New South Wales Supreme Court CITATION : Northey v Juul [2005] NSWSC 933 HEARING DATE(S) : 29/08/2005, 30/08/2005, 01/09/2005 JUDGMENT DATE : 16 September 2005 JURISDICTION : Equity Division JUDGMENT OF : Associate Justice Macready at 1 DECISION : Paragraph 57 CATCHWORDS : Succession - Executors and Administrators. - Application for accounts on the basis of wilful default. One wilful default established. No likelihood of other defaults. Limited order for an account on the basis of wilful default. Glazier v Australian Men's Health (No 2) [2001] NSWSC 6 Meehan & Ors v Glazier Holdings Pty Ltd [2002] NSWCA 22, 54 NSWLR Monty Financial Services Ltd & Anor v Delmo [1996] 1 VR 65 Plunkett v Bull (1915) 19 CLR 544 at 548-9 CASES CITED : Watson v Delaney (1991) 22 NSWLR 358 at 365 Cross on Evidence (7th Australian Edition) para. 15150 Clune v Collins Angus & Robertson Publishers Pty Ltd (1992) 25 IPR 246 Re Tebbs [1976] 2 All ER 858 PARTIES : Henry John Northey v Jennifer Frances Juul and James Knight Northey (Estate of the late Betty Frances Northey) FILE NUMBER(S) : SC 4408/2004 Ms R. Winfield for plaintiff COUNSEL : Mr R. Wilson for the defendants Delwyn A Bishop for plaintiff SOLICITORS : Wood Marshall Williams for defendant LOWER COURT JURISDICTION : - 1 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION Associate Justice Macready Friday 16 September 2005 4408/04 - Henry John Northey v Jennifer Frances Juul and James Knight Northey (Estate of the late Betty Frances Northey) JUDGMENT 1 His Honour: This is a hearing concerning the proper administration of the estate of the late Betty Frances Northey who died on 7 December 2003 aged 90 years. Her husband died in 1996 and the deceased was then left with a large run down house and some unused tennis courts. She decided to stay in the house and to subdivide the tennis courts in order to provide, in part, the funds needed to renovate her house. 2 The renovations were done with the help of her daughter, Jennifer Juul, the first defendant and her husband who was a former builder. Mr and Mrs Juul were to pay all the costs of the subdivision and to receive one block in the subdivision for their efforts. Over the ensuing years three blocks were sold and the funds received were used in part to renovate the deceased's house. 3 The deceased had seven children and she treated them equally under her will. The defendants, two of her children, are the Executors. She appears to have not told some them of the arrangements she had made with Mrs Juul and her husband and this has unfortunately split the family after her death. The plaintiff, one of the deceased's children, brings these proceedings on his behalf as well as two of his sisters and a brother. 4 In the proceedings the plaintiff, Mr Henry John Northey, asked the court to order the taking of accounts in the estate of the deceased and he suggested that this accounting be on the basis of Mrs Juul's and her co-Executor's wilful default in getting in the estate of the deceased. The estate, which he said was not got in, is the amount that he suggested is due by Mrs Juul and her husband following the completion of the renovations to which I have referred. Short History 5 The deceased, Betty Frances Northey, was born in 1913. She married James Henry Northey and they had seven children. Her husband died on 30 July 1996. 6 In late 1996 Mrs Juul and her husband said that they had a conversation with Betty Northey about the subdivision of the large property which she then owned and a renovation of her house. After looking at alternative accommodation Betty Northey decided that she would prefer to continue living in the house where she had lived with her husband. According to Mrs Juul and her husband there was an estimate for the cost of renovating the house at $515,000. 7 On 24 February 1997 Betty Northey and Mr and Mrs Juul entered into a Deed which provided that Mr and Mrs Juul would do all the work necessary at their expense to enable a subdivision of the property into five allotments. In return they were to receive one of the lots in the sub-division. The Deed itself provided that deceased appoint Mr and Mrs Juul as her Attorneys to sign any documents and, in addition, Betty Northey gave a separate power of Attorney to Mrs Juul. Between mid 1997 and August 2001 substantial renovations took place to the deceased's property at 62 Rose Avenue, Collaroy, which was situated on Lot 55 in the new subdivision. The amount that was spent on the renovation was the subject of some dispute. 8 Mr and Mrs Juul borrowed $460,000 secured on other properties they owned to commence the subdivision and the renovation work on 62 Rose Avenue, Collaroy. 9 On 2 February 1998 Lot 52 in the subdivision was transferred to Mr and Mrs Juul in accordance with the arrangement set out in the Deed. The transfer was stamped on the basis of a value of $175,000 being the consideration for the transfer. The deceased personally signed the transfer. 10 It seems that the subdivision was finally approved in September 1998. In October 1998 Lot 54 was sold to a Mr and Mrs Webster for $320,000 which amount was paid to the deceased. Mrs Juul, as Attorney for the deceased, signed the transfer to the Websters. On 28 October 1998, in what Mr Juul said was a discussion between him and the deceased, the deceased indicated that she wished to pay him $250,000 for the work he had done. The deceased went to the Commonwealth Bank and withdrew $250,000 and paid it to him. According to Mrs Juul her husband did not tell her about this withdrawal until December 2004. 11 Between late 1998 and October 1999 Mr and Mrs Juul constructed two townhouses on Lot 52 which became known as 62B Rose Avenue, Collaroy. 12 In January 1999 Lot 53 was transferred to Mr and Mrs Briggs for $305,000 which was paid to the deceased. Mrs Juul, as Attorney for the deceased, signed the transfer to the Briggs. A few days later, on 24 February 1999, the deceased withdrew amounts of $165,000 and $100,000 and paid them into Mrs Juul's accounts. 13 On 9 April 2003 Lot 51 in the subdivision was transferred to Gaetan Juul, the son of Mr and Mrs Juul for $300,000. The duty paid indicates a value of the property at that time for stamp duty purposes of $475,000. The purchase price of $300,000 was paid into the deceased's account on 28 April 2003. The deceased personally signed the transfer. 14 Betty Northey died on 7 December 2003 and at that stage she had in her bank accounts sums totalling $341,503.75. She still retained Lot 55 which was her home 62 Rose Avenue, Collaroy. That property is on the market for sale by the Executors for a price in excess of $900,000. 15 The cash has been distributed by an equal division between the deceased's seven children pursuant to the terms of her will. The plaintiff's claim 16 The plaintiff claimed in the Summons for an account to be given by the defendants in respect of the property comprised in the estate of Betty Frances Northey and of the dealings and transactions of the defendants therewith. 17 At the commencement of the hearing an amended form of order was handed up seeking that the account be on the basis of wilful neglect and default and seeking the removal of the defendants as Executors and trustees of the estate of the deceased. I gave leave for an amended summons to be filed which excluded the claim for removal of the defendants as Executors as this was a fresh matter and the defendants did not have time to consider the claim. If circumstances arise during the taking of any accounts which would justify the removal of the trustee that could be dealt with on further consideration of the matter after the taking of accounts. 18 In Glazier v Australian Men's Health (No 2) [2001] NSWSC 6 Austin J set out the general principles, which the Court should follow when making an order for an account for administration. At paragraphs 37 – 39 His Honour dealt with these matters and in particular the distinction between an administration in common form and an administration on the basis of wilful default as follows: "Order for an account of administration 37 An order for an account of administration is made for the taking of accounts of money received and disbursed by the person who is responsible for the administration of a business enterprise or fund or other property, and for payment of any amount found to be due by that person upon the taking of the accounts. For example, the Court routinely orders the taking of accounts of the administration of an estate by an executor, or upon the dissolution of a partnership, or of the administration of property by a mortgagee in possession, or of a trust fund such as a solicitor's trust account. In such a case the making of the order need not imply any wrongdoing by the defendant. Order for an account of administration in common form 38 The usual form of order, referred to as an order in common form or for common accounts, requires the defendant to account only for what he or she has actually received, and his or her disbursement and distribution of it. The defendant prepares accounts and it is open to the other parties to surcharge or falsify items in those accounts. A surcharge is the showing of an omission for which credit ought to have been given, while a falsification is the showing of a charge which has been wrongly inserted, the falsifying party alleging that money shown in the account as paid was either not paid or improperly paid: Parker's Practice in Equity (New South Wales) (2nd ed by GP Stuckey and CD Irwin, 1949), p 269. Part 48 Rule 6 of the Supreme Court Rules preserves these procedures for challenging the account, while abandoning the arcane terminology of the chancery practice. Order for an account of administration on basis of wilful default 39 Sometimes the Court orders that accounts be taken on the basis of wilful default (or in the earlier cases, wilful neglect or default). The order is 'entirely grounded on misconduct', the defendant being required to account not only for what he or she has received, but also for what he or she might have received had it not been for the default: Partington v Reynolds (1858) 4 Drew 253, 255-6; 62 ER 98, 98-9. To obtain an order for the taking of accounts in common form against an executor, for example, the plaintiff need only show that the defendant is the executor, and need not show anything about the defendant's dealings with the estate; whereas to obtain an order on the basis of wilful default the plaintiff must allege and prove 'that there is some part of the deceased's personal estate which ought to have been and might have been received by the defendant, and which he has omitted to receive by his own wilful neglect or default': Partington v Reynolds , at 256 (ER at 99). 40 It appears that in the present context, the concept of 'wilful default' is confined to cases where there has been 'a loss of assets received, or assets which might have been received': Re Stevens [1898] 1 Ch 162, 171. In that case the failure of executors to cause the proceeds of an insurance policy to be paid to the policy's mortgagee for nearly seven years, during which time interest accrued to the mortgagee, was held not to amount to wilful default for the purposes of an application for an accounting on that basis. However, the concept is evidently not confined to cases of conscious wrongdoing: Bartlett v Barclays Trust Co Ltd [1980] 1 Ch 515, 546. Obviously the concept here is not necessarily the same as the concept of 'wilful default' used in other parts of the law: see, for example, Wilkinson v Feldworth Financial Services Pty Ltd (1998) 29 ACSR 642, 696-700. 41 As will be seen, the court may make an order that general accounts be taken on the footing of wilful default if at least one instance of wilful default has been proved. However the court has a discretion whether to make such an order. The test is this: 'is the past conduct of the trustees such as to give rise to a reasonable prima facie inference that other breaches of trust not yet known to the plaintiff or the court have occurred?' ( Re Tebbs [1976] 2 All ER 858, 863; see also Russell v Russell (1891) 17 VLR 729). 42 An order for accounts based on wilful default has the effect of casting a much more substantial burden of proof on the accounting party than applies in the case of common accounts. On a falsification, the onus is on the accounting party to justify the account, unless the account is a settled account (not relevant in the present case): Parker , p 269; Daniell's Practice of the High Court of Chancery (5th ed, 1871), p 1120ff, p 575ff; Seton's Forms of Judgment and Orders (6th ed, 1901), Vol II, p 1356ff, p 1382ff; and note the forms of falsification and surcharge in Miller and Horsell's Equity Forms and Precedents (1934), p 195-196; and as to settled accounts, see Pit v Cholmondeley (1754) 2 Ves 565, 28 ER 360. An accounting on the footing of wilful default leads to an order requiring the defendant to replenish funds wrongfully depleted by him or her and in that sense to make restitution for the benefit of the plaintiff." 19 The matter was dealt with by the Court of Appeal in Meehan & Ors v Glazier Holdings Pty Ltd [2002] NSWCA 22, 54 NSWLR 146. The Court of Appeal did not dispute His Honour's summary and added the following comments on the nature of wilful default in these terms. "64. My reading of his Honour's reasons is, I believe, confirmed by regard to the concluding paragraph of that part of the reasons in which he regarded the Madden report as disclosing "numerous occasions giving rise to reasonable concern as to breach of trust", satisfying the requirement of "a reasonable prima facie inference that other breaches of trust have occurred". That is, the detailed findings were still no more than grounds for concern, and his Honour did not accept them as established breaches of trust. 65 It is then necessary to return to what amounts to wilful default, and to ask whether the matters found by Austin J were instances of wilful default. In an accounting by a trustee, the underlying concept is that through breach of trust the trustee has failed to obtain for the trust that which would have been obtained if the trustee's duties had been discharged. There may be simple failure to get in an asset of the trust; sale of a trust asset at an undervalue has been treated as wilful default, presumably because of failure to obtain for the trust the full value of the asset ( re Tebbs ); failure to obtain rent for a stranger's occupation of a trust property has been treated as wilful default ( Bartlett v Barclays Bank Trust Co Ltd (No 2) (1980) 1 Ch 515). The breach of duty need not be conscious wrongdoing ( Bartlett v Barclays Bank Trust Co Ltd (No 2) at 546). But wilful default is not coextensive with breach of trust: there may be a breach of trust which is not wilful default (see in re Wrightson: Wrightson v Cooke (1908) 1 Ch 789 at 799-800; Russell v Russell (1891) 17 VLR 729 at 732; In re Wood; Ebert v Union Trustee Company of Australia Ltd (1961) Qd R 375 at 378). 66 It is not necessary to explore in any more detail what may or may not amount to wilful default. It may be accepted that failure to maintain adequate books and records, to prepare monthly management accounts, and to maintain financial records for that purpose, were breaches of trust. It does not follow from the breaches that something was not received by the Trust or otherwise lost to it, on any reasonable amplitude of the concept of wilful default. Although there was a failing in record keeping, all assets of the Trust may have been got in and properly dealt with. I do not think that the matters found by Austin J were instances of wilful default." 20 The plaintiff made two submissions that there had been a sale of trust assets at an undervalue which should be treated as wilful default. The first one to which they referred was the sale of Lot 51 on 9 April 2003 when the deceased was about 89 years of age. 21 The sale was to the first defendant's son, Gaetan Juul, who paid the purchase price of $300,000. However the reasonable inference given the stamping of the transfer is that at the time of the sale the property was valued for stamp duty purposes at $475,000 and plainly it was a transfer at an undervalue. 22 The first matter to observe about this transaction is that it is not a sale of a trust asset. One is speaking of an inter vivos disposition made by the deceased. I have mentioned earlier the appointment of the first defendant as the Attorney of the deceased under the Deed and the separate power of Attorney. There is no doubt that the Court has power to order an account in respect of an attorney's dealings with property belonging to another which has been managed or dealt with by the attorney. In the circumstances of this case where the property holder has died the only person who can exercise that right to obtain an account would be the deceased's executors. If the executors also happened to be the donees of the power of attorney who had used the power of attorney to deal with the deceased's property then that would give rise to a conflict of interest which would in appropriate circumstances enable a court to remove the trustees so that the matter could be pursued. See Monty Financial Services Ltd & Anor v Delmo [1996] 1 VR 65. 23 In the present case it is clear that the deceased signed the transfer and, accordingly, there is no evidence that Mrs Juul used any authority under the power of Attorney to deal with the property of the deceased in respect of this sale. Apart from the fact of the transfer, the price paid and the value there are no other circumstances which have been demonstrated in the evidence to suggest that in some way Mrs Juul dealt with the deceased's property in respect of this sale. 24 In these circumstances it is not a matter which can be a wilful default in respect of the defendants' position as Executors and trustees because they did not deal with the property. It also does not appear to be a situation where the first defendant, Mrs Juul, has dealt with the deceased's property under the power of Attorney. 25 The second submission was that on the transfer of 2 February 1998 of lot 52 to Mrs Juul and her husband there was a sale at an under value. It seems plain that the stamp duty of $4,615 showed that the property was valued for stamp duty purposes at $175,000. The submission was that if one looked at the sales 8 months and 11 months later of slightly smaller blocks of land for substantially higher considerations it indicated that there had been a sale at an undervalue. 26 The conveyancing file for the transfer was tendered and there was a valuation of the land at $175,000 as at 21 January 1998. It seems plain from the valuation that was used for the purpose of stamp duty that it was made at a time when the driveway and all the other improvements necessary for the subdivision had not been completed. The valuer referred to this fact and noted that this caused the value of the lot to be reduced. Whether this was appropriate was not debated before me. In the solicitor's file there is a note from the valuer to the solicitor when he sent the valuation saying, "I have kept this on the low side, if there is a problem (eg Capital Gains etc) give me a call". This comment might make one suspicious but the fact of the matter is that the valuation is the only evidence of value as at the time of the transfer. I have no details of the circumstances of the subdivision and the physical features of the various blocks of land, which would allow me to consider whether the later sales were comparable. On the evidence before me, I do not think there was a sale at under value. 27 Once again in respect of this transfer the simple fact of the matter is that the transfer was signed by the deceased and not by Mrs Juul under her power of Attorney. There is no evidence of any dealing with the property by Mrs Juul pursuant to the power of Attorney and plainly the sale was not a sale of any estate asset. In these circumstances it is not a wilful default. 28 The next matter on which there was suggested there was some wilful default was that the deceased's house had been left empty from the date of death in December 2003 to the present time. 29 In evidence it transpired that John Northey was in occupation of the premises at the time of the deceased's death in December 2003 and he agreed to leave the premises by January 2004. For reasons which were never made clear to the Executors he did not move out until middle of 2004. In the circumstances that John Northey was living at the property, 62 Rose Avenue, Collaroy when the deceased was alive it seems to me that this is not a case where a stranger has been allowed occupation of the property and, given the period in question, in my view it does not give rise to any wilful default. The Executors have been trying to market the property and having it vacant would no doubt improve that process. 30 The final and most important matter that was raised as a question of wilful default concerned Mrs Juul's involvement in the renovation of the deceased's property with the proceeds of the sale of two of the blocks in the subdivision. The evidence given by Mrs Juul in her affidavit of 3 November 2004 was that renovation work was done by her husband who employed various contractors that he organised and paid for, he being reimbursed later by the deceased. She annexed to her affidavit a schedule, which disclosed what was said to be expenditure on items, purchased for $238,259.62 and an amount of $132,580 paid to contractors. This was a total of $370,839.62. 31 In her affidavit Mrs Juul went on to note that at the date of death the deceased had $343,000 in cash. It was also obvious, as she noted, that during her lifetime the deceased had received over $900,000 from the sale of the three lots and that, accordingly, this was substantially more than the total of the amount spent on the renovation and the cash which she had at her death which totalled $713,839.62. She drew attention to the fact that her mother had made gifts to her and her husband of appliances worth $37,000 and she paid some monies amounting to $12,000 owed by Mrs Juul's father to the bank. Plainly there was a substantial amount that was not accounted for although the deceased may have used it for living or other expenses. 32 Mr and Mrs Juul put on further evidence in affidavits, which they separately swore on 11 April 2005. Those affidavits referred to the discussions with the deceased before her death and whether she would renovate her property or buy somewhere else. Ultimately the decision was made to renovate the property. Mr Juul gave evidence of the conversation he had in the latter part of 1996 which was to the following effect: Deceased: "I have decided that I want to live in the house Jim built for me and in which we lived for the past 40 years. Ole, would you help me with renovating and extending the home?" I: "Of course I will Betty." Deceased: "Have you any idea how much it will cost?" I: "The cost of the new building work will be approximately $1,500 per m2 and $750 for per m2 for renovations. Additional costs will also be incurred for outside work such as retaining walls, driveway, fencing, lawn, paving and other things. As you are looking to nearly double the size of the home you should count on a total cost of around $515,000 for the work." Deceased: "Will we be able to cover the costs of this from the subdivision of the land?" My wife: "Yes, we should." 33 The first of the two blocks had been sold by October 1998 and Mr Juul gave evidence of a conversation which occurred about 28 October 1998 between him and the deceased in following terms: Deceased: "I want to pay you $250,000 for the work you have done to the home." I: "You don't have to pay me that much as this stage. I haven't spent $250,000. Deceased: "I want to give it to you anyway." 34 Thereafter the $250,000 was withdrawn and deposited in a joint account, which Mr Juul and Mrs Juul had with the Macquarie Bank. Mr Juul went on in his affidavit to justify the absence of funds by indicating that he had spent a substantial time in supervising the work that was carried out. Although his affidavit evidence was rejected further evidence of his time involved was eventually tendered. 35 Mrs Juul in her affidavit described the conversation in late 1996 in these terms. Deceased: "How much will it cost to renovate and extend the home?" Husband: You can count on it costing roughly $1,500 per square metre for new building work and $750 per square metre for the existing building. You can also count on spending $50,000 for work to the outside of the house." Deceased: Will we get enough money from the land to pay for the work?" I: "Yes." Husband: "The best way to calculate it is to work on the total figure of about $515,000 which is the best part of the sale of two blocks of land in the subdivision." Deceased: "Ole, will you do the work?" Husband: "Yes, I will do the work." Deceased: "I hope there will be enough for you to be paid for the work." 36 Mrs Juul then went on to deal with what she had not disclosed in her earlier affidavit namely that she had been paid $265,000 on 1 March 1999. 37 It is obvious that between them Mr and Mrs Juul had been paid $515,000 for the work involved in renovating the deceased's house. This was not the information that had been conveyed by Mrs Juul in her earlier affidavit in which she made no reference to any agreement as to amounts for the renovation or discussions between her and her mother about that matter. The conversations only saw the light of day after Mrs Juul discovered in late December 2004 that she and her husband had been paid a total of $515,000. 38 In these circumstances the following questions arise. 1. Whether I should accept the conversations as deposed to by Mr and Mr Juul with regard to the renovation. 2. Whether those conversations were for a fixed price of $515,000 for the renovation by Mr Juul or, alternatively, an estimate for the guidance of the deceased with an upper limit estimated at $515,000. 3. In the event of the latter finding in 2 above what money was spent and whether there has been a failure to account for the surplus over and above the amount that they have expended on the renovation. 4. Whether the court, in the exercise of its discretion, should order the taking of accounts on the basis of wilful default. Whether I should accept the conversations as deposed to by Mr and Mr Juul with regard to the renovation 39 The conversations were with the deceased who is not able to give her account of them. 40 I am mindful that many authorities have stressed that when assessing the evidence of such an agreement the Court must "scrutinize the evidence very carefully" in view of the unavailability of one party to give her account of the relevant events: see Plunkett v Bull (1915) 19 CLR 544 at 548-9 per Issacs J, applied in Watson v Delaney (1991) 22 NSWLR 358 at 365 per Meagher JA; Cross on Evidence (7th Australian Edition) para. 15150 and the cases there cited especially Clune v Collins Angus & Robertson Publishers Pty Ltd (1992) 25 IPR 246 at 253.29. In that case Wilcox J said: "… it is trite to say that evidence of conversations between a living witness and a dead person should be scrutinised with care, especially where there was no occasion for the dead person to record his version of them before his death. Of course, that is not to say that such evidence cannot be true; it obviously may. But it does mean that any matter adversely affecting the credit of the witness has special importance; the witness cannot be refuted in the usual way." 41 There does not seem to be any basis to dispute that the deceased wanted to renovate her house and to continue to live in the house which she had shared with her husband for some 40 years. She was elderly and she needed assistance. Mr Juul with his previous experience as a builder was in a perfect position to give that assistance. His past building work had been in 1976 and no doubt those skills, at least in so far as organisation was concerned, were still available to him. In his affidavit Mr Juul deposed to the area of new work on the property and the overall size of the property. Applying those areas to the different rates per square metre one comes to a price for the building work of $465,000. According to the conversation as there were to be additional costs it may have been that the figures for the outside work such as retaining walls, driveway, fencing, lawn, paving and other matters, the cost could have reached $60,000. There was no other evidence before me such as from a quantity surveyor who actually estimated the cost of construction of the building and the work involved. There was also no dispute or evidence before me to suggest that the figures which had been referred to by Mr Juul were inappropriate at the time of the conversation in late 1996. The only other possible comparable figure was the cost of building the house on 62B Rose Avenue which was in the order of $350,000. That was all new work but how it compares in terms of size, complexity, finishes and other matters was not before me. I would, therefore, not be able to form a view, based on that amount, as to whether or not what was said to be perhaps an estimate of the cost was totally unreasonable. 42 Assuming that a cost of $515,000 is the upper estimate the question is whether or not, in the absence of the deceased or any other person being a party to these conversations, that these conversations occurred. Mrs Juul was apprehensive as a witness and somewhat argumentative when giving her evidence. On the other hand I found Mr Juul calm and dispassionate and he seemed to give his evidence as accurately as possible. He gave his evidence on the basis that he appreciated that they had only justified part of the expenditure of $515,000. 43 There were minor differences in the versions given by Mr and Mrs Juul and there was no suggestion from the cross-examination that they in fact conspired to make up one identical and consistent story. It is plain that Mr Juul was the person responsible for the finances and although it is surprising that he did not mention to his wife that he had received $250,000 I think it is likely that he was well aware that she had received further funds because he knew that, according to him, when he called for more money to be transferred to him to cover additional expenses that he had incurred. 44 In the circumstances I am prepared to accept that the conversations took place as deposed to in Mr and Mrs Juul's affidavits. Whether those conversations were for a fixed price of $515,000 for the renovation or, alternatively, for the actual cost of building with an upper limit estimated at $515,000 45 As I have mentioned it is plain that the deceased was in a situation where she needed help with the renovation to her home. Mr Juul was not a builder and as he was unable to get insurance the deceased took out an owner builder's permit to do the renovation herself. When one looks at the conversations they seem to be predicated on the assumption that the deceased was going to do the work. She was asking for ideas on how much it would cost and she was given advice based upon standard rates and rough estimates on what it was likely to cost. It seems clear from the conversations, in particular with Mr Juul, that it was help and assistance which was being extended to her by him. There is nothing in the conversation to suggest that he was taking responsibility for the work in the terms of him guaranteeing that what would be done would be a construction for a fixed price. There is no evidence as to what point the design of those renovations had progressed at the time but it must have been somewhat advanced for the estimate to have been given. The deceased's concern was that she would be able to cover the costs which she was incurring from the sale of the two blocks of land. 46 It seems apparent to me that having given consideration to the conversations between the deceased and Mr and Mrs Juul they do not disclose any agreement that Mr and Mrs Juul would do the work for a fixed price. What in fact was happening was that Mr Juul was agreeing to assist with the work and that his best estimate of what it would cost the deceased was around $515,000 and that this would be covered by the sale of the two blocks of land. 47 There is nothing in the conversation with Mr Juul to indicate that he was to be reimbursed for his time and effort. In the conversation with Mrs Juul there is a reference to him being paid for the work although that is expressed more as a hope. Certainly there was no agreement on the basis of that conversation with the deceased that she would reimburse Mr Juul for the time he spent organising and supervising the work. 48 It was the defendants' submission that the payment of $250,000 and $265,000 were payments which the deceased voluntarily made in return for Mrs Juul and Mrs Juul arranging the renovation of her home. On this basis it was submitted that none of the money constituted estate assets and were liable to be accounted for by the defendants. Certainly the first payment which was made by the deceased to Mr Juul of $250,000 in the conversation which I accept occurred at the time has elements of making a gift. There is no doubt that during the renovation the first block of land had been sold and, indeed, at that stage $250,000 of work had not taken place. However, there has been no suggestion that the $250,000 was to be for any other purpose than the house renovation. There was evidence of other small gifts made by the deceased to Mrs Juul in recompense for other help and assistance extended to the deceased. 49 However, when one comes to the second payment of $265,000 to Mrs Juul no evidence was given as to the deceased's intention when giving those monies. In absence of any such evidence I would not conclude that the arrangements were as characterised by Mr and Mrs Juul. In substance the payment of the further $265,000 was nothing more than a further payment on account probably without any real discussion having taken place. Mrs Juul stated that she believed the payment was for work done on the house. In these circumstances I would not characterise the payments that have been made as gifts in a family setting rather than payments received on account for the renovation. In the event of the latter finding in 2 above what money was spent and whether there has been a failure to account for the surplus over and above the amount that they have expended on the renovation 50 The was much debate before me as to whether or not all the expenses set out in Schedule D to Mrs Juul's affidavit were incurred in the renovation or other matters. I have had no submission on what ultimately flows but it is plain having regard to the course of cross-examination and the subsequent non-objection to its tender, that prima facie the upper amount expended by Mr and Mrs Juul was $370,839.62. It is also apparent from my conclusions above that there was no agreement to pay Mr Juul for his time and effort although plainly he did spend a lot of time doing what the deceased had requested. In these circumstances Mr and Mrs Juul are obliged to account to the estate for the difference between $515,000 and the amount spent and this amount will be at least $144,160.38. This is subject to a question which has not been debated before me and that is whether on the taking of the accounts there should be a just allowance for the work involved in assisting with the renovation. This may raise question of whether there was any fiduciary relationship at the time. The extent of any such just allowance cannot be determined on the present evidence. 51 In these circumstances one instance of wilful default has been demonstrated, namely, the failure of the executors to get in the amount which was due to be refunded by one of the Executors and her husband to the estate. Whether the court in the exercise of its discretion should order the taking of accounts on the basis of wilful default 52 In Glazier v Australian Men's Health (No 2) Austin J referred to the existence of the discretion in paragraph 41 of his judgment. He referred to the cases and suggested when considering the exercise of the discretion the court should consider whether the past conduct of the trustees was such as to give rise to a reasonable prima facie inference that other breaches of trust not yet known to the plaintiff or the court have occurred. In the present case there is no information which would suggest that there are other breaches of trust which would have occurred. At the hearing there was complaint about the lack of record keeping in respect of the projects but that does not concern the duty of the trustees as executors of the estate. 53 The question that now arises is whether or not there ought to be an order for accounts on the basis of wilful default because of the existence of only one such default. To an extent the matter has been debated before me in evidence and dealt with by the parties. In the circumstances the question that arises is whether I should order an accounting and its attendant further costs or on the basis of the material before me determine the amount for which Mr and Mrs Juul should account. It is, of course, to be noted that Mr Juul is not a party to the proceedings and the account is technically given by the defendants who are the two Executors. The fact that Mr Juul was not a party to the proceedings may, of course, be a complete answer to any claim for a just allowance on his part. 54 Although an affidavit by the second defendant was initially read he refused to be cross-examined and therefore I rejected the affidavit. In the circumstances which have transpired he is likely to have a joint liability to account and he may now wish to play an active role in any further hearing. 55 In Re Tebbs [1976] 2 All ER 858 the Court was concerned with a similar situation to what has occurred here, namely, there is one clear area of wilful default and no grounds for assuming that other improper transactions occurred. The Court decided that an account be taken on the basis of wilful default in respect of the one clear area and that an account be taken of the rest of the testator's real and personal estate in common form with liberty to apply in the event of further wilful default being produced. 56 I propose to make a similar order in this case and reserve further consideration after the taking of the account. In case I am not available for the taking of the account the orders should envisage that the account may be taken before any Associate Justice of the Court. 57 I direct the parties to bring in short minutes which, if they wish, could included directions on any motion to proceed with the taking of the account. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. 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