Gibson v Murray

[2018] NSWSC 1067

Supreme Court

New South Wales

Medium Neutral Citation:

Gibson v Murray [2018] NSWSC 1067

Hearing dates:

11 May, 8 June 2018; further written submissions ending 2 July 2018

Date of orders:

11 July 2018

Decision date:

11 July 2018

Jurisdiction:

Equity - Real Property List

Before:

Parker J

Decision:

1.   Order that the monies held under the control of Gordon Albert Salier pursuant to the orders of the Court made on 20 October 2017 be paid out to the New South Wales Trustee & Guardian to be dealt with as an asset in the estate of the late Jeanie Gibson.

 

2.   Order that the cross-claim be dismissed.

 

3.   Order that the First and Second Defendants pay the costs of all other parties to the proceedings.

 4.   Grant liberty to the First and Second Plaintiffs to apply within 28 days of today’s date with respect to the incidence of the costs and disbursements charged by Mr Salier, and with respect to payment of further interest on the monies held by him.

Catchwords:

LAND LAW – life estate and interest in remainder – absolute gift – whether Deed of family arrangement provided for the grant of a life estate or absolute gift

 

LIMITATION OF ACTIONS – land – Limitation Act 1969 (NSW), s 36 – claim to recognise interest under Deed of family arrangement an action to “enforce an equitable estate or interest in land”

 

LIMITATION OF ACTIONS – land – Limitation Act 1969 (NSW), s 27(2) – claim to recognise an interest under Deed of family arrangement a “cause of action to recover land” – when cause of action to recover a life estate accrues

  LIMITATION OF ACTIONS – trusts – executors and administrators – alleged appropriation of estate by administrator – facts known or discoverable with reasonable diligence

Legislation Cited:

Limitation Act 1969 (NSW), ss 23, 27, 31, 36, 47, 51
Probate and Administration Act 1898 (NSW), s 45
Real Property Act 1900 (NSW), ss 41, 93, 96, 100
Uniform Civil Procedure Rules 2005 (NSW), rr 7.10, 27.1

Cases Cited:

Watson v Foxman (1995) 49 NSWLR 315
Verebes v Verebes (1995) 7 BPR 14,408

Texts Cited:

Brendan Edgeworth, Butt’s Land Law (Lawbook Co., 7th ed, 2017)

Category:

Principal judgment

Parties:

John Gibson (First Plaintiff / First Cross-Defendant)
Margaret Jaworski (Second Plaintiff / Second Cross-Defendant)
Robert George Murray (First Defendant / First Cross-Claimant)
Anne O’Brien (Second Defendant / Second Cross-Claimant)
NSW Trustee & Guardian as executor of the wills of Jeanie Gibson and John Gibson (Third Defendant / Third Cross-Defendant)
Jeanne Mackenzie (Fourth Cross-Defendant)
Ruth Mackenzie (Fifth Cross-Defendant)
Colin Mackenzie (Sixth Cross-Defendant)

Representation:

Counsel:
JE Thomson (First and Second Plaintiff)
MM Pringle (First and Second Defendant)

 

Solicitors:
Belmont Legal Services Pty Limited (First and Second Plaintiff)
IHS Law (First and Second Defendant)

  Submitting appearance:
NSW Trustee & Guardian (Third Defendant / Third Cross-Defendant)
Jeanne Mackenzie (Fourth Cross-Defendant)
Ruth Mackenzie (Fifth Cross-Defendant)
Colin Mackenzie (Sixth Cross-Defendant)

File Number(s):

2017/141427

Publication restriction:

Nil

Judgment

1. This is a family dispute between cousins concerning a property at Birchgrove Road, Balmain. For convenience, and without disrespect, I will on occasion refer to the members of the family by their Christian names.

2. The Balmain property was acquired in 1929 by Robert Murray and his wife, Jeanie Howie Murray, as their family home. The property was registered in their names as joint tenants in equal shares. I will refer to them as “Grandfather Murray” and “Grandmother Murray”.

3. Grandfather and Grandmother Murray had three children: Robert, born in January 1916; Mary, born in February 1920; and Jeanie (known as “Jean”), born in January 1925. I will refer to them as the “Murray siblings”.

4. Jean married John Patrick (known as “Jack”) Gibson in 1950. They moved to the Balmain property, living with Grandfather and Grandmother Murray. Grandfather Murray died in 1962 at the age of 74 and Grandmother Murray became, by survivorship, the sole registered proprietor of the property.

5. Jack and Jean Gibson continued to live at the property after Grandfather Murray’s death, helping to look after Grandmother Murray. Grandmother Murray died in 1976 at the age of 84. After her death, no will could be found. Jean obtained letters of administration on intestacy. The Balmain property was transferred into her name as administratrix in 1977. Later that year, the administration was wound up. The property remained in Jean’s name. Jack and Jean continued to live at the property for the next thirty-seven years until December 2014 when Jean died. By her will she appointed the third defendant, the New South Wales Trustee & Guardian (“NSW Trustee”), as her executor, and left her estate to Jack.

6. Jack Gibson survived Jean by only five months, dying in May 2015. He also appointed the NSW Trustee as his executor. He left his estate to their two children. I will refer to them as the “Gibson Grandchildren”.

7. Jean Gibson had outlived her siblings. Her brother, Robert, died in 1990. His estate passed to his widow, Joyce Edith Murray. On her death in 2009 her estate passed to their two surviving children. I will refer to them as the “Murray Grandchildren”. Mary died in September 2001. Her estate passed to her three children. I will refer to them as the “Mackenzie Grandchildren”.

Issues for determination

8. These proceedings have arisen because the Murray Grandchildren claimed, after learning in May 2016 that Grandmother Murray had died intestate, that they were entitled to one-third of the Balmain property, representing the share of their father, Robert.

9. The Gibson Grandchildren’s response was that it was always intended that Jean Gibson would inherit the Balmain property, in recognition of the fact that it was she and her husband Jack who looked after Grandmother Murray during her declining years. The Gibson Grandchildren said that following Grandmother Murray’s death, when no will could be found, the three Murray siblings (Robert, Mary and Jean) made a formal agreement to this effect by way of Deed of family arrangement.

10. Some solicitors’ correspondence from 1977 has survived and suggests that a Deed of family arrangement was prepared and executed. But if so, the Deed cannot be found.

11. The proceedings have followed an unusual course. In August 2016 the Murray Grandchildren lodged a caveat over the property claiming an “equitable estate as to part” of it. They stated their claim to be as “derivative beneficiaries” of Grandmother Murray’s estate, through the estates of their father, Robert Murray, and his widow Joyce. A lapsing notice, which would have required the Murray Grandchildren to commence proceedings so as to establish their interest, was not issued. Instead, the Gibson Grandchildren commenced proceedings as plaintiffs, naming the Murray Grandchildren and the NSW Trustee as defendants, seeking declaratory relief and the removal of the caveat.

12. Subsequently, consent orders were made on 20 October 2017 in the exercise of the Court’s power under Uniform Civil Procedure Rules 2005 (NSW) r 27.1 (‘UCPR’) appointing Gordon Albert Salier, solicitor, to sell the property. This has occurred and the proceeds totalling approximately $2.34 million were paid into a bank account controlled by Mr Salier pending the outcome of the proceedings. In the course of the hearing, a consent order was made on 23 May 2018 for the payment of one-third of those monies out to the Gibson Grandchildren (on the basis that they would receive at least one-third of the proceeds whatever the outcome of the proceedings). The balance remains under the control of Mr Salier.

13. The issue raised in these proceedings concerns the entitlements of the Murray siblings to the estate of Grandmother Murray. In the ordinary course, the claims would have been litigated between the executors of the Murray siblings’ estates. Strictly speaking, neither the Gibson Grandchildren nor the Murray Grandchildren (nor the Mackenzie Grandchildren) have any direct interest in the claims in these proceedings at all. The NSW Trustee has, as I have mentioned, been joined as the third defendant in the proceedings, but filed a submitting appearance and has not taken an active role on behalf of Jean Gibson’s estate. Presumably this is the result of an arrangement with the Gibson Grandchildren. The estate of Robert Murray, who died twenty eight years ago, has long since been wound up and was not represented in the proceedings. This point was mentioned by counsel for the Gibson Grandchildren at the commencement of the hearing on 11 May and I made an order under UCPR r 7.10, appointing the Murray Grandchildren as representatives of their father’s estate for the purpose of these proceedings.

14. In substance, it is the Murray Grandchildren who are the moving parties in these proceedings. Given that limitation is in issue in the proceedings, I considered it was essential that there should be formal pleadings setting out the claims made by the Murray Grandchildren on behalf of their father’s estate, and the defences to those claims.

15. In accordance with directions I made at the hearing on 11 May, a cross-claim was filed on behalf of the Murray Grandchildren naming the Gibson Grandchildren, the NSW Trustee and the Mackenzie Grandchildren as cross-defendants. By that cross-claim, the Murray Grandchildren seek orders for the distribution of one-third of the proceeds of the property to each of themselves, the Gibson Grandchildren and the Mackenzie Grandchildren. The Murray Grandchildren allege that the Deed of family arrangement “most likely” provided for a life estate in favour of Jean Gibson and “may have” included a life estate for Jack Gibson. Alternatively, if there is insufficient evidence to establish the content of the Deed, they contend that the Balmain property must be treated as having remained an unadministered asset in Grandmother Murray’s estate which passed to the Murray siblings in equal shares on intestacy.

16. A defence to the cross-claim has been filed for the Gibson Grandchildren. They deny the Murray Grandchildren’s claims about the Deed of family arrangement. They contend that the Court should be satisfied by secondary evidence that the Deed of family arrangement provided for the Balmain property to pass to their mother Jean. Alternatively, they contend that there was a conventional estoppel between the Murray siblings to this effect. They further contend that any claim against Jean Gibson’s estate is now statute barred.

17. A submitting appearance was filed for the Mackenzie Grandchildren. Like the NSW Trustee, they have not sought to play any active role in the proceedings.

Analysis of evidence

18. Documentary evidence: Grandmother Murray died on 1 August 1976. The letters of administration were issued to Jean Gibson in January 1977. The estate was valued at $25,000. Of this, $24,000 represented the estimated value of the Balmain property. The only other significant asset was approximately $1,000 in a Commonwealth Savings Bank account. The transmission application pursuant to which Jean was registered as the proprietor of the Balmain property was signed and lodged in March 1977. The application described her as entitled to be registered as administratrix of Grandmother Murray’s estate.

19. The firm of Mervyn Finlay, Thorburn & Marshall acted for Jean Gibson in connection with the estate. The matter was handled by Ms Diana Thorburn of that firm. Some of Ms Thorburn’s correspondence to Jean Gibson from 1976 and 1977 was in evidence before me. The correspondence includes a letter dated 7 June 1977 which stated that the estate accounts and affidavit in support had been lodged with the Probate Registrar for passing. The letter confirmed that this completed the formal administration of the estate and went on to set out a narrative bill of costs. This bill had three headings: “letters of administration”; “transmission application”; and “estate generally and accounts”. The third section contained the following notation as part of the narrative:

Attending preparation of Deed of family arrangement re your interest in the Estate. Attending all parties signing same.

20. Although this notation suggests that a Deed of family arrangement was not only prepared, but was signed, the correspondence contains no indication of its content. None of the parties to these proceedings has been able to produce the Deed or a copy of it.

21. The notation appeared after a description of the work done on closing the deceased’s savings bank account and applying the proceeds towards payment of death duties on the estate. Other correspondence shows that payment was made to the Commissioner of Stamp Duties in February. The next task referred to after the notation concerning the Deed of family arrangement was the preparation of the estate accounts, which were presumably completed shortly before they were lodged in late May or early June. Presumably the Deed was prepared and signed at some point between February and May.

22. The firm of Mervyn Finlay, Thorburn & Marshall still exists and Ms Thorburn is still in practice. But she has not retained any documents from the work done on Grandmother Murray’s estate and, I assume, has no recollection of it.

23. Searches were undertaken of the Court’s records concerning the estate. The file for Jean Gibson’s application for appointment as administratrix still exists. But the affidavits on the file are in standard form and do not say anything about the background to Jean’s application for appointment as administratrix. As already mentioned, Ms Thorburn’s letter of 7 June 1977 indicates that estate accounts were filed, but despite searches those accounts have not been found in the records of the Court.

24. Murray Grandchildren’s witnesses: Robert and Joyce Murray had three children: Robert George (born in August 1946), the first defendant; Neil (birth date unknown); and Anne (born in May 1954), the second defendant. The family lived at North Ryde.

25. Robert married in 1969 and moved to Campbelltown. In 1980, he and his wife moved to Mittagong. Neil married but died of leukaemia in September 1979. He left no children. Anne began a relationship with Alan Robert O’Brien in July 1977. They became engaged in mid-1978 and in early 1979 moved to their own house at Denistone East. They married in 1979. As mentioned, Robert died in 1990 and Joyce died in 2009.

26. Evidence was given in the Murray Grandchildren’s case by Robert, Anne and Alan. Each of them was cross-examined.

27. Robert described family visits to his grandparents’ house at Balmain. The Gibsons were there as well. Members of the family would go to a local bowling club. These memories went back to before the death of Grandfather Murray, in 1962. Thereafter Robert seems to have visited less often, particularly after he himself got married.

28. Anne gave some evidence of going on the family visits up until about 1966 or 1967, although she did visit her grandmother occasionally after that. She said that her aunts, Jean and Mary, and her mother, Joyce, got on well with each other and spoke regularly on the telephone. She said that after her grandmother’s death they went out regularly to celebrate each other’s birthdays.

29. Alan said in his oral evidence that when he began his relationship with Anne, her parents were overseas on an extended holiday. He did not meet them until after they returned, which would have been in August or September 1977, or perhaps later.

30. Anne gave evidence that on one or possibly two occasions she was told by her mother Joyce of Jean complaining about the costs of council rates for the Balmain property. Anne said that her mother was irritated by this and remarked that the Gibsons did not have to pay rent or pay off a mortgage.

31. There was a close family relationship between Robert and Joyce, their children and their children’s spouses. Each of Robert, Anne and Alan gave evidence that neither Robert nor Joyce ever mentioned to them any arrangement between the Murray siblings for Jean to be given the Balmain property.

32. Anne gave evidence that after the dispute arose with the Gibson Grandchildren she went through papers of her father’s that she had retained. These included references, school reports, historical documents and costings for the building of the house at North Ryde as well as documents from 1948 relating to a boundary fence agreement with the neighbours at North Ryde. The papers also included some financial records of her father’s retirement assets, and documents evidencing an interest free loan to Neil.

33. The only document found by Anne concerning dealings between her father and his parents or siblings was an undated undertaking to repay a sum of £850 at the rate of £8 per month advanced to them for the purpose of building the house at North Ryde. The money was to be paid into a bank account in the name of the three Murray siblings as trustees for the benefit of their parents during their parents’ lifetimes; afterwards, “any residue” was to be equally divided between the siblings. There is no direct evidence as to whether this loan was repaid, or, if so, when; but assuming that the house was built in the second half of the 1940s, if the loan had been repaid at the agreed rate it would have been paid off by about the mid-1950s.

34. Gibson Grandchildren’s witnesses: Jack and Jean Gibson had two children, the first plaintiff, John (born in December 1952); and the second plaintiff, Margaret (born in August 1955). John is married to Kathleen McCarthy. Margaret is married to Richard Czeslaw Jaworski. Each of John, Kathleen, Margaret and Richard gave evidence in the Gibson Grandchildren’s case, and were cross-examined.

35. John gave evidence that his mother told him that when Grandmother Murray’s estate was being settled, there was supposed to be a will under which she (Jean) was to receive the Balmain property, but the will could not be found. She told him that in order to resolve the issue of the missing will she entered into a formal agreement (inferentially, the Deed of family arrangement) with her siblings whereby it was agreed that the property would go to her. She told him that this was in recognition of the care which she and Jack had provided to her parents and also to recognise the fact that his grandparents had given both Robert and Mary cash gifts when they married but no such cash gift had been given to Jean and Jack. She told him that she and Jack took Mary, Robert and Joyce out to dinner to “seal the deal” when the agreement was finalised.

36. John said that during the last years of his mother’s life she frequently spoke about what was to happen to the house, mentioning the lost will and the subsequent family arrangement and expressing appreciation for her siblings’ co-operation. She frequently expressed the wish that either John or Margaret would “continue the family tradition” and live at the Balmain house.

37. Margaret gave evidence to similar effect. She also explained where the 1976-77 solicitors’ correspondence came from. In the last years of her life, Jean suffered from dementia. Margaret said that she came upon Jean one day tearing up old documents. Margaret asked if she could look at the documents as they might be interesting from a family history point of view and took them away. She found the solicitors’ correspondence among the documents. She did not think at the time to look through the documents which had already been torn up.

38. Margaret also said that after Jean’s death, a strongbox was found which contained the certificate of title for the Balmain property, but no other relevant documents. The certificate of title was sent to the NSW Trustee as executor.

39. Kathleen gave evidence that she was told “many times” by Jean that Grandmother Murray’s will had gone missing but that she (Jean) owned the Balmain property; that it would go to John and Margaret; and that she hoped that one or other of them would live there after she died.

20. Richard gave evidence of a conversation with Jean and her brother Robert at Christmas 1979 or shortly afterwards. Richard said he was told about the family history and in particular how Jean had looked after Grandmother Murray after Grandfather Murray’s death. Richard said he was told by Robert that he and his sister Mary agreed for the house to go to Jean. Richard said he remembered this conversation because he was impressed by the generosity of Jean’s siblings. He also said he and Margaret were having some trouble obtaining finance to buy a house and he was struck by the Gibsons’ good fortune.

21. There was some evidence from the Murray Grandchildren calling Richard’s account into question. Anne said she did not remember socialising at Christmas in 1979 at all. She said that her father was very upset by Neil’s death which had happened only about three months beforehand. Alan said that Robert was a reserved man who did not speak about financial matters outside his immediate family. But evidence in reply from Margaret established without any doubt that her wedding to Richard, which occurred in November 1979, was attended by Robert and his family; in fact Robert made a speech at the wedding. I see no reason to doubt that Robert would have attended the family gathering at the end of 1979 or the beginning of 1980 described by Richard.

22. It was formally put to each of the witnesses by counsel for the defendants that their evidence concerning conversations with Jean (and, in the case of Richard, his conversation with Jean and Robert) were incorrect. The witnesses reaffirmed their evidence. Each conceded, however, that (apart, in Richard’s case, from the alleged conversation involving Robert in late 1979 or early 1980) neither Robert nor Mary had ever told them about the supposed gift of the property to Jean.

23. Email from Mackenzie Grandchildren: After the dispute arose between the Murray Grandchildren and the Gibson Grandchildren in mid-2016, there were some discussions with the Mackenzie Grandchildren, who live in South Australia. In evidence is an email purporting to be from the three Mackenzie Grandchildren which was sent by one of them to John Gibson in November 2016. The email stated:

We have kept quiet up to now about this situation because frankly, we have not known what to say.

Both sides of this dispute seem to look to us for support. We do not wish to take sides.

We believe that our Mother and Uncle Robert wanted to make sure that Uncle Jack and Auntie Jean did not have to move in their lifetime. This was achieved without dispute.

We have faith that the law in NSW governing the allocation of property left by a person, who has not left a will, is perfectly satisfactory.

We are sure that our parents and our Nanna would be distressed by the thought of our family in dispute, as we are.

We wish all concerned come to a satisfactory settlement of this matter but request that we are kept out of the dispute.

44. The reference to Mary Mackenzie and Robert Murray wanting to make sure that Jack and Jean Gibson did not have to move is consistent with the existence of the Deed of family arrangement. Counsel for the Murray Grandchildren emphasised that the email referred only to the Gibsons not having to move during their lifetime. Counsel submitted that the email supported the Murray Grandchildren’s case that the family arrangement provided for a life interest only.

45. The email was tendered without objection and is therefore in evidence for what it is worth. But I do not think it is worth much. The email speaks of the author having a belief. It does not identify the source of the belief. If one or other of the Mackenzie Grandchildren were able to give admissible evidence on the question (which, in the circumstances of the case, would include evidence of statements made by Mary Mackenzie, now that she has died) then that could have been done by affidavit in the usual way. Such evidence could have been given on behalf of the Mackenzie Grandchildren had they wished to participate in the proceedings, or on behalf of the Murray Grandchildren if they did not. That has not happened.

46. The main reason I considered it appropriate to order the joinder of the Mackenzie Grandchildren was that I thought, having regards to the terms of the email, that the Mackenzie Grandchildren might have some claim, based on the belief stated in the letter, to a one-third interest in the property through their mother, Mary. Given the reference to the law of New South Wales being “perfectly satisfactory” I was not sure that they appreciated that they could not rely on the Court to articulate that claim on their behalf. But now that they have been formally joined and filed a submitting appearance, I think I must proceed on the basis that they do not wish to advance any such claim on their own behalf. In the circumstances, I do not think that the belief stated in the email is of any weight in resolving the factual issues in this case.

Limitation

47. The Murray Grandchildren put their claim to a one-third share of the Balmain property through their father’s estate in two ways. Their primary contention is that the Court should be satisfied that the Deed of family arrangement provided only for a life estate, and their father had been entitled to a one-third remainder interest. As a fall back, the Murray Grandchildren contended that if the Court could not be satisfied of a life estate it could not be satisfied that the family arrangement was an absolute gift either, and accordingly that the property remained in Grandmother Murray’s estate. On this analysis the Court was asked to make an order for administration de bonis non administratis of the proceeds of the Balmain property so that one-third of those proceeds could be distributed in accordance with the entitlement which arose on Grandmother Murray’s intestacy.

48. The two ways in which the Murray Grandchildren put their claims give rise to two separate limitation issues. In answer to the claim of a remainder interest, the Gibson Grandchildren relied on the bar created by the Limitation Act1969 (NSW), s 27(2). That provides:

27   General

…

(2)   …an action on a cause of action to recover land is not maintainable by a person other than the Crown if brought after the expiration of a limitation period of twelve years running from the date on which the cause of action first accrues to the plaintiff or to a person through whom the plaintiff claims.

49. The Limitation Act, s 23, provides:

23    Equitable relief

Sections 14, 16, 17, 18, 20 and 21 do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction or for other equitable relief.

50. The Limitation Act, s 36, provides:

36   Equitable interest

(1) Subject to section 23, this Act applies to an action on a cause of action to enforce an equitable estate or interest in land in like manner as it applies to an action on a cause of action to recover land by virtue of a legal estate or interest in land.

(2)   For the purposes of this Act, but without limiting the generality of subsection (1), a cause of action to enforce an equitable estate or interest in land accrues in the like manner and circumstances and on the same date as a cause of action to recover the land would accrue if the estate or interest were a legal estate or interest.

51. An estate in remainder is a legal interest in land. It is capable of being registered under the Torrens system: Real Property Act 1900 (NSW), ss 41(1), 100(2). On the Murray Grandchildren’s case, the Deed of family arrangement provided for Jean to complete the administration and pay any estate liabilities or costs which could not be met out of the liquid assets of the estate, and for her to receive a life interest, with a remainder to all three of the Murray siblings. If established, that would have been a specifically enforceable agreement which would have entitled Robert Murray to an order requiring Jean Gibson to register a transfer in his favour of a one-third estate in remainder. In other words, Robert Murray would have had a one-third equitable remainder interest in the property. In my view the present suit is an action on a cause of action “to enforce” an equitable estate on interest in land for the purposes of s 36(1): Verebes v Verebes (1995) 7 BPR 14,408 at 14,411. The Murray Grandchildren’s claim is therefore subject to the twelve year limitation period prescribed by s 27(2).

52. On the Murray Grandchildren’s case, the entitlement to specific performance arose at the time the parties entered into the Deed of family arrangement in 1977. The question is when the cause of action for “the recovery of” that interest accrued for the purposes of s 27(2).

53. The starting point is to ask when a cause of action for the “recovery” of a legal remainder interest accrues. That is determined by Limitation Act, s 31, which provides:

31   Accrual – Future Interests

Subject to section 67, where:

(a) the estate or interest claimed in an action on a cause of action to recover land is at any time an estate or interest in reversion or remainder or any other future estate or interest, and

(b) no person is, at any time after the date on which the estate or interest claimed becomes a present estate or interest and before the date on which the action is brought, in possession by virtue of the estate or interest claimed,

the cause of action accrues on the date on which the estate or interest claimed becomes a present estate or interest.

54. Section 36 requires that the application of s 27(2) to an equitable interest should be equivalent to that which applies for the equivalent legal interest. I think it follows from s 31 that proceedings to enforce an equitable remainder interest can only be brought once the interest in question would fall into possession. Consequently, if I were satisfied that the Deed of family arrangement in fact provided for Robert Murray to have a remainder interest in the property, there would be no defence under the Limitation Act to the assertion of that interest.

55. It might be asked why, given that the right to specific performance accrued as long ago as 1977, Robert or his estate should have been entitled to delay for a period of 37 years before asserting the interest. I think the answer is that such a delay in asserting an equitable interest may give rise to a defence of laches. But that is a separate defence entirely and has not been invoked in this case.

56. The secondary way in which the Murray Grandchildren put their case gives rise to separate considerations. The relevant provision is s 47 of the Limitation Act, which deals with claims against trustees. The term “trustee” is defined to include an executor or administrator (s 11). Section 47 provides:

47   Fraud and conversion; trust property

(1)   An action on a cause of action:

(a)    in respect of fraud or a fraudulent breach of trust, against a person who is, while a trustee, a party or privy to the fraud or the breach of trust or against the person’s successor,

(b)   for a remedy of the conversion to a person’s own use of trust property received by the person while a trustee, against that person or against the person’s successor,

(c)    to recover trust property, or property into which trust property can be traced, against a trustee or against any other person, or

(d)    to recover money on account of a wrongful distribution of trust property, against the person to whom the property is distributed or against the person’s successor,

is not maintainable by a trustee of the trust or by a beneficiary under the trust or by a person claiming through a beneficiary under the trust if brought after the expiration of the only or later to expire of such of the following limitation periods as are applicable:

(e)    a limitation period of twelve years running from the date on which the plaintiff or a person through whom the plaintiff claims first discovers or may with reasonable diligence discover the facts giving rise to the cause of action and that the cause of action has accrued, and

(f)    the limitation period for the cause of action fixed by or under any provision of this Act other than this section.

(2)    Except in the case of fraud or a fraudulent breach of trust, and except so far as concerns income converted by a trustee to his or her own use or income retained and still held by the trustee or his or her successor at the time when the action is brought, this section does not apply to an action on a cause of action to recover arrears of income.

57. On the Murray Grandchildren’s fall-back case, this provision would be engaged. In the absence of any agreement between the Murray siblings, Jean Gibson’s obligations as administratrix were to convert the estate into cash for the purpose of the administration, pay all debts and expenses of the estate, and distribute the proceeds in accordance with the statutory order of distribution. An administrator may have power to postpone conversion or to distribute assets in specie but he or she has no obligation to do so.

58. In the present case, there were insufficient assets in the estate (without recourse to the Balmain property) to discharge the estate’s liabilities for death duties and to meet the legal costs of the administration. It follows, on the Murray Grandchildren’s case, that Jean’s obligation would have been to sell the property, discharge all liabilities and distribute the proceeds equally among the Murray siblings. Such an obligation would have arisen in 1977. On that analysis, Jean’s retention of the property as her home from 1977 onwards was a breach of her obligations as administratrix, and the cause of action to recover the Balmain property as ‘trust property’ which flowed from that breach would have accrued at that time.

59. All relevant facts were either known, or could with reasonable diligence have been known, to Robert in 1977. The limitation period has therefore run. In any event, the thirty-year time period to bring proceedings has well and truly passed (see Limitation Act, s 51(1)). It follows that the Murray Grandchildren’s alternative case is statute barred.

60. Counsel for the Murray Grandchildren referred on a number of occasions to the fact that the transmission application, which was lodged in 1977, described Jean as being registered as administratrix. Counsel pointed out that there had been no subsequent transfer lodged pursuant to the Deed of family arrangement recording Jean’s absolute ownership.

61. It was not clear to me what significance counsel’s observation has for the Murray Grandchildren’s case. Counsel may have been suggesting that in some way Jean’s status as administratrix was protected or carried forward by being recorded under the Real Property Act. If so, I do not agree.

62. The Probate and Administration Act 1898 (NSW), s 45, provides:

45   Real estate held by testator or intestate to vest in executor or administrator, subject to equities

All real estate held by any person in trust or by way of mortgage, and vesting as aforesaid under this part, shall as from the death of such person vest in the person’s executor or administrator, subject to the trusts and equities affecting the same.

63. The transmission application was lodged pursuant to the Real Property Act, s 93, which provides:

93   Transmission on death of proprietor

(1)    Upon the death of a registered proprietor, the executor, administrator or other person claiming consequent upon the death, will or intestacy of that deceased proprietor, or otherwise, to be entitled to be registered as proprietor may apply in the approved form to the Registrar-General to be registered as proprietor of all or part of the estate or interest of that deceased proprietor.

(2)    An application under subsection (1) shall be:

(a)    supported by such evidence as the Registrar-General may require, and

(b)    accompanied by the consent of the executor or administrator of the deceased proprietor where the applicant claims otherwise than as executor, administrator or trustee unless the Registrar-General thinks fit to dispense with that consent.

(3)   The Registrar-General, on being satisfied that an applicant under subsection (1) is entitled to the estate or interest claimed in the application, shall record the applicant in the Register as proprietor of that estate or interest.

(4)    Where, pursuant to an application under subsection (1), a person is registered as proprietor with the consent of another person given under subsection (2) (b), the person who has given the consent shall, for the purposes of section 129 (2) (f), be deemed to have become, immediately before registration of the applicant as proprietor, registered as proprietor of the land specified in the application and to have transferred that land to the applicant.

64. Section 96 provides:

96   Trusts protected

A fiduciary registered as proprietor pursuant to section 93 shall hold the estate or interest in respect of which the fiduciary is so registered in trust for the persons for whom and purposes for which that estate or interest is applicable by law, but for the purposes of any dealing therewith the fiduciary shall be deemed to be absolute proprietor thereof.

65. The transmission application made it clear that Jean was being registered in her capacity as administratrix, and the application upon registration became part of the Register. But Jean’s name would have been recorded in the folio as owner without any reference to that capacity. It would have been futile and probably impossible for her to register a further transfer from herself “as administratrix” to herself as “absolute owner”. In short, Jean’s status as administratrix was recorded in the transmission application which was part of the Register but it was not recorded on the relevant folio. Section 42 creates indefeasibility against interests not recorded on the folio, not against interests not discernible from the Register.

66. In my view, the effect of s 45 of the Probate and Administration Act and s 93 of the Real Property Act was that Jean’s obligations as administratrix were not prejudiced by the registration of the property in her name. But this did not amount to some sort of qualification of her legal status as registered proprietor. This is underlined by the deeming effect of s 96. I therefore do not see how the registration of the transmission application could give Jean’s equitable obligations as administratrix some additional or continuing force or “indefeasibility” which would protect them against the effect of the Limitation Act. I do not think that it adds anything to the case.

Deed of family arrangement

67. As I have mentioned, Ms Thorburn’s letter of 7 June 1977 expressly referred to a Deed of family arrangement having been drawn up and signed. It was common ground between counsel for the parties that such a Deed had in fact been entered into between the Murray siblings concerning the Balmain property. I think a finding to this effect is inevitable. It is hardly likely that Robert and Mary would simply have allowed Jean and Jack to stay in the Balmain property if Jean had only been entitled to one-third of the estate on intestacy and no other arrangement had been made. The evidence of Anne about Jean’s complaint to her mother Joyce shows that it was understood, and, despite the irritation expressed by Joyce, accepted, that Jean was entitled to live at the property rent free.

68. The real question is what were the terms of the family arrangement. Counsel for the Murray Grandchildren submitted that I should infer that the arrangement was for a life estate in favour of the survivor of Jean and Jack. Counsel for the Gibson Grandchildren submitted that on the evidence the arrangement involved an absolute gift in favour of Jean.

69. I accept the evidence of the Murray Grandchildren’s witnesses that they were never told by Robert or Joyce of any arrangement whereby the property was given to Jean. But I do not think this evidence goes very far. They were never told that the arrangement was for a life estate either. Apart from the oblique reference in Anne’s evidence to Jean’s complaints, there was no evidence from any of the Murray Grandchildren’s witnesses that they were told about the arrangement at all. From the evidence about Robert’s character, this is not surprising. The arrangement was one between himself and his siblings. I see no reason why he would have treated it as a secret, but equally I see no reason why he would have brought it up afterwards. In particular I see no reason why he would have told Alan about it; the arrangement would have been made between February and May 1977, before Robert and Alan even met.

67. Similarly, I accept that the Murray Grandchildren only recently became aware that Grandmother Murray’s estate passed on intestacy rather than being dealt with by will, but this is of no real significance for present purposes. I am quite sure that Robert would have been fully aware of the intestacy.

68. Some of the factors relied upon by the Gibson Grandchildren in their case are, properly understood, also neutral. The circumstances that Jean and Jack lived at the Balmain property, paid for the maintenance and repair of the house, and paid the outgoings, were equally consistent with a life estate as with an absolute gift of the property to Jean. It is clear from the solicitors’ correspondence that the monies in Grandmother Murray’s bank account when she died were insufficient to discharge all of the death duties on the estate and to meet the solicitors’ costs, and the balance was paid by Jean out of her own pocket. This too is equally consistent with a life estate as it is with an absolute gift.

69. But the fact remains that the Gibson Grandchildren led evidence from four different witnesses, three of whom (John, Margaret and Kathleen) deposed to repeated statements by Jean to the effect that her siblings had given her the property, and the fourth of whom (Richard) deposed to a conversation to that effect involving both Jean and her brother, Robert. None of this evidence, in my view, is inherently implausible. In particular, I do not consider that Robert’s supposed reticence in financial matters is enough, of itself, to cast doubt on the alleged conversation with Richard.

70. Counsel for the Murray Grandchildren submitted that the Court should be cautious in accepting testimony from the Gibson Grandchildren’s witnesses of the effect of long-ago conversations when that testimony is not supported by contemporaneous evidence. Counsel called in aid the well-known statement of principle by McLelland CJ in Eq in Watson v Foxman (1995) 49 NSWLR 315 at 319. Watson concerned a claim for damages for misleading and deceptive conduct based on alleged oral representations, whereas the present case is concerned with secondary evidence of a lost document. Nevertheless, the frailties of recollection, and the possibility that evidence will be affected by reconstruction and self-interest (which may be quite unconscious), must be borne in mind in this case.

71. But, while counsel formally put to the witnesses that their evidence was incorrect, the cross-examination on this issue was perfunctory. Counsel did not probe the accounts given by the witnesses with a view to establishing whether the relevant conversations took place in or around 1977, or only much later. Nor did counsel seek to elicit the context of the statements attributed to Jean. Most importantly, in my view, counsel did not put to the witnesses the distinction between a life estate and an absolute gift, which is the critical distinction for the purposes of determining the present issue. Had that been done, details might have been elicited to blunt the effect of the witnesses’ testimony. But by the same token, their testimony might have been enhanced. Counsel evidently considered that exploring the issue was not worth the risk. In these circumstances, I think that counsel’s submission about the dangers of accepting the evidence carries less weight than it would otherwise have carried.

72. One aspect of the statements attributed to Jean by her son, John, requires specific mention. The loan acknowledgement from Robert’s papers provided that the repayment was to benefit Grandmother and Grandfather Murray, and after their deaths the Murray siblings equally. It is quite different from the gifts which Grandfather and Grandmother Murray supposedly made to Robert and Mary when they married, but not Jean, according to Jean’s account as remembered by John (see [35] above). But the loan acknowledgement is not necessarily inconsistent with Jean’s reported account. It may have been separate from the marriage gift referred to by Jean. And the equal division of the “residue” of the repayment account may have reflected previous testamentary plans of Grandfather and Grandmother Murray which had long since ceased to be current when Grandmother Murray died in 1976. The circumstances are so equivocal that I do not think, in the end, the loan acknowledgement document has much weight one way or the other.

73. Overall, I think the evidence does not affirmatively establish that the family arrangement was for a life estate only. Whatever might ultimately be said about the weight of the evidence given by the Gibson Grandchildren’s witnesses, the focus for present purposes must be on the case presented by the Murray Grandchildren’s witnesses. There was in fact no evidence which directly suggested that there had been any agreement for any form of life estate.

74. I say “any form of life estate” because the Murray Grandchildren’s case identified a number of possibilities. As I have already noted, counsel submitted that I should be satisfied that there was a life interest not only in favour of Jean, but in favour of Jack as well, so that the supposed remainder interest only fell into possession after Jack’s death.

75. There were other difficulties also with the formulation of the alleged remainder interest. An assumption underlying the Murray Grandchildren’s claim was that their father’s supposed entitlement continued to subsist after he pre-deceased Jean. While that could certainly have been achieved by appropriate words of limitation, it is not the only form in which the remainder might have been granted. The words of limitation might have provided for the remainder interest to go directly to Robert’s children if he pre-deceased Jean. They might even have provided for Robert’s interest to lapse entirely if he pre-deceased Jean.

76. In my view, all of these possibilities indicate how completely speculative the Murray Grandchildren’s case is. There is no way in which the Court can properly choose one over the other. That alone means, in my view, that the Murray Grandchildren’s case must fail.

77. Finally, practical considerations also tell against the Murray Grandchildren’s case. Had the Deed provided for a life estate in favour of Jean (or the survivor of Jean and Jack) this could, and should, have been reflected in a dealing registered on the title. But no such dealing was registered, and Ms Thorburn’s letter of 7 June indicated that there was nothing further to do in the administration. I think it is unlikely that, had the Deed provided for a life estate, that fact would not have been mentioned as unfinished business in the correspondence. I also think it unlikely that Robert Murray would not have retained a copy among his papers.

78. Given my conclusion at [59] above that the Murray Grandchildren’s alternative case is statute barred, it is unnecessary to decide whether the evidence affirmatively supports the Gibson Grandchildren’s contention that the Deed of family arrangement provided for an absolute gift. Nonetheless, I will for completeness record my view on the question.

79. I think there are only two realistic possibilities, a life estate or an absolute gift. The evidence of the witnesses, coupled with the absence of any conveyancing steps or solicitors’ advice concerning a life estate, is in my view enough to establish that the Murray siblings agreed in 1977 to an absolute gift of the property to Jean. If it were necessary to do so, I would find for the Gibson Grandchildren on this basis.

80. There appears to be little or nothing in the evidence to support the conventional estoppel argument put forward by the Gibson Grandchildren. Given my other conclusions, however, it is not necessary to consider that argument any further.

Conclusions and orders

84. For these reasons, I have concluded that:

1. the Murray Grandchildren’s primary contention, that the Deed of family arrangement granted Jean Gibson a life estate in the Balmain property with an interest in remainder to Robert Murray, is not barred by the Limitation Act, s 27(2);

2. but the contention fails on the facts;

3. the Murray Grandchildren’s alternative contention, that Robert Murray was entitled to receive a one-third share of the proceeds of the Balmain property in accordance with the statutory distribution on intestacy, is statute barred;

4. in any event, I am satisfied that the Deed of family arrangement provided for full ownership of the Balmain property to be retained by Jean Gibson, and accordingly the Murray Grandchildren’s alternative contention fails on the facts.

85. The Gibson Grandchildren have succeeded in resisting the Murray Grandchildren’s claims in these proceedings. Counsel for the Murray Grandchildren contended that, in this event, the costs of all parties should be paid out of the net proceeds from the sale of the property on an indemnity basis. I do not agree. These proceedings were adversarial in nature. The ordinary rule that costs follow the event should apply.

86. By making their claims to the Balmain property, the Murray Grandchildren made it necessary for Court to make orders appointing Mr Salier to sell the property under UCPR, r 27.1. The property may well have been sold in any event. But the making of the claims and the appointment of Mr Salier may have delayed the sale or otherwise resulted in higher costs being incurred. It may also have delayed the distribution of proceeds in a way which was not fully compensated for by the interest earned on the controlled monies account. I will grant liberty for the Gibson Grandchildren to apply, should they wish, for supplementary relief in this regard.

87. The orders of the Court are:

1.   Order that the monies held under the control of Gordon Albert Salier pursuant to the orders of the Court made on 20 October 2017 be paid out to the New South Wales Trustee & Guardian to be dealt with as an asset in the estate of the late Jeanie Gibson.

2.   Order that the cross-claim be dismissed.

3.   Order that the First and Second Defendants pay the costs of all other parties to the proceedings.

4.   Grant liberty to the First and Second Plaintiffs to apply within 28 days of today’s date with respect to the incidence of the costs and disbursements charged by Mr Salier, and with respect to payment of further interest on the monies held by him.

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Decision last updated: 11 July 2018