Haines (bht NSW Trustee & Guardian) v Bennett

[2023] NSWSC 1585

Supreme Court

New South Wales

Medium Neutral Citation:

Haines (bht NSW Trustee & Guardian) v Bennett [2023] NSWSC 1585

Hearing dates:

14 December 2023

Date of orders:

14 December 2023

Decision date:

14 December 2023

Jurisdiction:

Equity - Duty List

Before:

McGrath J

Decision:

Settlement approved

Catchwords:

PRACTICE AND PROCEDURE — approval of settlement of a claim involving plaintiff who is under a legal incapacity — Civil Procedure Act 2005 (Cth), s 75 — settlement in interest of plaintiff and accordingly approved

Legislation Cited:

Civil Procedure Act 2005 (NSW)

Cases Cited:

Budini v Sunnyfield(No 3) [2021] FCA 1540

Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388

Fisher v Marin [2008] NSWSC 1357

Permanent Trustee v Mills (2007) 71 NSWLR 1; [2007] NSWSC 336

Stojic v Stojic [2019] NSWSC 23

Category:

Principal judgment

Parties:

Pauline Julia Haines (bht NSW Trustee & Guardian) (Plaintiff)
Paul Julian Bennett (First Defendant)
Joanne Bennett (Second Defendant)

Representation:

Solicitors:
Zucker Legal (Plaintiff)

File Number(s):

2023/00434335

Publication restriction:

Nil

JUDGMENT

1. Before me as duty judge is an application pursuant to s 75(2) of the Civil Procedure Act 2005 (NSW) by summons filed 30 November 2023 for the court’s approval of a compromise or settlement of claims which are made against and by the plaintiff, Pauline Haines, who is under a legal incapacity before proceedings are commenced in respect of that claim. The application is brought by the plaintiff through her tutor, NSW Trustee & Guardian (NSWTG).

2. The claim made against the plaintiff (as purchaser) is by Paul and Joanne Bennett (as vendors, Bennetts) arising from a contract of sale dated 15 June 2023 of a property in Allambie Heights. The plaintiff also makes a claim against the Bennetts in relation to the same contract.

3. The evidence before me in support of the application is as follows:

1. affidavit of Joanna Christine Brouwer sworn 5 December 2023. Ms Brouwer is a solicitor at NSWTG.

2. affidavit of Adele Pamela Jarrett sworn 6 December 2023. Ms Jarrett is a Legal Administrator at Zucker Legal who act for the plaintiff on instructions from NSWTG.

3. further affidavit of Adele Pamela Jarrett sworn 6 December 2023.

4. The facts are as follows.

5. On 15 June 2023, the plaintiff agreed to purchase the Allambie Heights property for $4 million with a deposit to be paid of $400,000. An agreement was reached between the plaintiff and the Bennetts that the deposit would be paid in the form of a deposit bond of $200,000. Settlement of the sale was scheduled for 13 September 2023.

6. On 24 August 2023, the plaintiff and her husband (as vendors) entered into a contract for the sale of their property at Balgowlah Heights (where they were then living) for the amount of $4,550,000, with settlement scheduled for 13 September 2023, the same day as the scheduled settlement of the plaintiff’s acquisition of the Allambie Heights property.

7. At some time between 24 and 31 August 2023, there was a significant deterioration in the mental health of the plaintiff which caused her to be hospitalised. She was diagnosed as suffering from a serious neurological disorder and remains in hospital.

8. On 31 August 2023, the New South Wales Civil and Administrative Tribunal (NCAT) made a financial management order in respect of the financial estate of the plaintiff for a period of 6 months. Prior to that time, NSWTG had no knowledge of, or involvement in, the financial estate of the plaintiff or the making of any contracts by her.

9. Upon taking over the financial management of the plaintiff’s estate, NSWTG resolved that the sale of the Balgowlah Heights property should proceed and made arrangements for the accommodation of her husband and her son. NSWTG also took the view that it was not in the interests of the plaintiff or her husband to proceed with the purchase of the Allambie Heights property.

10. On 14 September 2023, the solicitor for the Bennetts served on the then solicitor for the plaintiff a notice to complete requiring completion at 12 noon on 3 October 2023. At that time, the sale of the Balgowlah Heights property was not ready and was unlikely to be ready for completion on 3 October 2023.

11. NSWTG gave instructions to the then solicitor for the plaintiff to rescind the contract of sale with the Bennetts for the Allambie Heights property, acting on the mistaken belief that special condition 34 of the contract of sale entitled either party to rescind the contract in the event of either party losing legal capacity.

12. On 26 September 2023, the then solicitor for the plaintiff sent a notice of rescission of the contract of sale with the Bennetts.

13. On 27 September 2023, in response to the erroneous notice of rescission, the Bennetts terminated the contract of sale and claimed the whole of the deposit. The part deposit of $200,000 was then released by the bondholder and is presently held by the Bennetts.

14. On 18 October 2023, settlement of the sale of the Balgowlah Heights property took place.

15. A significant dispute has arisen between the plaintiff and the Bennetts over the right of the Bennetts to retain the deposit of $200,000 and claim the other $200,000 of it. The resolution of that dispute appears to involve difficult questions about:

1. whether the Bennetts as vendors were entitled to accept the mistaken rescission as repudiation and terminate the contract of sale or whether they had a duty to inform the plaintiff of the mistake and insist that she proceed to complete the contract; and

2. whether the plaintiff would be able to show that she was ready, willing and able to complete the purchase of the Allambie Heights property.

16. It appears that on 3 October 2023, the plaintiff was unlikely to have had the funds to complete the purchase of the Allambie Heights property because of the complications which had occurred in relation to the settlement of the Balgowlah Heights property. On that basis, the plaintiff in all likelihood would not have been ready, willing and able to complete the purchase of the Allambie Heights property on 3 October 2023.

17. On the other hand, the plaintiff may be able to argue that the Bennetts moved too early to terminate the contract of sale on 27 September 2023 and should instead have waited until 3 October 2023 when the plaintiff would likely not have had the required funds to complete. If the Bennetts had waited until that time, they would have had a very strong argument of an unchallengeable right to terminate and to receive the whole of the deposit.

18. At the heart of the issues which would have to be determined by the court should legal proceedings have been taken in relation to the claim by the Bennetts to have validly terminated the contract of sale and to claim the whole of the deposit is whether the invalid notice of rescission evinced an intention by the plaintiff not to proceed with the contract.

19. There is a very significant risk that if the plaintiff was unsuccessful in any proceedings brought by the Bennetts she might be liable to pay the $200,000 balance of the deposit, damages for any loss on the resale of the Allambie Heights property, the costs of the Bennetts and her own costs which are estimated to be in the range of $350,000 to $400,000. The ultimate amount for which the plaintiff might be liable in that case could exceed $1 million.

20. A settlement of the Bennetts’ claim and the plaintiff’s claim has now been reached. Under the settlement, the Bennetts are to return $100,000 to an account nominated by NSWTG in its capacity as the financial manager for the plaintiff, mutual releases provided and each party is to bear their own costs in relation to it. This means that the Bennetts will retain the $100,000 balance of the deposit.

21. Counsel acting for the plaintiff has expressed the opinion that the settlement is in the interests of the plaintiff. NSWTG as tutor of the plaintiff also consents to the settlement.

22. The court's function on such an application for approval is protective. In Permanent Trustee v Mills (2007) 71 NSWLR 1; [2007] NSWSC 336, Hammerschlag J (as his Honour then was) observed at [29]:

The principle is that for the Court to grant approval for a compromise to be entered into by the disable person it must form the view that it is beneficial to his or her interests. The compromise should be assented to by the tutor and there should be opinions from his or her legal advisers that they consider it to be so: Re Birchall. The Court will consider for itself whether the compromise will be beneficial to the disable person: Re Ley’s Trusts [1964] 1 WLR 640.

23. Accordingly, in the exercise of the court's protective function under s 75(2) of the Civil Procedure Act 2005 (NSW), I consider that the proposed settlement is beneficial to the plaintiff in the sense described in Fairhurst (bht NSW Trustee and Guardian) v Fairhurst [2012] NSWSC 388 at [30]-[39], Permanent Trustee at [29], Fisher v Marin [2008] NSWSC 1357 at [29], Stojic v Stojic [2019] NSWSC 23 at [32] and Budini v Sunnyfield (No 3) [2021] FCA 1540 at [10]-[12].

24. For these reasons, I make the following orders in accordance with the short minutes of order (as amended):

1. Order pursuant to s 75 of the Civil Procedure Act 2005 (NSW) that the Court approves the agreement for the settlement of the claims by and against the plaintiff in the form of the document which is annexure A to the affidavit of Adele Pamela Jarrett sworn 6 December 2023.

2. Order pursuant to s 77(3)(b) of the Civil Procedure Act 2005 (NSW) for the money recovered pursuant to the settlement to be paid to NSW Trustee and Guardian as manager of the plaintiff’s estate.

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