the Nick interests (and the Court) to consider which it is said, if prudent, would not be capriciously resisted. (While it is noted that such a request has occurred previously and was resisted by the Nick interests, it is said that this was on the basis that the lengthy lease period may have prevented any dealings with the properties if it had been decided that a re-transfer back to John was the most appropriate order to make.) Pausing here, the experience of the litigation to date does not leave me with great confidence as to the proposition that an accommodation would be able to be reached co-operatively between the parties were such a request to be made in future.
9. The Nick interests submit that there is therefore no need to discharge the injunction (other than in relation to the unencumbered properties - which has been done).
10. Further, it is submitted that a discharge of the injunction in the manner proposed by the David/Karl interests is not in John's best interests in circumstances where: John has no assets; has no security as yet; any decision made by NAB will not affect his position as it currently stands; any recovery of costs may be stifled; and John remains without a lawfully appointed representative to act on his behalf.
11. Instead, it is requested that an order be made, as sought in prayers 17 to 19 of the prayers for relief in the amended statement of claim and that the parties be directed to approach the NSW Trustee & Guardian to seek consent as to its appointment as financial manager of John's estate. It is said that the NSW Trustee & Guardian will be able to ensure that, whatever the result of the farm debt mediation, John's ongoing care costs and other liabilities are met as contemplated by the Nick interests' proposed charge.

David/Karl interests' submissions in response

1. The David/Karl interests say that the effect of the Nick interests' submission that the injunction should be maintained until the costs liabilities are quantified and discharged is that the Nick interests (in whose favour Costs Order 1(i) was made) would, in substance, be converted into secured creditors over Wendy's interest in those three properties and given priority over other unsecured creditors.
2. Further, it is submitted that, as a result of the judgment of 12 January 2021, there is, at least in equity (as equity regards as done what ought to be done), a present existing equitable charge over Wendy's 50% share in favour of John to provide for his needs during his lifetime and to secure his bequest to Sara (see at [525], to which I have referred above).
3. The David/Karl interests submit that there is no good reason to prioritise Wendy's unsecured costs liability to Nick over Wendy's charged liability to John (and that none has been advanced by the Nick interests).
4. As to the submission by the Nick interests that there is no need to discharge the injunction (other than as consented to by Nick and as effected on 31 March 2021), the David/Karl interests say that Sackar J's orders were to protect John's potential interest in the real and personal assets referred to in the orders pending final hearing. It is said that, as a result of the principal judgment, the need for that protection has dissolved (with the exception of John's interest in the charge over Wendy's 50% interest in Woolharinga, Nellyvale and Sunrise to provide for John's needs and to secure his bequest to Sara). The David/Karl interests submit that John's interest is adequately protected by maintaining Order 5(c) as made by Sackar J with the variation suggested above.
5. As to the Nick interests' submission in relation to the NSW Trustee & Guardian, it is noted that this was the subject of the discussion in the principal judgment at [558]-[559] and it is said that as the Nick interests have not first consulted with or sought the NSW Trustee & Guardian's consent (see [558]), the application should be refused at this time. In any event, it is submitted that this is not relevant to the usual questions which arise in dissolving interlocutory injunctions when final judgment is delivered.

Determination

1. The injunctive relief was ordered by Sackar until further order of the Court. That relief was clearly on the basis that the status quo was to be preserved pending a determination of the respective claims in the 2017 Proceeding on their merits (the 2019 Proceeding not having been instituted at that stage). That has now occurred. I see no basis for converting Nick or the Nick interests into effectively secured creditors in relation to the costs orders made in their favour; particularly not when there are also offsetting costs orders in favour of the David/Karl interests (leaving to one side the potential that there might not be a technical set-off depending on the entity/entities liable for particular costs orders and those in whose favour the orders were made). In practical terms, the respective costs orders must be considered as a whole.
2. The concern that one or more of Woolharinga, Nellyvale and Sunrise might be transferred to Karl, leaving the estate insolvent and unable to meet costs owing in favour of the Nick interests, is little more than speculation. Apart from the fact that Counsel for the Nick interests candidly (and quite properly) conceded that it was unlikely that on a setting off of the costs orders his clients would come out in front, there is nothing to suggest that Angelena, as administrator of Wendy's estate, would not comply with her obligations in the administration of that estate and it seems unlikely that Angelena would expose herself to personal liability in that regard. Moreover, the spectre raised by the Nick interests of an insolvent estate does not take into account the potential for Angelena to put in place arrangements to cover any potential costs exposure of the estate before transferring Wendy's interest in one or more of Woolharinga, Nellyvale and Sunrise to Karl.
3. As to the complaint that the Nick interests know nothing about the negotiations with NAB, that is beside the point.
4. I am satisfied that, with the charge (in the terms proposed), and the undertaking proffered by David and Karl, John's interests will be protected; and I do not have the material before me to support the appointment of the NSW Trustee & Guardian as his guardian or financial manager (as has again been suggested by the Nick interests). Indeed, to date, David and Karl are the sons who have taken care of John's nursing home costs and care needs.

Orders

1. For the reasons set out above, I make the following orders: 1. Order that the three Trundle properties identified in orders 3(c), (d) and (e) of the orders made by Sackar J on 7 April 2017 in the 2017 Proceeding and entered on 11 April 2017 (the 2017 Orders) (known as the Woolharinga, Nellyvale and Sunrise properties) be charged in the terms set out at [12] of these reasons. 2. Order that, to the extent not already discharged, orders 3-5(b) of the 2017 Orders be discharged. 3. Order that order 5(c) of the 2017 Orders be varied so as to insert, immediately after the words "Properties Produce" in the first line of order 5(c), the words: or the land identified in Order 3(c), (d) and (e) [i.e. Woolharinga, Nellyvale and Sunrise] 1. Make no further order as to costs of the respective Proceedings. 2. Note that this disposes of the 2017 and 2019 Proceedings and that the Court files will now be closed.

SCHEDULE Undertaking to the Supreme Court of NSW by Karl Turner and David Turner I, Karl Turner of 331 Turners Lane, Trundle NSW 2875 and I David Turner of 331 Turners Lane, Trundle NSW 2875, hereby undertake to the Court as follows: 1. To pay: (a) the nursing home fees of our father, Owen John Turner, until 5 January 2022; and (b) sustenance and other financial need expenses of Owen John Turner (other than nursing home fees) for the term of his natural life. from the net cash income referred to below. 2. To pay the amounts referred to above from such net cash income (net of reasonable expenses incurred in earning that income) derived from the use of 50% of the land: (a) "Woolharinga" being Lot 3 in Deposited Plan 752121; (b) "Sunrise" being Lot 2 in Deposited Plan 828545; (c) "Nellyvale" being Lot 83 in Deposited Plan 752075; (d) "Nellyvale" being Lot 84 in Deposited Plan 752075; (e) "Nellyvale" being Lot 85 in Deposited Plan 752075. 3. We further undertake to honour the bequest of Owen John Turner in his last Will and Testament dated 9 October 2015 to provide an amount of $200,000.00 to Sara Turner and further undertake to make that payment within twelve (12) months of the date of death of Owen John Turner. 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: 08 April 2021