Empson v Hagar
[2016] NSWSC 129
•24 February 2016
|
New South Wales |
Case Name: | Empson v Hagar |
Medium Neutral Citation: | [2016] NSWSC 129 |
Hearing Date(s): | 24 February 2016 |
Date of Orders: | 24 February 2016 |
Decision Date: | 24 February 2016 |
Jurisdiction: | Equity |
Before: | Hallen J |
Decision: | Direct the parties to provide to my Associate, within 14 days, Short Minutes of Order that reflect these reasons for judgment. The orders may be made in Chambers without the need for any party to appear if the parties are in agreement in respect of the form of orders. Otherwise stand the matter over until 3:30 p.m. on 15 March 2016. |
Catchwords: | SUCCESSION – Administration of estates - ongoing disputes between two executors – Competing claims brought following settlement of Probate proceedings – Payment of interest on money payable to the estate by one executor |
Legislation Cited: | Civil Procedure Act 2005 |
Cases Cited: | Murdocca v Murdocca (No 2) [2002] NSWSC 505 |
Category: | Procedural and other rulings |
Parties: | Jennifer Bernadette Empson (Plaintiff) |
Representation: | Counsel: |
File Number(s): | 2014/161573 |
JUDGMENT – EX TEMPORE (REVISED)
The Claims
HIS HONOUR: There are listed, for hearing today, two notices of motion. The first in time was filed on behalf of Jennifer Bernadette Empson (to whom I shall refer as “the Plaintiff”) on 2 June 2015, in which she sought an order that Mark Anthony Hagar (to whom I shall refer as “the Defendant”), “administer the estate of the late Francis Dudley Hagar [to whom I shall refer as “the deceased”] according to law” and an order that he pay to the estate $15,673.77.
How the sum claimed by the Plaintiff is calculated is set out in an annexure to the Plaintiff’s affidavit sworn 28 May 2015 as follows:
| - | interest | $2,301.00 |
| - | furniture and personal effects | $8,500.00 |
| - | reimbursement of legal costs | $ 975.27 |
| - | money retained | $2,500.00 |
| - | Prices furniture | $1,397.50 |
| $15,673.77 |
The second notice of motion was filed on behalf of the Defendant on 2 November 2015 in which he sought the following relief:
“1. Pursuant to Section 73 of the Civil Procedure Act 2005, the Court orders that the Respondent provide a Transmission Application and Discharge of Mortgage in registrable form within 24 hours of the date of this order or such other time as the Court regards as reasonable.
2. In the alternative to 1 above, the Registrar in Probate be appointed forthwith to execute the said Transmission Application and Discharge of Mortgage on behalf of the Respondent.
3. Further, or in the alternative, an order that the Grant of Probate of the Will dated 19 February 2013 of the late Francis Dudley Hagar granted to the Applicant and the Respondent on 22 October 2014 by the Court be revoked and Letters of Administration with the Will annexed be granted to the Applicant.
4. An order that the assets of the estate be vested in the Applicant.
5. An order that the Respondent pay the Applicant’s costs of the Motion.
6. Further or other orders that the Court thinks fit.”
By email sent to the court at 6:24 p.m. yesterday, counsel for the Plaintiff, as part of an Outline of Submissions, stated “The Motion … is no longer operative as the Discharge of Mortgage has been provided” to the Defendant by the Plaintiff. However, this morning, I was informed by counsel for the Defendant that the statement was not accepted as accurately reflecting what had, in fact, occurred.
The Background Facts
The following background facts do not appear to be in serious contest between the parties.
On 11 April 2013, the deceased died. He left surviving him four children, two of whom are the Plaintiff and the Defendant. The other two children are Christopher Andrew Hagar and Francis Henry Hagar, who are not parties. Only Francis has played a part in these proceedings, as a deponent of an affidavit, some of which has been read (with other parts objected to and rejected).
The deceased left two Wills, namely a Will dated 13 March 2012 appointing the Defendant as the sole executor (“the 2012 Will”) and a Will dated 19 February 2013 appointing the Plaintiff and the Defendant as joint Executors and Trustees [“the 2013 Will”].
On 29 May 2014, the Plaintiff filed a Statement of Claim seeking that Probate in solemn form of the 2013 Will be granted to her.
On 1 July 2014, the Defendant filed a Defence alleging that the deceased lacked testamentary capacity at the time she executed the 2013 Will. He also filed a Cross-Claim in which he sought an order that Probate in solemn form of the 2012 Will be granted to him. No Defence to the Cross-Claim appears to have been filed by the Plaintiff.
Neither party tendered a copy of the 2012 Will. At the commencement of the hearing, the Court was informed by both counsel that the terms of the 2012 Will are not relevant to the issues raised in the current proceedings.
A copy of the 2013 Will, relevantly, provided that the “any debt owing to me by [the Defendant] in particular any monies owing in relation to mortgage dated 6 December 1995 and registered number xxxx to my son Christopher Andrew Hagar” (Clause 3). The terms of the balance of the 2013 Will are, otherwise, not particularly relevant to the current proceedings.
A copy of the registered Mortgage referred to in the 2013 Will is in evidence. It reveals that the principal sum secured was $100,000 and that it was to be repaid “within twelve months of the following events:
“(a) Service upon the mortgagor of a written notice of the mortgagee of demand requiring payment of the principal sum or any part(s) of the principal sum or;
(b) The date of death of the within named mortgagor”.
(It seems to be agreed that the reference in (b) to “mortgagor” should be a reference to “mortgagee”.)
There was no evidence of any notice served by the deceased on the Defendant prior to his death. Accordingly, the principal sum was to be repaid prior to 11 April 2014, one year after the death of the deceased. The fact that the Defendant did not pay that amount or any part of it within that period is not in dispute.
The Mortgage also provided that:
“No interest shall be payable on the principal sum hereby secured or any lesser amount thereof except in such circumstance where the mortgagor is in default in respect of his obligation to repay principal as provided for in the preceding paragraph. Should the mortgagor be in default in respect of the covenant to repay principal then in that circumstance interest shall be payable on the principal sum then owed at the rate of TEN DOLLARS ($10.00) percentum per annum during the period(s) of such default.”
On 16 July 2014, the parties attended a court-annexed mediation before Senior Deputy Registrar N Flaskas. On that date, each of them, and Leanne Hagar, who is the wife of the Defendant, signed and dated a handwritten document headed “Consent Orders” resolving the Probate dispute. I shall return to the contents of the Consent Orders later in these reasons.
In an affidavit of the Plaintiff and the Defendant subsequently filed in support of the application for the grant of Probate, which was read in the current proceedings, the deceased’s estate was disclosed as having a gross value of $205,966.68. The estate was disclosed as consisting of monies in bank accounts ($88,102.63), shares in public companies ($3,271.80), a motor vehicle ($1,500), a horse float ($2,000), household items ($10,000), a debt said to be owed to the estate by the Defendant ($100,000) and miscellaneous amounts ($1,092.25). In the same affidavit, the liabilities of the deceased were said to total $13,133.94, of which the funeral expenses were $8,568.20. It follows that the net estate had an estimated value of $192,832.74.
Despite the fact that the Consent Orders appear to have also been signed by Senior Deputy Registrar Flaskas, not all of the orders and the agreements referred to appear to have been recorded in the Court's computerised record system. It appears that neither party sought to have the orders entered in accordance with Uniform Civil Procedure Rules 2005 (NSW) (“UCPR”), rule 36.11(1).
However, on 22 October 2014, Senior Deputy Registrar L Brown granted Probate of the 2013 Will to both the Plaintiff and the Defendant “as Executors appointed under the will of the deceased”. A copy of the Probate, the 2013 Will and the Inventory of Property was part of the evidence on the notices of motion (Ex. NMA).
The Consent Orders were in the following form:
“1. The Defence and Cross-Claim be dismissed.
2. Leave to the Plaintiff to amend the Statement of Claim to include Mark Anthony Hagar as a second Plaintiff.
3. There be no order as to costs with the intent that each party bear its own costs.
4. The Plaintiff’s costs be paid from the estate of the late Francis Dudley Hagar on an indemnity basis.
5. The Court notes the following:
Mark Anthony Hagar (“Hagar”) consents to be joined as a second Plaintiff pursuant to order 2 above.
The parties, from hereon described collectively as “the executors” and Leanne Hagar, agree that within 14 days of Probate to the Will dated 19 February 2013 being granted:
Hagar will pay the sum of $85,000 to the executors
ii. The executors will pay Hagar the sum of $15,000
iii. Hagar will make available for collection motor vehicle XXXXX X being a Toyota ute, and the deceased’s ride-on-lawnmower [by] a nominee of Christopher Hagar
Each of the executors on the one hand, and Hagar on the other, release each other from any liability howsoever arising but for any liability pursuant to these orders and terms, and such release extends to any liability howsoever arising touching or concerning the partnership styled “the Murrulebale Pastoral Company” conducted by the deceased and Hagar, and later, Leanne Hagar, or any partnership including the deceased.
Each of the executors on the one hand, and Leanne Hagar on the other, release each other from any liability, however arising, but for any liability pursuant to these terms, and such release extends to any liability howsoever arising touching or concerning (the said partnerships in (c) above.
It is noted that Jennifer Empson has received from Hagar
A written Authority to collect the original of the deceased’s Will dated 19 February 2013 from Michael Commins Solicitor and
(ii) Hagar’s bank identification to permit Jennifer Empson to recoup funeral expenses.
Further upon 14 days from probate being granted in respect of the said Will, Hagar and/or Leanne Hagar will do all things necessary to enable Christopher to collect the deceased’s furniture located at Price’s furniture, Wagga, unit 1 Schiller St.
The executors will do all things necessary to provide Hagar with a discharge of the mortgage referred to in clause 3 of the said Will.”
On 24 February 2015, the Defendant transferred $63,277.33 (said to be calculated as $70,000 less what were said to be estate expenses) into the trust account of the Plaintiff’s solicitors. It is presently held by the Plaintiff’s solicitors on behalf of the estate.
The amounts deducted from the amount of $70,000 were set out in a letter dated 20 February 2015 as follows:
The net payment to the estate: | $70,000.00 |
Medibank Refund: | $857.73 |
Less: Storage costs | $455.00 |
Removalist costs | $942.50 |
Supreme Court filing fee | $685.00 |
Commins Hendriks fee | $307.01 |
Kell Moore costs paid | $2,690.89 |
Kell Moore – further fees antic | $2,500.00 |
| $63,277.33 |
The Plaintiff contested two of these amounts ($307.01 and $2,500). In addition, in a letter dated 9 March 2015, sent by her solicitors to the Defendant’s solicitors, she demanded “interest be paid from 5th November [2014] to 25th February [2015] at the rate of 10% as prescribed in the mortgage”. The amount claimed was said to be $2,301.
The parties were able to agree, at the hearing, that:
(i) Although the amount of $307.01, was required to be “reimbursed by the estate” to the Defendant, there was no evidence before the court to establish that it had been paid by the Defendant to the firm of solicitors identified; accordingly, it should be paid to the estate;
(ii) The amount of $2,500, described as being for “further fees antic” was being held in the trust account of the Defendant’s solicitors on behalf of the estate;
(iii) There was nothing in the Consent Orders entitling the Plaintiff to interest on the payment of $70,000 (or any part of it) and that the Plaintiff’s claim for interest was based on the terms of the Mortgage to which reference has been made or otherwise.
In relation to the Defendant’s notice of motion, the Defendant’s counsel conceded that the Defendant’s evidence did not go further than events that had occurred prior to 29 October 2015. However, during the course of submissions, counsel for the Plaintiff tendered, without objection, a copy of a letter dated 4 December 2015 from the Plaintiff’s solicitors to the Defendant’s solicitors which included a signed copy of the Discharge of Mortgage, a signed Transmission Application and a copy of the Plaintiff’s Driver’s Licence.
There was no dispute that there were some differences (minor only) between the Discharge of Mortgage and the Transmission Application that had been sent to the Plaintiff’s solicitors by the Defendant’s solicitors under cover of letter dated 6 October 2015 and the documents that had been returned under cover of the letter dated 4 December 2015.
The Submissions
I shall not set out all of the submissions made, in writing, by counsel for each of the parties as the issues were narrowed, significantly, during the oral submissions.
In relation to the Plaintiff’s claim, it was accepted that the two amounts that were in issue related to the amounts set out above and the amount of interest that had been claimed ($2,807.01 and $2,301).
(Sensibly, counsel for the Plaintiff accepted that there was no evidence to enable the court to conclude that the furniture had been damaged as a result of any acts or omissions of the Defendant and, therefore, her claim for $8,500 could not succeed. Indeed, the furniture is now in such a condition that none of the beneficiaries wish to take it and it will be disposed of as soon as reasonably practicable. The other amount of $975 (for reimbursement of legal costs) was not being pressed as being payable and agreement had been reached that $1,397.50 (for Prices Furniture) was to be paid.)
For his part, counsel for the Defendant accepted that $307.01 should be paid to the estate. The dispute then related to whether the balance ($2,500), which was currently held by his solicitors, should be held by those solicitors or be remitted to the Plaintiff’s solicitor, Mr Noonan, to be held by him as part of the fund that constituted the deceased’s estate. (Despite me taking the short adjournment early to enable this issue to be sensibly determined, the parties were not able to do so during the short adjournment. Indeed, it was only when the court suggested that perhaps, the Defendant should be made available to explain the reasons for the dispute, his counsel being unable to do so, that agreement was reached that the Defendant would instruct his solicitor to pay these amounts to Mr Noonan to be held on trust by him for the estate.)
In relation to the claim for interest, counsel for the Defendant submitted that the rights under the Mortgage had merged with the entry into of the Consent Orders, and that there was no entitlement, otherwise, to claim interest as the Consent Orders did not entitle the estate to interest.
Counsel for the Plaintiff countered that even if that were so (as he had to concede that there was no term in the Consent Orders dealing with interest), the court could order interest to be paid for the period stated because the Defendant was a person who was under an equitable obligation to pay a sum of money and had failed to do so.
Although counsel made no reference to authority, the principles have been set out succinctly in Murdocca v Murdocca (No 2) [2002] NSWSC 505 at [6]-[7], in which Campbell J wrote:
“Equity has a broad jurisdiction to order the payment of interest whenever a person who is under an equitable obligation to pay a sum of money fails to do so. In Hungerfords v Walker [1989] HCA 8; (1989) 171 CLR 125 at 148 Mason CJ and Wilson J said:
‘Equity has adopted a broad approach to the award of interest. It has long been accepted that the equitable right to interest exists independently of statute: Wallersteiner v Moir [No 2] [1975] 1 QB 373. Equity courts have regularly awarded interest, including not only simple interest but also compound interest, when justice so demanded, eg money obtained and retained by fraud and money withheld or misapplied by a trustee or fiduciary: La Pintada [1985] AC 104 at 116’
Some examples of the circumstances in which the equitable jurisdiction to award interest has been exercised has been set out in Mason and Carter Restitution Law in Australia, page 959-964. They include requiring a defaulting fiduciary (including a defaulting trustee) to pay interest, and requiring payment of interest when effecting restitution in integrum when a contract is rescinded. If a mortgagor came to equity to redeem, and had not given adequate notice of intention to redeem, equity would require the payment of interest in lieu of notice (Ashburner’s Principles of Equity, 2nd ed. Page 215). Equity treats and equitable charge on land as bearing interest, even if there is no specific agreement to pay interest (In Re Drax; Savile v Drax [1903] Ch 781). See also Hermann v Charny [1976] 1 NSWLR 261, at 269 per Hutley JA, with whom Glass and Samuels JJA agreed.”
In my view, in this case the Defendant did not pay the amount that he had agreed to pay to the estate within the time imposed by the Consent Orders. In these circumstances, he should pay interest to the estate for the period claimed.
As to an appropriate rate of interest, counsel for the Plaintiff submitted that the rate of interest provided by the Mortgage could be used as a guide to the rate of interest that the court would impose and that in all the circumstances, that should be the applicable rate of interest.
In re Dawson; Union Fidelity Trustee Co Ltd v Perpetual Trustee Co Ltd (1966) 84 WN (Pt 1) (NSW) 399; [1966] 2 NSWR 211 at [218], Street J wrote:
“The court’s jurisdiction in selecting the appropriate rate of interest is exercisable solely for compensatory purposes. Although orders for interest may in some cases appear to have the effect of penalising defaulting trustees, the court does not, in ordering interest and in selecting a rate, attempt in any way to impose a punishment upon the defaulter (Vyse v Foster (1872) 8 Ch App 309. The practice of imposing a higher rate in the second class of case is based upon a requirement that the defaulter compensate the estate at the mercantile rate. The lesser rate of four per cent applied in the first class of case is a special rate which represents some concession in favour of the trustee: the assessment is made by reference to interest considered to be obtainable on authorized trustee investments rather than on the higher mercantile rate.”
As a matter of discretion, taking into account all of the evidence, I am of the view that interest calculated at the rate of 5 per cent per annum ought to be paid by the Defendant, calculated for the period between 5 November 2014 and 25 February 2015. The Defendant’s counsel did not dispute that the amount that should be paid by the Defendant to the estate for interest is $1,075 and that it will be paid within 7 days. (I foreshadowed the rate of interest that I considered appropriate to the legal representatives in the event that interest was ordered to be paid. After obtaining instructions, neither party submitted that the rate that I had foreshadowed was inappropriate in all the circumstances of the case.)
Counsel for the Plaintiff sought an order that the Defendant pay the costs of the notice of motion filed on her behalf. However, he accepted that the Plaintiff had not been successful in obtaining orders in respect of all her claims. Indeed, he seemed to accept that the proceedings should not have been commenced to recover the amount of $307.01 and that it was accepted that the $2,500 was being held by the Defendant’s solicitors on behalf of the estate and, practically speaking, it was accepted that it was held on behalf of the estate. The agreement now reached as to the payment to his instructing solicitor was based upon the legal representatives accepting there was little left to do to finally administer the estate and that since the Plaintiff’s solicitor held the bulk of the estate funds, he should hold the balance.
In relation to the claim for interest, the amount of interest which I have ordered to be paid is modest in the extreme (about $1,075). Indeed, the total of the two amounts are less than fees for counsel for the Plaintiff appearing today (about which the court was informed).
In relation to the balance of the Plaintiff’s notice of motion, although it took some time, ultimately the parties were able to agree that there was little left to be done to complete the administration of the deceased’s estate, and that Mr Noonan should act for them in order to finalise the administration of the estate. They were also able to agree upon what is left to be done and upon the steps that he should take, which include:
(a) The Defendant within 7 days, is to pay to the trust account of Mr Noonan, $2,807.01 to be held in trust for the estate;
(b) The Defendant, within 7 days, is to pay to the trust account of Mr Noonan the amount of $1,075 on account of interest to be held in trust for the estate;
(c) Each of the parties, within 7 days, is to authorise Mr Noonan to arrange for the collection, and disposal, of the furniture held at Prices Furniture Wagga Wagga, and to pay all of the storage charges out of estate funds;
(d) If required, the Plaintiff is to do all things necessary to provide a Discharge of the Mortgage and a Transmission Application, each in registrable form, within 7 days of a request being made in writing to Mr Noonan;
(e) After the payment of any estate expenses properly payable, each of the parties will authorise Mr Noonan to distribute the balance of the estate funds to those beneficiaries entitled.
It follows that the Plaintiff’s notice of motion should otherwise be dismissed. As a matter of discretion, in view of the amounts involved, I propose to make no order as to the costs of the Plaintiff’s notice of motion to the intent that she bears, personally, those costs.
In relation to the balance of the Defendant’s notice of motion, counsel for the Defendant conceded that the orders sought in the Defendant’s notice of motion could not be made on the evidence presently before the court. He submitted, however, that since the Plaintiff had failed to comply with the request to provide the relevant documents until after the filing of the notice of motion, the Defendant was entitled to the costs of, and incidental to, its filing.
Even if I were to accept the submission, I am not prepared to make any order for costs of the Defendant. In my view, the evidence filed in support of the notice of motion was far from complete. Furthermore, if there were any serious concerns about the form of documents provided, these should have been pointed out and amendments made without the need for the continuation to final hearing of the notice of motion.
In the circumstances, the Defendant’s notice of motion should also be dismissed. I propose to make no order as to the costs of the Defendant’s notice of motion to the intent that he bears, personally, those costs.
I direct the parties to provide to me in Chambers, within 14 days, Short Minutes of Order that reflect these reasons for judgment. If they are in agreement, I shall make the orders in Chambers without the need for any party to appear. I stand the matter over until 3:30 p.m. on 15 March 2016.
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