Bkassini v Sarkis (No 2) (Revised)

1. [1]

   Following the hearing in this matter, the Court delivered its judgment on 1 November 2017: William Bkassini v Sonya Sarkis [2017] NSWSC 1487 (the principal judgment).

2. [2]

   These reasons assume knowledge of the principal judgment and I will use the same terms as used in that judgment.

The principal judgment

1. [3]

   The plaintiff, William, succeeded in an application under s 7 of the Family Provision Act 1982 (NSW) (the Family Provision Act) for further provision from the estate of his deceased wife. William’s daughter, Sonya, is the defendant and the deceased’s executor and trustee of her testamentary trust. The parties made various other claims against each other, but it is not necessary for present purposes to record those claims in detail.

2. [4]

   The deceased’s estate consisted substantially of interests in two adjoining properties, which were called No 93 and No 95 for the purposes of the principal judgment. At the time of her death, the deceased and William owned each of the properties equally as tenants in common. Number 95 had been the deceased’s and William’s matrimonial home.

3. [5]

   Because of the relative complexity of the claims and the outcome, I indicated at [416] of the principal judgment that I would require the parties to confer and prepare short minutes of order to give effect to the findings that I had made. At [417], I made observations concerning the subjects that were required to be dealt with in the short minutes of order. At [419], I said that the parties “should proceed on the basis that the Court will not welcome any continued unreasonable or unnecessary disputation”. It is doubtful that any less effective exhortation has ever been made by a court.

4. [6]

   After a number of hearings, the Court was able to make substantive orders on 5 July 2018. The orders were complex, and it will be sufficient to note the following:

   1. (1)

      By order 2, the deceased’s half interest in No 95 was declared to be notional estate under s 24 of the Family Provision Act, as was the deceased’s half interest in No 93, but in this latter case only to the extent necessary to enable Sonya to satisfy the order that she pay William’s costs.

   2. (2)

      The effect of orders 3 to 9 (the Crisp order) was that, as well as his own half interest in No 95, William received a right to reside rent-free in the deceased’s half interest in No 95 for as long as he wished, on condition of his paying certain expenses and keeping No 95 in reasonable condition. The orders made provision for William to be able to reside for the balance of his life in a substitute property in certain eventualities.

   3. (3)

      By order 10, upon the death of William, Sonya’s interest as executor in No 95, and any substitute property, was to form part of the deceased’s estate and be held on the terms of her will.

   4. (4)

      Orders 19 to 23 appointed trustees for sale of No 93 under s 66G of the Conveyancing Act 1919 (NSW). The effect of order 22(f) was that, after making a number of priority payments, the trustees were to pay the balance to William as to one half share and the other half share to Sonya as trustee of the estate of the deceased, subject to the adjustments to be made as set out in order 24. That order concerned a number of minor adjustments between the parties.

   5. (5)

      Cost orders were made in order 25, including by sub-order (c) that the deceased’s estate pay 85% of William’s costs of the proceedings, other than certain identified costs, on the ordinary basis. By sub-order (d), Sonya’s costs, other than certain identified costs, were to be paid from the estate, or the notional estate, of the deceased on an indemnity basis.

   6. (6)

      The effect of order 26 was that, if, as has happened, No 93 was sold to a third party, Sonya’s one half interest in the net balance of the proceeds of sale, as trustee of the deceased’s estate, after payment of certain identified expenses, was declared to be notional estate to the extent necessary to pay the costs order made in favour of William.

5. [7]

   It will be relevant to note that the costs order made in favour of William by order 25(c) provided that 85% of his “costs of the proceedings” be paid out of the deceased’s estate, save for certain excluded costs. The costs order in favour of Sonya, being order 25(d), did not specifically refer to the costs of the proceedings, but in my view that was implied. These considerations will be relevant to the new costs orders sought by the parties, to which I will return below.

6. [8]

   There have been a number of reasons why the making of final orders in these proceedings has become protracted. As it has turned out, the most significant of these has been order 4(a)(ii) made on 5 July 2018, which established, as a condition to William’s right to reside rent-free in the deceased’s half interest in No 95, that:

7. [9]

   Both parties agreed to the inclusion of this condition. The genesis of this condition was the following paragraph of the principal judgment:

8. [10]

   That observation was included in the principal judgment because William gave evidence in support of his family provision claim that he would need an amount of about $104,500 to carry out repairs to No 95, so that it would be in a suitable condition for him to live in for the balance of his life.

9. [11]

   When I made order 4(a)(ii) on 5 July 2018, I understood that the repair work that was contemplated in respect of No 95 was significant, but its cost, at about $104,500, was only a small proportion of the value of No 95 of $1,650,000, which the parties had agreed the Court should accept. While the need for the making of some of the repairs was pressing, in order to maintain the structural integrity of No 95, it was obvious that William would not have the funds to carry out most of the repairs until he received his share of the proceeds of sale of No 93. As it should not have taken many months, in the second half of 2018, to sell an inner-western Sydney property such as No 93, I assumed implicitly that, notwithstanding the animosity between the parties, their legal representatives would be able to guide them to a sensible compromise in respect of the precise definition and obligations in respect of the reasonable repairs that were required by order 4(a)(ii).

Dispute concerning orders for the repair of No 95

1. [12]

   The parties have not yet achieved the “precise definition and obligations in respect of such reasonable condition and repair” that was referred to in order 4(a)(ii). At its base, that is because a dispute broke out concerning the precise nature of the repair work that William should be required to carry out. On the one hand, Sonya has tried to hold William to the evidence that he gave in support of his family provision application, as referred to at [336] of the principal judgment. Sonya has also sought to change the identity of the tradesperson selected to carry out certain of the repairs, she has sought orders that some of the repairs carried out by William be redone, and she has arguably sought to increase the scope of the repairs. On the other hand, William has been forced by the reality of his financial circumstances to contend that he should only be required to carry out lesser works.

2. [13]

   On 3 September 2018, the Court by consent made orders that each party provide a building report specifying repairs required to be made to No 95 and the estimated cost of those repairs. William was required to prepare a schedule indicating which of the repairs he agreed ought to be performed by him. The matter was stood over to 19 October 2018.

3. [14]

   On that date, the Court was required to order William to provide access to all parts of No 95 to a licensed builder selected by Sonya. William was ordered to refrain from intimidating or harassing Sonya’s builder. The matter was stood over again to 6 December 2018.

4. [15]

   On 6 December 2018, I caused my Associate to send an email to the parties that contained my views as to how the resolution of the dispute concerning the building works should be resolved.

5. [16]

   The email relevantly said:

6. [17]

   On the last day of term in 2018, 14 December 2018, a further hearing occurred. In an adjournment of that hearing, I prepared draft short minutes of order that in a relatively detailed, but incomplete way, provided for what I considered to be a reasonable resolution of the outstanding disputes between the parties concerning the repair work to No 95 that should be done, and who should carry out the repairs. The draft short minutes of order were prepared using aspects of the contending drafts provided by the parties. They stipulated the builder that should do the work and made provision for the identification of which aspects of the works should be done by a tradesperson and not by William. They contained various mechanical provisions concerning the provision of quotations and the giving of notices.

7. [18]

   However, the draft orders required the parties to agree and to complete blanks in the formulation of the orders concerning work that could be carried out by William, work that should be done by a tradesperson, work that should be done as soon as possible, work that should be performed within six months, work that should be completed after the sale of No 93, and also whether items of work should be paid for by William or by Sonya. One problem that had to be addressed was that William did not have the funds to do all of the work immediately, and the carrying out of many aspects of the work would have to be deferred until William received his share of the sale proceeds of No 93. There also needed to be a sensible compromise as to what repairs should be considered to be necessary and what should only be treated as being desirable. Sonya, as executor and trustee of the deceased’s estate, should pay for repairs out of the assets of the estate that were only desirable.

8. [19]

   It was not possible for the Court to decide all of the disputes apparent in the parties’ conflicting draft short minutes of order, because that would not, in the circumstances, have been a proper exercise of the judicial function. Although the parties had provided some evidence on the matters in dispute, there had not been time for a proper hearing. The most that the Court could do, at the time, was to provide a detailed pathway for the parties to resolve their dispute, but further compromise on a common sense basis was required.

9. [20]

   The draft short minutes of order that I provided to the parties did not include any costs order. That was because I understood that the costs of specifying the effect of order 4(a)(ii) made on 5 July 2018 would be encompassed by the costs orders that were made on that date.

10. [21]

    After I had provided the parties with the draft short minutes of order, I made the following observation, at T 10.5:

11. [22]

    My use of the word “realistic” was intended to draw attention to the fact that the Court was being asked to order that William carry out numerous repair works, within specified timeframes, at his own expense. The Court therefore had to take care that it did not make orders that consigned William to an inevitable breach of the orders and contempt of the Court.

12. [23]

    At the end of the hearing, I made the following direction:

13. [24]

    On 21 December 2018, Sonya's solicitor provided to the Court further written submissions, proposed final short minutes of order, and Sonya’s Schedule of Building Works, as referred to in the draft orders. The Court was advised that the parties had agreed to use Sonya’s Schedule of Building Works as the basis for identifying repairs that may be required to be done, or which may otherwise be desirable. Compared with the draft short minutes of order that I had prepared on 14 December 2018, order 2 expanded the works to be done by a Tradesperson. Order 3 provided for Sonya to be notified of the proposed paint schedule for her approval. The orders did not provide for any repair works to be paid for by Sonya out of the deceased’s estate. Of the 28 items of repair work in the Schedule, on my count there was some degree of express or implied disagreement about all except five items.

14. [25]

    There is not now any utility in analysing the Schedule in detail, insofar as it explained the differences between the parties. Taking one example, described as “Roof Repairs”, the Schedule advised that William had agreed to engage a licensed tradesperson to re-point the roof tiles within three months of receiving the proceeds of sale of No 93. Sonya required the work to be done urgently to stop water entering the property. Sonya required that, in addition to the work that William had agreed to do, the rusted sheets and rusted valleys be replaced.

15. [26]

    The draft short minutes of order provided to the Court by Sonya did not include any order for costs.

16. [27]

    It is sufficient to note that there were significant differences between the parties concerning the extent of the repairs that should be carried out, and the timeframe in which William would be required to cause the repairs to be done.

17. [28]

    The Court received a formal response from William under cover of his solicitor’s 11 January 2019 email. Attached to the email were detailed submissions prepared by the solicitor, and a marked up revision of the draft short minutes of order provided to the Court by Sonya. The submissions informed the Court that William had obtained a report from a building inspector in response to a similar report obtained by Sonya. The submissions explained in detail William’s objections to aspects of Sonya’s short minutes of order.

18. [29]

    It is sufficient to note that, among many variations, the proposed orders increased the items of repair work that could be done by William rather than a tradesperson, decreased the items of repair work that would be required to be completed as soon as reasonably possible, increased the items of repair work that would be required to be carried out within six months, increased the items of repair work that would not be required to be undertaken until after William received his share of the proceeds of sale of No 93, and required Sonya to pay for seven items of repair works.

19. [30]

    Sonya delivered written submissions by her senior counsel in response on 30 January 2019.

20. [31]

    These responses to the Court’s 14 December 2018 direction had the result that the parties had turned the need to formulate the detail of William’s obligation, created by order 4(a)(ii) made on 5 July 2018, to keep No 95 in reasonable condition and state of repair, into a relatively complex building case that was not suitable for determination in this Court. In any event, the resolution of the dispute would have required a hearing and probably also a view of No 95.

21. [32]

    After contemplating the practical difficulties in trying to resolve the residual disputes between the parties, I caused my Associate on 16 May 2019 to send an email in the following terms to the parties’ senior counsel and solicitors:

22. [33]

    After further email correspondence, my Associate was advised by Sonya’s solicitor, on 28 May 2019, that a single set of draft orders had been prepared containing agreed orders and conflicting orders proposed by the parties, as well as a short summary of the parties’ submissions concerning the orders in dispute. The email advised that senior counsel for the parties would confer for the purpose of trying to reach the most extensive agreement possible.

23. [34]

    On 5 June 2019, Sonya’s solicitor advised my Associate that the parties were arranging a date for a settlement conference, and that the outcome was expected to be provided to the Court within three weeks.

24. [35]

    The next communication received by my Associate was an email dated 27 August 2019 from Sonya’s solicitor. The email attached further submissions on behalf of Sonya, proposed short minutes of order and a Schedule, a report from one of the trustees for sale of No 93 dated 25 July 2019, and a response from Sonya’s solicitor to the trustee for sale dated 14 August 2019.

25. [36]

    The trustee for sale’s report advised that Sonya had offered to buy No 93 for $1,420,000, but William had objected to the trustees for sale accepting this offer, because the price was less than the values contained in the appraisals obtained by William. Sonya then made a further offer to purchase No 93 for $1,200,000. The trustee for sale advised that he accepted that Sonya’s offer was at current market value. The trustee for sale provided the parties with estimates of the net receipts by William and the deceased’s estate from the sale of No 93 at auction at a low estimate of $1,050,000, a high estimate of $1,450,000, or alternatively a sale to Sonya at $1,200,000. The net value of a half share in No 93 was assessed at $417,034, $609,034 and $551,463 respectively. The sale to Sonya would have obviated certain repair and selling costs.

26. [37]

    Sonya’s reply to the trustee for sale’s report dated 14 August 2019 recorded, among other things, that Sonya understood that the trustees for sale had decided to sell No 93 by auction, advised that it was the trustees’ duty to take responsibility for the sale price, and threatened the trustees with liability for breach of their duty, if No 93 was sold at auction for a price less than the price that had been offered by Sonya.

27. [38]

    Sonya referred in her submissions to the communications with the trustees for sale, and sought a reservation of liberty to apply if the trustees for sale did not seek authorisation to sell No 93 to Sonya, and the property went to auction “with the consequent costs of auction, loss of rent, and need for repairs”.

28. [39]

    It should have been immediately apparent to Sonya and her lawyers that, if the high estimate of the sale price of No 93 was $1,450,000, even if that price was achieved, the amount received by the estate would be $190,000 less than the $1,640,000 value of No 93 that the parties had agreed that the Court should accept for the purpose of deciding the case. Plainly, if the price achieved was significantly less than the high estimate, the result would cause an even greater divergence from the state of affairs assumed in the principal judgment. The ability of the estate to meet the costs orders already made on 5 July 2018 was therefore in jeopardy. Furthermore, as William's ability to fund any repairs of No 95 depended on his expected receipt of his share in the net proceeds of sale of No 93, the outcome of the remaining issue that the parties were fighting about had also become susceptible to the price that could be achieved for No 93.

29. [40]

    The realisation of those obvious matters ought to have caused Sonya, as trustee of the estate, to have proceeded with great prudence. Although William did not owe any trustee obligation, when he became aware of these matters, he also ought to have acted with particular prudence in his own interests.

30. [41]

    Sonya’s submissions asserted that William had undertaken works to a lesser standard than required, and had undertaken work proposed to be done by a tradesperson himself, without seeking Sonya’s consent.

31. [42]

    The description of the repair works to be done by William in the proposed short minutes of order was substantially the same as in Sonya’s earlier proposed orders, save that some timeframes in which William would be required to complete the works were reduced. A substantive change was that orders were included that had the effect of changing the identity of the Builder (from the person chosen by the Court in its 14 December 2018 draft short minutes of order) to a person chosen by Sonya, and adding orders that, if William did not pay the Builder from his own funds, the amount payable could be deducted from William’s share of the net proceeds of sale of No 93.

32. [43]

    Order 19 of Sonya's draft short minutes of order was an order that William pay Sonya's costs. As I understand it, this was the first suggestion that the Court should make an additional costs order to the orders made on 5 July 2018.

33. [44]

    My Associate received William’s response to these documents as attachments to an email from his solicitor dated 3 September 2019.

34. [45]

    The submissions of William’s senior counsel dated 3 September 2019 noted that William had carried out the re-pointing of the brickwork at No 95, but that his builder had advised that an acid wash was required, which William was prepared to carry out. Senior counsel submitted that Sonya now wished William to be ordered to pay for repair works that were not identified at the hearing as being necessary, and that much of those works was not thought to be necessary by William’s builder or his building inspector. Senior counsel made submissions as to why William should be allowed to choose the builder to carry out the repair works, being the builder originally selected by the Court.

35. [46]

    It is not necessary to undertake an analysis of William’s detailed responses to Sonya’s new proposed short minutes of order. Order 19 in William's version of the draft short minutes of order was an order that Sonya pay William's costs.

36. [47]

    The parties continued this dispute concerning the additional costs order in subsequent versions of the draft short minutes of order.

37. [48]

    William provided correspondence with the trustees for sale dated 19 August 2019 in which he advised that he wished No 93 to be sold by public auction as soon as possible.

38. [49]

    The resolution of the outstanding issues in dispute fell into abeyance pending the sale of No 93.

39. [50]

    On 31 March 2020, senior counsel for Sonya advised my Associate by email that No 93 had been sold, so that William “is in funds to enable major works to be undertaken” on No 95. Senior counsel’s email concluded: “Could I ask that his Honour provide his decision on the matter?”

40. [51]

    In response to the imperative tone of that request, I would observe that the Court had not been provided with any of the information necessary to enable it to make a proper determination of what repairs could reasonably be funded by William. If it was thought that the Court could properly decide the expanded dispute, in the absence of much necessary evidence, and without a firm indication of the funds that would be available, then the thought was with respect misguided.

41. [52]

    Senior counsel for Sonya then advised my Associate by email on Wednesday, 1 April 2020 that the sale of No 93 was due to settle on the following Friday.

42. [53]

    After reviewing the file, I caused my Associate to send an email to the senior counsel and solicitors for the parties on 15 April 2020. The relevant parts of the email were as follows:

43. [54]

    By letter to the parties dated 7 May 2020, the trustees for sale advised that they were in a position to make a distribution following the sale of No 93 and then to retire as trustees.

Assumptions on which the 5 July 2018 orders were made

1. [55]

   Before I explain the present position in these proceedings, it will be convenient to outline the financial position of William and the estate of the deceased, as disclosed in the evidence at the hearing, and on the basis of which the orders made by the Court on 5 July 2018 were formulated.

2. [56]

   On the basis, primarily, of the findings in [316] to [327] of the principal judgment, the circumstances of the deceased's estate were found to be as follows (the amounts that I have set out in the table below have generally been taken from agreed figures provided to the Court by the parties):

3. [57]

   As I explained at [324] of the principal judgment, I reduced the legal costs payable to William and Sonya to allow for the failure of certain personal claims pursued by those parties. Consequently, by reference to the above table, Sonya's estimated costs on the indemnity basis were $164,718.93. William's estimated costs on the ordinary basis were $178,000.

4. [58]

   The effect of the financial information in the tables set out above was that, after Sonya paid the capital gains tax (CGT) payable by the estate on the sale of No 93, the value of the estate would be $880,000. The estate's half share in No 95 of $825,000 would represent all but $55,000 of the assets in the estate.

5. [59]

   The effect of the orders made on 5 July 2018, giving William a right to reside rent-free in the deceased's half interest in No 95 for as long as he wished would be to tie up that part of the deceased's estate for William's lifetime.

6. [60]

   However, the financial information agreed to between the parties justified a belief that the costs orders made by the Court could be met out of the estate's half share in the proceeds of sale of No 93.

7. [61]

   The value of William's half share in No 93 was also taken to be $820,000. He would be required to pay his share of the loan secured by mortgage over No 93 ($55,352), and also the amount of CGT payable in respect of his half share ($150,000). Finally, he would be required to pay the difference between his actual legal costs and the proportion of his costs on the ordinary basis that he was to receive from the deceased's estate.

8. [62]

   It was thought that William would have a sufficient surplus from his half share of the proceeds of sale of No 93, after allowing for these payments, to permit him to fund his obligation to repair No 95, and also enable him to retain a significant fund as a buffer against contingencies.

Continuation of the dispute concerning orders for the repair of No 95

1. [63]

   I will now return to the parties' responses to my Associate's 15 April 2020 email.

2. [64]

   On 13 May 2020, Sonya's solicitor sent an email to my Associate that included a summary of the financial position of the estate of the deceased as at 29 April 2020. In answer to my Associate's question as to whether the draft orders provided on 28 May 2019 were still relevant, Sonya's solicitor provided a new copy of the proposed orders that included Sonya's comments as well as the comments of William that had been incorporated into the earlier proposed orders.

3. [65]

   The summary of the financial position of the estate of the deceased as at 29 April 2020 was, slightly edited, as follows:

4. [66]

   The summary then set out the amounts required to be paid out of this total and the net balance of the estate, as follows:

5. [67]

   The net sale price of $1,380,000 was above the $1,200,000 price offered by Sonya, and closer to the high estimate of $1,450,000 referred to by the trustee for sale in the report dated 25 July 2019. However, as noted above, in the principal judgment I recorded that the parties had jointly adopted a value of $1,640,000 for No 93. The net sale price achieved was $260,000 less than this sum.

6. [68]

   The costs of the trustees for sale were $77,000 plus disbursements of $9,289.

7. [69]

   The estate's share of the net funds from the sale was $656,937.65, which was $163,062.35 less than the estimated value of $820,000, as adopted by the parties and included in the principal judgment.

8. [70]

   The estimated amount of CGT of $126,573.54 was somewhat less than the $150,000 that was allowed in the principal judgment.

9. [71]

   Sonya’s administration fees of $220,893.76 was an amount claimed by Sonya under clause 45.4 of the deceased's will, which entitled her to remuneration as trustee at the rate per annum charged by an authorised trustee company: see [201]-[205] of the principal judgment. At the time the principal judgment was published, this aspect of Sonya's claim was $168,162.50.

10. [72]

    The legal fees incurred by Sonya as trustee had increased from the amount of $203,345.11 as referred to in pars 88 and 89 of Sonya’s affidavit dated 24 April 2017 (prior to the final hearing) to $429,714.47. That is an increase of $226,369.36, although not all of those fees related to the issue of the repairs to be conducted to No 95.

11. [73]

    Sonya's claim for reimbursement of expenses of $93,921.75 was less than the amount of $107,406.77, as recorded in the principal judgment.

12. [74]

    William's estimated legal fees, which were not agreed to by Sonya, calculated under order 25 made on 5 July 2018 on the ordinary basis, had increased from $160,200 to $268,983.38. That was an increase of $108,783.38.

13. [75]

    The orders made following the principal judgment were therefore determined upon the basis that the total amount of the legal costs of both parties that would be payable out of the estate of the deceased was $308,447.04. Apparently, the parties incurred substantial additional legal costs after the principal judgment was delivered. Insofar as these additional costs were incurred in relation to the dispute as to what orders should be made by the Court in relation to the repair works to No 95, it will be remembered from [8] above that I had recorded at [336] of the principal judgment that William had claimed that about $104,500 was required to carry out the repairs he identified.

14. [76]

    As the total value of the deceased's estate’s interest in the proceeds of sale of No 93 was $656,937.65, and the amounts required to be paid by the estate totalled $1,155,693.55, the estate had a deficit of $498,755.90, given that the estate’s interest in No 95 was subject to a Crisp order in favour of William.

15. [77]

    As by 29 April 2020, the parties' legal costs of, and associated with, all legal proceedings had risen to $698,697.85, the amount of the legal costs exceeded the value of the estate’s net share in the sale price of No 93, before allowance was made for the estate's other liabilities. The total for legal costs does not allow for additional percentages in each case that the Court did not allow the parties, or the difference between William's actual costs and his costs calculated on the ordinary basis.

16. [78]

    Perhaps the most significant aspect of these revelations is that Sonya, as trustee of the estate of the deceased, has taken the position that she cannot pay to William any of the legal costs that have been ordered to be paid out of the estate.

17. [79]

    As noted above, Sonya's solicitor's 13 May 2020 email also attached draft proposed orders with the parties' competing positions. I will defer considering the proposed orders until I address below the issues that remain for determination in these proceedings.

18. [80]

    William's solicitor's 13 May 2020 response to the email from Sonya's solicitor of the same date confirmed William's acceptance of the figures in the summary of the financial position of the estate of the deceased, save that it recorded that William did not admit Sonya's full entitlement to the administration fees or the reimbursement of expenses, and that Sonya's legal fees had not yet been properly quantified.

19. [81]

    On 14 May 2020, William's solicitor sent a further email to my Associate to which he attached a document setting out an explanation of the funds available to William, after receipt on Friday, 8 May 2020 of his share of the net proceeds of sale from No 93.

20. [82]

    That document contained the following information, slightly edited:

21. [83]

    The total amount of William's legal costs that was outstanding as at that date was $339,030. As I understand footnote 2 contained in the document, William had already paid $46,887.64 to his solicitors during the course of the proceedings. The total amount of William's legal costs was therefore $385,917.64. That is $116,934.26 more than William's costs on the ordinary basis that William has claimed are payable out of the deceased's estate.

22. [84]

    The obligation to repay Sam Bkassini $61,285.89 relates to payments made by Sam, who is one of William's sons, that were detailed in a separate schedule. It is not necessary to record that schedule in its entirety. $37,398 was the total amount of a number of payments made by Sam to William's solicitors on account of William’s costs of the proceedings. Sonya has contested William's liability to repay Sam for some of the expenses, including motor vehicle insurance over seven years estimated at $7000, and internet and home phone payments of $2997.

23. [85]

    William's solicitor also provided the following schedule setting out William's asset position, slightly edited:

24. [86]

    As William will not be able to realise the value of his half share in No 95 as long as he makes that property his home, the obvious result of the combined facts that William's share of the proceeds of sale of No 93 was $86,184.40, and the assertion that the estate of the deceased will not pay him any of the costs that Sonya has been ordered to pay out of the estate of the deceased, will be that there will be insufficient funds to enable William to pay for any substantial repairs to No 95, and still retain even a small fund to cover contingencies.

25. [87]

    At the directions hearing in this matter that took place on 14 May 2020, the Court attempted to address the confronting reality that the combined effect of the sale of No 93, at a price substantially below the value adopted by the parties at the hearing, and the substantial increase in the parties’ combined legal costs, was that William would only have enough funds to carry out minimal repair works, and in addition to preserve a small fund to act as a buffer against contingencies. I made directions for the parties to provide reports to the Court to deal with this issue, given that it had become clear that the Court should not follow a course that may require the parties to incur further substantial legal costs.

26. [88]

    In response to the directions, William provided to the Court a report dated 25 June 2020.

27. [89]

    That report disclosed that Sonya had raised with William the issue of whether he would consent to the sale of No 95, so that the estate of the deceased could pay all of its outstanding liabilities.

28. [90]

    William's solicitor advised the solicitor for Sonya, on 10 June 2020, that William was not prepared to move out of the property, which had been his home for decades, and did not consent to its sale. William sought an undertaking that Sonya would not take proceedings to effect the sale of No 95. The report observed that Sonya had not responded to that request, and William was concerned that Sonya might attempt to force the sale of No 95, which caused William to have reservations about spending any money on further repairs.

29. [91]

    The report repeated, in substance, the information provided on 14 May 2020, concerning the amount received by William from the sale of No 93. After the retention of $20,000 for further legal fees, the amount available for William would be $66,184.40.

30. [92]

    The report stated that William retained the property in Lebanon that he had not been able to realise. Sonya had informed William that there was insufficient money from the sale of No 93 to pay William's costs. The parties were attempting to agree a figure for costs, but, in the absence of agreement, William would ask the Court to make a gross sum costs order so as to avert the need for a costly assessment process. William's only source of income is the age pension. The lodgers at No 95 gave notice and vacated in the first week of May 2020. It was asserted that it was unlikely that William will be able to obtain other lodgers in the immediate future. William's wife has casual employment in the aged care industry. William wishes to retain the amount in the Arab Bank account, as it is reserved for his funeral expenses.

31. [93]

    The report stated that William would prefer to reserve the whole of the remaining $65,000 as a contingency fund. He set out reasons concerning aspects of ill health that give rise to a need for a contingency fund. However, the report stated that William also recognises that there are structural repairs required for No 95 that, if not completed, will affect his enjoyment of the premises.

32. [94]

    The report then contained the following observations concerning the repair of No 95, given the amount of funds that will be available to pay for those repairs:

33. [95]

    Sonya's solicitor provided a report to the Court on behalf of Sonya dated 23 July 2020.

34. [96]

    The report stated that it was unnecessary for William to have brought to the Court's attention Sonya's suggestion that it may be necessary for the parties to sell No 95.

35. [97]

    It asserted that, if William spent money on repairs, that could only benefit William in terms of improving his accommodation and protecting or increasing the value of an asset of which he owns a half share.

36. [98]

    The report challenged William's estimation of the CGT that he would be required to pay following the sale of No 93. It asserted that Sonya had received accounting advice that the CGT would be $104,215.72 rather than the $135,000 estimated by William.

37. [99]

    The Court does not have any information that enables it to determine the true amount of CGT that is payable by William.

38. [100]

    As mentioned above, the report challenged the validity of William's claim that he was obliged to reimburse Sam $7,000 for paying car insurance and for William's Vodafone and Optus payments.

39. [101]

    The report observed that William had not included any rental income which his wife may be receiving from properties in China or overseas bank accounts belonging to William and his wife in China and Lebanon. No information was provided that would cause the Court to find that those supposed assets were of substantial value.

40. [102]

    The conclusion reached in the report, at par 12, concerning the amount of funds available to William was that he would have at least $103,000.

41. [103]

    The report contained the following observations on the issue of the repair work that should be carried out to No 95:

42. [104]

    As I had become aware that Sonya had proposed that William agree to the sale of No 95, it was necessary for the Court to consider the possibility that, if it ordered William to carry out repairs designed to keep No 95 in good repair for the balance of his lifetime, that may impose upon William a substantial waste of scarce funds, on 30 July 2020 I caused my Associate to send an email in the following terms to the senior counsel and solicitors for the parties:

43. [105]

    Sonya's solicitor provided the report requested by my Associate on my behalf on 10 August 2020.

44. [106]

    After explaining the nature of the increases in the costs and expenses incurred by the deceased's estate since the date the principal judgment was handed down, which have been set out above in the summary of the financial position of the estate as at 29 April 2020, the report gave the following information as to what had been done with the funds received by Sonya as the estate's share in the proceeds of sale of No 93:

45. [107]

    If I understand this aspect of the report properly, it means that Sonya has used the limited funds available to the estate from the sale of No 93 to partially repay herself and her husband, leaving no funds to make any partial payment to William of his costs in accordance with the Court's order. There does not seem to have been any consideration given to the possible need to make pro rata payments to all creditors of the estate.

46. [108]

    The report gave broadly expressed reasons why Sonya did not accept William's claim that he was entitled to be paid legal costs of $235,921.55 out of the deceased's estate.

47. [109]

    The report offered the following reasons concerning the inability of the deceased's estate to pay William's costs:

48. [110]

    The Court has been given no explanation as to why Sonya, as trustee of the estate of the deceased, has incurred the additional legal costs that have been incurred to pursue a claim in relation to the repair of No 95 that was, from its inception, understood to have involved potential costs of about $104,500.

49. [111]

    The report then raised a new issue concerning a broken sewer gully breather on No 95.

50. [112]

    The report contained the following response to the Court's question as to whether Sonya seeks an order that No 95 should be sold:

51. [113]

    Further, the report does not explain why Sonya kept incurring substantial additional legal costs on behalf of the deceased's estate, even after it became clear from the expected range of sale prices for No 93, and even the prices that she offered herself, that the assumptions upon which the orders made by the Court on 5 July 2018 were likely to be substantially undermined. The report contains no explanation for why Sonya, in the face of these changed expectations, did not compromise with William in a manner that recognised the inevitability of the shortfall in funds available to carry out the repairs.

52. [114]

    Annexure D to the report provided on behalf of Sonya is in the following terms, slightly edited:

53. [115]

    The $481,376.07 that is stated as being the negative balance of the estate regarding the sale of No 93 as at 17 July 2020 of $481,376.07 was calculated on the basis, which Sonya has not admitted, that William would be paid legal costs of $235,921.55 by the estate.

54. [116]

    These figures allow an estimate to be made of what funds William would have if he agreed to the sale of No 95.

55. [117]

    It may not be possible for the Court to estimate with accuracy the amount that William would have available for alternative accommodation and a contingency fund, if he agreed to the sale of No 95. Assuming that William's share of the net proceeds of sale was also $632,500, and that he was also obliged to pay CGT of $87,112.50, William would receive $545,387.50. If William established an entitlement to be paid all of the legal costs that he claims are payable from the estate, he would in addition receive $268,983.38. William would also have the $66,184.40 that he will receive from the sale proceeds of No 93, assuming that his further legal costs do not exceed $20,000. William would have a total of $880,555.28. It is probable that this amount would be whittled down by extra transaction costs.

56. [118]

    In par 17 of the final report provided to the Court by Sonya it is stated that William would also have "any surplus from the estate's share of the proceeds of sale, to purchase alternative accommodation", which is an amount of $64,011.43. As that amount would be an asset of the deceased’s estate, it is not clear why William would be entitled to use that money.

Repair works required for No 95

1. [119]

   A comparison between the contents of William's and Sonya's reports concerning further repair work required to be carried out on No 95, and the draft short minutes of order provided to the Court on 13 May 2020 containing the parties' opposing positions as to what work was necessary, suggests that the parties have bowed to necessity and realised that there are insufficient funds to enable all of the repairs suggested by the parties to be carried out.

2. [120]

   On William's part, he can only pay for certain essential repairs, while retaining a fund as small as $44,000 to $47,000 as a buffer against contingencies.

3. [121]

   On Sonya's part, it is accepted that the estate does not have funds to contribute towards repairs, and cannot meet the debts that it has accumulated, without No 95 being sold.

4. [122]

   The Court does not know why the parties did not anticipate a result such as this, in the first half of 2019, when the parties and the trustees for sale were considering the range of prices that might be obtained on the sale of No 93. Now that the Court has been informed of the additional legal costs incurred by the parties, it can only wonder why the present outcome was not anticipated.

5. [123]

   Although it now appears that the 13 May 2020 version of the draft short minutes of order, incorporating the opposed positions of the parties, has been superseded by a belated grasp of reality, it is appropriate that the Court make a number of short comments about that document.

6. [124]

   I have analysed the draft short minutes of order in detail, in order to gain an understanding of the relationship between the parties' positions, as disclosed by that document, and the positions that they have now adopted in the two reports. I will not attempt to summarise the result of that analysis, as a written description of the competing positions taken by the parties, and the reasons given for their differences, would be quite mesmerising.

7. [125]

   The analysis confirmed the view that I had gradually been forming, from my consideration of earlier versions of the draft short minutes of order, that the parties had developed a dispute that was in essence non-justiciable as an exercise in defining what was left indefinite in order 4(a)(ii) made on 5 July 2018. That was part of orders made to determine a family provision application in this Court. With each version of the draft short minutes of order, the dispute became more complex and less suitable for determination on the basis only of oral or written submissions and the consideration by the Court of building reports in chambers.

8. [126]

   There was a dispute as to which builder should be appointed to carry out works required to be done by a tradesperson. Sonya did not accept that the principal judgment had assumed that the repair works would be carried out by the builder who had given William a quotation that was put into evidence at the hearing. Sonya wanted a different outcome than that which was contained in the draft short minutes of order prepared by the Court on 14 December 2018.

9. [127]

   There was a dispute about whether Sonya had included in the list of items of repair works repairs that were not included in the quotation that was considered in the principal judgment.

10. [128]

    There was a continuing dispute as to which items of repairs could be undertaken by William and which items had to be done by the tradesperson. There were disputes concerning the urgency of the works. Where Sonya conceded that repair works should not have to be completed until after the sale of No 93, she wanted the works to be completed within three months of the sale, while William required that he had three months after the receipt of his share of the proceeds of sale.

11. [129]

    Sonya introduced, in draft order 13, a requirement that William, at his own expense, cause the tradesperson to rectify the work in items 5, 11, 13, 22 and 26 within three months of the sale of No 93. They were works that William by himself or his builder had carried out at his expense.

12. [130]

    Whatever the explanation may be as to how this state of affairs came about, the fact that the parties were entirely unable to reach a reasonable compromise led to the result that the dispute could not be resolved by any court without a substantial hearing. This Court was not a suitable forum for that purpose.

13. [131]

    I now return to a consideration of the positions reached by the parties in their recent reports.

14. [132]

    First, Sonya has agreed to William causing Proof Metal Roofing Australia to do work that includes removing and replacing the existing rusted roofing sheets, reframing the timber structure, installing a new fascia cover, gutter and downpipes, being the work referred to in pars 26 to 29 of William's report. The expected cost to William is $12,000 to $15,000, inclusive of GST.

15. [133]

    Sonya's only qualification to her consent is her requirement, expressed in par 14 of her report, that the roof tiles at the front of the No 95 should be replaced by tiles and not with colourbond sheets.

16. [134]

    It appears that Sonya's doubt about whether William intends to replace roof tiles with tiles at the front of the house comes from her reading of the quotation provided by Proof Metal Roofing Australia. I cannot tell from reading the quotation what is intended. Unfortunately, the Court does not know whether this is a real problem, and, if it is, what the extra cost of using tiles at the front of the house would be.

17. [135]

    Sonya accepts that it is appropriate for William to carry out the work referred to in par 30(a) of his report, being the replacement of the section of the ceiling in the living room, at an estimated cost of $1,000, inclusive of GST. However, she objects to the work being done by the builder nominated by William, who was the builder who gave the quotation referred to in the principal judgment.

18. [136]

    In par 30(b) of his report, William says that he cannot afford to remedy the rising damp by means of a damp course injection, but he is prepared to pay for the alternative rising damp treatment in accordance with the methodology recommended in his building expert's report dated 24 September 2018 at par 18. Sonya continues to insist that the repair works be carried out in the manner that was originally intended. A costing for the original approach has not been provided.

19. [137]

    Sonya has not pressed the addition of a security bar to window and the plumbing gully referred to in par 30(c) and (d) of William's report.

20. [138]

    Sonya now accepts that, as stated in par 30(e) of William's report, he can only afford to pay for the installation of a steel post to support the rear patio, and that she agrees with that alternative work being done, provided that it is in accordance with her builder's specifications using Australian certified galvanised structural steel, which is 150 mm x 150 mm x 5 mm, using an appropriate footing.

21. [139]

    It is not clear whether work to that specification differs from the work that William proposes to carry out, and, if it does, what the additional cost would be.

22. [140]

    Sonya has agreed with the external painting work that William proposes to have carried out by an appropriate tradesperson at an estimated expense of $5,000.

23. [141]

    However, in pars 17 and 19 of her report, Sonya requires that William carry out two additional repair works.

24. [142]

    First, Sonya does not accept William's case that the brick re-pointing work that he carried out could be made satisfactory by the application of a light acid wash. Sonya requires the work to be redone completely at a cost of at least $21,000, plus GST.

25. [143]

    Secondly, Sonya requires rectification of the work performed by William's builder to the posts on the front veranda of No 95. William's builder cut out damaged parts of the posts and replaced those parts, rather than replacing the whole of the posts to the front veranda.

26. [144]

    No estimated cost for this additional work has been given.

27. [145]

    Although it is not possible, because of the incompleteness of the information provided to the Court, to estimate what the effect would be, if the Court required William to comply with Sonya's additional requirements, it seems to be the case that the consequence would be to leave William with almost nothing as a cash reserve to give him some protection against the vicissitudes of life.

28. [146]

    Paragraph 15 of Sonya's 10 August 2020 report is equivocal on the issue of whether Sonya would make an application to force the sale of No 95. She said: "At this stage, although the Defendant can see no other alternative than for [No 95] to be sold, she is not seeking an order that No 95 be sold…"

29. [147]

    The level of doubt as to Sonya's intentions in this regard will justify the Court in being conservative in the repair works that it will require William to undertake at his expense in respect of No 95.

30. [148]

    That approach will be justifiable whether the amount of funds William receives, after legal costs are paid, are in the order of $66,000, as William claims, or $103,000, as estimated by Sonya. Even the latter sum will allow only an inadequate fund to cover contingencies, after essential repairs are made to No 95.

31. [149]

    The Court has already made the orders necessary to give William a right to live in the estate's half of No 95 rent free for life. Having been made, those orders stand.

32. [150]

    It is true that the sale of No 93 yielded an amount of $260,000 less than was assumed for the purposes of the principal judgment. However, in addition to that unexpected outcome, the parties incurred substantial additional legal costs after the principal judgment was delivered, largely to no effect. It is probable that the fundamental components of the 5 July 2018 orders could have been salvaged, if the only unexpected consequence had been the shortfall in the sale price of No 93.

33. [151]

    As the parties are already both in positions of substantial deficit as a result of the amount of legal costs that they have incurred, in my view the appropriate course is for the Court to decide the repair works that William should now be required to carry out, without the Court calling for even more information to remedy the deficiencies as to the costs of certain repair works that have been identified above.

34. [152]

    Unfortunately, the reality of present circumstances justifies the Court in only requiring William to carry out the repair works identified in the report that he provided to the Court by William dated 25 June 2020. Those works may not be entirely adequate, but they will have to do. This is so that William will be able to retain a modest fund to meet contingencies over the balance of his life. Those contingencies may include further repair works that may become necessary to preserve the structural integrity of No 95.

Costs

1. [153]

   It will be necessary for the Court to give the parties an opportunity to make further submissions on the issue of costs. While the 13 May 2020 draft short minutes of order showed that each party seeks an order that the other pay his or her costs, that subject was not addressed in any of the recent reports to the Court.

2. [154]

   The parties have not made clear what the effect would be of an order expressed in terms that one party pay the other's costs.

3. [155]

   As I have indicated above, it was my original understanding that the Court had made final costs orders, and that those orders would extend to encompass what I thought was the relatively uncontroversial issue of the specification of what repair works would be required in respect of No 95, by when those works would be required to be done, who would do them, and who would pay for them. As mentioned, the works were expected to cost $104,500, which is not much more than a quarter of the additional legal fees that the parties have incurred.

4. [156]

   That expectation was reflected in my draft short minutes of order prepared on 14 December 2018, and the contestant short minutes of order prepared by the parties in the following month. It appears that it was only when Sonya realised that the additional costs were getting out of hand that the claim for costs was first made in the draft short minutes of order provided to the Court on 27 August 2019.

5. [157]

   While I would hear the parties on the issue, it may be that the question of the additional costs must be dealt with on the principles stated by McHugh J in Re the Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex Parte Lai Qin (1997) 186 CLR 622; [1997] HCA 6. Whatever final orders are made by the Court concerning the making of repairs to No 95, that will not reflect a win by one party over the other. Reality has won, in that the combined effect of the lesser sale price of No 93 and the additional legal fees incurred by the parties has been to make both of them abandon the extremity of their original positions. The Court has in practical terms been required to conduct a salvage operation.

6. [158]

   There may be a question as to whether the parties should be required to bear the additional costs personally. It may be that that position should extend to Sonya, even though she is a trustee of the estate. That would depend upon whether she can establish that the expenditure of the additional costs was prudent and related solely to the proper affairs of the trust. In any event, legal costs incurred in trying to purchase No 93 may not be costs of these proceedings.

7. [159]

   I recognise that the parties may have reached the stage where they have insufficient funds to pay their lawyers to continue any sort of contest about costs.

8. [160]

   Some thought must be given to how William's entitlement to receive his costs from the deceased's estate should be protected. Whatever their quantum may be, he is entitled to payment of those costs out of the deceased's half share in No 95. His choice to take advantage of the Crisp order that he has received may have the effect of deferring his ability to receive the costs, but it does not extinguish his right to do so.

9. [161]

   Perhaps an additional order making the costs payable out of the estate to William due on the sale of No 95, and creating an equitable charge to secure that entitlement, may be appropriate.

10. [162]

    Sonya's entitlement to be paid any costs and other outstanding expenses should not need to be secured by any charge, because Sonya will be able to control the estate as its trustee.

11. [163]

    If William decides to make the foreshadowed application for a gross sum costs order, he will need to do so formally. A consideration of the costs order made in William's favour on 5 July 2018, in relation to what it includes and what it excludes, would suggest that this is not an easy case for the formulation of a clear basis for a gross sum costs order. Furthermore, it is not a conventional ground for the making of a gross sum costs order that the parties have been so extreme in incurring legal costs that there is no other way that they have left to quantify their entitlement to costs. However, I will deal with any application on its merits.

12. [164]

    William should prepare draft short minutes of order to give effect to these reasons in relation to the repair works that he should be ordered to carry out. That draft should be provided to Sonya before it is submitted to my Associate. Sonya is invited to agree to the terms of the draft, or alternatively to provide an alternative draft to my Associate. Further dispute should be avoided to the fullest extent possible.

13. [165]

    The draft short minutes of order should also address the outstanding issues concerning the costs of the proceedings, including how costs entitlements should be preserved, if they cannot be paid.