Porker v Richards

Case [2016] SASC 98

SUPREME COURT OF SOUTH AUSTRALIA

(Civil)

PORKER v RICHARDS & ORS

[2016] SASC 98

Judgment of The Honourable Justice Blue

1 July 2016

SUCCESSION - ADMINISTRATION OF ESTATE - ASSETS

CONTRACTS - GENERAL CONTRACTUAL PRINCIPLES - DISCHARGE, BREACH AND DEFENCES TO ACTION FOR BREACH

Derivative action by the plaintiff on behalf of a deceased estate for rent or rental value.

The parties’ mother died in July 2007, leaving her assets to the first and second defendants as executors and trustees on trust for her four children in equal shares. The primary asset was a house.

In 2008 the first and third defendants moved into the house. In December 2008 the first defendant commenced making rental instalments to the estate on a fortnightly basis. The third defendant resided at the house until October 2010, and the first defendant until September 2014. The first defendant paid rates and taxes and conducted general maintenance.

The plaintiff on behalf of the estate seeks rent or rental value from the first defendant in contract or alternatively for breach of fiduciary duty or trespass.

The first defendant claims by way of set-off or counterclaim against the estate reimbursement of expenses and other costs and losses that she claims were incurred as a result of her co-occupation and preservation of the property.

The first defendant claims by way of cross action against the third defendant for contribution towards rent payable by her to the estate and damages caused during his co-occupation of the property.

Held:

1.       On 15 December 2008 the second defendant in her capacity as executor and trustee of the estate entered into a contract on behalf of the estate with the first defendant for payment of rent on a fortnightly basis (at [90]).

2.       The estate is entitled to unpaid rental of $69,160 (at [94]).

3.       The estate does not have a cause of action against the first defendant for breach of fiduciary duty or in trespass by virtue of her occupation of the house between September 2008 and September 2014 (at [102] and [104]-[105]).

4.       The first defendant has a set off against the estate for $17,828.76 (at [115]).

5.       The estate is entitled to judgment against the first defendant for $51,331.24 less any legal costs incurred by the first defendant as executor (at [129]).

6.       The first defendant is entitled to judgment against the third defendant for $12,751.85 as contribution to rent and damages for the cost of repairs to damage by him to the house and for the cost or value of work to remedy the poor condition in which he left his room upon his departure (at [128]).

Alexander v Perpetural Trustees WA Ltd (2004) 216 CLR 109; Byrnes v Kendle (2011) 243 CLR 253; Canas Property Co Ltd v KL Television Services Ltd [1970] 2 QB 433; Chahwan v Euphoric Pty Ltd (2009) 73 ACSR 252; Johnson v Trotter [2006] NSWSC 67; Lidden v Composite Buyers Ltd (1996) 67 FCR 560; Progressive Mailing…

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Porker v Richards [2016] SASC 98
Case
[2016] SASC 98
Decision Date

CaseChat Overview and Summary

Porker v Richards is a case involving the administration of a deceased estate, where Garry Porker, on behalf of the estate of Alison Porker, sought to recover the rental value of a house from Stephanie Richards, who had occupied the house. Stephanie cross-claimed against Bryan Porker, another child of Alison, for a contribution towards the rent she had paid and for damages caused by Bryan’s actions. The primary legal issues revolved around the interpretation of the terms under which Stephanie occupied the house and the obligations of the parties concerning the payment of rent.

The court examined the circumstances under which Stephanie occupied the house and the discussions between the parties regarding the payment of rent. The court found that Stephanie had occupied the house under an arrangement whereby she would pay rent to the estate, and it was an implied term of this arrangement that Bryan would contribute half the rent when he had the means to do so. The court rejected Stephanie’s claim for two-thirds of the rent, reasoning that Bryan’s girlfriend’s occasional stays at the house did not warrant a variation of the original arrangement.

In its decision, the court ordered that Stephanie was entitled to a set-off against the estate of $17,828.76, with further submissions to be heard regarding the recoverable legal costs. Bryan was found responsible for half of the rent payable by Stephanie to the estate for the period from November 2008 to October 2010.

Orders

Orders of the court

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Background

Background to the litigation

This is a derivative action by the plaintiff on behalf of a deceased estate against the first defendant for rent or rental value. The first defendant brings a cross claims against the estate for monies paid and against the third defendant for contribution and damages.Background The parties are the children of the late Alison Porker (Alison) and equal beneficiaries of Alison’s estate (the estate). The plaintiff, Garry Porker (Garry), and the third defendant, Bryan Porker (Bryan) are the younger children of Alison. The first defendant, Stephanie Richards (Stephanie), and the second defendant Marjory Schulz (Marjory), are the elder children and the executors of the estate.The will and the house By her will made in May 1989, Alison appointed Stephanie and Marjory as her executors and trustees and left her assets to her trustees on trust for her children in equal shares as tenants in common. As at July 2007, Alison owned a house at Meadows (the house) that was valued by the Valuer-General at $215,000. Alison was living in a retirement village at Morphett Vale. Marjory’s son Antony was living in the house under an agreement with Alison that he would not pay rent but would pay rates and taxes and maintain the house in good condition. Apart from modest furniture and effects in the house and less than $2,000 in a bank account, Alison owned no other assets. As at July 2007, Marjory was living in Queensland. Stephanie was living at a house she owned in Flagstaff Hill. Stephanie also owned an investment house at Market Place Nairne and a unit in Brisbane. Bryan was living at Kuitpo. On 14 July 2007, Alison died. On 20 July 2007, Marjory and her husband Ian Schulz attended a meeting with Ben Siegmann of von Doussas, solicitors. Stephanie also attended the meeting, but not from the outset. There is a dispute about the discussion at the meeting about which I make findings below. On 21 December 2007, probate of the will was granted in favour of Marjory, reserving leave to Stephanie to apply for probate. On 8 January 2008, the Guardianship Board made an a order appointing Public Trustee as administrator of the estate of Garry on the ground that it was satisfied that he had a mental incapacity within the meaning of the Guardianship and Administration Act 1993 (SA). In January and February 2008, Mr Siegmann obtained an appraisal of the house from Ray White of $240,000 to $260,000, Marjory obtained an appraisal from Raine & Horne of $220,000 to $235,000 and Mr Siegmann obtained a valuation from Gil Piccinato valuing the house at $240,000. On 18 January and 6 February 2008, Mr Siegmann wrote two letters addressed jointly to Marjory and Stephanie. He said that he was still awaiting an appraisal that was being obtained by Stephanie. He expressed the opinion that, if the house were sold to one of the estate beneficiaries, it should be sold for $240,000 being the amount of Mr Piccinato’s valuation. On the other hand, if it were marketed for sale to a third party, it should be listed with Ray White Real Estate with a likely selling range of between $250,000 and $260,000. He asked for their views.

Evidence

Evidence Before The Court

On 30 May 2016, $255,600.93, being the net proceeds of sale, was paid by von Doussas into Court.The evidence and findings Garry did not adduce any oral evidence. Garry tendered an affidavit by Ms Hill sworn on 9 March 2016. Garry tendered an expert report by Mark Sanderson, a land agent, who expressed the opinion that the rental value of the house in 2007 was $260 per week increasing in increments each year up to $300 per week in 2014. Marjory and her husband Ian gave evidence. They both gave evidence concerning the meeting on 20 July 2007. Marjory gave evidence that all relevant dealings with Stephanie after that time were undertaken by von Doussas and not by her personally. An affidavit by Marjory exhibiting communications between von Doussas, Stephanie, her solicitors as well as other parties and other documents was tendered. Marjory tendered an affidavit by Benjamin Walker addressing his appointment by Stephanie to sell the house in 2014 and 2015 and the contract entered into in March 2016. Bryan gave oral evidence. Stephanie gave oral evidence. Several affidavits by Stephanie were tendered. All parties tendered various documents.Meeting on 20 July 2007 Marjory and Ian gave evidence that, at the meeting at von Doussas on 20 July 2007, Stephanie said that she was interested in purchasing a house and for this reason it was decided that Marjory alone would apply for probate. They gave evidence that Mr Siegmann said that three appraisals of the value of the house would need to be obtained for consideration of an offer by Stephanie. Stephanie gave evidence denying that there was any discussion about the possibility of her purchasing the house or about her not applying jointly with Marjory for probate. She said that it was agreed that three appraisals of the house would be obtained, one by her, one by Marjory and one by von Doussas. She accepted later in her evidence that it was possible that there was discussion about Marjory alone applying for probate and that she did not notice or recall it. I find that Stephanie did say that she was interested in purchasing the house and for this reason it was decided that Marjory alone would apply for probate. Marjory and Ian were straightforward witnesses and Ian’s evidence corroborated that of Marjory. In his letter to Elizabeth Olsson dated 28 April 2009, Mr Siegmann said that it was agreed at the meeting that application for probate would be made by Marjory with leave reserved for Stephanie. This corroborates the evidence of Marjory and Ian. Objectively, there was no reason for von Doussas not to apply for joint probate in the names of Marjory and Stephanie unless Stephanie was in a position of conflict of interest such as having expressed an interest in purchasing the house. Mr Siegmann’s letters to Marjory and Stephanie in January and February 2008 proceed on the premise that Stephanie had indicated an interest in purchasing the house and in obtaining an appraisal of its value for this purpose and on the evidence there is no explanation, other than that this had been discussed in July, for Mr Siegmann to have proceeded on that premise.Moving into the house

Decision

Reasons for decision

Stephanie claims $14,392.14 for legal costs paid to her solicitors Mellor Olsson. Mellor Olsson acted for Stephanie in her personal capacity in relation to the occupation of the house and as a beneficiary of the estate. Legal costs incurred by Stephanie by reason of Mellor Olsson undertaking that work are not recoverable from the estate. However, Mellor Olsson also undertook some work for Stephanie in her capacity as executor of the estate. That work comprised at least the application for double probate. I do not have sufficient information to assess the costs that are recoverable from the estate and will hear the parties further on this question.Conclusion Stephanie is entitled to a set off against the estate of $17,828.76.Claims by Stephanie against Bryan Stephanie claims by way of cross action[17] against Bryan for a contribution towards rent payable by her to the estate and damages caused by Bryan’s actions. [17] Stephanie did not file a cross claim. However, in light of the fact that Stephanie was conducting the trial as a litigant in person, both parties proceeded on the basis that Stephanie was entitled to advance a cross-claim as advanced in substance at trial without regard to the technical form of her pleadings.Contribution towards rent Stephanie claims against Bryan two thirds of any rent payable by her to the estate. The claim of two thirds is made on the basis that Bryan and his girlfriend were living in the house and it is fair and equitable that the rent be divided into thirds. Bryan accepts a responsibility to pay half of any rent payable by Stephanie to the estate in respect of the period from May 2008 to October 2010. Both Stephanie and Bryan were vague in their evidence about discussions between them concerning rent. There is no suggestion that there was any discussion about Bryan paying rent before December 2008. Stephanie did not give evidence that at any point Bryan agreed to pay any specific amount of rent or any clear evidence that Bryan explicitly agreed to pay rent. I find that in December 2008, Stephanie told Bryan that she was required to pay rent of $230 per week to avoid their being evicted from the house by von Doussas acting on the instructions of Marjory. I find that there was some discussion about the possibility of Bryan paying rent but both parties accepted that Bryan could not actually pay rent at that time because he had no significant income. The start of the period for which Bryan is responsible to pay rent is 17 November 2008 being the start of the period for which Stephanie is responsible to the estate to pay rent. I find that it was it an implied term of the arrangement between Stephanie and Bryan that, when Bryan had the means to do so, he would pay Stephanie half the rent that she was obliged to pay to the estate for the period during which Bryan was living in the house. I reject Stephanie’s contention that Bryan is obliged to pay two thirds of the rent because his girlfriend stayed at the house from time to time. I accept Bryan’s evidence that this was not continuous. I find that at no stage did the parties agree to vary the arrangement between them pursuant to which it was an implied term that Bryan would pay half the rent. I find that it was irrelevant whether Bryan’s girlfriend stayed overnight at the house.

Ratio Decidendi

Legal Principle Established

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