Deerbon v Deerbon
[2010] VSC 87
•25 MARCH 2010
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 7518 of 2009
IN THE MATTER of the Will and Estate of MURRAY KAREL FRANCIS DEERBON, deceased
- and -
IN THE MATTER of an application pursuant to Order 54 of the Rules of Court
| MURRAY KAREL HERMAN PETER DEERBON AND ROWAN QUENTIN JOHN DEERBON | Plaintiffs |
| v | |
| PAMELA ANN DEERBON | Defendant |
No. 7981 of 2009
IN THE MATTER of the Will and Estate of MURRAY KAREL FRANCIS DEERBON, deceased
- and -
IN THE MATTER of an application to the Court for directions and orders pursuant to rule 54.02 Supreme Court (General Civil Procedure) Rules 2005
| PAMELA ANN DEERBON | Plaintiff |
| v | |
| MURRAY KAREL HERMAN PETER DEERBON AND ROWAN QUENTIN JOHN DEERBON | Defendants |
---
JUDGE: | HABERSBERGER J | |
WHERE HELD: | MELBOURNE | |
DATES OF HEARING: | 4 NOVEMBER AND 7 DECEMBER 2009 | |
DATE OF JUDGMENT: | 25 MARCH 2010 | |
CASE MAY BE CITED AS: | DEERBON v DEERBON | |
MEDIUM NEUTRAL CITATION: | [2010] VSC 87 | |
---
Practice and Procedure – Special referee’s report agreed by parties to be final and binding – Whether party could seek to set aside or vary report – Supreme Court (General Civil Procedure) Rules 2005, O.50.
Practice and Procedure – Costs – Whether proceeding issued prematurely, without warning, contrary to agreed procedure and at a time when it was known that other party was unwell – Whether second proceeding disclosed cause of action – Costs where early resolution of disputes – Appropriate orders for costs of parties acting as executors or trustees when left out of pocket by other orders for costs.
---
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs/Defendants | Mr MW Morrison | Marshalls & Dent |
| For the Defendant/Plaintiff | Mr JK Arthur | South East Lawyers |
HIS HONOUR:
Introduction
Three separate disputes between the executors and trustees of the late Murray Karel Francis Deerbon (“the deceased”), are dealt with in this judgment. The deceased died on 1 February 2005, leaving a will dated 27 June 1996. Probate of that will was granted to Pamela Ann Deerbon, Murray Karel Herman Peter Deerbon and Rowan Quentin John Deerbon, the executors named therein, on 8 June 2005. Mrs Deerbon was the second wife of the deceased. Messrs Murray and Rowan Deerbon (“the brothers”) were the sons of the deceased by his first marriage.
By his will the deceased left one half of the residue of his estate to his wife and the other half to be divided equally between his two sons and five daughters by his first marriage. One asset of the estate was the 5,940 “A” class shares in the company Heathmont Total Service Pty Ltd (“HTS”). Mrs Deerbon held two “F” class shares in HTS and Darlow Nominees Pty Ltd (“Darlow”) held one “G” class share. Mrs Deerbon and Mr Murray Deerbon were the directors of HTS. In addition to the estate of the deceased, there was the Deerbon Family Trust the trustee of which was Darlow. The deceased’s wife and seven children were equal beneficiaries of the Family Trust. The deceased had held two shares in Darlow and Mrs Deerbon one. Mrs Deerbon and Mr Rowan Deerbon were the directors of Darlow.
Disagreements arose between Mrs Deerbon on the one hand and the brothers on the other hand over the administration of the deceased’s estate (“the Estate”) and the administration of the affairs of HTS and of Darlow as trustee of the Family Trust. Agreement on some matters was reached on 18 May 2006. Unfortunately, the disagreements continued but, following a mediation, terms of settlement were entered into on 11 September 2008 (“the 2008 terms of settlement”). After further disagreements and another mediation, supplementary terms of settlement were executed on 22 January 2009 (“the 2009 terms of settlement”). Part of the agreement was that various properties were to be sold, some by auction and some by private sale, according to a timetable set out in the 2009 terms of settlement.
On 3 July 2009, the brothers issued an originating motion, naming Mrs Deerbon as defendant, in which complaint was made that in breach of the 2008 and 2009 terms of settlement she had failed to sign various appropriate documents to enable the sale of three properties to go ahead. Orders were sought that Mrs Deerbon sign all necessary documents in relation to the sale of the three properties, alternatively that an Associate Justice be appointed to execute such documents in default of the defendant signing. Within a few days, all of the required documents were signed by Mrs Deerbon. The first of the three disputes before me concerns the costs of that proceeding (No. 7518 of 2009) (”the brothers’ proceeding”).
It should be noted that had there been a little bit of give and take leading to some common sense compromise on the question of costs, this proceeding could have been brought to an end on or about 15 July 2009, being the adjourned return date of the summons on originating motion. Instead, the parties decided to fight about the costs with the result that a total of another eight affidavits have been filed by both sides together with written submissions by their counsel and at least a day’s hearing was spent cross-examining deponents and making oral submissions. As I said when this matter was first mentioned before me, the costs incurred in fighting about the costs order are likely to be more than the costs incurred prior to receipt of the signed documents.
On 27 July 2009, Mrs Deerbon issued an originating motion, naming the brothers as defendants, alleging that the 2008 and 2009 terms of settlement had been breached in that various payments to her and to other employees of the medical practice previously carried on by the deceased and then by Mrs Deerbon on behalf of the estate had not been made. She sought specific performance of the terms of settlement and an order that all outstanding disputes be referred to a forensic accountant for determination, pursuant to clause 6 of the 2008 terms of settlement. As will be seen, this proceeding has, in effect, also come to an end. The second dispute between Mrs Deerbon and the brothers concerns the costs of her proceeding (No. 7981 of 2009) (“Mrs Deerbon’s proceeding”).
On 31 July 2009, Byrne J ordered by consent in both proceedings that a number of questions be referred to Worrells Solvency & Forensic Accountants (“Worrells”) for decision and determination by its Mr Wayne Lamb as a special referee. The report of the special referee was to be filed by 4 September 2009 and the matter come back to Court on 11 September 2009. By a summons issued in both proceedings on 25 September 2009 Mrs Deerbon sought an order that the special referee’s report be set aside or varied by deletion of the answer to question 1(f). This is the third dispute between the parties and the one that I will deal with first.
The Special Referee’s Report
In the “Other Matters” part of Byrne J’s order of 31 July 2009 it was stated in paragraph A that the decision of Worrells “acting as an expert and not as an arbitrator” would be “final and binding on the parties”. In paragraph C of “Other Matters”, it was further stated that:
The parties have agreed to abide the determination of the special referee hereunder and will consent to the adoption of his/her report.
This was a consent order and counsel for the parties left his Honour in no doubt that the special referee’s decision was intended to be “final and binding”. Counsel for Mrs Deerbon told his Honour that the orders were:
sort of an amalgam of the order 50 procedure with the actual terms of settlement that the parties entered into sort of embossed on top, as it were.
Later, in response to his Honour saying that the parties could agree between themselves that they would not challenge the report or would consent to its adoption in due course, counsel said:
That’s the intent of the parties and of the terms of settlement.
He also agreed with his Honour’s suggestion that these arrangements could be mentioned in “Other Matters”:
That the decision and determination of Worrells will be final and binding on the parties, full stop. To have it as “Other matters” would seem to be sensible as well.
Counsel for the brothers also told his Honour several times that:
the parties will be bound by those decisions of Worrells.
It was common ground between the parties that although, under r 50.04 of the Supreme Court (General Civil Procedure) Rules 2005, the Court had to decide whether or not to adopt the special referee’s report, the parties had agreed that they would consent to its adoption thus in effect removing the need for the Court to consider what “the interests of justice” required. Counsel for Mrs Deerbon relied, however, on the principle that the parties were only bound by the expert’s report if it had been carried out in accordance with the terms of their contract, as reflected in the wording of the consent order.
In dealing with an attack on a valuer’s determination of the revised rent of premises, which determination was agreed to be “final and binding”, McHugh JA, when a member of the Court of Appeal of the Supreme Court of New South Wales, said in Legal & General Life of Australia Ltd v A Hudson Pty Ltd:
In each case the critical question must always be: Was the valuation made in accordance with the terms of a contract? If it is, it is nothing to the point that the valuation may have proceeded on the basis of error or that it constitutes a gross over or under value. Nor is it relevant that the valuer has taken into consideration matters which he should not have taken into account or has failed to take into account matters which he should have taken into account. The question is not whether there is an error in the discretionary judgment of the valuer. It is whether the valuation complies with the terms of the contract.[1]
[1](1985) 1 NSWLR 314, 336.
Similar views have been expressed by the Court of Appeal of this Court. In AGL Victoria Pty Ltd v SPI Networks (Gas) Pty Ltd, Nettle J, with whom Maxwell P and Bongiorno AJA agreed, referred to Legal & General Life as standing for the proposition that:
… where parties to a contract have agreed that an expert determination shall be final and binding, it is ordinarily not open to a court to review the determination on the grounds of mistake unless the mistake is such as to show that the determination has not been carried out in accordance with the contract or, to put it another way, that the expert has not performed the task entrusted to the expert by the contract.[2]
[2][2006] VSCA 173, [43].
In Toll (FHL) Pty Ltd v Prixcar Services Pty Ltd Maxwell P, Nettle and Ashley JJA in a joint judgment stated that:
the court will intervene where a valuation fails to answer the contractual description of what the valuer was required to determine.[3]
[3](2007) 17 VR 632, [49].
Although Mrs Deerbon was unhappy about several aspects of Worrells’ report, her attack before me was limited to the way in which question 1(f) had been answered. That question asked:
What are the legal costs including the accountant’s costs (other than the costs of the present proceeding) which are to be paid by the Estate, the Trust and the HTS?
In his report the special referee was able to deal expeditiously with the accountant’s costs because he was satisfied that The Field Group had appropriately billed each entity for the services provided. He determined that the “amount of each invoice claimed by The Field Group as allocated between each entity should be paid in full”. There was no criticism of this conclusion by either party.
With the legal costs, none of the three firms of solicitors involved (one for the brothers and two for Mrs Deerbon) had made any allocation between the entities in their invoices. After considering the parties’ submissions the special referee determined that the non-court costs of the parties should be apportioned 60% to the Estate, 20% to Darlow as trustee of the Trust and 20% to HTS. He concluded that “this distribution” would be “fairer to the beneficiaries of the Estate” and that it would have “a commercial benefit to the associated entities in the form of tax benefit”. Counsel for Mrs Deerbon agreed that this apportionment could not be challenged.
The special referee then decided that the amounts claimed in the invoice of all three firms of solicitors were appropriate, but determined that the costs of Mrs Deerbon’s lawyers “be allowed in the amount of 50% in accordance with the previous agreement on 18 May 2006”. The brothers had submitted to the special referee that the 50% reduction was applicable because that had been agreed in May 2006 on the basis that half of Mrs Deerbon’s fees had been incurred “in her capacity as an executor” and half “in her capacity of a beneficiary”. No contrary submission had been made by, or on behalf of, Mrs Deerbon.
Counsel for Mrs Deerbon submitted that the answer to 1(f) was not in accordance with what the parties had agreed in clauses 15 and 16 of the Schedule to the 2008 terms of settlement. They read as follows:
15.The costs of the parties hereto in relation to the obtaining of the grant of Probate, and the steps taken to date, and the steps to be taken in administering or endeavouring to administer the Estate, and the affairs of Heathmont Total Service Pty Ltd will be agreed between the parties’ respective solicitors and in default of agreement they will be assessed on a solicitor client basis by the Law Institute Costing Service. The costs as agreed or assessed will be paid from the assets and funds of the Estate or of Heathmont Total Service Pty Ltd as may be most appropriate.
16.The like costs incurred in relation to the administration of the Family Trust will be agreed or assessed, and will be paid from the assets and funds of the Family Trust.
It was submitted that the 2008 terms of settlement were still binding on the parties and that the special referee’s task was to work out and effectuate such agreement. It was further submitted that it was not part of the special referee’s “brief” to decide, contrary to clauses 15 and 16, that only half of Mrs Deerbon’s costs should be paid out of the estate of the deceased, or to determine the “quantum” of the parties costs when that was demonstrably outside the special referee’s area of expertise as a forensic accountant.
Accordingly, it was submitted on behalf of Mrs Deerbon that this part of the report was not made in accordance with, and did not comply with, the terms of the contract between the parties, being the 2008 and 2009 terms of settlement and the order of 31 July 2009, which reflected the underlying contractual agreement between the parties.
Counsel for the brothers submitted that the agreement which led to the consent order of 31 July 2009 was the fourth agreement made between the parties and that nothing was said in either of the terms of settlement or the fourth agreement to suggest that the 50% reduction in fees payable by Mrs Deerbon contained in the first agreement was no longer applicable.
Further, it was submitted that it was clear that regardless of what was stated in clauses 15 and 16 of the Schedule to the 2008 terms of settlement, the parties had agreed to have all outstanding issues, including the quantum of the parties’ costs and the allocation of liability for those costs between each of the three entities, resolved by the special referee. As stated to Byrne J by both counsel, the special referee’s report was an attempt to bring a long overdue finality to all of the unresolved disagreements between the parties.
In accordance with the authorities referred to above the issue to be determined can be expressed and answered in a variety of ways. Subject to one small matter referred to below, I have concluded that the special referee’s answer to question 1(f) did comply with the terms of the contract between the parties as reflected in the consent order, and that he did perform the task entrusted to him in answering question 1(f), and that his answer to question 1(f) did meet the contractual description of what he was required to determine. I cannot accept the submission by counsel for Mrs Deerbon that all the special referee was being asked to do was to decide what proportion of the costs, to be later agreed between the parties’ solicitors or in default of agreement to be assessed by the Law Institute Costing Service, would be paid by which entity. If that had been the case, then question 1(f) would have read something like the following:
In what proportion are the legal costs including the accountant’s costs (other than the costs of the present proceeding) to be paid by the Estate, the Trust and for HTS?
But, of course, that was not how question 1(f) read.
I consider that by question 1(f) the parties were asking the special referee to decide what legal costs were to be paid by which entity. As counsel for the brothers submitted, there were two tasks involved – the first was to decide the quantum of costs and the second was to decide which entity paid what amount. Surprising as it may seem, the special referee was being asked to determine something about which he had no expertise, namely the assessment of legal fees charged by solicitors. Nevertheless, I am of the opinion that the wording of question 1(f) does not allow for any other conclusion. As stated previously, the special referee followed what might be thought to be a sensible course by simply accepting initially that the amounts claimed were appropriate.
If it is correct that the terms of question 1(f) in the consent order required the special referee to decide the quantum of costs, then, in my opinion, the special referee was entitled to take account of what the parties had agreed in May 2006 concerning Mrs Deerbon’s costs. Whether or not he was correct to conclude that this agreement was still valid is not the point. In making his determination that the quantum of Mrs Deerbon’s costs would be reduced by half, the special referee complied with the terms of question 1(f) of the consent order, performed the task entrusted to him and his answer to question to 1(f) met the contractual description of what he was required to determine.
Counsel for the brothers further submitted that the Court should look at the conduct of the parties to assist in construing the wording of question 1(f). He submitted, for example, that it was clear that both parties contemplated that the special referee would be fixing the quantum of the costs to be paid by each entity because they forwarded their solicitors’ invoices to the special referee. There was no point in doing this if all the special referee was asked to do was to decide the proportion of an unknown amount of costs each entity was to bear. Further, there was no reference to clauses 15 and 16 in either of Mrs Deerbon’s submissions to the special referee.
However, I accept the submission by Mrs Deerbon’s counsel that the subsequent conduct of the parties could not be used in this case, ex post facto, for the purpose of construing the terms of their contract as reflected in the wording of the order made on 31 July 2009.[4]
[4]See, for example, FAI Traders Insurance Company Ltd v Savoy Plaza Pty Ltd [1993] 2 VR 343, 348, 351 (Brooking J) (Nathan and Eames JJ agreed with Brooking J).
In conclusion, I have decided that Mrs Deerbon’s attack on the special referee’s report must fail. The report will not be set aside or varied by deletion of the answer to question 1(f). Each of Mrs Deerbon’s summonses filed on 25 September 2009 should be dismissed. I will return to the question of the costs of these summonses below. However, I note at this stage that this outcome of Mrs Deerbon’s application means that her offer of compromise is no longer relevant.
The small qualification referred to above relates to a point not argued by either side. In his answer to question 1(f) the special referee stated in his report that he recommended that the costs of the brothers’ solicitors ”associated with the court proceeding should be paid by the Estate”. I am not clear whether these costs related to only the brothers’ proceeding or both that proceeding and Mrs Deerbon’s proceeding. Either way, it was not part of the task entrusted to the special referee to decide anything with respect to the costs these proceedings. They were expressly excluded from his task by question 1(f).
It seems to me, therefore, that the special referee’s report will have to be varied by deletion of this recommendation before being adopted by the Court.
The Costs of the Brothers’ Proceeding
Counsel for the brothers submitted that there should be an order that Mrs Deerbon pay their costs of this proceeding on an indemnity basis. It was acknowledged, however, that this order should not apply to the costs of one issue, which I will explain below. Counsel submitted that Mrs Deerbon had been wrongfully withholding her signature on the documents in an attempt to force the brothers to agree on other unresolved issues and that the costs had therefore been incurred unnecessarily. Her refusal to sign had forced the brothers to issue their proceeding.
Counsel for Mrs Deerbon submitted that at no time did Mrs Deerbon refuse to sign. He submitted that the proceeding had been issued prematurely, without any warning, contrary to the procedure agreed in the 2008 terms of settlement and at a time when it was known that Mrs Deerbon was recovering from a serious operation. He therefore submitted that the brothers should pay her costs of their proceeding.
The various arguments advanced by each side were all directed to the question of the reasonableness of, on the one hand, the conduct of the brothers in issuing the proceeding when they did, and on the other hand, the conduct of Mrs Deerbon in not making available the signed documents until after the proceeding was issued. This is consistent with the approach of the courts in dealing with arguments about costs where there has been, for whatever reason, no hearing on the merits.[5] Nevertheless, there was in this case a substantial examination of the merits.
[5]See Australian Securities Commission v Aust-Home Investments Limited (1993) 44 FCR 194, 201 (Hill J) and Re The Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia: Ex parte Lai Qin (1997) 186 CLR 622, 624-5 (McHugh J).
In order to decide whether or not the proceeding was issued prematurely, as submitted by counsel for Mrs Deerbon, it is necessary to set out in some detail the events relating to each of the three properties in question. The first was a property owned by Darlow, units 1-3, 6 Braeside Avenue, Ringwood (“the Ringwood property”), which was passed in at auction in February 2009. The reserve set by the brothers was $750,000. Subsequently, an offer of $722,000 was received from a Mr Lock “and/or nominee”. The agent thought that this was a fair price. The offer was accepted and the contract signed by the brothers and Mrs Deerbon on 11 April 2009. Mrs Deerbon said that she signed because she was told by the agent that Mr Lock was buying on behalf of an Asian family.
In his affidavit sworn on 3 July 2009, Mr John Boyle, a consultant in the firm of Marshalls & Dent, the solicitors acting for the brothers, stated that on 27 April 2009 he spoke by telephone with Ms Ann Gambetta, of South East Lawyers, the solicitors acting for Mrs Deerbon, and advised her that Rowan Deerbon would be the nominated purchaser for the Ringwood property. He deposed that Ms Gambetta replied that as long as the contract price was observed, she and her client would have no objection who bought the property. On the other hand, Ms Gambetta said in her affidavit sworn on 27 July 2009 that Mr Boyle only mooted as a possibility that Rowan Deerbon was to be the nominated purchaser. She disputed that her client’s consent to such purchase was requested of her, or given by her, in that conversation. She said that she did not raise the matter with her client. Moreover, she said in evidence that she was “wrong” in thinking that her client would “not care”. This rather confirmed Mr Boyle’s account of the conversation. Mrs Deerbon said that she was not informed of this conversation at the time.
Mrs Deerbon went into hospital on 1 June 2009 for an abdominal operation. It was more complicated than anticipated. She remained in hospital until 8 June 2009. She recuperated at a friend’s place in Kilsyth for a fortnight and she was then driven by her brother to Warracknabeal to continue her recovery at his home. Mrs Deerbon said that during her recuperation she was physically in a lot of pain, “having painkillers every three to four hours”. She was also “depressed and emotionally drained”. She did not return to work until Monday 6 July 2009. Until then, she “did not feel able to deal with the issues surrounding the Estate”.
Mrs Deerbon’s surgeon, Dr Thomas Manolitsas, gave evidence that although he did not see her after leaving hospital until 27 July 2009, he expected that she would have been suffering significant pain and discomfort during the time she was off work, which required her to take analgesics. He said in cross-examination that Mrs Deerbon would have been physically capable of signing documents but that he could not say whether she was mentally alert enough to understand and evaluate those documents. Nevertheless, he agreed that she would have been asked to sign a discharge document when leaving hospital and that she was expected to understand what she was signing.
On 5 June 2009, the transfer, nomination form and goods statutory declaration were sent to Mrs Deerbon’s solicitors for her to sign. Mrs Deerbon said that it was only after reading the transfer on or about 9 June 2009 that she discovered that the nominee was Rowan Deerbon. She was unhappy about this and felt that she had been deceived. She said that she “was unable to properly respond to this information until 6 July” when she attended her solicitor’s office and resumed work. However, in cross-examination, Mrs Deerbon said that she “really” could not say why she did not sign the transfer at this time. She then said that she was not sure that she could “fully comprehend” what she was being called on to sign. She agreed that during this time she was in “reasonably regular” contact with Ms Gambetta This contrasted with the evidence of Ms Gambetta who said in her affidavit sworn on 14 July 2009 that Mrs Deerbon was “unavailable” to her for instructions and “for signing of documents for almost a month”.
Counsel for the brothers submitted that there were, in effect, five unanswered written requests, on 10, 11, 15 and 17 June and 2 July 2009, from the brothers’ solicitors to Ms Gambetta seeking Mrs Deerbon’s co-operation with respect to the transfer of the Ringwood property. Ms Gambetta’s letter of 17 June 2009, discussed below, did not deal directly with the question of the signing of the transfer. Thus, nothing of substance was heard from Mrs Deerbon or her solicitors and, in the absence of the signed transfer, settlement of the conveyance had to be postponed on 10, 12 and 19 June 2009.
Mr Rod Hendley, the conveyancer handling the matter said in his affidavit sworn on 2 July 2009 that he sent emails to Ms Gambetta on 10 and 15 June 2009 requesting the signed transfer. On 17 June 2009 he telephoned Ms Gambetta who told him that Mrs Deerbon was “not happy” with the transfer to Rowan Deerbon and that “she” would “be in contact with John Boyle direct”. There was no such contact by either Ms Gambetta or Mrs Deerbon.
On 7 July 2009 Ms Gambetta again suggested to Mr Boyle by email that Rowan Deerbon should pay the reserve price previously fixed by the brothers for the Ringwood property. On 10 July 2009 Mr Boyle informed Ms Gambetta that the brothers would proceed to seek an order regarding the Ringwood property and a costs order against Mrs Deerbon. He argued that Mrs Deerbon was ignoring the existence of a legally enforceable contract. This seemed to have the desired effect because on 10 July 2009 Ms Gambetta sent a facsimile to Mr Boyle advising him that the transfer and goods statutory declaration had been forwarded to Darlow’s conveyancer. Rather surprisingly, Mr Boyle expressed uncertainty as to whether this and the sales of the other two properties could now proceed. At 5.20 pm on 13 July 2009 Ms Gambetta emailed Mr Boyle stating that Mrs Deerbon would allow all three sales to proceed. Thus, the delay in returning the signed transfer was from about 9 June to 10 July 2009. On those facts alone, in my opinion, it could not be said that the brothers’ proceeding was issued prematurely.
At no time prior to the issue of the proceeding on 3 July 2009 was Mrs Deerbon informed that the other beneficiaries of the Family Trust (Mr Murray Deerbon and his five sisters) consented to their brother Rowan, a director of the trustee of the Family Trust, purchasing the Ringwood property. However, in my opinion, this fact is not relevant because Mrs Deerbon never based her delay in signing on a lack of consent from the other beneficiaries. She delayed because she was unhappy with Rowan Deerbon purchasing. Of course, as a beneficiary herself Mrs Deerbon was entitled to object to the transaction.[6] However, as she had previously agreed to the sale price, it seems to me that she was not justified in withholding her consent for so long (unless there were other reasons explaining the delay). It was in the interests of all beneficiaries that the Ringwood property be sold. Whilst Mrs Deerbon may have been entitled to be a little aggrieved by the conduct of Mr Rowan Deerbon in using a nominee clause this may well have been the only way to obtain from Mrs Deerbon an indication of what sale price was acceptable to her, without the complications of the poor relationship between her and her co-executors/trustees/company directors intruding into her assessment.
[6]See, for example, Union Trustee Co of Australia Ltd v Gorrie [1962] Qd R 605, 614-615 (Gibbs J); Re Tabone (dec’d) [1968] VR 168, 171 (Winneke CJ).
Affidavits by the other beneficiaries consenting to Mr Rowan Deerbon’s purchase were filed and served and it is the cost of preparing these affidavits which the brothers accept cannot be recovered from Mrs Deerbon.
The second property, which was also owned by Darlow, was at 413 Taylor Bay Right Arm Road, Taylor Bay, Eildon (“the Eildon property”). The supplementary terms of settlement provided that this property should be sold by private sale. Ms Belinda Hocking, the branch manager for Landmark Operations Limited, the real estate agents acting for Darlow on the sale, said in her affidavit sworn on 3 July 2009 that an offer of $60,000 was received and a deposit paid on or about 24 April 2009. Ms Hocking deposed that she then spoke by telephone with Ms Gambetta who told her that Mrs Deerbon accepted the offer of $60,000. Ms Hocking said that she sent the contract of sale signed by the purchasers and a s.32 statement to Mr Rowan Deerbon on or about 5 May 2009. They were then sent to Mrs Deerbon’s solicitors. Settlement was due on 9 June 2009.
Ms Hocking said that on 11 May 2009 she telephoned Mrs Deerbon’s workplace and was told by the receptionist that the contract of sale and s.32 statement had only just been received. Ms Hocking deposed that she telephoned Mrs Deerbon again between 18 and 21 May 2009 and that Mrs Deerbon said that she had signed the documents and given them to her solicitor. Why they were not promptly returned to the agent was not satisfactorily explained. On 29 May 2009, Ms Hocking left telephone messages for Mrs Deerbon and Ms Gambetta enquiring about the sending to her of the signed contract.
Later on 29 May 2009, Ms Gambetta telephoned her and told her that an acquaintance of Mrs Deerbon, Neil Thompson, would contact her the next day to make a higher offer. On 30 May 2009, Mr Thompson made a written offer of $65,000 with a preferred settlement of 60 days, although he said he would accept 30 days. Ms Hocking said that she was told by Mr Rowan Deerbon on 30 May 2009 that he felt obliged to proceed with the earlier offer of $60,000. On 1 June 2009, she spoke to Mrs Deerbon who said that she wanted to accept the $65,000 offer but wanted to speak to her solicitor first. Ms Hocking said that on 15 June 2009 she left messages for Ms Gambetta and Mrs Deerbon to call her, but had not received a response by the time of swearing her affidavit. Ms Hocking said that she was familiar with the Eildon property which was very steep and difficult to access and that the offer of $60,000 was a fair price.
Mr Boyle deposed that in late May and early June 2009 he spoke by telephone with Ms Gambetta. She informed him that an offer of $65,000 with a 60 day settlement had been received, but said that she had no instructions regarding the second offer.
In her affidavit sworn on 27 July 2009, Mrs Deerbon said that she was reluctant to sign the contract because she was aware of the offer of $65,000. She said that nevertheless she signed the contract but instructed her solicitor not to forward it “until the other offer had been investigated”. But according to what Ms Hocking said Mrs Deerbon told her before 21 May 2009, the signed documents had been given to Ms Gambetta before there was any mention of a higher offer.
The letter from Marshalls & Dent to Ms Gambetta on 17 June 2009 advised that the agent had warned that the purchasers of the Eildon property were threatening to withdraw from the sale unless the contract of sale was delivered by 18 June 2009. This should have been the occasion for Mrs Deerbon to decide whether she would honour her previous acceptance of the price of $60,000 or seek to obtain some insignificant financial gain in the form of an offer of $5,000 more with a longer settlement. Instead, there was silence.
On 7 July 2009, Ms Gambetta advised Mr Boyle that she held the signed contract. It was subsequently agreed that settlement could take place on 31 July 2009. Thus, the delay in returning the signed contract was from about 11 May to 7 July 2009. On those facts alone, in my opinion, it could not be said that the brothers’ proceeding was issued prematurely.
The third property, which was owned by HTS, was at 91-93 Canterbury Road, Heathmont (“the Heathmont property”). On 4 June 2009, an offer of $1 million was received following an unsuccessful auction in March 2009. Ms Karen Vogl, the principal of Hocking Stuart, thought that this was a fair price. Also on 4 June 2009 Ms Gambetta sent an email to Mr Boyle asking whether his clients were prepared to accept the offer. Marshalls & Dent wrote to Ms Gambetta on 11 June 2009 asking that Mrs Deerbon either execute the contract of sale of the Heathmont property or advise immediately that she required an independent real estate agent to be appointed to advise as to the proposed sale, pursuant to paragraph 5(c) of the terms of settlement. Follow-up communications were sent by the brothers’ solicitors on 15 and 17 June and 2 July 2009.
A second set of documents, being the contract of sale and s.32 statement, were delivered to Mrs Deerbon’s solicitor on 15 June 2009 by the agents. The second set was necessary because the first s.32 statement had been signed by the purchaser before it had been signed by the vendor. Ms Vogl sent emails to Ms Gambetta on 16 and 17 June 2009 urgently seeking a response to the offer. Although Ms Vogl stated in her affidavit sworn on 2 July 2009 that she did not receive a reply to her email of 16 June 2009, the exhibits to her affidavit show that Ms Gambetta emailed her at 8.51 am on 17 June 2009 advising that she did:
not yet have instruction from Pam regarding the Contracts. I will advise when I do.
Ms Vogl acknowledged that Ms Gambetta did send her an email on 18 June 2009, which relevantly read:
I would respond to your messages if I had anything to tell you.
The Contracts have been collected for Pam …
I am not prepared to hassle Pam about this. She needs to make up her mind about the contracts. I have given her the facts and she will determine what to do …
By a facsimile letter dated 22 June 2009, Ms Gambetta wrote to Hocking Stuart as follows:
We refer to the Contracts for the above [Heathmont] property delivered to our office last week, in replacement of those already signed by the Purchasers, which are voidable.
These replacement Contracts cannot be executed:
1. They are blank in all particulars related to the Purchasers;
2.The Contract signing page has been signed by the one of the Directors of the vendor company. Is it intend [sic] that there will be an exchange of contracts? If so, how do you propose to deal with the issue of the Purchasers having signed the section 32 before the Vendors?
3.The Contract signing page and the s 32 are signed by Rowan Deerbon who is not Director of Heathmont Total Service Pty Ltd.
All of the above faults result in Mrs Deerbon being unable and unwilling to execute these Contracts. Most concerning to her is the first fault. At no time could we recommend that our client execute blank documents.
We will return the Contracts to you via ordinary mail for them to be amended/corrected.
Ms Vogl made no mention of this letter in her first affidavit.
In her second affidavit, sworn on 7 December 2009, Ms Vogl said that following receipt of the above letter, she had hand delivered to South East Lawyers on Friday 26 June 2009 a third set of the documents. They were blank but signed by Mr Murray Deerbon. On Monday 29 June 2009, the documents were collected from the purchaser’s buyers advocate. They were signed by Mrs Deerbon and the purchaser. At 11.56 am on that day the documents were once again delivered to South East Lawyers. On 1 July 2009 Ms Gambetta rang Ms Vogl to say that she was sending back the documents “on the basis that Murray had not signed the contract first”.
The fresh contract of sale and s.32 statement signed by Mr Murray Deerbon were then delivered to Mrs Deerbon’s solicitors at 2.16 pm on 3 July 2009. This was after this proceeding had been issued at 12.48 pm on the same day.
Mrs Deerbon signed the contract on 6 July 2009 at which time Ms Gambetta informed Ms Vogl. On 7 July 2009, Ms Gambetta advised Mr Boyle by email that signed contracts for the Heathmont property had been collected by Hocking Stuart. Counsel for the brothers submitted that the delay was, therefore, from 15 June to 7 July 2009.
However, Mrs Deerbon’s argument was that there was no delay because she did not receive proper documents for signing until 3 July 2009, after the brothers’ proceeding had been issued, and she signed those documents on 6 July 2009. The brothers’ response was Ms Gambetta never told their solicitors of this problem, which she should have done given their relevant communications to her on 11, 15 and 17 June and 2 July 2009 which, in effect, went unanswered. Sending a copy of the letter of 22 June 2009 would have been a sensible course because Mr Boyle said in his affidavit sworn on 4 December 2009 that if he had been told about the faulty documents concerning the sale of the Heathmont property, the proceeding would not have been commenced. Ms Vogl said that she had not communicated the faulty document issue to the brothers’ solicitors because they were not acting in the conveyance. However, several of her earlier emails to Ms Gambetta were copied to Mr Boyle. It seems to me extraordinary that this problem with the documents did not come to light when contact was made with Ms Vogl for the purpose of obtaining instructions for her affidavit prior to the issue of the brothers’ proceeding. I also note that Mr Boyle said in evidence that “the feedback” he was getting from the conveyancer and the sales agent with respect to the Heathmont property was that they could not “get any co-operation”. Nevertheless, I accept Mr Boyle’s evidence that he was not aware of the faulty document issue.
Therefore, although I conclude that the brothers’ proceeding was commenced prematurely in respect of the Heathmont property because Mrs Deerbon’s solicitors did not receive the proper documents for her to sign until after the proceeding had been issued, I find that much of the blame for this resulted from the prolonged failure by Mrs Deerbon’s solicitor to respond to correspondence.
The next submission on behalf of Mrs Deerbon was that the brothers’ proceeding had been commenced without any warning. In my opinion, the facts make it clear that this submission was without merit. By a letter dated 15 June 2009, Margaret Leech of Marshalls & Dent wrote to Ms Gambetta seeking the signed documents. The letter concluded:
Should the contracts for Canterbury Road and Eildon not be executed and delivered to the agent, and should the transfers for the Braeside property and the Sunbury property which is due for settlement not be delivered to the conveyancer today we will seek our clients’ instructions to have the matter brought back before the Court to enforce the terms of settlement. If this becomes necessary we will be seeking a cost order in respect of your client and this letter will be produced in support of same.
Further, by an email sent at 6.01 pm on 2 July 2009 Mr Boyle warned Ms Gambetta that he had instructions to issue proceedings in this Court on the following day, returnable on 7 July 2009, because of Mrs Deerbon’s “unreasonable delay and frustration of the sale and settlement” of the Eildon, Heathmont and Ringwood properties.
The third submission on behalf of Mrs Deerbon was that commencing the proceeding was contrary to the procedure agreed in the 2008 terms of settlement. Clause 12 of the Schedule to those terms stated:
In the event of any disagreement amongst the parties as to the steps to be taken in completing the arrangements, the parties agree to negotiate in good faith, and if necessary to mediate their disputes, as a pre-condition of seeking any remedy direction or order from the Court.
I do not accept this submission. The steps to be taken with respect to realising and converting into cash the real assets of the estate, HTS and Darlow (clause 11 of the Schedule to 2008 terms of settlement), had been spelt out in clauses 2 to 5 of the 2009 terms of settlement – the manner in which each property was to be offered for sale, a procedure for dealing with offers below the agreed reserved price, and a procedure for dealing with pricing issues arising at an auction. In my opinion, the failure to sign the contractual documents was not a “disagreement … as to the steps to be taken in completing arrangements …” The steps had been agreed. If Mrs Deerbon was wrongly failing to comply with them there was, in my opinion, no point in returning to mediation. There was really nothing to be agreed and set out in yet another terms of settlement document.
The next submission on behalf of Mrs Deerbon was that the proceeding was issued at a time when it was known that Mrs Deerbon was recovering from a serious operation. There was dispute over whether the brothers and their solicitors were aware of Mrs Deerbon’s hospitalisation. Ms Gambetta said in her affidavit that she advised both Ms Vogl and Mr Boyle that Mrs Deerbon was unwell and unavailable. Mr Boyle denied in his affidavit sworn on 30 October 2009 that he was told by Ms Gambetta that Mrs Deerbon was to be hospitalised. Yet in cross-examination Mr Boyle said that in a conversation with Ms Gambetta “there was some talk” of Mrs Deerbon “going to hospital” for some surgery, “something to do with gynaecological issues”. That information was told to him in confidence because Mrs Deerbon did not “want the children of her late husband to know what was going on with her health”. Mr Boyle also said that he recalled Ms Gambetta saying on occasions that she could not get instructions, but he did not believe that had anything to do with Mrs Deerbon’s health. He said that he did not believe Mrs Deerbon was so unwell that she was incapable of signing the documents. He thought this was another delaying tactic on her part.
I conclude, therefore, that the brothers’ solicitors had some knowledge that Mrs Deerbon was to go into hospital but that they were never made aware of the extent of Mrs Deerbon’s medical problems. The only written communication referring albeit indirectly to Mrs Deerbon’s unavailability was an email from Ms Gambetta to Mr Boyle on 4 June 2009 regarding the offer for the Heathmont property. In this email Ms Gambetta said:
As you know Pam is not available to me for a few more days but she is aware of it. If Murray & Rowan are interested then I will ask Karen Vogl to get the Contract to them and by the time they have signed it, Pam should be OK.
This contained no suggestion of any long term illness or unavailability of Mrs Deerbon. Moreover, Mr Boyle’s limited knowledge was further hampered by the restriction of confidentiality placed on him.
Further, counsel for the brothers pointed out that although Mrs Deerbon said that she was so unwell that she could not sign the documents relating to the sales of the three properties, on Mrs Deerbon’s own evidence she was able to read and understand the effect of the transfer to Mr Rowan Deerbon on or about 9 June 2009. Counsel also submitted that if in fact Mrs Deerbon was unavailable to give instructions for almost a month, there was no correspondence from Ms Gambetta to the brothers’ solicitors, prior to this proceeding being issued, explaining the difficulty. It was never said that Mrs Deerbon was not signing any of the documents in question because she was unwell. This is important because Mr Boyle said in his affidavit sworn on 4 December 2009 that if he had been told that the reason Mrs Deerbon was not signing the documents was because of her illness, the proceeding would not have been commenced.
It seems to me, therefore, that Mrs Deerbon cannot rely on her illness as a reason for not signing the various documents or at least for not explaining to the brothers’ solicitors, in response to repeated requests for the signed documents, why there would be a delay.
I turn then to the submission on behalf of the brothers that, in reality, Mrs Deerbon had been wrongfully withholding her signature on the documents in an attempt to force the brothers to agree on other unresolved issues.
Counsel for the brothers submitted that their contention was supported by the following correspondence from Mrs Deerbon’s solicitor. In an email from Ms Gambetta to Mr Boyle dated 10 June 2009, which dealt with Mrs Deerbon’s concerns about cheques not being signed by the brokers and sent to creditors and about payments said to be owing to staff of the clinic, the following was stated:
We note your advice last week that you received instructions from Rowan to hold up a settlement last week until he secured into your hands a title that had nothing to do with that settlement. So far, Pam has resisted the temptation to play the same game. At no time does she want to be or be seen to be in at that level. However, unless some result is achieved for the staff of the clinic, Pam is very unlikely to sign any further documents until it is resolved. I have no specific instructions in this regard but will seek them in the next day. [Emphasis added]
Ms Gambetta gave evidence that what she was doing in writing this letter was playing a game. She said:
Litigation is a game.
Ms Gambetta also said that she made this statement without any instructions. What she had said in her email was an idea “floated only by me”. She never received any such instructions. Mrs Deerbon gave evidence that she did not discuss with her solicitors the idea of withholding her signature until there had been progress with respect to the clinic issues.
Another letter was sent by Marshalls & Dent to Ms Gambetta on 17 June 2009 complaining about the failure to respond to correspondence of 11 and 15 June 2009 which, it was suggested, constituted professional misconduct having regard to the urgency of the matters.
Later on 17 June 2009, Ms Gambetta replied to the letters of 15 and 17 June 2009 from Marshalls & Dent. She said that she was only responding to their point about her failure to respond in what they considered to be an appropriate time frame. She stated that they had not responded to her email of 10 June 2009 until 15 June 2009 and even then their letter had not addressed most of the issues raised. The letter concluded:
Further, had your client Mr Rowan Deerbon not introduced the notion of withholding a settlement until his demands were meet [sic], we would not have ever considered doing so. If these tactics are appropriate for your client then they are appropriate for all.
In my opinion, these statements should not have been made by Ms Gambetta. As I commented during the argument, two wrongs do not make a right and whatever the circumstances of the earlier episode (which were not investigated) they did not justify a solicitor floating the idea that her client’s signature would be withheld, thereby holding up certain transactions, until other issues were satisfactorily resolved. However, I am not satisfied that this correspondence necessarily demonstrates that Mrs Deerbon was wrongfully not signing the documents in an attempt to put pressure on the brothers with respect to these other issues.
What then are the appropriate orders with respect to the costs of the brothers’ proceeding? The basic facts should not be overlooked. Within a few days of this proceeding having been issued, Mrs Deerbon had signed the required documents. This suggests to me that there should be an order for costs in favour of the brothers. The next question is whether there should be any reduction in costs to take account of the fact that I have concluded that the proceeding was issued prematurely in respect of the Heathmont property. As discussed above, much of that problem was brought about by the conduct of Mrs Deerbon and her solicitor. In the circumstances, I see no reason to reduce the costs ordered to be paid to the brothers.
Further, even if it was premature to issue the proceeding with respect to the Heathmont property, that does not alter the fact that it was legitimately commenced as far as the Ringwood property and the Eildon property were concerned. For the reasons discussed above, I do not propose to make orders for costs on an issue by issue basis.
Counsel for the brothers sought an order that the costs ordered to be paid by Mrs Deerbon be on an indemnity basis. He submitted that Mrs Deerbon was guilty of misconduct in refusing to sign, or delaying signing, the documents before the proceeding was issued. I am not persuaded that, in all of the circumstances discussed above, her conduct as an executor or trustee was so culpable or derelict that the costs should be paid on an indemnity basis.
The final issue is whether there should be a further order dealing with the difference between the costs recoverable by the brothers from Mrs Deerbon and the costs actually incurred by them in bringing this proceeding. The causes of action were based on alleged breaches of the 2008 and 2009 terms of settlement. Both the brothers and Mrs Deerbon entered into these agreements in their capacities as executors, trustees or company directors. Therefore, it seems to me to be appropriate that the brothers should be entitled to look to one or more of the various funds for reimbursement of any shortfall in costs. Given that this proceeding involved three properties (two owned by Darlow and one by HTS), I consider that it would be appropriate to order that any shortfall in costs should be met by Darlow as to two thirds and HTS as to one third.
I set out at the conclusion of these reasons for judgment the form of order I would propose making with respect to the brothers’ proceeding.
The Costs of Mrs Deerbon’s Proceeding
Counsel for Mrs Deerbon submitted that she was justified in commencing her proceeding in order to bring the question of the disputed calculation of the interest on her loan to a head and to have all of the unresolved issues referred to a forensic accountant. Eventually, he submitted that Mrs Deerbon’s costs of her proceeding should be paid in the proportion of 60% by the Estate and 20% by each of Darlow and HTS and that the quantum of such costs should be agreed, and in default of agreement, be assessed by the Law Institute of Victoria, on a solicitor and client basis. He further submitted that there should be no order as to the costs of the brothers in this proceeding.
Counsel for the brothers submitted that Mrs Deerbon’s proceeding served no useful purpose as it disclosed no cause of action and that it had presumably been issued for tactical reasons. He sought an order that Mrs Deerbon pay the brothers’ costs on an indemnity basis.
I do not agree with the submission that Mrs Deerbon’s proceeding disclosed no cause of action. There was an arguable claim with respect to Mrs Deerbon’s unpaid loan and an allegation that clause 9(e) of the 2009 terms of settlement had been breached by the brothers’ failure or refusal to counter-sign some of the cheques forwarded to them. Complaint was also made that the brothers had “failed to join in with” Mrs Deerbon in appointing a forensic accountant to resolve disagreements between them pursuant to clause 6 of the Schedule to the 2008 terms of settlement.
Whether it was reasonable for Mrs Deerbon to commence this proceeding when an offer had just been made by a letter dated 21 July 2009 to repay the loan, albeit with an interest amount different to that claimed by Mrs Deerbon, is however another matter. Counsel for the brothers also submitted that what Mrs Deerbon sought was the transfer to Worrells of all of the accountancy work from The Field Group and was not limited to existing disagreements between them as required by clause 6.
However, the reality is that the strengths and weaknesses of Mrs Deerbon’s claims were not examined in any depth. No doubt this was because very few steps were taken in this proceeding. Instead, the parties entered into negotiations which culminated in the order of 31 July 2009 asking a number of questions of the special referee. It therefore seems to me that it would be premature and unfair to make any order for costs as between the parties.
What then are the appropriate orders with respect to the costs of Mrs Deerbon’s proceeding? In my opinion, as this proceeding arose out of alleged breaches of the two terms of settlement which the parties entered into in their capacities as executors, trustees or company directors, each party should recover her or their costs from the appropriate entity or entities on a solicitor and client basis. The disputes which led to the commencement of this proceeding seem to have nothing to do with HTS. Therefore, I consider that the appropriate allocation is that these costs be met by the Estate as to half and Darlow as to half.
The Costs of the Summonses Filed on 25 September 2009
I return, finally, to the question of the costs of Mrs Deerbon’s summonses filed on 25 September 2009. Rather unusually, an order had been made in both proceedings, when I would have thought that the brothers’ proceeding had come to an end apart from the question of costs. This necessitated a summons seeking to set aside or varying the special referee’s report being issued in each proceeding. In my opinion, in order to avoid unnecessary duplication, the best way to deal with the two summonses is to make no order as to costs of the summons issued in the brothers’ proceeding and to make orders in Mrs Deerbon’s proceeding with respect to the costs of the summons.
The parties agreed that the costs of Mrs Deerbon’s summons seeking to set aside or vary the special referee’s report should follow the event. As Mrs Deerbon failed in her application, there should be an order that she pay the brothers’ costs of her summons filed on 25 September 2009.
Counsel for the brothers submitted that it should be ordered that these costs be paid on an indemnity basis. He submitted that Mrs Deerbon had gone back on what had been said to Byrne J about each party agreeing that the Worrell’s report would be final and binding and that they would consent to its adoption by the Court.
I do not agree with this submission. It seems to me that, consistent with the authorities referred to above, a party is entitled to challenge an expert’s determination, even one agreed to be final and binding, if it is not in accordance with the terms of their contract. Whist I have rejected the particular attack on the report, it was not so unarguable that Mrs Deerbon, properly advised, should have known that she had no chance of success. There is no basis, therefore, in my opinion, for an order that the costs be paid on an indemnity basis.
This means that, unless a further order is made, the brothers will be out of pocket in respect of the costs of this summons for the difference between the costs paid to them by Mrs Deerbon on a party and party basis and their actual costs. As they were simply defending the attempt to set aside or vary the special referee’s report, they should not, in my opinion, be out of pocket. It is appropriate, therefore, to order that any shortfall in costs assessed on a solicitor and client basis should be met by the Estate as to 60%, by Darlow as to 20% and by HTS as to 20%, which was the allocation determined by the special referee in his report.
Other Issues
Counsel for the brothers put before the Court a letter from Worrells to Marshalls & Dent dated 16 November 2009 in which it was asked that a Judge:
authorise payments to be made in accordance with the special referee’s report.
The significance of the court order in respect of payments for legal costs as to the amount and allocation as to which entity the payments are to be made from is relevant to the special referee as that will control the quantum of funds actually available for the beneficiaries, either of the Darlow Trust and as shareholders of HTS.
It would be appreciated if it could be stated in the court order that payments from an entity will be directly affected by the quantum of legal costs paid out of that same entity. For example, payments from Darlow will be affected by the quantum of legal costs allocated to be paid out of Darlow.
It seems to me that orders that the report, as varied, be adopted and that Worrells implement the remaining recommendations in the report, which I propose making, should meet this request. It goes without saying that payments made in accordance with the report, whether of legal costs or otherwise, reduce the amounts left to be distributed respectively to the beneficiaries of the Estate, the beneficiaries of the Family Trust or the shareholders of HTS.
A second issue was that counsel for the brothers submitted that, in the event that Mrs Deerbon’s attempt to set aside or vary the special referee’s report was unsuccessful, interest should not continue to run on the loan to Mrs Deerbon because her unsuccessful application had delayed implementation of the report, in particular the repayment of that loan. He submitted that the accrual of interest should cease as at 4 September 2009.
Counsel for Mrs Deerbon accepted that it might be appropriate to stop interest accruing as a result of the unsuccessful attack on the special referee’s report, but agreed with my suggestion that, if it were to be stopped, a later date in September was fairer.
In all the circumstances I consider that I should order that the accrual of interest on Mrs Deerbon’s loan be suspended from 12 September 2009 to 25 March 2010 inclusive.
Orders
I set out below the orders I would propose making subject to hearing further from the parties if they wish, about any additions to or deletions from the orders or any drafting changes.
With respect to the brothers’ proceeding (No. 7518 of 2009) I would order that:
1.The defendant’s summons filed on 25 September 2009 be dismissed with no order as to costs.
2.The second plaintiff personally pay the costs of obtaining the consent of his brother and five sisters to his purchase of the property at 1-3, 6 Braeside Avenue, Ringwood including the costs of preparing their respective affidavits of consent (“the beneficiary consent costs”).
3.The defendant pay the plaintiffs’ costs of the proceeding, excluding the beneficiary consent costs but including any reserved costs, such costs to be taxed, in default of agreement, on a party and party basis.
4.Any costs incurred by the plaintiffs in this proceeding, in excess of the costs paid to them by the defendant pursuant to paragraph 3 hereof and excluding the beneficiary consent costs, be taxed, in default of agreement, on a solicitor and client basis and paid as to two thirds by Darlow Nominees Pty Ltd as trustee of the Deerbon Family Trust and as to one third by Heathmont Total Service Pty Ltd.
5.Otherwise the originating motion and summons filed on 3 July 2009 be dismissed.
With respect to Mrs Deerbon’s proceeding (No 7981 of 2009) I would order that:
1.The report of Worrells Solvency & Forensic Accountants (“Worrells”) dated 4 September 2009 be varied by deleting the recommendation at page 38 thereof that “the costs associated with the court proceeding should be paid by the Estate” and that otherwise the report be adopted.
2. Worrells implement the remaining recommendations in the report.
3.The accrual of interest due on monies payable to the plaintiff be suspended from 12 September 2009 to 25 March 2010 inclusive.
4.The plaintiff pay the defendants’ costs of the summons filed on 25 September 2009, including any reserved costs, such costs to be taxed, in default of agreement, on a party and party basis.
5.Any costs incurred by the defendants relating to the summons filed on 25 September 2009, in excess of the costs paid to them by the plaintiff pursuant to paragraph 4 hereof, be taxed, in default of agreement, on a solicitor and client basis and paid as to 60% by the Estate of Murray Karel Francis Deerbon, deceased (“the Estate”) and as to 20% by Darlow Nominees Pty Ltd (“Darlow”) as trustee of the Deerbon Family Trust and as to 20% by Heathmont Total Service Pty Ltd.
6. Otherwise the plaintiff’s summons filed on 25 September 2009 be dismissed.
7.The plaintiff’s costs of the proceeding and the defendants’ costs of the proceeding, excluding the costs referred to in paragraphs 4 and 5 hereof, be taxed, in default of agreement, on a solicitor and client basis and paid as to one half by the Estate and as to one half by Darlow.
8.Otherwise the originating motion and summons filed on 27 July 2009 be dismissed.
Unfortunately, these are complicated orders but it seemed to me that it was necessary that they be so in order to do justice not only to the parties but also to the other beneficiaries of the Estate and the Family Trust and the shareholders of HTS.
---
3
0