Nudd v Mannix
[2010] NSWCA 127
•1 June 2010
New South Wales
Court of Appeal
CITATION: Nudd v Mannix [2010] NSWCA 127 HEARING DATE(S): 3 May 2010
JUDGMENT DATE:
1 June 2010JUDGMENT OF: Hodgson JA DECISION: Matter stood over to a date before Hodgson JA in about four weeks’ time. CATCHWORDS: SUCCESSION – Family provision and maintenance – Enforcement of orders – Estate distributed by executor prior to order being made – Estate retained probably insufficient for costs – Beneficiary seeks remedies – What remedy available – What order should be made. LEGISLATION CITED: Family Provision Act 1982 ss 15, 24 and 28
Uniform Civil Procedure Rules 36.16CATEGORY: Consequential orders CASES CITED: De L v Director-General, New South Wales Department of Community Services [No 2] [1997] HCA 14; (1997) 190 CLR 207
Re Diplock [1948] Ch 465
Ministry of Health v Simpson [1951] AC 251
Nudd v Mannix [2009] NSWCA 327PARTIES: Rita NUDD (applicant/appellant)
Stephen MANNIX (respondent)FILE NUMBER(S): CA 2009/298084 COUNSEL: S J BURCHETT (applicant/appellant)
W J WILCHER (respondent)SOLICITORS: Shanahan Tudhope Lawyers (applicant/appellant)
Marsdens Law Group (respondent)LOWER COURT JURISDICTION: Supreme Court LOWER COURT FILE NUMBER(S): 2808/07; 3282/07 LOWER COURT JUDICIAL OFFICER: Mclaughlin AsJ LOWER COURT DATE OF DECISION: 21 November 2008 LOWER COURT MEDIUM NEUTRAL CITATION: Mannix and Nudd v Mannix [2008] NSWSC 1228
2009/298084
1 JUNE 2010HODGSON JA
: On 15 October 2009, Handley AJA delivered the judgment of the Court of Appeal in this case: [2009] NSWCA 327. The written judgment proposed the following orders:
(1) Appeal allowed with costs.
(2) Orders of Associate Justice McLaughlin of 21 November and 9 December 2008 set aside.
(3) In lieu thereof substitute an order that the appellant receive a legacy of $120,000 from the estate of the deceased.
(4) Subject to any payment under the orders that have been set aside interest on the appellant’s legacy at legacy rates is to run from 28 days after the date of these orders.
(5) The burden of the additional legacy of $60,000 for the appellant is to be borne by the six legacies of $10,000 in favour of the grandchildren of the deceased.
(6) Order that the costs of the plaintiff of the trial on a party and party basis, not exceeding $60,000, be paid out of the estate of the deceased.
(7) Order that the defendant’s costs of the trial and the appeal on an indemnity basis be paid out of the estate of the deceased, except to the extent that such costs are recovered under the Suitor’s Fund Act.
(9) The respondent is to have a certificate under the Suitor’s Fund Act.(8) The Court notes and accepts the undertaking given by the solicitors for the appellant on 4 August 2009 recorded in the reasons of this Court.
2 At the request of the appellant made on that day, those orders were either not made or were recalled; and they have not since been made.
3 On 24 March 2010, the appellant filed a notice of motion seeking the following orders:
- 1 That subject to the following orders, orders be entered by the Court in accordance with the Judgment of the Court of 15 October 2009 as follows:
i) Appeal allowed with costs.
ii) Orders of Associate Justice McLaughlin of 21 November and 9 December 2008 set aside.
iii) In lieu thereof substitute an order that the appellant receive a legacy of $120,000.00 from the estate of the deceased.
iv) Interest on the appellant's legacy at the rates prescribed for legacies under s.84A Probate & Administration Act 1898 is to run from 28 days after the 15 October 2009.
v) Order, that the burden of the additional legacy of $60,000.00 to the appellant is to be borne (in the first instance) by the six legacies of $10,000.00 in favour of the grand children of the deceased.
vi) Order that the costs of the plaintiff of the trial on a party and party basis, not exceeding $60,000.00 be paid out of the estate of the deceased.
vii) Order that the defendant's costs of the trial and the appeal on an indemnity basis be paid out of the estate of the deceased, except to the extent that such costs are recovered under the Suitor's Fund Act .
ix) The respondent have a certificate under the Suitor's Fund Act .viii) The court notes and accepts the undertaking given by the solicitors for the appellant on 4 August 2009 recorded in the reasons of this Court.
2 The Court reserves for further consideration any orders to enable effect to be given to the above orders, including under s.15 or 24 Family Provision Act 1982.
4 An order, that the respondent within 7 days or such other time as the Court deems fit, file and serve an affidavit setting out:3 Order, that order 1(vii) above shall have no effect unless and until the payment in full of the above provision and costs orders and any other costs orders made in these proceedings in favour of the Appellant or further order.
- A. all his knowledge of each of the purported distributions to beneficiaries from the estate, including:
i) the identifying details of cheques or electronic payments used,
ii) the bank accounts, from and into which payments were made, and
iii) all known details of any subsequent disposition, dealing with or use of the monies paid,
iv) copies of all relevant bank statements or other records,
v) details of all steps taken by him to recover the monies purportedly distributed,
vii) copies of all correspondence or records of conversations with the recipients referring to the payments.vi) the names, addresses and contact details of each beneficiary or subsequent recipient of any part of or benefit from the monies distributed, who has not repaid it, and
B. all his knowledge of each of the purported payments of legal costs in respect of the proceedings by the appellant in the Court of Appeal and Court below on the behalf of the estate, including:
i) the payee, date and amount of the payment,
ii) the identifying details of cheques or electronic payments used,
iii) the bank accounts, from and into which payments were made,
iv) copies of all memoranda of fees or assessments of costs paid,
vi) copies of all relevant bank statements or other records of the payments and any correspondence or conversations referring to them.v) copies of all authorisations given for the making of the payments, and
C. his present financial situation and, in particular:
- a) in respect of any real estate in which he has an interest:
(i) the extent of his interest.
(ii) the address and reference to the title of the real estate.
(iv) any mortgage and the amount owed on it.(iii) any known value thereof.
(ii) a description of the property.(i) the extent of his interest.
- (iii) any known value thereof.
- c) the name and identifying details of any bank or other credit account held by him and of any other person or entity holding any money on his behalf and the balance held.
6 Reserve liberty to the appellant to:
5 The appellant have leave to amend the proceedings to join as defendants such recipients of distributions or the proceeds of distributions from the estate, as have failed or may fail to repay them upon demand and to seek the repayment of those monies or the declaration of property held by them as notional estate.
- a) move the Court by this notice of motion or subsequent proceedings for punishment of the respondent for contempt of Court by:
ii) his failure to comply with the appellant's notice to produce of 17 December 2009, andi) his distribution of monies prior to the hearing of the appeal, and/or
b) relist this notice of motion on 24 hours' notice.
7 The respondent pay the appellant's cost of this motion on the indemnity basis and not have recourse to the assets of the estate for those costs or his own costs of this motion.
4 On 3 May 2010, this Notice of Motion was listed before me as the Referrals Judge, for the purpose of the appellant seeking order 4 in this Notice of Motion. I reserved judgment.
Circumstances
5 The proceedings concerned the Estate of the late Arthur Mannix, who died on 6 May 2006, leaving a distributable estate of $415,182. By his Will, he made no provision for the appellant, his de facto widow, after a relationship of at least nineteen years; but he left his estate as to $10,000 to each of his six grandchildren and one son (Wayne), and he left the residue to his two other sons equally (one of whom was the respondent executor).
6 On 21 November 2008, McLaughlin AsJ determined proceedings under the Family Provision Act 1982 brought by the appellant and by Wayne, ordering that Wayne receive $30,000 and the appellant receive $60,000, such legacies not to bear interest if paid on or before 5 December 2008.
7 On 5 December 2008, the appellant’s solicitors received a cheque in favour of the appellant for $60,000.
8 On 19 December 2008, within the time limited for an appeal, the appellant filed and served a notice of intention to appeal.
9 When the Court of Appeal delivered its judgment, the appellant had information suggesting that the Estate assets had been largely distributed, and it was for that reason that the appellant considered that it might be seeking further orders and requested that the orders proposed in the Court of Appeal judgment not be made.
10 The circumstances concerning distribution are set out in a letter dated 7 December 2009 from the respondent’s solicitors to the appellant’s solicitors, as follows:
1. Grandchildren:I have been instructed to advise you that the estate was distributed as follows:
1.1 Matthew Mannix - $10,000.00 on 18 December 2008;
1.2 Nathan Mannix - $10,000.00, not distributed, returned and paid to Rita Nudd;
1.3 Jessica Clare Needs - $5,000.00 on 30 December 2008, $5,000.00 on 31 December 2008;
1.4 Ellen May Mannix - $10,000.00 distributed on 18 December 2008;
1.6 Maxwell Arthur Mannix -$10,000.00, not distributed, returned and paid to Rita Nudd.1.5 Olivia Ann Mannix - $10,000.00 distributed on 18 December 2008 of which $6,000.00 returned and paid to Rita Nudd;
2. Rita Nudd - $60,000.00 on 4 December 2008;
4. Executor's Costs:3. Wayne Mannix - $75,000.00 on 4 December 2008 representing $30,000.00 per judgment, $10,000.00 specific gift in will and $35,000.00 costs;
4.1 Administration of Estate - $6,916.33;
4.2 Litigation - $63,929.64;
4.4 Held on Trust on account of costs -$38,126.67.4.3 Appeal - $22,943.69;
5.2 Stephen Mannix -$47,350.00 on 18 December 2008.5.1 Russell Mannix - $47,350.00 on 18 December 2008;
After the Court of Appeal decision (which I note we are still waiting for you to return the formal orders) $26,000 of the grandchildren's money was returned. We understand the balance has been spent. This $26,000 was paid to your client on 30 November 2009:
11 Since that time, a further $24,000 has been paid to the appellant, so that there is now just $10,000 of the legacy ordered by the Court of Appeal that is outstanding. However, also outstanding are the costs of the appellant at first instance and on appeal, in respect of which it would appear that the executor has retained $38,126.67.
12 As regards the appellant’s costs at first instance, the trial judge said he regarded the estimate he had been given of $82,200 as grossly excessive, and he imposed a cap of $60,000 on the appellant’s costs payable by the Estate. That cap was confirmed by the Court of Appeal. Although the cap was expressed in the Court of Appeal’s proposed orders as applying to the “costs of the plaintiff of the trial”, in the context of the judgment and other proposed orders (especially order (7)) the plain intention was that this cap was to apply to all the appellant’s costs at first instance. The Court of Appeal was concerned about the possible extent of solicitor/client costs, and it noted an undertaking by the appellant’s solicitors that they would not seek to recover from the appellant any costs additional to those recovered from the estate. (There is now evidence that the actual costs and disbursements of the appellant at first instance turned out to be $101,512.16.)
13 As regards the appellant’s costs of the appeal, the appellant’s solicitors have provided an estimate of over $60,000. For a one-day appeal of a simple (albeit apparently hard-fought) Family Provision Act case, this appears to me also to be grossly excessive. I note that the respondent executor’s costs of the appeal were apparently about $23,000.
14 Neither the costs at first instance nor the costs of the appeal have been assessed.
15 The appellant’s solicitors have been seeking from the respondent’s solicitors information of the type set out in order (4) of the Notice of Motion. Some information and documents have been provided, but not all.
Statutory provisions
16 The application requires some consideration of ss 15, 24 and 28 of the Family Provision Act 1982 (since repealed):
(1) To enable effect to be given to an order for provision out of the estate or notional estate of a deceased person (whether or not an order made in favour of an eligible person), the Court may:15 Consequential and ancillary orders
- (a) make orders for or with respect to all or any of the following matters:
(i) the transferring of property in the estate or notional estate directly to the person in whose favour the order for provision is made or to any other person as trustee for that person,
(ii) the constituting of a person by whom property in the estate or notional estate is held as a trustee of that property,
(iii) the appointing of a trustee of property in the estate or notional estate,
(iv) the powers and duties of any trustee of property in the estate or notional estate,
(v) the vesting in any person of property in the estate or notional estate,
(vi) the exercising of a right or power to obtain property for the estate or notional estate,
(vii) the selling of, or other dealing with, property in the estate or notional estate,
(viii) the disposing of the proceeds of any sale or other realising of property in the estate or notional estate,
(ix) the securing, either wholly or partially, of the due performance of an order under this section,
(xi) the executing of any necessary conveyance, document or instrument, the producing of such documents of title or the doing of such other things as the Court thinks necessary in relation to the performance of an order, and(x) the managing of property in the estate or notional estate,
(b) make such other orders with respect to such other matters as the Court thinks necessary.
(2) The provisions of section 78 (except subsection (1)) and 79 of the Trustee Act 1925 apply to and in relation to an order under subsection (1) for the vesting of the property in a person in the same way as they apply to and in relation to a vesting order referred to in those provisions and, in the case of section 78 (2) of that Act, as if the provisions of subsection (1) and the other provisions of this Act relating to the making of orders under this Act were contained in Part 3 of that Act.
(3) Where an order under subsection (1) provides for the payment of money, interest is not payable unless the Court specifically provides that the money shall bear interest.
24 Notional estate—distributed estate
On an application in relation to a deceased person, if the Court:
(a) is satisfied that an order for provision ought to be made on the application, and
(b) finds that, as a result of a distribution from the estate of the deceased person, property became held by a person (whether or not as trustee) or subject to a trust,
the Court may, subject to sections 27 and 28, make an order designating as notional estate of the deceased person such property as it may specify, being property which is held by, or on trust for, the person or the object of the trust, whether or not that property is the property distributed.
(1) On an application in relation to a deceased person for an order for provision in favour of an eligible person, the Court shall not make an order designating property as notional estate of the deceased person unless the deceased person left no estate or unless it is satisfied:28 Designation of property as notional estate—powers and restrictions
(b) that, by reason of the existence of other eligible persons or the existence of special circumstances, provision should not be made wholly out of the estate.(a) that the estate of the deceased person is insufficient to allow the making of provision that, in its opinion, should be made, or
(2) On an application in relation to a deceased person, the Court shall not make an order designating as notional estate of a deceased person property in excess of that necessary to allow the making of provision that, in its opinion, should be made.
(3) The exercise by the Court of its power under section 23, 24 or 25 to make an order designating as notional estate of a deceased person property held by, or on trust for, a person does not limit or restrict any further exercise by the Court of that power.
(5) On an application in relation to a deceased person, being an application:(4) Where, as a result of a prescribed transaction or a distribution made from the estate of a deceased person, property becomes held by a person as a trustee only, the Court shall not make an order under section 23, 24 or 25 by reason of the prescribed transaction or distribution in respect of any property (other than the trust property) held by, or on trust for, the person.
(a) made pursuant to an order under section 16 allowing the application to be made, or
(b) for an order under section 8 for additional provision,
(c) that:the Court shall not make an order designating property as notional estate of the deceased person by reason of a prescribed transaction or a distribution unless it is satisfied:
(i) the property was the subject of the prescribed transaction or distribution,
(iii) the property is not vested in interest in any beneficiary under the trust, or(ii) the person by whom it is held holds the property as a result of the prescribed transaction or distribution as trustee only, and
(d) that there are other special circumstances (including, in the case of an application made as referred to in paragraph (a), the incapacity, during any relevant period, of the person by or on whose behalf the application is made) which justify the making of an order so designating the property.
17 Reference was also made to Rule 36.16 of the Uniform Civil Procedure Rules:
36.16 Further power to set aside or vary judgment or order
(cf SCR Part 40, rule 9)
(2) The court may set aside or vary a judgment or order after it has been entered if:(1) The court may set aside or vary a judgment or order if notice of motion for the setting aside or variation is filed before entry of the judgment or order.
(a) it is a default judgment (other than a default judgment given in open court), or
(c) in the case of proceedings for possession of land, it has been given or made in the absence of a person whom the court has ordered to be added as a defendant, whether or not the absent person had notice of the relevant hearing or of the application for the judgment or order.(b) it has been given or made in the absence of a party, whether or not the absent party had notice of the relevant hearing or of the application for the judgment or order, or
(3) In addition to its powers under subrules (1) and (2), the court may set aside or vary any judgment or order except so far as it:
(b) dismisses proceedings, or dismisses proceedings so far as concerns the whole or any part of any claim for relief.(a) determines any claim for relief, or determines any question (whether of fact or law or both) arising on any claim for relief, or
(3A) If notice of motion for the setting aside or variation of a judgment or order is filed within 14 days after the judgment or order is entered, the court may determine the matter, and (if appropriate) set aside or vary the judgment or order under subrule (1), as if the judgment or order had not been entered.
(3B) Within 14 days after a judgment or order is entered, the court may of its own motion set aside or vary the judgment or order as if the judgment or order had not been entered.
(4) Nothing in this rule affects any other power of the court to set aside or vary a judgment or order.(3C) Despite rule 1.12, the court may not extend the time limited by subrule (3A) or (3B).
Submissions
18 Mr Burchett for the appellant referred to a number of cases affirming an executor’s obligation to preserve the estate pending the determination of any Family Provision Act claims, and to reinstate funds distributed if the undistributed estate is insufficient to meet such claims.
19 He submitted that the Court has an inherent power to make the orders sought, as well as a power under s 15 of the Family Provision Act (and also, if necessary, to designate notional estate under ss 24 and 28). He submitted that the Court ought to exercise that power to make order (4) in the first instance.
20 Mr Wilcher for the respondent submitted that exceptional circumstances were required to re-open an appeal, referring to De L v Director-General, New South Wales Department of Community Services[No 2] [1997] HCA 14; (1997) 190 CLR 207 at 215-216. He also submitted that UCPR 36.16(3) restricts the power of the Court under UCPR 36.16(1) and (2).
21 He submitted that s 15 of the Family Provision Act could at most apply in relation to the outstanding $10,000 of the provision. Otherwise, he submitted, there would need to be separate proceedings seeking administration of the estate. He also submitted that, in circumstances where costs were not yet assessed, the Court should not make any order.
Decision
22 Debts of an estate have to be paid in priority to legacies. Although s 15 of the Family Provision Act refers to giving effect to an order for provision and s 28 refers to what is necessary to allow for the making of provision, these words must be understood in the light of the circumstance that an order for provision can only properly be given effect to (and the making of provision can only properly occur) to the extent that the estate after payment of debts is sufficient. If it is necessary for provision properly to be made that debts of the estate be paid, then in my opinion the powers under ss 15 and 24 of the Family Provision Act can be exercised so as to ensure that debts are paid.
23 Accordingly, I reject Mr Wilcher’s submission that separate administration proceedings are required. There is no need to consider whether the Court would in any event have an inherent power.
24 In my opinion it is plain that UCPR 36.16(3) does not restrict the powers of the Court under UCPR 36.16(1) and (2), which provide independent grounds on which the power to re-open may be exercised.
25 Accordingly, in my opinion the Court clearly has power to make orders of the kind sought in the Notice of Motion, including order 4. The question then is how, if at all, should this power be exercised.
26 There is a real question as to whether any order of the kind now sought by the appellant should be made, or whether the claim for order 4 should be dismissed with costs. I say this for these reasons:
- (1) The appellant’s remedy is in the first instance against the respondent, and her direct claim against beneficiaries is limited to an amount which cannot be recovered from the respondent: Re Diplock [1948] Ch 465 at 503 (affirmed Ministry of Health v Simpson [1951] AC 251).
(2) The appellant has a claim for $10,000 which the Court could immediately enforce under s 15 of the Family Provision Act, but has no further claim which could immediately be enforced, until costs have been assessed.
(3) The appellant has not even commenced to have costs assessed, and while it is highly likely costs as assessed will be substantially more than $38,000, this has yet to be established.
27 I am greatly concerned at the costs already incurred in these proceedings on both sides, and particularly on the appellant’s side. I am further greatly concerned that the appellant is apparently claiming $8,674 for a costs argument below (seemingly inconsistently with the capping order, on my interpretation of it) and $15,000 for what is called recovery, making a total amount claimed for costs of $147,040. Disputes concerning assessment of costs could further add to costs on both sides.
28 The evidence does show that the executor did the wrong thing by paying out legacies before the time for appeal had expired. It is no justification that the primary judge had set a date from which interest was to accrue on the provisions ordered. However, the correspondence in evidence suggests that both sides are more concerned with continuing adversary disputes than finding a practical solution without further accumulation of substantial costs.
29 If I had power to do so, I would be minded to cap the appellant’s costs of the appeal at $30,000, and to rule that the $60,000 cap at first instance applies to all proceedings at first instance, so that (apart from the costs of this motion) the appellant’s costs would be capped at $90,000 in all; and it may be that the judges who heard the appeal would be minded to take that course, if the matter needs to be referred back to them. I think it would be reasonable for the respondent to recognise that it will have to provide about $90,000 in costs, and either to pay that amount as an agreed amount, or provide some sort of regime that ensures that such an amount can be paid.
30 I propose to stand the matter over to a date before me in about four weeks’ time, to give the parties a final chance to arrive at a sensible solution, before the die is cast and the incurring of further disproportionate costs on both sides becomes inevitable. If the parties have not reached an accommodation by then, I will be concerned (to the extent that this is consistent with any claim for privilege that may be made) to see correspondence between the parties setting out the positions they have taken. On the basis of these reasons and that correspondence and any other evidence as to what has happened, I will then decide whether to make orders of the kind sought by the appellant, or to refuse to make those orders, with the appellant to pay the respondent’s costs of the Notice of Motion to date.