Brown v Brown

[1999] NSWSC 604

CITATION:	Brown v Brown [1999] NSWSC 604
CURRENT JURISDICTION:	EQUITY
FILE NUMBER(S):	2107/90
HEARING DATE(S):	11/06/99
JUDGMENT DATE:	21 June 1999
PARTIES :	Mary Patricia NELSON and Jean FARRELL as Executrices of the Estate of Alice Veronica BROWN v Raymond BROWN & Anor
JUDGMENT OF:	Bryson J

COUNSEL :	M.S. Willmott for the Plaintiff Ms J. Sanford for the Defendant
SOLICITORS:	Lees & Givney for the Plaintiff Ronald S. Czinner & Co for the Defendant
CATCHWORDS:	TRUSTS and TRUSTEES - variations under Slip Rule of errors in judgment dated 29 April 1999.
DECISION:	See Paragraph 18.

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

BRYSON J.

MONDAY 21 JUNE 1999

2107/9 MARY PATRICIA NELSON and JEAN FARRELL as Executrices of the Estate of ALICE VERONICA BROWN v RAYMOND BROWN & ANOR.

JUDGMENT

1   HIS HONOUR: Two Notices of Motion seek further consideration of matters in my judgment of 29 April 1999. It was my view that the defendants should account as if they had made a fair charge in the nature of rent for occupation of No. 118 Morrison Road by Mr Jack Brown and his family. The plaintiffs’ Notice of Motion of 27 May 1999 Claim 3(a) asked me to re-open my consideration of findings relating to the charge in the nature of rent (para. 59), and to interest thereon (para. 65), and of the orders based on those findings. 2   In para. 59 I adopted $300 per week as the fair market rental value of the property from 28 October 1990 until 19 April 1999; so I applied $300 per week to the period from 1 January 1997 to 28 April 1999. It appeared to me that $300 per week was supported by Mr Phippen’s affidavit evidence. After hearing submissions on the Notice of Motion I am satisfied that reconsideration is appropriate, because I did not have regard to Exhibit P (tendered at transcript p.242), which was an agreed Schedule Market Rental Values. Exhibit P was based on Mr Phippen’s evidence but there were agreed handwritten modifications, and it was not appropriate to base findings on Mr Phippen’s affidavits, or on anything other than the agreed Schedule. As para.59 was affected by a slip or accidental omission to give attention to Exhibit P I withdraw the paragraph. 3   Exhibit P does not produce an agreed outcome. Column (a) sets out rental values for the whole property and Column (b) sets out rental values on a notional basis in which the property is treated as if the defendants had not added an upper storey and the property had a ground floor only. In my view I should adopt the rental value for the whole property, because the defendants were trustees of the whole property throughout the whole period to which the accounting for rent relates. The late Mrs A.V. Brown was and her estate is beneficial owner of a share in the property in whatever state of improvement it has been from time to time, and the defendants are accountable for its rental value as it actually was, irrespective of the earlier history of the improvements. This is no less so because, while Mrs A.V. Brown was still alive, the defendants, for their own purposes, improved the property by adding the upper storey. 4   The findings which I substitute for para.59 are as follows. The fair market rental value of the property is established at $114,159.25 for the period 29 October 1990 to 4 August 1998 by addition from Exhibit P of the agreed Schedule of Market Rental Values. I adopt $340 per week for the period from 5 August 1998 until 28 April 1999; 38 weeks at $340 produces $12,920. The total is $127,079.25. Exhibit O shows that the agreed outgoings incurred by the defendants total $12,935.00. The defendants are accountable to the trust for the balance of $114,144.25 and to the estate for 2125 parts in 4800 parts of that balance; that is for $50532.60. My judgment will include that sum of $50532.60. 5   This requires me to reconsider interest on the charge in the nature of rent, which I earlier dealt with in para.65. In calculating interest I treat the notional rent as having increased to $340 per week on 1 January 1997. Overall the adoption of notional balances at annual intervals produces a conservative calculation which is more favourable to the defendants than calculation based on the total rental value as it increased week by week throughout the whole period from 29 October 1990. 6   Defendants’ counsel pointed out errors in the rates of interest which I earlier used. I used interest rates for the first five interest calculations up to 28 October 1993 which were higher than those actually found in Schedule J. In my re-calculation I have adhered, as I earlier intended, to the rates actually found in Schedule J. 7   The Notional Balances on which the last three interest calculations in para 65 were based should be increased to allow for the higher rental value from 1 January 1997. The notional balance on which the interest calculation for the period from 29 October 1997 to 28 October 1998 is based should be increased by $761 from $34,300 to $35,061 to allow for the increase in rental value to $340 per week from 1 January 1997. The calculations are:

1.1.97 to 28.10.97: 43 weeks: 43 x 40 = $1720
Accountable to Estate for 2125 4800 = $ 761
The notional balance on which the interest calculation for the period from 29 October 1998 to 29 April 1999 is based should be increased by $1682 from $39,200 to $40,882. The calculations are:-

29.10.97 to 29.4.98: 52 weeks: 52 x 40 = $2080
Accountable to Estate for 2125 4800 = $ 921
Add: $761 + $921= $1682

8   I withdraw the interest calculations in paragraph 65 of my judgment of 29 April 1999 and adopt the following calculations in their place.

28.10.91 to 28.10.92: Notional Balance $4900
123 days at 15% to 28.2.92 247.68
185 days at 13% to 31.8.92 322.86
58 days at 11.25% to 28.10.92 87.59

29.10.92 to 28.10.93: Notional Balance $9800
307 days at 11.25% to 31.8.93 927.30
58 days at 10.5% to 28.10.93 163.51

29.10.93 to 28.10.94: Notional Balance 14700
1 year at 10.5% 1,543.50

29.10.94 to 28.10.95: Notional Balance 19600
123 days at 10.5% to 28.2.95 693.51
242 days at 12% to 28.10.95 1,559.40

29.10.95 to 28.10.96: Notional Balance 24500
1 year at 12% 2,940.00

29.10.96 to 28.10.97: Notional Balance 29400
123 days at 12% to 28.2.97 1,188.89
184 days at 10.5% to 31.8.97 1,556.19
58 days at 10% to 28.10.97 467.18

29.10.97 to 28.10.98: Notional Balance 35061
307 days at 10% to 31.8.98 2,948.97
58 days at 9.5% to 28.10.98 529.28

29.10.98 to 29.4.99: Notional Balance 40882
183 days at 9.5% 1,947.22
__________
Total interest: $17,252.74

9   Claim 3(b) in the plaintiffs’ Notice of Motion claimed reopened consideration of loss relating additional income tax on the amount awarded. This claim was not pressed at the hearing of the Notice of Motion. 10   Claims 1 and 2 claim extension of the time to appeal and of the time to apply for leave to appeal against the orders which I made on 29 April 1999. The orders which I then made included (order 1) my certificate of the findings on the Inquiry ordered on 29 October 1990. It is possible that leave to appeal may be necessary for an appeal against that order as it may be interlocutory in character. I leave the question whether leave to appeal is necessary undecided. I have power to extend the time for an application for leave to appeal and the time to institute an appeal, because the plaintiffs’ Notice of Motion was filed on 27 May 1999, the last day within which an application for leave to appeal might have been made under Pt.51 r.4(1) or an appeal might have been instituted under Pt.51 r.6(1). Power to grant the extensions is conferred by subr.4(5) and subr.5(3). It is appropriate to extend time for a further 28 days after the present decision because each party brought forward matters on which reconsideration was required. 11   The defendants’ Notice of Motion of 25 May 1999 asked me to vary or vacate the costs order of 29 April 1999. As the costs order was made as of course and the application for reconsideration was made reasonably promptly and before my order had been entered I am prepared to reconsider costs. 12   Claim (1) in the Notice of Motion is to the effect that the plaintiffs should pay the defendants’ costs of so much of the proceedings as relate to the determination of the appropriate amount of the proceeds of sale of Lot 101, alternatively that each party should pay his or her own costs of that part. Defendants’ counsel asked me to consider the costs of determination of the amount of the proceeds of the sale of Lot 101 which was subject to the trust for the estate of the late Mrs A.V. Brown. By far the greater part of the hearing time in 1998 was given to the determination of that amount, and relatively little hearing time, evidence and argument dealt with other matters for which the defendants were accountable, while the claim for the appointment of trustees for sale was little more than a formality. 13   In August 1996, about 18 months before the hearing before me began in February 1998, the defendants’ solicitor contended that the deceased’s share of the proceeds of Lot 101 was “$132,812.50 less part agent’s commission and part legal fees.” In a reply of 8 October 1996 the plaintiffs’ solicitor contended for $194,791.65, also subject to a deduction of part of agent’s commission and part of legal fees, but offered to agree to $163,802.07. After the inquiry had proceeded for three days before me on 16, 17 and 18 February 1998, the defendants’ solicitors offered $146,000 on 16 April 1998 by telephone, confirmed by letter of 23 April 1998. In reply on 25 May 1998 the plaintiffs’ solicitors offered to accept $197,000 . On 10 July 1998 by letter the defendants’ solicitor offered to accept $157,000. No agreement emerged, the hearing continued on 3 and 4 August 1998 and the value as found by me on 29 April 1999 was $130,216.00. 14   None of these offers was put in evidence as they were privileged offers made in the course of settlement negotiations. I doubt that they were relevant on the issue. They were not made in accordance with Rules of Court relating to consideration of offers on the question of costs, and were not made under any arrangement between the parties which provided for them to be considered on the question of costs. 15   Defendants’ counsel contended that the history of the offers made shows that the defendants made genuine and keen endeavours to resolve the major issue in dispute, and that if any of the defendants’ positions had been accepted by the plaintiffs the attention given at the hearing to this issue would have been unnecessary and the plaintiffs would have achieved a better outcome than they ultimately did. It was contended that although the provisions of the Rules of Court do not strictly apply, the principles of the Rules should be applied by analogy. The plaintiffs’ counsel contended that the defendants’ supposed offers were not in unqualified terms and that the defendants never adopted an identifiable and open position establishing a sum of money for which they contended that they were liable to account. 16   In my opinion there are no useful analogies with the formal offers for which Rules of Court provide. The parties were in contention in a situation very different to damages litigation, particularly damages litigation where liability is in issue. The defendants were trustees at all times and were liable to account, and their liability was plainly established by judicial decision in October 1990. At no time before or during the Inquiry did they in any way account or purport to account for any part of the proceeds of Lot 101, and they had no identifiable position on what part of the moneys which they had received was payable to the plaintiffs as executrices of the estate. As I commented in the judgment, they took a position which in substance was that they defied the plaintiffs to prove whatever they could. It was not appropriate for trustees to proceed in this way, even though they supplemented it by off-the-record offers of settlement which were not available to the Court. The appropriate course for trustees was to produce accounts which adopted an identifiable position which could be admitted or disputed and could be the basis for any further debate which was appropriate. They did not ever do this. Their manner of proceeding contributed greatly to the complexity of the Inquiry and to its length. In the circumstances I do not regard it as appropriate for me to modify the ordinary result in costs which flows from the plaintiffs’ success. I am not prepared to vary the costs order. 17   To give effect to these reasons I withdraw the calculations in paragraph 66 of my judgment of 29 April 1999 and substitute the following:

Amount certified at Inquiry $130,216.00
Interest thereon 132,166.59
Charge in the nature of rent 50,532.60
Interest thereon 17,252.74
__________
$330,167.93

18   My Orders are:

(1) Order 2 of the orders of 29 April 1999 is vacated and in lieu thereof I order with effect as of 29 April 1999:

Give judgment for the plaintiffs for $330,167.93.

(2) Order pursuant to Pt.51 r.4(5) and r.5(3) that the time for an application for leave to appeal and the time to institute an appeal from the orders of 29 April 1999 as varied by Order (1) hereof be extended for 28 days from the date of this Order.

(3) Order that the costs of the Plaintiffs’ Notice of Motion of 27 May 1999 and of the Defendants’ Notice of Motion of 25 May 1999 be plaintiffs’ costs in the proceedings.

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