SEE v HARDMAN & ANOR [2002] NSWSC 287

New South Wales Supreme Court

CITATION : SEE v HARDMAN & ANOR [2002] NSWSC 287 CURRENT JURISDICTION: EQUITY FILE NUMBER(S) : SC 3682 of 2001 HEARING DATE(S) : 20, 21, 22, 25, 26, 27 & 28/3/02 JUDGMENT DATE : 12 April 2002

PARTIES : Louise Mary See - Plaintiff William Patrick Hardman - Defendant JUDGMENT OF : Bryson J at 1

COUNSEL : Oakes SC and Fendekian - Plaintiff Whittle SC and BJ Burke - Defendant SOLICITORS : Watson & Watson - Plaintiff Hickson Wisewoulds - Defendant CATCHWORDS : TRUSTS and TRUSTEES - removal of trustee - application for removal of trustee of will on grounds of failures to investigate possible claims arising out of transactions by testatrix - review of information available to trustee and to court - no reasonable basis for supposed claims - removal of trustee refused. - WILLS PROBATE and ADMINISTRATION - Executor - removal of executor - removal refused. Miller v. Cameron (1936) 54 CLR 572 Letterstedt v. Broers & Anor (1884) 9 App Cas 371 Hunter v. Hunter & Anor [1938] NZLR 520 McLean v. Burns Phillip Trustee Co. (1985) 2 NSWLR 623 CASES CITED : Pope v. DRP Nominees Pty Ltd (1999) 74 SASR 78 Donowa v. Caddell (Court of Appeal Unreported 2 June 1980). Mavrideros v. Mack (1998) 45 NSWLR 80 Bates v. Messner (1967) 67 SR (NSW) 187 In the Goods of Loveday [1900] P 154 DECISION : Judgment for defendant - see [83]

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

BRYSON J

FRIDAY 12 APRIL 2002

3682/01 LOUISE MARY SEE v. WILLIAM PATRICK HARDMAN JUDGMENT 1 HIS HONOUR: Florence Amy Hardman of Balmain, hotel proprietor, aged 83 years, died at St Vincent's Private Hospital Darlinghurst on 25 May 2000 and probate of her last will dated 24 March 2000 was granted by this Court on 25 July 2000 to the defendant William Patrick Hardman senior, her only surviving son. 2 The will revoked all previous dispositions and appointed the defendant trustee and executor. By cl.3 Mrs Hardman gave her jewellery to her three daughters in equal shares. By cl.4 Mrs Hardman left the freehold of the Unity Hall Hotel at 292-294 Darling Street Balmain to her four surviving children in equal shares as tenants in common. The plaintiff, the defendant and their sisters Mrs Bernadette Deane and Mrs Maree Bell are the beneficiaries of this gift. The gift was "… subject nevertheless to any lease or agreement to grant a lease which I may have entered into in respect of the said property and subject to any mortgage which I may give or have given in order to secure borrowings of William Patrick Hardman (junior)". William Patrick Hardman junior, who was born in 1972, is the grandson of Mrs Hardman and the son of the defendant. Clause 5 of the Will gave the rest and residue of the estate to her trustee to convert into money and divide the proceeds of conversion after payment of debts and funeral expenses into five equal shares; one share to each of her surviving children and the fifth share to be divided among her surviving grandchildren. There are seventeen surviving grandchildren, including Mr Hardman junior, and they are not parties to these proceedings. The property of the deceased shown in the probate inventory includes the Unity Hall Hotel in Balmain, a home-unit in Coolangatta Queensland, money in bank accounts, a motor car, a life insurance policy, shareholdings in two public companies and 1000 shares in Holilol Pty Ltd the value of which was shown in the probate inventory at $172,000. The assets which the issues in these proceedings most concern are the Unity Hall Hotel and the shares in Holilol Pty Ltd. 3 Holilol was formed in 1990 and became the owner of the Hotelier's licence in that year. A search of registered particulars shows that in the last months of Mrs Hardman's life its principal place of business was the Unity Hall Hotel. Its directors were Mrs Florence Hardman who became a director in 1990, Mr Hardman junior who became a director in 1995 and Mr Francis Robert Larosa, who became a director on 23 May 2000, two days before Mrs Hardman's death. Mrs Hardman was Secretary of the company and had been since 1990. The company had $1000 issued shares on which $1000 had been paid; according to the registered particulars Mrs Hardman was the holder and beneficial owner of 999 shares and Mr Hardman junior was the holder and beneficial owner of one share; this is slightly different to the probate inventory. 4 Mrs Hardman granted a General Power of Attorney to Mr Hardman junior on 24 March 2000. On 24 March 2000 Mrs Hardman made her last will, executed the power of attorney and swore an affidavit verifying the application to transfer the Hotelier's licence, all in the presence of Mr Osburg, solicitor of Messrs Hicksons. This Power was in a standard form and extended to authorising execution of an assurance or doing any act whereby a benefit was conferred on the attorney. It was an enduring power in case of loss of capacity through unsoundness of mind; there is no evidence that that ever happened. The power of attorney was registered in the Land Titles Office Book 4273 No. 291 on 19 May 2000. 5 On 19 April 2000 Mrs Hardman attended a meeting with Mr Peter Robinson at Westpac; also present were Mr Osburg, Mr Hardman junior and Mr McGlynn. At the meeting security documents relating to Mr Hardman junior's application for finance were signed, and Mrs Hardman signed the guarantee and indemnity as guarantor for Hawksun in favour of Westpac. Other documents of the same date are a mortgage by Hawksun to Westpac of the lease (which had not yet been granted) and a fixed and floating charge by Hawksun to Westpac. That meeting took place early in the day and later in the day Mrs Hardman travelled to Brisbane, where she visited the defendant and his family and remained until she returned to Sydney on 29 April. Mrs Hardman was last admitted to hospital on 16 May, and remained there until her death. On and after 22 May she was incapable of communication. She did not participate in the events of 23 and 24 May. 6 Mrs Hardman was one of the parties to an agreement in writing dated 23 May 2000. The parties were Holilol referred to as the vendor, Hawksun Pty Ltd referred to as the purchaser, Mr Hardman junior referred to as the covenantor and Mrs Hardman referred to as the licensee. Hawksun Pty Ltd was and is a company wholly controlled by Mr Hardman junior. The recitals include a statement that Holilol was presently carrying on business as hotelier at the Unity Hall Hotel, and that Mrs Hardman held the hotelier's licence, and that she held three poker machine permits of which Holilol was the beneficial owner. The facts so recited are not in dispute in these proceedings. The recitals do not say in terms that Holilol was the beneficial owner of the hotelier's licence but the agreement provides for Holilol to sell and dispose of assets including the hotelier's licence as if it was fully entitled to do so. Recitals also state to the effect that Holilol had agreed to sell to Hawksun the business, the furniture, plant, stock, goodwill and hotelier's licence, and that Mr Hardman junior was a director of Hawksun Pty Ltd. The total purchase price was $4,203,000 which "… must be paid in cash on completion which must take place on or before 24 May 2000", the day after the date of the agreement. The purchase price was allocated as follows:-