Court of Appeal Supreme Court New South Wales Medium Neutral Citation: Turner v O'Bryan-Turner (No 2) [2022] NSWCA 44 Hearing dates: On the papers Date of orders: 25 March 2022 Decision date: 25 March 2022 Before: Meagher JA; White JA Decision: See [36] for orders Catchwords: JUDGMENTS AND ORDERS – Orders to give effect to reasons in principal judgment Legislation Cited: Bankruptcy Act 1966 (Cth), s 107 Civil Procedure Act 2005 (NSW), s 101 Competition and Consumer Act 2010 (Cth) Conveyancing Act 1919 (NSW), s 37A; s 66G Probate and Administration Act 1898 (NSW), s 46C; Pt 1 of Sch 3 Supreme Court Act 1970 (NSW), s 45AA(1) Uniform Civil Procedure Rules, r 36.16 Cases Cited: Turner v O'Bryan-Turner [2022] NSWCA 23 Lewis Securities Ltd (in liq) v Carter (No 2) [2018] NSWCA 159 Texts Cited: P Taylor SC (ed), Ritchie's Uniform Civil Procedure NSW, LexisNexis Butterworths Category: Consequential orders Parties: Owen John Turner by his tutor Nicholas John Turner (First Appellant) Allawah Pastoral Pty Ltd (Second Appellant) Nicholas John Turner (Third Appellant) Angelena May O'Bryan in her capacity as the executrix of the estate of Wendy Joan O'Bryan-Turner (First Respondent) David John Turner (Second Respondent) Karl John Turner (Third Respondent) Registrar General of New South Wales (Fourth Respondent) Owen John Turner by his tutor Angelena May O'Bryan (Fifth Respondent) Representation: Counsel: J Evans QC with J Svehla (Appellants) D Pritchard SC with A Macauley (Respondents) Solicitors: O'Loughlin Westhoff (Appellants) Turner Freeman Lawyers (First to Third Respondents) Office of the Registrar General (Fourth Respondent) File Number(s): 2021/36540 Publication restriction: Nil Decision under appeal Court or tribunal: Supreme Court of New South Wales Jurisdiction: Equity Division Citation: [2021] NSWSC 5; [2021] NSWSC 101; [2021] NSWSC 338 Date of Decision: 12 January, 18 February and 8 April 2021 Before: Ward CJ in Eq File Number(s): 2017/80121 [Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.] Judgment 1. THE COURT: Pursuant to the orders of this Court of 24 February 2022 (Turner v O'Bryan-Turner [2022] NSWCA 23), the parties have brought in proposed short minutes of order in accordance with the reasons of the Court. There is a substantial measure of agreement. The parties are divided on the following issues, which should be resolved as indicated below. 2. The first point of difference concerns the costs order to be made as to John's proceedings against Wendy's estate in the court below. White JA proposed (at [154]): "Angelena, in her capacity as Wendy's executrix, should be ordered to pay John's costs of the proceedings below, so far as such costs relate to the proceedings against Wendy and her." 1. The primary judge dealt with those costs in her judgment of 18 February 2021 (Turner v O'Bryan-Turner (No 2) [2021] NSWSC 101). Her Honour said: "[97] As to the 2017 Proceeding, I consider that costs should follow the respective 'events'. Wendy's estate should be ordered to pay the costs of the Nick interests so far as they relate to the claims ultimately pressed against her and which succeeded. However, I consider that a broad brush discount should be applied to reflect the abandonment of various claims that were made against Wendy and to reflect the fact that, by the time of the final hearing, the claims against Wendy which did succeed had to all intents and purposes been conceded so that, in practical terms, the final hearing so far as the 2017 Proceeding was concerned was largely focussed on the position of the David/Karl interests. Accordingly, and accepting that this is an impressionistic exercise, I consider that Wendy's estate should pay 20% of the Nick interests' costs of the 2017 Proceeding." 1. In the hearing below, Angelena, as Wendy's executrix, had conceded Wendy's breach of fiduciary duty as the primary judge acknowledged. The principal dispute in the light of that concession, so far as Wendy's estate was concerned, was the appropriate remedy. On that issue Angelena succeeded in persuading the primary judge there should not be a declaration that Wendy had held, and that Angelena now held, Wendy's interest in the Woolharinga, Nellyvale and Sunrise properties on trust for John and that John was not entitled to equitable compensation from Wendy's estate for Wendy's breach of fiduciary duty. That conclusion has been overturned on appeal. 2. The primary judge's order that Wendy's estate pay 20% of John's costs of the 2017 proceeding must have been informed by her Honour's decision on the relief to be granted for the ultimately acknowledged breach by Wendy of her fiduciary duties. 3. The primary judge noted the submissions made for Angelena that the overwhelming bulk of the 2017 proceeding was concerned with issues other than two issues on which John succeeded against Wendy, being the absence of power under the enduring power of attorney and breach of fiduciary duty (at [32] of Turner v O'Bryan-Turner (No 2) [2021] NSWSC 101). Her Honour also noted that John abandoned at the hearing claims under the Competition and Consumer Act 2010 (Cth) and a claim for breach of s 37A of the Conveyancing Act 1919 (NSW) and a claim for breach of a common law duty of care and failed in his claim for the taking of accounts (at [33]). 4. Of the abandoned and unsuccessful claims, only the claim for the taking of an account appears to have occupied any material time. The appeal from the primary judge's refusal to order the taking of accounts was dismissed, but on the ground that on the making of a declaration that she held her interest in the three properties on trust for John with consequential relief, and on the ordering of equitable compensation of $3,440,000, having regard to the value of Wendy's estate, there would be no point in ordering the taking of further accounts. 5. The 2017 litigation was occasioned by Wendy's breach of her duty as John's attorney. Neither the issue concerning the taking of accounts on which Wendy ultimately succeeded on appeal, albeit not for the reasons of the primary judge, nor the claims abandoned by John at trial, warrant any different order than that Angelena, in her capacity as executrix of Wendy's estate, pay John's costs of the proceedings below. 6. Accordingly, order 1(i) made on 18 February 2021 which relevantly provided: "…that Wendy's estate pay 20% of the Nick interests' costs of the 2017 Proceeding so far as those costs were identifiably referable to the claims brought against Wendy", should be set aside. 1. In lieu of that order the appellants proposed an order that: "…the first defendant…pay the first plaintiff's costs of proceedings 2017/80121, as agreed or assessed, so far as such costs relate to the proceedings against her or Wendy Joan O'Bryan-Turner." 1. The first defendant, Angelena, defended the proceedings in her capacity as executrix of Wendy's estate. There is no suggestion that she acted inappropriately in defending the proceedings and her success at trial would negative any such suggestion were it to be made. She can have no personal liability beyond the extent to which she is able to be indemnified out of Wendy's estate. 2. For these reasons we do not accept the submissions of either party as to the order that should be made in respect of Angelena's liability for costs of the proceedings below. The appropriate order as to the costs of the proceedings below is that: "The first defendant, in her capacity as executrix of the estate of the late Wendy O'Bryan-Turner, pay the first plaintiff's cost of proceedings 2017/80121 so far as such costs relate to the proceedings against her or Wendy Joan O'Bryan-Turner." 1. The second issue concerns the form of the order to be made in respect of Wendy's liability to pay equitable compensation to John. White JA said (at [152]) that it should be declared that, in the administration of Wendy's estate, John is entitled to prove as a creditor in the sum of $3,440,000. 2. The appellants propose that in proceeding 2017/80121 an order be made that "enter judgment against the first defendant in favour of the first plaintiff in the amount of $3,440,000". 3. The respondents proposed a declaration in the following terms: "Declare that in the administration of Wendy Joan O'Bryan-Turner's estate, the first plaintiff is entitled to prove as a creditor in the sum of $3,440,000 plus interest on that sum under s 101 of the Civil Procedure Act 2005 (NSW) with such interest to run from 12 January 2021." 1. The appellants submitted that the order for judgment against Angelena was sought to make certain that she was a judgment debtor and was said to be consistent with orders made previously by this court to give effect to an award of equitable compensation, referring to Lewis Securities Ltd (in liq) v Carter (No 2) [2018] NSWCA 159 at [68]. They also submitted that the order they propose was necessary to ensure that there was no difficulty with the application of s 101 of the Civil Procedure Act 2005 (NSW). That section relevantly provides that interest is payable on so much of the amount of a judgment as is from time to time unpaid. A judgment includes an order for payment of money (Civil Procedure Act 2005 (NSW) s 3). It does not include a declaration such as White JA proposed. The appellants noted that the respondents appeared to accept that s 101 should apply in principle. 2. Lewis Securities Ltd (in liq) v Carter (No 2) is irrelevant. There judgment was not sought or given against an executor of a wrongdoer. 3. An executor is liable to pay the deceased's debts out of the estate available to pay those debts before making any distribution of the estate. But the executor is not personally liable for the deceased's debts. Accordingly, it would not be appropriate to give judgment against Angelena for Wendy's liability to pay equitable compensation to John. It is for this reason that White JA proposed that the appropriate order be a declaration that John is entitled to prove as a creditor in Wendy's estate in the sum of $3,440,000. As he also said, this will mean that Wendy's estate is insolvent and is to be administered in accordance with s 46C and Pt 1 of Sch 3 to the Probate and Administration Act 1898 (NSW) (at [152]). This means that the estate is to be administered in bankruptcy. Subject to the priority given to funeral testamentary and administration expenses, the rights of unsecured creditors as to debts and liabilities under the law of bankruptcy are to be applied. In the unlikely event that there are available assets, after administration expenses, to pay any creditors, John's entitlement to interest on his debt is only that interest that is payable under the Bankruptcy Act 1966 (Cth) (Bankruptcy Act 1966 (Cth) s 107). 4. In our view the appropriate order is not that there be judgment against Angelena who is sued only in her capacity as executrix of Wendy's estate. The appropriate order is that which White JA proposed at [152] that it be declared that in the administration of Wendy's estate, John is entitled to prove as a creditor in the sum of $3,440,000. 5. The third issue concerns the sale of the jointly owned properties. The appellants propose orders as follows: ● order that the Properties be put up for sale as soon as practicable by public auction, with such sale to be conducted by a licensed real estate agent selected by the parties; ● order that the proceeds of sale of the Properties are to be applied as follows: - first, to the agent's commission, advertising and other costs and expenses of the sale; - second, in discharge of the debt secured by the registered mortgage in favour of National Australia Bank Ltd; - third, as a result of the declaration in paragraphs 3(a) and 3(b) above, 50% of the balance to the first plaintiff, and 50% of the balance to the second defendant. ● order that a Registrar of the Court be empowered to execute all such instruments and do all such things in the name of and on behalf of the first plaintiff as may be necessary in order to give effect to orders 3(e)-(g) above; ● grant liberty to the parties to approach a judge of the Equity Division for further orders, including an order under s 66G of the Conveyancing Act 1919 (NSW) for the sale of the Properties; 1. The respondents propose the following orders: ● grant liberty to the parties to approach the trial judge for further orders, including an order under s 66G of the Conveyancing Act 1919 (NSW), for the sale of the Properties; and ● in the first instance, stay the order in sub-paragraph (d) above for 28 days with a view to permitting the parties to approach the NSW Trustee and Guardian in respect of the future management of the first plaintiff's assets and affairs; and ● grant liberty to the parties to approach the trial judge to extend the stay referred to in sub-paragraph (g) above and any further and other consequential orders. 1. It is accepted that John lacks capacity to manage his financial affairs. Nick has been appointed as John's tutor for the purposes of this litigation. He is not John's financial manager. On the hearing of the appeal it appeared to be common ground that if John's appeal succeeded it would be necessary for a financial manager to be appointed and the parties proposed that the NSW Trustee and Guardian would be approached for that purpose. 2. It would be inappropriate for this Court to make an order as proposed by the appellants for the sale of the properties in which John has a beneficial interest in the absence of input from a financial manager, whomever that might be. It will be necessary for someone to be so appointed. 3. The appellants submit that as the undertaking and charge given by David and Karl are to be unwound, it will be necessary to ensure that liquid assets are expeditiously placed into John's name to ensure that his expenses are met. These are the kind of issues to which White JA referred (at [151]): "…if any application is required for the appointment of trustees for sale of those properties, or further interlocutory relief in respect of dealings with the properties, such application should be made to the Equity Division. The proceedings should be reserved for further consideration and there should be liberty to apply to the Equity Division accordingly". 1. That proposal appears to have been picked up by the respondents' proposed short minutes of order (third dot-point quoted above). 2. In respect of this issue we substantially agree with the orders proposed by the respondents. There are two incidental matters to be addressed. The respondents propose an order that the parties have liberty to approach the trial judge for further orders in relation to the sale of the properties. The trial judge has been appointed as President of the Court of Appeal. Accordingly it is appropriate that the order be amended to provide for the alternative of another judge of the Equity Division being nominated. That nomination would need to be made by the Chief Judge in Equity. 3. In the proposed order in the third dot-point quoted above, the word "for" should be added before "any further and other consequential orders". 4. The fourth issue concerns the costs of the appeal. The appellants propose the following orders: ● The first respondent is to pay the first appellant's costs of the appeal. ● The first appellant is to pay the second and third respondents' costs of the appeal. 1. The respondents propose orders that: ● The first respondent is to pay the appellants' cost of the appeal. ● The appellants are to pay the second and third respondents' costs of the appeal. 1. The issue apparently arises because there are three appellants, namely, John, Allawah Pastoral Pty Ltd and Nick. 2. Allawah Pastoral had no interest in the appeal, but nonetheless joined the appeal as the second appellant. Nick had no personal appeal. He was John's tutor and, as such, liable for costs (Ritchie's Uniform Civil Procedure NSW [7.15.30] and cases cited). 3. The respondents submit to an order that the first respondent (Angelena in her capacity as executrix of Wendy's estate) pay the appellants' costs of the appeal. They seek an order that "the appellants are to pay the second and third respondents' costs of the appeal". 4. No submissions have been made as to why Allawah Pastoral Pty Ltd, although joined as a second appellant, should not be liable for the costs of the appeal, even though the appeal did not concern it. If any such submissions can properly be advanced, they would have to be supported by evidence. Pursuant to Uniform Civil Procedure Rules, r 36.16, any such application can be made by notice of motion supported by affidavit within 14 days of the entry of costs orders. 5. The further costs incurred since the delivery of judgment on 24 February 2022 will form part of the costs of the appeal. Having regard to the parties' mixed success, there is no reason to make a separate order in relation to the further costs incurred since the delivery of reasons on 24 February 2022. 6. Since the delivery of reasons on 24 February 2022 McCallum JA has resigned as a judge and judge of appeal of this court in order to take up her appointment as Chief Justice of the Australian Capital Territory. The parties have consented to the making of final orders being completed by the remaining judges of appeal (Supreme Court Act 1970 (NSW), s 45AA(1)). 7. For these reasons, we make the following orders: 1. Appeal allowed in part. 2. In NSW Supreme Court proceedings 2017/80121: 1. set aside Order 2 made on 12 January 2021, Order 1(i) made on 18 February 2021, and Order 1 of the Orders made on 8 April 2021 by Ward CJ in Eq; 2. release the second and third defendants from the undertaking they gave to the Court on 8 April 2021, as recorded in the Schedule to the Reasons for Judgment of Turner v O'Bryan-Turner (No 3) [2021] NSWSC 338; and 3. to the extent not already discharged by order 2(a) above, discharge the charge over the first defendant's interest in Lot 3 in Deposited Plan 752121, Lots 83 to 85 in Deposited Plan 752075 and Lot 2 in Deposited Plan 828545, being the properties known as "Woolharinga", "Nellyvale", and "Sunrise" (the Properties), in favour of the first plaintiff, as recorded in the orders of 8 April 2021 and the Reasons for Judgment of Turner v O'Bryan-Turner (No 3) [2021] NSWSC 338 at [12]. 1. In lieu thereof, in NSW Supreme Court proceedings 2017/80121: 1. declare that Wendy Joan O'Bryan Turner held her interests in the Properties on constructive trust for the first plaintiff from the date on which she became a registered proprietor of each of the Properties; 2. declare that the first defendant, being the executrix of the estate of Wendy Joan O'Bryan Turner, holds her interests in the Properties on constructive trust for the first plaintiff; 3. declare that in the administration of Wendy Joan O'Bryan Turner's estate, the first plaintiff is entitled to prove as a creditor in the sum of $3,440,000; 4. subject to the consent of the National Australia Bank Ltd, as first registered mortgagee, being forthcoming, order the first defendant to transfer to the first plaintiff her interests in the Properties within 28 days of the NAB's consent; 5. order that a Registrar of the Court be empowered to execute all such instruments and do all such things in the name of and on behalf of the first plaintiff as may be necessary in order to give effect to order 3(d) above; 6. grant liberty to the parties to approach the trial judge or another judge of the Equity Division nominated by the Chief Judge in Equity for further orders, including an order under s 66G of the Conveyancing Act 1919 (NSW), for the sale of the Properties; and 7. in the first instance, stay the order in sub-paragraph (d) above for 28 days with a view to permitting the parties to approach the NSW Trustee and Guardian in respect of the future management of the first plaintiff's assets and affairs; 8. grant liberty to the parties to approach the trial judge to extend the stay referred to in sub-paragraph (g) above or another judge of the Equity Division nominated by the Chief Judge in Equity and for any further and other consequential orders; and 9. order that the first defendant, in her capacity as executrix of the estate of the late Wendy O'Bryan-Turner, pay the first plaintiff's cost of proceedings 2017/80121 so far as such costs relate to the proceedings against her or Wendy Joan O'Bryan-Turner. 1. The first respondent pay the appellants' costs of the appeal. 2. The appellants pay the second and third respondents' costs of the appeal. 3. Otherwise dismiss the appeal. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 25 March 2022