Perpetual Trustees Victoria Ltd v Soulis [2011] NSWSC 768

Supreme Court New South Wales

Medium Neutral Citation: Perpetual Trustees Victoria Ltd v Soulis [2011] NSWSC 768 Hearing dates: 13 July 2011 Decision date: 22 July 2011 Jurisdiction: Common Law Before: Schmidt J Decision: The Court orders that Ms Anna Soulis Jr as administrator of the estate of Dennis Soulis, deceased, is justified in settling these proceedings on terms and conditions agreed between the parties. Catchwords: EQUITY - trusts and trustees - applications to the court for advice and authority - notice of motion - advice sought under s 63 of the Trustee Act 1925 - administrator of an estate seeking advice as to whether proceedings should be settled on terms and conditions proposed by the parties - order made Legislation Cited: Real Property Act 1900 Trustee Act 1925 Category: Procedural and other rulings Parties: Perpetual Trustees Victoria Limited (Plaintiff) John Soulis (First Defendant) Anna Soulis Sr (Second Defendant) Anna Soulis Jr (Third Defendant) Representation: Brown and Partners (Third Defendant) File Number(s): 2005/266648

Judgment 1These proceedings were commenced in August 2005, the plaintiff Perpetual Trustees Victoria Limited ('Perpetual'), seeking orders for possession of property located at Wolli Creek. The claim was later amended to include Challenger Mortgage Management Pty Limited as a plaintiff and various other parties as defendants. Various cross-claims were also later brought in the proceedings. 2By notice of motion filed in April 2011, the third defendant, Ms Anna Soulis Jr, seeks advice under s 63 of the Trustee Act 1925, as to whether as administrator of an estate, she is justified in settling these proceedings on terms and conditions proposed by the parties. The section provides: "63 Advice (1) A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument. (2) If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee's own responsibility, to have discharged the trustee's duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction. (3) Rules of court may provide for the use, on an application under this section, of a written statement signed by the trustee or the trustee's Australian legal practitioner, or for the use of other material, instead of evidence. (4) Unless the rules of court otherwise provide, or the Court otherwise directs, it shall not be necessary to serve notice of the application on any person, or to adduce evidence by affidavit or otherwise in support of the application. (5)-(7) (Repealed) (8) Where the question is who are the beneficiaries or what are their rights as between themselves, the trustee before conveying or distributing any property in accordance with the opinion advice or direction shall, unless the Court otherwise directs, give notice to any person whose rights as beneficiary may be prejudiced by the conveyance or distribution. (9) The notice shall state shortly the opinion advice or direction, and the intention of the trustee to convey or distribute in accordance therewith. (10) Any person who claims that the person's rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution. (11) Subject to subsection (10), and subject to any appeal, any person on whom notice of any application under this section is served, or to whom notice is given in accordance with subsection (8), shall be bound by any opinion advice direction or order given or made under this section as if the opinion advice direction or order had been given or made in proceedings to which the person was a party." 3The motion was supported by affidavits sworn by Ms Soulis Jr in April and June 2011, as well as by affidavits sworn by her solicitor, Mr Jeremy Noonan, in April and June. 4At the hearing there was no appearance for the other parties, or for Ms Soulis' brother, Mr Nicholas Soulis, (aged 25) and sister, Katerina Soulis, (aged 15), who like her are residuary beneficiaries of the estate of their grandfather, Dennis Soulis. They are each entitled to a one third share of the residue of the estate. 5The executors of the estate were John Soulis and Anna Soulis Sr, who became registered proprietors of the property in 2002. The loan underlying these proceedings was advanced by Perpetual to the executors in 2003, in the sum of $487,500, secured over the property. They have not filed any defences in the proceedings. 6In June 2008, Ms Anna Soulis Jr was appointed by the Court as administrator ad litem for the purpose of representing the estate in the proceedings. She later brought a cross-claim seeking a declaration that the mortgage did not bind the estate; that the amount secured by the mortgage is nil and that she was entitled to a discharge of the mortgage, as well as damages, under Part 14 of the Real Property Act 1900. 7A second cross claim was brought by Global Capital Corporation Pty Limited ('Global Capital'), the fourth defendant, who introduced the loan to Perpetual under a loan origination and management agreement. 8The relief sought by Perpetual from the executors was possession of the property and payment of the outstanding debt under the loan; from Ms Soulis as administrator of the estate, payment of the outstanding debt under the loan; and damages from Global Capital and Bill Salouris (who guaranteed its obligations to Perpetual) in respect of breach of contract and negligence. 9The parties engaged in a mediation and further negotiations which resulted in an in principle agreement in February 2011 and the execution of a Deed of Settlement and Release in May, conditional on the Court's approval. The parties to the Deed are Perpetual Trustees Victoria Limited, Challenger Mortgage Management Pty Limited (formerly known as Interstar Securities (Australia) Pty Limited), Anna Soulis (Junior), the estate of the late Dennis Soulis, Global Capital Corporation Pty Limited, Bill Salouris, Community Mortgage Corporation Pty Limited and The Registrar General of New South Wales. The Deed provides for a valuation of the property to be obtained. 10The property has been assessed to have a value in the range of $720,000 to $750,000. Relevantly, so far as the estate is concerned, under the Deed, it is agreed that Perpetual will take possession of the property, sell it and keep the proceedings of the sale, up to and including an amount of $650,000. Ms Anna Soulis Jr will receive the sum of $485,000 (to which other parties are to make various contributions), as well as any proceeds of sale in excess of $650,000. 11Ms Soulis has received advice that she has reasonable prospects of success but that there was no certainty of such an outcome being achieved. The settlement represents a loss of some $165,000, apart from legal fees. Some $95,000 of the estate's and Ms Soulis' own funds have been expended in defending the proceedings. The estate's funds have been exhausted. She has also been advised that the further cost of continuing the proceedings will be between $100,000 to $150,000. Obtaining such funds was likely to prove very difficult. If she succeeds, the estate will have the property worth up to $750,000 and she will recover costs of up to $250,000. If unsuccessful, the property will be lost and she will have to bear her own costs and the other parties' costs, which have been estimated to range up to $1,250,000. In that event the estate will be insolvent and the beneficiaries will receive nothing. Mr Noonan's advice was that the settlement was reasonable, given the further costs and risks of the litigation for the estate. 12On the evidence, Ms Anna Soulis Jr has kept her brother and sister informed of her actions in defending the proceedings and the settlement which has been arrived at and sought their view as to whether court approval should be granted. Her sister's legal guardian, Faye Kritikas, is supportive of the settlement, that being evidenced by a written communication. That may not be her brother's position, but he has not responded in writing to Mr Noonan's written or verbal communications, so that his views may be understood, nor has he sought to appear in the proceedings or otherwise communicate his views, so that they might be considered. 13Ms Anna Soulis Jr deposed that during the settlement negotiations and subsequently, she had taken legal advice as to the merits of the various offers she had received. She believed that: "the settlement reached in the Proceedings is acceptable in light of the amount of the claim, the potential for the estate to incur further legal costs in my defence of the Proceedings and my conduct of the counter-claim therein, as well as the potential for adverse costs orders if my defence and counter-claim are unsuccessful" 14Having considered the evidence as to the circumstances in which the settlement has been arrived at and the risks of the litigation, given the parties' respective cases, in the light of the legal advice given, and Ms Soulis' submissions advanced at the hearing, I have come to the view that the Court should advise Ms Anna Soulis Jr that as administrator of the estate, she is justified in settling these proceedings on terms and conditions proposed by the parties.