Hons v Hons - [2010] NSWSC 247

No judgment structure available for this case.

CITATION: Hons v Hons [2010] NSWSC 247

HEARING DATE(S): 12 March 2010

JUDGMENT DATE :
1 April 2010

JURISDICTION: Equity Division
Probate List

JUDGMENT OF: Ward J

DECISION: Plaintiffs' claim dismissed with costs.

CATCHWORDS: PROBATE AND ADMINISTRATION – accounts –– plaintiff sought order for administrator to file or file and pass accounts in compliance with statutory obligation under s 85 Probate and Administration Act 1898 – deceased died in 1980 –– defendant relied on incorrect legal advice as to obligation to file accounts –– estate records no longer available to defendant – HELD – laches/acquiescence not available as defences to claim based on existence of statutory obligation –– discretion in court whether to grant relief and, if so, time and manner in which accounts should be filed –– consideration of factors relevant to exercise of discretion (delay of plaintiffs in seeking relief –– reason for failure of defendant to comply with obligation –– incomplete records available to defendant –– small size of estate –– onerous nature of procedure for accounts to be taken likelihood that order will be futile due to defendant’s inability to produce necessary documents for preparation of accounts –– disproportionate cost of such a process where estate so small) –– in exercise of court’s discretion relief should not be granted –– plaintiffs’ claim dismissed

LEGISLATION CITED: Civil Procedure Act 2005 (NSW)
Probate and Administration Act 1898 (NSW)
Supreme Court Rules 1970 (NSW)
Trustee Act 1925 (NSW)

CATEGORY: Principal judgment

CASES CITED: Allen v Tobias (1958) 98 CLR 367
Anglo-American Asphalt Co v Crowley Russell & Co [1945] 2 All ER 324
Asset Risk Management Limited v Hyndes [1999] NSWCA 201
Bartlett v Barclays Trust Co Limited (Nos 1 and 2) [1980] Ch 515
Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256
Commonwealth v Verwayen (1990) 170 CLR 394
Dawson v Dawson (1737) 1 Atk 1; 26 ER 1
Dimos v Skaftouros & Ors [2004] VSCA 141
Doss v Doss (1843) 3 Moo Ind App 175; 18 ER 464
Fysh v Coote & Ors [2000] VSCA 150
Garcia v Delfino [2003] NSWSC 1001
Gray v Haig (1855) 20 Beav 219; 52 ER 587
Glazier v Australian Men’s Health (No 2) [2001] NSWSC 6
Habib Bank Ltd v Habib Bank AG Zurich [1982] RPC 1
Hickson v Aylward (1828) 3 Molloy (Ir) 1
Ide v Ide [2004] NSWSC 751; (2004) 50 ACSR 324; (2004) 184 FLR 44
In the will of Lockett (1920) SR (NSW) 213; (1920) 37 WN (NSW)
Lord Chedworth v Edwards (1802) 8 Ves Jun 46; 32 ER 68
Ludwig v The Public Trustee [2006] NSWSC 890
Mayfair Trading Co Pty Limited v Dreyer [1958] HCA 55; (1958) 101 CLR 428
McLauchlan v Prince [2001] WASC 43
MLW Investments Pty Limited v Tacsum [2006] NSWSC 1256
Mulherin v Quinn Villages Pty Limited [2007] QSC 231
Nelson v Nelson (1995) 184 CLR 538
North-Eastern Railway Co v Martin (1848) 2 Ph 758; 41 ER 1136
Northey v Juul [2005] NSWSC 933
NWR FM t/a North West Radio v Broadcasting Commission of Ireland & Anor [2004] IEHC 109
Orr v Ford (1989) 167 CLR 316; (1989) 84 ALR 146
Pearse v Green (1819) 1 Jac & W 135; 37 ER 327
Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qdr 82
Re Craig (1952) 52 SR (NSW) 265; 69 WN (NSW) 205
Re Cyril Sharpe [1992] FCA 616
Strang v Strang [2009] NSWSC 760
The Ophelia [1916] 2 AC 206
Warman International Ltd v Dwyer (1995) 182 CLR 544

TEXTS CITED: Heydon D., and Leeming M., Jacobs’ Law of Trusts in Australia, 5th edn, 1986,
Mason K., and Handler M., Succession Law & Practice, Butterworths
Meagher R., Heydon D., and Leeming M., Meagher Gummow and Lehane’s Equity: Doctrines and Remedies, 4th edn, Butterworths, 2002
Baker P. & Langan P., Snell’s Principles of Equity, 28th edn, Steven & Hayes, 1982
Stuckey GP. And Irwin CD., Parker's Practice in Equity (New South Wales), 2nd edn, 1949
Young P., Croft P., Smith M., On Equity, Lawbook Co., 2009

PARTIES: Michael Hons (First Plaintiff)
Peter Hons (Second Plaintiff)
Pauline Hons (Third Plaintiff)
Cabrial Hons (Fourth Plaintiff)
Raphaella Hons (Fifth Plaintiff)
Alexander Hons (Defendant)

FILE NUMBER(S): SC 123139 of 2008

COUNSEL: J Reimer (Plaintiffs)
M Rollinson (Defendant)

SOLICITORS: LAC Lawyers Pty Limited (Plaintiffs)
KP Lawyers & Barristers (Defendant)

- 21 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROBATE LIST

WARD J

THURSDAY 1 APRIL 2010

08/313540 MICHAEL HONS & ORS V ALEXANDER HONS IN THE ESTATE OF VACLAV HONS

JUDGMENT

1 In this matter four of the six children of the late Vaclav Hons, who died on 8 April 1980, seek an order pursuant to s 85(1) of the Probate and Administration Act 1898 (NSW) that their brother (Alexander Hons), to whom letters of administration were granted in respect of their father’s estate on 6 August 1981, file an inventory and either file, or file and pass, his accounts for the period 8 April 1980 to date in relation to the said estate.

2 Although the period for which accounts are sought is specified in the Statement of Claim as being from the date of death to date, it appears in argument to have been conceded that in relation to the real property of which the estate was largely comprised (being properties owned by or in which the deceased had an interest in Earlwood, Bardwell Park and Mount Druitt) any obligation under s 85 of the Act ceased to operate once that property ceased to be subject to the trusts provided for under the will (the relevant dates on which this occurred varying from 1987 to around 1988/89 in respect of the properties in question).

3 Therefore, as I understand, it is accepted that the bulk of any accounts to be filed, if an order for the filing or filing and passing of accounts were to be granted, would relate to the period from 1980 to about 1988 or 1989 at the latest. One consequence of the resettlement and disposition of the estate assets back in the late 1980’s is that there would also be no assets from which any claim for commission by the defendant, as administrator, for his work in administration of the estate or for reimbursement of any later expenses relating to the family property could now be met (other than out of any sums for which he might personally be responsible on such an account).

4 The defendant (Alexander Hons) admits that he has not filed, or filed and passed, accounts in relation to the estate within the meaning of s 85 of the Act but denies that he is obliged to do so and denies that his siblings are entitled to an order that he do so on the grounds pleaded in paragraph 4 to 10 of his Defence filed on 22 July 2009. The denial of an obligation to account is made under those paragraphs, first, on the basis that the period over which the order for an account is sought (notwithstanding that the properties the subject of the estate ceased to be subject to the will trusts more than 20 years ago) is up to the date of the order and, secondly, by the invocation of defences based on delay and acquiescence. In relation to the latter, it is pleaded that the plaintiffs, between 1987 and the commencement of these proceedings on 11 September 2008, have acquiesced in the omission of the defendant to comply with any obligation he may after 1987 have had under s 85, such that relief should now be refused.

5 A number of discretionary grounds are also raised by the defendant. These include the occupation since 1999 by one of the plaintiffs (Gabriel) of one of the former estate assets (the family home at Earlwood), something apparently raised in response to any suggestion (of the kind evident from the alternative scenarios on which draft accounts were prepared in 2006/7), that the defendant might have an obligation to account to the estate for rent (or additional rent) for the period from May 1980 up to 1987 in respect of his occupation of the Bardwell Park property, which the defendant acquired from the estate at about that time).

6 More relevantly, in my view, the discretionary matters on which the defendant relies for the proposition that the relief now claimed should not be granted are the giving to him of (incorrect) advice (from a now deceased solicitor) in or about 1983 to the effect that it was no longer necessary for estate accounts to be filed in the court; the fact that the said solicitor had acted from 1980 until about 1987 in relation to the estate and had retained most, if not all, of the papers relating to the estate; and the fact that, despite enquiries of that solicitor’s subsequent practice manager, no papers have been able to be located in relation to any accounts of the estate held by the former solicitor.

7 By their reply, the plaintiffs deny that the defences raised of delay and acquiescence (and the discretionary grounds pleaded in paragraph 10 of the Statement of Claim) are maintainable. The plaintiffs say that they have not acquiesced in the failure of the defendant to meet his obligations as to estate accounts but further say that, if there was a period of acquiescence, it ended in July 2003 or at the latest on 5 December 2003 when the failure to account was first the subject of formal correspondence. It is pleaded that they did not pursue the defendant during the period alleged because the defendant told them they were not entitled to information; because to do so would have been against the wishes of their mother (though there is no suggestion that her wishes are presently any different); and because of the family relationship between the plaintiffs and the defendant.

8 The plaintiffs in their pleadings state that they seek to have the defendant comply with his statutory obligations, in respect of which there is no time limit and which are expressed in the imperative (paragraph 7, Reply).

9 Counsel for the plaintiffs, Mr Reimer, made it clear that there was no suggestion “in any formal sense in this litigation” by his clients that there is any amount of money to come forth to be paid to them out of the process of the taking of accounts (although the Statement of Claim does seek an order for payment of any amounts due on the taking of accounts, if ordered) – in which context I note that the process of taking an account (or at least an account in equity) involves more than a “mere direction to inquire and report” but proceeds upon an assumption that the party calling for the account is entitled to the sum found due after such an accounting task is undertaken (as was made clear in Doss v Doss (1843) 3 Moo Ind App 175, at 196-7; 18 ER 464, at 472, and applied in Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qdr 82, per Wanstall J and in Re Cyril Sharpe [1992] FCA 616, at [6], per Drummond J). Insofar as the plaintiffs do seek an order for payment of moneys on the filing and passing of the statutory accounts, this highlights the question as to the utility of the process if (as seems to be the case here) there is considerable doubt as to whether an account is likely to be able to produce a definitive outcome as to any accounting adjustments to be made as between the beneficiaries of the estate.

10 The plaintiffs assert that they are entitled to the benefit of whatever satisfaction may be available to them as a result of having the administrator comply with his statutory obligations (at his own cost if there be no assets from which the costs of filing and passing accounts can be met, since he is the one in default). The nub of the plaintiffs’ present application thus seems to be that which was put by Mr Reimer in submissions – that the process or protocol for taking accounts is there to be observed and that the plaintiffs want the satisfaction of seeing that it has been observed, come what may (and, I might add, without regard to the reasons why the process or protocol has not been observed to date). Mr Reimer informed me that his clients would have no complaint if the scenario on the taking of the accounts proved to be that they could not be completed (describing the position in that situation as being that “the chips fall where they have”; but observing that the plaintiffs will have had their day in court).

11 There was an earlier suit commenced on 26 September 2006 by the current plaintiffs (together with the only sibling (Raphaella) who is not a party to the current proceedings), claiming orders that the defendant file accounts of his administration of the estate. Those proceedings were dismissed by Windeyer J (with costs) for want of prosecution on 7 April 2008. According to Mr Michael Hons, the only plaintiff to give evidence in these proceedings, the dismissal of those proceedings was due to default on the part of the plaintiffs’ then solicitor in not attending in court on more than one occasion. I am not in a position to comment on this. Be that as it may, these proceedings were commenced less than six months after the dismissal of the first set of proceedings.

12 The defendant has sworn three affidavits in these proceedings. He has pleaded, and has given evidence, that he does not have possession of, or access to, records adequate to enable him to prepare accounts in compliance with what he understands would be required in order to comply with the obligations under s 85 of the Act. I accept that this is the case (particularly having regard to the incompleteness of the accounting material which was noted as being available to the forensic accountants when they investigated the estate finances in 2006/7).

13 It is submitted that it would be onerous (and in all probability futile) for the defendant now to be required to do what he has already attested he is unable to do. The plaintiffs, on the other hand, rely on the existence of a draft forensic accountants’ report prepared in 2006/7 as indicating that there are records available to the defendant by reference to which the accounts procedure could possibly be conducted. That said, in his oral submissions Mr Reimer conceded, as I understand it, that it is possible that such a procedure may not ultimately lead to any definitive outcome in respect of the accounts (though he by no means concedes that it would be futile to attempt to undertake such a procedure).

14 Without any disrespect to the parties, I shall refer to the siblings, and their mother, Hana, by their first names.

Issues

15 The issues, and my conclusion as to those issues, may be briefly summarised as follows:

1. Does s 85 of the Act oblige the defendant as administrator to file, or file and pass, accounts (and, if so, is there any discretion to dispense with such an obligation as opposed to a discretion as to the time and manner in which such an obligation may be required to be satisfied)?

There is such a statutory obligation (although it should be noted that the obligation to pass accounts in relation to real property resettled or disposed of in the course of administration of the accounts, including the Earlwood home in respect of which there was a Deed of Family Arrangement in late 1987), relates only to the period until those properties were disposed of by the administrator and ceased to be subject to the trusts of the will). Although there is no provision under the Act or Rules expressly permitting the court to dispense with the obligation to account, there remains a discretion in the court as to whether (and in what time or manner) any such account should be ordered.

2. Are the plaintiffs disentitled to an order in effect compelling performance of any subsisting obligation under s 85 because of acquiescence or delay?

Defensive equities such as acquiescence and delay are not available as a defence to a claim as to the existence of a statutory obligation to file and pass accounts. However, the conduct or omission of the plaintiffs which is relied upon for the pleas of delay and acquiescence may be taken into account in considering the exercise of discretion whether or not to grant the relief sought (and, if so, in what manner or on what terms such relief should be granted).

3. As a matter of discretion should any relief now be granted to the plaintiffs and, if so, what?

I am of the view that the fact that the records of the administration (on which the procedure for the taking of an account would have to be based) are in large part no longer available to the defendant and the very real possibility that the exercise itself would be futile, taken together with the circumstances that this is a small estate (of a kind in which, since shortly after the grant of letters of administration in 1981, there would not have been such an obligation as a matter of general course, presumably reflecting a recognition as to the need or utility for such a process in the ordinary turn of events) and that the administration of the estate (involving, as it did, the payment out by the administrator personally of liabilities both of the estate and of the deceased’s widow as to which it does not appear that any objection was made at the time by the plaintiffs and who, insofar as Michael is any indication, were concerned to protect their mother’s position and her ability to remain in the family home) was dealt with by the administrator on the basis of an incorrect understanding as to his obligations in relation to the filing of accounts; that the failure to file accounts was not the subject of formal complaint until some 22 years after the administration commenced; and that I have real doubt as to the utility of such a process given the limitations on the accounting records available for that purpose, are such that in the exercise of my discretion I think it appropriate to decline to grant the relief sought and to dismiss the plaintiffs’ application with costs.

I gave some thought to whether, in balancing the interests of all the parties, it would be appropriate to order the filing of accounts simply by the filing of the draft forensic accountants’ report, without requiring the usual process of verification of accounts to take place, in order to permit an assessment to be made as to whether the draft report was (as the plaintiffs contend) sufficient to enable the appropriate court officer to ‘get to the bottom of the estate affairs’. However, on its face the report was no more than a draft ‘for discussion purposes’ and was based on a number of stated assumptions, themselves not verified or agreed between the parties. The forensic accountants raised various issues in respect of which instructions would have been necessary to take matters further. I have difficulty in seeing how, even ‘armed with such a report’, a meaningful determination of the accounts could ensue. Insofar as the forensic accountants’ draft apparently represented just such an attempt (by consent between the parties) to verify the accounts of the administration, it would seem that the attempt was singularly unsuccessful. There is no reason to think that a court officer armed with such information would now be placed in any better position to complete such a task.

I do not see it as consistent with the mandate imposed on me under s 56 of the

2005 (NSW) to permit the use of court time and resources simply to provide the plaintiffs with the ‘satisfaction’ that the ‘protocols’ have been observed (particularly when they have waited an inordinate time to seek that satisfaction). (Had I been of the view that it was appropriate for relief of the kind sought in these proceedings to be granted, in the more limited fashion indicated above, I would have ordered that the process of taking the accounts be at the plaintiffs’ expense.)

Facts

16 Vaclav Hons died on 8 April 1980 and was survived by his wife, Mrs Hana Hons, and their six children. (Hana has resided overseas since around 1999/2000 and is not a party to these proceedings.) Under the deceased’s will, his estate was left to his widow and their six children in equal shares. At the time Vaclav died, three of the six children were still dependents. Hana renounced probate. Alexander sought and obtained a grant of letters of administration with the will annexed on 6 August 1981.

17 It does not appear to be in dispute that the main assets in the estate were properties in Earlwood, Bardwell Park and a half share in a property at Mt Druitt. The Earlwood property was the family home.

18 From about 1980, Alexander was advised in estate matters by a solicitor (Mr John Wheeler). In his affidavit sworn 22 October 2008, he sets out a brief (and, at least in one respect to which I refer later, inaccurate) chronology of events, deposing to the history of this matter. Alexander says that on 9 December 1982 he swore an affidavit, which was prepared by Mr Wheeler, verifying the accounts of the estate, and therein noting the balance in the estate account at $1,872.41 and listing each of the Earlwood, Bardwell Park and Mount Druitt properties as being unrealised real estate.

19 Alexander deposes, and was not challenged on this in cross-examination, to the fact that in 1983 Mr Wheeler informed him that, due to a change in the law, the filing of estate accounts was no longer required. Such advice was clearly incorrect. The provisions of the Act and Pt 78 r 71 of the Supreme Court Rules 1970, in force as at 31 December 1981, required a legal personal representative to file an inventory of the estate and to file, or file and pass, estate accounts. It was only for estates of persons dying after 31 December 1981 that the Act and Rules were amended to confine such an obligation to certain categories of estate (of which it is accepted that this estate would not have been one). Nevertheless, the pertinent fact for present purposes is that Alexander was advised otherwise. Hence, his failure in the late 1980’s to prepare and file accounts in relation to the administration cannot be said to have been in wilful default of compliance with his statutory obligations.

20 Alexander, in his affidavit sworn 3 December 2008, deposes that the estate matters were complex and that there were delays and complications in the administration of the estate (relating to the assessment of his father’s taxation position and a charity foundation involving both of his parents) (paragraph 13). (Michael, without asserting any basis for this opinion, apparently was under the impression that “probate shouldn’t take as long” (T 3.1) and seems sceptical as to the genuineness of Alexander’s claim that the administration of the estate involved complex issues.) Alexander also says that in the weeks just after his father’s death he asked all his siblings if they would be prepared to help him financially with the estate and they said they would not put any money into the estate. Alexander says (and Michael, by accepting that he signed a memorandum of understanding in which this was recited, appears to have acknowledged) that he put a considerable sum of his own money towards meeting estate liabilities and the personal debts of Hana. Alexander did not make any claim for commission in relation to his administration of the estate.

21 It does not seem to be disputed that the Hons children wished to put in place an arrangement whereby their mother would be able to remain in the family home for her life. Michael’s evidence was that his mother was worried at the prospect that she might lose her home. Indeed, Michael seems to have been critical of the fact that his mother’s concerns in this regard were not allayed for some years by reason of the fact that the administration took so long, yet there seems no doubt that part of the reason that Hana was able to retain her home was the fact that Alexander (unlike those of his siblings who may have been financially able to do so, and leaving aside those who were still dependents at that time) was prepared to advance his own funds to assist his mother.

22 On 11 December 1987, Hana and all of the children signed a Deed of Family Arrangement regarding the Earlwood property. A copy of the Deed was in evidence. It was prepared by the late Mr Wheeler’s firm. Under the Deed, Hana was given a life estate in the Earlwood property with the remainder to be transferred to the children as tenants in common in equal shares. A transfer of that property from Alexander, as administrator, to Hana pursuant to the Deed was executed on 1 July 1988.

23 According to Michael’s account of what he describes as a number of “informal discussions” with Alexander in the months prior to 11 December 1987 as to the progress of the administration (which I admitted subject to relevance), Michael seems to have understood the effect of the proposed deed of family arrangement as giving to the children one-sixth of the property each at the expense of their mother (something contrary to the arrangement in fact put in place which gave Hana a life estate in place of the one-seventh interest she had been left under the will). I mention this only because it indicates an early (and apparently unfounded) suspicion by Michael of his brother’s actions as administrator. Michael says he was of the opinion that in the “natural course of events” his mother should have inherited the Earlwood property from the estate (T 3.34). Whether or not one might have expected that to be the case, any complaint by Michael as to the exercise of his father’s testamentary bounty was one surely not appropriately directed to Alexander but more properly a criticism of his late father.

24 Michael accepts that he consented to the Deed of Family Arrangement, which he signed. He says that he did so (notwithstanding that he had disagreed with it) because his mother was happy with the arrangement based on the advice given by Alexander and his solicitor that that was the “best way to go”. Michael said in the witness box:

Even though I disagree with it, I am not in charge to make the decisions. The family, based on the authority and information, made a decision to agree to let Mum have life tenancy; because Mum says it’s okay… (T 4.9).

25 According to Michael, the outcome achieved by that arrangement (ie that his mother did not lose her home) was a great relief to Hana and led to her seeing Alexander as the “hero” (T 4.18) and considering that any criticism of Alexander’s conduct of the administration of the estate was an “affront” to him (T 8.25; T 8.32).

26 Alexander (with, he says, the consent of the other beneficiaries) purchased the shares of the other beneficiaries in the Bardwell Park property. Alexander says that Mr Wheeler also advised in relation to that transaction. It seems that this transaction is at least partly (if not largely) the source of Michael’s grievance.

27 Michael says that, at the family meeting on 11 December 1987 at which the Deed of Family Arrangement was signed, all the family also “gathered to sign” a “memorandum of agreement” for the sale of the Bardwell Park property to Alexander. Exhibit A is a copy of an unsigned Memorandum of Agreement which Michael says he received and which I understand him to say he had signed at that meeting. (Michael says that Alexander did not provide him with a copy of the signed document.)

28 The unsigned Memorandum of Understanding (which at first blush appears similar in typeface and format to the Deed of Family Arrangement, from which one might infer it was a document also prepared by the late Mr Wheeler’s firm), which seems to have been prepared in 1987, insofar as it leaves room for a 1987 execution date to be completed on execution, is drafted as an agreement between Michael (as vendor) and Alexander (as purchaser) of Michael’s one-seventh interest in the Bardwell Park property. The document recites that Hana and each of the children are beneficiaries of the estate; that the Bardwell Park property forms part of the estate; that the sale value of that property has been agreed at $130,000; and, relevantly, recites that Alexander (the purchaser) has paid debts, funeral and testamentary expenses of the estate amounting to $77,500 out of his own moneys and is entitled to recoup that amount from the estate. It further recites that each of the beneficiaries (excluding Alexander) has agreed to pay to Alexander the sum of $11,071.43, being a one-seventh part of the said expenses. The draft memorandum of understanding then provided that the vendor (Michael) agreed to sell to the purchaser (Alexander) his one-seventh share as tenant in common of the Bardwell Park property for the sum of $18,571.43 (ie one-seventh of $130,000) but that there was to be deducted from the purchase price for Michael’s share (and credited to Michael in satisfaction of Michael’s liability for a one-seventh share of the estate debts agreed to have been borne by Alexander) the sum of $11,071.43. In other words, contrary to Michael’s understanding of the effect of that document, it seems that Michael’s agreed share of the expenses which had been borne personally by Alexander was to be offset against the amount Alexander was to pay for Michael’s share in the property, leaving a lesser sum payable to Michael than he had thought.

29 Michael says that he signed a memorandum of understanding in this form on the same night as he signed the Deed of Family Arrangement (T 5.30-44). Alexander does not dispute it. There is also no dispute that Alexander in fact acquired title to the Bardwell Park property. It may be that he did so pursuant to a similar arrangement with each of the other beneficiaries (that certainly seeming to be contemplated by the format of the document which referred in the schedule to each of the beneficiaries), though whether any such document was signed by the other beneficiaries I do not know. There was no evidence by any of the other beneficiaries in these proceedings.

30 The relevance of this evidence, in my view, is threefold.

31 First, although Michael was clearly aggrieved in the witness box that he had not received what was due to him for his relevant share in the Bardwell Park property, in saying this he seems to have understood that he was to receive some eleven and a half thousand dollars for his share (T 5.35). However, if what Michael and Alexander signed was an agreement in the terms of that comprised by Exhibit A, as Michael seems to say, then on the terms of that document Michael would have been entitled to no more than $6,500 for his share of the property. (The corollary of that is that, if such agreement was signed then absent any amendment thereto or further agreement between the brothers, there would have been no basis for Alexander to deduct, from the $6,500 payable for Michael’s share, any further amount towards reimbursement of estate or other debts – whether or not he had paid other debts of his mother or the estate to which his brother might have been obliged to contribute. The agreed contract price at least under the memorandum of understanding seems to have been a fixed sum, not one for subsequent adjustment.)

32 Secondly, any dispute about the receipt of the moneys payable for Michael’s share of the Bardwell Park property is properly a claim in contract (arguably long since statute barred) and not one which is before me in these proceedings. On the disposition by the beneficiaries of their interest in the Bardwell Park property, that property ceased to be subject to the trusts of the will and is no longer available to meet any debts of the estate.

33 Thirdly, if an agreement was made in this form then on its face it amounts to an acknowledgement (and apparent acceptance) by Michael that Alexander had paid some of his own moneys towards debts and expenses of the estate and was entitled to recover that amount (quantified in the document at $77,500). (I note this because there seems to have been a suggestion that when the question of the estate accounts came to be considered by forensic accountants in 2006/07 they were unable to verify, on the records then available, all the payments claimed to have been made by Alexander on behalf of the estate, as well as a suggestion that various of the payments which had been made may have been to meet Hana’s personal liabilities – not estate debts. I do not understand the plaintiffs to be advocating any adjustment of the accounts so as to recover back from Hana any amounts paid by Alexander or the estate on her behalf; however, this does raise the question whether an adjustment of the accounts could be effected without reference to Hana’s position, particularly if the beneficiaries had acquiesced in or consented to, the payment of moneys out of the estate on her behalf.)

34 In his affidavit of 3 December 2008, Alexander says that, at the November 1987 meeting, Michael had said that he had considered Alexander’s “personal moneys used to help the estate as now belonging to the estate and not belonging to [Alexander]”. Alexander says that Michael was quite upset when Alexander replied that the moneys were owed to him as they had been lent by him to the estate to help see the estate finalised (paragraph 10, affidavit 3 December 2008). This suggests that Michael may not have understood the extent or basis of Alexander’s personal contribution to finalisation of the estate.

35 As to the remaining property assets in the estate, the half share held by the estate in the Mount Druitt property was apparently sold during 1988 to a third party (Elphinstone Pty Limited). There is little information as to this sale but it does not seem to be suggested that Alexander had any personal interest in relation to the sale (other than as a beneficiary of the estate who might share in the proceeds thereof on distribution of the net estate in due course).

36 Michael says that in early 1988 he spoke to Alexander at the Earlwood property, in the presence of the other plaintiffs, and asked him when they could expect to be paid for the sale of their interest in the Bardwell Park, to which Alexander responded that there were no proceeds as they had been absorbed by the remaining debts in the estate (a response which I note would seem to be inconsistent with the manner in which the unsigned memorandum of agreement provided for a payment of $6,500). However, Michael seems to have accepted or understood that the payment he was to receive for his share in Bardwell Park was to be determined by reference to the overall estate proceeds insofar as his response was, he says, to ask for evidence that there were no such proceeds. He says that about a month later he received a handwritten account (Annexure A to his affidavit) from Alexander.

37 Alexander says that he does not recall such a conversation in 1988 but says that he had a conversation with all of the beneficiaries in November 1987 to explain the breakdown of estate costs, expenditure and income. He says that his copy of Annexure A to Michael’s affidavit bears the date November 1987 and that he gave this document to his siblings at that meeting.

38 Of interest in the handwritten notes (Annexure A to Michael’s affidavit) is that the sum of $77,500 said in the unsigned Memorandum of Agreement to have been paid by Alexander is clearly noted. There is also reference to an amount described as “owing” by Alexander for rent of $17,000. (This document therefore seems to disclose an acceptance by Alexander of an obligation to pay rent for his occupation of the Bardwell Park property, although the arrangements in that regard were not clear to me. There was evidence by Alexander that one or more of his siblings at one stage had suggested that he should be paying more rent for that property.)

39 Also noted on Annexure A is a sum of $6,593.95 described as “recent solic./acc. bills”, that sum apparently being comprised of certain amounts itemised on page 3 of the handwritten notes. At least one of these amounts (noted as an extra solicitor fee of $120.00) can be identified in the forensic accountant’s report (item 165) and seems to be referable to an invoice prior to November 1987. In that report there are no itemised invoices for 1988. There is therefore nothing to indicate that the handwritten notes could not have been prepared prior to November 1987 and handed to the beneficiaries at the November 1987 meeting, as Alexander asserts.

40 Michael, however, was adamant that this document was not provided to him at a meeting prior to 1988 – when it was put to him that this was given to him at the family meeting on 11 November 1987, his pithy response was “And pigs fly” (T 5.27). In fact, Michael went further and asserted that this document was “nothing else than a sham” (T 5.45), though he does not deny having received it at some stage in 1988. (I understand Michael’s evidence in this regard to be that, insofar as the notation of November 1987 may have appeared on a copy of this document, it would be incorrect to infer that this was provided to the beneficiaries during that month and that the contents of the document had been contrived by Alexander to support his assertion that there were no funds in the estate from which to support a distribution of more than $814 to the beneficiaries. However, Michael puts forward nothing to support his view that the figures were contrived, or a sham, other than that he maintains they cannot be understood.)

41 Michael appeared to suggest that, had he been aware of the amount which he would ultimately receive out of the estate (ie, $814), he would not have signed the memorandum of understanding to sell his interest in Bardwell Park (T 5.47 - T 6.1), so that it should not be accepted that the handwritten notes had been provided to him before 1988. In that regard, it might well be thought that if Alexander had been aware of the estate debts as including the additional solicitor/accountants fees as at that time, he would have either added them to the $77,500 specified as sums paid by him – assuming those additional fees were paid by him – thus increasing the amount to be deducted from the purchase price by way of offset for the contribution of each beneficiary to estate liabilities, or otherwise made provision for an adjustment to the purchase price for Bardwell Park to take into account such expenses. That he did not do so, supports the likelihood that the handwritten notes were an assessment or calculation of costs made after the memorandum of understanding was prepared.

42 Therefore, if it were necessary to determine, I think it more likely that the document which is Annexure A was provided to Michael sometime in early 1988, as he contends, rather than at the family meeting in November 1987 or at the time the Deed of Family Arrangement and memorandum of understanding were signed on 11 December 1987. Ultimately, however, I think nothing turns on this. The notes could well have been prepared in November 1987 and added to as further expenses were incurred, before provision to one or more family members in 1988 when the full extent of the estate’s position became known to Alexander. It would not be surprising that Alexander’s recollection of dates, some 20 years after the events, may be faulty and that he would attribute a date to the provision of the document by reference to the date appearing on his copy of it rather than to a precise memory of when the relevant meeting took place.

43 Alexander says that in 1988 he was told by Mr Wheeler that the estate administration was complete and that he informed all of the beneficiaries of that advice. He says that the papers in relation to the administration were thereafter to be retained by Mr Wheeler.

44 Alexander says that he received no further communication in relation to the estate until December 2003, when an assertion was made by a solicitor acting for Michael to the effect that Alexander had not properly accounted to the beneficiaries of the estate. He denied the allegations and instructed Mr Wheeler to act on his behalf. Nothing material seems to have taken place in relation to those instructions before Mr Wheeler died on 17 July 2005. (Subsequently, Alexander has been informed by the manager of Mr Wheeler’s practice that no estate documents could be found in the office.)

45 The first proceedings were commenced in 2006. In 2006/2007 (and according to Alexander, this was by arrangement between the solicitors acting for the plaintiffs in the then proceedings and his solicitor), a firm of accountants, McMahon Worth, was retained to investigate the finances of the estate. In the chronology set out in the body of his affidavit, Alexander says “as far as I know, no report was obtained from them”. In fact, however, a draft report headed “Draft for Discussion Purposes Only” was prepared by McMahon Worth and forwarded by email on 25 September 2007 to the solicitors acting for the then parties to the then litigation. (Alexander explained the incorrect statement in his chronology as possibly being referrable to that part of the chronology having been prepared prior to his affidavit being sworn (and just not updated) (T 13.21; T 13.27).) Annexed to Michael’s affidavit of 18 November 2008, but not tendered or admitted as expert opinion evidence, was the draft report prepared by McMahon Worth in relation to the matter. (I discuss this report in more detail later.)

46 I note that Alexander’s evidence that the chronology was prepared earlier than the date on which he swore his affidavit and may not have been updated at the time it was sworn seems evident from the fact that the entry for 7 April 2008, which deals with the dismissal of the 2006 proceedings, includes the comment “neither K P Lawyers nor I have heard any further from the plaintiffs. … The costs have not been paid”, whereas, of course, by the time of the affidavit of 22 October 2008 Alexander had certainly heard further from the plaintiffs and, as set out later in his affidavit of that date, the bulk of his claimed costs had been paid. As noted above, the 2006 proceedings were dismissed on 7 April 2008. Alexander says that not all of the agreed costs of those proceedings have been paid to him. (He says that he had incurred costs of $40,476 in relation to the proceedings of which a sum of $27,690.14 was paid on 20 October 2008, slightly less than the amount for which he said he had agreed to settle his costs.)

47 Michael gave evidence that he had expressed disappointment at the outcome of the administration of the estate as early as 1987. Michael says that his brother had, in effect, had the control of the administration and had dismissed requests for advice as to the update of the administration over the six to seven year period in which the administration took place by saying that it was a complicated matter. Michael also says that his brother told him that the beneficiaries of the estate were not entitled to any documents and that he was not prepared to provide information to him. (Alexander denies that this was the case.)

48 The distrust and suspicion by Michael of his brother’s conduct was evident in the witness box (and, in particular, his accusations as to the Annexure A handwritten notes being a “sham” and his reference to a notion that there had been misappropriation of funds). Michael was quick to criticise his brother for having excluded him from decisions in relation to the estate but in so doing he seemed to exaggerate what had occurred. He said (at T 4.45):

We were barred from any action because it was under his authority, the administrator’s and the solicitor’s that these actions and decisions were going to be made

49 It is not disputed that Alexander offered to pay (he says as a gesture of goodwill) and did pay the sum of $1,000 to each of his siblings “out of [his] own pocket”. This seems to have been seen as in lieu of the $814 noted in Annexure A as the amount distributable to them (but does not seem to take into account the $6,500 payable under the terms of the unsigned memorandum of understanding, assuming that was duly signed without amendment and that the Bardwell Park arrangement as there recorded subsequently remained unchanged). If, as was put to Michael in cross-examination, the offer of this payment occurred at a meeting in 1988, it tends to support the conclusion that the Annexure A document was provided to the beneficiaries and the subject of discussion in 1988 rather than in November or December 1987.

50 In any event, Michael seems to have accepted the payment of $1,000 (together, of course, with the one-sixth interest in remainder of the Earlwood property) as being in satisfaction of his entitlement as beneficiary in respect of his father’s estate. He gave evidence that he did nothing further in relation to the administration at that time “out of respect for my mother’s wishes and the guilt associated with any notion of misappropriation”. As to the suggestion of misappropriation of funds, which is mentioned, almost in passing, as the source of Michael’s feeling of guilt, and hence reluctance, to take any issue in relation to the administration back in 1987/8, Michael said in the witness box that he had not accused his brother of misappropriating funds, but had rather said to his mother that “we haven’t known a correct account of the estate” (T 8.45).

51 As noted earlier, Michael gave evidence that his mother had been worried sick about losing the family home and it seems that she had taken umbrage at any questioning of Alexander’s conduct of the administration. He said that there was a volatile discussion in relation to that issue (T 9.9) at which his mother said she did not want her children to pursue it and that “she just wanted it finished” (T 9.16).

52 Michael’s statement as to a feeling of guilt at asserting misappropriation amply attests to his belief at the time that there has been misconduct, and his evidence in the witness box seemed to make it clear that Michael believes that he was owed more money out of the estate than he received and that there has been an incorrect accounting as to the estate moneys by his brother. However, this is something which Michael seems to have made a conscious decision not to pursue for almost two decades and, even now, no allegation of wrongdoing or breach of trust is made.

53 Alexander was asked whether or not he was aware that his conduct of the administration or the state of the accounts had been a “major issue” back in 1987. He denied that (T 15.44). He said that he knew, at the time he presented the accounting information (Annexure A) to his siblings, that Michael was not satisfied but said that he did not know it was a “major” issue. He assumed that after 1988 it had all been resolved (T 16.28), a not unreasonable assumption following Michael’s acceptance of the money offered by way of distribution from the estate and his belief that there was no statutory obligation to take matters any further.

54 In 2003, Michael instructed solicitors to write to Michael formally raising his complaint as to the administration accounts. It appears that Alexander referred the matter to Mr Wheeler for advice. It is not clear what happened between then and 2006 when the first set of proceedings was instituted. At that stage, and in the context of the proceedings then on foot, it seems that attempts were made to resolve the matter within the family by means of obtaining an independent report as to the accounts. Alexander’s evidence was that he believed the steps taken with McMahon Worth in 2006 and 2007 were in order to attempt to “fix” the “problem”, by which I understood him to mean his siblings’ dissatisfaction as to the manner in which he had accounted for the estate moneys.

55 Asked in cross-examination whether, so far as he was concerned, it would be impossible for an accountant, armed with the McMahon Worth report, to get to the bottom of what had happened in the estate or as to the estate’s affairs, Alexander’s response is recorded in the transcript as being “It is not possible” (T 17.48). My understanding of the thrust of his response, which I endeavoured to make clear at the time, was that the witness was not denying that it would be possible that an accountant, armed with the report, might be able to get to the bottom of the estate accounts but that, by that response, he was not accepting that an accountant would be able to do so or would be likely to be able to do so. Alexander’s belief (which seems to have been based on his view that this process is what had already happened and had been unsuccessful, T 18.9, in particular referring to various accountants’ reports which had been received) was that it would not be possible at this stage for there to be a final determination of the accounting for the administration because, as I understand it, he does not have any records other than as already produced.

56 Quite understandably, Alexander acknowledged that he would like to have that issue resolved (T 18.25) and said that is why the family had worked together to do that (T 18.31). Alexander accepted that he was not able to say whether an accountant armed with the McMahon Worth report would be able to get to the bottom of what had happened in the estate financially (T 17.18) (though he read the summary of the McMahon Worth report as having basically equated with what he had said was the outcome of the liabilities and assets of the estate) and he had no difficulty in accepting that what he and his family would like would be for somebody finally after all this time to say on the basis of that material what the outcome of the estate was. Mr Reimer sought to rely on this evidence as some kind of admission or an acceptance by Alexander that the relief sought was not unreasonable (or at least that Alexander, having given such evidence, could not be heard to assert the inutility of such an exercise). However, it is in my view significant that, notwithstanding Alexander’s understandable wish for a means to be found to resolve the issues which his siblings have pursued in these proceedings, the difficulty he articulated in this regard (which was broadly unchallenged) was that (T20.1):

As it’s in the documents cannot file full and complete accounts because it has been 30 years virtually to the day my father’s 30 years since he died [sic]. I do not have the full accounts. My family’s asking me to provide them. The issue’s then to provide absolutely full accounts. My brother says dot every “I” and cross every “T”. That’s not possible due to the passing of time and some documents [are] just no longer available even from the instrumentalities themselves.

57 Alexander said that even the accountant had advised that there was incomplete information (T 20.19) and that his opinion, based on that advice, was that to ask for a complete set of accounts at this stage was now impossible. In the face of that evidence, challenged only insofar as it is asserted that the McMahon Worth draft report indicates that there is material on which a final accounting could be determined, the very real prospect confronts me that the process of ordering accounts to be filed is likely to be a costly exercise for no productive outcome.

McMahon Worth report

58 The 2007 draft McMahon Worth report (which expressly records that it was prepared for discussion purposes), seems to have been prepared under two scenarios – first, on the assumption that Alexander would be liable to the estate for the market value of rent in relation to the Bardwell Park property from May 1980 to December 1987 and, secondly, on the basis of an assumed liability of Alexander to the estate for 50% of the market value of the rent. The rental figures so adopted seem to have been a matter for assumption (based on a letter of instruction from solicitors apparently acting for the plaintiffs and a real estate agent’s letter, to neither of which was I taken in evidence). The estimated estate accounts prepared on the first scenario show a net estate of $22,038; on the second scenario they show a net estate of $276.

59 I was taken to a document headed “Reconciliation of the Administrator’s Accounts and Our Estate Accounts”, in which various opinions were expressed (such as, for example, that the income tax liability of the siblings’ mother did not form part of the estate liabilities, although it had apparently been paid out of moneys either from the estate refinancing of Bardwell Park or from an account in Alexander’s name) which suggests that the estate (or Alexander personally) bore various liabilities which were not strictly referable to the estate. The reconciliation records refer to various amounts said to have been paid by Alexander (not all of which could be verified by reference to bank records).

60 It is not clear from the discussion draft whether it is likely that on a further consideration of the material available any final determination as to the estate accounts (or any liability owing by the administrator to the estate) could be made. Schedule 1(2) to the document includes what is said to be an illustrative calculation of an adjustment between Alexander and Hana in relation to partial payment of Hana’s income tax liability and other matters. (To the extent that the beneficiaries may have been prepared to permit the payment of Hana’s personal liabilities from estate funds, consistent with their desire for her to remain in her own home and their unwillingness to raise any query as to the accounts contrary to her wishes, it is not clear to me that there would not now be a difficulty for the beneficiaries in asserting that Alexander should now account to the estate for moneys paid out for their mother’s benefit – something which the draft McMahon Worth report seems to expect would have to happen on a proper accounting process.)

61 Schedule 1(2) to scenario 1 seems to show a balance, after an adjustment for income tax paid by Alexander for Hana, of $32,845 (on scenario 1) or $15,718 (on scenario 2) as having been overdistributed to Alexander. Insofar as the draft discussion accounts suggest that on a calculation of liabilities owing to or from the beneficiaries (which suggests that Alexander might have a liability to account of somewhere between $15,000 and $32,000, which Alexander denies), it is not clear to me that this takes into account the manner in which the agreement as to the sale of Bardwell Park was apparently to be effected.

62 In any event, on my preliminary review of the draft report, the suggestion that a court officer could reach a determination of the accounts based solely on this report seems to me to be rather far-fetched, given the nature of the qualifications and caution expressed by the author(s) of that report.

63 In the draft McMahon Worth report by letter dated 25 September 2007, the authors note that the estate accounts had been prepared under instructions from Ebsworths by letter dated 3 December 2007 in relation to the liability of Alexander to the estate for rent in relation to Bardwell Park and that they did so on the assumption that no fee in relation to any remuneration for duties undertaken and time incurred by the administrator was payable. It is noted:

As we were constrained, eg incomplete material provided to us, we have prepared all schedules on a best estimate basis and do not accept liability for any errors or inaccuracies herein … we were not provided with any bank statements in relation to an estate bank account the defendant’s response to our materials request list states that “an estate bank account was established with the St George Bank … my recollection … was that I did not receive any statements from the bank in relation to this account”. Other documents were not made available to us (if they ever existed) eg calculations of the net estate for death duty. The absence of bank statements for the estate bank account and certain key documents has had a number of significant effects on our work including:

(i) We have had to make assumptions in relation to transactions and in some instances estimate the amount of the transaction based on documents (eg invoices, correspondence, etc) made available to us. In the absence of essential documents, eg bank statements, we are unable to confirm that in some instances a transaction, (eg a cost) in fact occurred/was paid (eg in the absence of any receipt or account statement).

(ii) We have had to make a number of other assumptions. As a result we have prepared all schedules on a best estimates basis and do not accept liability for any errors or inaccuracies therein.

64 In relation to the illustrative calculations of an adjustment between Alexander and Hana it was noted that Alexander had paid $26,796.21 of Hana’s income tax liability. The schedules calculate an adjustment between Alexander and Hana in that amount and state an assumption that for the purposes of the “illustrative calculations of interest” that Hana would not be charged interest on any indebtedness between herself and Alexander but noting that those illustrative calculations may be subject to further instructions if the plaintiffs accepted equal liability for Hana’s income tax debt that was paid by Alexander. Instructions were also sought in relation to the Earlwood property since the authors of the report state that they had not included the property in the estimated estate accounts (on the basis that it becomes available to the plaintiffs and to the defendant upon the death of Hana but have included certain expenses in relation to the property such as payment from the estate of the mortgage balance).

65 The draft accounts show post-death advances having been made by both Hana and Alexander on behalf of the estate (Alexander in the sum of $69,185) under the heading “Expenses paid on behalf of the estate (advances)”.

66 In the schedule the calculations payable by the defendant to the estate are said to be based on the values of rent as stated in a letter from Raine and Horne, Bardwell Park to Ebsworths of 10 August 2007; the assumption being that the date upon which rent commences is 19 May 1980 and ceases on 11 December 1987 on the assumption that rent is “market rent” the amount attributable in Schedule 1 (to scenario 1) is $44,628; in scenario 2 it is $22,314. However, it is not clear whether this takes into account any moneys actually paid by Alexander in relation to rent over the period, nor is it clear how that takes into account the $17,000 shown as rent owing by Alexander in the document which is annexure A.

Submissions

67 It is submitted by Mr Reimer that this case does not involve the application of equitable considerations such as delay or acquiescence; that the plaintiffs are not obliged to show an “equity to relief” such that an equitable defence of that kind may be available; and that they may pursue their remedy unconditionally. Reliance is placed on what was said by Dixon CJ in Mayfair Trading Co Pty Limited v Dreyer [1958] HCA 55; (1958) 101 CLR 428 (at 450-451) to which I refer later. For Alexander, it is acknowledged by Mr Rollinson that Mayfair is authority for the proposition that if a party has a legal statutory right (there, under money-lending legislation, that a document is not to be enforced against that party) then it cannot be put to terms as to the price of accepting that remedy, but Mr Rollinson says that this is not such a case.

68 Mr Rollinson submits that the terms of s 85(1) and Pt 78 r 71 of the Supreme Court Rules 1970, show that the court has a discretion whether and to what extent to require that estate accounts be filed; that the plaintiffs are barred by delay and acquiescence; or alternatively that no sufficient reason is shown for the court to intervene at this stage.

69 It is further submitted that an order to file accounts would be futile since Alexander is not now in a position to prepare and verify accounts with any assurance of accuracy and that to impose such an obligation on him would be oppressive. Mr Rollinson maintains there is no utility in the court making an order in view of the present situation. Emphasis was placed on the serious obligations an administrator has when verifying and filing accounts or filing and passing accounts. It is said that this process puts an impossible obligation on Alexander in the circumstances in which he is placed.

70 Accordingly, Mr Rollinson submits that where there are admittedly incomplete and inaccurate accounts the filing of accounts would be of no use to anybody; that it is unlikely (having regard to the McMahon Worth accounts) that there would be a net payment out to anybody; and that the obligation to produce the accounts should not be imposed, having regard to the delay of over 20 years; the death of the solicitor who was handling the administration; the death of the solicitor on whose advice all the parties were acting; the decision of the relevant parties that the Earlwood property would be resettled so that Hana would have a life estate in that property; the decision by all the parties to sell the deceased’s interest in Bardwell Park; the other decisions were made on the basis of legal advice; and the fact that one aspect of that advice was that there was no obligation to file accounts.

71 The futility of filing the accounts in this case is said by Mr Rollinson to be such that if any order were to be made it would have to be heavily qualified. It was suggested that, in fairness, the only order, if any, that should be made would be an order that accounts be filed in a particular form, such as annexing a copy of the McMahon Worth report and simply deposing as to the administrator’s belief as to its inaccuracy. It is noted that this is not a particularly large estate and that the only circumstances in which the estate is in credit would be if there had been an obligation on the part of Alexander to pay rent on a particular basis for the Bardwell Park property until the time of its sale. That premise is not one which it is said should be accepted, in circumstances where there is no evidence as to any particular agreement in relation to payment of rent and where the Earlwood property itself had been occupied for some time rent-free by one or more of the plaintiffs.

72 In paragraph 16 of the affidavit of 3 December 2008, Alexander said that Michael had complained, a few months earlier than June 2003, that Alexander had not paid “enough rent” whilst living in the Bardwell Park house during the early part of the 1980s. It is not clear, however, what rent Alexander was then paying or how much more rent Alexander recalls he was being asked to pay in respect of the early years in which he had occupied the Bardwell Park house. (Insofar as Alexander points in his affidavit to other siblings having occupied the Earlwood house paying no rent, this seems to have been at a time after 1987 when the house had been resettled on the terms of the Deed of Family Arrangement and any entitlement to rent would therefore be an entitlement by Hana and not for the benefit of the estate.)

73 In regard to the issue of rent I note that in Fysh v Coote & Ors [2000] VSCA 150 (per Ormiston JA, Batt JA and Chernov JA agreeing), a judgment commended in Dimos v Skaftouros & Ors [2004] VSCA 141 per Winneke P, the Court of Appeal in Victoria considered the obligation of an executor to pay ‘fair rent’ for her occupation of a property which formed part of the estate, saying:

that she could not continue to occupy it without paying a reasonable rent or occupation fee from a reasonable time after the repairs had been concluded

Nevertheless, at some stage, perhaps a year, perhaps 18 months, from the time she first took possession, there could have been no justification for her remaining in possession of an estate asset held on trust while not paying a fair rent for its occupation. Perhaps she could have agreed with her co-executor or with all the beneficiaries that the cost of repairs etc. might be set off against some part of the rent for some defined period, but she had no right simply to stay on without proffering any rent or making any offer to do so. She was and remains thereby in conflict with the estate and the other beneficiaries in it

74 The difficulty in determining what the outcome of a consideration of the rent issue would be is that it seems that there was some rent paid (and/or offset against moneys paid by Alexander for the benefit of his mother or the estate) by Alexander for his occupation of the Bardwell Park property (by reference to the evidence noted above and to the reference in his own November 1987 notes to a figure for rent owing). It is not clear how that was calculated, or what a fair or reasonable rent in the circumstances might have been. On the process of filing and passing accounts by a probate registrar it seems unlikely that this issue would be able to be determined by reference to the records now available. (Any dispute as to whether Alexander had an obligation to pay an additional amount by way of rent, or was in breach of his duties as an administrator of the estate by not paying a particular rent for his occupation of the property or by not seeking to recover rent from Hana for the Earlwood property, would be a matter to be raised in a different proceeding (say on an application for an account in equity on a wilful default basis, which would be conditioned on a breach of duty being established), not on the application before me.

75 It is clear that any order for accounts would not be able to relate to any property which had been resettled (In the will of Lockett (1920) SR (NSW) 213; (1920) 37 WN (NSW)). Accordingly, there could not be any obligation to give any account for the period subsequent to 1987 and nor could such an account take into consideration the possibility of credits for liabilities borne thereafter.

76 It is said (and I accept) that the figures contained in the McMahon Worth report are not adequate to enable an assessment of any liability. As Mr Rollinson points out, the report itself acknowledges that further information is necessary. It seems to disclose that the estate funds would not have been sufficient to meet its liabilities and that certain tax liabilities of Hana had been paid by Alexander out of the estate.

77 Mr Reimer submits that those are not reasons on which the court should refuse to make an order. He submits that, instead, those are reasons why it should be left for a court officer to review. Mr Reimer made it clear that the plaintiffs did not suggest that some amount of money had to be paid out to them. Rather, his submission was that his clients were entitled to have the benefit of “satisfying themselves” as to the proper administration of the estate.

78 During argument on this issue, it seemed to me that if the plaintiffs were seeking such “satisfaction”, without alleging any breach by the administrator other than in respect of the failure to file accounts at all (and without seeking an account in equity on either the common form or the wilful default basis), then (at least in circumstances where the plaintiffs had chosen not to seek such satisfaction over a considerable period of time and, in the interim, any documents on which the administrator might have been able to rely in order to establish what had occurred in relation to the accounts seem to have been lost without fault on his part) there would be an argument that they should bear the costs of so doing. Mr Reimer said in response to such a proposition that the plaintiffs should not have needed to make this application, because there is an absolute obligation on the administrator to carry out the filing of accounts, and that, the administrator having failed to do so, the administrator should bear the costs of doing so.

79 Mr Reimer submits that it cannot be said that this would “necessarily” be an exercise in futility because the only evidence as to this is from an administrator whom he describes as being unable to say that the exercise will be pointless (and who, it is said, agrees that it may be possible for a relevant person to get to the bottom of things). The position of the plaintiffs, through their Counsel, seems to be that if the process of filing accounts is taken at least as far as putting those accounts before the court, and if an “appropriate person” then says that it cannot be taken any further, then the plaintiffs will accept that the protocols have been observed and that will be that, but that until the so-called protocols have been observed, the plaintiffs cannot so do.

80 I turn then to the issues for determination.

Issues

1 Obligation under s 85?

81 Section 85(1) of the Act provides as follows:

85 Executor, administrator or trustee to pass accounts

(1) In respect of the estate of a person who died before 31st December, 1981, every person to whom probate or administration has been or is granted shall file an inventory of the estate of the deceased and file or file and pass the person’s accounts relating thereto within such time, and from time to time, and in such manner as may be fixed by the rules or as the Court may order.

82 There is no dispute that Mr Vaclav Hons died before 31 December 1981. Where a deceased has died prior to 31 December 1981 the person to whom a grant of probate or letters of administration is made is obliged to comply with s 85. The plaintiffs contend, and I agree, that insofar as s 85 uses the imperative “shall”, the legislation prescribes an obligation to which Alexander is subject. However, what I do not accept is the contention by Mr Reimer that the court has no discretion in relation to whether an order should be made for the administrator now to file an inventory and file, or file and pass, accounts (as opposed to the more limited discretion which Mr Reimer, after some debate, conceded that the court did have - as to within what time and in what manner to make any such order).

83 Mr Rollinson, in arguing that there is no obligation on the administrator, contends that there are two possibilities in construing s 85: first, that the court has the power to direct that an administrator need not file accounts (conceding that such an order would then dispense with the accounts) and, secondly, that, if his principal submission is not accepted, the court may select any time period within which the accounts should be filed (including making an order that the accounts be deferred until further order of the court) and that this would be an appropriate order in the present case, pointing out the likely futility of the litigation.

84 In the commentary by Mason & Handler on Succession Law & Practice, Butterworths, (at [1437.1]), in relation to s 85, it is said that “unlike the situation under the prior rules there is no provision for an order dispensing with the filing of accounts: but an executor or administrator may in proceedings for the grant or resealing seek an order extending the period for filing accounts until the further order of the court”. Insofar as the amendments made did not continue to provide for an order formally dispensing with the obligation to file, it might perhaps be thought this indicated an intention that there should be no such discretion. That said, it might equally have been thought there was no need to include such a discretion, when the question whether relief should be granted by a court of equity to compel performance of a statutory obligation would, as with other kinds of relief to compel performance of obligations (irrespective of whether those obligations be conditional or unconditional), lie within the discretion of the court (as opposed to there being any discretion as to the subsistence of the obligation per se).

85 In any event, insofar as s 85(1) requires the filing or filing and passing of accounts, this obligation is specified as one to be carried out “within such time, and from time to time, and in such manner as may be fixed by the rules or as the Court may order”, the obligation encompasses within it the possibility of variation in accordance with the discretion of the court.

86 Pt 78 r 71(1) of the Supreme Court Rules 1970, requires the filing of accounts within 12 months after grant or resealing. Pt 78 r 73, however, enables an executor or administrator in proceedings for the grant or resealing to move for an order extending the period referred to in r 71 including an order extending the period until the further order of the court without the prior filing or service of notice of the motion. The rules therefore contemplate that there may indeed be some circumstances in which an order may be made, to all intents and purposes dispensing with the need for the filing of accounts by ordering that this not occur unless and until a further order is made, although not in terms formally dispensing with the requirement ever to file such accounts. In their commentary on applications for an order extending the time for filing accounts Mason and Handler (at [8265]) contemplate that such an application may be made where the legal personal representative is experiencing difficulty in filing accounts within the period (as might well be thought to be the case in the present circumstances given the lapse of time since the administration was completed). They go on to note as a matter of practice that:

If the applicant seeks to have the time extended until the further order of the court and is not entitled absolutely to the whole of the estate it would be necessary for the application to be supported by verified consents of all the other beneficiaries [none of which, it may safely be said, would here be likely to be forthcoming]. If the applicant seeks to have the time extended until a specified date the supporting affidavit should set out the grounds for the application.

87 Here, the grounds on which such an application would be made have been clearly set out in the affidavits of Alexander, and are based on the delay/acquiescence of the plaintiffs, that the lack of records is due, it would seem, to circumstances out of the control of Alexander, and the likely lack of utility of such a task. Insofar as a satisfactory explanation as to the delay or apparent neglect is required, Alexander’s evidence places the reason for his failure to file accounts prior to or at the conclusion of the administration squarely on the incorrect legal advice he was given.

88 It does not seem to me that there is any doubt that Alexander, as an administrator, remains under an obligation under s 85(1) of the Act to file an inventory of the estate of the deceased and to file, or file and pass, accounts in relation to the administration of the estate of the deceased but it is open to me to determine the time and manner within which such an obligation is to be performed. While there is not, in the Rules or in the Act, an express provision allowing for the dispensation of relief from such an obligation, the effect of an order (of the kind which is clearly contemplated under the rules) extending the time for filing of the accounts until further order would in practical terms be to dispense with any immediate obligation to do so. There is also clearly a discretion as to the manner in which any order for accounts should be made, which would have to take into account the evidence as to what is likely now to be possible after the lapse of time since completion of the administration.

89 Whether or not there is a power formally (if not as a matter of practicality in terms of the timing of such an order) to dispense with the filing of the statutory accounts, does not affect the court’s discretion whether to grant any relief at all on the present application. Here, what is sought is an order compelling performance of a statutory obligation. There is no doubt that there is such an obligation. However, the question is whether that obligation should be the subject of an order by the court of the kind sought (or the administrator should simply be left in the position that without accounts having been passed and filed there is no release in respect of the estate accounts and no basis on which commission can be claimed). I consider below whether such a discretion would appropriately be exercised in this case.

2 Applicability of defences of laches/acquiescence

90 The plaintiffs contend that no defence of acquiescence or laches can be raised to the claim for an order that Alexander be required to comply with his obligations under s 85. Reliance was placed on Mayfair in this regard.

91 In Mayfair, Dixon CJ said (at [19]):

In the Court of Chancery it was necessary for a plaintiff to show an equity to relief; otherwise he was not entitled to specific relief at the hands of that court but must rest content with whatever relief he could obtain at law, whether under the provisions of statute or at common law. What constituted an equity to relief was determined by the doctrines of equity. In a case such as this the question would be governed by the rules regulating the exercise of the auxiliary jurisdiction of courts of equity. For the rights of the parties, as distinguished from their remedies, are determined by the Money Lenders Act 1912-1948 (W.A.) and no question of substantive equitable rights could arise. Whatever remedies at law are given by or arise in consequence of the statute may, of course, be pursued by the party unconditionally. But something more would be required before a court of equity intervened on equitable grounds and so went further in point of remedy than the statute provided. There must be some ground, some particular situation, giving an equity to the party to the form of relief sought. … In many situations something beyond the mere existence of a legal right was needed before a ground could be found for the intervention of a court of equity. The fact that the legislature has declared a particular transaction illegal or void does not in itself warrant a court of equity in improving upon or adding to what the legislature has done and to furnish its remedies on no other ground than that the mere existence and general character of the statute would be to do that. But rescission of the entire transaction and restitution of the parties so far as may be to the situation they initially occupied stands on a different footing. It is a form of relief administered by a court of equity and it may be appropriate to the situation in which the statute places the parties. If the party whom it is the purpose of the legislature to protect is prepared to do his part by restoring what he has obtained from the other party by means of the transaction, a court of equity may properly consider that an equitable title exists in him to the remedies which will result in remitting the parties to their former position so far as may be. Such a court may take the view that it is by submitting to this condition that the party makes out an equitable title to the relief of the court. Sometimes it is simply put that because he seeks equity he must do equity.

92 Accordingly, it is not necessary for a plaintiff to establish an equitable right to relief where enforcing a remedy at law which is given by or arises in consequence of a statute.

93 It is well recognised that equitable defences (or, as they are termed in Commonwealth v Verwayen (1990) 170 CLR 394, at 435, defensive equities) such as laches and acquiescence are not available as a defence to a legal claim (Orr v Ford (1989) 167 CLR 316, at 340; (1989) 84 ALR 146, at 159; Batistatos v Roads and Traffic Authority(NSW) (2006) 226 CLR 256, at 268). Indeed the authors of Meagher Gummow and Lehane’s Equity: Doctrines and Remedies, 4^th edn, Butterworths, 2002, at [36-030], criticised in forthright terms (as “heresy”) the proposition (the subject of an assertion made by the English Court of Appeal in Habib Bank Ltd v Habib Bank AG Zurich [1982] RPC 1) that the doctrine of laches applies equally to legal and equitable rights.

94 Similarly, in On Equity, Lawbook Co., 2009, Young JA, Professor Croft and Ms Smith (at [17.10]) note that defensive equities are relevant only when the court is considering the grant of equitable relief and do not affect the availability of any legal remedy (Nelson v Nelson (1995) 184 CLR 538, at 550); observing that if proceedings are based on common law or statutory rights, then it will be the common law or statutory defences which must be considered. Acquiescence and delay cannot be invoked to deny the existence of a statutory right to account.

95 There is authority to support the proposition that where there are legal rights, entitlements and obligations, founded upon and in aid of equitable rights, entitlements and obligations (such as a vesting order under s 71 of the Trustee Act 1925 (NSW)) which are enforced in equity, then equitable defences, such as laches will be available to prevent equitable relief in support of these statutory rights, entitlements or obligations, providing there is nothing in the relevant statute which precludes the application of such equitable defences (Strang v Strang [2009] NSWSC 760).

96 In Strang v Strang, Nicholas J stated (from [122]):

[122] In opposition, the plaintiff’s first submission was that as laches was an equitable defence to an equitable cause of action, it had no application [sic] for the plaintiff’s statutory rights under the Act. …

Hourigan v Trustees Executors and Agency Co Ltd

Orr v Ford

Re McCready

Supreme Court Act

Minister for Lands & Forests v McPherson

97 There, laches was sought to be raised in defence to a claim for a vesting order, that relief being available in relation to and predicated upon an underlying equitable claim. That is not the situation before me at present. Rather, what is sought is to raise laches (and acquiescence) to deny an obligation under statute to file accounts.

98 While it has been said that the statutory scheme, under which an administrator such as Alexander is required to file accounts, supplements the general law obligations of trustees (including executors and administrators) to keep and render proper accounts and to give full information to beneficiaries when required (Re Craig (1952) 52 SR (NSW) 265; 69 WN (NSW) 205 and Jacobs’ Law of Trusts in Australia, 5^th edn, 1986, at paras [1713]-[1717]), it is nevertheless only the statutory duty to account which is here sought to be enforced (and which Alexander seeks to deny by invoking delay/acquiescence).

99 In On Equity, the authors (Young JA, Professor Croft and Ms Smith), state (at [16.1340]) that if there is a liability to account then the only defences are that of release (ie that proper accounts have already been rendered and the account has already been paid) or that there are settled accounts between the parties (Dawson v Dawson (1737) 1 Atk 1; 26 ER 1). As to the latter (the defence of settled accounts) the authors note that traditionally this meant that there had been mutual dealings between the parties and they had for valuable consideration agreed on a balance (Anglo-American Asphalt Co v Crowley Russell & Co [1945] 2 All ER 324) but that “these days [it] means a general settlement of every pending transaction between the parties and therefore must include all the accounts between the parties” (there citing Hickson v Aylward (1828) 3 Molloy (Ir) 1, at 15). Neither defence was pleaded in this case.

100 Having regard to the above, it seems to me that it is not open to Alexander to raise equitable defences such as laches and acquiescence to defeat the existence of a statutory liability to account on an application by the plaintiffs seeking the aid of equity to enforce such a statutory obligation, even though that obligation is broadly similar to rights and obligations otherwise enforceable in equity such as the obligation of a trustee to account. That said, insofar as there is a discretion to determine whether, and if so, what relief should be granted the factors which give rise to the claimed defence of delay and acquiescence should be taken into account. I consider this further in answer to Issue 3 below.

3 Discretion

101 In On Equity (at [16.1340]), the authors, having noted both that the remedy of account (there not distinguishing between an order to comply with a statutory obligation to account and an order requiring a party under an equitable duty to account to do so) is a discretionary one (and therefore aside from the defences to an application for an account), and that the court has a discretion not to order an account, give as an example the situation where the court considers that such an order would be futile or premature (Mulherin v Quinn Villages Pty Limited [2007] QSC 231). Mr Reimer, in argument, conceded that if the court concluded that it would be futile to order an account then there would be a discretion not to do so.

102 At [16.1310], the authors cite Cottenham LC in North-Eastern Railway Co v Martin (1848) 2 Ph 758, at 762; 41 ER 1136, at 1138:

It is, therefore, impossible with precision to lay down rules or establish definitions as to the cases in which it may be proper for this Court to exercise this jurisdiction

103 The kinds of factors which are taken into consideration on an exercise of discretion in relation to the grant of an account in equity can be seen from the decision in Mulherin v Quinn Villages, where Muir J considered a claim for an account on the basis of an admitted fiduciary relationship arising from a development agreement between the parties. His Honour stated (from [22]):

The remedy of account is an equitable one which is discretionary (Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544, at 559), and will not be ordered if an account will serve no useful purpose (Lindley & Banks on Partnership 18 ^th ed, at 612; Marshall v Bullock, unreported, March 27, 1998 (CA England), Brown v Rivlin, unreported, February 1, 1983 (CAT No 56); [1984] CLY, p 138 and Hurst v Bryk [2000] 2 WLR 740, 748B; Lindley & Banks on Partnership 18 ^th ed, at 612; Marshall v Bullock, unreported, March 27, 1998 (CA England), Brown v Rivlin, unreported, February 1, 1983 (CAT No 56); [1984] CLY, p 138 and Hurst v Bryk [2000] 2 WLR 740, 748B). It is argued on behalf of Quinn Villages that even if an account is an available remedy it would not be ordered in the exercise of the court’s discretion. The matters which are said to count against the exercise of the discretion are as follows:

The evidence which shows that the books and records of Quinn Villages in relation to the project were open for inspection by Dr Mulherin at all times.
The absence of evidence of deficiencies in the way in which the books were kept.
The fact that it was not until after the dismissal of his appeal from the decision in the action that Dr Mulherin sought an account.
Income tax returns for years ended 30 June 2000, 2001, 2002, 2003 and 2004 were prepared and submitted in respect of the joint venture.
In 2003 a firm of consulting engineers reviewed the project accounts with a view to reconciling the respective contributions of the parties under the agreement and a copy of their findings was provided to Dr Mulherin.

[and concluded as follows]

[30] I have concluded that an account should not be ordered for a number of reasons. Firstly, in my view, the account would be premature. It would achieve nothing more than an identification, subject to the Hellen accounting, of the current state of accounts between the co-venturers. Another account would need to be ordered after the production and confirmation of the Hellen accounting and after all assets of the joint venture had been realised and all liabilities ascertained. It is desirable that there be only one account of what is or isn’t owed between the parties and “little bits of accounts” should not be ordered ( Adams v Bank of New South Wales [1984] 1 NSWLR 285, at 296).

If any accounting is to be ordered, it would be sensible also to defer that until results of Mr Hellen’s enquiries were available. There is also something oppressive in the way in which Dr Mulherin has sought his further account. It was always open to him to claim such an account in the alternative in conjunction with the accounting ordered by Chesterman J. He chose not to take this course, probably as a tactical decision based on the lack of evidence that there is anything untoward with the way in which the accounts of the project have been kept.

Process of account

104 It is necessary, when considering a number of the discretionary factors which have been raised, to bear in mind what is comprised by such a process, since that enables an assessment to be made not only of how onerous an order for the filing of statutory accounts would be in this case but also the utility of such an order.

105 The accounting principles carried out under the statutory processes of the probate court are the same as with other accounts (Northey v Juul [2005] NSWSC 933, at [18] and see On Equity, at [16.1320]). Although accounts are ordinarily taken on the basis of actual figures, notional figures may be taken into account where accounts are ordered on the basis of wilful default. (In Garcia v Delfino [2003] NSWSC 1001, at [33], this was described as a situation where “the central concept is one of loss or potential loss through inactivity, inattention or failure to face up to responsibilities”.) The authors of On Equity note (at [16.1330]) that wilful default in this context does not connote actual dishonesty but that passive negligence “where the trustee understood the obligations but failed to comply with them” will suffice, citing McLauchlan v Prince [2001] WASC 43, at [16] and [14]; Bartlett v Barclays Trust Co Limited (Nos 1 and 2) [1980] Ch 515, at 546. The authors note that on the wilful default basis the objective is to ascertain what the accounting party should have received or paid had there been no wilful default (MLW Investments Pty Limited v Tacsum [2006] NSWSC 1256, at [33]).

106 In McLauchlan v Prince an action for account on the basis of wilful default was distinguished from common account by Sanderson M (at [12]):

Generally speaking a common account is a procedure to ascertain the monetary dealings of the parties in respect of the subject property and to determine with precision the balance due between them. After the balance is ascertained orders are made as to the rights of the parties to that balance. Thus a common account generally involves a two-step process. But an account on the basis of wilful default involves ascertaining the status of the corpus, determining the extent to which it has been depleted, ascertaining what would have been earned had the estate been properly administered and ordering payment to the plaintiff of that amount. This whole process is wrapped up in the one procedure.

107 An order for taking accounts on the basis of wilful default is thus more onerous on the accounting party than an accounting in common form.

108 In Glazier v Australian Men’s Health (No 2) [2001] NSWSC 6, Austin J (though there dealing not with the process for the taking of statutory accounts under s 85 but with accounts ordered to be taken in equity) set out the general principles which the court should follow when making an order for an account for administration and noted that when an order is made in equity for the taking of accounts the usual form of order is an order in common form or for common accounts. Such an order requires the defendant to account only for what he or she has actually received, and his or her disbursement and distribution of the amounts so received. His Honour noted that the defendant prepares accounts and that it is open to the other parties to surcharge or falsify items in those accounts; (a surcharge being the showing of an omission for which credit ought to have been given, and a falsification being the showing of a charge which has been wrongly inserted, the falsifying party alleging that money shown in the account as paid was either not paid or improperly paid, referring to Parker's Practice in Equity (New South Wales), 2nd edn, 1949, by GP Stuckey and CD Irwin, at 269) (at [38]). His Honour referred to Part 48 Rule 6 of the Supreme Court Rules which preserves these procedures for challenging the account (at [38]).

109 The distinction between an order for accounts in common form and an order on the basis of wilful default was noted by his Honour as follows (at [44]):

Partington v Reynolds

110 I note the differences in procedure by way of highlighting the alternative courses of action which the plaintiffs might have had in seeking to challenge the manner in which Alexander has conducted the administration. However, insofar as what they have sought is simply an order compelling the filing of statutory accounts (and not, for example, an order for the taking of accounts in equity on a wilful default basis) as I understand it the process to be carried out in the probate registry would be in essence an administrative one of verifying the accounts as filed (with whatever requisitions may be considered appropriate). I note, however, that it is likely that the accounts would need to be verified in order to comply with the practice of the probate registrar (in Mason & Handler on Succession Law & Practice, (at [1437.1]) it is said that, while not obligatory for accounts themselves to be verified in estates of persons dying before 31 December 1981, it is the current practice of the Registrar to require verification). Hence at the very least some form of dispensation from that strict requirement would be needed to take into account the present circumstances.

Consequences of an account under s 85

111 In Ludwig v The Public Trustee [2006] NSWSC 890, Campbell J (as His Honour then was) noted (in passing) (at [247]) that:

Wills Probate and Administration Act

Filing and passing accounts has some consequences analogous to a release, in that it provides the opportunity to question the various dealings that the administrator has engaged in concerning the estate

112 The consequence of passing the accounts, as noted by Campbell J, is to provide a release in favour of the accounting party. The consequences of the accounts not being passed is that the accounting party is not in a position to claim commission and that the accounting party would remain (subject to any limitations or defensive equities) open to a claim by the beneficiaries in relation to any alleged breach of duty in relation to the administration of the estate.

113 No relief is sought in these proceedings by way of a general administration order nor, as has been made clear by Mr Reimer, is there any assertion that Alexander has failed in his obligations as administrator of the estate other than the obligation to file and file or pass accounts. The plaintiffs do, however, seek an order that any amount found to be due to a party be paid to that party (paragraph 3), an outcome which seems to me to be highly unlikely given the state of the draft accounts and lack of records available on the evidence given by Alexander.

114 Paragraph 16 of the Statement of Claim pleads that “the defendant’s conduct in relation to the estate caused ill-feeling within the family over many years. The plaintiffs’ case is that they are unaware whether the defendant properly discharged his obligations as administrator and trustee in relation to the estate and in relation to the Earlwood property”.

115 To the extent that what the plaintiffs are seeking is the opportunity to question the various dealings in which the administrator has engaged concerning the account, they have had that opportunity already, albeit in a private context, when McMahon Worth were commissioned to review the material which the administrator was able to provide in 2006/7. (There is no suggestion that any further information is available to be provided and, indeed, the administrator contends that the opposite is the case.)

Relevance of delay

116 In Pearse v Green (1819) 1 Jac & W 135, at 140; 37 ER 327, Master of the Rolls, Sir Thomas Plummer, stated:

It is the first duty of an accounting party, whether an agent, a trustee, a receiver, or an executor, for in this respect, as was remarked by the Lord Chancellor in Lord Hardwicke v Vernon (14 Ves. 500 And see White v Lincoln , 8 Ves. 363) they all stand in the same situation, to be constantly ready with his accounts.

117 Delay, of itself, is not something which would necessarily preclude an order for accounts in equity (or by analogy for the filing of statements of accounts) being granted. From Lord Chedworth vEdwards (1802) 8 Ves Jun 46; 32 ER 68 (there in the case of a principal/agency relationship) it can been seen that the failure to ask for an account, even over a long period, does not diminish the duty to keep proper accounts. Moreover, it is clear that an account may be ordered even though the only breach may be of the duty to provide an account (Meagher JA, at [8] in Asset Risk Management Limited v Hyndes [1999] NSWCA 201, referring to Baker P. & Langan P., Snell’s Principles of Equity, 28th edn, Steven & Hayes, 1982).

118 Nevertheless, where to order accounts to be taken (even where there is a clear duty to account) would be likely to be an exercise in futility at a disproportionate cost to any potential benefit resulting therefrom, the fact of delay in seeking an account seems to me to be an added factor tending against the exercise of the discretion to order such relief.

119 In exercising my discretion as to whether now to order accounts to be filed (and/or as to the manner in which those accounts should be filed), I think it is significant that the plaintiffs have delayed for some considerable time in articulating their complaints in a formal manner (as per the letter of complaint in 2003) and have delayed even longer in taking action to enforce the obligation for the verification of accounts. It is said that the plaintiffs did not act at an earlier time than 2003 out of respect for their mother’s wishes. That may well be the case. However, the consequence of no steps having been taken at an earlier stage to demand or compel the production of accounts is that Alexander was not put on notice until at least 2003 of the need to prepare or retain records in relation to the administration. In 1988, he considered the administration to be finalised. I accept the evidence of Alexander that he does not now have the records necessary in order to comply with what he has been advised would now be required for the filing of accounts in accordance with the rules of court. The incorrect advice given to him by his solicitor has exacerbated the position as Alexander was not made aware of the need to retain professional advisers as necessary in relation to the preparation of formal accounts.

120 When the issue was first raised in 2003 Alexander gave instructions to Mr Wheeler. What Mr Wheeler did or did not do at that stage, is not clear, but what is clear is that insofar as Mr Wheeler retained the estate papers relating to the accounts, they have not been able to be retrieved by Alexander. In those circumstances, the delay since 1982, when accounts were first due to be filed in accordance with Alexander’s statutory obligation, has had the effect that Alexander is now prejudiced by not having caused his solicitor at an earlier time to prepare or retain the relevant documents the necessary papers in order to comply with his obligations nor was he on notice of a need to take steps to retrieve them from his then solicitor prior to the commencement of the litigation. In those circumstances the breach by Alexander of his obligation to file accounts is not one which I could infer was intentional or in contumelious disregard for his obligations as administrator.

Incorrect advice

121 I have adverted to this factor above. It is put by Mr Reimer that Alexander should not, in effect, be entitled to rely upon his own default. However, where that default has been produced by reliance on incorrect legal advice, and where the administrator was by reason of that advice of the incorrect belief that he had no particular need to retain the estate paperwork for such a long period after the finalisation of the administration, it hardly seems a situation in which the maxim omnia praesumuntur contra spoliatorem in my view apply. (I accept that that maxim, perhaps imprecisely, translated as “all things are presumed against the wrongdoer” per Mozley and Whitley’s Law Dictionary (as cited in NWR FM t/a North West Radio v Broadcasting Commission of Ireland & Anor [2004] IEHC 109) can apply even where the destruction of records is bona fide, with negative consequences for the spoliator (see Gray v Haig (1855) 20 Beav 219, at 235-238; 52 ER 587 the Master of the Rolls (Sir John Romilly); Allen v Tobias (1958) 98 CLR 367, at 375, adopting the statement of the maxim given in The Ophelia [1916] 2 AC 206)), here it is not suggested that the loss of records following the death of Mr Wheeler is something which could fairly be laid at Alexander’s door.)

Conduct of the plaintiffs

122 The evidence given by Michael was that he had concerns in relation to the accounts as far back as 1987; that he raised those concerns with one or more of his siblings and his mother; and that he (and it would seem they) chose not to do anything about those concerns out of respect for his mother’s wishes. There was an apparent acceptance by Michael of the finalisation of the accounts when he accepted payment of $1,000 (albeit unhappily) as a final distribution (though I note that this does not address the unpaid sum due under the memorandum of understanding about which Michael may well have a legitimate basis for grievance).

Prejudice to Alexander

123 There could not be any obligation for any account to be given of any transaction regarding the subject of the real property after the transactions occurred in which the property ceased to be part of the estate (in the case of Earlwood that was in December 1987). Mr Rollinson points to the exercise carried out by McMahon Worth which took into account transactions regarding, for example, Earlwood after the time at which it ceased to be part of the estate and, as I understand it, the difficulty with an exercise of the kind proposed was that there might be debts arising from transactions between 1980 and 1987, to the extent that they related to payment of rates, the mortgage and the like for Earlwood prior to 1987 but not corresponding credits for anything engaged in subsequent to 1987 because those transactions would no longer form part of the estate accounts even though what happened to the property in 1987 was that it was retained intact and resettled as a life estate for the deceased’s widow and continued to accrue rates, liabilities and the like.

124 Alexander gave evidence that out of his own pocket he had met numerous expenses during the 1980s in relation to the Earlwood property (that would otherwise have fallen on the estate) because there were no funds in the estate in order to meet those expenses; that he could not now be recouped for the expenses of Earlwood the family having agreed not to sell that estate property but to resettle it.

125 Michael and his siblings seemed to have accepted the benefit of Alexander attending to the payment of benefits on behalf of their mother out of his pocket and/or the estate and to finalise the estate without seeking commission for his efforts without raising any claims to a more detailed accounting until some years after the finalisation of the estate and at a time at which any claim for commission could no longer be satisfied given the fact that all the main assets of the estate are no longer subject to the trusts under the will.

Futility/Expense

126 Mr Reimer conceded during argument that if I were to come to the view that the taking of accounts would be a pointless exercise then I would not be obliged to make an order. However, he submitted that I could not be so satisfied because the only evidence in relation to that matter came from the administrator who had, in evidence, agreed with the premise that it might be possible for some person to get to the bottom of it. (He conceded nevertheless that it might be possible that difficulties in the passing of the accounts would lead to a situation where the relevant court officer would say that matters had been taken as far as they could and that would be the end of the matter.)

127 The authors of On Equity (at [16.1360]), there speaking generally on accounts in equity, state that there is a very wide discretion in the courts under modern rules to deal with each case on its merits, citing Ide v Ide [2004] NSWSC 751; (2004) 50 ACSR 324; (2004) 184 FLR 44, where it was said that the court was justified in bypassing the standard procedure for the taking of an account in cases where any benefits obtained by adhering to the standard procedure would be outweighed by the time and costs involved. The authors recognise that the formal court processes, while thorough, are expensive (at [16.1310]).

128 In Ide v Ide, Young CJ in Eq (as His Honour then was) considered an application for an order that receivers file and serve a detailed claim for remuneration from the date of appointment up to and including finalisation of the receivership and final distribution. His Honour found that the court was there justified in bypassing the standard procedure for the taking of an account in cases where any benefits obtained by adhering to the standard procedure would be outweighed by the time and costs involved. His Honour stated:

[22] … [the] process [of taking accounts] carries with it considerable cost to the parties and significant time delay, at times taking years to come to fruition.

…

Supreme Court Act

[25] Where there are many issues arising on accounts, the time honoured practice on taking accounts has much to commend it as it focuses on the whole issue as well as identifying all the sub-disputes which will need to be determined in order to decide the main issue. It also prescribes the onus of proof, the onus with surcharges being on the surcharging party and the onus with falsifications being on the accounting party. The present case involves a falsification, so that the onus would be on the receiver.

However, in cases where the gross assets of the receivership are minimal and the parties are not wealthy and indeed in cases such as the present, any benefit obtained by adhering to the standard procedure is outweighed by the significant costs and time involved.

[30] A court must also, however, remember that its power to grant declaratory relief should only be exercised in circumstances where the declaration sought will have practical utility and should not be used to determine matters, which may well be otiose. (my emphasis)

Conclusion

129 I have set out above the factors I take into account in exercising my discretion in this case. I accept that whatever records Alexander may have had in order to enable him to file or file and pass full accounts in relation to the estate are no longer in his possession. Alexander and his solicitor either did not cause to be prepared or did not retain the relevant documentation, due to the solicitor’s incorrect belief that there was no statutory duty to file accounts. Alexander’s late solicitor’s file containing whatever information might have been available for the purpose of now preparing accounts cannot be found. The draft accounts which were prepared in 2006/7 make it clear that the information contained there is incomplete and based on assumptions which have - at least in a number of instances – not been verified. Even if the draft accounts are able to be utilised for the purpose of passing final accounts, the size of the net estate is small and any adjustments which might need to be made between beneficiaries would seem to require an alteration to the arrangements apparently acquiesced in by the siblings as to how their mother’s position was to be treated. I am of the view that to order that accounts now be filed and passed would be likely to be an exercise in futility at a cost disproportionate to the parties, given the size of the estate.

130 The position of the plaintiffs in effect is that there is a statutory obligation to file accounts and that the plaintiffs want to have that enforced at the cost of Alexander (who is not now in a position to obtain any commission out of the estate for Alexander’s costs of the administration or of the filing of accounts) simply for the sake of that exercise being completed. It was put to me by Mr Reimer that his clients were entitled to the benefit of gaining “what satisfaction is available to them as a result of having the administrator comply with his obligations”. However, any suggestion that they might pay for the cost of obtaining such satisfaction was adamantly rejected by Mr Reimer.

131 I note that in Warman International Ltd v Dwyer (1995) 182 CLR 544, at 577 (albeit where the court was considering an application for an account of profits) the court referred to the “cardinal principal of equity that the remedy must be fashioned to fit the nature of the case and the particular facts”. Had I been of the view that it was appropriate to order the filing of accounts I would have fashioned the relief such that all Alexander would have been required to file would be the draft McMahon Worth report and any material referred to in it which is in Alexander’s possession and that the exercise of taking accounts be at the plaintiff’s expense.

132 As it is, however, for the reasons set out above I do not consider relief should be granted.

**********

Citations

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Chang v Registrar of Titles [1976] HCA 1

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CITATION:	Hons v Hons [2010] NSWSC 247
HEARING DATE(S):	12 March 2010
JUDGMENT DATE :	1 April 2010
JURISDICTION:	Equity Division Probate List
JUDGMENT OF:	Ward J
DECISION:	Plaintiffs' claim dismissed with costs.
CATCHWORDS:	PROBATE AND ADMINISTRATION – accounts –– plaintiff sought order for administrator to file or file and pass accounts in compliance with statutory obligation under s 85 Probate and Administration Act 1898 – deceased died in 1980 –– defendant relied on incorrect legal advice as to obligation to file accounts –– estate records no longer available to defendant – HELD – laches/acquiescence not available as defences to claim based on existence of statutory obligation –– discretion in court whether to grant relief and, if so, time and manner in which accounts should be filed –– consideration of factors relevant to exercise of discretion (delay of plaintiffs in seeking relief –– reason for failure of defendant to comply with obligation –– incomplete records available to defendant –– small size of estate –– onerous nature of procedure for accounts to be taken likelihood that order will be futile due to defendant’s inability to produce necessary documents for preparation of accounts –– disproportionate cost of such a process where estate so small) –– in exercise of court’s discretion relief should not be granted –– plaintiffs’ claim dismissed
LEGISLATION CITED:	Civil Procedure Act 2005 (NSW) Probate and Administration Act 1898 (NSW) Supreme Court Rules 1970 (NSW) Trustee Act 1925 (NSW)
CATEGORY:	Principal judgment
CASES CITED:	Allen v Tobias (1958) 98 CLR 367 Anglo-American Asphalt Co v Crowley Russell & Co [1945] 2 All ER 324 Asset Risk Management Limited v Hyndes [1999] NSWCA 201 Bartlett v Barclays Trust Co Limited (Nos 1 and 2) [1980] Ch 515 Batistatos v Roads and Traffic Authority (NSW) (2006) 226 CLR 256 Commonwealth v Verwayen (1990) 170 CLR 394 Dawson v Dawson (1737) 1 Atk 1; 26 ER 1 Dimos v Skaftouros & Ors [2004] VSCA 141 Doss v Doss (1843) 3 Moo Ind App 175; 18 ER 464 Fysh v Coote & Ors [2000] VSCA 150 Garcia v Delfino [2003] NSWSC 1001 Gray v Haig (1855) 20 Beav 219; 52 ER 587 Glazier v Australian Men’s Health (No 2) [2001] NSWSC 6 Habib Bank Ltd v Habib Bank AG Zurich [1982] RPC 1 Hickson v Aylward (1828) 3 Molloy (Ir) 1 Ide v Ide [2004] NSWSC 751; (2004) 50 ACSR 324; (2004) 184 FLR 44 In the will of Lockett (1920) SR (NSW) 213; (1920) 37 WN (NSW) Lord Chedworth v Edwards (1802) 8 Ves Jun 46; 32 ER 68 Ludwig v The Public Trustee [2006] NSWSC 890 Mayfair Trading Co Pty Limited v Dreyer [1958] HCA 55; (1958) 101 CLR 428 McLauchlan v Prince [2001] WASC 43 MLW Investments Pty Limited v Tacsum [2006] NSWSC 1256 Mulherin v Quinn Villages Pty Limited [2007] QSC 231 Nelson v Nelson (1995) 184 CLR 538 North-Eastern Railway Co v Martin (1848) 2 Ph 758; 41 ER 1136 Northey v Juul [2005] NSWSC 933 NWR FM t/a North West Radio v Broadcasting Commission of Ireland & Anor [2004] IEHC 109 Orr v Ford (1989) 167 CLR 316; (1989) 84 ALR 146 Pearse v Green (1819) 1 Jac & W 135; 37 ER 327 Rapid Metal Developments (Australia) Pty Ltd v Rosato [1971] Qdr 82 Re Craig (1952) 52 SR (NSW) 265; 69 WN (NSW) 205 Re Cyril Sharpe [1992] FCA 616 Strang v Strang [2009] NSWSC 760 The Ophelia [1916] 2 AC 206 Warman International Ltd v Dwyer (1995) 182 CLR 544
TEXTS CITED:	Heydon D., and Leeming M., Jacobs’ Law of Trusts in Australia, 5th edn, 1986, Mason K., and Handler M., Succession Law & Practice, Butterworths Meagher R., Heydon D., and Leeming M., Meagher Gummow and Lehane’s Equity: Doctrines and Remedies, 4th edn, Butterworths, 2002 Baker P. & Langan P., Snell’s Principles of Equity, 28th edn, Steven & Hayes, 1982 Stuckey GP. And Irwin CD., Parker's Practice in Equity (New South Wales), 2nd edn, 1949 Young P., Croft P., Smith M., On Equity, Lawbook Co., 2009
PARTIES:	Michael Hons (First Plaintiff) Peter Hons (Second Plaintiff) Pauline Hons (Third Plaintiff) Cabrial Hons (Fourth Plaintiff) Raphaella Hons (Fifth Plaintiff) Alexander Hons (Defendant)
FILE NUMBER(S):	SC 123139 of 2008
COUNSEL:	J Reimer (Plaintiffs) M Rollinson (Defendant)
SOLICITORS:	LAC Lawyers Pty Limited (Plaintiffs) KP Lawyers & Barristers (Defendant)