Supreme Court New South Wales Medium Neutral Citation: Gardiner v Gardiner (No 2) [2012] NSWSC 1025 Hearing dates: 16 August 2012 Decision date: 29 August 2012 Before: Associate Justice Macready Decision: (1) I dismiss the plaintiff's motion of 4 April 2012 with costs; (2) I order the plaintiff to pay an occupation fee of $595 per week from 5 July 2012 to the date he moves out of the premises; (3) I order the plaintiff to pay the defendant's costs of the defendant's motion of 28 May 2012. Catchwords: FAMILY PROVISION - Succession Act 2006 - application for the setting aside of a family provision order in favour of a son of the deceased under UCPR 36.16(3A) - claim by defendant for orders enforcing the Court's order for vacation of the estate property Legislation Cited: Succession Act 2006 Uniform Civil Procedure Rules 2005 Cases Cited: Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 De L v Director General, NSW Department of Community Services (No 2) (1997) 190 CLR 207 Gardiner v Gardiner [2012] NSWSC 269 Category: Consequential orders Parties: Linton Gardiner (plaintiff) Matthew Gavin Gardiner (defendant) Representation: Counsel: S Hill (plaintiff) A Lakeman (defendant) Solicitors: Geoff Osborne and Associates (plaintiff) Taperell Rutledge (defendant) File Number(s): 2011/136886 Judgment 1I heard this matter on 14 and 15 March 2012 and gave judgment on 16 March 2012. The case is reported as Gardiner v Gardiner [2012] NSWSC 269. On 21 March 2012 I made orders in accordance with Short Minutes of Order formulated by the parties and based on my reasons for judgment. Amongst other orders, I made an order that the plaintiff was to receive an additional legacy of $80,000 to be held on trust on his behalf. 2There are now two applications flowing from the orders which I made in that matter. The first application is by the plaintiff by motion filed 4 April 2012 seeking that the judgment be set aside pursuant to Uniform Civil Procedure Rules 2005, r 36.16(3)(A). The application is based upon what is said to be a misapprehension by me of a factual matter dealt with in the judgment. 3The other is a motion by the defendant filed 28 May 2012. That motion sought a Writ of Possession of the estate property at Dixon Avenue, Frenchs Forest and other relief. On 6 July 2012 Assistant Registrar Musgrave made orders by consent granting leave to the defendant to issue a Writ of Possession directed to the plaintiff who is in occupation of the property at Frenchs Forest. The plaintiff has not yet vacated the premises and the order now sought pursuant to that motion is that the plaintiff pay an occupation fee of $595 per week from 22 May 2012 to the date the plaintiff vacates the premises. 4I turn to deal with the plaintiff's motion first. In my judgment at [55] - [60], I dealt with the defendant's situation in life. At [58] I said the following: "Matthew and his trust have debts of $51,787 and he owes the estate $7,297." 5One of the debts referred to in that paragraph was a debt of $45,000 which the plaintiff categorised as being owed to Matthew's Trust, known as the Gardiner Family Trust. It was submitted on this application that as that Trust was for the benefit of his family, Matthew and his family would be entitled to that amount. Accordingly, the amount should not be taken into account as one of his debts unless there is a countervailing asset taken into account, namely, $45,000. 6It was submitted that this misapprehension meant that Matthew's financial position was superior to that considered by me and, therefore, there should be reconsideration of the additional provision which I made for the plaintiff. Under the will of the deceased, both the plaintiff and the defendant, who are brothers, share equally in the residue of the estate. 7The motion was filed within the 14 days required under rule 36.16(3A) so that the Court has the power to set aside or vary the judgment or order, as if the judgment or order had not been entered. The jurisdiction to set aside the order has been referred to by Mason CJ in Autodesk Inc v Dyason (No 2) (1993) 176 CLR 300 at 301-303. Although a dissenting judgment, the principles set out by Mason CJ were approved by the High Court in De L v Director General, NSW Department of Community Services (No 2) (1997) 190 CLR 207 at 215. 8The words of Mason CJ in Autodesk were: "The exercise of the jurisdiction to reopen a judgment and to grant a rehearing is not confined to circumstances in which the applicant can show that, by accident and without fault on the applicant's part, he or she has not been heard. It is true that the jurisdiction is to be exercised with great caution, having regard to the importance of the public interest in the finality of litigation. It is equally true, as this Court said in Wentworth v Woollahra Municipal Council, that 'generally speaking, it will not be exercised unless the applicant can show that by accident without fault on his part he has not been heard.' But these statements do not exclude the exercise of jurisdiction to reopen a judgment which has apparently miscarried for other reasons, at least when the orders pronounced have not been perfected by the taking out of formal orders. So much was acknowledged by Brennan, Dawson, Toohey and Gaudron JJ. in Smith v N.S.W. Bar Association when their Honours said: "if reasons for judgment have been given, the power is only exercised if there is some matter calling for review." It is sufficient to give three examples. In In re Harrison's Share under a Settlement, orders were set aside following a decision of the House of Lords which overruled authorities on the basis of which the orders had been made. In New South Wales Bar Association v Smith, the New South Wales Court of Appeal reconsidered orders previously made in view of an argument that the Court had mistakenly assumed that particular evidence had not been given at earlier hearings. And, in Pittalis v Sherefettin, a judge recalled orders the day after they were made upon determining that he had 'erred in a material matter in his approach to the case'. These examples indicate that the public interest in the finality of litigation will not preclude the exceptional step of reviewing or rehearing an issue when a court has good reason to consider that, in its earlier judgment, it has proceeded on a misapprehension as to the facts or the law. As this Court is a final court of appeal, there is no reason for it to confine the exercise of its jurisdiction in a way that would inhibit its capacity to rectify what it perceives to be an apparent error arising from some miscarriage in its judgment. However, it must be emphasized that the jurisdiction is not to be exercised for the purpose of re-agitating arguments already considered by the Court; nor is it to be exercised simply because the party seeking a rehearing has failed to present the argument in all its aspects or as well as it might have been put. What must emerge, in order to enliven the exercise of the jurisdiction, is that the Court has apparently proceeded according to some misapprehension of the facts or the relevant law and that this misapprehension cannot be attributed solely to the neglect or default of the party seeking the rehearing. The purpose of the jurisdiction is not to provide a backdoor method by which unsuccessful litigants can seek to reargue their cases." 9In the affidavit of the defendant of 29 February 2012, the defendant said the following about his debts: "4(e) My liabilities are: St George Mastercard $5,517 Orthodontic loan for braces $1,270 Loan (Gardiner Family trust) $45,000 Total liabilities $51,787" 10In the plaintiff's submissions handed up at the commencement of the hearing (Ex 1), the following is said at paragraph 21 in relation to the defendant's situation: "21. His assets are held in the family trust and include two cars and a timeshare. His liabilities include a $5,517 Mastercard debt, a $1,270 loan for braces and a $45,000 loan." 11The total of the debts referred to is, of course, $51,787. In the defendant's submissions a similar approach was taken at paragraph 25 (Ex 2): "The Defendant's competing claim on the estate is : (i) Discharge of his liabilities including those of the family trust $51,787.00 (ii) Repayment of the debt due to the estate $7,297.00 (iii) Purchase of a new (work) vehicle $40,000.00 (iv) Deposit on the purchase of a family home ($600-660,000)" 12When he was called in chief, Matthew Gardiner gave this evidence (T63): "Q. I just want to take you to the last of the affidavits you swore on 29 February 2012. Page 3 of that affidavit you have listed your liabilities? A. Yes. Q. Included in those liabilities are a St George MasterCard account and Orthodontic expenses? A. Yes. Q. Third item of your liabilities is a loan "(Gardiner Family Trust)" for $45,000? A. Yes. Q. Could you just tell the court what that entry represents? A. Clarified that with my accountant and it's not quite what I thought it was. Really, it represents, you know, a balance between myself and the trust. So, it's a liability of one and asset of the other. Q. What it actually is, is a loss from a former business enterprise? A. Yes." 13In cross-examination it became clear that the family trust had incurred a business loss of some substance and it thus had losses which it could carry forward. For this reason, Matthew's IT business for the last few years was run through the Trust so that tax was not payable because the losses could be offset against the income. 14Matthew was then cross examined as follows (T71): Q. In your affidavit of 1 September 2011 you put as your liability paragraph 22, the loan to the Gardiner Family Trust of $45,000 and Mr Lakeman asked you some questions about that before and you have agreed that's, in fact, not your personal liability at all? A. Yes, correct. Q. If you go back to the bundle I gave you, at page 32 of the bundle, first page of the financial statement for the Gardiner Family Trust for the year ended 30 June 2011. At page 33 and page 35 the balance sheet and the notes referred to in that balance sheet are set out. Do you have page 33 in front of you? A. Yes. Q. The liabilities: There is listed as a financial liability for the financial year 2011 $18,930? A. Mmm. Q. Page 35 of the bundle, item 7, that's in fact a loan to M Gardiner. That a loan to yourself? A. Yes. Q. So the loan is actually of the Gardiner Family Trust is in fact a loan to yourself? A. Yes. Q. If you look at page 35 of the bundle, financial year ending 30 June 2010, a loan is listed to you as 33,881? A. Yes. Q. If you go back to page 33 under 'liabilities', you have a trade and other payables, a sum of $47,392? A. Yes. Q. That's remains the same since the year 2010? A. Yes. Q. That's a trade creditor, is it not? A. Yes. I actually just questioned that with my accountant recently as well and it appears that's an oversight and should not have remained that way, should have diminished over time. Q. That's not the accurate number? A. I believe so, yes. Q. Do you know what the accurate number should be? A. I don't. Q. But- A. It would be considerably less than that. Q. The loan in your affidavit that you have listed is $45,000 owing to yourself? A. Mmm. Q. So, that's in fact an asset for you personally? A. Yes. I think it relates to this liability here, or a portion of it. Q. Page 57 of the bundle of documents I have given you. This is a third page of the financial report for the Gardiner Family Trust ending in 30 June 2008? A. Yep. Q. The financial year 2007, your loan was in fact $81,208? A. Yes. I believe when we placed our previous business into administration- Q. I'm just asking you that question. The effect of the tax losses being carried forward means that you have the Gardiner Family Trust income earned from business consultancy. There is no tax being paid on that income and that further income which you, as trustees, can use at your disposal? A. Yes. As I was going to explain, though, at the time that our previous business failed I was left- HILL: Sorry, I'm not asking that question. Mr Lakeman can ask questions later. Q. And the Gardiner Family Trust has as its beneficiaries yourself, your wife, and your children? A. Yes. Q. And it's a family trust, so it's set up to benefit, principally, your family. A. Yes. Q. If you so choose, as trustee, to distribute any of the income? A. Yes. Q. So you would agree that's a further resource of money that you can use for your benefit and your family's benefit. OBJECTION: FORM, ALLOWED WITNESS: I guess, yes. Q. You have disclosed in one of your affidavits sworn this year, a loan that the deceased advanced you during his life time? A. Yes. Q. And you have disclosed that as $7,297? A. That was the balance the day of his death, yes. Q. And that the total amount he advanced was 30,000? A. No, it was 15,000, I think. Q. You were responsible for setting out the assets - your father's assets in the inventory of property in the probate? A. Yes. Q. And that was not put down as an asset? A. To be honest, I didn't even think about it at the time. Q. It was not until a reference was made in Linton's affidavit to a loan that you then disclosed it? A. Yep. Q. So you wouldn't have disclosed it if you had not read it in Linton's affidavit? OBJECTION. ALLOWED Q. You have also disclosed in an update of the estate expenses executor's expenses of $8,457.89? A. Yes. Q. Can you tell the court what those expenses are for? A. I don't have it in front of me, no. Q. So, you have no idea what those expenses relate to? A. Off the top of my head, no but I will have them itemised. They won't be unknown. Q. You also listed in your affidavit in your financial circumstances a timeshare held by the Gardiner Family Trust. Does that relate to the Mainland Resort? A. Yes, it does." 15Exhibit B in the original proceedings were the documents cross-examined upon in respect of the Trust. Importantly, they included a Balance Sheet of the Trust as at 30 June 2011. The Balance Sheet was in this form: GARDINER FAMILY TRUST A.B.N 45 379 565 179 BALANCE SHEET AS AT 30 JUNE 2011 2011 2010 Note $ $ ASSETS CURRENT ASSETS Cash and cash equivalents 2 300 45 Trade and other receivables 3 19 82 TOTAL CURRENT ASSETS 319 127 NON-CURRENT ASSETS Property, plant and equipment 4 3,042 21,519 Inventories 5 16,000 16,000 TOTAL NON-CURRENT ASSETS 29,042 37,519 TOTAL ASSETS 29,361 37,646 LIABILITIES CURRENT LIABILITIES Trade and other payables 6 47,392 47,392 Financial liabilities 7 18,930 33,881 TOTAL CURRENT LIABILITIES 66,322 81,273 TOTAL LIABILITIES 66.322 81,273 NET ASSETS (LIABILITIES) (36.961) (43,627) EQUITY Settlement capital 8 10 10 Accumulated losses (36,971) (43,637) TOTAL EQUITY (36,961) (43,627) 16As appears from the Notes to the Accounts, the financial liabilities referred to are borrowings, being a loan due to Mr M Gardiner. What is important is that although there are some non current assets, being property, plant and equipment, there are no current assets in the Trust and yet it still owes trade and other payables of $47,392. This is a liability of the Trust and as a result mainly of the former failed business venture. 17Given the lack of ready assets to meet it, it seems to me perfectly plain that what Mr Gardiner had in his mind in dealing with the matter, in a perhaps somewhat confused way in his affidavit, was that the Trust owed $45,000 to the creditors. This is the way I perceived it. It is plain from the way I expressed it at [58] in my judgment because I talked of both Matthew and his Trust having debts. Given the way the parties approached it, I do not think I was under any misapprehension as to the true situation. Looking at the Balance Sheet, the "financial liabilities", which is a loan due to Mr Gardiner of $18,930, may be able to be satisfied out of property, plant and equipment but the amount of this additional asset is not something which makes any material difference to my judgment. 18In the circumstances, I do not think that I acted under any misapprehension in respect of the liabilities for which the defendant would be responsible and, accordingly, I decline to set aside my judgment. Claim for occupation fee 19I turn to the claim for payment as a result of the failure of the plaintiff to vacate in accordance with my orders. They required him to vacate two months after the orders were made, namely on 21 May 2012. The source of power for making this order is s 66(i) of the Succession Act 2006 in that if an order is made for payment of an occupation fee, the plaintiff, who has so far refused to move out of the property for various reasons is more likely to do so if there is a financial incentive for him to move out. On the defendant's original motion there was a consent order for possession and the evidence before me shows that the plaintiff will be ejected at 11.30am on Thursday 20 September 2012 when the Sheriff attends the property to execute the writ (Ex 3). 20The plaintiff has indicated to the court that he will vacate by early September following dental surgery he is having towards the end of August. The defendant also agrees to pay $595 per week from 6 August 2012 until he vacates. The argument is thus about the period from 21 May to 5 August 2012. 21This application requires consideration of the reasons why he did not vacate at the time requested. 22Under the original orders, I gave two months for the plaintiff to move out of the property. The reason he declined to do so apparently was a mistaken belief on his part that he was going to be paid his expenses pursuant to the agreement for his brother to fund these expenses. That agreement was recorded in the hand written short minutes used for the purposes of me making the orders in the matter. The actual order that was taken out is as follows: "6. The Court notes that the parties have agreed that the Defendant is to pay the Plaintiff's temporary accommodation and storage on or before 21 May 2012 and that the Plaintiff is to repay the Defendant upon receipt of his share of the Deceased's estate." 23The parties are agreed that I should amend the order to reflect the handwritten order by inserting the word "for" after the word "pay" and I so order. 24It seems that the plaintiff's misapprehension might have been based upon what he was hoping was going to be the position put forward by his counsel. However, the court did not accept that and the order was made in the terms set out above. Thus there was a delay of two months in the lengthy process of the plaintiff moving out of the premises, which clearly was due to the plaintiff's misunderstanding. 25Thereafter the plaintiff engaged a company, 'clarity matters', to provide a quote to do the packing work as he declined the defendant's offer to do the packing after he had moved out. It seems he feared the defendant would throw a lot of his goods in the rubbish bin. The quote was obtained on 25 June 2012 and they have been ready to do the job, which will take four days, since 29 June. In early July the plaintiff had some health issues but still anticipated leaving by 6 August. That was not achieved and at the end of August he has to have some dental surgery, which he says will incapacitate him for a week. 26I accept that he has had some health problems, which have caused delays. Accepting his need to pack up all his belongings before he leaves the site the main problem has been his failure to act in the two months allowed by the court. If he had acted then and engaged clarity matters the move probably could have been completed by from 5 July 2012. 27I dismiss the plaintiff's motion of 4 April 2012 with costs. I order the plaintiff to pay an occupation fee of $595 per week from 5 July 2012 to the date he moves out of the premises. I order the plaintiff to pay the defendant's costs of the defendant's motion of 28 May 2012. ********** 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: 31 August 2012