Irvine v Dowling

[2021] NSWSC 119

Supreme Court

New South Wales

Medium Neutral Citation:

Irvine v Dowling [2021] NSWSC 119

Hearing dates:

18, 19, 20, 22 May, 17 June and 13 August 2020; supplementary written submissions 11 June, 12 August, 11 September, 15, 23 October and 5 November 2020.

Decision date:

19 February 2021

Jurisdiction:

Equity - Probate List

Before:

Kunc J

Decision:

Defendant entitled to purchase property from estate

Catchwords:

LAND LAW — Conveyancing — Requirements of writing — Agreement to create or dispose of interest in land — Where beneficiaries including executrix agree in writing to bid among themselves to purchase estate property instead of sale by public auction — Whether subsequent purported oral variation enforceable —Conveyancing Act 1919 (NSW), s 54A(1)

Legislation Cited:

Conveyancing Act 1919 (NSW)

Cases Cited:

Allied Marine Transport Ltd v Vale do Rio Doce Navegacao S.A. (Leonidas D) [1985] 1 WLR 925

Axelsen v O’Brien (1949) 80 CLR 219; [1949] HCA 18

Esdaile v Stephenson (1822) 57 ER 49

Fitzgerald v Masters (1956) 95 CLR 420; [1956] HCA 53

Green v Sommerville (1979) 141 CLR 594; [1979] HCA 60

Radoman Pty Ltd v Vexapu Pty Ltd [2008] BPR 24,903; [2008] NSWSC 8

Unisys International Services v Eastern Counties Newspapers [1991] 1 Lloyds Rep 538

Wright v Madden [1992] 1 Qd R 343

Texts Cited:

J D Heydon, Heydon on Contract, Law Book Co, 2019

Category:

Principal judgment

Parties:

Maxwell Charles James Irvine (Plaintiff and Cross-Defendant)
Elizabeth Ruth Dowling (First Defendant and Cross-Claimant)
Robert John Irvine (Second Defendant)

Representation:

Counsel:
L Ellison SC (Plaintiff and Cross-Defendant)
E Cohen (First Defendant and First Cross-Claimant)
D Williams (Second Defendant and Second Cross-Claimant)

Solicitors:
McIntosh McPhillamy & Co (Plaintiff and Cross-Defendant)
Aubrey F Crawley & Co (First Defendant and First Cross-Claimant)
Nexus Lawyers (Second Defendant and Second Cross-Claimant)

File Number(s):

2018/00014669

Publication restriction:

No

Judgment

Summary

1. Robert John Irvine, Maxwell “Max” Charles James Irvine and Elizabeth Ruth Dowling are siblings and the only children of the late Verdun John Irvine. For convenience and without any disrespect, the Court will refer to the parties in these proceedings and others by their given names.

2. These proceedings are yet another chapter in what is nearly thirty years of litigation over the administration of their late father’s estate (the “Estate”). Verdun died in September 1992. Elizabeth was granted probate of his will on 19 November 1992. Robert, Max and Elizabeth have been the sole beneficiaries of the Estate since June 2002. At the time of the hearing, Robert, Max and Elizabeth were aged 79, 71 and 65 respectively.

3. The main asset in the Estate was and still remains a farming property called “Lowery”, located near Orange in New South Wales. In 1998, Lowery was subdivided and the northern part sold pursuant to orders made by Cohen J of this Court on 14 October 1994. In these reasons, reference to the “Property” is to the southern subdivision only, unless otherwise specified.

4. Elizabeth, as executrix of the Estate, is the registered proprietor of the Property, which she holds on trust for herself and her siblings as beneficiaries of the Estate. Several attempts to sell the Property have been made over the years, including pursuant to a written agreement between Max, Elizabeth and Robert in 2016 that the Property should be sold to the highest bidder by a private auction between the siblings using written bids (the “Agreement”). Subsequently, the siblings agreed orally to a process of verbal bids (the “Verbal Bid Agreement”).

5. Elizabeth claims that she is entitled to buy the Property as the highest bidder pursuant to a written bid made in May 2016 in accordance with the Agreement. However, the siblings fell into an impasse over this and the future administration of the Estate. They are now split into two camps: Max on the one side, Elizabeth and Robert on the other. The Estate is yet to be wound up, and the impasse between the siblings has culminated in the current proceedings.

6. Max commenced these proceedings to have Elizabeth removed as executor relying on, among other things, her alleged delay in administering the Estate. Elizabeth brought a cross-claim (supported by Robert in his own identical cross-claim) which primarily sought:

“A declaration that by reason of a written agreement (made between the cross claimant, the cross defendant and the second defendant on or about 23^rd February 2016) (“the written agreement”), the cross claimant, as executrix of the estate of the late Verdun John Irvine, is entitled to purchase the property known as Lowery 2 … from the Estate of the late Verdun John Irvine (“the estate”) for the sum of $2,300,000.”

7. The matter was initially listed before me for hearing over four days, commencing on 18 May 2020. Mr L Ellison of Senior Counsel appeared for Max, Ms E Cohen of Counsel appeared for Elizabeth and Mr D Williams of Counsel appeared for Robert.

8. The emphasis in the parties’ pleaded cases changed over the course of the hearing. I gave an early indication that if all that remained in the Estate was the sale of the Property and the filing of accounts, I would not impose on the Estate the costs and delay of appointing a new executor. Elizabeth undertook to file accounts. Max accepted that if Elizabeth was entitled to sell the Property to herself pursuant to the Agreement, there was no utility in changing executor.

9. What was initially a dispute over the administration of the Estate and revocation of probate became a contest over whether Elizabeth has a present entitlement to purchase the Property pursuant to the Agreement. The parties ultimately accepted that the success of their respective cases turned largely on the principles of contract, including the application of the Statute of Frauds as enacted in s 54A(1) of the Conveyancing Act 1919 (NSW) (the “CA”), which provides:

No action or proceedings may be brought upon any contract for the sale or other disposition of land or any interest in land, unless the agreement upon which such action or proceedings is brought, or some memorandum or note thereof, is in writing, and signed by the party to be charged or by some other person thereunto lawfully authorised by the party to be charged.

10. This led to additional evidence and submissions being filed after the hearing, concluding on 5 November 2020.

11. Elizabeth’s case was that she was entitled to purchase the Property for $2,300,000 pursuant to a written bid she purported to make under the Agreement or, if the Verbal Bid Agreement was valid (which she denied), for $2,500,000 pursuant to a verbal bid she had made under the Verbal Bid Agreement. She said she had been and was ready, willing and able to complete that purchase. No party took any point about the form of declaration which Elizabeth sought and the proceedings were conducted on the basis that in substance, if not form, Elizabeth was seeking relief in the nature of specific performance.

12. The parties agreed that the Agreement was valid and binding. The Court’s conclusions to the effect that Elizabeth is entitled to purchase the Property for $2,300,000 may be summarised as:

1. Because the Agreement required the successful bidder to enter into a written contract to buy the Property on specified terms, the Agreement was a contract “for the disposition of land” for the purposes of s 54A of the CA and had to be in writing to be enforceable.

2. The Verbal Bid Agreement was a purported variation rather than a waiver of the Agreement because it sought to change a fundamental aspect of the Agreement, the bidding method. A variation to an agreement that had to be in writing was itself required to be in writing under s 54A of the CA to be enforceable. The Verbal Bid Agreement was unenforceable for want of writing, so Elizabeth was not obliged to buy the Property pursuant to her $2,500,000 verbal bid and the Agreement remained on foot in its original terms.

3. Elizabeth’s subsequent written bid of $2,300,000 gave her the right to buy the Property pursuant to the Agreement.

4. Viewed objectively, the three parties to the Agreement had not abandoned it. Elizabeth’s proposals to Max to depart from the Agreement were attempts on her part to avoid litigation. These were never accepted by Max and were never put or agreed to by Robert.

5. Max’s defence of laches failed. Elizabeth’s conduct amounted to mere delay and there was no prejudice to Max other than a delay in receiving his share of the proceeds. This would be compensated for by Elizabeth, who sought equity, having to do equity by paying the Estate interest on the purchase price.

6. Nor was the fact that the Property had now appreciated in value beyond $2,300,000 a discretionary reason to deny Elizabeth relief. The parties had made their bargain in the Agreement and there was no suggestion that there were vitiating circumstances attending their entry into the Agreement. While Elizabeth’s delay had been a breach of the Agreement, no party had purported to accept that breach and terminate the Agreement. Requiring Elizabeth to pay interest would do equity to the Estate in all the circumstances, including that the Property was now worth more than it was at the time of the Agreement.

The facts

13. With minor exceptions, the facts were not in dispute. It is convenient to commence these reasons by setting out the Court’s chronological findings of fact. In what follows, where any reference is made to findings on contentious matters, they are cross-referenced to that part of the of the judgment where reasons for the finding are given. To the extent that any other facts set out below were not agreed by the parties, I am satisfied on the balance of probabilities that they could not be sensibly disputed.

14. The first round of litigation following the death of Verdun comprised four sets of proceedings, including family provision claims by Elizabeth (ultimately not pressed) and Verdun’s widow, Enid. These were resolved by a judgment of Cohen J delivered on 14 October 1994 (the “Family Provision Judgment”), the effect of which was summarised by Johnson J in Dowling v Irvine [2005] NSWSC 531 (the “Possession Judgment”) in a passage which I respectfully adopt:

“4.   [Elizabeth], as Executrix of the Estate of the late Verdun John Irvine, is the registered proprietor of “Lowery”. As such, [Elizabeth] holds “Lowery” on trust for the beneficiaries of the Estate of the late Verdun John Irvine. The beneficiaries are the three siblings – Robert John Irvine, [Elizabeth] and [Max].

5.   On 14 October 1994, Cohen J, in Equity Division proceedings No. 2009 of 1993 and No. 4253 of 1993, made orders pursuant to the Family Provision Act 1982 which, inter alia:

(a)   confirmed [Elizabeth] as the Executor and Trustee of the Estate of the late Verdun John Irvine;

(b)   created a life tenancy in the southern part of “Lowery” in favour of Enid Ruth Irvine, the widow of Verdun John Irvine;

(c)   ordered that, in lieu of the benefits to which [Max] was entitled under the Will of Verdun John Irvine, [Max] is to receive 45% of the residue of the estate of Verdun John Irvine.

6.   Accordingly, as a result of the orders of Cohen J, [Max] was entitled as beneficiary to 45% of the residue of the estate of the late Verdun John Irvine and [Elizabeth] and Robert John Irvine were entitled to 27.5% each. The principal asset in the estate was and remains “Lowery”.

….

8.   Enid Ruth Irvine died on 29 June 2002 having made her last Will on 2 April 1993. Administration of the Estate of the late Enid Ruth Irvine was granted to [Max] on 23 July 2004.

9.   Between 1994 and June 2002, [Max] and the late Enid Ruth Irvine operated a partnership business on “Lowery” grazing livestock, growing crops and removing timber.

10.   In 1998, “Lowery” was subdivided and the northern part was sold pursuant to orders made by Cohen J on 14 October 1994. Thereafter, [Max] and his mother continued to farm and maintain the remaining southern part of “Lowery” in which the mother had a life interest. …

11.   Following the death of Enid Ruth Irvine on 29 June 2002, [Max] has remained in occupation of “Lowery”. [Max] does not reside at “Lowery” but lives in XXXX Street, Toogong. He uses “Lowery” for agricultural purposes.”

15. Max’s continued use of the Property after Enid’s death led to a dispute with Elizabeth, in her capacity as executrix of the Estate. On 19 November 2004, Elizabeth instituted proceedings against Max in this Court for possession of the whole of the Property. For the reasons set out in the Possession Judgment, on 3 June 2005 Johnson J made orders in Elizabeth’s favour for possession of the Property and restrained Max from re-entering the Property other than for the purpose of attending an auction of the Property or with Elizabeth’s consent.

16. Elizabeth obtained possession of the Property on 31 August 2005. The detail of what happened thereafter is not relevant. A public auction scheduled for 30 May 2008 did not proceed due to a caveat lodged by Max. No further attempt was made to sell the Property at this time, with the three siblings eventually coming to a modus vivendi of Max and Elizabeth (in her personal capacity and as executrix of the Estate) using the Property for the benefit of them all. Robert did not take an active farming role.

17. In or around early 2014, there was what Elizabeth and Max agreed was a casual conversation between the three of them about putting in place an arrangement whereby the three siblings could bid to purchase the Property, thereby ensuring the Property remained in the family.

18. On 12 September 2014, Elizabeth saw a conveyancer, Ms Sonia Doherty, but at that time did not give Ms Doherty any instructions to prepare a contract. Ms Doherty did not receive further instructions from Elizabeth until March 2016 (see paragraph [27] below).

19. In early 2015, discussions continued between the siblings as to the sale of the Property. The result of those discussions was subsequently reduced to writing in the form of the Agreement.

20. Elizabeth had the Agreement prepared with legal assistance (not by Ms Doherty) as a typed document. It was signed by Robert and Elizabeth on 11 February 2015 and provided:

“AGREEMENT

The Property and the Estate of the late V.J. Irvine

All three beneficiaries of the Estate of V.J. Irvine namely Robert John Irvine, Maxwell Charles James Irvine and Elizabeth Ruth Dowling agree that in consideration of the Executor, Elizabeth Dowling agreeing to refrain from selling Lowery at Public Auction the beneficiaries agree that they will hold a private auction between themselves for the purchase of Lowery as they each acknowledge a desire to keep the property in the family and all parties are desirous of owning the property.

All bids are to be in writing and are binding on the bidder.

The bids to be delivered by hand or email to each of the other parties.

No party to this agreement will make any objection to the Executor, Elizabeth Dowling making a bid and if she makes the winning bid it is agreed that it will not be a breach of her executorial duties that she purchase Lowery.

Any bid must be made within 48 hours of the previous bid, in the event a further bid is not received within 48 hours the last bid placed will be the winning bid.

Following a winning bid being accepted by the Executor the purchaser will execute a contract (sic) a Contract of sale and the contract will provide that settlement will take place within four weeks of acceptance of a winning bid for a sale price equal to the winning bid.

Upon a winning bid being accepted by the Executor a deposit of $10,000 will be paid to the Executor to hold on trust for the Estate until settlement.

Settlement is to take place with (sic) 4 weeks of the final bid being received.

All parties are advised to seek independent legal advice.”

21. Shortly after she and Robert had signed the Agreement, Elizabeth asked her husband, Richard Dowling, to go to Max’s house and have him sign the Agreement. Max said he would only do so on terms. Max did not sign the Agreement at that time. Richard returned home and made this diary note of his discussion with Max:

“Discussion with Max re Agreement

He wants: $81K owed to [Enid Ruth Irvine]

happy to round to $81.

Liz is to pay $25K from probate

$71K for contracting

Bank balance approximate

Toogong blocks for him [Max]

Cudal to Liz + Rob

Agistment calculated at finish”

22. The references to “Toogong” and “Cudal” in the preceding paragraph are to additional property owned by Verdun, both forming part of the assets of the Estate. Although the Property was (and is) the main asset of the Estate, discussions between the siblings in recent years have included reference to the Toogong and Cudal properties, as well as other assets of the Estate (such as cash at bank). These other assets are not the subject of the current dispute and not something about which the Court has been required to make a determination.

23. Richard and Max had several discussions over the next year, the main topic of which was various demands Max had about the winding up of the Estate. This included conditions for the proposed contract of sale that the successful bidder for the Property would enter into. In or around July 2015, Richard typed up a list setting out the purported position of the Estate and Max’s conditions, and took them to Max. He told Max that if the list was an accurate reflection of the position they had reached, Max should sign the Agreement to enable the family auction of the Property to proceed. Richard’s list, which I will refer to the as the “Estate Position Statement” was:

POSITION OF THE ESTATE AT 31 DECEMBER 2015

WITHOUT PREJUDICE

Assets of the Estate

Bank balance approx.           $30,808.12

Boree St Cudal           Unknown

Barrack St Toogong           Unknown

Liabilities of the Estate

Rural Assistance Authority        $70,000

Owing to ER Irvine Estate        $81,000

Monies owed to the Estate

Agistment     Max     $40,218

Liz     $73,097

Loan to Liz           $25,000

Monies owed to Max

Max’s claim     $71,000

Monies owed to Liz/Richard

Invoice exceeding but say   $75,000

7,160t Biosolids 2008     $25,518

TERMS FOR PRIVATE AUCTION

Cudal block be transferred to Robert and Liz

Toogong blocks be transferred to Max”

24. Max still did not sign the Agreement.

25. It appears that discussions between the siblings waned in the second half of 2015. However, there is no dispute that on 23 February 2016, Richard attended Max’s home and that, on this occasion, Max signed a counterpart of the Agreement. Max contends he signed the Agreement subject to a number of conditions.

26. Mr Ellison SC submitted for Max that the Agreement was evidenced by the two signed counterparts (one signed by Robert and Elizabeth on 11 February 2015 and the other by Max on 23 February 2016), together with the Estate Position Statement. All parties agreed that the Agreement was valid and binding, and Elizabeth and Robert did not dispute that the Estate Position Statement was part of the Agreement. It is not necessary for the Court to make any finding about the status of the Estate Position Statement because the real issue in dispute presented for resolution by the parties was whether Elizabeth was entitled to purchase the Property pursuant to the Agreement.

27. On 10 March 2016, Elizabeth instructed Ms Doherty to prepare a contract for the sale of the Property. On 18 March 2016, Ms Doherty provided Elizabeth with a draft contract.

28. On or about 6 May 2016, on receipt of further instructions from Elizabeth, Ms Doherty provided a final draft contract for sale to Elizabeth (the “Sales Contract”) which the Court finds complies with the Agreement. There was more than one draft prepared by Ms Doherty and there was some confusion in the evidence about the final form of the document provided to Elizabeth. Ultimately nothing turns on this. However, based on Elizabeth’s evidence and Ms Doherty’s evidence (the latter was not cross-examined), the Court finds the Sales Contract included provision for a 28 day settlement, a $10,000.00 deposit and was for both the Property and the water allocation licence associated with the Property (searches for both were attached to the Sales Contract). It also included special condition 37 for the payment of interest, to which further attention is given below (see paragraphs [151]–[155]). Ms Doherty also provided Elizabeth with a list of instructions of what to do when the “purchaser” of the Property was determined:

“WHEN THE BUYER HAS BEEN DETERMINED THE BUYERS (sic) NAME IN FULL AND ADDRESS IS WRITTEN ON BOTH COPIES OF THE FRONT PAGE WHERE INDICATED

THEIR SOLICITORS / CONVEYANCERS / LEGAL REPRESENTATIVE DETAILS ARE INSERTED WHERE INDICATED

THE PRICE TO BE INSTALLED (SIC)

THE BALANCE, PRICE LESS $10,000 TO BE INSERTED

THEN THE PURCHASER TO SIGN AS PURCHASER ON COPY WITH CROSS NEXT TO PURCHASER

VENDOR TO SIGN AS VENDOR ON COPY WITH CROSS NEXT TO VENDOR

THEN YOU INSERT THE DATE THE CONTRACTS ARE SIGNED BY BOTH PARTIES.

YOU HAND THE PURCHASER THE CONTRACT SIGNED BY THE VENDOR

RETURN TO ME THE CONTRACT SIGNED BY THE PURCHASER”

29. At some stage prior to 10 May 2016, Max, Elizabeth and Robert came to the Verbal Bid Agreement, being an oral agreement that an auction (the “Private Auction”) would take place between them with their bids for the Property being made verbally. I do not accept the submissions made for Elizabeth and Robert that the Private Auction was a non-binding occasion to negotiate about indicative bids, but nothing turns on this because of the view the Court has taken that the Verbal Bid Agreement is unenforceable (see paragraphs [131]–[135] below).

30. The Private Auction took place on 10 May 2016. Max and Elizabeth met in person at the Property, with Richard and various members of Max’s family also in attendance. Robert participated in the Private Auction by listening in on Richard’s mobile phone.

31. All of the bidding at the Private Auction was verbal. It was common ground that Robert dropped out of the bidding first, leaving it to Max and Elizabeth.

32. Elizabeth made a bid of $2,300,000. The Court is satisfied that this was then superseded by Max with a bid of $2,400,000.

33. Elizabeth then countered with a bid of $2,500,000, following which Max shook Elizabeth’s hand, said words to Elizabeth to the effect of “Congratulations, it’s yours” and left the Property. The Court is satisfied that even if Robert did not hear in real-time Elizabeth’s successful bid of $2,5000,000, there can be no doubt that he was made aware of it. It was left unchallenged by all parties that no further bidding took place that day, and I accept it as inherently likely that Richard, who had been acting as a conduit for Robert all day, would have informed him of the outcome.

34. It was common ground that on 10 May 2016:

1. No written offers were made;

2. Elizabeth did not pay the $10,000.00 deposit; and

3. No written contract for sale of the Property was entered into.

35. Max and Elizabeth had a discussion the next day, 11 May 2016. There was a dispute in the evidence as to the details of everything said on this occasion, but again nothing turns on this. However, it was common ground that Elizabeth informed Max she no longer wanted to pay $2,500,000 as it was “too much” and that there were subsequent discussions about next best offers.

36. The detail of what happened next is not relevant, because there was no dispute that on 18 May 2016 Elizabeth gave Max, in writing, an offer to purchase the Property for $2,300,000.00 (the “Written Offer”):

“In accordance with the agreement signed by Robert and me on 11 February 2015 and signed by Max on 23 February 2016, I offer $2,300,000 for the purchase of the Property.

Elizabeth Dowling

Elizabeth Dowling

18^th May 2016

9 AM”

37. The text reproduced in italics above was handwritten, the balance being in typescript.

38. On 19 May 2016, Max sent an email to Elizabeth and Richard, with a hard copy of that email also placed in Elizabeth’s letterbox. The email said:

“To Liz & Richard Dowling

The agreement in which you made at the family action (sic) and accepted on the 10/05/16 was 2.5 million. No other offers were made by you or Robert within the 48 hour period that followed.

However, we may accept your bid of 2.3 million made on the 18/05/16 with the following conditions;

1.   The property is only to be put in [Elizabeth Ruth] Dowling name

2.    Full lists of assets and liabilities to Robert and Max as to date

3.   Guarantee that there is no executor fees in writing

4.   The blocks at Toogong be transferred to Max

5.   Max’s share of the block at Cudal be transferred to Robert and Liz

6.   Copies of all Bank statements from the NAB as well as all copies of statements from the rural assistance authority to Robert and Max as to date

7.   Each beneficiary needs to be notified in writing their share of monies in final distribution of the estate before the sale of the property

8.   Robert and Max need to approve these conditions before the sale goes ahead”

39. There was no evidence of Elizabeth’s reply to the above correspondence. However, on the basis of the events that occurred thereafter, I am satisfied — and certainly on the balance of probabilities — that Max never communicated that he accepted Elizabeth’s Written Offer.

40. On 27 May 2016, Max lodged a caveat over the title to the Property, claiming an “equitable interest as a beneficiary of the estate of the late Verdun John Irvine”. I accept Max’s evidence that this was because he was concerned Elizabeth intended to sell the Property to herself pursuant to the Written Offer, a course to which he did not agree. The caveat was ultimately withdrawn on 27 July 2016.

41. On 27 June 2016, the solicitors then engaged by Max, BJ Macree, wrote to Elizabeth stating that “our client has handed us a form of agreement that in its present form and detail is unsatisfactory” and requesting that she retain a legal representative “with whom we can discuss and hopefully come to agreement that will ensure the estate is finally distributed and accounted for without further cost and delay”. On the basis of evidence given in cross-examination and in light of Elizabeth’s reply (set out in the next paragraph), I accept that the “form of agreement” referred to in BJ Macree’s correspondence is the Agreement.

42. On 7 July 2016, Elizabeth responded to BJ Macree:

“I have your letter of 27^th June 2016 which was not received until 4^th July.

I am enclosing a document that your client signed on 23^rd February 2016. We are unable to complete the sale as your client has lodged a Caveat on the property Lowery.

I have submitted a further agreement to your client to finally distribute the estate. Please advise in writing as to the changes you want to the deed and I shall consider them. I do not wish to go to the expense of retaining a solicitor at this time as the Estate has had too many legal expenses and the costs of retaining a solicitor and having a new solicitor understand what has occurred in the past is too high and will be born 45% by your client.

I am consulting direct access with a barrister who has a knowledge of what has occurred since the death of my late mother in 2002, I shall put all amendments to the barrister for approval.”

43. Elizabeth’s evidence is that the “further agreement” referred to is a document entitled “Family Agreement”, which provided:

“FAMILY AGREEMENT

THIS AGREEMENT is made between

MAX IRVINE, ROBERT IRVINE AND ELIZABETH DOWLING

WHEREAS

1.   The parties to this agreement are the beneficiaries of the Estate of the late Verdun John Irvine who died on……

2.   Elizabeth Dowling is the Executor of the Estate of the late Verdun John Irvine appointed pursuant to his Will dated……

3.   The terms of the Will have been altered by certain Court orders made by consent and by order of the Supreme Court of New South Wales.

4.   The parties have agreed that Elizabeth Dowling is entitled to purchase the property known as ……. being the whole of the land contained in ……. for the sum of $2,300,000.

5.   All parties have examined the contract of sale between the Estate and the said Elizabeth Dowling and agreed to its terms.

6.   The true financial position of the Estate is as set out in the Annexure to this Deed.

IN CONSIDERATION OF THE PROMISES AND AGREEMENTS SET OUT ABOVE THE PARTIES AGREE

A.   That upon the sale of Lowery to Elizabeth Dowling, Elizabeth Dowling will distribute the estate finally to the parties in accordance with their entitlements under the Will and the Court Order made in Family Provision proceedings and in accordance with the promises set out below.

B.   That the financial position of the Estate is in accordance with the Annexure to this Deed and no party will make any further claims in relation to the facts set out in the Annexure and will take no legal or other action against the Executor personally or against any other party to this deed in relation to the assets and liabilities set out in the Schedule or the correctness of the Schedule.

C.   The parties agreed that they will not take any legal action against the Estate, the Executrix personally or any beneficiary in relation to the Estate of the late Enid Ruth Irvine.

D.   The parties agree that any monies owed by the Estate to any beneficiaries be offset by any monies owed to the Estate by any beneficiaries as the attached Statement of Position which is annexed to this Deed and the terms set out below

1.   That all beneficiaries have access to any bank statements or financial records including records of any assets and liabilities they may seek;

2.   That the Executor of either estate will not charge any commission;

3.   Max Irvine will pay to each of Robert Irvine and Elizabeth Dowling $80,000 which shall be deducted from his entitlement on settlement

4.   That Robert Irvine will receive the portable cattle yards now situate on The Property;

5.   That the two blocks owned by the estate in Barrack St Toogong be transferred by the estate to Max Irvine at the expense of Max Irvine.

6.   The block in Boree St Cudal, the property of the estate be transferred by the Estate to Robert Irvine and Elizabeth Dowling at their expense;

7.   That the estate transfer Lowery to Elizabeth Dowling at a price of $2,300,000 in accordance with the terms of the Contract of Sale which is mentioned above provided that her share of the estates and the payment in 3 above is offset against the purchase price. …”

A.   Each party to this agreement has been given the opportunity to obtain separate legal advice in relation to this Agreement.

B.   This agreement is executed as a Deed.

C.   This agreement may be pleaded as a bar to any action taken by any part to this deed against the other.

D.   Max Irvine and Robert Irvine agree that Elizabeth Dowling has completed her executorial duties in a proper manner and will make no claims against her in relation to any funds expended or actions taken by her in completing her executorial duties and indemnify her against any claims made by any party to this Deed.

E.   The parties agreed that the terms of this Deed and the performance of its terms will satisfy all of their entitlements pursuant to the terms of the Wills of the late Verdun John Irvine and Enid Ruth Irvine and any Court orders made in relation to their estates and the assets of their estates.”

44. There was a dispute in the evidence as to whether a copy of this “Family Agreement” was ever given to Max (directly or via his solicitors). Mr Ellison SC submitted on behalf of Max that only one document was attached to the 7 July letter, being a copy of the counterpart to the Agreement signed by Max. This was said to be evident when considering Elizabeth’s further letter of 12 July 2016. It appears that before receiving her letter of 7 July, BJ Macree had sent a follow-up to their June correspondence. On 12 July, Elizabeth responded and informed Max’s solicitors she enclosed “a copy of my letter and document sent to you on 7 July 2016” (emphasis added).

45. Elizabeth accepted that the document re-sent on 12 July appeared to be the Agreement only, with no reference to the Family Agreement (T229.39-230.1), and that no subsequent correspondence in these proceedings refers to the Family Agreement (T230.43-46). That concession was wrongly made. Though admitting she couldn’t clearly remember, Elizabeth was adamant that she would have sent a copy of the Family Agreement to Max’s solicitors (T228.14-19, 230.25-32, 230.50-231.16, 233.4-17). The Court is not satisfied a copy of the Family Agreement was provided to Max personally or through his solicitors until some time later because, contrary to Elizabeth’s concession, it is referred to in Max’s solicitors’ correspondence of a year later (see paragraph [53] below). Again nothing turns on this because it was not suggested the Family Agreement was ever agreed to by anyone.

46. In any event, on 1 September 2016, Elizabeth commenced a new series of correspondence with Max’s solicitors, BJ Macree:

“I note that you are acting for Maxwell Charles James Irvine in this matter.

I am the executor of the Estate of the late Verdun John Irvine and I am attempting to finalise the Estate. Your client is a substantial beneficiary of the Estate, but he does not appear to have any interest in seeing it finalised. This is causing substantial expense to the Estate.

On 23^rd February 2016 the beneficiaries came to an agreement in relation to the sale of a substantial asset of the estate, a property known as “Lowery” which was the deceased’s family property. The idea was to retain the property in the family. A copy of the counterpart of that agreement signed by your client is enclosed.

An offer to purchase “Lowery” was made by me on 18^th May 2016 at 9am and no higher offer has been received. No other bid had been received from any other person. I am enclosing a copy of the offer.

I wish to go ahead and transfer the property into my name and finalise the Estate. The estate will be the beneficiary of the $2,300,000. I do not wish to incur the costs of the Transfer and finance if there is to be an objection by your client.

Please advise if your client has any objection to this course. If he does wish to object please advise the reason for his objection.

If I do not hear from you within seven days I shall proceed with the Transfer on the basis that your client does your object….”

47. BJ Macree replied on 6 September 2016:

“We confirm that we act for Maxwell Irvine.

Your letter dated 1 September 2016 was received at this office today and we are instructed to reply as follows:

Our client objects to the transfer of the property to yourself as proposed in your letter.

We are instructed that the day following the private auction referred to in the agreement that was attached to your letter, you withdrew your offer of $2,500,000.

In any event if the property is to be sold it is out client’s wishes that the market be tested and the best offer be obtained by the property being offered for sale at public auction.

Further, our client is concerned as to the manner by which estate monies have been dealt with since his father’s death. He requests that you make available to him all of the accounts of the estate for his inspection. If you do not agree to this course our client may seek to have an enquiry undertaken through the court process. …”

48. I infer that the response provided by BJ Macree (notably Max’s explicit objection to the transfer of Lowery to Elizabeth) led Elizabeth to file a notice of motion on 16 November 2016 in the 1992 proceedings in which she was granted probate of the Estate, seeking judicial advice on questions including:

“A.   Whether [Elizabeth], as executrix of the Estate would be justified in purchasing the property Lowery from the Estate for the sum of $2,300,000.

B.   Whether [Elizabeth], as executrix of the Estate is bound by her offer to purchase the property Lowery from the Estate for the sum of $2,300,000.

C.   In the event that the answer to A and B are in the negative, whether [Elizabeth] would be entitled to bid at an auction of Lowery. …”

49. The motion came before Lindsay J on 5 December 2016, who made orders and notations which included:

“2.   NOTE that the subject matter of the motion is a dispute between the plaintiff and her two siblings (namely, Robert John Irvine and Maxwell Charles Irvine) about the proper disposition of land which comprises the principal asset of the estate, and about whether the plaintiff is entitled to perform an alleged agreement (made between the three beneficiaries) for her to purchase the land.

3.   ORDER that the plaintiff’s application for judicial advice (by the notice of motion filed 16 November 2016) be dismissed, but subject to directions for any dispute between the parties to be determined on notice to all beneficiaries.

4.   ORDER that the plaintiff be at liberty to file a summons (naming herself as plaintiff and her siblings as defendants) returnable before the Probate Registrar on 5 February 2017 claiming such relief as she may be advised to claim in the nature if the relief sought on p.8 of the statement of facts filed 16 November 2016 [This is a reference to the questions posed that are set out in paragraph [48] above], such summons to be filed in fresh proceedings. …”

50. Elizabeth did not exercise the liberty granted by Lindsay J to commence fresh proceedings to enforce the Agreement.

51. However, it was Elizabeth’s evidence that she went on to pay the $10,000 deposit in relation to her Written Offer, alleging that two instalments of $5,000.00 were made to the Estate’s bank account on 29 December 2016 and 3 January 2017. Elizabeth accepted that at some later point this $10,000.00 was appropriated for agistment monies she owed to the Estate (T165.30-36), and that she re-paid the deposit in October 2018. I do not accept the 2016 and 2017 instalments were ever intended as payment of the deposit. For the reasons set out in paragraphs [81] and following below, I am satisfied the earlier payments were always intended as payment of agistment fees.

52. There is no other evidence of what happened after Lindsay J’s directions until, on 15 May 2017, Max’s new solicitors, King Cain, wrote to Elizabeth threatening an application to the Court for her removal as an executor and seeking an undertaking “that you will not take any steps to sell [Lowery] prior to providing a full and proper accounting of your administration of the estate and allowing time for review of that by our client and confirming by our client”. The letter, which proposed a deadline for response of 31 May 2017, also invited Elizabeth to agree to participate in a mediation to endeavour to finalise the administration of the Estate by agreement.

53. Elizabeth responded to King Cain’s letter by email on 7 June 2017. A copy of this email was not in evidence, however I accept a response of that date was provided because it is referred to in Max’s solicitors’ reply on 20 June 2017:

“Thank you for your email of 7 June 2017. We note you do not wish to discuss this matter on the telephone.

We have a copy of a document headed ‘Agreement’ dated 11^th of February 2015. We are instructed that its terms were not complied with and in any event, the document probably fails for lack of consideration. There is no ‘contract already agreed between the parties’.

We have been provided with a copy of a document headed “Family Agreement” which sets out certain provisions regarding purchase of the property by you for $2,300,00.00. Attached to that document is an annexure headed “Position of Estate as at 31 May 2016”.

Our client does not accept the estates (sic) position as outlined in that document.

He has issues with the expenses claimed as he has not seen documentation supporting the claims. He also wants an accounting of the estate cattle and a cash management account that totalled $150,89.71 (sic) in March 2004.

The issues between you have remained unresolved for a long time. Our client does not agree to the ‘sale’ of the property to you, and could not, as you have not provided any certainty of the distribution he will receive if that sale went ahead. At best, you have given an estimate in a document marked ‘without prejudice’.

We had hoped that a phone conversation may have helped in identifying if the issues could be narrowed and a way in which they might be resolved.

As you don’t want to have the telephone conversation, our client again asks that you agree to attend a mediation to try to avoid the cost of further litigation. A formal mediation before an Accredited Mediator where the parties are proactive in trying to reach a resolution should be the most economical and expeditious way to try and complete the administration.

Please advise us whether you will agree to take part in mediation. If we do not have your agreement to that by Friday 23^rd June 2017 we will presume that you do not agree and we will advise our client of the course of action/s we consider that remain available to him to secure his entitlement”.

54. Elizabeth responded to King Cain on 23 June 2017:

“I note that your client does not consent to me purchasing the property for $2,300,000.

Would you please advise whether your client will be prepared to consent to a sale by Public Auction. I will require a consent from him that he will vacate the property for that purpose. If your client wishes to purchase the property at Public Auction he will be entitled to do so if he is the highest bidder. Any beneficiary will be entitled to purchase at public auction and the property will be sold to the highest bidder.

If your client wishes an accounting we shall lodge accounts with the Probate Office in the normal course with a Motion for Executor’s commission to be paid to me.

I am not quite sure what issue your client wishes to mediate and do not wish to have the Estate involved in any more legal costs.

Please advise me of your clients (sic) response by Wednesday 28^th June 2017.”

55. On 28 June 2017, King Cain answered Elizabeth’s letter:

“We refer to your letter of 23^rd June 2017.

We do not have instructions from our client to consent to a sale by public auction.

Our client is considering the matter. We will advise you of our instructions when received.”

56. Elizabeth subsequently replied to King Cain on 11 July 2017. As is made clear in the letter, Elizabeth recorded Max was not willing to consent to her buying the property for $2,300,000.00 (that is, pursuant to her Written Offer) and, in light of this, Elizabeth proposed to either “re-open” the private auction process between the siblings or proceed to public auction:

“I note that your client’s position now is that

1.   He has not responded to my email of 23^rd June 2017.

2.   He will not consent to me buying the property for $2,300,000.

Robert Irvine, who is also a beneficiary of the Estate has expressed his desire to have the Estate finalised as soon as possible so that he can receive his share of the proceeds of the sale as soon as possible.

In order to reach a resolution and as all parties agreed that the property be sold to one of the beneficiaries I am prepared to reopen the bidding for Lowery in which case your client will need to better my bid of $2,300,000. Robert Irvine, whilst being dismayed at the need for another private auction, agrees to this action so long as the sale proceeds quickly. If your client does not agree to pay more than $2,300,000, Robert has expressed his wishes for the sale of the property to proceed at $2,300,000 to me or at my direction.

I would suggest that your client make a higher bid in writing within seven days, i.e. by 4pm on 18^th July 2017. In the event your client makes a higher bid than $2,300,000 within seven days he will be deemed to have consented to me purchasing the property if I make a higher bid than his bid. Any other beneficiary has the right to make a further bid in writing within 24 hours and that is to continue until such time as there have been no more bids for a period of 24 hours. Once the bidding has stopped the highest bidder will have to sign the agreed contract and pay the deposit and settle in accordance with the terms of the contract.

I am prepared to sell the property via public auction to have the matter finalised to satisfy all beneficiaries… However, if your client fails to respond Robert has advised me to proceed with purchasing the property and finalising the Estate.

As for the Estate accounts, your client has been satisfied with the information that he received up until he failed to win the private auction. His position since has been an offer to withdraw all action and complaints if I sold him the property for $2,200,000. Any questions relating to the accounts will be dealt with by me passing the accounts through the Court for verification and I shall then apply for commission.

Please advise me if your client will be placing a further bid by 4pm on 18^th July 2017.”

57. On 13 July 2017, King Cain wrote to Elizabeth:

“We acknowledge receipt of your letter of the 11^th July 2017.

We have referred your letter to our client for instructions.

You have nominated a deadline for a response and proposed that should you not receive it, our client will be deemed to have consented to your purchasing the property. That is not the case and you are not entitled to that assumption. Our client’s consent to you purchasing the property for $2.3 million has not been given.

The difficulty for our client on your proposal remains the lack of information supplied on the accounts and no clear determination from you on the estate expenses to date or the final estimate estate expenses. At the least that needs to be provided so our client can determine the likely share of the distribution to him of his entitlement to the residue.

Our client does not call on you to file estate accounts at this time, but does call on you to provide up to date accounts of the estate. You are obliged to do that on request from a beneficiary.”

58. Based on the correspondence in evidence, the parties’ attention then appears to have turned to focus on the provision of the Estate accounts by Elizabeth to Max. She provided these in or around December 2017, and an inspection of the Estate accounts took place at the offices of King Cain. On 18 December 2017, King Cain wrote to Elizabeth:

“We confirm that an inspection of Estate accounts from 2008 to date took place at our office on 14 December 2017. Mr & Mrs Irvine [this is a reference to Robert and his wife, Lynne] remained in the office throughout the inspection and documents were returned to them following inspection.

Our client’s Accountant is preparing his Report on the accounts presented. If he has any queries we will forward them to you for a response.

You have not provided accounts from the date of death of the late VJ Irvine. Our client again calls on you to provide those accounts for inspection.

You stated in your letter of 30 November 2017 that you are working towards finalising the affairs of the Estate. You have not indicated when or how you intend to complete that.

Following advice, our client intends to commence proceedings for a Statement of Claim in the Supreme Court for Orders including an Order that the Grant of Probate to you be revoked and Letters of Administration CTA in respect of the Will and Codicil be granted to our client.

We enclose a copy of the Statement of Claim for your information. It has not been filed.

Further Court proceedings will add expense to our client and the Estate. Our client would prefer this not happen.

We are instructed to file the Statement of Claim on 15 January 2018. Our client will refrain from commencing proceedings if you:

1.   Advise prior to 15 January 2018 that you will take immediate steps to complete administration of the Estate prior to 31 January 2018;

2.   You advise how you propose to complete the administration; and

3.   You present Estate accounts from the date of death – 2008 for inspection by our client.”

59. Elizabeth replied on 20 December 2017:

“Thank you for your letter of 18 December 2017 and draft Statement of Claim.

I am somewhat perplexed by the timing of this correspondence. With few business days until Christmas and most offices closed until 8 January 2018. Appointments are difficult to obtain before 15 January 2018.

Your client’s instruction to you in drafting a Statement of Claim seems somewhat premature given we have not received any response from your client’s accountant following inspection of the Estate financials on 14 December 2017.

The accounts prior to 2008 have already been submitted to your client, his auditor and solicitor at the Supreme Court in 2007. I strongly disagree with the contents of the draft Statement of Claim.

Legal costs are of great concern to me and have been discussed with Robert and Maxwell on many occasions.”

60. Max commenced these proceedings by filing his Statement of Claim on 15 January 2018.

61. Apparently unaware that Max had instituted proceedings, Elizabeth again wrote to King Cain on 17 January 2018:

“Further to your letter of 18 December 2017 and draft Statement of Claim.

Please be assured that my first priority is to finalise the Estate as quickly as possible which involves the sale of all Estate assets.

In view of the draft Statement of Claim would you please confirm that your client now has no desire for the property Lowery to stay in the family.

However, if your client still feels it is preferable that the property stay within the family I am prepared to reopen negotiations for its’ (sic) purchase by one of the beneficiaries.

In the event your client is not interested in participating in such negotiations I will proceed to list the property for public auction forthwith.”

62. On 23 January 2018, King Cain responded:

“Thank you for your email of 17 January 2018. We advise that following instructions we did file the Statement of Claim with the Supreme Court. We had instructed a Process Server to effect service.

Following receipt of your letter we have instructions to withhold serving the Statement of Claim in view of your advice of your intention to finalise the Estate as quickly as possible.

We are instructed our client would like the property “Lowery” to stay in the family and for this purpose would like the opportunity of purchasing the property. You have indicated that in such event you are prepared to reopen negotiations.

Please advise:

1.   The format you propose for negotiations;

2.   Who in the family, if anyone else apart from our client, is interested in purchasing the property;

3.   If there are competing interests, how do you propose they be dealt with in order for you as the Executrix to make a decision on a sale?

4.   Full details of outstanding liabilities that you consider are to be paid by the Estate from any sale proceedings, before distribution to the beneficiaries. This information needs to be complete and accurate to enable beneficiaries to calculate the likely distribution to themselves which may have a bearing on any offer they make.

Our client is encouraged by your desire to complete the administration of the Estate and is prepared to withhold serving any Court process providing the arrangements for completing the administration are progressed without delay.

Please let us have your advice on your proposed arrangements for sale of the Estate assets, particularly the property “Lowery”.”

63. I pause to note that although it is clear Robert had not played an active role in any discussions with Max (or his solicitors) to this point, I accept that Elizabeth was keeping her eldest brother abreast of developments. I infer that Elizabeth must have shown or informed Robert of the contents of King Cain’s correspondence of 23 January, because on 29 January 2019, Robert sent Elizabeth an email stating his “strong disagreement” to any re-negotiation of a private auction with Max:

“I thought that we had an (sic) negotiated an agreement, in writing, between the three beneficiaries re the sale of Lowery, however, as Max no longer acknowledges that then I strongly disagree with any attempt for a re-negotiation.

I will definitely not be a party to it. Please make sure that this is made known to Mr Carver and his client.”

64. It appears that King Cain sent a further email on 25 January 2018, however a copy of this email was not in evidence. Whatever its contents, I infer the correspondence set a deadline for Elizabeth of 5.00pm 30 January 2018. So much is apparent from the response Elizabeth provided to King Cain on 30 January 2018:

“Your client’s recent actions and the deadline of a response by 5.00pm today (your email of 25 January 2018), indicate to me that a settlement within the family is extremely unlikely to succeed, I also inform you that I have received a written objection to any further negotiations from our eldest brother Robert (a copy of which is attached) [This is a reference to the email set out in paragraph [63] above].

I propose to list Lowery for sale by public auction, I am currently seeking advice and obtaining quotes from suitable selling agents for all property owned by the Estate and as soon as one is chosen you will be informed.

Please be advised that with regards to Boree Street Cudal, I have for some time now been gathering appraisals and seeking interested private buyers due to high selling costs.

As to the position of the Estate it is impossible to provide until all Estate assets are sold.”

65. In cross-examination, Elizabeth accepted it was a fair and reasonable reading of her 30 January 2018 correspondence that, in evincing her intention to list Lowery for public auction, she was now walking away from whatever agreements may have previously been in place between the siblings (T149.4-36). In accepting this proposition, Elizabeth remained resolute in her evidence that the contents of the letter were only ever intended as an offer to settle the litigation now on foot (T176.7-11). Importantly for present purposes, there is no suggestion that Max, who apparently now wanted to reopen the private auction process (see his solicitors’ letter in paragraph [62] above), ever communicated his agreement to Elizabeth’s 30 January 2018 indication that she was listing Lowery for public auction.

66. On 10 April 2018, King Cain informed Elizabeth that they had received a letter from Max’s accountant outlining questions in relation to the Estate account documents inspected on 14 December 2017. For present purposes, it is sufficient to record that a response to those questions was provided in the affidavit of Lynne Heather Irvine (Robert’s wife) sworn 19 September 2018. Lynne has assisted Elizabeth in keeping the financial records and accounts of the Estate since 1992.

67. In May 2018, Elizabeth (in her capacity as executrix of the Estate), transferred the Toogong blocks to Lynne for $14,500. This was notwithstanding the purported conditions set out in the Estate Position Statement (see paragraph [23] above) which contemplated a transfer of that land to Max as part of his share of the residue of the Estate, and Elizabeth stating in her affidavit of 21 May 2018 that she had intended this to occur. Elizabeth agreed in cross-examination that she did not discuss with Max his purchase of the land (T133.35-46), nor did she discuss the sale with Max prior to the transfer to Lynne (T133.17-24, T162.25-30).

68. On 4 October 2018, the parties to the present dispute attended mediation. The matter did not settle, but Elizabeth nevertheless decided to pay the $10,000.00 deposit. In her affidavit evidence, Elizabeth explained:

“…after the mediation I felt that I should have just completed the sale to myself and consequently I paid another $10,000 deposit to the Estate in two transfers of $5,000.”

69. The deposit was paid into the Estate’s National Australia Bank (“NAB”) account in two instalments of $5,000.00 on 16 October and 17 October 2018. As set out in paragraph [51] above and for the reasons set out in paragraphs [85]–[90] below, I am satisfied these October payments were intended by Elizabeth to be in satisfaction of the deposit referred to in the Agreement and the Sales Contract.

70. Finally, there was uncontested evidence of the value of Lowery. In the course of the proceedings, and as the issues developed, orders were made for the parties to obtain single expert current and historical market valuations of Lowery. Both valuation reports were provided by Messrs Matthew Petty and A. Jamie Gibson of Aspect Property Consultants:

1. “Historical Market Valuation” as at 18 May 2016 (being the date of Elizabeth’s Written Offer) of $2,375,200 ($2,230,000 for the property and $145,200 for the water allocation licence); and

2. “Current Market Valuation” as at 13 July 2020 of $4,957,800.00 ($4,740,000 for the property and $217,800 for the water allocation licence).

Credit

71. In addition to each of the siblings, only two other witnesses were called to give evidence at the hearing: Richard Dowling and Lynne Heather Irvine, the respective spouses of Elizabeth and Robert.

72. Each witness called at the hearing was cross-examined, although Richard, Lynne and Robert only briefly. Most of the cross-examination was directed to the evidence of Max and Elizabeth.

73. In final addresses no specific submission was made by Max or Elizabeth on the issue of the credit or reliability of the witnesses, notwithstanding that the Court was told during some of the cross-examination that the relevance of questions put went to credit. In his written submissions of 22 May 2020, Mr Williams made a brief submission on behalf of Robert that Elizabeth’s evidence should be preferred to the evidence of Max whenever there was any significant issue, as Max has “very little credibility and will lie whenever it suits him”. In support, Mr Williams relied specifically on Max’s evidence in cross-examination over incidents involving alleged violence towards Robert, where Max’s evidence was said to be contradicted by photographic evidence before the Court. Neither Mr Ellison SC nor Ms Cohen responded to this submission.

74. Although credit was therefore not an issue of serious contention, it is nonetheless necessary for the Court to set out brief observations on the matter.

75. Turning first to Richard and Lynne, I formed the opinion that each presented as an honest witness doing their best to assist the Court. I am satisfied that each gave their evidence in a frank manner, freely admitting to the limits of their involvement in the dispute and of their recollection. At no point was I left with the impression that either Richard or Lynne’s evidence was biased in favour of their respective spouses. They were not active parties to the critical events underlying the present dispute, a fact reflected in the limited evidence each was called to give. I note without discourtesy that Richard was in effect left to play the “middle man” between his wife and brother-in-law, a role made necessary due to the animosity between the siblings. As noted in paragraph [66] above, Lynne has assisted Elizabeth in keeping the financial records and accounts of the Estate since 1992.

76. With respect to Max, Elizabeth and Robert, I am satisfied that each of the siblings’ evidence was coloured by the years of dispute and disagreement between them. In the Possession Judgment, Johnson J, referring to the earlier reasons of Cohen J in the Family Provision Judgment, made the following observation:

“7.   Cohen J referred in his judgment (pages 4.8, 13.3, 23.2) to the ill-feeling and bitterness that existed between [Elizabeth] and [Max] prior to and in 1994. Regrettably, it is apparent that those feelings persist and are reflected in the present dispute between the parties.”

77. It remains regrettable that both judges’ observations are still appropriate. Of the two camps (Max on the one hand, Elizabeth and Robert on the other), neither made any attempt in the present proceedings to conceal their distrust or contempt of the other, or the responsibility they perceived the other to bear in bringing the current dispute to a head. Consequently, there can be no doubt that Max, Elizabeth and Robert remain steadfastly entrenched in what they each assert to be the correct narrative regarding the Agreement, Verbal Bid Agreement, Private Auction and subsequent conduct.

78. However, I stress that this is not to say Max, Elizabeth and Robert were deliberately dishonest witnesses and the Court makes no such finding. Rather, the impression I formed of each sibling was that their recollection of events could simply not be accepted as reliable unless inherently likely, against interest or supported by contemporaneous documentary evidence, because each had clearly persuaded themselves of their version of events and what they took to be the effect of the dealings between them. The commencement of these proceedings was the only way to break the impasse created between them by their mutual intransigence and Elizabeth’s (understandable) reluctance to involve the Estate in further litigation.

“37.   If the purchaser fails to complete this contract by the completion date without default by the vendor the purchaser shall pay to the vendor on completion in addition to the balance of the purchase monies interest calculated at the rate of ten (10) percent per annum on the balance of the purchase monies outstanding hereunder such interest to be calculated daily computed from the date provided for completion until the date of actual completion. It is agreed that this amount is a genuine pre-estimate of the vendors loss of interest for the purchase money and liability for rates and outgoings.”

153. On the question of the time for which interest should run, I do not accept Mr Ellison SC’s submission that interest should run until the Property is sold to Elizabeth pursuant to the outcome of these proceedings. In my view equity requires Elizabeth to compensate the Estate for that delay which is solely referable to her failure to exercise her rights under the Agreement.

154. In the events which happened, Elizabeth’s entitlement to purchase the Property under the Agreement for $2,300,000 arose at 9am on 20 May 2016, being 48 hours after she gave Max her bid and with no subsequent bid being received (Robert taking no point that he did not receive the bid at the same time or at all). The Agreement stated that the Sale Contract “will provide that settlement will take place within four weeks of acceptance of a winning bid”. Had she complied with the Agreement, Elizabeth would have entered into the Sale Contract on 20 May 2016 and settled four weeks later on 17 June 2016. Interest should run from the latter date.

155. However, consistently with the view that I have taken that she should have moved to sell the Property to herself in accordance with the Agreement and left it to Max to commence proceedings to restrain her, it would be inequitable for her to continue to pay interest past the point when Max definitively denied that she was entitled to act on the Agreement. This is because at that point the Estate was suffering a delay not solely because of Elizabeth’s inaction. In the events which happened, Max did this when he filed his defence to Elizabeth’s cross-claim on 23 April 2018. That should be the terminal date for Elizabeth’s liability to pay interest to the Estate. Interest is payable for the period on the entire purchase price because the Court has found that Elizabeth did not pay the deposit until later in 2018.

156. Finally, I should record three matters which I have not overlooked in reaching my conclusions on interest and more generally.

157. First, I have considered whether interest should not run for that period when Max’s caveat was registered on the Property (see paragraph [40] above). I have rejected this because it is Elizabeth’s inaction which caused delay during that period. Had she been advised to issue a lapsing notice, there is every chance the present dispute would have been brought to a head at that time.

158. Second, the fact that Robert has said that he does not require Elizabeth to pay interest is irrelevant. That is a matter between him and Elizabeth. The Court will grant relief to Elizabeth on the terms which the Court considers equity requires in the interests of the Estate.

159. Third, by her inaction, Elizabeth was in breach of the Agreement. However, I accept Ms Cohen’s submission that this was not deliberate but was the result of Elizabeth’s erroneous views about her rights. Therefore, the fact of her breach is not a matter to be weighed against her in the exercise of the Court’s discretion. Furthermore, and importantly, no other party (in particular, Max) has purported to accept any breach on her part and accordingly sought to terminate the Agreement. The Agreement therefore remains on foot.

Conclusion

160. The Court will give the parties an opportunity to bring in orders to give effect to these reasons, including to make good Elizabeth’s undertaking to the Court that she will file proper accounts for the Estate. Looking at the matter realistically and with a view to reducing costs, the parties should now attempt to agree a suite of orders, including as to the costs of these proceedings, that will enable the Property to be sold to Elizabeth for $2,300,000 (together with the interest calculated in accordance with paragraphs [154]–[155] above) and the Estate to be finalised. Those orders should include provision for the sale of the Property to Elizabeth to be completed with 28 days of the orders being made. Elizabeth should be entitled to set off, from any amounts she must pay to the Estate, her interest as a beneficiary to the extent that can be practicably done.

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Decision last updated: 19 February 2021