James Justin O'Neill v Antony Patrick O'Neill

[2015] NSWSC 644

Supreme Court

New South Wales

Medium Neutral Citation:	James Justin O’Neill v Antony Patrick O’Neill [2015] NSWSC 644
Hearing dates:	22 May 2015
Date of orders:	22 May 2015
Decision date:	22 May 2015
Jurisdiction:	Equity Division
Before:	Darke J
Decision:	Orders made revoking grant of probate and appointing trustees for sale of principal estate asset.
Catchwords:	SUCCESSION – probate – revocation of grant – grant made to two executors – failure of one executor over lengthy period to carry out duties – revocation order made
Legislation Cited:	Conveyancing Act 1919 (NSW) s 66G
Cases Cited:	Bates v Messner (1967) 67 SR (NSW) 187 Mavrideros v Mack [1998] NSWCA 286; (1998) 45 NSWLR 80
Category:	Principal judgment
Parties:	James Justin O’Neill (first plaintiff) Fiona Mary O’Neill (second plaintiff) Catriona Mary O’Neill (third plaintiff) Antony Patrick O’Neill (defendant)
Representation:	Counsel: J E Thomson (plaintiffs) Solicitors: P A Keith (plaintiffs)
File Number(s):	2014/349825
Publication restriction:	Nil.

Judgment – EX TEMPORE

1. The plaintiffs are three of the children of the late Catherine Theresa Thom, who died on 19 February 2003. On 16 June 2003 probate of her last will dated 15 February 2003 was granted to the second plaintiff and the defendant, another child of Catherine Thom.

2. The principal asset of the estate is a large property in Withers Road, Rouse Hill. The title is held by the executors as joint tenants. The defendant has lived at the property since about March 2005. Another asset of the estate was a house in Eastwood.    

3. The will provided for various specific gifts, and for the residue of the estate to be given to the four children in equal shares. Clause 5 of the will provides:

“I DIRECT that one of my executors, ANTONY PATRICK O’NEILL, be the executive officer of my property at Lot 2 Withers Road, Rouse Hill, New South Wales 2155 in terms of its management and disposition in view of his knowledge and long association with the property. Final decisions regarding the property should be in the sole discretion of ANTONY PATRICK O’NEILL but only after full, fair and amicable family discussions."

4. The Eastwood property was sold in early 2007. The Rouse Hill property has not been sold, despite almost 12 years passing since the grant of probate. Problems have emerged between the executors in relation to that issue. The plaintiffs, by a Summons filed on 27 November 2014, seek orders for the revocation of the grant of probate, and for a grant of administration in their favour. Orders are also sought for the appointment of trustees for sale in respect of the Rouse Hill property.

5. The Summons originally came before me on 8 May 2015 in the Applications List. On that occasion the defendant appeared in person, and sought an adjournment. I granted the adjournment and urged the defendant to obtain legal advice about the issues raised in the proceedings. I indicated that the matter was not one that could stand any further delay.

6. Prior to 9am this morning my Chambers received a telephone call from someone who identified themselves as "the defendant's partner". She informed a member of my staff that the defendant was ill today, and was unable, or likely to be unable, to attend Court. Mention was made of the possibility of obtaining a medical certificate. When the matter was called at 10am and again at approximately noon today, there was no appearance by the defendant. The defendant has not sought to place any medical evidence before the Court.

7. There has been no attempt on the part of the defendant to suggest that he wishes to resist the orders sought by the plaintiffs, outline the bases of any such resistance, or indicate that he wishes to adduce any evidence in the matter. In those circumstances, the matter has proceeded today in the defendant's absence.

8. Each of the plaintiffs swore an affidavit which was read at the hearing. Affidavits proving service were also read. The first plaintiff, James O'Neill, deposed that in a conversation with the defendant in 2004 or 2005 he said to him that the retention of the Rouse Hill property for any significant duration beyond the sale of the Eastwood property would not be acceptable, to which the defendant replied that it would take “a special amount of care” for the sale of Rouse Hill, unlike Eastwood.

9. A further conversation took place in late 2006, or early 2007, in which the defendant said it was up to the executors how Rouse Hill should be marketed, and that its sale may take longer. The first plaintiff says that in about early 2010, after discussing the matter with his sisters, who are the other plaintiffs, he spoke to the defendant on the telephone, and told him that he and his sister Catriona wanted the property sold, as they would both like to receive their money. The defendant is said to have replied: “We must one day all get together and talk about it”. The first plaintiff has not had any contact with the defendant since that telephone call, despite attempts to reach him by leaving messages on a mobile phone used by the defendant, and leaving a note for the defendant at the property. On 29 November 2013, a letter was sent to the defendant by a solicitor acting for the first plaintiff, but the letter was returned to the solicitor.

10. The third defendant, Catriona O'Neill, has had no contact with the defendant since January 2012. She deposed that since that time she has made numerous attempts to contact him to discuss the sale of the Rouse Hill property, but her telephone calls have not been answered, and neither have her text and voice bank messages been responded to.

11. The second plaintiff, Fiona O'Neill, is the other executor of the estate. She deposes that on numerous occasions she has attempted to reach agreement with the defendant concerning the sale of the Rouse Hill property, mostly without success. However, in June 2012 the executors entered into an agency agreement with LJ Hooker at Riverstone to sell the property. That agreement continues to be on foot. It seems that, at the defendant's request, it was agreed that the property would initially be marketed at a value of $11 million, although a valuation obtained in May 2012 from a qualified valuer suggested that the value was only $9.78 million. The asking price was at some stage reduced to $10 million. A more recent valuation given by the valuer in February 2013 gave a figure of about $8.45 million.

12. The second plaintiff further deposes that the defendant has, since about October 2012, ceased communicating with her. She says that she has made numerous attempts to contact him by telephone, and has gone to the property and left letters there for him. She has received no response to any of those letters, which were left in January, February and October 2013, and March, May and June 2014.

13. The letter of 14 January 2013 contained the following:

“This letter follows numerous unanswered phone calls to you via Julie's mobile, which is the only contact you have provided me. As we are both legally responsible for the Estate of the Late Catherine Thom (Mum), it is necessary for me to be able to discuss this Estate and for us to be able to make decisions, jointly with respect to the sale of the property. We are holding this property beneficially (on trust) for four (4) persons nominated in Mum's Will. Considering that Probate for this Will was granted in June 2003 it is only a few months short of ten (10) years since we were charged with the duty of executing the Estate.

Aside from the time lag, there is the issue of financing continuing expenses incurred by retaining the property including Council Rates. As I explained in my letter of 28 June 2012, I borrowed the funds to pay for the 2012/13 rates. We will be liable for 2013/14 rates if we are named as owners on the tile [sic - title] for one day over 30 June 2013. Adjustments will be made once the property is sold although the initial expense will be ours and so having the property completely sold before 30 June 2013 is my aim.

The property has been listed with LJ Hooker Riverstone for approximately six (6) months and although there has been some interest, no offers have ensued. The principal agent, Stephen Trethowan has suggested in light of current economic conditions and the fact that the property is undeveloped (therefore the purchaser must pay a development charge per square metre); we reduce the current listing price to below $10 million to attract more potential purchasers.

Without continuing financial assistance the Estate will become insolvent and a forced sale will be necessary. The result will be a loss of control for us as Executors and a much lower return for all beneficiaries. As before mentioned, we have an obligation to act o [sic – on] behalf of not only ourselves, instead for all four named beneficiaries of Mum's Will.

Should I not hear from you by 1 February 2013, I will contact Stephen Trethowan to advise that from that point on, we would like the property marketed at $9.5 million. You have the choice to discuss this with me and time is of the essence.”

14. The letter of 15 February 2013 contained the following:

“Attached is a copy of this revised valuation and I propose that we allow the Agent to market the property at $8.5 million in accordance with market value. Please make contact with me if you wish to discuss this figure and it is not one I have randomly chosen, instead being based on fact.

Again I will remind you that without continuing financial assistance the Estate will become insolvent and a forced sale will be necessary. The result will be a loss of control for us as Executors and a much lower return for all beneficiaries. As before mentioned, we have an obligation to act o[n] behalf of not only ourselves, instead for all four named beneficiaries of Mum's Will.”

15. The letter of 5 October 2013 contained the following:

“Here I am updating you since my last hand delivered letter dated 15 February 2013. In that letter I advised that due to the downturn in the market for industrial land, the valuation had been revised to $8.5 million and unless you had any objection, that was the price that Lot 2 Withers Road was to be marketed for from 1 March 2013. You made no contact and I chose the conservative approach, knowing that what goes down will not come up again, so advised Stephen Trethowan of LJ Hooker (the Agent) to change the sale price to $9.9 million. Since the time of that change, he has received no offers, excepting someone wanting to lease the shed for storage. Recently I have revised that figure to be $8.5 million so the property is now being listed for its' market value.

Many times I have tried to contact you by phone and you may be aware that at one point I contacted Maureen, Julie's mother to check on the wellbeing of you and Julie. Maureen told me you are both well and living at Rouse Hill and that calls to Julie's mobile phone (XXXX XXX XXX) are notoriously hard to receive. This is the only number I have for you and would appreciate you updating me if there is a better number to have as your contact. It is important that we as joint Executors stay in touch and so I would ask that you maintain lines of communication.

[…]

Considering it has been over ten (10) years since Probate was granted, it is clearly time that this Estate was wound up and we were enabled to move forward as would have been the intention of the Will. In the best interests of all the beneficiaries, we need to have a roundtable discussion on the future of Lot 2 Withers Road, Rouse Hill. Currently no single person is benefitting from holding onto this property. If you or I were to be seen as not being proactive in the sale, this could have a negative impact on our duty as Executors. If you or I lost control as Executors the outcome could result in a much lower return for all beneficiaries. For this reason I urge you to be in touch with me and I list my contact details below for your reference.”

16. The letter of 11 March 2014 contained the following:

“There has been some movement on the sale of Rouse Hill and for this reason I ask that you contact me or our Estate Agent, Stephen Trethowan as soon as possible. If this progresses, we will need to be in a position to sign documents for the sale of land and work with our solicitor to effect this sale. To date I have no more details and when I do I will try to contact you to relay these.

Please remember it has been over ten (10) years since Probate was granted, and we need to finalise the Estate to allow all beneficiaries to move forward as would have been the intention of the Will.”

17. The letter of 9 May 2014 contained the following:

“Firstly I would like to point out that we have not made contact since about July 2012. This is despite numerous phone calls I have made to Julie's mobile and also letters which I have hand delivered at various times. Aside from the fact that as siblings, we previously had contact on an infrequent yet regular basis, given that we are co-executors to our Late Mother's Estate, this is an untenable situation.

Here attached is an email dated Wednesday 7 May with an Offer for the purchase of Lot 2 Withers Road, Rouse Hill. This is the first and only offer I recall seeing documented and we need to give this serious consideration. We should feel free to come back with alternate figures for purchase price/ option time period / settlement time period. Your advice on this will be valued and in the absence of any response I will have to make a decision based on my own judgement. We do not need to get back to Stephen Trethowan immediately only I would like to do so before the end of May. This will give us ample time for consideration. Note that we need an updated 149 Certificate and therefore will need to be in touch with the solicitors you engaged (Dawson's). They can also give us legal advice on the best course of action, although ultimately it will be up to us.

Please remember it has been over ten (10) years since Probate was granted, and we need to finalise the Estate to allow all beneficiaries to move forward as was the intention of the Will.”

18. The letter of 26 June 2014 contained the following:

“This letter is a last request for you to fulfil your duty as Executor of the Estate of the Late Catherine O'Neill / Thom. My last letter stated that despite numerous phone calls and letters drafted then hand delivered, you have not responded to any contact since about July 2012. During this time, beneficiaries of the Estate have been pressing for the sale of Lot 2 Withers Road Rouse Hill. As you are aware, the Will of our late mother gave you the added role as final decision maker (after amicable discussion with beneficiaries) with respect to the sale of this property. To date, you have not exercised appropriate action towards discharging this duty.

Given this letter is being hand delivered on Friday 27 June 2014, you have two (2) weeks i.e. until .Friday 11 July 2014 within which to make contact and failing this, a process will commence within the legal system to achieve a sale of Lot 2 Withers Road, Rouse Hill. At this stage I am not aware of how this will be effected as the solicitor engaged will need to act in accordance with statute law and possibly through the Supreme Court of NSW. Should this process be undertaken, there will be sizable costs involved, you will receive correspondence from the solicitor and if needed, may have to appear in Court. Note: This action could be avoided if you simply agree to work with me towards the sale of the property, a pathway that will give you more control over the price and conditions of the sale.”

19. As referred to in the second plaintiff's letter of 9 May 2014, in May 2014 an offer was received from a purchaser wishing to enter into an option agreement, with a purchase price of $4.8 million. In July 2014 the offer was raised to $5.2 million. At about the same time an offer to purchase with a deferred settlement was made by another interested party, at a much lower figure. The second plaintiff considered the $5.2 million offer too low, in light of the valuation advice received, but in the absence of any feedback from the defendant a joint response was not possible.

20. The principles applicable in respect of applications to revoke grants of probate are found within the decisions of the Court of Appeal in Bates v Messner (1967) 67 SR (NSW) 187 and Mavrideros v Mack [1998] NSWCA 286; (1998) 45 NSWLR 80.

21. In Mavrideros v Mack (supra) Sheller JA, with whom Priestley and Beazley JJA agreed, stated the relevant principles (at 101 and 102) as follows:

“[…] The principles to be applied are stated in the decision of this court in Bates v Messner. In that case, the appeal was from a decision of Myers J dismissing an application for the revocation of a grant of probate made to the respondent. Sugerman JA (at 189; 36) quoted from the judgment of Jeune P in In the Goods of Loveday [1900] P 154 at 156 and said the principle there stated had been consistently followed and no doubt cast on its correctness in point of principle. Jeune P in the passage quoted said:

“After all, the real object which the court must always keep in view is the due and proper administration of the estate and the interests of the parties beneficially entitled thereto; and I can see no good reason why the court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient. If the court has in certain circumstances made a grant in the belief and hope that the person appointed will properly and fully administer the estate, and if it turns out that the person so appointed will not or cannot administer, I do not see why the court should not revoke an inoperative grant and make a fresh grant.”

Asprey JA said (at 191-192; 39-40):

“… that the essential basis of the exercise of the court's inherent jurisdiction to revoke a grant of probate is that emphasised by Jeune P, namely, that the real object which the court must always keep in view is the due and proper administration of the estate in the interests of the parties beneficially entitled thereto on the part of the person to whom and by whose oath as to the faithful performance of his duties the court has been induced to entrust the office of executor. […]”

22. Sheller JA then stated the following (at 108):

“The question was, to adapt the language of Asprey JA (in Bates v Messner at 192), whether the due and proper administration of an estate had either been put in jeopardy or had been prevented either by reasons of acts or omissions on the part of the executor or by virtue of matters personal to him, for example, mental infirmity, ill-health, or by virtue of the proof of other matters which established that the executor was not a fit and proper person to carry out the duties he had sworn to perform."

23. Such a finding is not to be made lightly. However, it seems to me that the evidence given by the plaintiffs, which was not contradicted and which I unhesitatingly accept, clearly demonstrates that the due and proper administration of their mother's estate has been prevented since at least late 2012 by the failure of the defendant to actively carry out his duties as an executor. The grant of probate, even if it has not turned out to be abortive, has certainly become inefficient to a very high degree indeed. It is in fact no longer functioning at all, and certainly not in any way like the manner intended.

24. I consider that the defendant's conduct in essentially eschewing engagement, not only with the other beneficiaries including the first and third plaintiffs, but also his co-executor, the second plaintiff, demonstrate that, in the circumstances, the defendant is not a fit and proper person to continue to hold the office of executor of this estate.

25. I have not overlooked the provisions of clause 5 of the will. Whilst clause 5 is an indication of the testator's intention in relation to the defendant playing a central, and indeed decisive role, in connection with the disposition of the Rouse Hill property, the clause makes it clear that the defendant is only to have such a decisive role after full, fair and amicable family discussions have taken place. The evidence makes it plain that despite exhortations made to the defendant to engage in discussions, including a round table discussion of all concerned, those exhortations have effectively been rebuffed by silence and inaction. I also note that in the letters sent by the second plaintiff to the defendant there were a number of pleas for the defendant to take action in order to fulfil his duties as an executor.

23. I have therefore come to the conclusion that it is appropriate to make an order revoking the grant of probate, and for an order that the plaintiffs be appointed as administrators of the estate by virtue of a grant of administration with the will annexed.

24. The plaintiffs, as I have mentioned, also seek orders for the appointment of trustees for sale. There is no reason why this order should not be made in the circumstances. Indeed, it seems to me to be appropriate having regard to the type of property involved and the fact that it may be very valuable. Clearly, a professional marketing campaign, carried out under the oversight of suitable trustees, is desirable. I will therefore make orders for the appointment of trustees as suggested.

25. The orders of the Court will be:

1. Order that grant of probate No. 109120/2003 dated 16 June 2003 whereby Fiona Mary O'Neill and Antony Patrick O'Neill were appointed executors and trustees of the estate of the Catherine Theresa Thom be revoked;

2. Order that the defendant deposit the revoked grant in the Registry for cancellation;

3. Order that the plaintiffs, James Justin O'Neill, Fiona Mary O'Neill and Catriona Mary O'Neill be appointed administrators with the will annexed, and trustees of the estate of Catherine Theresa Thom with all such powers as are necessary for the carrying out of their functions;

4. Order that the proceedings be remitted to the Registrar for the issue of the appropriate grant;

5. Order pursuant to section 66G of the Conveyancing Act that David Arthur Jackson, solicitor of 65 York Street, Sydney, and James Andrew Eager, solicitor of 65 York Street, Sydney, be appointed as trustees of Lot 2 Withers Road, Rouse Hill, being the land in Folio Identifier 2/32107, on the statutory trust for sale;

6. Order that the said property be vested in the said trustees for sale, subject to encumbrances affecting the entirety but free from encumbrances affecting any undivided shares, to be held by them on the statutory trust for sale in accordance with section 66G of the Conveyancing Act;

7. Order that the defendant deliver up possession of the land to the said trustees within six weeks, that is by 4pm on Friday 3 July 2015;

8. Order that, subject to further order of the Court, the said trustees are entitled to be paid their usual fees and disbursements from the proceeds of sale of the said property; and

9. Order that the plaintiffs' costs of the proceedings, on an indemnity basis, be paid from the estate of the late Catherine Theresa Thom, and deducted from the defendant's entitlement to receive his interest in respect of that estate.

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Decision last updated: 27 May 2015