Nixon v Nixon - [2009] WASC 23

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: NIXON -v- NIXON [2009] WASC 23

CORAM: MASTER SANDERSON

HEARD: 27 AUGUST, 23 OCTOBER, 13 & 25 NOVEMBER 2008 & 10 FEBRUARY 2009

DELIVERED : 12 FEBRUARY 2009

FILE NO/S: CIV 2122 of 2006

BETWEEN: JANE ANNE NIXON as beneficiary of the estate of JEFFREY ROY MARQUIS and JANE ANNE NIXON as administrator of the estate of JEFFREY ROY MARQUIS
Plaintiff
AND
JANE ANNE NIXON, JOHN ALEXANDER MARQUIS and KELLY BIANCA MARQUIS as administrators of the estate of JEFFREY ROY MARQUIS
Defendants

Catchwords:

Administration of estate - Directions as to how estate ought be distributed - Turns on own facts

Legislation:

Nil

Result:

Directions made

Category: B

Representation:

Counsel:

Plaintiff: Ms J D Kenny
Defendants: Mr M J McPhee

Solicitors:

Plaintiff: Dwyer Durack
Defendants: Michell Sillar McPhee

Case(s) referred to in judgment(s):

Nil

MASTER SANDERSON: The plaintiff and the defendants are the joint administrators of the estate of the late Jeffrey Roy Marquis who died on 10 December 2004. Letters of administration (with the will annexed) were granted to the parties on 27 July 2005. The will was dated 26 November 2004. Pursuant to the provisions of the will, the deceased left to the plaintiff all of his right, title and interest in a property situated at 13 Charleston Street, Myaree (the Myaree property). That was the only specific bequest contained in the will. The residue of the estate of the deceased was to be divided equally between the parties who are now the administrators. The residuary clause was in what might be described as standard terms.
The plaintiff was the de facto wife of the deceased for approximately 15 years prior to his death. The second and third‑named defendants were the only two children of the deceased by his former wife. As at the date of his death, the deceased was the sole registered proprietor of the Myaree property. He and the plaintiff resided in that property. The other assets of the estate were a share in a yachting syndicate valued at $6,000 and interests in superannuation and insurance which together amounted to some $25,000. The deceased also held one share in Deancrest Nominees Pty Ltd (Deancrest Nominees).
Deancrest Nominees is the trustee of the Booragoon Tyre Service Unit Trust. On behalf of the trust, Deancrest Nominees carried on business under the name of Booragoon Tyre Service. The other share in Deancrest Nominees was owned by one Chris Gray who, together with the deceased, operated the business. There were two units in the Booragoon Tyre Service Unit Trust. One was owned by the Gray Family Trust and the other by the J R Family Trust. The trust deed of the J R Family Trust provided that upon the death of the deceased, his former wife, Anne, became appointor of the trust. On 11 May 2005, Anne exercised her power of appointment and appointed Marquis Nominees Pty Ltd as trustee of the family trust. The listed beneficiaries of the family trust are the plaintiff, the two defendants and Anne.
As at the date of death of the deceased, a sum of $72,740.39 was owing to BankWest on the Myaree property. This was a standard conventional home loan. There was also an amount of $177,502 owing by the deceased to the family trust. On 18 October 2005, the trustee of the family trust issued a writ against the administrators of the estate for the amount owing. Judgment was entered in that action. The estate did not have sufficient liquid assets to meet the debt. Accordingly, the Myaree property was sold.
Apart from the home loan in favour of BankWest, the Myaree property was encumbered to secure what the plaintiff in her affidavit of 11 October 2006 refers to as the 'Deancrest loan facilities'. Essentially, these facilities were to secure the business debts of Deancrest Nominees.
On 14 June 2006, the Myaree property was sold for $595,000. From that amount, the following deductions were made:
(a)$190,731.76 was paid to the family trust pursuant to the judgment it obtained against the estate;
(b)$173,913.11 was paid to BankWest to discharge the mortgage and the Deancrest loan facilities. The Deancrest loan facilities were in an amount of $101,172.72;
(c)$15,052.69 was paid to the purchaser of the Myaree property for penalty interest;
(d)$16,362.50 was paid by way of agent's commission; and
(e)$1,171 was paid by way of settlement fees.
During the course of the administration, John and Kelly Marquis (the second and third‑named defendants) indicated that they did not intend to pursue Deancrest Nominees for repayment of any debt owed to the estate. By originating summons dated 18 October 2006, the plaintiff applied for an order that she be authorised to pursue Deancrest Nominees on behalf of the estate. I made that order on 30 April 2007. The estate issued a statutory demand against Deancrest Nominees and application was made by Deancrest Nominees to set aside the statutory demand. That application was successful in part, with the amount of the demand reduced to $74,595.72. This amount was paid by Deancrest Nominees and is presently being held by the plaintiff in an account.
By this present application, the plaintiff seeks a series of orders which will, she says, conclude the administration of the estate. She seeks a direction that all of the funds presently in the estate be paid out to her. She also seeks a direction that she transfer her interest (or any interest she may have) in the one share in Deancrest Nominees to the other administrators of the estate. The plaintiff says that her interest in the share is of no value to her and she is happy for her co‑administrators to take that interest. Essentially, the plaintiff seeks to bring the administration of the estate to an end so she can receive what she says is hers and so that further expense will not be incurred by the estate.
The defendants oppose the making of the orders. As counsel said effectively these directions amount to a removal of the administrators of the estate. There is no suggestion that the administrators have behaved improperly or done anything which would disqualify them participating in the administration. It was counsel's primary submission that it was not open to me to make the order sought by the plaintiff.
I accept that submission. If I were to make the orders sought by the plaintiff, I would be removing the defendants as administrators and there is no warrant for doing so. That would be enough to dispose of this application.
However, there are four matters which are at issue and which are dividing the administrators. They need to be resolved because no agreement is ever likely to be achieved. Having heard full argument on the matter, and having had these issues specifically addressed by counsel, it seems appropriate at this stage I make directions as to the proper disposition of the estate.
After hearing argument in this matter, I reserved my decision. Because of the way in which the argument was conducted and, in particular, the fact that I had reached a conclusion which was not the subject of submissions by either party, I took the unusual step of providing the parties with a draft copy of my reasons and inviting them to discuss these reasons with their clients. I then invited further submissions. At that stage, there were only three issues dividing the parties. The question of costs appeared to have been resolved. Between providing my draft reasons to the parties and the making of further submissions, the issue of costs was reignited. I have therefore dealt with that issue, to a limited extent, in these reasons. The reasons as a whole take into account the further submissions made by the parties.
The first issue is the entitlement of the parties to the remaining funds in the estate. The plaintiff's position is quite straight‑forward. She says that she was given the Myaree property in the will. However, there was not sufficient in the estate to discharge all the estate's liabilities - although the estate itself was not insolvent. The result has been that with the sale of the Myaree property and the payment of debts owed to creditors, what is left is what remains of the sale price achieved for the Myaree property. She is entitled to those funds because they represent what remains of the proceeds of sale of the property and there is no amount available for distribution to anyone else. In particular, the residuary clause in the will does not operate.
The defendants reject that proposition. They say that the Myaree property had to be sold to satisfy the debts of the estate. It is now not possible to transfer the Myaree property to the plaintiff, therefore that bequest fails. The funds now left are properly regarded part of the residuary estate. The residuary clause then operates and the funds in the estate are distributed pursuant to the residuary clause. As an alternative, the defendants say that the $74,595.72 repaid by Deancrest Nominees forms part of the residuary estate and that amount should be distributed pursuant to the residuary clause.
It was common ground between the parties that the bequest of the Myaree property to the plaintiff meant that the plaintiff took the property subject to the securities registered over it. That would suggest that the plaintiff is entitled to the funds that remain after the sale of the Myaree property. The fact that the property was sold before it was actually distributed to the plaintiff in my view makes no difference to the principle. The remaining question, then, is whether or not the plaintiff is entitled to the funds repaid to the estate by Deancrest Nominees.
It is important to note that the repayment by Deancrest Nominees was effectively a refund of money paid out under the securities over the Myaree property. All along, the money was payable by Deancrest Nominees. But the secured creditor looked to the Myaree property first.
The position can be further explained by looking at what might have happened if the Myaree property was transferred to the plaintiff and, once in her name, it was sold and the securities discharged. Equity, whether by the application of the doctrine of marshalling or otherwise, would have ensured that the plaintiff could have recovered from Deancrest Nominees. That being so, it follows, in my view, that the plaintiff is entitled to the funds recovered from Deancrest Nominees although they, at present, remain in the estate.
The conclusion, then, is that all of the funds presently held by the estate are properly considered the property of the plaintiff. They should be distributed to her.
The second issue concerns the estate's holding of the Deancrest Nominees' share. The defendants are keen to pursue Deancrest Nominees on the grounds that they believe there may be money owing to the J R Family Trust. Counsel in his submissions said that the defendants were anxious that any action taken in relation to Deancrest Nominees be taken by the estate rather than by the defendants who might become shareholders if the plaintiff transferred whatever interest she might have in the share to the defendants. The plaintiff does not want to have the estate pursue Deancrest Nominees. She sees no benefit to her in doing so and her entitlement in the estate being dissipated in the pursuit of the company.
The answer to this issue, I think, is to allow the estate to take whatever action it wishes in relation to Deancrest Nominees provided the defendants indemnify the estate against any costs associated with that action. That order would then be made subject to the plaintiff undertaking, when called upon to do so, to transfer any interest she may have in Deancrest Nominees to the defendants.
I would propose that the order should be as follows:
Subject to the plaintiff undertaking to the court that when called upon to do so transferring to the defendants any right, title or interest she may have in the estate's shareholding in Deancrest Nominees Pty Ltd, the defendants shall indemnify and keep indemnified the estate against any costs incurred in the estate taking any action in relation to the estate's holding in Deancrest Nominees Pty Ltd.
The third issue between the parties relates to personal items of the deceased. The plaintiff says that she has either accounted to the defendants in relation to all of the personal items, or that they have been disposed of and can no longer be distributed to the defendants. The defendants say that they have never had a proper explanation as to what became of the personal effects of the deceased. While it is possible to understand the concern of the defendants in this matter, this is an issue whose time has passed. There is nothing to be gained by prolonging the dispute between the parties over this issue. Accordingly, I would direct that the plaintiff not be required to provide any further accounting as to the personal effects of the deceased to the defendants.
The fourth issue relates to costs. This question has to it two aspects. First, there is the question of costs payable to Lavan Legal. These costs were incurred by the defendants and relate to matters not directly attributable to the estate. The costs have been taxed and allowed against the estate in an amount of $2,013. There is no argument that this amount ought be paid out of the estate. However, there remains outstanding a balance of $33,463. By letter dated 24 November 2008, Lavan Legal advised that they intended to pursue the defendants for the outstanding balance. The defendants seek to be indemnified out of the estate.
I can see no basis upon which such an indemnity ought be extended. The taxing officer dealt with the issue of the liability of the estate to the former solicitors. There is nothing in the material which has been lodged with the court which could justify any further order for costs being made against the estate with the effect that the defendants were indemnified. On that basis, no order should be made.
There remains the question of costs in relation to this application and of the defendants' present solicitors. In one sense this application was entirely unsuccessful. In essence what the plaintiff was seeking to do was to remove the defendants as administrators of the estate. This decision really reflects directions as to how the estate is to be distributed. That suggests that the costs of all parties should be paid out of the estate. However, each of the orders that I have made, or proposed to make, was opposed by the defendants. To that extent they have been unsuccessful. In the circumstances it seems inappropriate that they should be indemnified entirely for their costs.
In the circumstances there will be an order that the defendants' costs in relation to this application be taxed and that 1/4 of those costs be paid out of the estate. To cover those costs, an amount of $25,000 should be retained in the estate pending determination of the defendants' entitlement. The rest and residue of the estate ought be paid to the plaintiff.
I will hear the parties as to the precise form of orders and as to costs.