Graham v Hulme; Hulme v Graham

[2009] NSWSC 1167

CITATION:	Graham v Hulme; Hulme v Graham [2009] NSWSC 1167
HEARING DATE(S):	7 October 2009
JUDGMENT DATE :	7 October 2009
JURISDICTION:	Equity
JUDGMENT OF:	Slattery J at 1
EX TEMPORE JUDGMENT DATE:	7 October 2009
DECISION:	See orders made in judgment of 8 October 2009 (Graham v Hulme; Hulme v Graham [2009] NSWSC 1169).
CATCHWORDS:	EQUITY - trusts and trustees - action by executor - recovery of money transferred out of estate - whether there should be a stay on a judgment for funds transferred from the estate pending action against the estate by the transferee of those funds
LEGISLATION CITED:	Succession Act 2006 (NSW)
CATEGORY:	Principal judgment
PARTIES:	3887/09: Plaintiff/Cross-Defendant: Courtney Michelle Graham as Executor of the Estate of Jeffrey James Graham First Defendant/ First Cross-Claimant: Janet Ann Hulme Second Defendant/Second Cross-Claimant: Bronwyn Ann Hulme-Craig 4332/09: Plaintiff: Janet Ann Hulme Defendant: Courtney Michelle Graham as Executor of the Estate of Jeffrey James Graham
FILE NUMBER(S):	SC 3887/09; 4332/09
COUNSEL:	3887/09: Plaintiff/Cross-Defendant: Mr A Rogers Defendants/Cross-Claimants: Mr J O'Connor 4332/09: Plaintiff: Mr J O'Connor Defendant: Mr A Rogers
SOLICITORS:	3887/09: Plaintiff/Cross-Defendant: Dribbus Kovacevic Lawyers Defendants/Cross-Claimants: Guardian Lawyers 4332/09: Plaintiff: Guardian Lawyers Defendant: Dribbus Kovacevic Lawyers

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

SLATTERY J

WEDNESDAY 7 OCTOBER 2009

3887/09 COURTNEY MICHELLE GRAHAM AS EXECUTOR OF THE ESTATE OF JEFFREY JAMES GRAHAM v JANET ANN HULME AND BRONWYN ANN HULME-CRAIG
4332/09 JANET ANN HULME v COURTNEY MICHELLE GRAHAM AS EXECUTOR OF THE ESTATE OF JEFFREY JAMES GRAHAM

JUDGMENT

1 HIS HONOUR: These are two sets of proceedings between the executrix of the estate of the late Jeffrey James Graham, Courtney Michelle Graham, on the one hand, and Janet Ann Hulme on the other. Jeffrey Graham died on 25 March this year. Janet Hulme, claims that she was living in a de facto relationship with him at the time of his death. Courtney Graham is the daughter of a prior marriage of the deceased.

2 After Jeffrey Graham's death, Janet Hulme had access to certain of his bank accounts. She caused the transfer of the sum of $59,510.37 from those bank accounts, within two days of his death. She was personally active in transferring those funds. She readily concedes they were deposited into accounts either in the name of her daughter Bronwyn, or jointly in an account held by herself and Bronwyn.

3 Courtney Michelle Graham, on behalf of the estate of her late father, has commenced proceeding numbered 3887 of 2009 for recovery of these moneys from Janet Hulme and, Bronwyn Hulme-Craig (“Bronwyn”), as first and second defendants respectively ("recovery proceedings").

4 By separate proceedings numbered 4332 of 2009, Janet Hulme sues Courtney Graham, as executrix of the estate of the late Jeffrey James Graham, for relief under the Succession Act and for declaratory relief that she has an interest in certain land at Port Macquarie, under either a resulting or constructive trust (“the Succession Act proceedings”). In a cross-summons filed in the recovery proceedings, Janet Hulme has also sought relief claiming an interest in the land at Port Macquarie. She and Bronwyn also seek an order that, the moneys withdrawn from the deceased's bank accounts, be held on account of the claims Janet Hulme makes in that cross-summons.

5 The moneys in the sum of $59,510.37, the subject of the estate's primary claim in the recovery proceedings, were taken from the estate in circumstances raising a cause of action for moneys had and received against both, Janet Hulme and Bronwyn.

6 Counsel for Janet Hulme and Bronwyn has not disputed, on the evidence and properly so, that judgment should be entered for that amount. The real question is whether that judgment should be stayed pending the pursuit of the cross-claim in the recovery proceedings and pending the pursuit of the Succession Act proceedings. Janet Hulme's counsel submits that there should be a stay in respect of the whole of the sum of $59,510.37.

7 Janet Hulme has foreshadowed that she will be claiming interim relief in the Succession Act proceedings for an advance of moneys to her before the determination of the final hearing of the those proceedings and the parallel cross-claim in the recovery proceedings. That application for interim relief cannot be heard today because it would require a greater contest of evidence than is possible in the Duty List. A date will need to be fixed in the near future for that to be determined if it is to be pursued.

8 The $59,510.37 that Jane Hulme received remains undistributed but for two amounts. The first distributed amount is a sum of $10,608.08 which is set out in exhibit A. This amount covers a variety of expenses which were incurred from the transferred funds, the largest single item of which was to pay the funeral expenses of the late Jeffrey James Graham in the sum of $6,740.41.

9 The primary position put by the estate is that there should only be a stay for the amount of $6,740.41, which represents the indisputable expenditure on the funeral of the deceased. This would have been expenditure that would have had to be met by the estate. The estate concedes that there is no issue that those sums have been paid for funeral expenses and that a stay on judgment for that amount, to save double-handling of that sum, would be appropriate. If the full amount was paid to the estate, the $6,740.41 would presumably have to be repaid to Janet Hulme to reimburse her for the fact that she paid for the funeral with the funds from the estate.

10 Mr Rogers, on behalf of the estate, says that there should not be a stay beyond the sum of $6,740.41 for a number of reasons. Principally he submits it would make a virtue out of a vice if a stay beyond the $6,740.41 were granted. Ms Hulme should not have the benefit of any of the moneys which have been wrongfully or mistakenly obtained by her. Even worse, he says that a situation should not be allowed to subsist in which Janet Hulme can take advantage of that mistake or wrong by using those moneys to prosecute a claim against the estate, either in the cross-summons or in the Succession Act proceedings. Mr Rogers further points to the course of correspondence which at one level shows that Janet Hulme was reluctant, to come forth with information about either the Succession Act claim or the whereabouts of the funds, the subject of the transfer. However the correspondence on behalf of Janet Hulme can also be characterised as demonstrating her difficulties in dealing with the matter for the early months close to the death of Jeffrey Graham, with whom she claims to have had a de facto relationship.

11 On this application, I do not have to resolve this tension in the correspondence. I simply record the different ways that it may be able to be looked at, to a limited degree.

12 Mr O'Connor for Janet Hulme submits that there should at least be a stay for all the expenses that she incurred on behalf of the estate, or on account of the deceased's liabilities. He contends for a stay on not just the limited amount of $6,740.41 contended for by the estate, but upon the larger amount of $10,603.08.

13 The remaining moneys, that is the difference between the $59,510.37 and the amount of $10,603.08, leave a balance of $48,907.29. Of this balance an amount of $6,000 has been paid to Guardian Lawyers and used to satisfy Memoranda of Fees duly rendered by that firm to Janet Hulme. This is the second distributed amount. That leaves a balance of $42,907.29 that has not been used to pay legal fees or for expenses that Janet Hulme says are associated with the estate.

14 Mr O'Connor submits that the whole of that balance of $42,907.29 which, for convenience, I will call the "remaining sum" should be the subject of a stay. He says that the remaining sum should be made available to Ms Hulme for her future expenditure upon legal fees.

15 In the alternative, he submits that, pending his client's application for interim relief under the Succession Act, that the remaining sum should be quarantined in the Guardian Lawyers trust account, but preserved free of claims for legal fees until the outcome of the interim relief application under the Succession Act.

16 These facts and contentions leave for determination three issues. Should there be a stay for the full amount of $10,608.08? Should there be a stay for the additional amount of $6,000 paid into the Guardian Lawyers trust account? Should there be a stay in respect of the "remaining amount"?

17 No-one has submitted to the court that it is not appropriate that I enter judgment for $59,510.37. Subject to one matter to which I will come, that is what I will do.

18 As to the stay in respect of the $10,608.08, having looked at the list of expenses, it is obvious that there are a number of expenses in addition to the funeral expenses which may well have been payments that might have been made on behalf of the estate, either associated with the funeral and funeral events or associated with Jeffrey Graham’s grave. Some of the component amounts of the $10,608.08 also look as though they may have been liabilities of the deceased incurred prior to his death. Many of these amounts may well be able to be justified as expenditure undertaken on behalf of the estate. It is not possible on this interlocutory application for the court to analyse the proper justification for each item of that expenditure now. Therefore, in my view the sensible course is for there to be a stay in respect of the full amount of $10,608.08. Such issues, as may remain between the parties about whether or not this expenditure was properly undertaken on behalf of the estate or was personal expenditure of Janet Hulme, is something that can be resolved in the proceedings at final hearing.

19 The next question is what should happen in respect of the amount of $6,000 already expended on legal fees with Guardian Lawyers? In relation to that sum, the freezing orders, which were made on 4 August 2009 did include an exception that allowed moneys to be expended on legal fees. Janet Hulme and her lawyers have undoubtedly proceeded on the legitimate basis, since those freezing orders were made, that some amount of legal fees could be expended within that exception. That resulted in the payment of a Guardian Lawyers bill of $6,000. If there was going to be an issue about whether or not it was legitimate for Ms Hulme to spend any of the funds transferred to her and to her daughter Bronwyn on account of legal fees, then the time for that debate to have occurred probably was at the time that the freezing orders were first obtained. They having been obtained and the expenditure having occurred, the appropriately practical interim course is for there to be a stay for the amount of the judgment representing those fees.

20 Finally, there is the question of what happens in respect to the remaining balance of $42,907.29. Janet Hulme concedes that the remaining sum was obtained by her as a result, at least, of an error. It is difficult therefore to justify its retention by her so that it could now be used to fund proceedings against the estate. Whatever her financial circumstances, her retention of a sum such as that obtained in error could perhaps be justified if an appropriate defence were deployed. But I am disinclined to allow the sum to be used for legal fees against the estate. I do not see on what legal basis Janet Hulme could justify it being retained merely to be so used. The only argument advanced to justify its use that way really is that she might later succeed in an interim application for financial relief under the Succession Act or ultimately at final hearing, and that the money should be kept available for use by her pending her possible success in that interim application or in her claim for final relief.

21 The difficulty with that argument is that it merely throws up an anterior problem of whether the remaining sum can be used to fund legal fees to pursue the interim application itself, before that application is made. It is difficult, on the argument put, to justify that result. There seems to be no good reason, therefore, why the $42,907.29 should be kept away from the estate by Janet Hulme and quarantined within a trust account of Guardian Lawyers. There is no reason advanced in evidence before me why Janet Hulme, if she is successful in a Succession Act interim relief application, would not be able to get prompt payment of any award of interim relief from the estate. It is not suggested that the estate will not be able to meet that obligation were Janet Hulme’s claim for interim relief to be successful. Accordingly, I do not propose to allow a stay in respect of the remaining sum of $42,907.29.

22 At this stage I have not heard submissions in relation to costs. I will reserve the question of costs. I will deal with that after further submissions tomorrow. I will also then make the orders which flow from this judgment. Those orders will include the arithmetic effect of the parties agreed interest calculations.

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