Gritzman v McRae [2022] NSWSC 745

Supreme Court New South Wales

Medium Neutral Citation: Gritzman v McRae [2022] NSWSC 745 Hearing dates: 13 – 16 December 2021 Date of orders: 8 June 2022 Decision date: 08 June 2022 Jurisdiction: Equity Before: Ward CJ in Eq Decision: 1. The grant of probate made on 4 July 2017 be revoked. 2. Letters of administration be granted to the plaintiff to administer the estate of the late Asher Mannie Osband and refer the file in this matter to the Probate Registrar to complete the grant of letters of administration. 3. The amount of $469,718.04 be paid out of Court to the plaintiff, representing the balance of 37.5% of the net proceeds from the sale of the Double Bay Property remaining after the funds already disbursed to the plaintiff from the funds held in Court. 4. The defendant pay the plaintiff interest on the sum of $889,718.04 (being 37.5% of the net proceeds from the sale of the Double Bay Property) from 13 October 2017 to the date of distributions made in respect of the plaintiff's share of those proceeds and for the balance up to the date of judgment, calculated at the rate prescribed by s 100 of the Civil Procedure Act 2005 (NSW). 5. The defendant pay the plaintiff equitable compensation of $163,125, representing the loss suffered by the plaintiff as a consequence of the sale of the Double Bay Property at an undervalue. 6. The defendant pay the plaintiff interest on the sum of $163,125 from 13 October 2017 to the date of judgment, calculated at the rate prescribed by s 100 of the Civil Procedure Act 2005 (NSW). 7. The defendant pay the plaintiff $484,552.89 in her capacity as administrator of the estate of the late Asher Mannie Osband in order to replenish funds improperly paid from the deceased's estate by the defendant. 8. The defendant pay the plaintiff in her capacity as administrator of the estate of the late Asher Mannie Osband interest on the sum of $484,552.89 calculated from the date of each such payment to the defendant out of the estate funds of the amounts comprised in this sum to the date of judgment, calculated at the rate prescribed by s 100 of the Civil Procedure Act 2005 (NSW). 9. The balance of the funds held by the Court are to be paid to the plaintiff, to be held by the plaintiff as trustee. 10. The defendant pay the plaintiff's costs of the proceeding on an indemnity basis. 11. Declare that the defendant is not entitled to be indemnified from the funds from the sale of the Double Bay Property, including but not limited to the interest of the deceased estate in those funds, in respect of his legal costs, or any other costs and expenses relating to this proceeding. Catchwords: EQUITY — Trusts and trustees — Constructive trusts — Common intention — Where there was a common intention between the plaintiff and the deceased that the plaintiff hold a proprietary interest in the property the subject of the will — Where defendant held property as constructive trustee for the benefit of the plaintiff — Where defendant sold property without consulting plaintiff, and transferred the proceeds of the sale to his personal bank account — Where defendant breached duties as constructive trustee SUCCESSION — Trusts and trustees — Breach of trustee's duties — Where defendant failed to keep proper accounts, to facilitate inspection of those accounts, and distributed estate funds otherwise than in accordance with fiduciary duties — Whether liability of defendant excused by operation of s 52 and 85 of Trustee Act 1925 (NSW) SUCCESSION — Executors and administrators — Proceedings against executors and administrators — Application for removal SUCCESSION — Construction — Whether the plaintiff's interest is subject to provisions in the will entitling the defendant to the income from investment of the proceeds of sale of property in which the plaintiff had an interest prior to the deceased's death Legislation Cited: Civil Procedure Act 2005 (NSW), s 100 Conveyancing Act 1919 (NSW), ss 23C, 54A, 66G Probate and Administration Act 1898 (NSW), ss 44(1), 66, 85 and 86 Trustee Act 1925 (NSW), ss 38(1A), 46(3), 52, 59(4), 70, 85 Trustees Act 1962 (WA), s 50 Uniform Civil Procedure Rules 2005 (NSW), r 14.14(2)(a) Cases Cited: Allen v Snyder [1977] 2 NSWLR 685 Amit Laundry Pty Ltd v Jain [2017] NSWSC 1495 Aon Risk Services Australia Ltd v Australian National University (2009) 239 CLR 175; [2009] HCA 27 Brambles Holdings Limited v Bathurst City Council (2001) 53 NSWLR 153; [2001] NSWCA 61 Broadway Plaza Investments Pty Ltd v Broadway Plaza Pty Ltd In the matter of Combined Projects (Arncliffe) Pty Ltd [2020] NSWSC 1778 Calverley v Green (1984) 155 CLR 242; [1984] HCA 81 Carr v Carr (1987) 8 NSWLR 492 Carruthers v Manning [2001] NSWSC 1130 Clay v Clay (1999) 20 WAR 427 Coorey v George (Supreme Court (NSW), Powell J, 27 February 1986, unrep) County Securities Pty Limited v Challenger Group [2008] NSWCA 193 Cowan v Scargill (1984) 2 All ER 750 Crossman v Sheahan [2016] NSWCA 200 Donis v Donis (2007) 19 VR 577; [2007] VSCA 89 Draper v British Optical Association [1938] 1 All ER 115 Fountain Selected Meats (Sales) Pty Ltd v International Produce Merchants Ltd (1988) 81 ALR 397; [1988] FCA 202 Frost v Bovaird [2012] FCAFC 60 Gibson v Holland (1865) LR 1 CP 1 Giumelli v Giumelli (1999) 196 CLR 101; [1999] HCA 10 Grant v Edwards [1986] Ch 638 Green v Green (1989) 17 NSWLR 343 Hancock v Reinhart (2015) 13 ASTLR 1; [2015] NSWSC 646 Hartigan Nominees Pty Ltd v Rydge (1992) 29 NSWLR 405 Ireland v Retallack (2011) 6 ASTLR 585; [2011] NSWSC 846 Juul v Northey [2010] NSWCA 211 King v Adams [2016] NSWSC 1798 Langford v Gascoyne (1805) 11 Ves 333; 32 ER 1116 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 Maelor Jones Investments (Noarlunga) Pty Ltd v Heywood-Smith (1989) 54 SASR 285 Mavrideros v Mack (1998) 45 NSWLR 80 Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13 Nguyen v Cosmopolitan Homes (NSW) Pty Ltd [2008] NSWCA 246 Nicol v Chant (1909) 7 CLR 569; [1909] HCA 4 Northey v Juul [2014] NSWSC 464 O'Regan v Hellstrom [2020] NSWSC 16 Partridge v Equity Trustees Executors & Agency Co Ltd (1947) 75 CLR 149; [1947] HCA 42 Personal Representatives of Tang Man Sit v Capacious Investments Ltd [1996] AC 514 Phillips v McCabe [2016] SASC 27 Priestley v Priestley [2017] NSWCA 155 Re Bowcock [1968] 2 NSWR 697 Re Cobcroft [2015] NSWSC 346 Re O'Callaghan [1972] VR 248 Salier v Watson [2014] NSWSC 237 Shepherd v Doolan [2005] NSWSC 42 Sidhu v Van Dyke (2014) 251 CLR 505; [2014] HCA 19 Spellson v George (1987) 11 NSWLR 300 Spencer v The Commonwealth (1907) 5 CLR 418 Toowoomba Foundry Pty Ltd v Commonwealth (1945) 71 CLR 545; [1945] HCA 15 Tsaknis as executor and trustee of the estate of Geoffrey Douglas Roland Lilburne (Dec) v Lilburne [2010] WASC 152 Worrall v Harford (1802) 8 Ves Jun 4; (1802) 32 ER 250 Wright v Stevens [2018] NSWSC 548 Wyman v Paterson [1900] AC 271 Youyang Pty Ltd v Minter Ellison Morris Fletcher (2003) 212 CLR 484; [2003] HCA 15 Texts Cited: G Jones, "Delegation by Trustees: A Reappraisal" (1959) 22 Modern Law Review 381 H Ford and W Lee, Laws of Trusts (4th ed, 2010, Thomson Reuters J Edelman, Gain-Based Damages: Contract, Tort, Equity and Intellectual Property (Hart Publishing, 2002) JD Heydon and MJ Leeming, Jacobs' Law of Trusts in Australia (8th ed, 2016, LexisNexis) Category: Principal judgment Parties: Rosie Gritzman (Plaintiff) Ranald Scott McRae (Defendant) Representation: Counsel: J Foley (Plaintiff) A Lakeman (Defendant) Solicitors: Phillip Silver & Associates Lawyers (Plaintiff) & Legal (Defendant) File Number(s): 2018/00051369 Publication restriction: Nil