Perpetual Trustee Company Limited (as Executor and Trustee of the Estate of Peter Fraser) v Boyd and Veronica Fraser
[2019] VCC 906
•27 June 2019
| IN THE COUNTY COURT OF VICTORIA AT MELBOURNE COMMERCIAL DIVISION | Revised Not Restricted Suitable for Publication |
Case No. CI-19-01624
| Perpetual Trustee Company Limited (as Executor and Trustee of the Estate of Peter Fraser) | Plaintiff |
| v | |
| Boyd Fraser Veronica Fraser | Defendant |
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JUDGE: | Lewitan | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 May 2019 | |
DATE OF RULING: | 27 June 2019 | |
CASE MAY BE CITED AS: | Perpetual Trustee Company Limited (as Executor and Trustee of the Estate of Peter Fraser) v Boyd and Veronica Fraser | |
MEDIUM NEUTRAL CITATION: | [2019] VCC 906 | |
REASONS FOR RULING
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Subject: Recovery of Land under Order 53
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr J Smith | KCL Law |
| For the first defendant For the second defendant | The first defendant appeared in person The second defendant appeared in person |
HER HONOUR:
1 By originating motion filed 10 April 2019 the plaintiff (Perpetual) applies for recovery of the land at 2/9 Hopetoun Road Toorak (the property) pursuant to Order 53 of the County Court Civil Procedure Rules 2018 (County Court Rules).
2 Perpetual is the executor and trustee of the estate of the late Peter Fraser (the deceased) and, in that capacity, sole proprietor of the property.[1]
[1] Exhibit NA3 to affidavit made by Nina Acutt on 9 April 2019 (Acutt’s affidavit).
3 Peter Fraser married twice. His first marriage produced two children; Siri Omberg (Siri) and Peter John Phillip Fraser (Peter). Mr Fraser’s second marriage was to Valerie Margaret Fraser (Valerie). That marriage produced one child, the first defendant Boyd Fraser (Boyd).
4 On 27 February 1963 the deceased made a will (the will) by which he appointed Perpetual and Valerie as executors and trustees of his estate.[2] By clause 3(a) of the Will, the deceased left his entire residuary estate after payment of debts and expenses on a testamentary trust (the trust) pursuant to the terms of which:
[2] Exhibit NA1 to Acutt’s affidavit.
(a) Valerie had a life interest in the residuary estate;
(b) any net income generated from the residuary estate was to be paid to Valerie during her life;
(c) the trustees could make advances from capital for Valerie’s benefit; and
(d) on Valerie’s death, the trust was to be divided:
(i) Peter as to 3/9ths;
(ii) Siri as to 2/9ths; and
(iii) Boyd as to 4/9ths.
5 The deceased was the registered proprietor of the property. The deceased lived at the property with Valerie.
6 The deceased died on 19 December 1978.
7 On 14 January 1980 probate of the deceased’s will was granted to Perpetual and Valerie.[3]
[3] Exhibit NA2 to Acutt’s affidavit.
8 Valerie continued to live in the property after the death of the deceased. She did so as the holder of a life interest in the estate. Boyd and his wife Veronica Fraser (the defendants) moved in with Valerie sometime thereafter.
9 On 23 January 2014 State Trustees Limited (State Trustees) was appointed administrator for Valerie. In 2014 Perpetual was advised by State Trustees that Valerie had been admitted to an aged care facility and was no longer living in the property. Notwithstanding her departure from the property, the defendants continued to live in the property without paying rent.
10 After extensive correspondence between Perpetual and the defendants, Perpetual commenced an application pursuant to Order 53 of the County Court Rules seeking recovery of the land from the defendants.
11 Subsequent to the filing of that application, Valerie was discharged from the aged care facility on or about 13 February 2017 and resumed living at the property with the defendants. Accordingly the first Order 53 proceeding was dismissed by consent with no order as to costs.
12 Valerie died on 24 November 2017. The trust vested and the three children became entitled to their respective shares in the trust. Perpetual submits that it is obliged to finalise the trust now that it has vested.
13 Peter died on 22 June 2018. Peter’s estate is entitled to his share in the trust. Peter’s estate is administered by Equity Trustees Limited (Equity Trustees).
14 The only significant asset in the trust is the property. To finalise the administration of the trust in accordance with the will of the deceased, Perpetual submitted that it had available to it three options:
(a) transfer the property to the three children in specie in the respective proportions (transfer option); or
(b) sell the property and distribute the net proceeds of sale to the three residuary beneficiaries in the proportions (sale option); or
(c) have the first defendant “buy out” his siblings.
15 Perpetual has been in communication with Siri and Peter’s estate as to their entitlements under the estate. Perpetual has been advised that neither Siri nor Peter’s estate wish to receive an in specie transfer (in their respective entitlements) of the property. Both Siri and Peter’s estate advised Perpetual that they would agree to the buy-out option if Boyd agreed to certain terms (valuation and timeframe for payment) but they otherwise required the sale option.[4]
[4] Exhibit NA5 to Acutt’s affidavit.
16 In June 2018 Perpetual asked the defendants to vacate the property. Subsequently Perpetual gave the defendants the opportunity to “buy out” Siri and Peter. The defendants did not take those opportunities.
17 The defendants continue to occupy the property and refuse to leave.
18 In the absence of unanimous agreement between the three residuary beneficiaries, Perpetual proposed to execute the sale option.
19 Boyd states that he lived in the property with his mother Valerie and the deceased from the age of 13 in 1970. Veronica moved into the property in 1978. His daughter Georgia was born on 3 October 1978 and lived in the property from birth. Georgia no longer resides at the property.
20 Boyd alleges that Perpetual in its capacity as co-executor for the estate breached its duties to act in the interests of the life tenant and the residuary beneficiaries by failing to act in the best financial interests of the beneficiaries and failing to exercise care, skill and diligence. Boyd’s claims stem from the investment strategy that Perpetual employed during the administration of the deceased’s estate. The following allegations against Perpetual are set out in paragraphs 48 and 49 of the affidavit made by Boyd on 27 May 2017 (Boyd’s affidavit):
48.The investment strategy implemented by the trustees on the advice and recommendations of Perpetual has had the effect of reducing the estate capital to a negative balance, excluding the remaining asset of the trust, the matrimonial home.
49.I claim that a fair and prudent investment policy over the period 1 January 1982 to date would have been to invest the available $80,000 in a combination of real property, shares, bonds and cash.
21 The anxieties and concerns that Boyd has about the administration of the estate are not shared by the other beneficiaries.[5]
[5] Exhibit NA5 to Acutt’s affidavit.
22 In his affidavit Boyd stated that he has lodged a formal complaint with the Australian Financial Complaints Authority (AFCA). Boyd stated that the outcome sought via the complaint is that the deceased’s estate “should be restored to the value that it would have been, had Perpetual fulfilled their trustee responsibilities as professional trustee, which would have seen the real value maintained and a far more significant income earned during the administration.” Boyd submitted that in the absence of resolution of his financial claim against Perpetual, it would be premature for Perpetual to execute the sale option.[6] Boyd submitted that in the event that the order for possession is granted today, the opportunity to buy the property would be lost to him. Boyd submitted that he would be deprived of the opportunity to buy the property that he has lived in continuously since he was 13 years old.
[6] Paragraphs 38 and 39 of the affidavit made by Boyd on 27 May 2019 (Boyd’s affidavit).
23 The plaintiff submitted that the matters alleged by Boyd in his affidavit do not provide a defence to Perpetual’s application for recovery of the property. The asserted claims are made against Perpetual in its corporate capacity and do not provide a basis for Boyd’s right to occupy or remain in the property. The plaintiff submits that the defendants have had abundant time to get their affairs in order and vacate the property.Valerie died in November 2017.Boyd and his family have occupied the property for 18 months without any payment into the estate. The estate and the other beneficiaries are materially disadvantaged by the defendants’ occupation of the property. As a beneficiary under the terms of the trust, Boyd has no right to demand the sale of the property to him. The trustee has a total discretion in the sale of the assets of the trust.
24 I accept the plaintiff’s submission that the defendants do not have a defence to the plaintiff’s application for recovery of possession of the property. The trustees are obliged to administer the estate. The trustee has determined that the appropriate manner to administer the estate is to sell the property and distribute the proceeds to the beneficiaries. The plaintiff is entitled to an order that it recover possession of the property.
25 The plaintiff seeks an order for possession effective forthwith. However the plaintiff will undertake not to enforce the order for a period of 60 days subject to the provision by the defendants of reasonable access to the property upon 48 hours’ notice.
Costs
26 The plaintiff seeks costs on an indemnity basis because the defendants defended the application notwithstanding that they had no arguable defence to the application. The plaintiff referred to Colgate-Palmolive Co v Cussons Pty Ltd[7], Ugly Tribe v Sikola[8] and Re Kataryna [9]
[7] (1933) 46 FCR 225.
[8] [2001] VSC 189 at [7] and [8].
[9] [2017] VSC 466.
27 The usual order as to costs is that a successful party in litigation is entitled to an award of costs in its favour and the unsuccessful party bears the liability for the costs of the unsuccessful litigation.[10]
[10] Oshlack v Richmond River Council (1998) 193 CLR 72, 97; IMC Aviation Solutions Pty Ltd v Altain Khuder LLC [2011] VSCA 248 [325].
28 The discretion to make a special costs order is an unlimited one though it must be exercised judicially and not unreasonably, and the circumstances should be ‘special’.[11] That is to say, the court’s discretion to award indemnity costs against an unsuccessful party is dependent upon there being ‘circumstances of the case … such as to warrant the Court … departing from the usual course’ of awarding costs on a party-party basis.[12] It has been noted that the categories in which that discretion may be exercised are not closed. [13]
[11] Aljade and MKIC v OCBC [2004] VSC 351 [10].
[12] Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225, 233.
[13] Ugly Tribe Co Pty Ltd v Sikola [2001] VSC 189, [8] per Harper J.
29 Indemnity costs do not, however, serve the purpose of punishing a party merely for persisting with a matter that ultimately fails, or for the purpose of deterring litigants from putting forward arguments that might be attended by uncertainty.[14] To do so would have a chilling effect on legal argument, and in many cases consign many but the most adept self-represented litigants to such a result.
[14] Hamod v New South Wales (2002) 188 ALR 659, 665 per Gray J.
30 Rather, as stated in Hamod v New South Wales by Gray J:
[Indemnity costs] serve the purpose of compensating a party fully for costs incurred, as a normal costs order could not be expected to do, when the Court takes the view that it was unreasonable for the party against whom the order is made to have subjected the innocent party to the expenditure of costs.[15]
[15] Ibid at [20].
31 Although the defendants have failed in their attempt to defend the present application, I am not satisfied that their defence has been unreasonable. Boyd Fraser is one of three beneficiaries to the Estate of his late father, and the defendants have lived in the property for several decades, and have a strong personal connection to it.
32 Having regard to the whole of the evidence and the circumstances of this case I do not propose to exercise the Court’s discretion to order that the defendants pay the plaintiff’s costs on an indemnity basis. I propose to order that the defendants pay the plaintiff’s costs of the application on a standard basis.
Orders
33 The title of the proceeding be amended to identify the second named defendant as “Veronika Fraser”.
34 The plaintiff recover possession of the land described in the originating motion as 2/9 Hopetoun Road, Toorak, in the State of Victoria (being the land described in Certificate of Title Volume 08807 folio 979).
35 The plaintiff undertakes not to enforce the order for a period of 60 days subject to the provision by the defendants of reasonable access to the property upon 48 hours’ notice.
36 The defendants pay the plaintiff’s costs on a standard basis.
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