Tipple v Phillips

Case •

[2019] NSWSC 933

•

18 July 2019

No judgment structure available for this case.

Supreme Court


New South Wales

Medium Neutral Citation: Tipple v Phillips [2019] NSWSC 933
Hearing dates: 18 July 2019
Date of orders: 18 July 2019
Decision date: 18 July 2019
Jurisdiction:Equity
Before: Kunc J
Decision:

Judicial advice given

Catchwords: EQUITY – Trusts and trustees – Judicial advice – Dispute between executor and beneficiaries
Legislation Cited: Trustee Act 1925 (NSW)
Uniform Civil Procedure Rules 2005 (NSW)
Category:Principal judgment
Parties:

Stuart Graeme Holden Tipple (Plaintiff)

  Nerolie Phillips (First Defendant)
Kaylene Cook (Second Defendant)
Representation:

Counsel:

 

P Menadue (Plaintiff)

 

N Phillips (First Defendant – self-represented)
K Cook (Second Defendant – self-represented)

 

Solicitors:

  Kent Law Group (Plaintiff)
File Number(s): 2018/390652
Publication restriction: No

EX TEMPORE Judgment (REVISED)

Summary

  1. In form, these are proceedings for judicial advice pursuant to s 63(1) of the Trustee Act 1925 (NSW). In reality, they are a means of resolving a dispute between two beneficiaries and the executor of their late mother's estate ("Estate").

  2. The plaintiff, Mr Tipple, is a solicitor and the executor of the estate of the late Helen Muriel Potter (Mrs Potter). Mrs Potter died on 22 June 2016. She and her husband, Mr Potter, lived in a unit in a retirement village (the “Unit").

  3. Under her will, after providing for Mr Potter to live in the Unit for his lifetime, Mrs Potter essentially left the Estate to her three adult children in equal shares. Without intending any disrespect, I shall refer to her children by their Christian names: Nerolie, Kaylene and Warren (together, the “Beneficiaries”).

  4. Warren has played no part in these proceedings. For good order, and given the costs orders that I propose to make, Nerolie and Kaylene will be formally joined as defendants to the proceedings.

  5. The Estate currently comprises approximately $90,000 in cash. No payment has yet been made from the Estate in relation to the costs of these proceedings, other than the filing and hearing fees.

  6. By the time of the hearing, the only contested issue was whether Mr Tipple should be given the advice he now seeks: that he would be justified in completing the administration of the Estate without taking any further steps to challenge a Valuation of the Unit as at 1 December 2016 of $250,000 (the “Valuation") in an endeavour to increase the monetary benefit of the Unit to the Estate.

  7. Nerolie, to some extent supported by Kaylene, submits that Mr Tipple should challenge the Valuation. She says that the correct Valuation should have been between $350,000 to $400,000. However, she has no evidence to support that assertion. Furthermore, even if she were correct, Nerolie and Kaylene now accept that the additional benefit to the Estate would only be approximately $20,000 to $30,000 before the costs of pursuing the matter are taken into account.

  8. In those circumstances, the Court is satisfied that Mr Tipple should be given the advice he seeks and that he should proceed to complete the administration of the Estate. These proceedings were properly brought, so he is entitled to his costs of the proceedings out of the Estate on the trustee basis. Given their respective roles in causing these proceedings, Mr Tipple's costs should be paid out of the Estate by being borne by Nerolie and Kaylene's respective shares. Nerolie has agreed, in that eventuality, that three-quarters of those costs should come from her share and only one quarter from Kaylene's.

  9. Mr P Menadue of Counsel appeared for Mr Tipple. Nerolie and Kaylene represented themselves. Given the small size of the Estate, and the fact that Nerolie and Kaylene were without legal representation, I have approached the matter with as little formality and technicality as possible with a view to resolving the real issues in dispute between the parties in a way that is just, quick and cheap so as to enable this small estate to be finally administered without further delay.

The facts

  1. Mr and Mrs Potter moved into the Unit in 2006. From a strictly legal point of view, it appears that their occupation of the Unit was as licensees. Under their arrangements with the retirement village operator, on the Unit being sold they (or the relevant estate) would be entitled to receive $185,000 (being what they had paid in, less a management fee) plus an amount representing a share of any capital gain. That share was calculated pursuant to a formula which depended on a valuation of the Unit when they moved in (being $200,000) and a valuation of the Unit when they (or the survivor of them) left. Both valuations were to be obtained on the instructions of the retirement village operator.

  2. Mrs Potter made a Will on 20 October 2008 which included:

3.   MY Executor shall hold my interest in Unit XX, XXX Road, Cooranbong “the Unit” and shall deal with it in accordance with the following provisions of this subclause;

3.1   My husband WALTER JOHN POTTER may personally reside in the Unit as long as he wishes for life, provided that he pays the outgoings on the Unit and keeps it in repair to my Executor’s satisfaction.

3.2   Until my husband dies, or in the opinion of my Executor my husband ceases to live in the Unit permanently or fails to comply with the conditions of his right of occupation, then the Unit shall not be sold without the consent of him or his legal personal representative.

3.3   On the death of my husband or when he ceases to live in the Unit permanently or fails to comply with the conditions of his right of occupation, then my Executor shall sell my interest in the Unit and my share of the net proceeds of sale shall form part of the residue of my estate.

4.   PERSONAL CHATTELS

4.1   I give free of all duties and encumbrances, my personal and household chattels as defined in the Statute governing the administration of wills and probate “my chattels” to my Executor to be distributed in accordance with this clause.

4.2   It is my wish that my Executor distribute my chattels in accordance with any list I may leave stored with my Will or amongst my private papers and signed by me.

4.3   If I fail to leave such a list or to the extent that any of my chattels are not listed or distributed, they shall form part of the residue of my estate.

5.   MY Executor shall hold the residue of my estate on trust to divide it equally between my children NEROLIE HELEN PHILLIPS. KAYLENE PATRICIA COOK and WARREN FRANKLIN PHILLIPS, but if any of these named beneficiaries dies before me or before attaining a vested interest leaving children, then those children shall on attaining the age of Twenty-one (21) years take equally the share which their parent would otherwise have taken.”

  1. Mrs Potter died on 22 June 2016. Mr Potter continued to live in the Unit until his death approximately 6 months later.

  2. On 20 September 2016, Mr Tipple applied for probate of Mrs Potter's will. The sworn inventory of property disclosed that the Estate had a net value of approximately $194,000. No real property was listed among the Estate's assets. That appears to have been correct. Nor was there any reference to the Estate having any entitlement, contingent or otherwise, to any money upon Mr Potter vacating the Unit. The Court does not have enough information to determine whether there was an entitlement that should have been included in the inventory but, in making this observation, no criticism is intended of Mr Tipple.

  3. Probate of Mrs Potter's will was granted to Mr Tipple on 16 February 2017.

  4. The Estate later received Mrs Potter's half share of the funds in respect of the Unit, being approximately $102,000. That amount was calculated by reference to the Valuation, as appears from the correspondence extracted in paragraph [18] below.

  5. A dispute broke out between Warren, Nerolie and Kaylene. This was summarised in the statement which was provided to the Court in accordance with UCPR Pt 55, r 55.1:

“8.   The Executor is presently unable to make the said final distribution because a dispute has arisen between the Beneficiaries and the Estate in the following manner;

(a)   the Deceased lived with her then husband, Mr Walter Potter, in Unit XX at Avondale Retirement Village, Cooranbong, NSW. Mr Walter Potter was the registered proprietor of the Unit (“the Unit”);

(b)   Nerolie alleges in correspondence with the Executor and the Estate Solicitors (“the Correspondence”) that, in about late November 2016 (that is, after the death of the Deceased), Warren:

(i)   took from the Unit various personal documents (including letters that Nerolie sent to the Deceased) (“the Personal Documents”) and has refused to return them to Nerolie. He has instead used the Personal Documents to destroy the lives of Nerolie and Kaylene in various ways; and.

(ii)   Warren took more furniture from the house of the Deceased than he was entitled to take as a 1/3rd residuary beneficiary.

(“the Dispute”)

Warren denies taking the Personal Documents; he admits taking some furniture but denies taking more than his fair share.

(c)   Nerolie has stated in the Correspondence that the Personal Documents have no financial (as distinct from personal) value and the total value of the furniture of the Deceased at the time of her death was no more than about $3,000 to $4,000.

(d)   Nerolie has also raised in the Correspondence the prospect of her challenging the will of the Deceased, although the grounds are not clear.

(e)   The Estate’s Solicitors wrote to the Beneficiaries on 9 October 2017 and informed them, inter alia, that the Executor;

(i)   would not become involved in any further disputes regarding the personal property;

(ii)   would not make a final distribution unless satisfactory releases were obtained from each beneficiary: and

(iii)   would otherwise have to approach the Supreme Court of New South Wales for a direction as to what should happen.

(f)   Despite the above, Nerolie has repeatedly instructed the Executor that there should be no final distribution of the assets of the Estate. On 15 October 2017 she wrote that there should be no final distribution until:

(i)   Warren hands over the Personal Documents in his possession; and

(ii)   Warren consented to ''financial equalization regarding the furniture, by agreeing in writing, that Kaylene get $1,000 of his share of the money.’’

Otherwise, she will contest the Will on ground that are not specified.

(g)   Kaylene has, at various times, indicated in correspondence with the Executor and the Estate Solicitors that she supports the position of Nerolie.

(h)   Warren has informed the Executor that he wishes a final distribution of the Estate: and

(i)   The Estate’s Solicitors wrote to the Beneficiaries on 6 November 2017 and asked them to indicate whether the Executor should, inter alia;

(i)   proceed to make final distributions of the residue after paying the Estate legal expenses, accountancy and tax liabilities and make no further claim against the Estate or the Estate Executor; or

(ii)   apply to the Supreme Court to seek advice and direction as to the final distribution

(j)   Warren has agreed to step (i). Nerolie and Kaylene have refused to signed those documents in the circumstances set out in the Affidavit of Ivan Kent filed in this proceeding.”

  1. It is necessary to set out some of the correspondence which passed between the parties before these proceedings were commenced.

  2. On 2 November 2017, Mr Tipple's solicitor, Mr Kent, wrote to the Beneficiaries:

““AVONDALE RETIREMENT VILLAGE AND VALUATION

We attach documents received from the Avondale Retirement Village which include the Valuation relied on and we make the following observations from the material provided:

A.   The Valuation: please note that the Valuation of the unit was $250,000.00 before refurbishment and the refurbishment was estimated to cost between $80,000.00 - $100,000.00. Accordingly, the capital increase was $50,000.00 from the Valuation of $200,000.00 referred to in the correspondence.

The calculation for the capital value was set out in the letter to Mr & Mrs Potter from John Kingstone on 20 June 2016 and provided the example on page one. Using that example and that formula the capital value and repayment should be assessed as follows:

(a)   The unit was valued at $250,000.00 which was a 25% increase from the base valuation of $200,000.00.

(b)   The capital gain was on the further $110,000.00 and the formula was as follows:

$110,000.00 X 25% of the market value x 75% share = $20,625.00.

(c)   The payout should be as follows;

$75,000.00 (being the original $103,000.00 less entry fee of $28,000.00).

$110,000.00 (being the additional amount paid,

$20,625.00 being the capital gain.

Total: $205,625.00

(d)   Cost of valuation $350.00.

(e)   One half share payable to the Estate $102,637.50

We received the sum of $102,637.50 from ARV in our trust account.

Accordingly, the repayment appears to be in accordance with the Agreement and once we have:

1.   Receive advice on any tax liability and paid it;

2.   Receive a response from Warren regarding outstanding items;

3.   Obtain appropriate releases from the beneficiaries we will be in a position to finalise the Estate and distribute the balance to you as equal beneficiaries.

We look forward to hearing from you.”

  1. That letter included the Valuation. It appears that there was no complaint from anyone at that time about the Valuation being at an undervalue.

  2. On 6 November 2017, Mr Kent wrote to the Beneficiaries:

“We refer to previous correspondence and we write to you regarding costs in this matter.

Warren has raised the issue of the additional costs being raised.

As you can appreciate Mr Tipple and our firm do not offer a free service.

Mr Tipple decided to forgo charging a commission and some costs as previously advised in an attempt to resolve this. The additional costs have been incurred because of the conflict between the beneficiaries. The Public Trustee and our firm are entitled to charge for the work carried out.

If the beneficiaries do not give a release to distribute, Mr Tipple has no choice but apply to the Court. The Court may order the additional costs are paid by a specific beneficiary. However, in the meantime all additional work will be charged to the Estate by ourselves and Mr Tipple.

We look forward to hearing from you.”

  1. By another letter of the same date, Mr Kent wrote to the Beneficiaries, including:

“As requested, we obtained clarification from ARV about how the refund was calculated and we have provided a full report to you. The calculation appears to be in line with the agreement between your mother and ARV. We see no utility in spending more time and expense in obtaining any further information. The amount calculated and received was lower than you expected because it is apparent you were unaware of the Agreement and formula and thought the calculated capital gain would have been calculated on the whole sale price and did not make any allowance for the fact that between $80,000 to $100,000 was spent in refurbishing the unit before it was sold.

The Executor now wishes to finalise the Estate and make final distributions. The Executor is not prepared to spend any more time and incur expense in trying to settle personal issues between you.

Accordingly we enclose an Instruction form and request you return this within fourteen (14) days. You will note that this allows you to request one of 2 options:

(a)   either to proceed to the final distribution proceed; or

(b)   in the alternative request the Executor to approach the court for advice and direction.

Please delete the option you do not want. Again we warn you that unless all beneficiaries agree to proceeding to a final distribution the Executor will have little choice but to proceed to Court which will incur further costs and the court may require any beneficiary requesting that action to pay for it.

If we do not receive a properly signed instruction from you within fourteen (14) days we will assume you require the Executor to proceed with Court action.”

  1. The instruction form was:

“BENEFICIARY INSTRUCTION

Estate of the Late Helen Muriel Potter

I, NEROLIE PHILLIPS request Mr Stuart Tipple, the Estate Executor to:

1.   Proceed to make final distributions after paying the Estate legal expenses, accountancy and tax liabilities and upon receiving my 1/3 share of the residue and will make no further claim against the Estate or the Estate Executor.

OR

2.   To make an application to the Supreme Court to seek advice and direction as to the final distribution and confirm I have been advised that the Court may order that costs in making such an application are paid by me.

(DELETE EITHER OPTION 1 or 2)

Dated the    day of       2017.

……………………………..

NEROLIE PHILLIPS’

  1. On 15 November 2017, Nerolie responded to Mr Kent's office by email, which included:

“2.   I am opposed to the estate being finalized until the chattels and personal documents are distributed equitably.

3.   I don’t’ see what harm it does you to just leave the money sitting in the trust account long term. That won’t cost you any money. I know of an estate where that happened. A man who lives in the next suburb to me, who came from England, was not told of his mother’s death until 7 years after she died. His share of the estate stayed in the solicitor’s trust account for 7 years and after that time the solicitor realized he would have to locate the beneficiary and did so. Until the 7 year mark, he didn’t bother – simply just left the money in the trust account. Why can’t you do the same?

…

6.   There is no reason to just make an application to the court regarding paying out the estate – both Kaylene and I are agreed to just let the money sit there, and it doesn’t do you any harm or create any problems for you.

7.   Because Warren stole my full statement of assets, including all my bank account details, I have changed all of my bank accounts, so you no longer have my bank details. I am not prepared to disclose my bank details at this point in time.”

  1. Nerolie subsequently submitted a form of the beneficiary instruction to Mr Kent which Nerolie had significantly amended by deleting the alternative instructions proposed by Mr Kent (see paragraph [22] above) and inserting:

“N.B. I oppose any distribution of the estate until equalization money regarding uneven distribution of furniture agreed upon, and the chattels divided in accordance with the will. I have written to Belmont Police re theft of items from Mum’s house on 28/11/16, and will follow up once I can get hold of Senior Constable Matt G(untranscribable). I remind you Kaylene & I opposed distribution of the interim payment, and the fact you paid $60,000 to Warren creates a huge problem if I am granted leave to contest the will out of time. Please do not make the problem bigger.

Nerolie Phillips 16/11/17”

  1. On 26 November 2017, Warren responded to Mr Kent by letter. :

“To the Executor of the late Helen Potter:

Dear sir,

Thank you for your letter sent to me on 15 November 2017, I am pleased that the Executor now wishes to finalise the Estate and make final distributions.

I am also thankful that the "Executor is not prepared to spend any more time and incur expense in trying to settle personal issues …”. I have not initiated any complaints in relation to personal issues regarding my sisters but have merely responded to and answered the Executors questions in response to my sisters repetitive and unfounded complaints. Those personal issues are not mine and I have certainly been concerned in relation to the costs generated by my sisters actions but I felt reassured by the Executors letter to me dated 29 June 2017 in which Mr Tipple stated to me at Point 1 in the letter that he had advised Nerolie that if she continues to write to Brennan Tipple Partners then any work that is carried out in that regard will be charged to her benefit in the estate.

My mothers estate is small and she went without many things in life in the hope of providing for her children when she passed away. Her will was that there be no disputes when she passed away and that is important to me. Therefore I am not interested in doing anything that could raise costs further, I am not interested in bringing up personal issues with you or having any disputes with anyone and I am not interested in having any application made to the Supreme Court or to make any other claim.

I am now looking forward to the Executor finalising the Estate and making final distributions.”

  1. That letter was accompanied by this instruction signed by Warren:

“I, WARREN PHILLIPS request Mr Stuart Tipple, the Estate Executor to personally proceed to make final distributions after paying the Estate legal expenses, accountancy and tax liabilities and upon receiving my share of the residue I am not intending to make further claim against the Estate or the Executor.”

  1. On 6 February 2018, Mr Kent wrote a letter to the beneficiaries which included:

“We advise the following:

1.   Warren has confirmed he wants to proceed to a settlement and final distribution;

2.   Nerolie has requested Warren respond to the matters raised in the attached letter and Inventory so Warren if you wish to respond please do so. We will forward this directly to David Potter for his response.

3.   Kaylene has not responded.

Unhappily, it appears the Executor will have little choice but to make the foreshadowed application to the Court.”

  1. On 22 May 2018, Mr Kent wrote a letter in identical terms to Nerolie and Kaylene which included (emphasis in original):

“We have briefed Mr Menadue to prepare the application to the Supreme Court and attach his advice.

As you will note the advice confirms that there is no valid reason to delay this matter but unless the Executor receives the assurance of your consent he understandably wants to obtain Court Orders.

Warren has already provided his consent and we are waiting on consents from Nerolie and Kaylene. Nerolie has refused to give her details to us or the Accountant to allow the final tax return to be lodged.

This is your LAST AND FINAL WARNING.

UNLESS WE RECEIVE SIGNED CONSENTS (Enclosed) AND THE INFORMATION REQUIRED FROM YOU within 14 days the application will be completed and filed in Court.”

  1. These proceedings were commenced by summons filed on 17 December 2018.

  2. On 26 February 2019, the proceedings were fixed for hearing before me on 18 July 2019. While the proceedings were proceedings for judicial advice, so that the Beneficiaries had not been joined as parties, they were all on notice of the proceedings.

  3. Having received the file and noted the nature of the dispute and the size of the Estate, I ordered that a directions hearing take place before me on 26 June 2019. On that occasion, Mr Menadue appeared for Mr Tipple, and Nerolie and Kaylene appeared by telephone. What emerged at that directions hearing was that what might be termed the original dispute concerning the property said to have been taken by Warren (see paragraph [16] above) was no longer pressed by Nerolie or Kaylene.

  4. However, Nerolie asserted that there were other assets of Mrs Potter that Mr Tipple had not located and expressed her concerns about the Valuation being incorrect. Nerolie had commenced proceedings in the NSW Civil and Administrative Tribunal (“NCAT”) against the proprietor of the retirement village in which the Unit had been located, but had been told that she did not have standing to bring those proceedings because she was not the executor of the Estate. As it happens, those proceedings in NCAT are listed for further directions tomorrow. That has presumably been done because it was known that these proceedings would be heard today.

  5. At the directions hearing, Kaylene said that she did not want these proceedings to go to a hearing, but that she supported whatever steps Nerolie wished to take, in particular in relation to the Valuation.

  6. I made these orders at the directions hearing on 26 June 2019:

“1.   Vacate the usual order for hearing with the intention that no party is required to provide a Court Book or any documentation to the Court in advance of the hearing, unless that party wishes to do so and at his or her own risk as to the costs.

2.   Direct the applicant executor to serve a copy of the Probate of the will of the late Helen Muriel Potter on each of the beneficiaries, being Nerolie Helen Phillips, Kaylene Patricia Cook, and Warren Franklin Phillips by 28 June 2019.

3.   Direct any beneficiary, who wishes to do so, that on or before 5 July 2019, that beneficiary should provide to the solicitor for the applicant a list of all steps which that beneficiary considers the applicant should take in relation to the administration of the estate, including inquiries to be made in relation to the location of any assets of the deceased or steps to be taken in connection with the Valuation of the deceased’s unit.

4.   Direct the applicant by himself or his solicitor to conduct a telephone conference with any beneficiary who wishes to participate in that conference by no later than 12 July 2019 in an endeavour to resolve the dispute between the parties as to what is required to complete the administration of the estate or, in default of such agreement, to narrow the matters in relation to which the applicant wishes to seek judicial advice. …”

  1. The parties met by telephone as was contemplated by the directions which I had made.

  2. On 15 July 2019 Mr Tipple wrote to the Beneficiaries:

“Based upon your last email to Mr Tipple, we understand that the only outstanding matters are:

(a) Whether or not the executor will give you the power to pursue the NCAT action against the retirement village;

(b)   Whether the Executor’s legal and administrative costs should be paid out of the whole Estate on an indemnity basis or only the portions of Nerolie and Kaylene, or some other basis.

As regards (a), Mr Tipple has taken the view that an NCAT action would be most improvident from the point of view of the Estate. It could be expensive and you have not provided any evidence that it would be successful and any potential recovery even if it succeeded may be small (particularly in the light of the fact that half of any recovery would to go to the Estate of Walter). It would also delay the finalisation of the Estate. Indeed, there is a danger that the costs of the action could diminish any distribution. This is because NCAT is a jurisdiction which can award costs against an unsuccessful litigant; Plus, if the executor brought the action in NCAT he would be entitled to deduct HIS costs from the estate (which could well end up being more than the distributable amount).

Despite the above, Mr Tipple has, with great indulgence, been prepared to give you a power of attorney to pursue such an action on various conditions, including that you give an indemnity and your share of the estate is retained in trust to support that indemnity. As Mr Tipple would be personally liable for any costs order made against you, or any disbursements which you incur, that is wholly understandable.

Mr Tipple is not prepared to provide that power of attorney without that comfort and your agreement that you accept the NCAT decision will not appeal. There would also have to be a no disparagement clause in relation to Mr Tipple.

As there appears to be no agreement in relation to the NCAT issue, please confirm that the Court should make the following orders on Thursday:

1.   The Court notes that question 1(a) in the Statement of Facts is amended to read: “(a) whether the Plaintiff has a duty to make any further inquiries or take any further steps in relation to the dispute referred to in paragraph 8(b) of the Statement of Facts or the assets or potential assets of the Estate of the Late Helen Muriel Potter including the value of her retirement village home.”

2.   The Court orders that its answer to Question 1 (a) is “no” and the Plaintiff would be justified in now completing the administration of the Estate and making a final distribution of the Estate of the Late Helen Muriel Potter to the beneficiaries.

As regards the question of costs, the correspondence before the court clearly shows that you and Kaylene made no concessions in relation to the dispute over property until AFTER the summons was filed. Further, you then substituted other issues (the alleged need to gather in unclaimed assets/the valuation of the retirement village property). His Honour, the Judge at the last mention indicated he is likely to order the costs be shared equally between the beneficiaries if the determination on Thursday is by consent (see 1 and 2 above). However, if the Judge is forced to engage in a contested hearing on Thursday orders could be made that you and Kaylene exclusively pay the costs of the proceedings.”

  1. Kaylene's position was thereafter made clear in an email which she sent to Mr Kent on 15 July 2019 in response to his letter reproduced in the preceding paragraph:

“I received your email dated 15th July 2019.

I thought that NCAT didn't charge anything to the estate, and assumed Nerolie was paying for this as she has with everything to receive justice. Also I have said repeatedly that I have dropped everything, which means even the unfair valuation of mum's unit, so why do you still state that money should be taken from my share of the estate!

I want the distribution of the rest of mum's estate now, even though I have said that I would like Nerolie to have the authority to take the matter of the valuation further. If she wishes to take this on for justice for my mother, this should be up to her, but I don't. I just want this finished.

I had already told you that I have dropped everything, yet you still send me a letter saying that I will have to pay the costs in the court case. I mentioned this in the teleconference with the judge and the teleconference with you Mr Tipple and the Barrister you felt necessary to employ by my mother. Please stop making out that I still haven't agreed to stop this unnecessary court case.

The Judge said unless we worked these issues out he would charge me for the costs, yet I have repeatedly said that I have dropped everything, yet you continue to threaten me. At least I have made more steps to resolving this than Mr Tipple has.

I think it is right and fair that my sister Nerolie can continue to fight for mums estate, but I do not want to be involved with this in anyway except to help preserve some of the money that my mother so desperately wanted to give to all three of her children.”

  1. When the matter came on for hearing before me today, the position between the parties appeared to be:

  1. Nerolie and Kaylene no longer required Mr Tipple to take any steps to resolve the dispute referred to in paragraph 8(b) of the statement accompanying the summons (set out in paragraph [16] above).

  2. Kaylene no longer maintained that there were any unclaimed assets of the Estate which Mr Tipple should locate. Nerolie ultimately came to the same position.

  3. Nerolie (though not Kaylene) continued to insist that steps should be taken in NCAT to sue the operator of the retirement village in relation to the Valuation. Nerolie's position was that if Mr Tipple did not wish to take that action, then she should be authorised by him to do so.

  1. As a result of the change in position of the parties, Mr Tipple submitted that the questions which the Court should answer ought to be:

“1.   The Court notes that question 1(a) in the Statement of Facts is amended to read:

“1.   The opinion, advice and direction of the court is sought on the following questions:

(a)   whether the Plaintiff has a duty to make any further inquiries or take any further steps in relation to:

(i)   the dispute referred to in paragraph 8(b) of the Statement of Facts; or

(ii)   the assets or potential assets of the Estate of the Late Helen Muriel Potter; or

(iii)   the value of her retirement village home or the amount which the Estate received with respect to it.”

2.   The Court orders that its answer to Amended question 1(a)(i) to (iii) is “no” and the Plaintiff would be justified in now completing the administration of the Estate of the Late Helen Muriel Potter and making a final distribution of the Estate to the beneficiaries.”

Resolution

  1. I commence this part of the reasons by recording that Nerolie applied at the outset of the hearing for the summons to be dismissed. She did so on the basis of a concern that these proceedings were somehow "illegal" because the Court had been misled in the inventory that had accompanied the original probate application by the omission of any reference to the Unit. On that topic, I repeat what I have said in paragraph [13] above.

  2. In any event, and with respect, Nerolie's application was misconceived. Even if there had been an error in the sworn inventory of property, that would not have been a reason to dismiss the summons. There was no dispute that the money to which the Estate was entitled in respect of the Unit had been received and had been properly accounted for by Mr Tipple, subject only to Nerolie's strongly expressed belief that the Valuation should be challenged.

  3. Insofar as the question of challenging the Valuation is concerned, the Court concludes that Mr Tipple would be justified in taking no further action in relation to the Valuation and that he should proceed to administer the Estate. This is for four reasons.

  4. First, Nerolie submitted that there were some inaccuracies in the Valuation, including a description that suggested there was no “car accommodation” (when there was, and in circumstances where the Valuation included a picture of the garage) and as to the floor space of the Unit. There was no evidence before the Court that would enable the Court to find that those were in fact errors given that the garage appeared to be being used for storage. Even if they were errors, having read the Valuation I find they would have been immaterial. The Valuation is regular on its face and there is nothing in it which it could be said should have put Mr Tipple on some form of inquiry.

  5. Second, and most importantly, there is no evidence to support Nerolie's contention that the Valuation is wrong. With respect, what she put to the Court on this question were no more than assertions from the bar table. When I asked Nerolie why she had not taken any steps to retain a valuer at least to provide some form of report to justify her position that the Valuation was wrong, she was unable to offer any satisfactory explanation. While, as I will shortly indicate, I think her belief as to what such a new valuation report would cost is unrealistic, her lack of explanation is all the more striking when one takes into account that she told me she believed getting a new valuation to demonstrate the error in the Valuation would only cost $450.

  6. Third, compared to the risks involved, even if Nerolie were right, there would be no real benefit to the Estate warranting the time and expense that would be incurred in pursuing the matter when compared with the desirability of the prompt, final administration of the Estate.

  7. During the course of the hearing I asked the parties to see if they could agree what the impact of an increased valuation would be, having regard to the formula used by the operator of the retirement village to determine the amount that would be payable to the Estate (as to the formula, see paragraph [18] above). That was done, and the parties agreed that if the correct valuation were $350,000 this would result in an approximately $20,000 benefit to the Estate; if the correct valuation were $400,000 this would result in an approximately $30,000 benefit to the Estate.

  8. This prospect has to be measured against at least these matters:

  1. A proper retrospective expert valuation report of the kind that would be required for legal proceedings would have to be obtained. I do not think there would be any real difference between the type of such valuation that would be required for the proceedings in NCAT and the type of valuation that this Court is familiar with seeing in valuation disputes. While there was no evidence before me on this topic, I am prepared to infer, on the basis of my own experience in valuation cases while at the Bar and as a judge, that some thousands of dollars would probably have to be spent to obtain a suitable valuation to prosecute the type of claim which Nerolie said should be made. Her belief that this could be done for a few hundred dollars is, with respect, unrealistic.

  2. Mr Tipple and Mr Kent (or both of them) could reasonably be expected to incur costs that would be visited on the Estate in the prosecution of any such claim, whether by time spent trying to negotiate a settlement with the retirement village operator or in the proceedings in NCAT.

  3. If the claim failed, it remained possible that NCAT could make an adverse costs order against the Estate, notwithstanding the primary position of NCAT as a no-costs jurisdiction.

  1. Fourth, as appears in paragraph [36] above, Mr Tipple had offered to appoint Nerolie as the attorney for the Estate to prosecute proceedings in NCAT in relation to the Valuation, provided that she agreed to indemnify the Estate by leaving her remaining share of the Estate in the Estate's trust account to meet any costs that might be visited on the Estate. I asked Nerolie more than once whether she was prepared to agree to such an arrangement and to give such indemnity. More than once she replied that she was not prepared to do so. In the absence of her willingness to provide an indemnity to the Estate, supported by leaving her share of the balance of the Estate in the Estate trust account, Mr Tipple is justified in not pursuing any further the question of appointing Nerolie to prosecute the NCAT proceedings on behalf of the Estate.

  2. What I have said disposes of the main issue in dispute between the parties. The other questions which the Court has been asked to answer relate to matters that are no longer pressed by either Nerolie or Kaylene. However, I accept Mr Menadue's submission that, for more abundant caution, the Court should answer those questions so a line can be definitely drawn under those issue as between the Beneficiaries and the Estate.

Costs

  1. Mr Menadue applied for an order that Mr Tipple have his costs of these proceedings out of the Estate on the trustee basis, and for a special order that those costs be borne by Nerolie’s and Kaylene's respective shares of the balance of the Estate. Mr Menadue accepted that, as the evidence had fallen out, it would be appropriate to apportion the liability for those costs between Nerolie and Kaylene, with Nerolie to bear the greater share.

  2. This application was properly brought by Mr Tipple. As the correspondence which I have extracted above demonstrates, Mr Tipple did all he could to avoid the need for these proceedings and warned Nerolie and Kaylene, more than once, of the risk that they may be ordered to bear the Estate's costs of the proceedings.

  3. On any view, and in particular by reference to the correspondence set out in paragraphs [25] and [26] above, Warren's share of the balance of the Estate should not bear any part of the costs of these proceedings. In reaching that conclusion, I have not overlooked Nerolie and Kaylene's submission that Warren should also be responsible for some of the costs because, in some sense, this dispute was really Warren's fault as is set out in paragraph [16] above.

  4. I do not accept that submission. Prior to the commencement of these proceedings, Warren made it clear that he was content for the Estate to be administered and did not wish to take any issue with what Mr Tipple had done or ought to do (see paragraphs [25] and [26] above). It would be most unfair for his share of the balance of the Estate to be reduced by the costs of these proceedings.

  5. The correspondence and history of the proceedings which I have set out above demonstrates that the issues which have precipitated these proceedings were primarily driven by Nerolie. She was, to some extent, supported in that by Kaylene. However, in fairness to Kaylene, it is also clear (see the correspondence in paragraph [37] above) that at least after the directions hearing Kaylene wished to have no further part in the proceedings and wanted them to come to an end.

  6. The evidence makes clear that both Kaylene and Nerolie were aware of the risk they bore in relation to costs. Kaylene said that she had not received the letter which I have set out in paragraph [28] above. Nevertheless, she affirmed in response to an answer from me that she had understood that she was at risk as to costs but "never thought it would come to this."

  1. In those circumstances I am satisfied that it is proper for Nerolie's and Kaylene's remaining shares in the Estate to bear Mr Tipple's costs of these proceedings. To her credit, Nerolie has agreed that if the Court came to this view, in order to reflect their respective roles her (Nerolie’s) share should bear three-quarters of those costs and Kaylene's only one-quarter.

Conclusion

  1. The opinion, advice and direction of the Court on the following questions is:

  1. Whether the plaintiff has a duty to make any further inquiries or take any further steps in relation to:

  1. the dispute referred to paragraph 8(b) of the statement of facts - NO; or

  2. the assets or potential assets of the Estate of the late Helen Muriel Potter (the “Estate”) - NO; or

  3. the value of her retirement village home or the amount which the Estate received with respect to it - NO.

  1. The plaintiff's costs of the proceedings be paid out of the Estate on the trustee basis.

  2. That Nerolie Phillips and Kaylene Cook be joined to the proceedings as the first and second defendant respectively.

  3. That the costs referred to in order 2 be borne as follows:

  1. as to three-quarters from the share of the Estate owing to Nerolie Phillips; and

  2. as to one-quarter from the share of the Estate owing to Kaylene Cook.

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Decision last updated: 23 July 2019

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