Supreme Court New South Wales Medium Neutral Citation: Re the Estate of John Gordon Ross [2014] NSWSC 1954 Hearing dates: 12 December 2014 Date of orders: 12 December 2014 Decision date: 12 December 2014 Jurisdiction: Equity Division Before: Brereton J Decision: Administrator justified in entering into contract for the sale of the land concerned. Catchwords: SUCCESSION – administrators and executors – application for judicial advice – whether administrator justified in entering into contract for the sale of land to particular purchasers – whether entering into contract is based on the reasonable judgment of the administrator following a diligent process of marketing – held, entering into contract was justified. Legislation Cited: (NSW) Trustee Act 1925, s 63 Category: Principal judgment Parties: Richard Anthony Watson as administrator of the Estate of the Late John Gordon Ross (applicant) Representation: Counsel: Mr Birch SC (applicant) Solicitors: Watson & Watson (applicant) File Number(s): 2010/284489 Judgment (ex tempore) 1. HIS HONOUR: By summons filed on 3 December 2014, the plaintiff Richard Anthony Watson, in his capacity as administrator of the estate of the late John Gordon Ross, seeks judicial advice in respect of a contract for sale of certain real property of the estate into which he has entered with proposed purchasers of that property. 2. Mr Watson is the administrator of the estate as a result of a deed of family arrangement entered into between parties interested in the estate in circumstances where probate proceedings were on foot, with two putative executors propounding two different wills of the deceased. As a compromise, the parties and beneficiaries agreed to appoint an independent administrator and agreed also on the adjustment of beneficial interests in the estate. Those agreements were contained in the deed of family arrangement to which I have referred. 3. One of the assets of the estate was a parcel of land at Annangrove. It comprises two parts, one which has potential for development as an industrial property, and the other which is subject to environmental restrictions. When Mr Watson was appointed executor, he was given to understand that the land might be worth in the order of six million dollars, however as things transpired, it was far from so. He proceeded to take steps towards a sale of the property, but on 4 November 2014, the parties in the probate proceedings, Mr Latham and Mr Hubbard, obtained from the court an interlocutory injunction restraining Mr Watson from proceeding with the proposed sale. That injunction was extended on 5 November, but dissolved by consent orders made on 7 November 2014. Those consent orders further provided that Mr Watson would not enter into a contract before 3pm on Tuesday 11 November, that in doing so he would take into account any existing participant in the expression of interest process and any further offers received before the closing time, and that after exchange of contracts he would seek judicial advice as to any contract he might exchange. Provision was also made for the representation of the creditors and beneficiaries on any judicial advice application. Mr Watson had prepared a preferred form of contract containing the terms which he wished to be included in any contract, although indicating that if an offer sought different terms, it would still be considered. 4. In conformity with the orders of 7 November 2014, Mr Watson proceeded, through the agents that he had retained, with the expression of interest process. Although over the period before, as well as after, the injunction was granted, a number of offers had been obtained ranging from a low of $785,000 to a high of $1.9 million (which, it should be noted, was withdrawn and replaced by a lower offer only one day after it was made), as at 11 November 2014, there were essentially three offers on the table. 5. Of the three offers on the table on 11 November 2014, one was for $1.302 million and adopted the preferred form. A second, by Boon and Goh, was for $1.4 million and also adopted the preferred form of contract. A third was in the form of a letter from Mr Latham, which was originally proffered on the basis that he would be prepared to make an offer if others were not adequate, but was persuaded by Mr Watson that it should be put forward as an offer so that all three could be considered contemporaneously. Mr Latham's offer was in a sum of $1.5 million, but sought a number of variations to the preferred form of contract. One was that it sought a period of 4 months for settlement as opposed to the 6 weeks under the preferred form of contract. A second was that the deposit would be $10 only, although subject to a provision that if there were default by the purchaser, the purchaser would forfeit $150,000. A third was that there was to be no adjustment for land tax, the effect of which was to reduce the value of the offer by about $53,000. The fourth was that on completion, a sum of $400,000 was to be adjusted in the purchaser's favour in settlement of moneys said to be due and payable by the estate to Mr Latham, so that the balance due and payable on settlement would be $1,099,990. 6. Accordingly, while Mr Latham's offer was greater in value in terms of the nominated purchase price than the Boon and Goh offer, it carried with it a number of difficulties including, in particular, the terms to which I have referred, which both reduced the actual superiority in value terms and introduced a number of complications, not least that there is inherently greater risk and uncertainty in a 4 month contract with a $10 deposit than in a 6 week contract with a 10% deposit. 7. Mr Watson, having considered the three open offers and their various advantages and disadvantages, determined to accept the offer from Boon and Goh and exchanged contracts with them, the contract including a clause that it was subject to the Court giving advice that it was appropriate for Mr Watson to enter into that contract. He now approaches the Court for that advice. Although the solicitor for Mr Hubbard and Mr Latham, who appeared when the summons was filed and an abridgement of time for service obtained on 3 December 2014, is not presently in court, it has been communicated to the Court that he has agreed that the Court may be informed that his clients support the giving of the advice sought by Mr Watson. 8. In order to give such advice, it is not necessary that I be comfortably satisfied or satisfied at all that the Boon and Goh offer is the superior offer, although it seems to me strongly arguable at least that it is. It suffices that I be satisfied that it is a reasonable judgment on the part of the trustee in discharge of his duties to accept that offer in preference to the others, and that it follows a diligent process of marketing in which all reasonable steps to obtain the best possible offer have been undertaken. I am amply so satisfied. 9. The Court orders that: 1. Pursuant to the (NSW) Trustee Act 1925, s 63, the plaintiff, Richard Anthony Watson, as administrator of the estate of the late John Gordon Ross, is justified in entering into and completing the contract for sale of land dated 11 November 2014 between himself as vendor and Joolan Boon and Julius Shee Young Goh in respect of the land comprised in lot 2, Deposited Plan 1032790 being Certificate of Title, folio identifier 2/1032790 situated at and known as 282 Annangrove Road, Rouse Hill, in the State of New South Wales. 2. The costs of the application be paid on an indemnity basis out of the estate of the deceased. ********** 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: 20 March 2015