Robinson v Hill

[2010] NSWDC 100

CITATION:	Robinson v Hill [2010] NSWDC 100
HEARING DATE(S):	17/05/10, 18/05/10
JUDGMENT DATE:	9 June 2010
JURISDICTION:	Civil
JUDGMENT OF:	Sidis DCJ at 1
DECISION:	Verdict for the defendant. The plaintiff is to pay the defendant's costs of the proceedings. This order is suspended for a period of seven days to allow the parties to apply to list the proceedings for further argument on the matter of costs. The exhibits will be returned through the Lismore registry.
CATCHWORDS:	Distribution of estate of the father of the plaintiff and the defendant contrary to provisions of will - Alleged agreement concerning responsibility for unpaid bequests to beneficiaries - Credit - Co-ordinate liability
LEGISLATION CITED:	Limitation Act 1969
CASES CITED:	Burke v LFOT Pty Ltd [2002] HCA 17
PARTIES:	Charmaine Jane Robinson Dallas James Hill
FILE NUMBER(S):	2008/321731
COUNSEL:	C Simpson (for the Plaintiff) G M McGrath (for the Defendant)
SOLICITORS:	Baker Mannering & Hart Solicitors (for the Plaintiff) James Fuggle Rummery (for the Defendant)

JUDGMENT

1 Charmaine Jane Robinson claimed to recover from Dallas James Hill one half of the sum that she paid pursuant to consent orders filed in Supreme Court proceedings 1383 of 2003 proceedings.

2 Ms Robinson and Mr Hill were named as defendants in the Supreme Court proceedings. The claim was based on the provision in the consent orders that stated that they were jointly and severally liable for the amount to be paid to the plaintiffs in those proceedings.

3 The issues were:

1 Whether an agreement was reached between the plaintiff and the defendant under which the defendant agreed to contribute one half of the amount payable pursuant to the Supreme Court orders and one half of the legal costs and disbursements incurred in those proceedings.

2 Whether the relative positions of the plaintiff and the defendant were such that the doctrine of co-ordinate liability applied.

3 Whether the proceedings were statute barred.

4 The Supreme Court consent orders were entered in the following circumstances.

5 Dallas Etienne Hill died on 27 February 1983. He left his widow, Irene Jane Hill, and three children, Dallas Hill, the defendant in these proceedings, Charmaine Robinson, formerly Fassos, the plaintiff in these proceedings and Wayne John Frederick Hill.

6 Mr Wayne Hill died on 9 June 1986.

7 Mrs Hill, the plaintiff, the defendant and Mr Peter Phillips, solicitor, were appointed executors and trustees of the estate.

8 The deceased provided in his will for a number of bequests of specific sums of money, shares and personal property. Those bequests were not relevant to the dispute before the court.

9 The complexity in the administration of the estate arose out of the provision made in the will for the major asset, a property in Byron Bay known as Victoria House to be subdivided in the manner described in a plan forming part of the will. Specific lots created by the subdivision were devised to the plaintiff and Peter Fassos, the plaintiff’s son.

10 A life estate was created in favour of Mrs Hill in respect of the lot upon which the house on the property was erected. After her death, that lot was to go to Mr Fassos. The will was ambiguous as to whether this provision extended to the remainder of the land after subdivision or whether the remainder was to be dealt with as part of the residue of the estate.

11 The residue of the estate was to be used to provide income for Mrs Hill during her lifetime and thereafter it was to be divided into 15 parts and allocated as follows:

3/15 Charmaine Robertson

5/15 Wayne Hill

5/15 Dallas Hill

1/15 Peter Fassos

1/15 Karen Louise Hill, the daughter of Wayne Hill

12 On 2 June 1983 probate of the will was granted to the executors and trustees.

13 Two claims were made against the estate. The first was made by Mrs Hill in 1983. Her claim for further provision was accepted by Master Gressier in the Supreme Court and in October 1985 he ordered that she be paid out of the estate the sum of $325,000.

14 The subdivision of the Victoria House property did not proceed as proposed in the will. Instead the property was sold in 1992 for a sum of about $1,600,000.

15 The delay in the sale of the property resulted in delay in the payment of the further provision for Mrs Hill and the accumulation of a significant sum in interest. The result was that Mrs Hill was paid about $850,000 out of the proceeds of sale, $525,000 of which represented interest.

16 By deed, undated and unregistered, but signed in 1987, the defendant purported to retire as trustee of the will. The deed provided for Mr Fassos to be appointed in his place. The plaintiff, Mrs Hill, Mr Phillips, as continuing trustees, signed the deed in acknowledgment that they consented to the defendant’s retirement. Mr Fassos signed the deed by way of consent to his appointment.

17 Mr Phillips retired as trustee of the estate under a deed of retirement dated 21 October 1991. Mrs Hill, the plaintiff and the defendant were named in that document as continuing trustees.

18 The defendant was named as a vendor in the contract of sale dated September 1992 and as a mortgagee in the mortgage granted to the purchaser in respect of part of the purchase moneys.

19 Mrs Hill died on 16 April 2000. The plaintiff and the defendant were appointed executors of Mrs Hill’s estate and were beneficiaries of the estate.

20 Supreme Court proceedings 1383 of 2003 were commenced against the plaintiff and the defendant in February 2002 as trustees of the will of Dallas Etienne Hill and as executors of the estate of Irene June Hill. The statement of claim dealt with claims made by the widow of Wayne Hill and his daughter, Karen, on the estate of Dallas Etienne Hill. They claimed breaches of trust on the part of the plaintiff and the defendant because of their failure to distribute to Wayne John Hill or his estate 5/15 of the residue of the estate and to Karen Hill 1/15 of the residue. It was alleged that the residue comprised the real estate that depended upon the aborted subdivision of the Victoria House property.

21 The claim was resolved by the payment to the plaintiffs in that case of $215,000, a sum close to 6/15 of the sum remaining from the sale of the Victoria House property after payment of the amount due to Mrs Hill and after deduction of expenses of the sale and of the administration of the estate.

22 The Supreme Court noted that the plaintiffs in those proceedings agreed to the consent orders upon the representation by the plaintiff and the defendant that the net distributable estate of Dallas Etienne Hill was approximately $640,000.

23 At the time of settlement, the plaintiff and the defendant swore separate statutory declarations detailing payments made out of the estate, valued at $1,681,000, and stating:

4. After payment of all of the above expense the net amount available for distribution from the estate was approximately $646,940.88.

24 The figure of approximately $640,000 could only have been arrived at by accepting that, the proposed subdivision not having been implemented, the bequests of the specific allotments failed and the property involved in those lots fell into residue.

25 The residue of the estate had not been distributed in accordance with the provisions of the will. The evidence was that $174,479.26 was paid to the plaintiff; $190,838.34 was paid to Mr Fassos, of which $11,800 appeared to relate to specific bequests of shares and cash; and $85,008 was paid to the defendant. Nothing was paid to Wayne Hill, to his estate or to Karen Hill.

26 No explanation was provided for the substantial sums paid to the plaintiff and Mr Fassos when their shares of the residue of the estate were 3/15 and 1/15 respectively. Nor was it explained why the defendant received less than 5/15 of the residue or why Wayne Hill and Karen Hill were paid nothing.

The Alleged Agreement

27 It was against this background that the plaintiff asked the Court to accept that she and the defendant agreed as between themselves that the obligation to the plaintiffs in the Supreme Court proceedings should be paid, not from the assets of the estate, but by each of them personally in equal shares. The result for the defendant would be that he was required to contribute a greater amount than he received from the estate.

28 The defendant denied that there was such an agreement. He said that the plaintiff told him that the Supreme Court proceedings involved a claim on their father’s estate and not him personally. He said he was lead to believe that there was money in the estate and that this would be the source of the funds required to pay the plaintiffs in the Supreme Court proceedings.

29 Determination of this issue involved my accepting the evidence of one of the parties and rejecting the evidence of the other. There were weaknesses in the evidence of both the plaintiff and the defendant but for the reasons that I set out I decided that I should prefer the version of events of which the defendant gave evidence to that of the plaintiff.

30 The plaintiff relied heavily on evidence that the defendant shared with her in the estate of Mrs Hill but there was nothing in that evidence that suggested that Mrs Hill made specific provision out of her estate to compensate the defendant for any shortfall in the distribution out of his father’s estate.

31 I therefore did not consider that the distribution of Mrs Hill’s estate was relevant to the issues arising under their father’s will.

32 The defendant signed a deed of retirement, to which the plaintiff consented, in 1987. It was not registered and it was therefore ineffective. In addition the defendant continued, on request, to be involved in the affairs of the estate when he was named in documents that he signed as a trustee. He could not therefore avoid liability as a trustee of the estate in reliance on the deed of retirement.

33 The fact that the deed of retirement existed and was signed by all relevant parties provided support for the defendant’s evidence that he had minimal involvement in the administration of the estate, that he was unaware of the way in which the residue of the estate was paid out and that he received no explanation of the calculation of the sum of approximately $85,000 paid to him.

34 The defendant’s evidence that the plaintiff and Mrs Hill, to the time of her death, took primary responsibility for estate matters was not contested. His statement that there was mutual disrespect between him and Mr Gordon, the estate’s solicitor, was confirmed by documentary material and gave support to his claim that he was excluded from many of the meetings at which estate matters were discussed.

35 It was not denied that the plaintiff paid out of residue amounts to herself and Mr Fassos. There was no evidence to indicate that the plaintiff consulted with or informed the defendant of the amounts paid to herself and Mr Fassos.

36 In such circumstances, the defendant’s evidence that at the time he signed the statutory declaration for the purpose of the Supreme Court proceedings he believed that there was available for distribution the sum of approximately $640,000 was probable and credible and I accepted it.

37 The payments made to the plaintiff and Mr Fassos were not authorised by the terms of the will. In making those payments the plaintiff failed to implement the terms of the will relating to the shares of residue to which the defendant and Wayne Hill, or his estate, and Karen Hill were entitled.

38 The representations made at the time of the making of consent orders in the Supreme Court indicated that there was available in the residue of the estate a fund that was more than sufficient to meet the liability to the plaintiffs in those proceedings.

39 The consequences of the agreement alleged by the plaintiff would be that the defendant, having been denied his full entitlement under the will, would be required not only to return such amounts as he did receive, but an additional amount to meet a liability that, but for the unauthorised payments made by the plaintiff, would be met by the estate.

40 I therefore rejected as improbable the plaintiff’s claim that the defendant agreed that he would personally meet his share of their joint and several liability under the consent orders entered in the Supreme Court proceedings.

Co-ordinate Liability

41 In dealing with the issue of co-ordinate liability, both parties relied on the decision of the High Court in Burke v LFOT Pty Ltd [2002] HCA 17. In that decision at [14] Gaudron ACJ and Hayne J stated the principles, in general terms, to be:

… the principle of equitable contribution requires that those who are jointly or severally liable in respect of the same loss or damage should contribute to the compensation payable in respect of that loss or damage, either equally where they are liable in the same amount or proportionately, where the amount of their liability differs. (authority not quoted)

42 Justice McHugh at [38] noted that the liability of each party must be of the same nature and to the same extent. He said the principles were based on the equitable doctrine of equality and that equity required a common burden to be shared equally so that none of those owing a common obligation paid more than his or her share of the burden.

43 As to what was common, he said at [41] that the nature of the relevant interest and burden was such that …the burden by one party constitutes a benefit to the other which, in fairness, the law cannot countenance them keeping. For that reason, he said, the doctrine will not apply merely because the obligations in question are owed to the same party or because one party’s payment has benefited or relieved the other party financially.

44 Justice Kirby at [94] referred to the maxim that equality is equity but said that this maxim should not be applied literally and that the duties, legal source of duty and amounts owed need not be identical. What was necessary was that one party should not be allowed to profit from another’s loss where the first party had incurred a similar responsibility.

45 Justice Callinan at [142] referred to a number of different circumstances in which the doctrine of contribution might be applied:

· Where there is a mutuality of rights and obligations between the parties;

· When the burden is and must be seen to be a common burden;

· When several persons owe the same obligations, they should satisfy them equally;

· When in reason, justice and law there should be equality of liability;

· When it can be shown that one person has paid more than his or her share;

· When general principals of justice require that a contribution be provided.

46 The High Court also referred to the circumstances in which principles of contribution will not be applied.

47 They referred to the doctrine of clean hands. Gaudron ACJ and Hayne JJ said this doctrine applied in claims for contribution in equity in the sense of legal responsibility for the loss in question. Justice Callinan said at [143] in respect of this doctrine:

… it is likely that in modern times whatever would have provided a defence to a claim in equity for contribution would equally provide a defence in law.

48 Justice Callinan rejected the proposition that a party, itself having committed a wrong doing should be entitled to contribution in respect of the loss caused by that conduct. Such a concept, he said, at [143] struck at the very heart of the notions of justice and equity.

49 The Court also raised the issue of unjust enrichment. Justices Gaudron and Hayne said the principles of contribution would not apply where, to the extent of the contribution recovered, the claimant would not pay his or her proper share but would be unjustly enriched. Justice McHugh said that any principle of common law or equity that would lead to such a surprising result would have to be re-examined.

50 Applying these principles as already noted, the plaintiff represented in the Supreme Court proceedings that a fund of $640,000 was available for distribution out of the estate. At the time she swore on oath to this effect, she was aware that there was no such fund. The defendant believed that the fund existed and that the money to be paid pursuant to the consent orders was to be taken from it. The reason that the fund did not exist was that the plaintiff distributed it, without consultation with the defendant, in a manner that was not authorised by the will.

51 In the circumstances, I find that the plaintiff did not come to this Court with clean hands and that there was no co-ordinate liability.

The limitation period

52 I considered that there was insufficient information available to the Court to decide whether s 26 of the Limitation Act 1969 dealing with contributions between tort-feasors should, by analogy, be applied to claims for contribution based on principles of equity. Nor was it necessary to do so.

ORDERS

53 Verdict for the defendant.

54 The plaintiff is to pay the defendant’s costs of the proceedings. This order is suspended for a period of seven days to allow the parties to apply to list the proceedings for further argument on the matter of costs.

55 The exhibits will be returned through the Lismore registry.