Jordan v Jordan
[2018] WASC 384
•11 DECEMBER 2018
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CIVIL
CITATION: JORDAN -v- JORDAN [2018] WASC 384
CORAM: MASTER SANDERSON
HEARD: 8 - 11 OCTOBER 2018
DELIVERED : 10 DECEMBER 2018
PUBLISHED : 11 DECEMBER 2018
FILE NO/S: CIV 1653 of 2014
BETWEEN: BERNARD PATRICK JORDAN
First Plaintiff
BERNARD PATRICK JORDAN as executor of the estate of MARJORINE JORDAN
Second Plaintiff
AND
MICHAEL PAUL JORDAN
Defendant
Catchwords:
Probate - Determination of assets of estate and beneficiaries' entitlements - Turn on own facts
Legislation:
Property Law Act 1969 (WA), s 126
Trustees Act 1962 (WA), s 89
Result:
Order made
Representation:
Counsel:
| First Plaintiff | : | Dr P R MacMillan |
| Second Plaintiff | : | Dr P R MacMillan |
| Defendant | : | Mr T R Stephenson |
Solicitors:
| First Plaintiff | : | Vogt Graham Lawyers |
| Second Plaintiff | : | Vogt Graham Lawyers |
| Defendant | : | K G Sorensen |
Case(s) referred to in decision(s):
Baumgartner v Baumgartner (1987) 164 CLR 137
Chapman v Chapman [1954] AC 429
Hardman v Hobman [2004] DFC 95-281
Re New [1901] 2 Ch 534
Tickle v Tickle (1987) 10 NSWLR 581
MASTER SANDERSON:
This action concerns the estate of the late Marjorine Jordan (the deceased) who died on 31 August 1988. Probate of the will of the deceased was granted to the first plaintiff on 20 October 1989. He sues in his personal capacity and as executor of the deceased estate. The deceased had five children. The first plaintiff, Bernard Patrick Jordan, the defendant, Michael Paul Jordan, Winston Peter Jordan, Elizabeth Anne Earl‑Peacock and Christopher Paul Jordan. For ease of reference and without meaning any disrespect I will refer to the children of the deceased by their christian names.
The estate of the deceased is modest. Essentially it is a house and land at 40 Danbury Crescent, Girrawheen (the Property). For reasons which I will explain below the Property is presently registered in the name of Michael. It is clear then that although the deceased passed away more than 20 years ago and despite the fact probate of the will of the deceased was granted 19 years ago the estate remains undistributed. The point of this action is to determine who among the five children of the deceased is entitled to what proportion of the estate.
The pleadings
The plaintiff pleads that, in or about 1974, Bernard, Michael and the deceased verbally agreed they would acquire a block of land in Girrawheen and build a house which would be the family home. Consequently, land at 40 Danbury Crescent was purchased and a house was built. The plaintiff alleges that an agreement was reached as to the terms upon which the Property was purchased and the parties respective interests in the Property. Paragraphs 6 and 7 of the re‑amended statement of claim filed 10 July 2018 are in the following terms:
6.For reasons that concerned providing security for a housing loan to purchase 40 Danbury Crescent (housing loan), it was further verbally agreed by the First Plaintiff, the Defendant and Marjorie that the title to the land would be registered in the names of only the First Plaintiff and the Defendant, but that:
6.1.the First Plaintiff, the Defendant and Marjorie would contribute equally both to the deposit and to the costs and repayment of housing loan; and
6.2.the First Plaintiff, the Defendant and Marjorie would enjoy an equal beneficial interest in 40 Danbury Crescent
(the Agreement).
7.Pursuant to the Agreement:
7.1.the First Plaintiff and the Defendant obtained $21,500 or thereabouts by way of a housing loan from Perth Building Society which was secured by registered mortgage on the title of 40 Danbury Crescent;
7.2.on 23 January 1976, 40 Danbury Crescent was registered in the names of the First Plaintiff and the Defendant as joint tenants; and
7.3.the First Plaintiff, the Defendant and Marjorie contributed equally both to the deposit and to the costs and repayments of housing loan as those repayments fell due from time to time.
The plaintiff pleads that by 17 September 1980 Bernard, Michael and the deceased had paid off the mortgage on the Property. The plaintiff says that the three parties were at that stage entitled to an equal beneficial interest in the Property. When the final payment was made the Property was still registered in the names of Bernard and Michael. It would seem no consideration was given to transferring a third interest in the Property to the deceased.
Bernard pleads that he married on 5 December 1981 and ceased to reside at the Property. In or about March of 1987 Bernard and his wife decided to purchase land in Carine. For reasons not presently relevant Bernard could not continue as a registered proprietor of the Property and acquire the land in Carine. He transferred his interest in the Property to Michael. He says despite that transfer he was still entitled to a one third beneficial interest in the Property. Bernard maintains that at all times he and the deceased met their obligations under the agreement. In other words, he says that both he and the deceased paid one third each of the mortgage payments.
In large measure, Michael accepts these facts as pleaded by Bernard. He accepts the Agreement and he accepts that Bernard transferred his one third interest in the Property to him but retained the beneficial interest. What Michael disputes is that Bernard and the deceased made their contributions under the Agreement. I will detail more precisely below what Michael says happened.
The deceased made her last will on 22 August 1988. The will bequeathed her personal possessions, her bank deposits and her entitlement to any workers compensation that her estate might receive to be divided equally between her five children. The will also contained the following:
I devise my property known as 40 Danbury Crescent Girrawheen to be divided into thirds, one third to Bernard, one third to Michael one third to be divided amongst my five children only.
The difficulties with that disposition are readily apparent. It is framed as if the deceased owned the Property in her own right. In fact she was not at the time of her death and never had been registered on the title. The most she could have been entitled to was a one third interest in the Property pursuant to the Agreement. Not surprisingly, the will was homemade and that probably explains the deceased's mistaken view as to the ownership of the Property.
The five children of the deceased appear to have reached an agreement that the Property would not be sold until the last of them was no longer residing in the Property. Pursuant to that agreement Christopher remained in the Property until about December of 2010. Christopher did not pay rent for the Property but no complaint is made about that by Bernard, Michael or any of the other children. Bernard pleads that after Christopher moved out of the Property Michael assumed control. The Property had been damaged by a storm and work needed to be undertaken to make it habitable. Bernard seeks an account from Michael in relation to the Property from 1 January 2011 to 8 October 2018, being the first day of the trial.
In his prayer for relief, Bernard seeks an order that the Property be sold. He also seeks a declaration that he holds a one third beneficial interest in the Property in his own right and a one third beneficial interest in the Property as executor of the deceased's estate.[1] If those declarations were made Bernard would hold more than a majority and would be entitled to an order for sale in lieu of partition under s 126 of the Property Law Act 1969 (WA). The prayer for relief in the re‑amended statement of claim offers a number of alternatives to the order for sale. But really it is a sale Bernard is seeking.
[1] Reamended statement of claim filed 10 July 2018.
In his defence, Michael admits he entered into the Agreement. However, he pleads there were further terms of the Agreement. Paragraph 2 of the substituted defence and counterclaim filed 13 August 2018 is in the following terms:
The Defendant admits paragraph 6 of the Statement of Claim and says it was orally further agreed between the First Plaintiff, the Defendant and the deceased, Marjorine Jordan ('Marjorie') (collectively 'the parties') that all forms of contribution both financial and non‑financial would be recognised and to the extent that the contributions of the parties were not equal the interests of the parties would be adjusted to ensure a fair outcome based on those contributions. The Defendant avers for the reasons pleaded in paragraphs 3 ‑ 5.7A hereof that the contributions of the parties to the acquisition improvement and maintenance of 40 Danbury Crescent were not equal, and, that pursuant to the Agreement the interests should be adjusted according to the actual contributions to the acquisition improvement and maintenance of 40 Danbury Crescent as set out herein. In the alternative, if it should be held that the Agreement did not contain the further oral term pleaded above, the Defendant avers, for the reasons pleaded in paragraphs 3 ‑ 5.7A hereof, that it would not be fair and equitable for the Agreement to be enforced and that in lieu thereof this Honourable Court should declare the equitable interests of the parties according to their contributions to the acquisition improvement and maintenance of 40 Danbury Crescent as set out herein.
Paragraph 5 of the substituted defence and counterclaim goes into detail as to the payments made by the respective parties to the mortgage. It also forms the basis of Michael's counterclaim. It is in the following terms:
5.1 Admits the parties contributed equally to the deposit of $2,100 by payment of $700 each, and, paid the stamp duty of $91.25 and transfer costs of $18 equally but denies the balance of paragraph 7.3.
5.2The Defendant avers that between 18 September 1976 and 23 June 1977 the First Plaintiff made payments towards the housing loan totalling $547. Following 23 June 1977 the Defendant sought on numerous occasions that the First Plaintiff contribute to the payment of the housing loan and the First Plaintiff failed or refused to do so.
5.3The Defendant avers that between 18 September 1976 and in or around August 1979 Marjorie made payments towards the housing loan totalling $4,311. In or around August 1979 Marjorie advised the Defendant that she was no longer able to make any contributions towards the housing loan and the Defendant accepted this advice and did not press for any payments after that time.
5.4The Defendant avers that between 18 September 1976 and 17 September 1980 the Defendant paid $16,458 towards the housing loan including the final payment thereof when the mortgage securing the housing loan was discharged.
5.5By virtue of the matters set out in paragraphs 5.1 ‑ 5.4 hereof the total of the amounts paid to purchase the property including, for the deposit, transfer, stamp duty and repayment of the housing loan was $23,525.25 of which the First Plaintiff paid $1,283.42 (or 5.46%), Marjorie paid $5,047.42 (or 21.46%) and the Defendant paid $17,194.41 (or 73.08%) and pursuant to the Agreement as pleaded by the Defendant in paragraph 2 hereof the interests should be adjusted according to the actual contributions to the acquisition of the property.
5.6As set out in paragraphs 5.1 ‑ 5.5 hereof the Defendant paid the overwhelming majority of the costs of purchase of the property including the repayments for the housing loan and it would not be just and equitable for either the First Plaintiff in his own right, or, for the Second Plaintiff on behalf of the deceased estate of Marjorie to obtain a 1/3rd share of the equity in the property. The Defendant avers that in lieu thereof this Honourable Court should declare the equitable interests of the parties according to their contributions to the acquisition, improvement and maintenance of 40 Danbury Crescent as set out in paragraphs 5.1 ‑ 5.5 hereof.
5.7Further, between in or around December 1976 ‑ 1985 and from time to time the property needed repairs and refurbishment, or, additions were made to the property at the request and with the consent of Marjorie. The Particulars of these works is set out more fully in Answer 8 of the Defendant's Answers to the First Plaintiff’s Request for Further and Better Particulars of Defence and Counterclaim dated 23 October 2015 which is incorporated herein by reference pursuant to Order 19 Rule 13(2) of the Rules of Court (hereinafter 'the costs of repairs'). Marjorie advised on each such occasion that she was unable to contribute to the costs of repairs. The First Plaintiff when asked to contribute to the costs of repairs either refused or ignored the requests of the Defendant to contribute to the costs of repairs.
5.7AFurther, from in or around 1979 and from time to time the rates and taxes and insurances had to be paid for the property. From on or about 16 July 1977 the First Plaintiff, and, from in or around August 1979 Marjorie ceased to pay any contribution to the rates and taxes and insurance for the property and the same were paid by the Defendant save only when the same were paid for by Christopher Paul Jordan when he resided in the property rent-free following the death of Marjorie and to the date when he ceased to reside at the property in or around May 2010.
5.8Pursuant to the terms of the Agreement (whether as pleaded in paragraph 6 of the Statement of Claim or as pleaded by the Defendant in paragraph 2 hereof) both the First Plaintiff and Marjorie ought to have contributed 1/3rd each towards the costs of repairs and the costs of rates and taxes and insurances.
5.9In the alternative to paragraph 5.8 hereof, the Defendant avers that at all material times he held the property as constructive trustee for all parties who hold an interest therein, and, as such had a right to be reimbursed for the costs of repairs and the costs of rates and taxes and insurances incurred by him for the property.
5.10The Defendant avers that at no time has the First Plaintiff in his own right, or, Marjorie, or, the Second Plaintiff on behalf of the deceased estate of Marjorie ever paid, or, offered to pay to the Defendant an amount so as to compensate the Defendant for the amounts paid by the Defendant to the costs of purchase of the property over and above the 1/3rd share of those sums which he ought to have paid if the First Plaintiff and Marjorie had contributed to the purchase costs pursuant to the Agreement (whether as pleaded in paragraph 6 of the Statement of Claim or as pleaded by the Defendant in paragraph 2 hereof). Further, the Defendant avers that at no time has the First Plaintiff in his own right, or, Marjorie, or, the Second Plaintiff on behalf of the deceased estate of Marjorie ever paid or offered to pay to the Defendant an amount so as to compensate the Defendant for the amounts paid by the Defendant to the costs of repairs and the costs of rates and taxes and insurances either as to a 1/3rd portion each, or, by way of reimbursement to the Defendant for expenses incurred by him for the property in his capacity as trustee.
5.11Further, or in the alternative to paragraph 5.6, and, by virtue of the matters pleaded in paragraphs 5.1 ‑ 5.9 the relief sought by the First Plaintiff in his own right, or, by the Second Plaintiff on behalf of the deceased estate of Marjorie should be refused as neither come before the Court with ‘clean hands’.
Really it is par 5.5 above which is at the heart of Michael's case. He says pursuant to the Agreement, with the additional terms he pleads in par 5.1 the parties' interests ought to be adjusted. As an alternative, if it is found there was no such agreement, then the equitable entitlement ought be adjusted to the percentages Michael has calculated.
As to the control of the Property, Michael does not really dispute that he did take control of the Property after Christopher's departure. However, he says that until May of 2013 when repairs were completed the Property was not habitable and could not be leased. He accepts that as and from that date an account should be taken in relation to income and outgoings on the Property.
By way of counterclaim, Michael seeks a declaration the Property is held on trust by him in the proportions set out in par 5.5 of the substituted defence and counterclaim. As an alternative he seeks a declaration that the Property is beneficially owned by him, by Bernard and by the estate in equal shares. He then seeks an order he is entitled to be paid amounts that the deceased and Bernard did not pay towards the mortgage together with interest thereon. By way of example, he seeks an order Bernard pay him an amount of $6,558.33 together with interest from 17 September 1980 until judgment. But, whichever way the matter is approached Michael seeks orders which will entitle him to a greater share of the estate because of his alleged extra contribution to the mortgage.
Issues for determination
Based upon the state of the pleadings, there are three issues for determination in this matter. First, was there an agreement between the parties as set out in par 2 of the substituted defence and counterclaim? If there was then there appeared to be no dispute on the part of Bernard that there would be an adjustment of the respective interests in the Property and declarations would be made accordingly. Second, if Michael did make additional payments to discharge the mortgage would he be entitled in equity to a greater interest in the Property as a consequence of those payments? This question really has two parts. First, were extra payments made by Michael? Second, if there were, how would equity deal with those payments? The third issue is the date from which an account should be taken. Should it be taken from January 2011 as Bernard says or should it be taken from May 2013 as Michael says?
All of the five siblings gave evidence, but it was the evidence of Michael and Bernard which was of most importance. It was Bernard's evidence first that there was the Agreement and nothing more. That is to say, it was never agreed between him, Michael and the deceased that there would be any adjustment of their respective interests consequent upon one party paying or contributing more to the mortgage. Furthermore he maintained that both he and his mother had made the payments required of them. In response to a request for further and better particulars of the amended statement of claim Bernard provides a remarkably detailed statement of what amounts he and the deceased contributed and when. So far as he is concerned the first payment was made 18 September 1976 and was for an amount of $54.65. He says the last payment was made on 30 August 1980 and was for $100. In all he says he contributed $7,652.75. The amounts vary from time to time and it was Bernard's evidence that as and when he was able to do so he contributed more to the payment of the mortgage than he was strictly obliged to do. The aim was to pay the loan off as quickly as possible. So far as the deceased is concerned her first contribution is shown as being 18 September 1976 and it is for $54.65. Her last contribution is shown as $100 and that is on 16 August 1980. The total contributions she made total $7,147.75.
At pages 25 to 31 of the trial bundle is a copy of the passbook for the Perth Building Society bank account for the loan taken out over the Property. At page 32 is a copy of the final statement of the mortgage loan account showing it was paid in full. Of course what these statements do not show is who actually made the payment. They show that a payment was made but they do not indicate whether it was made by cash or cheque. It was Michael's evidence that he made all of the payments. Bernard disputed that and said some payments were made by the deceased. For the purposes of this action it is irrelevant who actually physically deposited money in the bank. What was important was who contributed the funds.
What does seem clear is that from time to time Michael made contributions to paying down the mortgage which were not matched by Bernard or his mother. By way of example on 16 July 1977 a payment of $1,500 was made to reduce the mortgage. On that same day Michael had withdrawn $1,000 from a savings account he held (page 36 of the trial bundle). Given the exact date match, Michael's evidence that he paid the $1,000 must be accepted. The same is true of a payment of $1,000 on 2 November 1977. An entry in Michael's savings account shows a withdrawal of an amount of money on that day. I accept the payment of that amount was made by Michael and was additional to any other amounts he paid on a monthly basis to reduce the mortgage.
Neither Bernard nor Michael were particularly satisfactory witnesses. Both had difficulty in answering straightforward questions. Both were inclined to quarrel with counsel. Despite the fact I issued a number of warnings, particularly to Bernard, the problem persisted. As a consequence, it was difficult to form any clear view of the credibility of each of the two witnesses. The evidence of the remaining three siblings really did not add anything to the question of the terms of the agreement or who made repayment of the mortgage.
Disposition
During the course of his closing submissions counsel for Michael effectively abandoned the argument that there was an agreement between the parties to adjust their respective interests in the Property in line with their contributions. He was right to do so. When cross‑examined about this agreement Michael could really offer no details. He could not explain how the regime was to work. In fact his evidence was so lacking in detail it simply could not be accepted. As a consequence I find as a fact that there was no additional terms of the Agreement as pleaded in par 2 of the substituted defence and counterclaim. As I have said the Agreement was not in dispute between the parties. Accordingly, prima facie, Bernard and the deceased are entitled in equity to a one third interest in the Property. As the deceased was entitled to a one third interest, the estate is now entitled to that one third interest. That was not the end of the matter. It was Michael's position that as he had made further contributions a constructive trust should be imposed with the effect that he would receive a greater proportion of the Property than either Bernard or the estate. Before dealing with the basis upon which this claim was made in this particular case, and the evidence supporting Michael's position, it is necessary to say something about the nature of the trust which all parties agreed was established but which Michael says was varied by his superior contribution to paying the mortgage.
It seems clear that in this case the trust created by the Agreement between the parties can be classified as a private fixed express trust which was executed. This description requires some explanation. Clearly the parties intended to create a trust and in that sense it was 'express'. It was clearly private in nature rather than public. It was fixed in the sense that the beneficiaries were identified and had fixed entitlements in equity. It was also intended that on distribution each of the three parties would receive a third of the Property each. It was executed in the sense all necessary formalities to complete the trust had been fulfilled and its terms were clear.
Both parties in this case approached the matter on the basis that there could be an inferred resulting or constructive trust. With respect that cannot be correct. If there is absent an express or inferred intention to create an interest that equity will recognise, equitable interests can arise by implication of law or will be imposed by a court. In the context of trusts, the former category includes resulting trusts, the latter constructive trusts. Resulting trusts arise where a person confers title to a property on to another person but retains beneficial ownership of the property in whole or in part. The resulting trust is premised on presumed intention arising out of a particular form of transaction. The court imposes a constructive trust where no express trust has been declared, but where, according to principles of equity, it would be a 'fraud' for the person in whom the court imposes the trust to assert a beneficial ownership as to the property in issue or otherwise not to account for a gain or compensate another for a loss as if he or she were a trustee of an express trust: see G E Dal Pont; Equity in Trusts in Australia (7th ed) [16.20].
Given the existence of the express trust in this case there is no room - and indeed no need - to impose either a constructive or resulting trust. What Michael was actually seeking was a variation of the express trust to recognise his alleged superior contributions to paying off the mortgage. It has long been recognised that the court has an inherent jurisdiction to vary a trust, although that jurisdiction is 'exceptional': see Re New [1901] 2 Ch 534 [544] – [545]; Chapman v Chapman [1954] AC 429 [445] and Tickle v Tickle (1987) 10 NSWLR 581 [586].
Furthermore, under s 89 of the Trustees Act 1962 (WA) the court is empowered to vary a trust in certain circumstances. So really what Michael was seeking was a variation of the trust either pursuant to the inherent jurisdiction of the court or pursuant to the provision of the Trustees Act.
That then leads onto the question of the circumstances in which Michael came to make further contributions to the mortgage. As I have indicated above, I am satisfied that he did in fact make a greater contribution than either Bernard or his mother. But I am not satisfied that he paid the bulk of the mortgage payments. So the question then is whether his additional contribution is such as to make it 'expedient' that he should have a greater interest in the trust.
In all of the circumstances I am not satisfied such a course would be proper. There are a number of factors which lead me to that conclusion. First, it would appear Michael made the additional contributions freely and without any promise or undertaking on the part of either Bernard or the deceased. It may be that Michael expected Bernard and the deceased to match his contributions but when that was not done he did not take any steps to adjust his contribution to reflect the failure of the other two to contribute. To that extent he undertook the additional burden without any incentive to do so.
Moreover, so much time has now passed that to attempt to adjust interests based upon varying contributions is to effectively tinker with the interests of the parties. Even when constructive trusts are imposed, courts have been slow to undertake a dollar for dollar analysis of the party's respective contributions and adjust interests accordingly. That is evidenced by Baumgartner v Baumgartner (1987) 164 CLR 137 [150]; Hardman v Hobman [2004] DFC 95-281 [3]. None of those cases involved a lapse of time anything like has occurred in this case.
In his counterclaim by [29] Michael seeks compensation for additional amounts he allegedly paid over and above contributions made by the deceased and Bernard.[2] This claim is reflected in pars B, C and D of the prayer for relief.[3] As I have already indicated, I am not satisfied that Bernard and the deceased did not make contributions required of them for repayment of the mortgage. As to any additional amounts contributed by Michael I am not satisfied that equity requires some form of compensation for these amounts. No principle of equity is engaged. It cannot be said that a failure to compensate Michael is some form of equitable fraud or unconscionable. Additional payments made whether directly to the mortgage or by way of household repairs reflect a domestic arrangement between the parties into which equity should not intrude. Moreover, the lapse of time between the payments that might have been made and this claim is such that to attempt now to quantify what additional amount has been paid and impose interest on those payments would be unfair and unreasonable.
[2] Par 29, page 11 of the substituted defence and counterclaim dated 13 August 2018.
[3] Page 11 of the substituted defence and counterclaim dated 13 August 2018.
On that basis I am satisfied that each of Michael, Bernard and the estate is entitled to a one third interest in the Property.
That then leaves the question as to the date from which an account should be taken. On balance I am satisfied the account should be taken from May 2013 - that is to say that I accept Michael's position on this question. A remarkable amount of evidence was led on this relatively minor issue. What was not in dispute was that after Christopher vacated the Property it was not in habitable condition. It required substantial repairs largely due to storm damage which it had sustained. Some time was spent arguing with the insurance company as to the amount of the payout. That led to some delay in repairs being undertaken. When a payout was eventually received it was not sufficient to cover all of the costs of repair. The siblings then decided to undertake a substantial part of the work themselves or on a subcontract basis. Bernard participated in this process. It appears to have been somewhat protracted but the evidence is to the effect that the Property was not habitable during this process.
In my view there is no doubt that Michael acted properly and appropriately in his approach to repairing the Property and he was supported by his siblings, including Bernard. There is no warrant for requiring him to account for the Property prior to the date on which it was actually available for rental.
On publication of these reasons I will give the parties the opportunity to consider the orders which are appropriate. One of the matters is a question of costs. It is entirely possible that by the time the costs of this action are paid each of the parties will be left with a few pennies. While the processes of this court are available to any individual, some sense of proportion is required. This case serves to illustrate that point.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
18 APRIL 2019
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: JORDAN -v- JORDAN [2018] WASC 384 (S)
CORAM: MASTER SANDERSON
HEARD: 20 FEBRUARY 2019
DELIVERED : 18 APRIL 2019
PUBLISHED : 18 APRIL 2019
FILE NO/S: CIV 1653 of 2014
BETWEEN: BERNARD PATRICK JORDAN
First Plaintiff
BERNARD PATRICK JORDAN as executor of the estate of MARJORINE JORDAN
Second Plaintiff
AND
MICHAEL PAUL JORDAN
Defendant
Catchwords:
Practice and procedure - Form of orders - Costs
Legislation:
Supreme Court Act 1935 (WA)
Result:
Order made
Category: B
Representation:
Counsel:
| First Plaintiff | : | Dr P R MacMillan |
| Second Plaintiff | : | Dr P R MacMillan |
| Defendant | : | Mr T R Stephenson |
Solicitors:
| First Plaintiff | : | Vogt Graham Lawyers |
| Second Plaintiff | : | Vogt Graham Lawyers |
| Defendant | : | K G Sorensen |
Case(s) referred to in decision(s):
Nil
MASTER SANDERSON:
After publication of my reasons in this matter the parties took time to consider two issues. The first was the terms of sale of the property. I indicated in my reasons the property should be sold and I also set out the way in which proceeds should be distributed. Given that the plaintiff was the holder of a two‑third interest in the property – one‑third in his own right and one‑third as executor of the deceased estate – it is reasonable the sale should be handled by him in the terms he proposed. In fact, as to the sale, there was a large measure of agreement between the plaintiffs and the defendant. But insofar as there is disagreement I am satisfied it is the plaintiffs' version of orders which should be adopted.[4]
[4] Pars 1 – 4 of plaintiffs' minute of proposed orders filed 14 December 2018.
That leaves the question of costs. Not unexpectedly there was a vigorous argument on this issue. So far as the plaintiffs are concerned they claim they were in the main successful and costs ought follow the event. They do appear to accept the defendant was successful on the issue of taking of an account. The matter is complicated by an offer of settlement put by the plaintiffs to the defendant on 11 May 2016.
A copy of that letter appears as attachment JW1 to the affidavit of Jacqueline Tekura Wi‑Kaitaia sworn 13 December 2018. Relevantly that letter reads as follows:
RE: JORDAN & ANOR v JORDAN
SUPREME COURT CIV 1653 OF 2014We refer to the parties' previous offers and counter-offers to settle the matter.
Our client has instructed us to make a one last effort to settle the matter without the need of a lengthy and expensive trial.
Our client's offer to settle is contained in the attached Deed of Settlement and Release and Minute of Consent Orders Pursuant to Order 43 rule 16.
Our client's offer to settle can be summarised as follows:
1.the parties sign a transfer to give effect to your client, our client and our client in his capacity as his mother's executor as registered proprietors of 40 Danbury as tenants in common in equal shares;
2.40 Danbury be sold as set out in the Minute of Consent Orders enclosed herewith;
3.the nett proceeds of sale be divided equally between the three registered proprietors;
4.your client retain all the rental income derived from 40 Danbury and he be solely responsible for all outgoings and tax on the rental income;
5.your client pay to our client $45,000 by way of contribution to the costs incurred by our client in his personal capacity and in his capacity as his mother's executor such payment to be made from your client's portion of the nett proceeds of sale.
We are instructed to put your client on notice that our client's offer is open for acceptance within 14 days from the date of this letter. Should our client's offer not be accepted, our client will seek to rely on the contents of this letter and the enclosures on the issue of costs on an indemnity basis should our client be successful at trial.
We look forward to hearing from you.
Yours faithfully
It is the plaintiffs' position, even allowing for the success of the defendant on the issue of taking of an account, the defendant did not do as well in the eventual outcome as he would have done if the offer was accepted.
The defendant's position is to the effect that an agreement in substance was reached in the course of mediation and was not put into effect because the plaintiffs increased their demands after an agreement had been reached. Details of this alleged agreement are contained in an affidavit of Keith Gordon Sorensen sworn 21 January 2019. Counsel for the plaintiffs objected to the filing of this affidavit and its contents. Counsel maintained it provided evidence of what took place at a mediation conference and such evidence is not admissible because there is no rule to that effect and s 71(5) of the Supreme Court Act 1935(WA) is not engaged. I accept that submission. Accordingly I have not taken into account what is contained in Mr Sorensen's affidavit in resolving the question of costs.
As submitted on behalf of the plaintiffs, the defendant's resistance to the making of an indemnity costs order is based on three considerations. First, the defendant achieved a better result in the action than he would have enjoyed pursuant to the acceptance of the offer. Second, the plaintiffs did not succeed in their claim for occupational rent. Third, the offer required acceptance by others not party to the action.[5]
[5] Plaintiffs' amended submissions filed 11 February 2019.
The last of these objections can be put to one side. The fact is it was the first plaintiff and the defendant who were the protagonists in these proceedings. There seems to be no reason why the action could not have been compromised as between the two of them. That said, it must be acknowledged that the relationships between family members were fractured and the defendant might have felt it prudent to obtain the agreement of all siblings to any settlement. But strictly speaking that was not required.
The difficulty in this case is that the terms of the deceased's will were not in accordance with the real legal position. She purposed to leave the whole of her property to her children. In fact she had no legal interest in the property at all (she was not registered on the title) and she had only a one‑third equitable interest at most. So it was in one sense inevitable this matter would require litigation to determine the proper interpretation of the will. While I would accept it is arguable the defendant did not achieve a better result as a consequence of the litigation than is reflected in the offer, I am not satisfied it was unreasonable for him to maintain his position in the litigation. He did succeed on the account issue and it was his version of the will which was accepted. On that basis I am not satisfied an indemnity costs order is warranted.
In the circumstances, there should be a costs order in favour of the plaintiffs. To reflect the defendant's success on the account question, I would order the defendant to pay 90% of the plaintiffs' taxed costs such costs to include reserved costs.
The orders will date from the date of publication of these supplementary reasons.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
DG
Associate to Master Sanderson
18 APRIL 2019
0
2
2