Carrington v Wallace

[2022] NSWSC 1078

Supreme Court

New South Wales

Medium Neutral Citation:

Carrington v Wallace [2022] NSWSC 1078

Hearing dates:

9-10 May 2022

Date of orders:

16 August 2022

Decision date:

16 August 2022

Jurisdiction:

Equity

Before:

Ward P

Decision:

1.   Direct the parties to file proposed short minutes of order to reflect and give effect to these reasons, within 14 days, together with brief submissions (if those orders not be agreed) as to the form of orders sought.

2.   Direct the parties to file submissions on costs (and any submissions as to the question whether Matthew and Ashley should now be removed as executors and trustees of the deceased’s estate) within 14 days.

3.   Note that the final orders and costs orders will be made, if possible, on the papers but that if any of the parties requires a brief oral hearing this should be identified in the submissions filed pursuant to the above orders (with a short explanation as to why an oral hearing is necessary).

Catchwords:

SUCCESSION — Executors and administrators — Proceedings against executors and administrators — Application for relief – Application for removal – Rule against self-dealing – Whether the sale of estate property to an executor of the will was authorised by the will – Whether the beneficiaries consented to the sale of the property – Whether the beneficiaries made an election in respect of the breach of trust by the executors

EQUITY — Equitable remedies — Rescission – Whether restitutio in integrum was possible

Legislation Cited:

Trustee Act 1925 (NSW), ss 81, 85

Trustee Act 1958 (Vic), s 63A

Uniform Civil Procedure Rules 2005 (NSW), Pts 7, 28

Cases Cited:

Acme Office Service Pty Ltd v Ludstom [2002] NSWSC 277

Adams v Alemite Lubrequip Pty Ltd [1994] NSWCA 1

Aequitas Ltd v Sparad No 100 Ltd [2001] NSWSC 14

Agricultural & Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570

Alati v Kruger (1955) 94 CLR 216

Allcard v Skinner (1887) 36 Ch D 145

Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43

Application of Tatham [2021] NSWSC 540

Arakella v Paton (2004) 60 NSWLR 334; [2004] NSWSC 14

Archbold v Scully (1861) 9 HLC 360

Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1

Brown v The NSW Trustee & Guardian [2011] NSWSC 1203

Byrnes v Kendle (2011) 243 CLR 253; [2011] HCA 26

Cachia v Westpac Financial Services Ltd (2000) 33 ACSR 572

Campbell v Walker (1800) 5 Ves 678

Canson Enterprises Ltd v Boughton & Co [1993] 3 SCR 534

Carrington v Wallace (No 2) [2020] NSWSC

Carrington v Wallace [2019] NSWSC 1301

Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36

Cisera v Cisera Holdings Pty Ltd (2018) 98 NSWLR 747; [2018] NSWCA 286

Cisera v Cisera Holdings Pty Ltd [2017] NSWSC 960

Clay v Clay (2001) 202 CLR 410; [2001] HCA 9

Clough v London & North Western Railway Co (1871) LR 7 Ex 26

Cole v Miles [2002] NSWCA 150

Commercial Union Assurance Company of Australia Ltd v Ferrcom Pty Ltd (1991) 22 NSWLR 389

Craine v Colonial Mutual Fire Insurance Co Ltd (1920) 28 CLR 305

Crown Melbourne Ltd v Cosmopolitan Hotel (Vic) Pty Ltd (2016) 260 CLR 1; [2016] HCA 26

Dalrymple v Melville (1932) 32 SR (NSW) 596

Edmonds v Donovan (2005) 12 VR 513

Ex parte Bennett (1805) 10 Ves 381, 394; 32 ER 893

Ex Parte James (1803) 32 ER 385; 8 Ves 337

Ex parte Lacey (1802) 6 Ves 625

Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22

Fell v Fell (1922) 31 CLR 268; [1922] HCA 55

Frith v Gold Coast Mineral Springs Pty Ltd (1983) 47 ALR 547

Fysh v Page (1956) 96 CLR 233

Hagan v Waterhouse (1991) 34 NSWLR 308

Hall v Hallet (1784) 1 Cox 134

Hartley Poynton Ltd v Ali (2005) 11 VR 568

Hewitt v Gardner; Hewitt v Gardner [2009] NSWSC 705

Holder v Holder [1968] Ch 353

Immer (No 145) Pty Ltd v Uniting Church in Australia Property Trust (NSW) (1993) 182 CLR 26

Ip v Chiang [2021] NSWSC 822

Jones v Dunkel (1959) 101 CLR 298

Kane v Radley-Kane [1999] Ch 274

Khoury v Government Insurance Office (NSW) (1984) 165 CLR 622

Maelor Jones Investments (Noarlunga) Pty Ltd v Heywoord- Smith (1989) 54 SASR 285

McCrohon v Harith [2010] NSWCA 67

McHugh v Eastern Star Gas Ltd (2012) 265 FLR 124; [2012] NSWCA 169

McNally v Harris (No 3) [2008] NSWSC 861

Metropolitan Petar v Mitreski [2012] NSWSC 16

Miller v Miller (1995) 16 ACSR 73

Munchies Management Pty Ltd v Belperio (1988) 58 FCR 274

Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114

Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383

NSW Masonic Youth Property Trust v Attorney-General (NSW) [2010] NSWSC 333

O’Connor v SP Bray Ltd (1936) 36 SR (NSW) 248

O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262

Our Lady’s Mount Pty Ltd v Magnificat Meal Movement International Inc (1999) 33 ACSR 163

Partridge v Equity Trustees Executors and Agency Co Ltd (1947) 75 CLR 149

Pateman v Heyen (1993) 33 NSWLR 188

Phipps v Boardman [1964] 2 All ER 187

Pleash, in the matter of Suncoast Restoration Pty Ltd (in liq) (2013) 211 FCR 203; [2013] FCA 355

Port of Melbourne Authority v Anshun Pty Ltd (1981) 147 CLR 589

Precision Plastics Pty Ltd v Demir (1975) 132 CLR 362

Re Bell’s Indenture; Bell v Hickley [1980] 1 WLR 1217; [1980] 3 All ER 425

Re Chomley [2014] VSC 220

Re Country Road Services Pty Limited (2019) 18 ASTLR 44; [2019] NSWSC 779

Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399; [1966] 2 NSWR 211

Re Kingston Property Holdings Pty Ltd (No 2) [2017] FCA 974

Re Manormay Investments Pty Ltd [2013] VSC 260

Re Patros (2007) 16 VR 182 [2007] VSC 83

Re Simpkiss Pty Ltd (in liq) [2018] FCA 2121

Re Tabone [1968] VR 168

Riddle v Riddle (1952) 85 CLR 202

Rothschild v Brookman (1831) 2 Dow & Clark 188

Sargent v ASL Developments Pty Ltd (1974) 131 CLR 634; [1974] HCA 40

Saunders v Vautier (1841) 41 ER 482

Sibley v Grosvenor (1916) 21 CLR 469

Silkstone and Haigh Moor Coal Co v Edey [1900] 1 Ch 167

Southern Real Estate Pty Ltd v Dellow (2003) 87 SASR 1

Spellson v George (1992) 26 NSWLR 666

Target Holdings Limited v Redferns (a firm) [1996] 1 AC 421

Thomas Hare Investments Ltd v Hare (2012) 34 VR 656

Tito v Waddell (No 2) [1977] Ch 106

United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766

Vadasz v Pioneer Concrete (SA) Pty Limited (1995) 184 CLR 102; [1995] HCA 14

Waine v King (unreported, Supreme Court of New South Wales, Hodgson J, 5 October 1994)

Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18

Williams v Scott [1900] AC 499

Yates v Halliday [2006] NSWSC 1346

Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15

Texts Cited:

Ashburner’s Principles of Equity (1933, 2nd ed)

D O’Sullivan, S Elliott and R Zakrzewski, The Law of Rescission (2014, 2nd ed, Oxford University Press)

David J Hayton, Paul Matthews and Charles Mitchell, Underhill and Hayton Law of Trusts and Trustees (2016, 20th ed, Lexis Nexis Butterworths)

H A J Ford, W A Lee, Law of Trusts (2010, 4th ed, Thomson Reuters)

J D Heydon, M J Leeming, Jacob’s Law of Trusts in Australia (2006, 7th ed, Lexis Nexis Butterworths)

J D Heydon, M J Leeming, P G Turner, Meagher, Gummow & Lehane’s Equity, Doctrines & Remedies (2015, 5th ed, Lexis Nexis Butterworth)

Lord Goff of Chieveley, Gareth Jones, The Law of Restitution (2002, 6th ed, Sweet & Maxwell)

PW Young, C Croft, M Smith, On Equity (2009, Thomson Reuters Lawbook Co)

Category:

Principal judgment

Parties:

Mischa Grace Carrington (First Plaintiff)
Dean Edward Carrington (Second Plaintiff)
Matthew Gary Wallace (First Defendant)
Ashley Joseph Carrington (Second Defendant)

Representation:

Counsel:
A Cheshire SC with H Morrison (Plaintiffs)
A Harding SC with J Cook (Defendants)

Solicitors:
Glass Goodwin (Plaintiffs)
MinterEllison (Defendants)

File Number(s):

2018/00238530

Publication restriction:

Nil

Judgment

1. HER HONOUR: This matter concerns a dispute arising out of the administration of the estate of the late Edward Joseph Carrington, who died on 19 December 2015 leaving his partner (Ms Seaham Kharoufeh) and three adult children (Mischa Carrington, formerly known as Michelle Wallace; Dean Carrington and Ashley Carrington). Without intending any disrespect, I will refer to the family members (and Ashley’s co-executor) by their first names.

2. By his last Will dated 18 April 2015, the deceased appointed Mischa’s former husband (Matthew Wallace), who was a close friend of the deceased and a partner at KPMG Enterprise in Hobart, and Ashley as his executors and trustees. A grant of probate was obtained by the executors on 27 May 2016 (Ex A at p 58).

3. During the administration of the deceased’s estate, a dispute arose as to the proper construction of cl 6 of the Will (which is set out in due course below) (Ex A at p 61). Mischa and Dean contended that each of the three children (being the three residuary beneficiaries in equal shares) was absolutely entitled to a one-third share of the residuary estate; whereas Matthew and Ashley contended that under cl 6 of the Will they, as executors, were entitled to make discretionary distributions from the estate of up to $50,000 annually to any one or more of the residuary beneficiaries before the residuary entitlements arose. Matthew and Ashley were also adamant that the deceased’s wishes were for such moneys only to be advanced for wealth creation purposes, imposing that as a condition on any requests by the residuary beneficiaries for distributions under cl 6 of the Will.

4. Mischa and Dean commenced proceedings in this Court by summons filed on 3 August 2018, seeking a determination as to the proper construction of the Will, an order requiring the payment to each of them of one-third of the residuary estate remaining after payment of certain identified gifts, and, in the alternative, an order for the removal of Matthew and Ashley as executors. At the time of commencement of the proceeding, Ashley had already received two distributions totalling $100,000 out of the estate; during the course of the proceeding, he received a third $50,000 distribution.

5. The matter was heard by Robb J commencing on 2 August 2019. At the hearing, the plaintiffs informed the Court that they would withdraw their claim for an order for the replacement of Matthew and Ashley as executors and trustees (prayer 3 of the summons) provided that, in consequence of leave to be granted by the Court, they would remain able to seek any necessary further orders in the proceeding to implement the terms of the Will, including if necessary to renew their claim for an order replacing the defendants as executors and trustees (see [47] of his Honour’s judgment in which this is recorded). Robb J noted this in the proposed orders set out at [115](16) of his Honour’s judgment and see the formal notation at [16] of the final orders ultimately made on 28 November 2019.

6. By the end of the hearing before Robb J, the issues for determination were therefore limited to the proper construction of the Will and the claim for declaratory and other relief in relation to the distribution of the residue of the deceased’s estate. Relevantly, for present purposes, there was no application at that stage by Mischa and Dean seeking to set aside the sale to Ashley of the principal asset in the deceased’s estate – a property in Manyana, New South Wales (the Manyana Property) (see below).

7. On 27 September 2019, Robb J published reasons for judgment (Carrington v Wallace [2019] NSWSC 1301), finding in favour of the construction contended for by Mischa and Dean as to the proper interpretation of cl 6 of the Will (see at [102]). His Honour held that on the death of the deceased each of the three surviving children became absolutely presently entitled beneficially to an equal one-third share of the residue of the deceased’s estate, held on trust for them by the defendants (Matthew and Ashley).

8. Robb J made directions for the further administration of the estate (including orders made on 28 November 2019 for the residue of the estate to be distributed as soon as reasonably possible after it had been determined and was available in cash to be paid to the plaintiffs) (see Order 3). Pausing here, although reliance is placed on this order by Matthew and Ashley (variously as either satisfying the condition placed by Mischa and Dean as to their consent to the sale to Ashley or as an election as to the remedy for breach of trust), an order for distribution of the residue of the estate as soon as reasonably possible after its determination necessarily begs the question (as his Honour was well aware – as evident from the further direction that was made at the time) as to what comprises the residue, which is ultimately what is here left in dispute.

9. His Honour directed the plaintiffs to inform the defendants, within fourteen days, of all alleged breaches of the defendants’ duties as executors in respect of the circumstances in which certain Property of the deceased was sold to Ashley (i.e, the Manyana Property); and the remedies sought in respect of those breaches that the plaintiffs wished to pursue (see Order 12).

10. Perhaps unsurprisingly, given the course that the matter has taken since his Honour’s judgment, the determination as to the proper construction of the Will did not resolve all the disputes between the parties. Relevantly, there has still been no distribution of any part of the residuary estate to Mischa or Dean (see at T 75.49) (although, as noted, there has been distribution of sums totalling $150,000 to Ashley; the last tranche of which – being a sum of $50,000 – having been made after the commencement of the proceeding). The estate thus remains not fully administered. It appears that the delay in administration of the estate is at least in part due to the need to determine the issues raised by the claims now before me (including the costs of the proceeding to date). Robb J noted (at [44] of his Honour’s reasons) that if some or all of the costs were to be paid out of the estate there might be an insufficient balance in the estate to enable the payment of $150,000 each to Mischa and Dean. Moreover, various of the lawyers who have acted for Mischa and Dean have claimed fruits of the litigation liens in respect of unpaid fees which, if satisfied, would exhaust much if not all of the distributions to come to them from the estate (unless the sale of the Manyana Property is set aside and that asset is realised for a greater value to the estate).

11. Robb J published a subsequent judgment concerning costs on 13 January 2020 (Carrington v Wallace (No 2) [2020] NSWSC 5).

12. Meanwhile, on 31 December 2019, the plaintiffs filed a statement of claim (that pleading being subsequently amended, first on 21 February 2020 and again on 14 May 2021). Under the further amended statement of claim filed on 14 May 2021, Mischa and Dean seek an order that the sale transaction in respect of the transfer from the estate to Ashley of the Manyana Property be set aside (prayer 4A) or that the Manyana Property be declared to be held on trust for the estate (prayer 4B) (that being relief that the defendants say is inconsistent with the relief the plaintiffs sought, and which the defendants say the plaintiffs obtained from Robb J, for the immediate distribution of the estate). This relief was not sought in the earlier iterations of the statement of claim. The plaintiffs accept that if the sale is rescinded then account must be taken of allowances in favour of Ashley (the purchase price and the value of any improvements – see [3](b) of the Reply filed on 17 August 2021) less income received from Ashley’s use of the Manyana Property.

13. Alternatively, the plaintiffs seek an order requiring the defendants to account to the estate for: the amount of $15,000 (being the difference between the amount at which the Manyana Property was valued at the time of sale ($480,000) and the amount paid by Ashley ($465,000)) (prayer 5(a)) or, in the alternative, an amount representing the difference between the current value of the Manyana Property (which is not known but pleaded as not less than $480,000) and the amount paid for it by Ashley (prayer 5(b)). The relief claimed by prayer 5(a) is said to be by way of equitable compensation or an account of profits (see T 104.6); the relief claimed by prayer 5(b) is said to be by way of an account of profits (see T 103.32 – T 104.34). In terms of the relief claimed, in closing submissions it was made clear that the claim in prayer 5(a) – the claim for $15,000 – is the final fallback (see at T 167.17). Thus, in order of priority as to the relief they seek, the plaintiffs place rescission (and/or a declaration of constructive trust) first; then the prayer 5(b) relief and only last the prayer 5(a) relief (no doubt because the last would be disproportionate to the costs incurred in pursuing such relief).

14. In that regard, the plaintiffs made clear in oral closing submissions that, if the sale were set aside, they would be prepared to co-operate with Ashley if he were able (and wished) to acquire the Manyana Property from the estate (at a price reflecting a current valuation but to take into account allowances of the kind referred to above).

15. The plaintiffs maintain that the transfer of the Manyana Property to Ashley infringes the rule prohibiting self-dealing on the part of trustees and executors (see below). The plaintiffs note that it is possible that, by the time of the impugned transaction, Matthew and Ashley had in fact got in the estate assets and so were holding the Manyana Property as trustees; but say that nothing turns on this as the rule against self-dealing applies also to both executors and trustees.

16. Matthew and Ashley contend that the sale was authorised under the Will (cl 11.1(q) – see below) but, if not, then they rely upon a (conditional) consent given by the beneficiaries in respect of the sale. They also rely on a number of equitable defences (election and acquiescence) and have served a cross claim seeking relief under the Trustee Act 1925 (NSW) (Trustee Act) or in the Court’s inherent jurisdiction to approve the sale or otherwise excuse any breach by them.

17. For completeness, I note that complaint was made by the defendants in their written submissions (though this was not raised in oral submissions) that the current proceeding is procedurally irregular, in that the plaintiffs (as two of the three residuary beneficiaries of the deceased’s estate) purport to seek relief on behalf of the estate but no order has been made under Pt 7 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) appointing either of the plaintiffs to represent the estate for the purposes of the proceeding. If that remains an issue (which is not clear), the perceived irregularity would be readily met either by an order appointing the plaintiffs as authorised representatives of the estate pursuant to r 7.10(2)(b) of the UCPR for the purposes of representing the estate’s interest in the present proceeding or by an order pursuant to r 7.10(2)(a) of the UCPR that the proceeding continue in the absence of a representative of the estate. An order of such kind would be appropriate in circumstances where the executors are party to the proceeding (and are defending claims made against them as to their administration of the estate) and where the relief sought by the plaintiffs (in their capacity as residuary beneficiaries) relates to dealings in relation to the estate assets (and seeks the setting aside of the sale of the Manyana Property and, further or in the alternative, a declaration that it is held on trust for the estate; and in the alternative to the setting aside of the sale an order for the defendants to account to the estate for certain amounts) (see, for example, Hewitt v Gardner; Hewitt v Gardner [2009] NSWSC 705, albeit in a different context). Thus, it would be inappropriate for the executors to represent the estate in the present proceeding.

18. That leads me to observe that, in circumstances where: the deceased’s estate is not large, there has been considerable delay in the administration of the estate (including the distribution of funds out of the residue of the estate to date only to one of the three residuary beneficiaries – the co-executor, Ashley); and the dispute in essence is between the three siblings, it is unfortunate (to say the least) that the parties have apparently not been able to reach a sensible resolution to their disputes (if not before, then certainly once the dispute as to the proper construction of the Will was resolved by Robb J’s decision – and it could no longer have been contended by the executors that the plaintiffs did not have a vested entitlement to an equal share of the residue of the estate; and, if not then, after the hearing had concluded).

1. When I reserved judgment in the matter, I encouraged the parties to explore a resolution to their disputes and made orders for the matter to be referred to court annexed mediation. That mediation did not eventuate (the first date set for the mediation was vacated at the parties’ request and, after another date was set within the range of dates that the parties had advised my associate were available dates, there was then a further application to vacate the mediation; after which I indicated through my associate that I would not further defer proceeding to judgment on the matter). I cannot and do not attribute blame for the fact that the parties did not engage in the mediation process. I simply note that it is unfortunate that the parties did not avail themselves of that opportunity, particularly having regard to the family context in which these issues have arisen and the fact that it must have become obvious by the conclusion of the hearing (if not before) that there was a risk that costs issues would exhaust the funds presently available to the estate, ultimately to the detriment of all of the beneficiaries.

Background

20. As noted above, the two plaintiffs and their brother, Ashley, are the three children of the deceased. Matthew is the former husband of Mischa and was a close friend of the deceased. It appears that there is now little love lost between Matthew and Mischa. At the outset of her cross-examination, Mischa denied the proposition that she hated Matthew with a passion, though she did accept that she was not on good terms with him. That is borne out by a voicemail message that Mischa had left for Matthew (which was played in Court) in which Mischa said that Matthew “might just get dropped off the continental shelf one day by someone who really … hates [him]” (see at T 13.25-43). Nothing here turns on this apparent animosity between the former spouses, save that it may perhaps explain the tenor of some of the communications between the two (as to which, see the chronology of events below) and no doubt it cannot have assisted any attempts amicably to resolve the estate issues.

21. The deceased’s assets included the Manyana Property. Ashley has deposed (see his second affidavit sworn 5 October 2021 at [14]) that, prior to his death, the deceased had told him that he (Ashley) would have the first option to purchase the Manyana Property after the deceased’s death but (at [15]), that his father had said there was a “catch”, being that Ashley was only entitled to a maximum of $50,000 a year out of the estate, by which Ashley understood the deceased meant that he could not acquire the Manyana Property and merely contribute two-thirds of the value back into the estate; instead he would “have to purchase it from the estate in the ordinary way”.

22. Ashley also deposed (see at [11] of his second affidavit) to a conversation with the deceased in which the deceased had said words to the effect:

… you three children will get the bulk of my estate, but money is not to be paid out unless it meets the criteria of my wishes. My money is not to be used on living expenses. I don’t want to see it pissed up against the wall. It is to be used to create wealth and keep a roof over your heads. And that goes for you too Ashley. You should all have jobs and pay your own way through life. That is not what my money is to be used for. It is to create future wealth, used for real estate, that sort of thing.

and to a conversation (see at [17] of his second affidavit) in which the deceased said to him and to Matthew, of Mischa and Dean, that “they have to come to you and Matthew with a proposal on what they are going to spend their money on. It has to be spent on securing an asset for their financial security”. (There was no reference in the account of those conversations to any reduction in price if the estate were to save selling or marketing costs by reason of a sale to Ashley.)

Will

23. The deceased’s last Will was dated 18 April 2015 (Ex A at p 59). An email dated 23 August 2016 from Matthew (see below) suggests that Matthew himself had a role in drafting the Will in early 2015 (see Ex A at 100), which may explain his apparently firm belief in how it was to be construed and applied).

24. Under cl 2 of the Will, as noted above, Matthew and Ashley were appointed as executors and trustees.

25. After specific gifts provided for in cl 4 of the Will, cl 5 provided for the division of the balance of the deceased’s estate into one or more equal parts or sections, to be held on trust in accordance with Part B of the Will (that Part headed “Administrative Provisions”). Clause 5.2 provided that each of the deceased’s three children was to receive one equal part of the balance of the estate “subject to clause 6”.

26. Clause 6 of the Will, headed “Request Provision”, provided as follows:

I request that my Executors distribute the residue of my Estate to my beneficiaries by paying to each of my beneficiaries distributions (to be determined by the Executors in their absolute discretion) up to a maximum total amount of $50,000.00 per annum until there are no funds remaining.

27. Robb J concluded that the proviso in cl 5.2 (“subject to clause 6”) qualified only the circumstances in which each child’s beneficial share of the residue would actually be distributed to that child (and did not qualify the existence of each child’s entitlement to a beneficial interest in the equal part of the residue held on trust for that child) (see [93]-[102]). His Honour attached significance to the fact that cl 6 was described as a “request provision” and that the wording of the clause was in terms of a request, not a direction (being precatory in nature). His Honour said (at [100]):

… Subject to the application of any principle of law that governs how the defendants must exercise the discretion given to them by clause 6, the effect of the request is that the defendants are free to act on the request or not. It may be that, provided the defendants exercise their discretion in conformity with the will, their actions could not be attacked as a breach of trust, because the request in clause 6 constitutes an authorisation to them as to how they may distribute the residue of the estate. However, the defendants could ignore the request. In that event, the only residual course available to them would be to distribute to each surviving child the equal part of the residue held by the defendants on the trusts created by clause 5.1.

28. His Honour concluded (as noted above) that on the proper construction of the Will each of the surviving children became absolutely presently entitled beneficially to an equal one-third share of the residue of the estate held on trust for them by Matthew and Ashley ([102]).

29. Clause 11 .1 of the Will relevantly empowered the executors and trustees:

…

(g)    To hold, use, surrender, let, lease, take and grant options or rights in, or otherwise deal with any real or personal property and including, but not limited to, shares, units, debentures or securities of any company or trust on whatever terms as the Trustee thinks fit;

(h)    To sell, lease, exchange or otherwise dispose of assets in my Estate on whatever terms they consider expedient as if they were the absolute beneficial owner;

…

(q)    To purchase all or any part of an Asset of my Estate at a value determined by a qualified valuer and on terms that would be granted to an arm’s length purchaser from my Estate;

Chronology of events

30. The deceased died on 19 December 2015.

31. On 8 January 2016, Matthew (who as noted above is an accountant, not a solicitor) sent an email to the residuary beneficiaries (Dean, Mischa and Ashley) attaching the Will, and including the following:

Commencing next week, Ashley and I will identify a solicitor in NSW to assist us, seek market valuations for Manyana and compile a list of assets which will give an estimate of the value of the Estate. As soon as this is completed we will report to the beneficiaries.

The majority of the Will is dealt with in clause 6. The discretion contained in the clause was discussed at length with Joe [the deceased] and his clear intent is that the beneficiaries utilise these funds, up to $50,000 p.a. to create/buy assets for long term wealth creation. It was not Joe’s wishes that any of these funds would be utilised on everyday living costs or consumables.

Once we have engaged a solicitor, we will also outline both the process and timeframes for asset realisation and distributions in accordance with the Will.

In the meantime, please give Ashley or I a call to discuss any matters.

32. On 15 January 2016, a valuation report was obtained from Blake McKenzie of MVS National South Coast Pty Ltd (the MVS valuation) in respect of the Manyana Property (see Ex A at p 3). The MVS valuation was obtained on Ashley’s instructions but, he says, for the estate (see at T 109.14) because he says that he was not sure at that stage if he was in a financial position to purchase the property. The stated valuation purpose was for “Family Law Asset Value Determination” (and the report inexplicably contained a declaration made in accordance with the Family Law Rules 2004) but it was also noted in the report that the valuation may be relied upon by the estate of the deceased.

33. The Manyana Property was inspected by the valuer on 15 January 2016 and valued, on the basis of an assessment of “Market Value assuming sale with vacant possession” (expressed to be prepared on an unencumbered fee simple basis), including fixed floor coverings and standard fittings and fixtures but excluding items of furniture and furnishings, at $480,000 (see Ex A at pp 6-18).

34. On 16 January 2016, a valuation was obtained from South Coast Auctions Pty Ltd of a motor vehicle, household furniture and associated items (at $6,535) (see Ex A at p 22).

35. On 30 January 2016, Matthew sent another email to the residuary beneficiaries, stating:

Well its been a busy three weeks since we last emailed and Ashley and I (particularly Ashley) have achieved a fair bit.

We have identified what we believe to be all the assets of the Estate and the attached provides a detailed summary of assets, the estimated value of the assets and any related costs.

We have sourced a solicitor [Ms Anne Brown of Marriott Oliver] and are in the process of finalising the cost agreement before we engage, their costs are currently noted at $8,737.47 (including approximately $2,000 of out-of-pocket expenses for filing and related fees).

The next steps involve obtaining probate, then realising the assets, paying the gifts to Seaham [the deceased’s partner] and the grandchildren and then having the remaining funds available for the beneficiaries (Michelle, Dean and Ashley).

It seems that probate is a longer process than envisaged and it is likely to take 12 weeks (6 weeks to prepare the application and receive documents from relevant parties and 6 weeks for the Court to approve). It will then take a further 3 weeks for parties involved to transfer assets. On this basis the Estate should have all the assets recognised [sic; realised] May/June 2016.

In respect to the house, Ashley is still considering whether he wishes to purchase it and if this occurs this will expedite things considerably. In the event Ashley wishes to purchase the house, (which was Joe’s wish as communicated to Seaham, Ashley and I, both collectively and individually) I would seek your agreement. [My emphasis]

If Ashley doesn’t purchase the house then there is a bit to do to have the house completed and building compliant before it is placed on the market.

…

36. By letter dated 2 February 2016, Ms Brown of Marriott Oliver provided Matthew and Ashley with her initial advice in relation to various aspects of the estate, including the following:

Ashley’s plan to purchase the property

We note that Matthew recently informed us that Ashley is considering purchasing the estate property based on a valuation which was obtained recently.

We confirm that the law of equity prevents an executor from purchasing any property from an estate unless all of the beneficiaries agree to the purchase, including the purchase price. [My emphasis]

In order to work around this problem, Ashley can renounce his position as executor, however, in our view, even if this occurs, Matthew, as executor would still leave himself open to risk from legal challenge if he sold the property to Ashley at the valuation amount without testing the open market, regardless of whether Ashley was an executor or not.

This is particularly poignant in this matter where there are possibilities of the Will being challenged for two other reasons, being:

1.   Any of the beneficiaries could challenge the Will on the basis that they should receive their share of the estate absolutely without any trust limiting their entitlement.

2.   Any of the beneficiaries can make application to the Court that they should receive more than their 1/3 allotted share, on the basis that they are in more need financially than the other beneficiaries.

This jurisdiction [here seemingly referring to family provision matters] is not about equality, and there have been matters where the Court has changed the terms of a Will which has left an estate equally to family members, and has instead provided more funds to one member of the family because of their particular financial need.

As there are already grounds for a possible Will challenge, in our view it would be risky for the property not to be sold on the open market. An alternative path would be as follows:

1.   Write to Michelle and Dean enclosing a copy of the valuation.

2.   Explain to Michelle and Dean that there is a significant amount of work to be done on the property for the renovation work to be completed which may adversely affect the number of interested purchasers which would result in a lower sale price.

3.   Explain to Michelle and Dean that if the property is sold at auction or through normal sale processes then advertising and commission costs will further reduce the total amount available for the beneficiaries at the end of the process.

If you can get Michelle and Dean to agree to sell the property to Ashley for the valuation amount then we suggest that all the parties sign a Deed of Family Arrangement which will protect you as executors from any future Michelle and Dean [sic] in relation to the sale of the property.

If you went ahead and sold it to Ashley without consent (in our view, whether he is the executor or not), the executors would be personally at risk for any challenge from Michelle or Dean for potential loss of estate funds and loss of opportunity. [Emphasis as per original]

…

37. I interpose to note that Senior Counsel for Matthew and Ashley has here contended that this advice was wrong; as I understand it, on the basis that informed consent was not necessary if the sale of the Manyana Property to Ashley conformed with cl 11.1(q) of the Will (see at T 186.17-34). It was further submitted that the rule against self-dealing (notwithstanding its absolute nature as recognised in academic writing in the area – to which I refer in due course), is not absolute in the sense that there are exceptions thereto and it is subject to equitable defences and the doctrine of election (see at T 168.20). That, however, is not to my mind the significance of this initial advice – rather, its significance is that Matthew and Ashley are here squarely being told (correctly or otherwise) that agreement from all the beneficiaries is necessary for a sale to an executor and (which Ms Brown herself emphasised) that, even if Ashley were not an executor, the executors would be personally at risk if the sale was not to occur on the open market. The giving of that advice informs the reasonableness of their later conduct (which was inconsistent with that advice), although (as I note in due course) the defendants’ position is that their later conduct was in accordance with advice subsequently given by Ms Brown.

38. By letter dated 26 February 2016, Ms Brown gave Matthew and Ashley further advice, confirming advice given previously and providing further information concerning the process in relation to the estate. As to the Manyana Property, the letter stated:

We note that Ashley may be purchasing the property. We have previously advised that Ashley would need the consent of the residuary beneficiary to purchase the property. We note that Ashley is in the process of ascertaining whether he is in a financial position to proceed with the purchase and when this is confirmed, then we will further discuss obtaining consent from the beneficiaries.

If the property is not sold within one year of the date of death there could be Land Tax implications

If the property is not sold within two years of the date of death there could be Capital Gains Tax implications

39. Thus, it is clear that, prior to the sale to Ashley, the defendants had been advised by the estate’s solicitors that the beneficiaries’ consent was necessary for a sale to an executor and in any event should be obtained prior to any sale to Ashley (and Matthew gave evidence at the hearing that he understood that advice and sought to follow it – see at T 46.30-47.14).

40. Meanwhile, Ashley has deposed that in or about February 2016, after receiving the MVS valuation, he made enquiries of the National Australia Bank (NAB) as to whether he would be able to borrow sufficient funds in order to purchase the Manyana Property (see his second affidavit at [26]) and that, in or about early February 2016, he obtained pre-approval from NAB (see his second affidavit at [27]). In cross-examination, Ashley was unsure whether this pre-approval was for $480,000 or $465,000 (see T 109.37-44).

41. Ashley has also deposed that, given he was both an executor and beneficiary of the estate, he and Matthew decided that it would be best if Matthew took responsibility for liaising with Mischa and Dean about the sale of the property on behalf of the estate (see his second affidavit at [28]).

42. On 8 April 2016, Dean sent an email to Matthew and the other residuary beneficiaries, “[j]ust checking to see where everything is at” and asking “[w]here are we at with the house, has this been ‘realized’ as yet?”. In that email, Dean said:

As to ALL of Dad’s assets and the fact that a dollar value was put on his car, this then needed to been [sic] independently valued on a proper letterhead once an interest was shown, I feel it is only appropriate that ANY of Dad’s assets receive the same treatment and are disclosed to all as an act of fairness and transparency, agreed? [Emphasis as per original]

43. On 9 April 2016, Matthew sent an email to Dean and the other residuary beneficiaries, saying, among other things:

Probate is a slow process and consistent with last email of 30 January the last few months have been all about probate and nothing can happen with any of the estate assets until probate has been granted.

…

In addition to the probate processes, Ashley has been dealing with the NAB to get pre-approval for the purchase of Manyana. Once he has pre-approval (which should be this week) he will then put an offer forward for consideration. As noted previously, if Ashley wishes to purchase Manyana I will seek your agreement. In any event, settlement cannot occur until after probate is granted. [My emphasis]

…

There won’t be much to report until we have been granted probate and can begin to realise the estate assets. I expect probate will be late May/early June as previously advised.

44. On 27 April 2016 at 10.26am, Mischa sent an email to Matthew asking “what’s the latest, where are things at?”. At 10.44am on the same day, Mischa sent Matthew an email (apparently responding to an earlier email from Matthew sent on 26 April 2016 at 1.32pm which read “Nothing much, probate still in progress and I understand that Ashley now has conditional approval from the NAB and he is putting an offer together for consideration”), Mischa asking in her email “Ok. What is the time frame looking like, what exactly are we waiting on in the probate process?”.

44. Matthew responded at 2pm on 27 April 2016 to say that probate was with the Court, and that the timeframe was “what it was when we first got legal advice and per my initial email of 30 January”; that it had taken a fair bit of input to keep it on track to this timeframe; and that “it seems you are expecting a different timeframe?”.

45. Mischa then responded at 2pm that:

No, I didn’t indicate I was expecting a different time frame, just wanted to gain a clearer understanding of what’s happening and where it’s at.

With regards to dads house are you seeking at least 2 private and independent valuations from qualified valuers who know the Manyana area well?

47. Matthew’s response, at 3.11pm on 27 April 2016, was that:

It took some time to find a “local” credible valuer (from Ulladulla) and that value was recorded and noted as an independent valuation in the statement of assets provided to you on 30 January 2016.

The NAB will also have the property valued and hopefully we will get access to that valuation as well. If not, we can consider a second valuation.

48. Pausing here, the suggestion that it took “some time” to find a credible valuer for the Manyana Property seems somewhat curious – since the deceased died on 19 December 2015 and the MVS valuation was less than a month later (on 15 January 2016), so the time taken cannot have been more than about three to four weeks. Moreover, in cross-examination, Matthew professed to have kept a general eye on the property market in Manyana (T 94.12) (which makes surprising the suggestion that it was hard for him to find a credible valuer in the area). However, perhaps the explanation for this is that it was Ashley who arranged the initial MVS valuation (see at T 109.1-10).

49. At 7.47pm on 27 April 2016, Ashley sent an email to Matthew, copied to Dean and Mischa, with Ashley’s initial proposal to purchase the Manyana Property (and all the assets pertaining to the house excluding a Pajero vehicle) for $450,000:

I have considered the valuation report, noting the current valuation of $480,000 (copy attached)

I have considered the auctioneers report noting all of Dad’s household effects with a value of $3,535.00 excluding the Pajero (copy attached)

I have considered the building inspection report prepared N.R. Wallace building inspections, noting total repair costs of $35,540.00 (copy attached) and there are obviously things that need immediate attention.

I put my offer forward to you taking into consideration the above reports and also noting that costs associated with a sale would be in the order of $20,000.

My offer incorporates all of Dad’s assets pertaining to his house as included in the above reports (excluding the Pajero) and my offer is $450,000. If my offer is accepted I will be ready to settle once probate is obtained.

In respect to Dad’s household effects, if there is anything in particular that you would like then we can sort through this together.

50. Matthew gave evidence at the hearing that he considered this initial offer to be too low (see T 49.30-37). It also appears (see below) that Ashley may have been notionally factoring in room for negotiation with his siblings about the price when he made that offer. Ashley has deposed (see his second affidavit at [30]) that his initial offer was based on: the MVS valuation; his understanding of the costs of rectification of non-compliant building works and other repair work (that he then incorrectly understood had not been taken into account in the valuation); the saving of agent commission and selling costs if the estate sold the property to him; and an allowance for household contents which he would acquire with the property (see his second affidavit at [30]-[31]). In cross-examination, Ashley’s evidence was that he “sort of misconstrued” the MVS valuation report (see T 109-111) in that he now understood that the Property was valued “as is” (i.e., in its then current condition whereas he seems to have thought that if further work needed to be done on the property that would reduce the price).

51. It also appears that there was some discussion between Ashley and Matthew as to the making of that initial offer – at T 111.49-112.3, Ashley said that this offer “was discussed” because the estate had to be no worse off but then, at T 112, Ashley clarified that what he discussed (with Matthew) was the amount for selling agents’ costs ($20,000), not the figure of $450,000.

52. As adverted to above, Ashley also appears to have envisaged a process of negotiation with his siblings (rather than a sale at the stated valuation figure) in that he gave as an explanation for his first offer that when he had purchased his first property on the Gold Coast his father told him he was an “absolute dickhead” for offering the full price and so he said he did not offer the full price (for the Manyana Property) “due to the repairs” (T 112.21-29).

53. In any event, the plaintiffs did not agree to a sale to Ashley at that price. By email sent on 16 May 2016 to Matthew and the other residuary beneficiaries, Dean said:

I have still to scrutinize all content of the latest email but my initial reaction is I do not agree. The value placed on the house by the assessor is for the house as it stands, the builders report is what should be done, therefore you by [sic] the house at it’s [sic] assessed value knowing what additional moneys need to spent [sic]. The value of the house is exactly that, not minus what repairs may or may not be needed to be done.

54. Similarly, by email sent on 19 May 2016 by Mischa to Matthew, Mischa referred to “our recent discussion” and said that she thought she should put some of those points in writing, saying that:

With regard to Ashley’s email 26 April 2016 [sic; presumably 27 April], I have a couple of concerns regarding valuations and building reports but my main concern is that an offer is being made on the house which is being based on the valuation of the house minus the cost of repairs to the house. You and I both know that a valuation from an accredited valuer takes into consideration the condition of the property and any significant amounts of money that may need to be spent on that property and/or any subsequent defects/repairs that may be needed.

The other factors that have influenced my thoughts are,

•   Only one valuation

•   Property price will not be tested by market

•   Property presentation is very poor

•   Household contents valuation is extremely low

•   Very rare to buy into a fully furnished home and fully operational workshop with significant water views 500m from the beach in a popular coastal town for under $500,000

I believe the purchase price for the property given what we know is the valuation of $480,000. The only way to realise the true value is to test the market and that would probably be by way of auction where Ashley can bid with other purchases [sic]. This is the only real way of achieving a true and transparent result.

55. Mischa also there indicated that she had no interest in any of the household contents or other saleable items.

56. On 18 May 2016, at 1.45pm, Matthew sent an email to Dean and Ashley’s email addresses, copied to Mischa, asking Dean and Mischa if they had any further comments regarding:

1.   What is a fair price for the house.

2.   The potential saving of selling costs if the house is purchased by Ashley

3.   The inclusion or otherwise of all or any of the household contents and personal effects

57. Mischa’s response to this (at 11.09am on 19 May 2016) was:

1.   As indicated already I believe that $480,000 is a fair price for the property

2.   It is debatable that there will be savings in selling costs as we will never really know the true sale price unless the property goes to market. So the answer is zero

3.   Can you be more specific on this, I am not sure exactly what you mean.

58. Matthew then responded at 2.13pm, saying that “in respect to the household and personal effects, I note you are not interested in any of them so what is the value you would attach to them ...current assessment/auction value is $3,535”, to which Mischa replied “Well I guess that is what it is then. It seems quite low but as I have said I am not here to debate, argue or delay the process”.

59. Meanwhile, on 19 May 2016 at 12.59pm, Matthew sent an email to the plaintiffs (not on its face copied to Ashley) headed “Sale of Manyana” in which he proposed that the Manyana Property be sold to Ashley for $465,000. The email read as follows:

Just thought it was worth summarising my thoughts.

As Trustee I need to make sure I am honouring Joe’s wishes as well as realising assets for the benefit of the beneficiaries of the Estate.

In respect to the house, there is no doubt in my mind that Joe wanted Ashley to end up with the house but ultimately that was Ashley’s decision to make. We spoke specifically about this in July 2015 when I was at Manyana. Joe also spoke to Seaham about Ashley ending up with the house.

In respect to price, I think $480,000 per the valuation is the easiest place to start. The house does need some work as identified in the building report and not all of that work that needs to be done will add value to the house. Items like fixing wiring would add no value but replacing the deck would add value to the property.

If we go to market there is an additional cost of agents commission (say $15,840 at 3% + GST) and advertising (say $3,600), totalling [sic] This is just an estimate but would be in the ball park.

In respect to the household contents and personal effects, there appears little of any significant value and the auction value of $3,535 seems a reasonable staring point.

In summary, based on the information we currently have, the Estate is no worse off if we accept $464,095 made up as follows:-

House                      $480,000

Selling costs saved  ($19,440)

Contents and effects   $3,535

$464,095

If we don’t sell to Ashley then we have to go to market. Although I am happy to do this if we need to, this is no small exercise and I am concerned there will be significant additional time as well as additional costs. Additional costs would include getting the house ready for sale and making sure we had all Council approvals etc.

My advice as to the best options from here are:-

1.   Offer the house to Ashley for $465,000 (this is a non-negotiable amount) on the basis it is sold as is where is with all defects (including any boundary defects) with settlement 45 days from receiving Probate. We need 45 days as it will take 2 weeks for Land titles to change the Title into the name of the Estate and then 30 days for the Bank to be ready. This should see settlement sometime in July.

2.   The Estate obtains a second valuation and we offer the house to Ashley based on the average of the two valuations. If the second valuation is $480,000 then the price is still $465,000. If the second valuation is $470,000 then the offer to Ashley is at $460,000 and if the second valuation is $490,000 then the offer to Ashley is $470,000 etc. All other matters noted in point 1 remain.

Option 1 or 2 leave me feeling I have honoured both my obligations to your Dad and also to you as the beneficiaries.

If you are agreeable to one of the 2 options above then I will commence the process so I can make the offer to Ashley. If Ashley accepts then we will go to contract. If he does not accept the price increase then I feel (unless you both change your mind and accept $450,000) we have little choice but to go to market.

…

60. There are a number of noteworthy features about this communication. First, although there is a reference to “any boundary defects”, it is not apparent that any issue had been raised as to boundary defects, so it is not clear what this adds to the estate’s position or its relevance to the sale to Ashley. Second, Matthew accepted in cross-examination that at this stage he had taken no steps to make enquiries of property agents as to how the property might fare on the open market(T 48.49-49.12); and he agreed that he thought he had some discretion to vary the price as long as it was something that might be offered to an arm’s length purchaser (T 51.3-7). Matthew’s understanding of the second part of cl 11.1(q) (i.e., the reference to “and on terms …”) was that this was to deal with selling costs (although in my opinion the clause does not make that clear in its terms).

61. Matthew’s evidence (at T 53.37-49) was that by April or possibly early May he had made enquiries of one of the local agents as to the possibility of listing for sale (though did not refer to this in his affidavit sworn on 5 October 2021 – see at T 54.8). Matthew said that the conversation with the agent was “around commissions”.

62. Of course, if the sale of the Manyana Property were to be effected pursuant to the authorisation under the Will, the relevant question would be whether the sale was “at a value determined by a qualified valuer and on terms that would be granted to an arm’s length purchaser” (see my consideration of this requirement in due course).

63. In the meantime, a kerbside valuation was undertaken on 17 May 2016 by NAB (for internal, presumably mortgage, purposes). This valuation of the Manyana Property also arrived at a value of $480,000. A copy of that valuation (which Matthew said he had received from Ashley on the night of 19 May 2016, following the email sent by him to Dean and Mischa on the afternoon of 19 May 2016 set out above) was forwarded to Dean and Mischa by email from Matthew at 9.01am on 20 May 2016. There is a copy of an email of 19 May 2016 at 2.45pm from an NAB banking adviser to Ashley’s wife attaching the valuation, saying “Please note; that valuations are normally for bank purposes only but I hope this helps”. It is not clear what real estate or valuation qualifications were held by the author of the NAB valuation (i.e., whether this would satisfy the description in cl 11.1(q) of the Will of a “qualified valuer” but ultimately nothing turns on this).

64. Probate was granted, as noted above, on 27 May 2016.

65. On 30 June 2016, Ms Brown, from Marriott Oliver, wrote to Matthew and Ashley. Among other things, the letter stated:

Can you please advise whether Ashley still intends to purchase the property and if so when that will occur? If Ashley does intend to purchase the property you will need to obtain a formal registered valuation of the property which you will need to provide to the beneficiaries. The beneficiaries must then consent to Ashley purchasing the property for an agreed price.

We note in earlier correspondence, you indicated that you were arranging a valuation of the property and were going to provide it to us. Our file indicates that we have not received the valuation to date. Can you please provide us with a copy of the valuation, if one has been done, at your earliest opportunity?

66. Ms Brown’s letter also raised the issue that if Ashley was going to purchase the property he would need to arrange for a conveyancer or solicitor to act on his behalf, particularly if he would be borrowing money to purchase the property; and indicated the intention to do the transfer by way of a transfer document instead of a contract for sale (which it was said would save both Ashley and the estate property related expenses). It appears from other statements in the letter that the specific gifts provided for under the Will had not yet been distributed. There was also reference to a debt owing by Matthew and Michelle (Mischa) to the estate. (There was an issue raised about this loan for some time – Mischa’s position being that, as part of her Family Law settlement, Matthew was to take responsibility for this loan and that there was no evidence that it had been repaid to the estate; but ultimately it was resolved and a claim in this regard against Matthew in the present proceeding was not pressed.)

67. Ashley responded to this letter on 3 July 2016 by email at 7.47pm, stating that his intentions were to purchase the Manyana Property; that he had had a valuation done on the property which he had forwarded to the other beneficiaries (Mischa and Dean) and that he was awaiting their reply to see if they agreed on the purchase price for the property and for him purchasing it (in fact it was Matthew who had sent the valuation to Mischa and Dean – and who had put forward the offer proposal to them, which rather suggests that Ashley regarded this as a joint process).

68. On 8 July 2016, a solicitor (Ms Bridget Rheinberger) from a Hobart firm of solicitors (Tremayne Fay Rheinberger Lawyers) sent an email to Matthew in relation to the deceased’s estate, attaching a letter. It is not clear what letter that was (since the letter appearing in Ex A at p 96 after this email is dated 29 July 2016 and in its terms responds to a 13 July 2016 email from Matthew – that email presumably being the email at 1.55pm by which Matthew attached a copy of the probate Will and list of assets and liabilities and said “I am keen to deal with the major asset, the property at Manyana, and to date this has been a little frustrating with little/no response from Dean and Michelle”).

69. I interpose to note that Ms Rheinberger appears to have been the first of a succession of lawyers who advised Mischa (some of whom also advised Dean). From about June 2016 to December 2016 Ms Rheinberger (from a firm in Tasmania) advised Mishca and Dean. From April to May 2017 a barrister in Tasmania, Mr Fernandez, advised Mischa (but was not apparently acting for Dean at the time). Later in 2017, Malcolm Robinson of Robinson Locke Litigation Lawyers (RL Lawyers) in Queensland acted for Mischa (and, it seems also for Dean); and Mischa said that he had referred her to a David Simmons (now deceased) and Stuart Bell (see T 24/25). (Mischa said that she had initially engaged RL Lawyers in a litigation matter with Matthew.) SR Law in New South Wales acted for Mischa from about July 2018 to November 2019 (overlapping with RL Lawyers). RL Lawyers were involved again from December 2019 to January 2021. From about February 2020 the plaintiffs’ current lawyers (Glass Goodwin) became involved. Mischa also referred to advice sought from a Greg Mellick but she said that she did not engage him (see at T 24.25-29). (Little wonder, one might think, that Mischa has said that her resources had been depleted by legal fees – see below.)

70. Ms Brown responded to Ashley’s 3 July 2016 email (see above) by email sent at 11.54am on 13 July 2016. In that email, among other things, Ms Brown advised that Ashley would be required to pay stamp duty on the share of the property which was not bequeathed to him under the Will (i.e., stamp duty on two thirds of the value of the property as indicated on the valuation). Ms Brown also sought information as to, among other things, the debt owed to the estate by Matthew and Mischa. (Matthew’s response to this, at 12.46pm, was that the loan was forgiven prior to the deceased’s demise but that he was honouring the loan and, based on previous discussions with the deceased, it was repayable by 18 December 2018; and Matthew said that the specific gifts would not be made until the house was sold and proceeds received into the estate.)

71. There was a series of emails sent on 13 July 2016 by Matthew to Ms Brown, apparently updating her on the property negotiations. At 12.50pm, Matthew sent a copy of Ashley’s initial proposal to purchase the property; at 12.53pm on 13 July 2016, in separate emails, Matthew forwarded to Ms Brown a copy of Michelle’s 10.15am 19 May 2016 email to him (seemingly as part of an email chain commencing with the 27 April communications) and Dean’s email of 16 May 2016 (again as part of an email chain); and at 2.55pm on 13 July 2016, again in separate emails, Matthew had forwarded to Ms Brown a copy of his email sent on 19 May 2016 to Dean and Mischa as to the sale (putting forward the $465,000 proposal); and the 20 May 2016 email sending them the NAB valuation. In cross-examination, Matthew said that he had forwarded these emails to get advice from Ms Brown (T 64.5-10) and that he had subsequent telephone conversations with Ms Brown. There was no reference in Matthew’s affidavit to any telephone conversation with Ms Brown on 13 July 2016 but, when pressed as to this, Matthew said he did not just send emails to her “with no background” – T 64.45).

66. By email on 13 July 2016 at 2.09pm, Ms Brown noted that, with the exception of the property (i.e., presumably the conveyance), Matthew and Ashley would be dealing with the remainder of the estate issues themselves. Thus, by this point, Ms Brown at least appears to have regarded her retainer as to estate issues effectively to have been concluded.

67. I have referred above to Matthew’s 13 July 2016 email to Ms Rheinberger in which he complained of frustration at the “little/no response from Dean and Michelle”. The relevant timeline at this stage seems to have been that Ashley made his first offer by email on 27 April 2016. That offer was rejected on 16 and 19 May 2016, by Dean and Mischa respectively. Matthew (who denied in the witness box that he was seeking to get a “good price” for Ashley) had sought Dean and Mischa’s opinion on a fair price on 18 May 2016 and Mischa had immediately responded on 19 May 2016. Matthew’s proposal of a $465,000 figure was sent on 19 May 2016. The period of delay in response from Dean and Mischa to that letter was thus about six to seven weeks (Matthew suggested around two months – see T 66.26-34). The relevance of any such delay is that Matthew’s position appears to have been that Mischa and Dean were the ones responsible for delay in the administration of the estate (see below).

68. By letter dated 29 July 2016 to Matthew and Ashley, responding to Matthew’s 13 July 2016 email, Ms Rheinberger set out her clients’ instructions in relation to various matters. As to the sale of the Manyana Property, those instructions could not have been clearer:

I am instructed that my clients do not consent to a sale of the property for less than the full registered valuation of $480,000. The valuation takes into account the current state of the property and any work required. My clients will consent to a sale to Ashley at this price including household effects only.

75. Matthew accepted in cross-examination (T 66.49) that if no consent (i.e., to the sale to Ashley at the lesser price) was obtained then the only option was to place the property on the open market. His recollection was that he considered that going to the open market was going to be a long process (see at T 67.7-18).

76. It appears that on 1 August 2016, Matthew arranged a teleconference with Ms Brown on 17 August 2016 at the tentative time of 11am (see Matthew’s affidavit at [41]). There is no reference in Matthew’s affidavit to what was said in the 17 August 2016 conversation with Ms Brown (assuming it took place as tentatively scheduled by him).

77. On 23 August 2016 (around 3 weeks after the 29 July 2016 letter), Matthew responded to Ms Rheinberger’s 29 July 2016 letter, copied to Ashley’s email address. Relevantly, that response included the following:

Estate property

Given Ashley’s interest in the property, I am acting as sole Trustee on this matter.

The property has been valued by independent valuer in January 2016 (copy attached) at $480,000 and by NAB in May 2016 (copy attached) at $480,000.

I sent an email to Dean and Michelle on 19 May 2016 (copy attached) outlining what I think is the best way to proceed, being a sale to Ashley at $465,000.

I am conscious of the average time on market for properties to sell in Manyana being in excess of 150 days. Holding and maintenance costs continue to be incurred.

Most importantly, it was Joe’s wish that Ashley buy the property and although it was not in the Will, it was regularly discussed.

Joe discussed with me in July 2016 [sic] that if Ashley wanted to proceed with a purchase of Manyana then the process should be an independent valuation then deduct the selling costs so the Estate was no worse off.

Given Joe’s wishes, I feel compelled to advocate for a sale to Ashley at $465,000, can you please seek agreement from Michelle and Dean. [My emphasis]

78. I interpose to note that it appears from the later communications by Ashley in relation to the sale (notwithstanding Matthew’s explanation of his role as being the “interface” between Ashley and his siblings – see at T 52.33) that it was not wholly accurate to suggest that Matthew had been acting as sole trustee in the matter of the proposed sale of the Manyana Property. Further, the reference to the deduction of selling costs appears to be Matthew’s understanding of what he discussed with the deceased (and which is what he seems to have understood to be meant by the second half of cl 11.1(q) in the Will – see his affidavit at [12]). Tellingly, in this email, Matthew appears to acknowledge that his role was as advocate for Ashley; but, as noted, he denied in cross-examination that he was trying to get a good deal for Ashley.

79. On 13 September 2016, Matthew emailed Ms Rheinberger (copied to Ashley’s email address) advising that he was on leave from 23 September to 10 October and saying that if Mischa and Dean wanted him to progress the estate before his return from leave then ideally he would need their input that day.

80. On 14 September 2016, Ms Rheinberger sent a letter to Matthew (who presumably by then was not yet on leave given that his leave was only said to commence on 23 September; however, in cross-examination Matthew thought he may have already been in Thailand and not necessarily able to receive email communications – see at T 68.42) and Ashley, relevantly advising that:

My clients agree to the sale to Ashley Carrington for $465,000 but only on the basis that net sale proceeds are distributed to the beneficiaries upon settlement.

As co-executors must act jointly in any matter my clients do not accept any position that Ashley is not involved in this negotiation nor can he avoid his duty to act in a way to avoid loss for the beneficiaries.

81. That letter also raised as an issue of concern the position in relation to the (disputed) $50,000 loan, it being said that Ms Rheinberger’s clients did not accept that any forgiveness was promised; and that there was a serious conflict of interest; and full repayment of the loan was requested within 60 days.

82. By letter dated 30 September 2016, Ms Rheinberger sought a response from Ashley to the matters that had been raised in her earlier correspondence “particularly in relation to the property”. The letter stated:

Given my clients agreed to the sale to Ashley for $465,000 on the basis that net sale proceeds are distributed to the beneficiaries upon settlement; would you please advise:

1.   Whether Ashley is proceeding to purchase; and

2.   If so, what is the settlement date.

83. On 4 October 2016, Ashley responded:

Our father left clear and concise instructions to myself and Matthew in relation to the disbursement of funds from the estate. This is our fathers last wish which he has put into his will, don’t forget that this is a GIFT given to each of us under his terms and this needs to be realised and respected. As one of the executors I have an obligation to fulfil. Therefore the sale of the house can have no conditions attached and the proceeds will be received by the estate to be administered in accordance with Dads will. Can you please confirm the condition that all proceeds be distributed is now removed. When this matter is clarified we will proceed with the sale and inform you of a settlement date.

84. The response to this, by letter dated 21 October 2016 from Ms Rheinberger, was:

Ashley’s email advised your position is to refuse my clients’ offer to allow the sale of the property under market value on the basis of an immediate distribution of sale proceeds.

I bring to your attention clause 11.1 q of the Will. This clause sets out that any purchase of estate property by an executor of the estate is to be at “...a value determined by a qualified valuer on terms granted to an arms’ length purchaser ...” The qualified valuer determined the value on 15 January 2016 was $480,000. Noting your original proposal was for $30,000 below valuation, my clients have been more than reasonable in agreeing to a reduced price of $465,000.

85. The letter referred to the loan to Matthew (requesting full documentation as a matter of priority) and summarised the advice that had been given to the clients as to their entitlement under cl 6 of the Will to their share of the estate; and noting that even if the terms of cl 6 were found to be mandatory it would be open to all parties to reach an agreement.

86. The letter then set out the following proposal:

In order to move this forward towards a resolution, and on a without prejudice basis, my clients make the following proposal:

1.   Sale proceeds to be distributed to all beneficiaries on settlement of the sale of the estate property. This assumes that Ashley Carrington will use his entire interest in the property to assist his purchase. If Ashley does not agree to distribution to all beneficiaries then my clients will only agree to $50,000.00 being attributed to the sale price and Ashley will be expected to fund the remaining purchase by his own funds or bank loan.

2.   The remaining estate assets to be distributed by 31 January 2017.

87. Matthew’s evidence was that (at T 73.18-24) he understood the concept of the making of a conditional offer and Matthew said that if the condition was something that could normally be satisfied then, if the condition was not met or agreed to, there would be no offer. However, he appears to have been of the view that, if the executors were not legally able to comply with the condition as to distribution of the sale proceeds (as was his belief), that meant he could simply disregard the condition and proceed on the basis that there was an agreement on price (T 73.31-74.3). Tested on this in cross-examination, Matthew said that his view was that they needed unconditional consent (T 74.21); and he agreed that they (i.e., he and Ashley) never received “confirmed unconditional consent” or indeed any unconditional consent at all; and thus he agreed they could not proceed (T 75.6-12); but then (inconsistently with this apparent acknowledgment of the position that they could not proceed with the sale), Matthew said that the sale was based on the legal advice at the time (see below).

88. By email sent at 3.27pm on 4 November 2016, Matthew responded to Ms Rheinberger’s 21 October 2016 letter (in an email copied to Ashley’s email address). Inconsistently with the suggestion in Matthew’s earlier email that Matthew was acting as “sole trustee” in the sale process, the email made clear in its terms that the response was from both Matthew and Ashley. Relevantly, it stated:

Ashley and I have taken some time to respond to your letter dated 21 October 2016 in the hope that this response enables us to now get on and deal with the estate.

We note that the proposal contained in your most recent letter and instructions in respect to the payment of estate distributions are both inconsistent with the Will, and more importantly, inconsistent with the wishes of the Deceased. On that basis they cannot be agreed to by the Trustees.

The Will and Joe’s intentions have been made abundantly clear to the Trustees and at Joe’s direction, these are not to be varied by the Trustees. It was expected that some beneficiaries would seek to meddle in the affairs of the estate, this was discuss [sic] at length with Joe prior to his demise and the Trustees are clear on Joe’s wishes and will honour those without waiver. The direction of the Will and Joe’s wishes have been previously discussed with the beneficiaries in early January at Manyana.

In order to move forward with the Estate we need to deal with the house. To recap, the house is to be sold to Ashley at a price that leaves the Estate with the same net proceeds. Ashley’s initial offer was not in accordance with the Will and made by him, without consultation and expecting to be forced to negotiate the price with his siblings. The price of $465,000 including contents is the correct price and this is in accordance with the Will and his Father’s wishes.

I note your reference to clause 11.1(q) and advise that part B of the Will contains “standard” provisions and “To purchase all or any part of an Asset of my Estate at a value determined by a qualified valuer and on terms that would be granted to an arm’s length purchaser from my Estate” is a standard clause. However, this clause is consistent with the current price of $465,000 (including contents) because sale to an arm’s length purchaser would see the Estate incur additional costs which have been deducted to arrive at the price of $462,000 for the house.

Please provide consent to sell the house and contents to Ashely [sic] for $465,000 so we can progress with a sale. Such consent is invalid if it comes with any conditions. I expect that settlement of the house is now likely to be 60 days after I receive unconditional consent from the beneficiaries as valuations and loan approvals are now all out of date.

Once the house is sold and proceeds received into the Estate, the Estate will deal with the specific gifts under clause 4.

The Estate will then deal with the beneficiaries under clause 5 and 6. Although you note that the meaning of clause 6 is unclear, it is not at all unclear with the benefit of discussion with Joe. The “history” of clause 6 also sheds light on Joe’s intentions and directives as this is one clause in the Will that changed from the first draft by solicitors to the final Will. The initial draft of the Will simply provided for $50,000 paid lump sum per annum to each beneficiary. This was not Joe’s wish and the final Will has several important changes from the draft which go to the nub of Joe’s intent and the clear direction he gave the Trustees. The final Will notes “distributions” (plural and not necessarily a single payment), to be determined by the Executors in their absolute discretion (distributions are only to be utilised to acquire assets for wealth creation, distributions should supplement beneficiaries contribution to assets, and ideally the assets should be left intact for the next generation) and up to a maximum of $50,000 per annum (not a fixed amount … but the intention is $50,000 for appropriate acquisition of assets).

We note you have assumed Ashley is utilising his entire interest to assist the purchase of Manyana. I can confirm this is not the case as Ashley is entitled to distributions on exactly the same basis as the other beneficiaries and in accordance with Joe’s wishes. I further confirm that there is not an agreement by all beneficiaries (as Ashley is not in agreement) to call for the estate to be distributed. Importantly, and it would be good if we could move on and deal with the task at hand, the Trustees are committed to carrying out Joe’s wishes and directives and any request by any beneficiary to the contrary will be refused.

In respect to the other assets of the estate, in accordance with Joe’s instructions, these assets will be realised as the estate requires funds (during the 3^rd year). Once realised, the funds will sit in an interest bearing bank account but given current interest rates this is unlikely to result in any significant earnings. We note a request to repay the loan within 60 days of 14 September 2016 and advise that this request is without substance.

In respect to the financial affairs of the estate, we confirm that there are no material movements since the initial estimates provide [sic] late January 2016 and all monies have now been deposited into specific estate bank accounts held at either the solicitors or the NAB.

You would appreciate that the estate administration is being undertaken by the Trustees, honouring a commitment made to Joe, and neither Trustee is being remunerated. It would be good to get on with the administration of the estate, for the benefit of all.

In summary, can you please provide unconditional consent to sell the residence to Ashley so we can proceed to sale and then to specific gifts and distributions to beneficiaries.

We look forward to your positive response.

89. Significantly, there is no evidence to suggest that Matthew ever sent to Ms Brown a copy of that 4 November 2016 email (in which he had sought unconditional consent from Mischa and Dean to the proposed sale). Matthew was not sure if he had sent Ms Brown the email (T 77.46) and agreed that if it had been sent then a copy could have been produced. This is highly relevant when one comes to consider the advice said to have been given by Ms Brown in January 2017 (see below).

90. By email on 5 December 2016 at 10.50am, sent by Matthew to Ms Rheinberger and copied to Ashley’s email address, Matthew noted that over four weeks had passed without a response to “our email dated 4 November”, saying that:

Costs continue to accrue to holding the house and in order to mitigate future costs, the house will now be sold to Ashley with settlement in January. [My emphasis]

In accordance with your previous letter dated 21 October and our email of 4 November, Ashley is utilising $50,000 from the estate to assist with the acquisition of the house. This is in accordance with both the discretion given to the Trustees of the Will and Joe’s wishes that the beneficiaries are to use the funds for wealth creation and acquiring assets.

Upon settlement of the house, funds will be available to satisfy the gifts made in accordance with the Will.

The beneficiaries are now invited to apply to the Trustees for any funds they require, up to a maximum of $50,000. The application to the Trustees must include the purpose for which the funds are required. Funding for approved applications will be available upon settlement of the house.

91. By email sent on 16 December 2016, Ms Rheinberger advised Matthew that she no longer acted in the matter and asked that he deal directly with Mischa and Dean from then. At Matthew’s request, Ms Rheinberger confirmed those instructions by email, in which she also confirmed that the 5 December email had been forwarded to Mischa and Dean.

92. Ashley has deposed that, in about December 2016, he had to re-apply for approval from NAB for finance in order to purchase the Manyana Property (as it had lapsed due to the delay in the process of attempting to agree on the purchase price with his siblings (about which he candidly acknowledges he was frustrated) (see his second affidavit at [37]). Ashley has deposed that the finance was subsequently re-approved by NAB (see his second affidavit at [38]). There was no copy of any further valuation by NAB at the time; nor of its re-approval of the finance for the purchase.

93. According to Ashley (see his second affidavit at [40]), on or about 25 January 2017 he had a discussion with Matthew (as to what they should do as they had not received a response from Mischa and Dean from about 4 November 2016 to their requests for unconditional consent) in which Matthew told him that he would call Ms Brown that afternoon to seek advice on what they should do in respect of the sale of the Manyana Property.

94. There was in evidence a copy of an electronic diary calendar entry for Matthew with an entry with the subject “Anne Brown” apparently recording a meeting or telephone conference on 25 January 2017. The duration of that meeting or telephone conference (according to Matthew – see at T 85.33-38, although this is not clear on the copy of the electronic calendar in evidence) was 1pm to 1.30pm. The entry appears to have been created at 3.56pm on that day, which suggests that this may have been a retrospective entry (perhaps for time-keeping purposes). Matthew explained in cross-examination that the electronic diary was akin to a “to do list” and that the 3.56pm entry was when it was edited (T 85.33-35). In his affidavit evidence (see at [58]) Matthew deposed to the effect that this was an entry reminding him to speak to Ms Brown (see T 85.27-38) (which leaves unanswered why the entry would then need to be amended after the conversation had taken place). Matthew’s timeline of events, as explained in the witness box, was nevertheless that the conversation with Ms Brown was at 1pm – 1.30pm before he sent the email to Mischa and Dean at 3.24pm (see below) (and hence before he last edited the calendar entry). Matthew was adamant that he did not draft that email (or the part of the email giving notice of the impending sale); rather, he says that Ms Brown “dictated” this (see at T 81-83).

317. The defendants say that this reasoning applies with equal force here and compels the rejection of the plaintiffs’ claim for rescission.

318. Second, the defendants say that the plaintiffs have not demonstrated that restitutio in integrum is possible. It is noted that, in the Reply, the plaintiffs accept that, if the sale is unwound and the Manyana Property re-sold, Ashley will need to be repaid the purchase price and the value of any improvements (see Reply filed 17 August 2021 at [3](b)).

319. The defendants say that it would appear be common ground that Ashley has undertaken improvements to the Manyana Property. The defendants note that the plaintiffs have led no evidence of the current value of the Manyana Property or the value of the improvements undertaken by Ashley. Thus, it is said that the plaintiffs have not demonstrated that if the sale transaction is unwound and the Manyana Property resold, the estate would be any better off once it has satisfied the obligation to repay the purchase price to Ashley ($465,000) plus the (unquantified) value of any improvements. It is submitted that there is thus no demonstrated utility in making the order and it should be refused in the Court’s discretion.

320. The defendants say that there is even the prospect that the estate may be worse off if rescission is ordered (say, if the net realisable proceeds of the Manyana Property at its current value – as to which the plaintiffs have led no evidence – are not sufficient to repay the purchase price to Ashley plus the value of the improvements and other costs which Ashley has incurred in holding the land, such as rates, insurances and utilities).

321. The defendants say that in these circumstances the plaintiffs have not demonstrated that restitutio in integrum doing justice to all parties is possible; nor has it been demonstrated that there is any utility in making an order for rescission as it may leave the estate worse off. The defendants say that there is no evidentiary basis put forward by the plaintiffs to suggest that the estate would be better off by the making of an order for rescission.

322. The defendants argue that the failure by the plaintiffs to lead evidence as to the current value of the Manyana Property, or as to the value of the improvements made by Ashley (as distinct merely from the costs incurred by him), is also unexplained; and that there is no reason why the plaintiffs could and should not have led such evidence in support of their application for rescission.

323. It is noted that the plaintiffs have never applied or sought to have any question of liability or any other question determined as a separate question under Pt 28 of the UCPR; and that the further amended statement of claim does not seek relief for the determination of quantum, loss or profits to be determined by way of separate enquiry or reference.

324. The defendants says that it is questionable whether, in a matter such as this, it could ever be appropriate for equitable relief of the nature sought to be granted in the absence of any confidence that the relief would sound in any practical or tangible benefit to the parties or the subject trust. Furthermore, and in any case, it is said that the nature and degree of the loss is a relevant matter in the exercise of discretion in assessing the appropriateness of equitable relief and is not a matter which could sensibly be deferred. In these circumstances, the defendants argue that rescission should not be ordered.

Equitable compensation

325. The defendants say that, if there has been a breach of trust (which is denied but which I have concluded was established), it was a technical breach which has not been shown to have caused the estate any loss. It is said that the question of loss is only relevant to the plaintiffs’ alternative claim for equitable compensation, sought in prayer 5(a) of the further amended statement of claim. As noted above, the plaintiffs do not seek equitable compensation in respect of prayer 5(b) but only an account of profits (see the exchange at T 103.38-104.33).

326. The defendants note that the traditional duty of the defaulting trustee is to effect restitution to the estate, but if restitution in specie is not possible, equity awards compensation in place of restitution (McNally v Harris (No 3) [2008] NSWSC 861 (McNally v Harris) at [13] per White J, as his Honour then was, citing Canson Enterprises Ltd v Boughton & Co [1993] 3 SCR 534 (Canson Enterprises) at 547 per McLachlin J as her Ladyship was then – there in dissent but whose reasoning was endorsed by the High Court in Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 (Youyang) (at [35]; see also at [50])). It is noted that the object of equitable compensation is to restore persons who have suffered loss to the position in which they would have been if there had been no breach of the equitable obligation (reference being made to Target Holdings Limited v Redferns (a firm) [1996] 1 AC 421 (Target Holdings) at 437 per Browne-Wilkinson LJ; O’Halloran v R T Thomas & Family Pty Ltd (1998) 45 NSWLR 262 (O’Halloran) at 272 per Spigelman CJ; McCrohon v Harith [2010] NSWCA 67 (McCrohon) at [60] per McColl JA).

327. The defendants say that, while the plaintiff is to be put in the same position as he or she would have been in if the wrong for which equitable compensation is awarded had not been sustained, the defendant is not liable to pay compensation which exceeds the loss suffered from such wrong (Target Holdings at 432G, 433H, cited with approval in O’Halloran at 272-273; McCrohon at [60]); and that, in a claim for equitable compensation, the onus of establishing loss rests on the plaintiff (Farah Constructions Pty Ltd v Say-Dee Pty Ltd (2007) 230 CLR 89; [2007] HCA 22 (Farah Constructions) at [200]).

328. It is noted that equitable compensation is ordinarily assessed at the time of trial, with the full benefit of hindsight (Re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399; [1966] 2 NSWR 211 (Re Dawson); Canson Enterprises at 555; Youyang at [35]; [50]). Reference is also made to Target Holdings at 438-439 as to the use of hindsight and common sense in determining causation in assessing equitable compensation (approved in O’Halloran at 273).

329. The defendants note that, if considered just, the amount of compensation will be assessed at a different time (referring by way of example to Re Bell’s Indenture; Bell v Hickley [1980] 1 WLR 1217; [1980] 3 All ER 425 (Re Bell’s) (where it was held that the authorised investment would in any event have been sold, and thus the date when such sale should have occurred will be the relevant date for valuing the loss); and Southern Real Estate Pty Ltd v Dellow (2003) 87 SASR 1 at [52] per Debelle J (value of rent roll assessed at an earlier point in time). The defendants say that, ultimately, the task is to compensate the plaintiff for what it has lost but no more. It is noted that equity will act flexibility to achieve this outcome (Cole v Miles [2002] NSWCA 150 (Cole) at [63] per Heydon JA as his Honour then was); and that the remedial response of equity can vary considerably depending on the circumstances; it turns not only on the actions of the wrongdoer but also on the need to avoid injustice even to the wrongdoer (Cole at [63]). The defendants also point out that it has been said that a fiduciary is not an insurer (Beach Petroleum NL v Kennedy (1999) 48 NSWLR 1 at [444]).

330. The defendants say that it follows from the above that, when assessing equitable compensation, the hypothetical situation should be considered as to the counterfactual if there had been no breach of duty; and that, in undertaking this exercise, account will be taken of objective facts to assess the extent to which the plaintiff’s losses could be attributed to the defendant’s breach of fiduciary duty (citing Nicholls v Michael Wilson & Partners Ltd [2012] NSWCA 383 (Nicholls v Michael Wilson) at [200] per Sackville AJA).

331. Reference is made by way of example to the following cases: Re Bell’s at 1232E-F, H, where trust property, sold wrongfully by the trustees, would have been sold in any event and the trustees were only liable to replace the asset at its value at the date it would have been sold rather than at the date of judgment; Hagan v Waterhouse (1991) 34 NSWLR 308, where Kearney J, applying Re Bell’s, held (at 346-347) that, although the trustee had sold trust property for a purpose foreign to the power of sale vested in the trustee, no loss had been suffered by the trust (and the trustees were not liable to make restitution), as the trust property would likely have been sold in any event; Warman International Ltd v Dwyer (1995) 182 CLR 544; [1995] HCA 18 (Warman), where the High Court (at 565) took into account the fact that the supplier would have terminated the agency agreement at an early stage independently of any breach of fiduciary duty by the defendant; and Nicholls v Michael Wilson, where equitable compensation was assessed on the basis that the defaulting fiduciaries would have acted lawfully to sever their association with the relevant company without breaching their fiduciary obligations.

332. The defendants say that they were empowered under the Will to sell the Manyana Property; and that, on the findings of Robb J, the defendants were obliged to convert the estate assets into cash and to do so as soon as reasonably practicable (referring to orders 2 and 3 made by Robb J on 28 November 2019). That being so, it is said that the position that would have obtained had there been no breach (and no sale to Ashley) is that the Manyana Property would have been sold to a third party. The defendants say that, on such a sale, transaction costs would likely have been incurred by the estate and that the plaintiffs, who bear the onus on the claim for compensation, have not established the likely amount of those transaction costs. Nor, it is said, have the plaintiffs established that the transaction costs would have been less than the $15,000 difference between the amount paid by Ashley ($465,000) and the valuation of the Manyana Property ($480,000). The defendants emphasise that there was no challenge to Matthew’s estimate of selling costs, given at the time of the sale, of approximately $19,440 (see above).

333. Thus, the defendants say that the plaintiffs have not demonstrated that the estate is any worse off by reason of the sale. The defendants argue that if, as it appears, the plaintiffs’ complaint is that Ashley should have paid $480,000 instead of $465,000, then the maximum loss is $15,000. However, it is said that that hypothetical loss does not address the savings to the estate realised by selling to a purchaser without the intervention of a selling agent or advertising costs. Hence, the defendants say that there is no basis for an award of equitable compensation.

Claim for account of profits

334. As to the alternative claim by the plaintiffs for an order that the first and second defendants account to the estate for: the amount of $15,000 (being the difference between the amount at which the Manyana Property was valued at the time of sale ($480,000) and the amount paid by Ashley ($465,000)) or, alternatively, an amount representing the difference between the Manyana Property’s current value and the amount paid by Ashley (prayer 5 of the further amended statement of claim), the defendants accept that the plaintiffs may elect to seek an account of profits rather than equitable compensation. The defendants point out that the amount recoverable in an action for an account of profits is dependent upon the profit made by the fiduciary, not the loss suffered by the beneficiary (Target Holdings at 440E; United States Surgical Corporation v Hospital Products International Pty Ltd [1982] 2 NSWLR 766 (Hospital Products) at 814F, 816E).

335. The defendants say that the remedy of account of profits is generally appropriate where the fiduciary’s relevant gain is the derivation of profits from a particular activity rather than by the acquisition of a particular asset: it is directed at revenue rather than capital (referring to Hospital Products at 814 E-F, cited for this proposition in P W Young, C Croft, M Smith, On Equity (2009, Thomson Reuters Lawbook Co) at [16.1220]; also cited with approval by Gzell J in Acme Office Service Pty Ltd v Ludstrom [2002] NSWSC 277 at [40]).

336. It is noted that the purpose of ordering an account is not to punish the defendant, but to prevent the defendant’s unjust enrichment (Warman at 557); and that the enrichment is unjust if it was acquired at the expense of the trust (Warman at 557).

337. The defendants say that the conduct of a plaintiff may be such as to make it inequitable to order an account; thus, a plaintiff may not stand by and permit the defendant to make profits and then claim entitlement to those profits (Warman at 559). It is noted that the right to require an accountant from the fiduciary may be lost by reason of the operation of doctrines of equity such as laches, equitable estoppel, or informed consent or in circumstances where it would be unconscientious to assert the right to an account (citing Warman at 559; see also Chan v Zacharia (1984) 154 CLR 178; [1984] HCA 36 at 204-205; Edmonds v Donovan (2005) 12 VR 513 (Edmonds v Donovan), where there was unjustified delay amounted to appellants “waiting to see” and then, when the property said to have been “stolen” had proved profitable, acting opportunistically to grasp the benefit).

● The plaintiffs’ claim for an account for $15,000 [prayer 5(a)]

338. The defendants say that the Manyana Property if sold at auction to a third party in February 2017 would have realised $480,000. It is said that prayer for relief 5(a) presumes that very fact (the claimed $15,000 being the difference between $480,000 and the $465,000 paid by Ashley).

339. It is said that, although there was a suggestion during submissions for the plaintiffs (at T 57.12) that the plaintiffs’ case was that the Manyana Property was possibly worth more than $480,000 as at February 2017, the plaintiffs led no evidence to establish that fact and the case was conducted on the basis of an assumed valuation of $480,000.

340. The defendants say that Ashley did not make a “gain” of $15,000 at the time he acquired the Manyana Property. First, he made no revenue or profit of any kind (noting that a difference in capital values is not properly the subject of an account of profits – see Hospital Products). Second, it is said that although Ashley acquired for $465,000 (a property which it is admitted he could sell to a third party for $480,000), in his hands the Manyana Property was worth less than $480,000, as Ashley would incur selling costs (commission and marketing costs) on any sale.

341. Thus, the defendants say that the net realisable value of the Manyana Property in Ashley’s hands was $480,000 less selling costs. As already noted, the defendants’ estimate of the selling costs of the time of the sale was $19,440. The defendants say that, once account is taken of selling costs, Ashley acquired an asset the net realisable value of which, in his hands, was worth not one cent more than the price he paid for it. Third, that even if there was a gain made by Ashley, it was not again made at the expense of the estate (see Warman at 557). Thus, it is said that there were no “ill-gotten gains” made by Ashley and this claim should be rejected.

● The plaintiffs’ claim for an account to be taken based on current property value

342. Similarly, the defendants say that the plaintiffs’ claim for an account based on the current value of the Manyana Property should be refused for the following reasons.

343. First, it is again noted that the nature of the remedy itself is directed not at capital but at revenue; so that disgorging Ashley of any capital gain (which they say has not been demonstrated) is not the purpose of the remedy (see the authorities cited above). Second, the defendants say that the plaintiffs have adduced no evidence of the current value of the Manyana Property (or its value at any other time), and that there is no evidence which establishes whether Ashley has derived a “gain” as matters presently stand.

344. Third, it is said that it would be unconscionable to grant an account in respect of any capital gain realised from the date of sale to date in circumstances where: Ashley undertook improvements to the Manyana Property; at the time many of the renovations were undertaken, Ashley had no notice of the plaintiffs’ claim was based on a current value; other renovations were undertaken at a time when this claim was limited to $55,000; and, in their statement of claim filed 31 December 2019, the plaintiffs sought relief for the payment of money representing the difference between the then current value and the price paid by Ashley (that being the first time that the plaintiffs brought a claim with regard to its “current” value). The defendants say that the quantum of the claim at that time was $50,000.

345. It is noted that, in its current iteration, the plaintiffs’ pleading does not assert or allege any particular amount as being the current value of the Manyana Property; and that there has been no explanation provided by the plaintiffs as to their delay in formulating its claim as it is presently brought, or as to why the plaintiffs have not adduced evidence concerning the current value of the Manyana Property. The defendants’ complaint is that the plaintiffs have unjustifiably “waited to see” whether the Manyana Property would increase in value, whilst not being exposed to any risk (either themselves or the estate) (referring here to Warman and Edmonds v Donovan).

346. The defendants point to Phipps v Boardman [1964] 2 All ER 187 (Phipps v Boardman), where Wilberforce J recognised that if an account is to be taken, the expenditure which would be necessary to enable the property to be realised, including, for instance, experts, is to be considered for the purposes of making allowances to the defendant. The defendants say that the fact that these types of transactional costs are expressly to be taken into account in determining any “profit” which may need to be disgorged to an estate by way of an account, brings into sharp focus the “merely technical” nature of the alleged breach and the reason why equity should not intervene to create an unjust outcome not intended by the doctrine.

Determination

347. As noted earlier, where there is a breach of the rule against self-dealing, the general principle is that the sale is voidable at the election of the beneficiaries (who retain the right to have the property reconveyed to the estate at the purchase price but with account to be taken both of any profits made by the trustee and of the cost of any permanent improvements effected by the trustee of the property; and also taking into account interest).

348. I do not accept that this is a case where the beneficiaries have delayed and then sought to act opportunistically (such as was the case in Edmonds v Donovan); nor was the delay inordinate in all the circumstances (such as was the case in Fysh v Page).

349. In Edmonds v Donovan, the Victorian Court of Appeal considered a claim following the breakdown of the relationships between parties involved in a joint venture and profit-sharing arrangement in relation to a golf-course. The defendants at first instance had been successfully running the golf course venture for many months. The plaintiffs sought an account, which the Court considered to be a tactical decision in light of the defendants’ success in operating the golf course. The court considered various remedies for the breach of fiduciary duty there found: a constructive trust (which was determined to be inappropriate due to multiple competing interests and the tactical delay – see at [65] per Winneke P); the taking of accounts (which was considered inappropriate due to the tactical delay and would, in any event, achieve much the same result as equitable compensation in the circumstances – see at [70] per Winneke P); and equitable compensation (which was considered sufficient to compensate the plaintiffs for the loss of opportunity – see at [68] per Winneke P). At [76], the President said:

First, there was the matter of delay; for there was no reason for the respondents to have waited so long before attempting to intervene in the appellants’ exploitation of what they now say was “stolen”. Such delay smacks of their “waiting to see” and then, when the venture proved profitable, acting opportunistically to grasp the benefit. In short, I consider that too much time had passed to justify a simple accounting: the respondents had waited too long before asserting an overriding interest in the appellants’ pursuit of the common enterprise.

350. His Honour distinguished between the functions of equitable compensation and an account at [78], as follows:

It may be said, in broad terms, that the remedy of an account looks to the gain made by the party in breach while the remedy of equitable compensation looks rather to the loss suffered by the aggrieved party. If, as I think, an account was inappropriate, this was a case for equitable compensation, the aim of which “is to place the party who suffers following the breach of duty as nearly as possible in a position in which he would have stood had there been no breach” … In this case, pecuniary gain was made by the appellants and it was not inappropriate to fashion an award of compensation by reference to that gain. That is in accord with what the trial judge did and, with respect, there was no error in that.

351. The position in the current case is distinguishable in that, in Edmonds v Donovan, the defendants (who continued running the golf-course) were entitled to a share of the profits on account of the initial agreement between the parties and the substantial skill and effort required to ensure the golf course was profitable (see at [81] per Winneke P); and the nature and duration of the delay was substantial. The plaintiffs had “not merely stood by for nearly two years without attempting to intervene but thereby acquiesced in what was happening” (see [82] per Winneke P).

352. Furthermore, Edmonds v Donovan concerned a joint venture arrangement in which neither party had an inherent right to select a remedy; the focus was rather on what would be the most appropriate remedy for the breach of fiduciary duty; whereas, in matters of self-dealing, as noted above, it has been recognised that beneficiaries may elect to have the property reconveyed as the sale is by nature voidable (see Jacob’s at 467-468).

353. In the present case, following the sale of the Manyana Property, the beneficiaries sought the fulfilment of the condition upon which their consent to the sale was predicated. That was not forthcoming, which precipitated the litigation. There has not been inordinate delay. Nor can it seriously be said that the plaintiffs were seeking to take advantage of a windfall opportunity in the increase in property prices or the improvement of the property by Ashley. Their attempts to obtain their distributions under the Will have been thwarted for years; and the fact that they were only belatedly advised as to the ability to have the conveyance set aside is hardly a matter about which Matthew and Ashley can complain. The irony is that the considerable costs no doubt incurred in this litigation (which may well have an impact upon Ashley’s ability to retain the Manyana Property and the quantum of the residuary beneficiaries’ ultimate entitlements) could have been avoided at a much earlier time had Matthew and Ashley not insisted upon their stance (based, as it was, on their view of the deceased’s wishes).

354. Nor do I accept that restitution in the requisite sense is not possible. It is certainly the case that one of the circumstances in which the discretionary remedy of rescission may not be available is where restitutio in integrum is not possible (see Lord Goff of Chieveley, Gareth Jones, The Law of Restitution (2002, 6^th ed, Sweet & Maxwell) [9-023] to [9-043]).

355. Considerations of restitutio in integrum and practical justice on an application for rescission are summarised by Austin J in Aequitas Ltd v Sparad No 100 Ltd [2001] NSWSC 14 at [426] and [427]:

Rescission in equity does not require precise restitution in integrum. A court of equity can require adjustments to be made inter parties of a kind not available to a court of common law … The Court's decree is moulded to achieve ‘what is practically just’ … Once a breach of fiduciary duty has been established, ‘the nature of the case will determine the appropriate remedy available for selection by a plaintiff’.

Rescission in equity is a more flexible tool than rescission at common law. The common law required the plaintiff to return in specie that which he had received under the contract, in the same condition as it was in when he received it; equity, having the means the common law lacked to ascertain and provide for adjustments necessary to restore the parties substantially to the status quo, was able to see the possibility of restitution in integrum in a much wider variety of cases.

356. An order for rescission thus requires acceptance that the parties can be restored to their original pre-conveyance position. Consideration must be given to whether rescission, either alone or in combination with other orders, can achieve restitutio in integrum and practical justice – see Nadinic v Drinkwater (2017) 94 NSWLR 518; [2017] NSWCA 114 at [140] per Leeming JA quoting D O’Sullivan, S Elliott and R Zakrzewski, The Law of Rescission (2014, 2^nd ed, Oxford University Press) at p 277:

This idea is inconsistent with the way in which the principles governing the relief given upon rescission have conventionally been understood, the central tenet of which is that the restoration of the parties to their original positions is the criterion on practical justice. From this conventional viewpoint the idea that practical justice should be done at the expense of restoring the parties to their original positions is difficult to understand. It is not clear what alternative criterion of justice is being proposed. The proposal may simply be that justice should be done according to the judge’s personal conception of what seems fair in all of the circumstances.

357. However, in contrast to rescission at common law, rescission at equity requires a “less precise” form of restitutio in integrum (see Frith v Gold Coast Mineral Springs Pty Ltd (1983) 47 ALR 547 at 581-582 per Fitzgerald J). Consequently, the improvements that Ashley has made to the Manyana Property will not preclude an order of rescission, provided that account can appropriately be made out of the estate for those improvements. Although to my mind the relevant allowance might have been said to be for the cost of any permanent improvements reasonably made by Ashley (since logically the cost of improvements may not be commensurate with the value, if any, attributed to those improvements from a real property perspective – say, for example, if there was over-capitalisation of the property), the plaintiffs in their reply appear to accept that if the sale is set aside then account should be made in favour of Ashley for the value of any permanent improvements and I see no reason why they should not be held to that concession.

358. Circumstances in which rescission has been ordered, and restitutio integrum achieved, include (but are not limited to): rescission of a sale of a business when the respondent had already taken possession of the property, taken over stock, and deteriorated the business (see Alati v Kruger (1955) 94 CLR 216 at [225] per the Court); rescission of a sale of farming land where the purchaser had made substantial repairs and lasting improvements to the land (see Sibley v Grosvenor (1916) 21 CLR 469 at 475 per Isaacs J); and rescission of a personal guarantee of past and future indebtedness insofar as past indebtedness was concerned (see Vadasz v Pioneer Concrete (SA) Pty Limited (1995) 184 CLR 102; [1995] HCA 14). The circumstances of the current matter are no more complex, in terms of restitutio in integrum, than those (in circumstances where account can surely be taken of the cost of maintenance over the years since the date of acquisition and in light of the concession referred to above).

359. To the extent that Ashley complains that he is unable to quantify expenditure incurred on the Manyana Property, apart from the fact that this is met by compensating him for the value of the improvements effected by him, it is relevant to note that the bulk of the renovations occurred at a time when Ashley was on notice of the claim by Mischa (and Dean) that the sale was at an undervalue and with only their conditional consent and (from at least December 2017) of Mischa’s assertion that the property might ultimately be required to be resold; and Ashley seems simply to have taken a calculated risk that Mischa would not act on the threats he perceived that she was there making. The difficulty of ascertaining exact costs will not arise if there is an account to Ashley as to the value of the improvements (and nor in those circumstances will there be any windfall gain to the estate arising out of that expenditure). Any increase in value due to market forces in the intervening period is not a windfall in circumstances where Matthew and Ashley have chosen to dispute the claims made, rather than to accede to the claim for equitable compensation in the (perhaps) lesser amount referable to the $480,000 purchase price; and in any event all the beneficiaries will share equally in such a benefit.

360. In my opinion, the appropriate relief is for the sale to be set aside and (subject to one qualification) to order that the Manyana Property be reconveyed to the executors of the deceased’s estate to be held by them as an asset of the estate (with Ashley to be reimbursed the purchase price with interest plus the value attributable to any permanent improvements effected by him to the property and the cost of maintenance of the Manyana Property since its acquisition but less any profits earned from the use of the property since its acquisition and less an occupation fee for the period in which Ashley has occupied the property). That accounting exercise should be referred out to a court appointed referee; and there should be an independent market valuation by a suitably qualified valuer both as to the current market value of the property and as to the value of any permanent improvements effected to it by Ashley since its acquisition.

361. The qualification is this. It is accepted by the plaintiffs that, if the sale is set aside, Ashley would be entitled under the Will to acquire the Manyana Property at a price determined by a qualified valuer and on terms that would be granted to an arm’s length purchaser. If Ashley wishes to exercise that right, then the appropriate order (to avoid incurring unnecessary conveyancing costs involved in a transfer to the estate and then back to Ashley) would be for there to be a declaration that Ashley holds the property on constructive trust for the estate. There could then be a regime for obtaining an independent valuation from a qualified valuer as to the value of the property and of any permanent improvements; and an assessment of the account required to be made by Ashley to the estate (or vice versa) between the market valuation (adjusted to reflect the allowances as to the matters to which I have referred above).

362. As noted, I do not accept that this provides a windfall to the estate. The cost of any permanent improvements effected to the Manyana Property does not necessarily translate to an increase in value of the property and Ashley will share in any benefit in the increase in value of the property as a result of market increases over time in any event.

363. Thus, in the absence of a consensual arrangement between the beneficiaries at this stage as to any re-sale or marketing of the property, I consider that the sale to Ashley should be set aside; the Manyana Property reconveyed to the executors and trustees of the deceased’s estate; Ashley be repaid out of the estate the purchase price paid for the property plus the costs of maintenance and the cost of effecting permanent improvements (to be determined by reference out to an expert valuer); and that Ashley should account to the estate for any profits made by him in respect of the property since its sale to him and pay an occupation fee for the period in which he has occupied the property (to be calculated with the assistance of a professional real estate agent having regard to market rents at the relevant time).

364. There are potentially other ways in which the appropriate relief could be framed (see for example the orders considered in Holder v Holder [1968] Ch 353 per Harman LJ at 390) but this was not the subject of debate or consideration in oral or written submissions. (Hence, the need, as I see it, for the parties sensibly to attempt to arrange an appropriate regime now to rectify the issues caused by the transfer of the Manyana Property to Ashley at less than the then market valuation without the unconditional consent of all the residuary beneficiaries).

365. There is a question to my mind as to whether, in all the circumstances, Matthew and Ashley should now be removed as executors and trustees so that an independent executor can oversee the reconveyance of the Manyana Property to the estate and the obtaining of the necessary valuations and accounting to be carried out. Then, if Ashley does wish to re-acquire the Manyana Property, there will be someone who is independent and has no conflict of interest involved in the sale. If the parties wish to be heard on this issue then I will make directions for submissions to be filed (and, if necessary, a brief oral hearing).

366. Given that there may be complications as to the framing of the relevant orders and that much may depend on whether Ashley now does wish to (re)acquire the Manyana Property (this time on the terms provided under the Will), I consider that the appropriate order at this stage is to direct the parties to file within 14 days proposed short minutes of order to reflect these reasons (and, if there be a dispute as to those orders, brief written submissions, with a view if possible to making final orders on the papers).

367. Although, for the reasons set out above, I consider that rescission is both available and appropriate (perhaps coupled with a declaration of constructive trust), I will deal briefly with the alternative prayers of equitable compensation or an account of profits (the claim for $15,000 in prayer 5(a) and an unquantified amount in prayer 5(b)).

368. As to the claim for equitable compensation, in light of the defendants’ evidence that estimated selling costs would have been $19,440 and the plaintiffs’ failure to lead any evidence to the contrary, I accept that the plaintiffs have not discharged the onus of proving that the estate has suffered a loss by Ashley purchasing the Manyana Property at a sum of $15,000 below the independent valuation (see Farah Constructions at [200]). Given that the purpose of equitable compensation is “to put the trust estate back into the position in which it would have been had there been no breach” (McNally v Harris at [16] per White J, as his Honour then was, quoting Target Holdings at 437), in the absence of compelling evidence of loss, an award of equitable compensation would not have been available (see also Re Dawson; at 216 per Street J, as his Honour then was, and Hospital Products at 816E per McLelland J as his Honour then was).

369. As to the plaintiffs’ alternate claim for an account of profits, the “profit” sought is either in relation to the difference between the price at which the property was independently valued ($480,000) and the price at which the property was sold to Ashley ($465,000), or alternatively for the increase in value between the current market value less the purchase price paid by Ashley.

370. In Hospital Products, McLelland J (at 814F) noted that an account of profits is “generally appropriate where the fiduciary’s relevant gain is the derivation of profits from a particular activity rather than the acquisition of a particular asset”. However, the High Court subsequently emphasised in Ancient Order of Foresters in Victoria Friendly Society Ltd v Lifeplan Australia Friendly Society Ltd (2018) 265 CLR 1; [2018] HCA 43 that the equitable remedy to account is “concerned with ‘a profit or benefit’ in language divorced from a confined conception of benefit as accrued profit in narrow accounting terms” (see at [24] per Kiefel CJ, Keane and Edelman JJ, their Honours there citing Warman at 557). In that case, Gageler J said at [75]:

Although commonly referred to as an “account of profits”, there is no reason why a benefit or gain to be made the subject of an account must answer the description of a “profit” in conventional accounting terms. Nor is there any reason why that benefit or gain must answer the description of “property” or must have sufficient certainty as to be capable of forming the subject matter of a trust.

371. This broad approach reflects the principle as set out in Warman that “the purpose of ordering an account is not to punish the defendant, but to prevent the defendant’s unjust enrichment”, and its application does not depend “upon detriment to the plaintiff or the dishonesty and lack of bona fides of the fiduciary” (see at 557). Accordingly, it is no bar to the plaintiffs’ claim for an account of profits that the profits or benefit here relates to the acquisition of an asset, being the Manyana Property (and I further note that the remedy to account was recently held to be available in respect of all rents, profits or benefits received in respect of an acquisition of property by Lindsay J in Ip v Chiang [2021] NSWSC 822 at [327]).

372. I accept the plaintiffs’ submission that Ashley’s purchase of the property at a value less than the independent valuation provided him with a benefit (though it did not cause loss to the estate), as any advertising fees or associated costs with selling the property would not ordinarily have flowed to Ashley or any arms’ length purchaser of the property (and on this hypothesis Ashley acquired the property for less than he might otherwise had to have done had the estate borne those costs). Moreover, there seems no doubt that Ashley has received rents and benefits in respect of his acquisition of the Manyana Property, including profits received by him from use of the Manyana Property (such as through an AirBnB) and his occupation of the property rent-free. It follows that, if restitution had not been available, I would have found that the plaintiffs’ claim for an account of profits in principle was made good (but would have referred out to a referee the precise quantification of those profits).

Costs

373. The defendants wish to be heard further on consequential orders, including as to their right to indemnification from the estate and/or in the event that the plaintiffs are successful on any of their claims. Accordingly, I will make directions for costs submissions to be filed, with a view to determining the issue of costs on the papers.

Orders

374. For the above reasons, I make the following orders:

1. Direct the parties to file proposed short minutes of order to reflect and give effect to these reasons, within 14 days, together with brief submissions (if those orders not be agreed) as to the form of orders sought.

2. Direct the parties to file submissions on costs (and any submissions as to the question whether Matthew and Ashley should now be removed as executors and trustees of the deceased’s estate) within 14 days.

3. Note that the final orders and costs orders will be made, if possible, on the papers but that if any of the parties requires a brief oral hearing this should be identified in the submissions filed pursuant to the above orders (with a short explanation as to why an oral hearing is necessary).

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Decision last updated: 16 August 2022