Blow v Hill
[2022] ACTSC 299
•2 November 2022
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Blow v Hill |
Citation: | [2022] ACTSC 299 |
Hearing Date: | 9 June 2022 |
DecisionDate: | 2 November 2022 |
Before: | McCallum CJ |
Decision: | (1) Dismiss the defendant’s oral application for the recission of the defendant’s irrevocable authority dated 2 July 2021; (2) Declare that the plaintiff as executor of the estate of Suzanne Elizabeth Schreiner is authorised to receive, and Trinity Law Pty Ltd as the executor’s solicitor is authorised to pay, the net proceeds of sale of the defendant’s half interest in the Red Hill property to the estate of Suzanne Elizabeth Schreiner; (3) That the defendant pay the plaintiff’s costs as assessed on the ordinary basis; (4) That the plaintiff be indemnified out of the estate of Suzanne Elizabeth Schreiner for any costs differential between her actual costs and the amount of costs she recovers under Order 3. |
Catchwords: | EQUITY — Fiduciary obligations — Executor of Will — Where testator’s Will made gifts to de facto partner conditional upon fulfilment of his promise to pay his share of proceeds of sale of property into the estate — Where de facto partner signed irrevocable authority to executor’s solicitor to pay proceeds into estate — Whether irrevocable authority vitiated or liable to be rescinded by reason of alleged breach of fiduciary duty by executor — Whether executor a fiduciary for the purpose of obtaining the irrevocable authority ORDERS — Application for declaratory order — Where dispute exists between executor and beneficiary as to existence of obligation to fulfil condition of testamentary gift — Consideration of appropriateness of making declaratory order |
Legislation Cited: | Court Procedures Rules 2006 (ACT), r 2900 |
Cases Cited: | Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 Reilly v Reilly [2017] NSWSC 1419 Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 |
Parties: | Boronia Blow (Plaintiff) Alan Hill (Defendant) |
Representation: | Counsel J Mitchell (Plaintiff) B Buckland (Defendant) |
| Solicitors Bertollo Advisory (Plaintiff) Artisan Legal (Defendant) | |
File Number: | SC 18 of 2022 |
McCallum CJ:
These proceedings concern the estate of the late Sue Schreiner, a long-serving New South Wales magistrate. Ms Schreiner died of cancer on 1 September 2020. She made her last Will during her illness, on 2 June 2020.
Ms Schreiner’s Will makes several specific bequests, including two gifts (the sum of $200,000 and a New South Wales property) to her long-term de facto partner, Mr Alan Hill. The bequests also include a gift of $500,000 to a charity, Animals Australia. The residue of the estate is to be divided equally between Ms Schreiner’s sister, niece and nephew. Ms Schreiner’s niece, Ms Boronia Blow, is the executor of the Will.
Ms Schreiner’s assets at the time of her death included her half share in a property in Red Hill in the Australian Capital Territory held by her and Mr Hill as tenants in common. That property has since been sold and the proceeds are held in a solicitor’s trust account pending the determination of these proceedings. Shortly before Ms Schreiner’s death, Mr Hill promised her that, following her death, he would pay his share of the proceeds into her estate upon confirmation of his entitlement to her superannuation pension. Ms Schreiner recorded the promise in her last Will and made the two testamentary gifts to Mr Hill conditional upon its fulfilment. Following Ms Schreiner’s death, Mr Hill signed an irrevocable authority reflecting the promise. Mr Hill has since sought to resile from that agreement, prompting the executor to commence these proceedings against him.
The only relief sought that remains in dispute is the executor’s application for declaratory relief reflecting the irrevocable authority and orders authorising the distribution of the proceeds of sale in accordance with that authority and the Will.
Mr Hill contends that, in securing his agreement to sign the irrevocable authority, the executor acted in breach of a fiduciary duty allegedly owed to him as a beneficiary under the Will. During the hearing, he made an oral application to have the authority rescinded on that basis.
I have determined that Mr Hill is bound by the terms of the irrevocable authority and that his application for its rescission must be dismissed. I am further satisfied that the declaratory order sought by the executor is necessary to determine a legal controversy between the parties and that there is no basis for refusing to make an order of that kind. These are my reasons for reaching those conclusions.
Circumstances in which the dispute arose
Before summarising the evidence, it is important to be clear about the basis for the executor’s claim. The executor seeks a declaratory order concerning Mr Hill’s obligations in accordance with the irrevocable authority. There is no dispute that Mr Hill signed the irrevocable authority. The executor contends that, in accordance with orthodox principle, Mr Hill is accordingly bound by his agreement. On that analysis, the irrevocable authority stands as the principal evidentiary basis for the relief sought by the executor. Much of the extrinsic evidence is irrelevant to that issue but is relevant to Mr Hill’s contention that the authority is liable to be rescinded. Other aspects of the summary that follows are included simply by way of background.
At the time of Ms Schreiner’s death, she and Mr Hill had been in a de facto relationship for around 25 years. Ms Schreiner had no children. She had a very close relationship with her niece and nephew (her sister’s children).
Mr Hill has children and grandchildren but has evidently been estranged from them for many years. The evidence included a copy of his Will dated 12 December 2019 by which he proposed to leave his entire estate to Ms Schreiner or, if she did not survive him, to charity and the residue to Ms Schreiner’s sister, niece and nephew. That Will concludes with the following paragraph:
I state that I am aware that some might consider that I have an obligation to include my children and grandchildren in the distribution of my assets. I have not done so because I have had no meaningful contact with them for in excess of 20 years and because most of my assets have been derived from my partner’s capital and income which she had and has continued to have prior to and during our relationship.
That statement is consistent with something Ms Blow said Ms Schreiner told her during her lifetime: that she (Ms Schreiner) contributed “the significant proportion of finances to the relationship”.
Ms Schreiner was unexpectedly diagnosed with pancreatic cancer in January 2020. Ms Blow gave evidence that Ms Schreiner became ill extremely quickly, and it became clear that she would pass away within months. In the period leading up to her death, Ms Schreiner took steps to get her affairs in order, including making the new Will.
One of the matters addressed by Ms Schreiner during that period was the fate of the Red Hill property. Ms Schreiner and Mr Hill had bought the property many years earlier as joint tenants. That was in circumstances where, as was common ground at the hearing, they had always assumed he would die first. In that event, Mr Hill’s interest in the property would have passed to Ms Schreiner. Until she was diagnosed with cancer, they evidently did not contemplate the reverse situation; that she would die first and that her interest in the property would pass to Mr Hill. In that unexpected event, being Ms Schreiner’s de facto spouse, Mr Hill would also become the “spousal recipient” of her superannuation pension.
After being diagnosed with cancer, Ms Schreiner decided to sever the joint tenancy. It is clear enough that she also raised the matter of the superannuation pension with Mr Hill at that time. However, she was evidently met with scepticism on his part as to whether he would in fact receive those payments.
It is difficult to know what to make of Mr Hill’s position concerning the pension. In his affidavit, he said that he “trusted and relied on” Ms Schreiner and that he deferred to her on questions of law.
In any event, so far as the evidence reveals, he raised a concern about his entitlement to receive the pension in the context of discussion of the joint tenancy of the Red Hill property. In April 2020, Ms Schreiner told Ms Blow that Mr Hill would not agree to sever the joint tenancy because he wanted to hold it as security to be certain that he would receive her pension and that, when the pension was transferred to him, he would relinquish his share in the property. While there is no direct evidence as to Ms Schreiner’s reason for asking Mr Hill to relinquish that share, the likely explanation is that they both regarded her as the beneficial owner of the whole of that property.
By at least 6 April 2020, Ms Schreiner had evidently invoked the assistance of her lawyer in relation to that issue. In an email of that date to Ms Blow, she said “am trying to sever the joint tenancy but lawyer very slow and I might be gone before he does it. If done I will have to make a new Will.”
On 27 April 2020, Ms Schreiner signed a transfer giving effect to her unilateral transfer of her interest in the Red Hill property to herself. She also swore a statutory declaration that day which included the following statements:
I hold an interest in [the Red Hill property] as a joint tenant with Alan James Hill.
I am signing a transfer of my interest in the property to myself with the intention of unilaterally severing the joint tenancy.
I understand that by severing the joint tenancy, my share and interest in the property will not on my death pass to the surviving tenant, Alan James Hill, and instead will be determined by my Will.
The transfer was registered on 8 May 2020.
Mr Hill accepts he agreed that he would give his “holding” in the property to Ms Schreiner. However, he gives a different account of the circumstances in which that occurred.
According to Mr Hill, he agreed to give his share of the property to Ms Schreiner at a time when they both believed he would die first. In his affidavit, he explained that he was experiencing breathlessness in late 2019 and believed he was going to have a heart attack. He said, “Sue told me that my children from my previous marriage could claim a proportion of the house. She wanted me to transfer my interest in [Red Hill] to her to protect her if my children wanted to make a claim”. He said that, as he trusted Ms Schreiner and deferred to her on questions of law, and as they both believed he would die first, he agreed to give his holding in Red Hill to her.
Mr Hill’s account does not make sense and I do not accept it. Until Ms Schreiner was diagnosed with cancer, the property was jointly owned. Had Mr Hill died first while the property was jointly owned, his share would have passed to Ms Schreiner by reason of that fact; there was no need in those circumstances for her to seek the protection of any transfer of his interest.
Ms Blow’s evidence supports a different conclusion. On her account of her conversations with Ms Schreiner, Mr Hill’s agreement to give his holding in the Red Hill property to Ms Schreiner was given after Ms Schreiner was known to be terminally ill. Ms Blow had conversations with Ms Schreiner which confirm that both Ms Schreiner and Mr Hill had previously assumed he would die before her. Ms Blow gave evidence that, after Ms Schreiner received her diagnosis, she expressed concern that Mr Hill would receive her assets upon her death. It was in that context that Ms Schreiner made the new Will. Ms Blow said that Ms Schreiner said to her, “I am adamant that Alan will not receive my earnings from all of my hard work and my life savings and assets”. Ms Schreiner told Ms Blow that the sticking point was the joint tenancy of the Red Hill property. She said to Ms Blow, “I do not want Alan to be a joint tenant of [the Red Hill property]. I do not want him to receive any of my share of the property”.
The severance of the joint tenancy achieved Ms Schreiner’s wish of preventing Mr Hill from receiving her share of the property but does not explain her request, to which Mr Hill agreed, that he transfer his interest in Red Hill to her, unless that was the true reflection of their respective beneficial entitlement to the property.
On 2 June 2020, Ms Schreiner made her new Will. The Will made specific reference to Mr Hill’s entitlement to the superannuation pension and implicitly acknowledged his scepticism as to whether he would receive it. The Will directed the executor to sell Ms Schreiner’s half share of the Red Hill property, which by then they owned as tenants in common, and recorded Mr Hill’s promise to pay his share into the estate provided his receipt of her pension was certain (clause 3(k)):
My partner, Alan, has promised me that within three months of his claim to be the spousal recipient of my superannuation pension being accepted by my superannuation fund, and on the sale of [the Red Hill property], whichever is the later, he will pay the net proceeds of sale of his half of [the Red Hill property] to form part of the residue of my estate.
The Will made two specific bequests to Mr Hill: a property owned by Ms Schreiner (clause 3(a)) and the sum of $200,000 to be paid out of the proceeds of sale of Ms Schreiner’s half share of the Red Hill property (clause 3(m)). However, those bequests were conditional upon his fulfilling the promise set out above (clause 3(o)).
As already noted, Ms Schreiner died on 1 September 2020. On 18 December 2020, Mr Hill received confirmation from State Super that payment of the pension to him had been approved. According to the promise recorded in the Will, it followed that he was thereupon obliged, in conscience if not by law, to pay the net proceeds of sale of his half of the property to form part of the residue of Ms Schreiner’s estate.
Throughout the first half of 2021, there was extensive correspondence between Ms Blow and Mr Hill concerning the sale of the Red Hill property. It is not necessary to go to the detail of that correspondence, save to observe that it is entirely consistent with the understanding recorded in Mr Hill’s promise to Ms Schreiner before her death.
As arrangements for the sale continued, Mr Hill became somewhat irascible. In an email dated 21 June 2021, he complained to Ms Blow about a meeting the previous day at the Red Hill property. He embraced the fact that Ms Blow was to arrange a meeting with the solicitor acting for the estate, Ms Sarah Mason-Jones, but added “I hope it is done on a more businesslike basis than yesterday’s meeting.” In the balance of the email, Mr Hill made a series of relatively trivial complaints about the process of preparing the property for sale and the extent to which that process was an imposition on him (as a man might, who perceived he was undertaking tedious chores for the benefit of others).
The following day, Ms Blow sent Mr Hill a proposed agenda for a meeting scheduled for Friday 25 June 2021 at the offices of Trinity Law. The proposed agenda recorded that the meeting was to be between Ms Mason-Jones, Mr Hill and Ms Blow. Mr Hill replied that the agenda “looks good” and had nothing to add.
The agenda thus stands as an agreed contemporaneous record of what was proposed to be discussed at the meeting. It was in the following terms:
Desired outcome: agree steps to enact sale and timetable for signing documentation
Item 1 – [the Red Hill property]
-Interpretation and clarification of Will regarding [the Red Hill property] in accordance with Sue’s wishes
Item 2 – related items
-3(a) Lot 3 at Glenheather
-3(k) Alan’s half of his proceeds of [the Red Hill property] paid to the estate
-3(k) Superannuation to Alan
-3(l) $500,000 Animals Australia commitment
-3(m) $200,000 to Alan
-3(o) Direction in relation to promise regarding [the Red Hill property]
Item 3 – Documents
-Sarah to draft required documents
Ms Blow, Mr Hill and Ms Mason-Jones all gave evidence at the hearing and each was cross-examined. Ms Blow’s evidence was that Mr Hill attended the Friday meeting and brought with him a large folder of materials including Ms Schreiner’s Will. By that time, Mr Hill had been in receipt of Ms Schreiner’s superannuation pension for some months. At the meeting, he raised a new concern, about the $200,000 bequest. In order to understand that concern, it is helpful to explain that both the gift of $500,000 to Animals Australia and the gift of $200,000 to Mr Hill were to come out of the proceeds of Ms Schreiner’s half share of the Red Hill property. Ms Blow said that Mr Hill’s concern expressed at the meeting was, “if Boronia spends money paying the bills and looking after the house and I’m made to pay half, then I might not get the $200,000 I’m supposed to”.
Ms Blow said she assured Mr Hill that expenses would not be taken out of the $200,000. She said, “I’m happy to sign a document to that effect, assuming you are returning the half in your name to the estate.” That was entirely consistent with the terms of the Will, which made the $200,000 gift conditional upon fulfilment of the promise. Ms Blow’s evidence was that Mr Hill replied, “I want a guarantee on the $200,000 because I certainly intend to adhere to the promise I made [to] Sue.”
Ms Mason-Jones proposed that she could prepare documents recording an irrevocable authority by Ms Blow to pay $200,000 in full to be held in the solicitor’s trust account and an irrevocable authority by Mr Hill to transfer his share of the Red Hill proceeds to the estate.
After the meeting, Ms Blow made notes which she emailed to Mr Hill. The notes stated:
Meeting with Sarah Mason-Jones
The “promise” between Sue and Alan will be adhered to
-Alan to transfer his share of [the Red Hill property] to the estate
-The estate to transfer Alan $200,000 (no expenses to be removed from this amount)
-Sarah to prepare paperwork to this effect, which includes the estate transferring $200,000 to Trinity Law Holdings account
-Follow-up meeting and signing of documents to occur within a week
The email also included notes of a separate meeting with the real estate agent.
Mr Hill responded to that email:
Thank you Boronia for an accurate account of our meetings. I believe it was said that another meeting should be held in about a week.
In cross-examination, Mr Hill questioned the authenticity of that email. There is no basis for his scepticism about that. I accept that the email was sent by Mr Hill in response to Ms Blow’s email and that it reflected his agreement at the time that Ms Blow had provided an accurate account of the key points agreed at the meeting.
In her evidence in the proceedings, Ms Blow confirmed that there was indeed a further meeting on 2 July 2021 at which they each signed an irrevocable authority prepared by Ms Mason-Jones in accordance with the earlier meeting.
Ms Mason-Jones gave evidence consistent with that account. She said that, at the outset of the meeting on 25 June 2021, she informed Mr Hill that she was acting for Ms Blow and had acted on estate matters in which her interests and Mr Hill’s were aligned (such as preparing death notices). She said that, if their interests remained aligned, she could act for them on the sale of the property but that he was welcome and encouraged to get his own advice. Ms Mason-Jones said that he responded, “lawyers always say that” and that he did not think he needed a lawyer.
Following the meeting on 25 June 2021, Ms Mason-Jones prepared the irrevocable authorities. She then met again with Ms Blow and Mr Hill. Ms Mason-Jones said that she again opened the meeting with a remark to the effect that she had prepared the documents at Ms Blow’s request and that Mr Hill could have them reviewed by a lawyer. She said they were a first draft and that there was no need to sign them that day.
Ms Mason-Jones said that Ms Blow and Mr Hill each proceeded to sign the authorities in her presence that day. The only change to the documents she drafted was that Mr Hill requested that both authorities be placed on the same page, which she did.
Each authority was directed to Trinity Law, the firm for which Ms Mason-Jones worked. The authority signed by Ms Blow noted that she would pay $200,000 into Trinity Law’s trust account and authorised Trinity Law to release that amount to Mr Hill conditional upon his paying the net proceeds of sale of his interest in the Red Hill property to the estate.
The authority signed by Mr Hill was in the following terms:
Subject to and conditional upon Trinity Law Pty Ltd receiving the sum of $200,000 as cleared funds in their trust account from Boronia Blow, to give full effect to the promises made between me and my late partner Suzanne Elizabeth Schreiner, I hereby irrevocably direct and authorise Trinity Law Pty Ltd to pay the net proceeds of sale of my half interest in [the Red Hill property] to the estate of Suzanne Elizabeth Schreiner.
Ms Mason-Jones prepared comprehensive contemporaneous file notes of both meetings. Those file notes are entirely consistent with the evidence of Ms Blow and Ms Mason-Jones, which I accept without equivocation.
The second file note was wrongly dated 20 July 2021, a matter explained by Ms Mason-Jones in her affidavit. It included the following notes:
Alan felt like things were back on track. Happy that the issue of his gift being “last” from Suzanne’s share has been dealt with.
Alan wanted the authorities put on the same page.
We talked about process for Alan. He flagged that his energy is pretty low these days. Has a specialist appointment next Wed. He is happy for Boronia to run from here.
Towards the end of the file note, Ms Mason-Jones recorded that she “left to update the authorities as Alan wanted” (that is, to put them on the same page). She reminded Mr Hill that her firm acted for “Boronia as executor” and “did not act for Alan”. She wrote “he is welcome to and encouraged to get independent legal advice” and that he did not have to sign that day. She recorded that he said he was happy to sign and that he wanted to “hand over” to Boronia and Ben (Ms Blow’s brother).
Mr Hill’s evidence was that there was only one meeting. In his affidavit, he stated that he was concerned that, after the gift to Animals Australia and the costs of sale, there would not be sufficient funds to pay him his $200,000. He said:
As I was concerned with how the estate was being administered and that I was not being consulted I asked for a meeting with Boronia and Sarah Mason-Jones, a solicitor at Trinity Law who had been engaged to sell the property. I believed she was acting for both Boronia and myself. At the meeting Boronia attended with an agenda and wanted a lot of documents signed.
Mr Hill’s recollection is inconsistent with the contemporaneous notes in at least the following respects: first, the emails establish that Ms Blow sent Mr Hill the agenda in advance of the meeting and that he agreed to it. Secondly, Ms Mason-Jones’ file note indicates that the preparation of documents was discussed at the first meeting and that they were presented for his signature at a second meeting.
In his affidavit, Mr Hill stated that, at the meeting, he said words to the effect “we need to have a look at Sue’s Will. Here is Sue’s Will and this is what it says.”
Under cross-examination, Mr Hill contradicted his own account and denied that he had a copy of the Will with him at the meeting. That exchange provides just one illustration of what I found to be a dogmatic and unhelpful approach in his evidence:
Yes. And at this time you had a copy of the Will, didn’t you?---No.
So, you were aware that this was going to be – you’re suggesting, are you, that you’re aware that you were going to discuss the interpretation and clarification of the Will and specific gifts given under the Will but you did not have a copy of the Will?---I only had an unsigned copy.
Right?---Boronia produced a signed copy at the meeting.
Right, okay.
HER HONOUR: Was it different from the unsigned copy?---Not that I was able to detect at that time.
Mr Hill confirmed in his affidavit that, to “allay” his concerns about the proceeds of sale of the Red Hill property, Ms Blow told him he would be paid his $200,000 regardless of what the property sold for.
Mr Hill described the meeting as follows:
It all happened very quickly and I was not given time to think about the arrangement much. I did not look close enough at the irrevocable authority and felt rushed into signing it. I am 82 years of age and need more time to properly consider things.
I did not know at the time that I signed the irrevocable authority that the Will gave me an option at clause 3(o) not to give the estate my share of the proceeds of the sale of [the Red Hill property]. If I had been advised of this earlier, what the estimate was to be realised after the sale and advised about the irrevocable authority I would not have agreed to sign it.
The credibility of that evidence is significantly undermined once it is accepted, as it must be, that there were two meetings. Importantly, Mr Hill acknowledges that he did sign the irrevocable authority. I do not accept that he was rushed into doing that. In cross-examination, Mr Hill was obstinate and self-contradictory. He flatly denied matters admitted by his own affidavit, such as whether he had a copy of Ms Schreiner’s Will with him at the meeting with Ms Mason-Jones. In my assessment, his recollection entails a measure of reconstruction which may reflect his current sentiment but which does not accurately reflect what occurred, as recorded in Ms Mason-Jones’ careful file notes. Mr Hill’s counsel accepted during closing submissions that the version of events supported by file notes might properly be preferred.
The evidence of Ms Blow and Ms Mason-Jones, supported as it is by contemporaneous notes, persuades me that there were two meetings; that Ms Mason-Jones repeatedly told Mr Hill that she did not act for him and invited him to obtain his own legal advice; that his main concern was to ensure that he would receive the full bequest of $200,000 and that he willingly signed the irrevocable authority in return for Ms Blow’s irrevocable authority to secure that payment.
Resolution of the dispute
The executor’s case, put simply, is that Mr Hill signed the irrevocable authority knowing that it contained contractual terms and affected legal relations and that he is accordingly bound by those terms in accordance with the “general rule” stated in Toll (FCGT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; 219 CLR 165 at [57]. The executor submitted that there is no vitiating element to displace that rule. The legal controversy between Ms Blow (as executor) and Mr Hill is whether he is bound by the irrevocable authority; if he is, it follows that the executor is entitled to act in accordance with the direction to pay (by receiving the proceeds of sale into the estate).
Mr Hill did not dispute the characterisation of the irrevocable authority as a document that contained contractual terms and affected legal relations. He submitted, however, that the executor “is not entitled to declaratory relief or specific performance because she comes to equity with unclean hands”. As debated during the hearing, it may be doubted whether Ms Blow seeks any remedy in the nature of specific performance, since the relief sought does not require Mr Hill to do anything in order to give effect to the agreement. In any event, Mr Hill submits that Ms Blow should be denied the relief sought because, “being the fiduciary of the defendant in the relevant dealings with the estate, [she] acted in breach of fiduciary duty in obtaining the defendant’s assent to the 2 July agreement”.
The untested premise of the submission is that Ms Blow stood in the role of Mr Hill’s fiduciary in obtaining his assent to the 2 July agreement. That premise warrants scrutiny. It is based on the contention that, on its proper construction, the Will conferred an “election” on Mr Hill because the bequests to him were conditional upon fulfilment of his promise and he could elect not to fulfil the promise (by not paying his share of the Red Hill property proceeds into the estate). In oral submissions, Mr Buckland, who appeared for Mr Hill, said, “this is an election, not of a power by Ms Blow, but a choice in the hands of Mr Hill”.
It may be accepted that, in practice, Mr Hill could elect not to pay his share of the Red Hill property proceeds into the estate and so forgo the bequests made to him under the Will. That was a matter for his conscience. But it is wrong to speak of the Will conferring an election. The Will conferred bequests, not choices. The imposition of the condition (that any gift to Alan under the Will was contingent upon his fulfilling his promise) did not create alternative bequests; it gave rise to a choice between a bequest and no bequest. Ms Blow stood in the role of fiduciary to Mr Hill only in his capacity as a beneficiary, not in his capacity as an elective non-beneficiary.
In any event, however one analyses Mr Hill’s position, an aspect of Ms Blow’s function as executor was to ascertaining whether Mr Hill would fulfill his promise. Obtaining a personal benefit in the event that he did was an inevitable consequence of the exercise of her power as executor in accordance with the terms of the Will. As submitted by the executor, there could be no conflict between interest and duty in those circumstances: Reilly v Reilly [2017] NSWSC 1419 at [116] (Lindsay J).
Mr Hill’s submissions would hold that obtaining a personal benefit was not inevitable because of the availability of the so-called election not to fulfil the condition of the conditional bequests. Mr Hill submitted that what he was to receive under the Will was uncertain “at any time prior to the signing of the irrevocable authority”. As already explained, if that was the case, it was due not to any uncertainty in the terms of the Will or the powers of the executor; only uncertainty as to whether Mr Hill would fulfil his promise. Ms Blow was not the trustee of that promise. Her power to transfer the testamentary gifts to Mr Hill (the NSW property and $200,000 out of Ms Schreiner’s share of the proceeds of sale from the Red Hill property) was conditional upon Mr Hill’s fulfilment of the promise. Dealing with him in that capacity (to ascertain whether he would or would not fulfil the promise) was an inevitable consequence of the exercise of her powers as executor.
Even if my analysis of that issue is wrong, and Ms Blow did stand in the role of a fiduciary towards Mr Hill concerning the dealings discussed at the meetings of 25 June 2021 and 2 July 2021, I am not satisfied that she acted in breach of any fiduciary duty. Mr Hill submitted that Ms Blow breached her fiduciary duty because she did not make him aware of the value of the Red Hill property, the anticipated expenses of the sale and the value of the other property he was to inherit so as to enable him to make an informed decision as to whether to fulfil his promise before he signed the irrevocable authority.
There are several difficulties with this aspect of the argument. First, there was no evidence to establish that Ms Blow had any better information as to the value of the Red Hill property at the time the irrevocable authority was signed than was available to Mr Hill. The evidence established that she had a view or opinion which she had adopted for various purposes but she had not obtained a valuation or even an informal appraisal. Further, there is no reason Mr Hill could not similarly have formed his own view on that matter; he was certainly more familiar with the property. He knew what he and Ms Schreiner had paid for it in 1993 and he had owned it since that time. The position is the same with the property Mr Hill was to inherit; the evidence did not establish that Ms Blow had any better information than Mr Hill had or could readily have obtained about the value of that property. As to expenses, there was no suggestion that Mr Hill at any stage requested those details. For those reasons, I reject the contention that the irrevocable authority is vitiated or liable to be rescinded on the grounds of breach of fiduciary duty.
The executor submitted that there is no other vitiating element to displace the rule that Mr Hill is bound by the terms of the document he signed. Mr Hill did not address that issue in closing submissions and it is not clear to what extent he contends otherwise, apart from the allegation of breach of fiduciary duty considered above. For completeness, I would reject any such contention for the reasons put forward by Ms Blow.
Ms Blow’s written submissions identified several matters to support the contention that the irrevocable authority is not vitiated by unconscionable conduct, undue influence or duress. First, Mr Hill speaks English, is literate and is well-educated. In his communications with Ms Blow prior to the sale of the Red Hill property, he spoke of his experience in legal matters and expressed a certain disregard for lawyers.
It is clear from the email correspondence that Mr Hill willingly attended the two meetings with Ms Mason-Jones. Indeed, according to his affidavit, he requested such a meeting. I accept, in accordance with the evidence of Ms Blow and Ms Mason-Jones, that Mr Hill was invited to obtain his own legal advice and declined to do so. He later received Ms Blow’s notes and agreed that they provided an accurate reflection of the meeting. He was given an opportunity to obtain legal advice before signing the irrevocable authority and declined that invitation.
Finally, and perhaps most persuasively, the irrevocable authority reflected a promise made by Mr Hill to his de facto partner of over 25 years on her deathbed. The proposition that he had to be procured by sharp tactics to comply with it sits uncomfortably with the importance and solemnity of such a promise.
Appropriateness of making a declaratory order
The source of the Court’s power to make a declaratory order of the kind sought may be found in r 2900 of the Court Procedures Rules 2006 (ACT). The Court also has inherent power to make such an order: Ainsworth v Criminal Justice Commission [1992] HCA 10; 175 CLR 564 at 582.
The exercise of the power is “confined by the considerations which mark out the boundaries of judicial power”: Ainsworth at 582. The plaintiff’s application does not invite the Court to exceed those boundaries here. The question raised is not hypothetical. There is a legal controversy between Ms Blow in her capacity as executor and Mr Hill as to whether he is bound by the irrevocable undertaking. Ms Blow has a real interest in obtaining a determination of that controversy because it will inform her administration of the Will.
I make the following orders:
(1) Dismiss the defendant’s oral application for the recission of the defendant’s irrevocable authority dated 2 July 2021;
(2) Declare that the plaintiff as executor of the estate of Suzanne Elizabeth Schreiner is authorised to receive, and Trinity Law Pty Ltd as the executor’s solicitor is authorised to pay, the net proceeds of sale of the defendant’s half interest in the Red Hill property to the estate of Suzanne Elizabeth Schreiner;
(3) That the defendant pay the plaintiff’s costs as assessed on the ordinary basis;
(4) That the plaintiff be indemnified out of the estate of Suzanne Elizabeth Schreiner for any costs differential between her actual costs and the amount of costs she recovers under Order 3.
| I certify that the preceding sixty-nine [69] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice McCallum Associate: Date: |
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