Serves Pty Ltd atf The Rosemont Trust v Roche (Deceased); Roche (Deceased) v Serves Pty Ltd atf The Rosemont Trust

1. [1]

   The claim to be adjudicated is a remnant of a long running dispute between two sisters who have fallen out with one another and who, by all accounts, inherited or otherwise received a fortune from or via their late father, John Justin Roche (the deceased), who died on 24 April 2010.

2. [2]

   It is brought by way of a cross-claim, the protagonists to which are the cross-claimant, Deborah Ann Hamilton, in her capacity as an executor of the estate (Hamilton) and a company (Serves), the cross-defendant, which was established by the deceased. Hamilton and her sisters, Fiona Roche (Roche) and Shauna Roche (Shauna) are shareholders and directors of Serves.

3. [3]

   Hamilton and Roche are joint executors of the estate, but Hamilton, on behalf of the estate, is the real protagonist of the cross-claim. Roche, no doubt instructs on behalf of Serves, but takes no active part in the proceedings in an individual capacity. She has filed a submitting appearance.

4. [4]

   Shauna Roche plays no role in this contest.

5. [5]

   To put things into perspective, the maximum positive outcome for Hamilton on her pleaded case (if she won on everything) would be a verdict for one-half of $279,904 (ie. $139,952), which would go into the estate, the residuary beneficiary of which is a trust for the benefit of her daughters, Airlie and Alexandra. In fact, in the manner in which the case was conducted, the maximum amount she could have recovered is one-half of $85,998 (ie. $42,999), which amount was established not by Hamilton, but by an appropriate, if somewhat generous, admission by Serves.

6. [6]

   But as will be explained, her case fails in any event.

7. [7]

   To put things further into perspective, the matter was set down to be heard over two days. I was provided with a court book (including affidavits) exceeding 1,000 pages. The written submissions run to 30 pages. Although legal costs may be of a matter of indifference to these parties, I required them to complete the hearing in one day, which counsel comfortably achieved.

8. [8]

   The deceased was a highly successful businessman who, with his family, did property developments and conducted agribusiness, predominantly through a group of companies called the EDC/ADC Group (the Group). He amassed significant wealth. The family is based in Adelaide, South Australia.

9. [9]

   By will dated 16 February 2006 (the Will), he appointed Hamilton and Roche joint executors. Probate in common form of the Will was granted by the Supreme Court of South Australia on 22 August 2011 and probate in solemn form was re-sealed by this Court on 2 August 2019.

10. [10]

    In the 1960s, the deceased’s mother (Dorinda) acquired a residential property at Rosemont Avenue, Woollahra (the Property), an eastern suburb of Sydney. Dorida died on 2 February 1986, leaving a half-share in the Property to each of the deceased and his brother, David Roche (David). They became registered owners of the Property as tenants-in-common in equal shares on 17 October 2003.

11. [11]

    The Property was used as a Sydney family holiday home. According to Hamilton, the deceased liked to visit Sydney each year for the Royal Easter Show. He also had friends in Sydney. He stayed at the Property during visits here. Other members of the family, friends and some employees also stayed there from time to time.

12. [12]

    In 1995, the Group was owned and controlled by the deceased and his siblings. There were discussions about splitting the group assets amongst different family groups. In 2000, the deceased’s family group acquired the interests of his siblings in a number of assets. The deceased funded the acquisitions, which were made through entities controlled by or established for the benefit of his daughters.

13. [13]

    In the context of the splitting, the deceased and David agreed that the deceased (or his interests) would buy David’s half-share in the Property for $571,188. To this end, the deceased arranged for the establishment of the Rosemont Trust and for it to be the vehicle for the acquisition. The Rosemont Trust has never held any assets apart from its interest in the Property. The beneficiaries of the Rosemont Trust include the respective corporate entities of the three sisters, Darden Pty Ltd (Roche), Dairal Pty Ltd (Hamilton), and Proscenium Pty Ltd (Shauna). The purchase price paid by Serves was financed by the deceased.

14. [14]

    Serves, which had been incorporated in October 1985 and was part of the Group, was made trustee of the Rosemont Trust. The deceased was appointed a director of Serves on incorporation. He held shares in it. Hamilton was appointed a director in 1994, and Roche and Shauna were appointed in 2003. They are the current shareholders. Roche is the executive chairman of the Group and since 2008 has been the managing director of Serves.

15. [15]

    At some point, Shauna asked the deceased whether she could permanently move into the Property and rent out her residence in Woollahra. He declined. Hamilton gave evidence that the deceased had the final say in regard to the use of the Property. She also gave evidence that he had the final say on how the business of the Group operated.

16. [16]

    It may safely be inferred that during his lifetime, Serves was a creature of the deceased.

17. [17]

    On 28 March 2006, the deceased wrote a handwritten letter “To my Trustees”, whom I take to be Roche and Hamilton. It appears that at the time, Shauna wished to be bought out of the Group. In the letter, he expressed a requirement that he wanted immediately $6,000,000 for a series of reasons including “for the unit at Rosemont NSW to be maintained”.

18. [18]

    One consequence of the falling out between the sisters is that the Property was sold by orders of this Court made on 25 May 2023, under s 66G of the Conveyancing Act 1919 (NSW). The sale yielded net proceeds of $3,859,360, which amount is currently held by the trustee for sale.

19. [19]

    During the period October 2003 to May 2011 (the Period), for most of which the deceased was alive, he or his estate paid $279,904, for what has been described as maintenance costs, rates, taxes and outgoings on the Property. Serves, his legal co-owner, did not make any contribution to these payments.

20. [20]

    Hamilton gave evidence and was cross-examined. She was evasive and not a satisfactory witness, departing from clear and unequivocal statements made by her on affidavit. But she accepted that, during his lifetime, the deceased chose to pay the maintenance and ongoing costs associated with the Property. Under cross-examination, she maintained that she had no personal knowledge that the deceased paid everything until he died, but conceded that it was her understanding that he probably did. The evidence leaves no doubt that he did. Serves itself did not have the money to do so. Its only asset, as reflected in its accounts, was the Property, shown at cost. The deceased or his interests would have had to have funded maintenance of the Property.

21. [21]

    Roche swore an affidavit dated 22 March 2024 upon which she was not cross-examined. Of the Property, she says that it is and has always been maintained as a Roche family holiday house.

22. [22]

    Her affidavit includes reference to the deceased’s business records including a “drawings ledger” which records a total of $279,904.06 as having been paid by the deceased in the period October 2003 to May 2011. [1] There was no objection to the admission of the document into evidence and nothing in it was challenged by Hamilton.

23. [23]

    Hamilton on behalf of the estate claims equitable contribution of half of what the deceased or his estate paid during the Period in respect of the Property.

24. [24]

    The principles of contribution were elucidated by McHugh J in Burke v LFOT Pty Ltd (2002) 209 CLR 282; [2002] HCA 17 at [38] as follows:

25. [25]

    Hamilton pleads her case in the following numbered paragraphs (which are a little out of sequence) of her Second Further Amended Statement of Cross-Claim (underlining removed):

26. [26]

    The order sought by her in her cross-claim was:

27. [27]

    Three things may immediately be observed.

28. [28]

    First, the only basis for the claimed right of contribution is the joint or co-ordinate liability of the estate and Serves as co-owners of the Property for the described expenses, and payment by the deceased or the estate to the benefit of both. It was submitted on behalf of Hamilton that the pleading comprehends some other species of right to contribution, which I understood to be on the basis that Serves merely received some benefit from the payments concerned. If there is such a right of equitable contribution, it was not pleaded.

29. [29]

    Second, the amount said to have been paid is neither pleaded nor particularised.

30. [30]

    Third, the above formulation of the relief specifies no amount and its scope and operation cannot be divined from its terms. An order in that form would be of no utility and would leave over for dispute whether any particular expense which might fall within the description is co-ordinate or not. Describing a payment or liability as being for “maintenance costs, rates, taxes and outgoings” says nothing of whether the payer had any, let alone a co-ordinate, liability to pay or discharge it.

31. [31]

    At the end of the hearing, the Court having raised the problem with the form of the relief sought, Hamilton applied for and I gave her leave (which was not opposed) to amend the terms of the relief claimed to be:

32. [32]

    Hamilton did not take upon herself the burden of proving that any particular amount making up the total of $279,904.06 paid by the deceased and the estate was a joint or co-ordinate liability of the deceased and Serves as co-owners of the Property. Indeed, she took the position that it was impermissible for the Court to have regard to the accounting material which establishes the amounts and for what they were paid.

33. [33]

    Hamilton relies exclusively on an admission which results from a non-response by Serves to a Notice to Admit Facts served on behalf of Hamilton dated 3 September 2024 (the Notice), which required admission of the following fact:

34. [34]

    This admission to which the Notice gives rise, suffers from the same deficiency as the relief originally claimed. It says nothing of whether any of the amounts paid were the subject of a joint or co-ordinate liability.

35. [35]

    I record that on behalf of Hamilton, it was sought to tender documents which explained how the forensic decision came to be made to rely on the Notice. I rejected the tender. The admission operates according to its tenor and no more, and Hamilton’s reasons for the forensic decision are irrelevant.

36. [36]

    Many, if not the bulk of payments recorded in the drawings ledger would not appear to be for joint or co-ordinate liabilities at all, let alone ones such arising because of co-ownership of the Property and counsel for Hamilton did not wish to be heard to contend otherwise in relation to any particular payment. Examples of these include:

37. [37]

    I was provided with an aide memoire intended to compare the level of payments made respectively by the deceased and the estate on the one hand and for the later period when Serves paid on the other. I think this was for the purpose of demonstrating that Serves spent more than the deceased or the estate, giving rise to the implication that the claim in this case is a modest ask. Such a comparison has no role to play in the determination of the issues in this case.

38. [38]

    Serves, however, made a voluntary admission that joint liabilities of $85,998.73 (strata levies, rates, land tax and water service) were paid by the deceased or the estate. Half of this is $42,999 (1.1% of the amount held by the trustee for sale).

39. [39]

    Unsurprisingly, given her exclusive reliance on the Notice, it was not submitted on behalf of Hamilton that any amount different from that claimed should be awarded. However, if Hamilton was otherwise entitled to succeed, a verdict for $42,999 may have been appropriate as an order which the nature of the case required (Civil Procedure Act 2005 (NSW) s 90).

40. [40]

    I turn then to Serves’ defences.

41. [41]

    Serves abandoned an untenable contention that there was a binding agreement between the deceased and Serves that the deceased would pay all of the expenses in connection with the Property without any recourse to Serves, and an alternative contention that an estoppel arose because they adopted this a common assumption, acted upon it and departure from it would occasion detriment to Serves.

42. [42]

    As to the first, the evidence did not establish any such agreement or any consideration for it. As to the second, Serves did not identify any cognisable detriment. It was put that based on the common assumption, Serves did not rent out the Property. But the evidence clearly establishes that this was never an option. Moreover, it is manifest that the deceased paid the expenses voluntarily.

43. [43]

    Next, Serves argued that any equitable relief should be withheld because of Serves itself had discharged joint liabilities of it and the estate (although, after the period to which the claim in this case relates) and that to do equity Hamilton must take this into account. The amount said to have been expended by Serves (and proved by the documents) is $30,658.41 of which half is $15,329. If this contention were to have been upheld and Hamilton been otherwise entitled to succeed, the resulting verdict would be reduced from $42,999 to $27,670. I, however, reject Serves’ contention because;

    1. (1)

       on Serves’ own case (to which further reference is made below), there was never any intention on behalf of the deceased or Serves (which had been his creature) that there would be such an accounting;

    2. (2)

       the contention was made late; and

    3. (3)

       in the particular circumstances of this case, it should have been pleaded or made clear early on in the piece. It was not.

44. [44]

    It was put on behalf of Hamilton that this contention should be rejected for the additional reason that to entertain it may give rise to some issue estoppel preventing a claim by the residuary beneficiary. That beneficiary is not a party to these proceedings. It apparently wishes to bring a claim against Serves. Hamilton intends to make an application for leave to bring a derivative action on its behalf. I confess to having had some difficulty understanding the thrust of this contention but in any event, any potential problem with it was overcome by an undertaking by Serves to the Court not to take any such point in any such further proceedings.

No right of equitable contribution

1. [45]

   Serves put a further contention that the deceased made, and Serves received, the benefit of the payments without any intention on the part of either that there would ever be any recovery from Serves (or, for that matter, any other entity representing his family interests), so that no right of equitable contribution arose.

2. [46]

   I uphold this contention.

3. [47]

   In Global Consulting Services Pty Ltd v Gresham Property Investments Ltd [2018] NSWCA 255; (2018) 365 ALR 143 at [65] and following, Leeming JA said that it is uncontroversial that the right of contribution will not be available if there is a contrary “common intention falling short of a legally enforceable agreement”. The parties’ intentions are not references to their subjective intentions but rather the intentions to be imputed to them having regard to the transaction in its context: see Muschinski v Dodds (1985) 160 CLR 583 and Ermogenous v Greek Orthodox Community of SA Inc (2002) 209 CLR 95; [2002] HCA 8.

4. [48]

   That is this case.

5. [49]

   The common intention on the part of the deceased and Serves that contribution would not be available can be inferred from each of the following circumstances on its own. The cumulative effect leaves no real room for doubt:

   1. (1)

      Serves was a creature of the deceased which held one asset for the benefit of his family and did not have the wherewithal in its own right to pay;

   2. (2)

      over the years, the deceased paid everything and never asked for anything;

   3. (3)

      there is no evidence in any accounting or other material placed before the court which reflects any entitlement or expectation on the part of the deceased to be reimbursed for the payments he made or in the records of Serves of any corresponding liability;

   4. (4)

      various members of the family, and others, used the property without paying any rent or other expenses;

   5. (5)

      to have expected payment in either direction would have amounted to asking the family to pay to and receive money itself; and

   6. (6)

      the deceased’s handwritten letter reflects an intention that his assets would maintain the Property.

6. [50]

   It follows that the cross-claim fails.

Limitation Act Defence

1. [51]

   Finally, Serves contends that the claim is statute-barred under the Limitation Act 1969 (NSW) in any event.

2. [52]

   The following are the relevant sections of the Limitation Act:

3. [53]

   The last payment subject of the cross-claim, was made on 16 May 2011 (the last payment of a liability conceded by Serves to be joint, for rates, was made on 18 August 2010). If s 14 (1)(a) applies, all components of the claim were statute barred at the latest by 17 May 2017. These proceedings were commenced on 9 December 2022 (although the cross-claim was only filed on 18 May 2023 by s 74(1)(b)(i) of the Limitation Act).

4. [54]

   The question is whether s 23 applies the time bar in s 14(1)(a) to Hamilton’s cause of action because the cause of action is analogous to one founded on contract, including quasi contract.

5. [55]

   The common obligation in discharge of which the payments admitted by Serves were made was, in each case, a statutory joint and several obligation on the co-owners of the Property: Local Government Act 1993 (NSW) s 560; Land Tax Management Act 1956 (NSW) s 27; Strata Schemes Management Act 1996 (NSW) s 78. The precise source of the joint obligation to pay water rates and charges was not identified. Both sides appeared to accept that such an obligation exists.

6. [56]

   There is no doubt an equitable right of contribution in an owner of land against a co-owner for payment of a pro tanto share made by the owner of a co-ordinate obligation (equity now covers the field – Burke v LFOT (supra)).

7. [57]

   The difficult question is whether that right is analogous to the legal right in contract or quasi contract referred to in s 14(1)(a).

8. [58]

   The Court was not referred to any direct authority on the point (maybe because there is no analogy or no authority).

9. [59]

   The statutes imposing the obligations give no such right of contribution.

10. [60]

    Reliance was placed on Barber v De Prima (2018) 97 NSWLR 932; [2018] NSWSC 601 in which Robb J made reference to and followed McLelland J (subsequently CJ in Eq) in Lang v Le Boursicot (1993) 5 BPR 11,782 which was a dispute between co-guarantors. McLelland J referred to the fact that a claim for contribution between co-guarantors under the same instrument may be brought as a claim at law for a simple contract debt in quasi contract. McLelland J considered, and Robb J agreed, that s 14(1)(a) applied by analogy to a claim by a guarantor for contribution from another guarantor where the very same facts gave rise to a claim for contribution in equity and the equivalent claim at common law: Barber v De Prima at [45].

11. [61]

    This holding does not solve the difficulty in this case. While there is clearly a right to contribution in equity, I am unpersuaded that there is also a parallel right at law or, if there is, that it is a right which can be analogised to contract or quasi contract, as opposed to being exclusively equitable.

12. [62]

    The parties had no relevant relationship apart from that of co-ownership of a piece of land. They are not co-parties to any relevant instrument which gives rise to any rights or obligations between them. It is difficult to draw an analogy with a right of contribution – no doubt based on the equitable doctrine of equality – which arises because one discharges a common obligation imposed on them by statute, with an obligation owed in real or quasi contract.

13. [63]

    I consider that the better view is that it is left to equity and not the statute to impose any bar (see Gerace v Auzhair Supplies Pty Ltd (2014) 87 NSWLR 435; [2014] NSWCA 181 at [70]-[72]).

14. [64]

    It follows that the Limitation Act defence fails.

15. [65]

    The cross-claim is dismissed.

16. [66]

    I provisionally order that the cross-claimant pay the costs of the cross-defendant. This order will solidify 7 days after delivery of this judgment, unless a party notifies the others, and my Associate in writing that some other order is sought, specifying briefly the basis for it, in which event the order will not take effect and I will give directions for the resolution of costs.

17. [67]

    The exhibits are to be returned.