Mann v Grantham
[2004] VSC 156
•4 May 2004
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 8281 of 2002
| IN THE MATTER of Part IV of the Administration and Probate Act 1958 |
| - and - |
| IN THE MATTER of the Will and Estate of ALEXANDER ORR MANN SNR, late of Eastwood Hostel, Kingston Centre, Warrigal Road, Cheltenham in the State of Victoria, deceased |
BETWEEN:
| ALEXANDER ORR MANN JNR | Plaintiff |
| v | |
| GEOFFREY ROY GRANTHAM (who is sued as one of the Executors of the Will of ALEXANDER ORR MANN, SNR, deceased) and LEA RICHARD JAMES | Defendants |
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No. 4353 of 2003
IN THE MATTER of s. 34 of the Administration and Probate Act 1958 and s. 48 of the Trustee Act 1958
- and -
IN THE MATTER of R54.02 of the General Rules of Procedure in Civil Proceedings 1996
- and -
IN THE MATTER of the Will and Estate of ALEXANDER ORR MANN SNR, deceased
BETWEEN:
| GEOFFREY ROY GRANTHAM | Plaintiff |
| v | |
| ALEXANDER ORR MANN, JNR | Defendant |
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No. 6747 of 2003
IN THE MATTER of an application pursuant to Order 54 of the Rules of Court
- and -
IN THE MATTER of an application pursuant to s. 34
of the Administration and Probate Act 1958
BETWEEN:
| ALEXANDER ORR MANN, JNR | Plaintiff |
| v | |
| GEOFFREY GRANTHAM and LEA RICHARD JAMES | Defendants |
--------
JUDGE: | Byrne J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 27, 28 and 29 April 2004 | |
DATE OF JUDGMENT: | 4 May 2004 | |
CASE MAY BE CITED AS: | Mann v Grantham | |
MEDIUM NEUTRAL CITATION: | [2004] VSC 156 | |
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Administration and Probate – two executors and trustees – irreconcilable differences – whether order for removal of one – whether one trustee have leave to retire – costs of proceedings – disposition of reserved costs of interlocutory applications - claims by estate against executor.
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APPEARANCES: | Counsel | Solicitors | |
| For Geoffrey Roy Grantham | Mr R.B. Phillips, | Lyttletons | |
| For Alexander Orr Mann | Mr R. Cook | Battiato Drane & Co | |
| There was no appearance for Lea Richard James | |||
HIS HONOUR:
These proceedings arise out of difficulties which have arisen between two executors of the will of Alexander Orr Mann ("the Deceased"). The Deceased died on 6 November 2001 leaving a will dated 25 May 2001. He was survived by his two adult children, Jennifer Phyllis James ("the Daughter"), and Alexander Orr Mann Jr ("the Son"). The Daughter died on 24 January 2002 and thereafter her husband Lea Richard James represented her interests.
By his will the Deceased appointed as his executors the Daughter, and the Son, and his solicitor Geoffrey Roy Grantham. The Daughter had not proved the will before her death. Under the will the Deceased gave the whole of his estate to his executors to divide it equally between the Son and the Daughter.
The estate of the Deceased was valued for probate at about $2.5 million of which $1.6 million was represented by four pieces of real estate. One such piece was the land situate at and known as 1-11 Pine Lane, Heatherton, for which the given value was $500,000. This land at Pine Lane comprised some two acres on which stood the home of the Deceased and about seven acres which was let to a market gardener. As at the date of death of the Deceased, the house and the surrounding acres at Pine Lane had been occupied, since September 2001, by the Son and his family under an arrangement with the Deceased. It seems that no rent was agreed to be payable under this arrangement, but that the Son would maintain and secure the property.
Within a short time after the death of the Deceased there were signs of the difficulties which lay ahead. Mr Grantham and the Son appear to have been incapable of reaching agreement on the most ordinary and uncontroversial matters arising in the administration. Since there were only two executors, this produced an impasse. I should add that Mr James too, spoke of what he called "a constant problem of communication which has resulted in significant difficulties and delays in the administration of the estate". These difficulties appear to have become more acute over the two and a half years since the death of the Deceased. Each of Mr Grantham and the Son blames the other for this. As I indicated at the hearing it is not necessary that I enter upon this contest except with respect to certain specific matters, and I express no view as to whether one or other of these two executors, or both of them, was responsible for the impasse which undoubtedly existed. It is sufficient to acknowledge that the difficulties and consequent deadlock existed and still exist.
In or about February 2002 the Son indicated that he was dissatisfied with his share of the estate under the will. He took the position that he should have either Pine Lane, and one half of the balance of the estate, or 80 per cent of the whole estate.
Before I turn to the particular matters for determination, I should place on record my general impression of the two principal witnesses, Mr Grantham and the Son. This impression was been gained from an examination of the affidavits, the correspondence, and from their demeanour in the witness box. The Son appears to be of a forthright disposition, direct and at times aggressive where he perceives that he has not been dealt with fairly. He feels strongly that he has been neglected in the administration of the estate, and has made this clear in his long, rambling and often repetitive affidavits. Mr Grantham appeared to be of a more cautious and even timid disposition. His reaction to a forthright demand appears to be that he withdraws and then seeks legal advice, and with the consequence that the demand tends to be resisted. Furthermore, he was distrustful of the motives, and even of the integrity, of the Son and was therefore concerned to ensure that the other beneficiary suffered no disadvantage. Much of the difficulty which beset the administration might have been avoided if those advising the Son had appreciated these matters. Had they done so his demands would have been perhaps moderated, his cooperation perhaps given, and his affidavits much reduced in length. Moreover, their approaches to Mr Grantham especially after the settlement between the beneficiaries would have been gentler and more conciliatory, and therefore would have had a greater prospect of producing a result.
I turn to the history of the estate. Shortly after the death of the Daughter, Mr Grantham gave consideration as to how the difficulties ahead might be avoided. Having taken the advice of counsel he decided to apply for probate alone. This he did without informing the Son, and on 20 May 2002 a grant was made to him reserving leave to the Son to come in and prove. Shortly after, on 25 July 2002, the Son also obtained a grant of probate.
On 22 November 2002, the Son commenced a proceeding[1] under Part IV of the Administration and Probate Act 1958 seeking further provision out of the estate. This is the first of the three proceedings before me. On 5 March 2002, Mr James who had by then obtained a grant of probate of the will of the Daughter was joined as second defendant.
[1]No 8281 of 2002
On or about 27 November 2003, the Son and Mr James agreed to settle this proceeding but Mr Grantham, the first defendant, was not a party to the settlement. In essence the parties agreed that the entitlement of the Daughter under the will of the Deceased would be satisfied by payment to the solicitors for her estate of the sum of $990,000 of which $100,000 had previously been paid. The parties to this agreement further agreed that the Part IV proceeding would be discontinued against Mr James with no order as to costs. Each of the Son and Mr James, on behalf of the Daughter's estate, further agreed that he would make no further claims against the other arising out of that proceeding. The absence from the settlement agreement of Mr Grantham as first defendant and the representative of the estate of the Deceased in the Part IV proceeding, had a number of consequences.
The Part IV proceeding against the estate of the Deceased was in fact not settled. No order for further provision was to be made. What was created by this settlement was simply an agreement between the beneficiaries to require the estate to make the payment to Mr James. The estate was not bound to make this payment, and would have been entitled not to do so unless the two beneficiaries had given an unequivocal instruction to do so and, second, there were sufficient funds to make the payment. A further consequence was that issue in the proceeding, notably the question of the costs of the estate of the proceeding, and the costs of the plaintiff, the Son, of the proceeding, were not dealt with. As will be seen this has created more difficulties.
By the end of 2002 the position between the two executors had become intolerable. Mr Grantham, Mr James and the Son had each retained solicitors to represent their interests. Mr Grantham had made suggestions to resolve the impasse, but without success.
On 3 February 2003 Mr Grantham commenced the second proceeding before me[2] to achieve one of the options he had suggested. This was that each of the executors would be removed, or would retire, and that an independent administrator acceptable to the beneficiaries be appointed to wind up the estate. Mr James became a defendant to this proceeding which I shall refer to as the Grantham proceeding.
[2]No 4353 of 2003
On 16 July 2003, the Son himself brought the third proceeding[3] against Mr Grantham and the estate of the Daughter, seeking the removal of Mr Grantham as executor and consequential orders, and certain other orders arising out of his alleged maladministration of the estate. I shall refer to this proceeding as the Mann proceeding.
[3]No 6747 of 2003
The terms of settlement of November 2003 also resolved these proceedings as between the Son and Mr James. The terms provide that neither of those parties would make a claim against the other arising out of the Mann proceeding or the Grantham proceeding. This must have been agreed between them from an abundance of caution, as, in fact, neither had made a claim against the other in the Grantham proceeding, and further because Mr James remained a necessary party to the Mann proceeding given the relief sought against the estate of the Deceased in that proceeding. Finally, and even more remarkable, is the provision in the terms that the Mann proceeding and the Grantham proceeding were discontinued against Mr James. It was not for the Son to discontinue the Grantham proceeding, nor could he oblige Mr Grantham to do so. It is doubtful whether the Son's own proceeding could continue without Mr James as a party on behalf of the beneficiary.
In any event, having in this way resolved the Part IV proceeding, the Son became for practical purposes, although not I think for legal purposes, the sole beneficiary of the estate of the Deceased. Nevertheless, Mr Grantham maintained his resistance to the Son's urging that he resign as executor and to the Son's other demands. And so these matters, together with a miscellany of other matters, have come on for determination before me.
There are voluminous and numerous affidavits relied upon[4] and very many exhibits. For the most part they cover an enormous number of grievances and complaints most of which are not relevant for my purposes. Happily counsel for the parties have formulated the issues which they have asked me to determine. Less happily, many of these issues are not dealt with in the affidavits. I informed counsel at trial, and in the course of final addresses, that I would not trawl through this mass of material to discover evidence which I thought might bear upon the issues which they raised. I will act only those matters which have been brought to my attention and, of course, upon the oral evidence given at trial.
[4]10 affidavits in the Part IV proceeding, 25 in the Mann proceeding and 12 in the Grantham proceeding.
The Removal Application.
Each executor sought orders pursuant to s. 34 of the Administration and Probate Act 1958, and s. 48 of the Trustee Act 1958, for the removal of the other as executor and trustee respectively.
At the outset of the trial, counsel for Mr Grantham announced that his client was content to withdraw provided any entitlement to which he might be found to have from the estate was protected. Counsel for the Son in principle agreed with this. What then remained was the form of the order and the amount of the security.
Under s. 34 of the Administration and Probate Act 1958 I may remove or discharge an executor on any of a number of grounds, including unfitness. It was suggested that I have a like power under s. 48 of the Trustee Act insofar as Mr Grantham may now be a trustee of the estate. It was agreed by counsel that I might remove or discharge one of two executors or trustees from office pursuant to the statutes referred to and, further that this might be done where there is such conflict between them that the due administration of the estate is prejudiced[5]. The view expressed by Young CJ in Eq in Morgan v Macrae[6] to the effect that an executor may be removed only by revocation of the grant appears to depend upon the statutory provision in that State. There is no doubt that I also have the power to remove a trustee in the appropriate case, or to permit a trustee to retire. But this jurisdiction, it would seem, does not arise from statute.
[5]Monty Financial Services Ltd v Delmo [1996] 1 VR 65; Profilio v Profilio [1999] NSWSC 657
[6][2001] NSWSC 1017
It is clear enough that Mr Grantham now wishes to retire from the offices of executor or trustee. I have at this trial, and in this judgment, refrained from undertaking a general review of his administration as urged on behalf of the Son. Accordingly, I make no findings of general unfitness or breach of trust other than upon the matters which are otherwise required for my determination. It seems to me that the submission put on behalf of the Son that I should exercise the power under s. 34 to remove him from the office of executor, and for a stated reason of unfitness, would serve no good purpose other to gratify the Son's desire for revenge. Moreover, I make no finding which would warrant such a step. The finding which I do make is that irreconcilable differences existed and exist between the executors which have led to deadlock, which is to the detriment of the estate. The appropriate order, therefore, is to note Mr Grantham's desire to retire from office, and to discharge him from the office of executor. With respect to his office as trustee there does not appear to be a statutory provision which applies to this case. Section 44 is not apposite. In Re Phillips[7], Molesworth J in a case like the present simply allowed the trustee to retire. I will follow this course.
[7](1879) 5 VLR (E) 274
It will then be necessary for consequential orders to be made perhaps for the vesting of the assets in the continuing executor and trustee, and for the passing of accounts and for the handing over of the estate assets, accounts and other documents. I will hear counsel in due course as to the terms of these and other consequential orders.
I shall return to the question of the amount of security for the outgoing executor and trustee's entitlements in due course.
Costs of the Part IV Proceeding
It was proper for Mr Grantham to resist the Son's claim in the Part IV proceeding, especially as it was opposed by the other beneficiary. Accordingly, he is prima facie entitled to the usual executor's order.
It was put, however, that he should be deprived of some or all of this because of his active involvement in resisting the application notwithstanding that Mr James was a party to the proceeding. Examination of the material does not bear this out. He did file an affidavit in opposition, but it would appear that his involvement in this litigation thereafter was minimal.
It was put that the costs reserved by Mandie J on 15 December 2003 should not be included in this order. This was because Mr Grantham, it was said, was unreasonable, if not in breach of his executorial duties, in "refusing to execute the terms of the settlement" of November 2003. I reject this submission. First, for reasons which I have mentioned above, Mr Grantham was entitled to take the position he did. In fact the order which was sought in the summons and obtained from His Honour was not the order asserted in argument by counsel for the Son.
What was sought in the summons of 10 December was an order that the unpaid sum of $890,000 agreed in the settlement to be paid to Mr James be paid to him on or before 18 December. Mr Grantham was, not surprisingly, resistant to this. He insisted upon a release from Mr James and an order for his costs of the Part IV proceeding so that it might be finally disposed of. At the door of the court Mr James provided the release so that the payment might be made and the remaining issues in the Part IV proceeding were reserved for trial. For practical purposes the matter which was in this way reserved was the question of Mr Grantham's costs. It seems that neither of the contending beneficiaries was concerned to have an order made under Part IV of the Administration and Probate Act.
For reasons which I have mentioned it was perfectly proper for Mr Grantham as executor to seek to protect his position in this way. I will not order that he pay the costs reserved by the order of 15 December.
Costs of the Grantham Proceeding
Under this heading there fall for determination the costs which were reserved on 30 June 2003, and the costs of the proceeding generally. A number of other orders for reserved costs were made but these were not pressed before me.
On 2 June 2003, Cummins J made orders and gave directions in accordance with the following timetable:
10 June Further affidavits on behalf of the Son.
13-20 June Mr Grantham's affidavit as to the estate.
24 June Affidavits in reply by Mr Grantham.
27 June Mediation.22 July Pre-trial directions by the Listing Master.
The solicitors for the Son filed their further affidavit on 12 June, two days late.
On 14 June Mrs Lyttleton, the solicitor handling the matter on behalf of Mr Grantham, suffered a fall and underwent consequential surgery on 16 June. In his affidavit explaining this, her husband said that she would be incapacitated for six to 10 weeks but that she expected to be able to resume work on a part-time basis within two weeks. Mr Lyttleton therefore requested an extension of the timetable so that the affidavit in reply be filed on 1 August, and the mediation take place on 15 September. The solicitors for the Son responded by letter dated 18 June to the suggestion that the timetable be extended by making the following proposal: the extension was agreed to if the money held in the estate bank account be distributed equally and the mediation occur in September. This request for an interim distribution had previously been made and rejected by Mr James and Mr Grantham.
And so it was necessary for the parties to attend court on 30 June to obtain an extension of the timetable. Mrs Battiato, the solicitor for the Son, swore an affidavit on 27 June in opposition to the extension. On 30 June 2003 Redlich J extended the time for the affidavit in reply to 25 July and for the mediation to 2 September. His Honour reserved costs. The attendance before His Honour on that day was entirely due to the unreasonable position adopted by the Son. I will therefore make no order for the payment by Mr Grantham of the costs reserved on that day.
In the Grantham proceeding, Mr Grantham seeks orders for the removal of himself and the Son as executors and trustees of the estate. As things stood when the proceeding was commenced, it cannot be said that it was doomed to fail or that it was brought for an improper purpose. The fact that it is not now necessary for it to be pursued is a consequence of the settlement achieved between the Son and Mr James in November 2003.
It was accepted on behalf of the Son that Mr Grantham should have his costs of this proceeding on the ordinary executor's basis up to 17 February 2004, but that they should be reduced by 50 per cent. Costs after that date, it was contended, should be paid by him to the estate on a solicitor and client basis. The significance of this date is that it was then that the solicitors for the Son wrote to the solicitors for Mr Grantham a four page letter which included a requirement that Mr Grantham resign as executor on the basis that shares to a value of some $225,000, and some cash in bank, be retained against his entitlements, if any, from the estate. I should add that the terms and tone of this letter were very aggressive and uncompromising, notwithstanding that it contained a proposal for the resolution of the dispute with the consequent prospect of the saving of costs. It was as if the writer was contriving a rejection of the proposal. A response was required by 10 am the following day.
It is sufficient for present purposes that I note that no further step has been taken in this proceeding following the settlement in November 2003, other than an order on 3 February 2004 striking out a summons which had been filed on 11 November 2003. There was no appearance on that occasion.
In his affidavit of 15 December 2003, Mr Grantham acknowledged that this proceeding, the Grantham proceeding, might be discontinued on conditions which included that his entitlements be preserved. No costs in this proceeding appear to have been incurred thereafter by any party other than their attendance at trial before me. There is, therefore, no need to deal separately with costs after 17 February 2004.
The contention that the executor's costs should be reduced by 50 per cent was the product of a confused assertion that the Grantham proceeding ought not to have been brought, that the work done in it on behalf of the executor was excessive, and that the general conduct of the administration by Mr Grantham was such that the estate should not be required to bear the cost of this proceeding entirely. The first contention I reject. The second, and perhaps the third, I leave to the Taxing Master. In the circumstances, Mr Grantham will have his costs of the Grantham proceeding on an executor's basis, including the costs reserved and, in particular, those reserved on 30 June 2003.
Costs in the Mann Proceeding
Under this heading there fall for determination orders for costs which were reserved upon seven interlocutory applications as well as the costs of the proceeding generally. I shall deal with the interlocutory costs first. I put to one side those which were not pursued before me.
On 24 July 2003, Gillard J ordered that costs be reserved in an application brought by summons seeking an interim distribution filed on 16 July, the same date that the proceeding was commenced. It was said on behalf of Mr Grantham, and disputed on behalf of the Son, that this claim for distribution was unexpected. I think this is not in accordance with the evidence. The Son had been seeking an interim distribution for some months. Mr Grantham refused to accede to his requests for a number of reasons, some more compelling than others. First, there were insufficient funds available for the purpose. Second, the other beneficiary was not agreeable. Third, there was on foot the Part IV proceeding whose outcome might affect the entitlement of the Son. And finally, the Son had since his father's death already enjoyed but not accounted for considerable benefits from the estate.
Notwithstanding these concerns, Mr Grantham agreed on 24 July 2003 to an order that he distribute $100,000 to each beneficiary. To my mind his resistance to this application, nonetheless, was not such that I should order that he pay the costs of the Son which were reserved on this occasion.
On 15 December Mandie J reserved costs on the return of the Son's summons filed on 10 December. I have already dealt with aspects of this application in my consideration of the costs application in the Part IV proceeding. In this summons the Son also sought a further interim distribution. His Honour referred this application to the trial and reserved costs generally. For reasons which I have mentioned I will not order that Mr Grantham pay the Son's costs reserved on this occasion.
A further problem which existed at this time related to the lease of the market garden at Pine Lane. The Son had agreed to the terms of a lease with the existing tenant following the expiry of the term, but Mr Grantham declined to execute the lease except on the basis that the rental be paid into an estate bank account in the names of the two executors. This the Son refused to do.
On Wednesday 17 December, therefore, the Son filed a summons seeking an order that Mr Grantham execute the lease and that he take steps to permit the rental to be paid to the Son. The summons also renewed his application for an interim distribution which had been declined two days previously.
On 18 December, Mr Grantham had by letter agreed to execute the lease, but with an amendment making it clear that the rental should be paid to the estate account and not to the Son directly, and he proposed that the rental might be distributed to the Son from that account in due course. In fact, he signed a copy of the lease amended in this form on 19 December at the court.
On the return of the summons on Friday 19 December, the application was dismissed by Mandie J, and the costs reserved for the trial. It seems to me that, in the circumstances, Mr Grantham was entitled to insist that proper procedures be followed with respect to the rental and that the claim for further distribution was doomed. I will not make an order that he pay the costs reserved on 19 December.
By summons filed on 9 January 2004, the Son returned to court seeking an order that the rental received in the estate account be paid to him as agreed. He sought also that other estate income be dealt with in this way and that Mr Grantham authorise the payment of a number of specified accounts totalling about $25,000.
On 13 January 2004, Gillard J ordered that the estate pay to the Son 52 per cent of income received after 19 December, and that about $14,000 of the accounts be paid. His Honour reserved costs.
The evidence of Mr Grantham's receipt of rental in the period since 19 December was very vague, and no amount was proved. The position adopted by Mr Grantham in his letter of 12 January with respect to the accounts was that, one, in the sum of $7,452 had been paid, and that he would make available for others $5,709.97 only. His concern was that the liquid assets of the estate were such that further payments would be inadvisable. There were abundant assets in the estate in the form of shares and real estate, even allowing for the uncertainty of the tax position at that time.
In the circumstances, I do not consider it unreasonable for Mr Grantham to have taken the position which he did. I will not order that he pay the costs reserved on 13 January.
The next order for reserved costs was made by Balmford J on 2 March 2004 on a summons filed on behalf of the Son on 27 February 2004. This application was adjourned by Her Honour to 17 March when it was dealt with by Dodds-Streeton J. On each occasion costs were reserved. It is convenient to deal with these two reservations of costs together.
It will be recalled that on 17 February the solicitors for the Son wrote a four page letter in which they required Mr Grantham to retire from the offices of executor and trustee on the basis that shares valued at about $225,000, and cash in bank, be held as security for any entitlement he might have. This and other matters were discussed at a meeting between Mr Grantham, Mrs Battiato, and the Son, on 25 February. A point of difference at this meeting was the identity of the estate assets to be retained as security for any entitlement of Mr Grantham. The meeting concluded with Mr Grantham saying that he would consult with his solicitor on 27 February and this he did.
On this day, Friday 27 February, the Son's summons was filed and served returnable on the following Tuesday 3 March. It sought the removal of Mr Grantham, alternatively an interim distribution. It was supported by an affidavit of Mrs Battiato, another 16 page rambling affidavit by the Son, and an affidavit of his accountant seeking to allay the concerns of Mr Grantham that the value of the estate was likely to be diminished by taxation. Mr Grantham sought time to consider these matters. This was not agreed to.
Then there followed the hearing on 2 March when the application was in fact adjourned. I will not order that Mr Grantham pay the costs reserved on that occasion. It was entirely reasonable that he have the opportunity to reflect upon the proposal of 17 February and on the events which had followed this.
Pending the adjourned hearing of the summons, three further affidavits were filed on behalf of the Son, including another eight page affidavit by him detailing his current difficulties with Mr Grantham. These were responded to by affidavits of Mr Grantham (14 pages) and of Mrs Lyttleton. This material included an assessment by Mrs Lyttleton of possible claims against, and entitlements of her client totalling $366,695, plus an indeterminate figure for income tax. The point at issue in this application was the amount and form of security for these liabilities and entitlements. Moreover, it is clear from Mr Grantham's affidavit that he did not trust the Son to assume control of assets which might be required to be realised to cover these liabilities and entitlements.
Having heard argument Dodds-Streeton J ordered that Pine Lane be transferred to the Son, and that upon production of the relevant receipts, Mr Grantham release $52,709.39 for payment of particular accounts by the Son on behalf of the estate. It should be noted that this order was in terms of a suggestion made by Mr Grantham in his affidavit sworn on 15 March. Her Honour declined to make an order removing Mr Grantham, particularly since the trial was now fixed for 27 April. The application was otherwise referred to the trial judge, and costs were reserved.
In my opinion Mr Grantham was in the circumstances not unreasonable in opposing this application. I will not make an order that he pay the costs reserved on 17 March 2004.
On 31 March 2004, some 14 days later and less than a month before the date fixed for trial, yet another summons was filed on behalf of the Son. He again sought the removal of Mr Grantham, the execution of documents with respect to the transfer to the Son of Pine Lane and with respect to certain AMP shares, and payment to him of certain accounts and of income in accordance with the order of 13 January. This application was supported by a 20 page affidavit sworn by the Son with voluminous exhibits. On 7 April 2004, Gillard J dismissed these claims. His Honour did make other orders sought in the summons to the effect that Mr Grantham deliver the probate parchment to the Registrar of Probates to enable a joint parchment to issue and an order with respect to the purchase of the AMP shares.
I decline to make an order that Mr Grantham pay the costs reserved on 7 April.
I turn now to consider the orders for costs which ought to be made generally in the Mann proceeding. Counsel on behalf of the Son ask that these costs be paid by Mr Grantham, and that they be taxed on a solicitor/client basis. This was put on the basis that the application was unsuccessful in that Mr Grantham now accepts that he must retire. The authorities in this area of law suggest that on an application for removal the removed executor will normally be ordered pay the costs of the application. It is however made clear that this is ultimately a matter for the discretion of the court and that it will depend upon the findings as to the reasons for the removal.
In the present case I make no findings that Mr Grantham is in breach of trust or in breach of his executorial duties. Such difficulties as arose, arose not through the fault of him alone.
In my opinion Mr Grantham was properly entitled to resist the claims in the Mann proceeding. First, the Son sought relief which was more contentious than merely the removal of his co-executor. Second, it would have been unreasonable to expect Mr Grantham to withdraw at the time the proceeding was commenced, leaving the Son as sole executor with a responsibility to have regard to the interests of the other beneficiary. Both Mr Grantham and Mr James had every reason to be very apprehensive of the outcome if this had been done.
Mr Grantham's position changes somewhat following the November settlement between the beneficiaries. Thereafter, for practical purposes, the estate was to go to the Son, subject to payment of liabilities, including those to Mr Grantham himself. It may be, too, that Mr Grantham was himself exposed to some of these liabilities by virtue of his having acted as executor for some 18 months, but the evidence as to this was not clear. My impression is that, given the sort of person he is, Mr Grantham was in December 2003 and thereafter, reeling from the succession of aggressive demands and applications made upon and against him. As he fended off one after another, he sought to assert his entitlement to seek security for his entitlements. The response of the Son, and those advising him, culminated in the letter of 17 February 2004 to which I have referred. Moreover, his withdrawal from the office of executor and trustee would not have resolved the many other demands which were being made of him, some only of which were pursued before me, and which I will deal with in a moment. These ancillary claims made in this proceeding, including the provision for security, seemed to have assumed greater importance than the claim for his withdrawal. And indeed this is how it appeared at trial, notwithstanding that many of them were abandoned and others must be categorised as trifling.
In these circumstances, I do not consider it unreasonable for Mr Grantham to have continued to resist the Mann proceeding after December 2003. His entitlement to the costs of the proceeding after that date must depend upon the outcome of those particular claims to which I now turn.
The Claims Against Mr Grantham
Under this heading counsel for the Son presented a number of claims for payment by Mr Grantham to the estate arising out of his neglect or maladministration as executor and trustee. The total amount sought was $113,632.32. I shall deal with each in turn, passing over those which were abandoned in the course of the trial. I mention in passing my considerable regret that the time of the court should be occupied with many of these trifling claims.
(a) Loss of profit, Cheltenham Road. This claim is put on the basis that Mr Grantham refused to authorise the agent to accept an offer in September 2002 from a purchaser to purchase the property at 169 Cheltenham Road, Dandenong for $740,000. The property remained unsold until May 2003, so that the claim was for the loss of interest for the period from September to May on the money which would have been paid had the offer been accepted. The claim, as ultimately formulated, was for $27,533.32.
I mention at the outset, in order to put it to one side, that there was another claim with respect to this property which was never included in the Son's list of claims. It was that in June 2002 Mr Grantham declined to let the property to a prospective tenant. The reason for this was that he had been advised that it would be preferable to sell the property with vacant possession. This was a view he was entitled to hold so that he cannot be criticised for this decision.
The case for the Son on the present claim was that a Mr Ramazon Gune, had in September 2002 offered to purchase the property for $740,000, and that Mr Grantham should have accepted it, or at least permitted it to have been accepted. Unfortunately the evidence shows nothing of the sort. On 9 September the solicitors for the Son agreed to put the property to sale by auction in November with a reserve of $720,000. In due course, an auction authority was forwarded to Mr Grantham and he signed it. In about mid-September the Son and his wife attended Mr Grantham's office asking for the authority. Mr Grantham then crossed out his signature and handed over the authority to them. He said that he was not told of any offer to purchase, and there is no evidence that he was. The Son said that Mr Grantham cancelled his signature saying that he insisted upon carrying out the conveyancing work. Mr Grantham denied this. He said that the Son was handling the sale and that he was told nothing of any offer by Mr Gune of $740,000 until the sale to Mr Gune at that price occurred in May the following year. Such correspondence as was produced is consistent with this and I accept this evidence of Mr Grantham. The factual basis for this claim does not exist.
(b) Loss of rental, Cambria Road. The lease for the property at Cambria Road expired on 17 August 2002 and it remained untenanted until 26 March 2004, a period of 19.5 months. It was put that on 2 August 2002 the Son had found a new tenant who was prepared to take a lease for two years with a two year option at a rental of $38,400 plus GST and that Mr Grantham unreasonably refused to concur in granting the lease to this person. Mr Grantham said that he was unhappy with the Son's proposal on a number of grounds, including the commercial standing of the proposed tenant and the proffered guarantees, which reasons he set out in a letter to the solicitors for the Son dated 14 August. No response was received, and there the matter ended. The matters raised in the letter were not unreasonable. If the Son wished to take the matter further he might have done so. Mr Grantham also said that the other beneficiary, Mr James, wanted to sell the property, and that his, Grantham's, advice was that the granting of the proposed tenancy would diminish the price which might be recovered.
In the circumstances, I am not satisfied that Mr Grantham was in breach of any obligation with respect to this matter. The claim fails.
(c) Loss of Interest, Pine Lane. The claim as finally formulated here is for $121.75 representing the loss to the estate arising out of the fact that Mr Grantham refused to agree to the new lease to the tenant of the Pine Lane market garden until December 2002. This meant that the overholding tenant paid at the old rental rate from 14 June until December 2002. When the new lease at a higher rental was entered into, this rental commenced as from June so that the tenant was required to make up the shortfall of about $7,500. The claim is for interest lost on this sum.
This is a case where Mr Grantham took the view that the tenant had not exercised his option so that there was no obligation to grant the lease. As with the Cambria Road property, he had been advised by the letting agent that the existence of the lease might adversely affect the price of the property if the property were sold, and he was in my view entitled to act upon this advice.
In the circumstances, the claim for this trifling sum has not been made out.
(d) Loss of Interest - trust money. The trust account records of Mr Grantham show that, at the date of the death of the Deceased, the balance in his account stood at $82,613.98. This balance increased to $177,595.35 on 5 December 2001, and remained at about that figure until $150,000 was withdrawn on 18 June 2002 and deposited in a cash management account which was then opened in the name of the estate with the ANZ Bank. During this period, the money earned no interest. The Son claims that this investment should have occurred earlier, so that the estate suffered a loss of $4,590.
Mr Grantham agreed in evidence that the money should have been placed in an interest bearing account but he said he could not obtain the Son's agreement as to the choice of a suitable bank. The Son insisted on the Bank of Melbourne and would agree to no other. It was only when he had a grant of probate on 20 May that Mr Grantham felt able to act as he preferred.
In my opinion the conduct of Mr Grantham was not such as warranted the finding sought by the Son. He held the money in trust for the estate. Following the death of the Daughter, he was entitled to act only upon the instructions of the two remaining executors. I accept his evidence that the two men could not agree upon the appropriate bank. His decision as executor not to place the money in the Bank of Melbourne was the result in part at least of his distrust of the Son. He was entitled in the interests of the other beneficiary to exercise the caution which he did exercise. The claim is not made out.
(e) Loss of Interest - ANZ Cash Management Account. In June 2002, as I have mentioned, Mr Grantham opened a cash management account with the ANZ Bank in the name of the estate, and deposited a total of approximately $600,000 in that account. This is a claim for a sum representing the 0.95% differential between the interest received from the ANZ Bank and the interest which might have been received from the Bank of Melbourne on the sum of $600,000 for the period from June 2002 to May 2003, when the account was transferred to the Bank of Melbourne. The amount claimed for the 11 month period is $5,225.
It is the responsibility of an executor to select a bank in which the estate money is to be lodged. It is not contended that the ANZ Bank was unsuitable. The complaint was that the rate of interest offered by the other bank was greater. To my mind the differential of 0.95% was not to great as to warrant a finding of impropriety. Mr Grantham offered other reasons, including a reason that the account with the Bank of Melbourne might have been improperly accessed by the Son. I do not find this reason compelling. Nevertheless I am not prepared to make a finding of breach of duty. I reject this claim.
(f) Unreasonable Legal Costs. This is a claim for $1,150 representing the difference between the conveyancing costs paid to Messrs FR Monotti & Co upon the sale of a property and those costs which might reasonably have been incurred had another firm of solicitors been retained to do the work.
On 10 April 2003 the solicitors for the Son wrote to the solicitors for Mr Grantham about a likely offer to purchase the Cheltenham Road property. In this letter they indicated that they intended to retain as solicitor for the conveyancing, Ms Robyn Calder, a solicitor in Dandenong, and they set out an estimate of her fees. These fees are now said to be $1,550 but there is no evidence as to how this sum has been arrived at. Mr Grantham said he was reluctant to engage Ms Calder for fear that she might be in the camp of the solicitors for the Son. Such was the distrust that existed between the two men.
There being no agreement on this and other matters, following a firm offer to purchase the property at an acceptable price, the matter was referred to the court. On 13 May 2003, Coldrey J made an order by consent which included an order authorising Mr Grantham to request the Law Institute to nominate a solicitor for the transaction. Monottis were nominated and retained. There is no evidence that any estimate of their charges was previously obtained. Mr Grantham was therefore faced, according to the claim, with the choice of deciding whether the costs of Monottis, which he did not know, were comparable with those of Ms Calder, which he also did not know.
Faced with this obvious difficulty, counsel for the Son shifted the complaint to one that Mr Grantham should have obtained a quotation from Monottis before retaining that firm. Given the terms of the court order and the state of the evidence there is no substance in this small claim.
(g) VCAT Hearing Costs re Raymac Transport. This is another claim for a modest sum, $1,600, said to have been incurred by the Son in setting aside determinations of VCAT with respect to a tenant's claim arising out of the tenancy of the property at Cambria Road. The factual basis for this claim is complicated and obscure. In early 2002 the tenant, Raymac Transport, sought the return of its security bond. Why it was entitled to do this at this time is unclear. Mr Grantham said that, acting on the advice of the letting agent, he was for returning the bond, but that the Son refused to do so. The Son's contention was that he was prepared to return the bond, but that Mr Grantham refused. In this he is supported by a letter which Mr Grantham says he did not receive. What is then put is that the refusal to return the bond caused the tenant to make a claim in VCAT for $9,000 damages for a breach of the lease and that an order in that sum was obtained against the Son. The Son then applied to set this order aside and succeeded. For some reason a fresh order in the same amount was made against him, and he also had this set aside. The tenant then abandoned its claim.
What is put against Mr Grantham is that the legal costs of $1,600 incurred by the Son in making the two applications to set aside the determinations of VCAT were caused by Mr Grantham's unreasonable attitude to the return of the bond. Evidence was led of the incurring of two sets of counsel's fees each of $350. There was no evidence of other costs incurred, so that the claim at best was for $700.
I reject it. I do not accept that it was Mr Grantham who rejected the tenant's claim for the bond. In any event, the causal nexus between this rejection and the tenant's orders for $9,000 and between this and the suggested legal costs incurred, has not been established. Finally, the note on counsel's backsheet does not support the claim as put.
(h) Costs of the Second Grant of Probate. This claim is for $2,753. It is for the costs incurred in the Son's obtaining a second grant of probate.
The claim suffers from evidentiary shortcomings which characterise the Son's case generally. The evidence is that the costs of the first grant were $215 court fees plus the cost of advertising. Mr Grantham said that he thought the advertising cost was $130 but his trust record shows that it was $145. Mr Grantham says, too, that he has not charged the estate for his professional costs or for his disbursement of the $215 court fees. The total cost to the estate therefore was either $145 or, if Mr Grantham be entitled to the court fees, $360. The cost of the Son's grant is asserted to be $2,753 of which all but $288 represents solicitors' costs. The balance of this charge was never proved. The duplication is only of $145, or perhaps $360; a negligible sum. In any event, given the most unusual situation which he faced in early 2002, and the fact that he acted on legal advice, I am not prepared to criticise Mr Grantham for obtaining probate as he did. The claim fails.
(i) Overpayment of Land Tax. This trifling claim is for $47. I accept Mr Grantham's evidence and reject it.
(j) Overpayment of Management Fees. This trifling claim is for $22.50. I accept Mr Grantham's evidence and reject it.
(k) Excessive Administration Costs. This claim relates to the costs of Messrs Lyttletons, the solicitors for Mr Grantham. It must be accepted that, in the circumstances of this case, it was reasonable for him to have independent legal representation in the estate administration as well as in the litigation. What is said is that this extra expense should be taken into account in fixing his executor's commission. That may be so. My present concern is whether there is here an obligation for Mr Grantham to repay to the estate any sum to compensate it for loss incurred by his breach of obligation. This is not such a claim. Doubtless when the bills are taxed and the commission fixed these questions will be considered, if raised.
Mr Grantham's Claims for Disbursements
This claim by Mr Grantham is first for the costs of two valuations of estate property for which he produced accounts totalling $2,255. These are properly payable by the estate and he is entitled to them.
The remaining component is $217, being the court fees for his grant of probate. For the reasons which I have given I see no reason to deny him this expense.
Costs of Administration.
Mr Grantham does not seek an order with respect to his costs of the administration. He will render an account and this, if challenged by the Son, will be considered by the appropriate taxing authority. It was, nevertheless, argued that I should reduce them by reason of his breaches of duty which caused loss to the estate. I have rejected the claims based on his suggested breaches. He is therefore entitled to recover his costs in the normal way. I need say nothing further, for his claim for these costs is not before me, and his claim when made and if challenged will fall to be determined in the normal way.
Executor's Commission
Mr Grantham does not here seek an order that I fix his executor's commission. I will therefore make no order.
Security
It is common ground that the Son as continuing executor and trustee should furnish security for the entitlements of Mr Grantham for costs and commission. I fix the amount of this security in the sum of $250,000 made up as appears below. In fixing this sum I have had regard to what I consider to be the reasonable outer limits of this entitlement. I express no view as to this entitlement itself.
The items are as follows:
Costs of the Part IV proceeding
$23,701
Costs of the Grantham proceeding
$49,301
Costs the Mann proceeding
$72,557
Costs of the administration
$17,719
Executor's commission
$50,000
Costs of the trial
$30,000
Total
$243,278
It is proposed by both parties that the property at Cambria Road should stand as security for this sum. Given the evidence of its value, it will support a liability to Mr Grantham of $250,000 if this be established. Counsel for Mr Grantham seeks a further $50,000 cash security on the basis that this property when sold might not produce this amount after tax. It is said, too, that Mr Grantham may have further potential liability for tax payable by the estate. I am not persuaded this extra security is necessary. The Cambria Road property alone will suffice.
Orders
I turn now to the orders which should be made. I merely record here the matters which ought to be dealt with in the orders which I will consider when drafts are submitted by counsel -
The Part IV proceeding
(1)The proceeding be struck out.
(2)The costs and expenses of the firstnamed defendant of and incident to the proceeding, including reserved costs, in particular including the costs reserved on 15 December 2003, be had and retained out of the estate.
The Grantham proceeding
(1)The proceeding be struck out.
(2)The costs and expenses of the plaintiff of and incident to the proceeding including costs reserved, and in particular the costs reserved on 6 February 2003, 5 March 2003, 2 June 2003, 30 June 2003, 14 October 2003 be had and retained out of the estate. I should interpolate that those dates are intended to be the dates that were called in question. It may be that they will have to be looked at again in the light of the actual list of reserved costs that were called into question.
The Mann proceeding
(1)The firstnamed defendant, Geoffrey Grantham, be discharged as executor of the will of the Deceased.
(2)That the firstnamed defendant, Geoffrey Grantham, have leave to retire as trustee of the estate of the Deceased.
(3)The assets of the estate vest in the remaining executor and trustee, Alexander Orr Mann Jr, the plaintiff.
(4)The firstnamed defendant execute any document reasonably required to give effect to the vesting order and to transfer the assets of the estate to the continuing trustee, and that the costs of so doing be his costs in the estate.
(5)The probate of the firstnamed defendant be delivered to the Registrar of Probates so that it may be amended and reissued to reflect this order.
(6)That the firstnamed defendant file and serve within a time to be fixed an account of his administration.
(7)The claims of the plaintiff for payments for losses caused to the estate claimed in this proceeding be dismissed.
(8)The costs and expenses of the firstnamed defendant of and incident to the proceeding including the reserved costs, and in particular those reserved on 24 July 2003, 14 October 2003, 15 December 2003, 19 December 2003, 13 January 2004, 2 March 2004, 17 March 2004 and 7 April 2004 be had and retained out of the estate. Again it is intended to pick up the disputed orders for reserved costs.
(9)It will be necessary to make provision for the security, I will hear counsel on how that should be done.
(10)I should in this proceeding reserve liberty to apply with respect to any further matters arising out of the winding up of the involvement in the estate of Mr Grantham as executor and trustee.
And I think that deals with all the matters that I have mentioned. But if I have not, I will hear counsel further as to the terms of the orders.
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