Gardiner v Anita Emery as Executor and Trustee of the Estate of Pearl Nita Edwards
[2017] WASC 55
•24 FEBRUARY 2017
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: GARDINER -v- ANITA EMERY As Executor and Trustee of the Estate of PEARL NITA EDWARDS [2017] WASC 55
CORAM: TOTTLE J
HEARD: 24 FEBRUARY 2017 & ON THE PAPERS
DELIVERED : 24 FEBRUARY 2017
FILE NO/S: CIV 3000 of 2015
MATTER :Sections 29 and 42 of the Administration Act 1903 (WA), Sections 77 and 94 of the Trustees Act 1962 (WA) and Order 58 of the Rules of the Supreme Court 1971 (WA)
BETWEEN: FREDERICA GARDINER
Plaintiff
AND
ANITA EMERY As Executor and Trustee of the Estate of PEARL NITA EDWARDS
Defendant
FILE NO/S :CIV 1204 of 2016
BETWEEN :ANITA EMERY
HEIDI EMERY
PlaintiffsAND
FREDERICA GARDINER
Defendant
Catchwords:
Compensation from deceased estate - Loss of residual property - Property of negligible value - Executor seeking compensation
Costs - Compromise at hearing - Action necessary for sale of property - Defendant to pay plaintiff's costs to final hearing - No order as to costs of final hearing
Legislation:
Nil
Result:
Application for compensation unsuccessful
Second-named plaintiff awarded costs to, but not including final hearing
Category: B
Representation:
CIV 3000 of 2015
Counsel:
Plaintiff: Ms T T Htin
Defendant: Mr R A S Rowick
Solicitors:
Plaintiff: Bennett + Co
Defendant: Richard Rowick Lawyers
CIV 1204 of 2016
Counsel:
Plaintiffs: Mr R A S Rowick
Defendant: Ms T T Htin
Solicitors:
Plaintiffs: Richard Rowick Lawyers
Defendant: Bennett + Co
Case(s) referred to in judgment(s):
Nil
TOTTLE J: Pearl Nita Edwards died on 11 February 2015. She was survived by her two daughters ‑ Frederica Gardiner and Anita Emery. Anita Emery is the executor and trustee of her late mother's estate. The relationship between the sisters is acrimonious.
Two actions have been commenced relating to the deceased's estate: one directly concerned the administration of the estate, CIV 3000 of 2015; and the other concerned the sale of the deceased's apartment, CIV 1204 of 2016, which I will refer to as the partition action.
Ms Gardiner is the plaintiff in CIV 3000 of 2015 and the defendant in the partition action. Ms Anita Emery is the defendant in CIV 3000 of 2015 and the first‑named plaintiff in the partition action. Ms Heidi Emery, Anita's daughter, is the second-named plaintiff in the partition action.
On 2 March 2016, I heard the partition action. At the conclusion of the hearing, I made orders concerning the manner in which the deceased's apartment should be sold. At that hearing, I ordered that the questions of costs be reserved.
On 31 May 2016, Ms Gardiner and Ms Anita Emery attended a mediation in the CIV 3000 of 2015 proceedings. At the mediation, they signed a binding heads of agreement compromising what was left in dispute between them. The heads of agreement records, amongst other things, the agreement between Ms Gardiner and Ms Anita Emery on the question of costs in the partition action. Ms Heidi Emery, was as I have noted the second-named plaintiff in the partition action did not attend the mediation because she was not a party to the proceeding CIV 3000 of 2015. I note that a request to permit her attendance had been made by Ms Anita Emery's solicitors, but there was an objection by Ms Gardiner.
Thus, Ms Heidi Emery is not a party to the heads of agreement. The deed of settlement contemplated by the heads of agreement was not executed because Ms Heidi Emery did not agree with its terms. Ms Heidi Emery is not bound by the heads of the agreement and she seeks her costs of the partition action from Ms Gardiner.
The actions have been resolved subject to two remaining issues. First, whether the defendant in CIV 3000 of 2015, Ms Anita Emery, is entitled to be compensated from the deceased estate for furniture lost after the auction of the deceased's apartment. Second, whether Ms Gardiner should pay Ms Heidi Emery's costs of the partition action.
Is Ms Anita Emery entitled to compensation from the estate?
I turn first to the dispute about compensation for the furniture. Ms Anita Emery seeks a direction from the court that she is entitled in her capacity as executor of the estate to expend up to but not exceeding a sum of $10,400 from the final distribution of the estate to compensate her for the loss of furniture that was to be distributed to her under the agreement struck at the mediation. The issue is whether she ought to be permitted to do so. Ms Emery says that the division of the assets agreed at the mediation can no longer be achieved and that that is the reason why she should be compensated by a payment of up to $10,400.
The lost furniture comprised six dining chairs, a three-seater lounge and two occasional chairs. It was part of a set of furniture which is now incomplete. The items of furniture form part of the residual estate. They were provided to an independent stylist who was retained to decorate the deceased's apartment in anticipation of an auction.
The resale value of that furniture is negligible.
Ms Emery has not filed an insurance claim for the lost furniture, nor has she filed a police report. Her evidence is that the insurance company advised her that there was an exclusion clause in the policy that prevented a claim being made where it appears that the furniture was removed by someone who had a key.
Several people had a key to the apartment, including Ms Gardiner. There was no sign of forced entry and no damage to the apartment. Ms Emery does not allege any wrongdoing against Ms Gardiner or anyone else for that matter, but she says that as she was to be the recipient of the missing furniture it is appropriate that the estate compensate her for her loss.
Ms Emery says that the furniture had sentimental value and that she has been inconvenienced by the loss of it because she had planned to use it in her home.
The context in which this application falls to be decided is not irrelevant. The net value of the estate is approximately $5.7 million and, to date, distributions of over $2 million have been made to Ms Anita Emery and Ms Gardiner.
In my opinion, Ms Emery should not be compensated for the loss of the furniture. I have reached this conclusion for the following reasons.
First, the missing items of furniture form part of the residue of the estate. They were of negligible financial value. Thus, in my opinion, it cannot be said that the loss of these items has a materially adverse effect upon the division of the assets that was agreed at the mediation. This is especially so where each of the protagonists in this dispute has received substantial amounts of money from the estate.
Second, I do not consider that the sentimental value of the furniture is an appropriate justification for compensation. As I have mentioned, the furniture in question was not bequeathed to either Ms Emery or Ms Gardiner. It formed part of the residue of the estate. In her affidavit evidence, Ms Emery states that the furniture was of a unique style that cannot be replaced. Replacing the lost furniture with new furniture that bears no resemblance to it will not alleviate any sentimental attachment that has been prematurely severed.
Third, the evidence of the value of the missing furniture is exiguous. Ms Emery deposes to a conversation that she had with a member of staff of the La‑Z‑Boy furniture store as to the replacement value of that furniture. There is no direct evidence of the actual value of the furniture, nor is there any justification, in my opinion, for replacing what is essentially second-hand furniture with new furniture.
Fourth, Ms Emery was the executor and trustee of her late mother's estate. I appreciate that this may seem harsh but she had the responsibility to ensure that the trust property was not lost or destroyed. If the furniture went missing, as it appears to have done, then ultimately the responsibility for that rests with Ms Emery.
For those reasons, I do not propose to make a direction as sought by Ms Emery to the effect that she should be compensated for the loss of the furniture from the estate.
Should Ms Gardiner pay Ms Heidi Emery's costs of the partition action?
I now turn to the question of Ms Heidi Emery's costs of the partition action. The orders made by me following the hearing on 2 March 2016 did not reflect a decision on the merits, but rather reflected a compromise between the positions that had previously been adopted by the parties that was worked out during the hearing before me.
Ms Emery's application for costs rests essentially upon the proposition that the action was required to compel a sale.
In response, Ms Gardiner says, essentially, that she always intended to sell the apartment, but not on the basis that was proposed by the plaintiffs, and that the orders made by me did not reflect the basis that had previously been proposed by the plaintiffs. In response to that, Ms Emery says that the defendant, Ms Gardiner, did not articulate a basis upon which she was prepared to sell the property until submissions were filed on her behalf immediately before the hearing.
In my view, it was necessary for the plaintiffs to commence the action to bring about a sale of the unit and, in those circumstances, I consider that the defendant, Ms Gardiner, should pay Ms Emery's costs of the action up to but not including the costs of the hearing on 2 March 2016 and that such costs should be taxed if not agreed.
I have not ordered that the costs to be paid by Ms Gardiner should extend to the hearing itself because, as I have said, the hearing did not reflect a decision on the merits, but rather reflected what was essentially a negotiated outcome between the parties. There should be no order as to costs in relation to the hearing.
Conclusion
For the reasons which I have given, I order that:
(1)Ms Gardiner pay the costs of Ms Heidi Emery in CIV 3000 of 2015 up to, but not including, the hearing on 2 March 2016, to be taxed if not agreed.
(2)There be no order as to the costs of the application for compensation and costs.
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