Cassin v Peak; Tonzing v Caldwell
[2023] VSC 108
•9 March 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S ECI 2021 04515
IN THE MATTER of Part IV of the Administration and Probate Act 1958 (Vic)
- and –
IN THE MATTER of the Estate of GEOFFREY MICHAEL CASSIN, deceased
BETWEEN:
| JACQUIE CASSIN | Plaintiff |
| v | |
| GRAEME ROBERT PEAK (as executor and trustee of the Estate of GEOFFREY MICHAEL CASSIN, deceased) | Defendant |
- and –
S ECI 2022 01632
IN THE MATTER of Part IV of the Administration and Probate Act 1958 (Vic)
- and –
IN THE MATTER of the Estate of RONALD JAMES TONZING, deceased
BETWEEN:
| LEIGH JAMES TONZING | Plaintiff |
| v | |
| LINDA JANE CALDWELL and LORETTA JOYCE TONZING (as executors of the Estate of RONALD JAMES TONZING, deceased) | Defendant |
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JUDICIAL REGISTRAR: | Englefield JR |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 23 January 2023 |
DATE OF JUDGMENT: | 9 March 2023 |
CASE MAY BE CITED AS: | Cassin v Peak; Tonzing v Caldwell |
MEDIUM NEUTRAL CITATION: | [2023] VSC 108 |
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TESTATOR FAMILY MAINTENANCE – Application for approval of compromise of proceedings – Application by defendant as legal personal representative of estate - Minor beneficiaries – applicability of r 54.02 of Supreme Court (General Civil Procedure) Rules 2015 (Vic)- Administration and Probate Act 1958 (Vic) Pt IV – Supreme Court (General Civil Procedure) Rules 2015 (Vic) ord 15, r 54.01, r 54.02 - Trustee Act1958 (Vic) s 63A.
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| S ECI 2021 04515 | ||
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ex parte | |
| For the Defendant | N Baum | William Hunt & Bett |
| S ECI 2022 01632 | ||
APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ex parte | |
| For the Defendant | N Baum | Maloney Anderson Legal |
TABLE OF CONTENTS
Introduction........................................................................................................................................ 1
The Proceedings................................................................................................................................. 2
The Submissions................................................................................................................................ 2
Consideration................................................................................................................................ 5
Legislative Interpretation Principles................................................................................. 5
Application of the Principles to ord 54 of the Rules....................................................... 7
Two Types of Proceedings in r 54.02................................................................................ 8
What is the relief that could be granted in an ‘Administration Proceeding’?................... 12
Power of a LPR to enter and to ‘give effect to’ compromises of family provision litigation 14
The Purpose and Effect of a TFM Approval of Compromise............................................... 16
Inherent Jurisdiction................................................................................................................... 17
The ‘Protective Jurisdiction’ of the Court................................................................................ 19
Section 63A of the Trustee Act inapplicable............................................................................. 20
Joining the Minor Beneficiaries................................................................................................. 21
An Order under Pt IV of the Act............................................................................................... 22
Conclusion......................................................................................................................................... 24
JUDICIAL REGISTRAR:
Introduction
These proceedings concerned separate applications for family provision from a deceased estate under Pt IV of the Administration and Probate Act 1958 (Vic) (‘Act’). The proceedings were resolved by agreement between the respective parties, subject to the approval of the Court, as each proposed compromise affects the interests of minor beneficiaries of each estate. For the purposes of these reasons the proposed compromises are referred to as ‘compromise’.
The defendants in each proceeding[1] issued an ex parte summons for approval by the Court of each compromise pursuant to s 63A of the Trustee Act1958 (Vic) (‘Trustee Act’) or that the minor beneficiaries be joined as parties for the purposes of seeking an approval of the compromise under ord 15 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic) (‘Rules’).
[1]Given the same issues and submissions were made in respect of both applications, I will refer to the defendants in the two proceedings as collectively, ‘the defendants’.
The summonses were noteworthy in that they eschewed reliance on r 54.02(2)(c)(i) of the Rules. The Court, of its own motion, proposed to amend the summonses so that the applications for approval would be made under r 54.02(2)(c)(i) of the Rules and thereafter approve each compromise under that rule (as the applications for approval were and remain, in substance, meritorious).
The defendants did not consent to amendment of their summonses. The defendants, represented by different solicitors in each proceeding, had the same counsel. The defendants asserted, on counsel’s advice, that approval of the compromises under r 54.02(2)(c)(i) of the Rules “may not authorise” each defendant “in administering the trusts established by the will, to depart from the terms of that trust”.
For the reasons that follow, I am satisfied that the approval of the compromises under r 54.02(2)(c)(i) of the Rules is sufficient to protect the defendants from later complaint. I decline to approve the compromises under s 63A of the Trustee Act or to join the minor beneficiaries as parties to the litigation for the purposes of an approval under ord 15 of the Rules.
The Proceedings
As the proceedings have settled, subject to Court approval, there is no need to expose the facts and circumstances of the deceased persons, their estates, their beneficiaries or the plaintiffs. In my view, it suffices to say that:
(a) neither estate is a multi-million dollar estate;
(b) the legally capable adult beneficiaries have given their consent to the compromises;
(c) an application for the approval of the Court is appropriate as each compromise, once approved, will impact the share of the estates left by the wills to minor beneficiaries, who lack legal capacity to give consent to this outcome;
(d) the compromises are for the benefit of the minor beneficiaries;[2] and
(e) an extension of time to make the application (required in S ECI 2021 04515) is appropriate and will be granted.
[2]The advice of counsel in each application supports this conclusion.
As an application for approval compromise is determined ex parte[3], the plaintiffs in each proceeding have not been served with any of the material in support and did not participate in the hearing of the summonses.
[3]An “ex parte” application is heard in the absence of other parties to the proceedings.
The Submissions
The defendants submit that as executors they have ‘the power to compromise a claim seeking further provision’ under the Act but if such compromise effects ‘a variation of the beneficial interests of the terms of the trust, an executor is not authorised to give effect to that compromise.’[4] The authority to give effect to a compromise may be derived from ‘consent of all affected beneficiaries, being sui juris, or a court order’.[5]
[4]Defendants’ Outline of Submissions dated 16 January 2023 [2] (‘Defendants’ Submissions’).
[5]Ibid [38], relying primarily on Hodge v De Pasquale [2014] VSC 413 (‘Hodge’).
Then, they submit that r 54.02 of the Rules is limited to the relief that could be granted in an administration suit. An administration proceeding is defined in r 54.01 of the Rules as a proceeding for the administration of an estate or the execution of a trust under the direction of the Court. Therefore, r 54.02(2)(c)(i) of the Rules is restricted to an order approving a compromise which could be approved ‘in an administration suit’. Their written submissions principally rely on Morris v Smoel[6] and Gonzales v Claridades[7] to support this limitation.
[6][2013] VSCA 11 (‘Morris v Smoel’).
[7]58 NSWLR 211 (‘Gonzales v Claridades’).
The next step the defendants take is to argue that in an administration proceeding, the Court is limited to what a trustee can do. The Court is confined within the limits of the trust.[8]That is, if the trustees cannot do it, neither can the Court. Therefore, the defendants say that the Court must first decide whether the trustee’s decision to agree to the compromise was within power per the principles in ExxonMobil Superannuation Plan Pty Ltd v Esso Australia Pty Ltd (‘Exxonmobil’).[9]
[8]Re Kelly [2021] VSC 580.
[9][2010] 29 VR 356 (‘Exxonmobil’).
Then, the defendants would limit r 54.02(2)(c)(i) of the Rules to relief that may have been granted in an administration proceeding at the time the United Kingdom precursor to ord 54 of the Rules was passed in 1883.[10] This, they say, excludes family provision claims on the basis that such claims did not exist prior to the 20th Century. Therefore, even if the compromises were approved under r 54.02 of the Rules, the defendants could not properly ‘give effect’ to the approved compromise. The defendants require instead orders for a ‘variation of the trusts established’ under each will. They say an administration proceeding “is not a vehicle” by which a family provision claim may be resolved.[11]
[10]Defendants’ Submissions (n 4) [41] – [52].
[11]Ibid [52].
The defendants say that Tritt v Hoskins[12] and Re Evans[13] do not contradict the submissions above, as these cases involved sui juris beneficiaries and the Court’s approval was unnecessary.
[12][2016] VSC 589 (‘Tritt v Hoskins’).
[13][2023] VSC 4 (‘Re Evans’).
The defendants rely on Chapman v Chapman[14] to emphasis again that the Court has no inherent power to alter a trust. Indeed, they submitted Chapman v Chapman was a leading authority on r 54.02 of the Rules.[15]
[14][1954] AC 429 (‘Chapman v Chapman’).
[15]Transcript of Proceedings, between Jacquie Cassin v Graeme Robert Peak (as Executor and Trustee of the Estate of Geoffrey Michael Cassin, deceased and between Leigh James Tonzing v Linda Jane Caldwell and Loretta Joyce Tonzing (as Executors of the Will and Estate of Ronald James Tonzing, deceased) 34 [10] – [12] (‘Transcript’).
They state that a compromise in a family provision claim may given effect by the making of a final order under s 91 of the Act, however that avenue is unavailable to the Court in these cases as no material has been filed, merely exchanged between the parties. Therefore, the Court is ‘not in a position to make an order for further provision.’
It is s 63A of the TrusteeAct which the defendants present as the solution to their problem and which they say gives the Court power to make an order approving the compromise in these proceedings. This section negates the effect of Chapman v Chapman. It is broad enough to empower the Court to order a variation to ‘the trusts’ by reducing the shares of the residuary beneficiaries under the wills, including the shares that would otherwise flow to the minors, in order to ‘make provision’ for the plaintiffs.
The defendants concede that there is no application by them for variations of the ‘trusts’ in the wills by way of originating motion, and seek dispensation to seek this relief in the plaintiffs’ claims for family provision.
If the Court declines to make orders under s 63A of the Trustee Act (either to vary ‘the trusts’ created by the wills or to approve the compromise, it is unclear) they seek the minor beneficiaries be joined the proceeding as parties so that the Court may exercise power to approve the compromise under ord 15 of the Rules.
Consideration
Legislative Interpretation Principles
Rules of Court are a form of ‘delegated’ or ‘subordinate legislation’.[16] Delegated legislation is not ‘inferior’, it carries out the commands of the Act of Parliament that empower its making.[17] The general principles of legislative interpretation apply to the Rules of Court.[18]
[16]Interpretation of Legislation Act 1984 (Vic).
[17]In this case Supreme Court Act 1986 (Vic) s 25.
[18]Interpretation of Legislation Act 1984 (Vic) s 4.
A construction that promotes the purpose or object underlying the Rules of Court (whether or not that purpose or object is expressly stated) must be preferred to a construction that would not promote that purpose or object.[19] The Court ought to adopt a ‘wide and facilitative, rather than a narrow or strict’ approach to applications under r 54.02 of the Rules, to promote the intent and function of the rule.[20]
[19]Ibid s 35.
[20]Re Fast [2015] VSC 780 [14] (Digby J).
Extrinsic material may be considered, but is not mandatory. The High Court observed in Federal Commissioner of Taxation v Consolidated Media Holdings Ltd[21] that:
This Court has stated on many occasions that the task of statutory construction must begin with a consideration of the [statutory] text. So must the task of statutory construction end. The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text. Legislative history and extrinsic materials cannot displace the meaning of the statutory text. Nor is their examination an end in itself.[22]
[21][2012] 250 CLR 503 [39] per French CJ, Hayne, Crennan, Bell and Gageler JJ.
[22]Ibid [39] (citation omitted).
The doctrine of precedent applies differently to legislative interpretation. Each judicial officer must construe the statutory text, not the words of earlier decisions. On this basis, a court is not bound by submissions on interpretation.[23] This approach may be distinguished from legal concepts developed in the common law which are to found only in the words of earlier decisions.[24] This difference is underlined if the earlier decision deals with different legislation.[25] Nonetheless, earlier decisions interpreting the same or similar provision have strong persuasive authority. Therefore, the leading authority on r 54.02 of the Rules is undoubtedly the decision of the High Court in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Diocesan the Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (‘Macedonian Church-HCA’).[26]
[23]Accident Towing and Advisory Committee v Combined Motor Industries Pty Ltd [1987] VR 529 per McGarvie J at 547.
[24]Dennis Charles Pearce and Robert Stanley Geddes, Statutory interpretation in Australia (LexisNexis, 7th Ed, 2011) [1.7]; Ogden Industries Pty Ltd v Lucas (1968) 118 CLR 32 per Lord Upjohn at 127.
[25]McNamara v Consumer Trader and Tenancy Tribunal (2005) 221 CLR 646 at 661 per McHugh, Gummow and Heydon JJ; Gleeson CJ agreeing at 650; Hayne J agreeing at 668.
[26](2008) 237 CLR 66 (‘Macedonian Church-HCA’).
Macedonian Church-HCA involved an application for judicial advice made under s 63 of the Trustee Act 1925 (NSW), which has no equivalent in the Victorian Trustee Act. The High Court nonetheless noted that the principles expounded by it apply equally to applications made under rules of court which are ‘functionally equivalent’ to s 63 of the Trustee Act 1925 (NSW). Therefore, these principles apply to applications made under r 54.02 and r 54.03 of the Rules.[27]
[27]Re Centro Retail Australia Limited [2012] 35 VR 512 [13] per Almond J (‘Re Centro’); Macedonian Church-HCA (n 26) cited in footnote [40] and [49].
In Macedonian Church-HCA, Gummow ACJ, Kirby, Hayne and Heydon JJ (with whom Kiefel J agreed) made a number of general points regarding judicial advice applications, including:
(i) Implications are not to be read in. Where statutory provisions confer jurisdiction or grant powers it is quite inappropriate for a court to make implications or impose limitations which are not found in the express words;[28]
[28]Macedonian Church-HCA (n 26) [55] (emphasis in original, citations omitted).
(ii) there are no implied limitations on the power to give advice;[29]
[29]Ibid [56], [57] (emphasis in original, citations omitted).
(iii) the sole purpose in giving judicial advice was to determine what ought to be done in the best interests of the trust;[30]
(iv) there is only one jurisdiction bar, an applicant for judicial advice must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument. [31]
[30]Ibid [105 –[107] (citations omitted).
[31]Ibid [58].
Macedonian Church-HCA is an important decision of which it has been said that it dismantled the impediments that lower courts had, over time, imposed on the curial discretion to give a trustee advice and directions.[32]
[32]John Dyson Heydon and Mark James Leeming, Jacobs’ Law of Trusts in Australia (LexisNexis Butterworths, 8th Ed, 2016) [21-34].
Section 32 of the Charter of Human Rights and Responsibilities Act 2006 (Vic) requires interpretation of all statutory provisions, as far as possible consistent with their purpose, in a way that is compatible with human rights. The minor beneficiaries of these estates have the right to recognition and equality before the law, among other human rights. I must interpret r 54.02(2)(c)(i) of the Rules in a manner that is compatible with such rights.
Application of the Principles to ord 54 of the Rules
The text of rr 54.01 and 54.02 of the Rules are as follows:
Order 54 — Administration of estates and execution of trusts
54.01 Definition
administration proceeding means a proceeding for the administration of an estate or the execution of a trust under the direction of the Court;
estate means the estate of a deceased person.
54.02 Relief without general administration
(1)A proceeding may be brought for any relief which could be granted in an administration proceeding and a claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which the relief is sought.
(2) Without limiting paragraph (1), a proceeding may be brought for —
(a)the determination of any question which could be determined in an administration proceeding, including any question —
(i)arising in the administration of an estate or in the execution of a trust;
(ii)as to the composition of any class of persons having a claim against an estate or a beneficial interest in an estate or in property subject to a trust; or
(iii)as to the rights or interests of a person claiming to be a creditor of an estate or to be entitled under the will or on the intestacy of a deceased person or to be beneficially entitled under a trust;
(b)an order directing an executor, administrator or trustee to —
(i)furnish and, if necessary, verify accounts;
(ii)pay funds of the estate or trust into court; or
(iii)do or abstain from doing any act;
(c) an order —
(i)approving any sale, purchase, compromise or other transaction by an executor, administrator or trustee; or
(ii)directing any act to be done in the administration of an estate or in the execution of a trust which the Court could order to be done if the estate or trust were being administered or executed under the direction of the Court.
Two Types of Proceedings in r 54.02
The learned authors of Civil Procedure Victoria state that ord 54 of the Rules establishes two types of proceeding, first, any relief which may have been granted in an administration proceeding, as defined, and secondly, a proceeding under r 54.02 of the Rules.[33] This statement is reinforced by the chapeau to r 54.03: ‘[I]n an administration proceeding or a proceeding referred to in Rule 54.02…’ The opening words of r 54.04 are ‘[I]n an administration proceeding or a proceeding within Rule 54.02…’ Rule 54.05 (1) reads:
In an administration proceeding or a proceeding within Rule 54.02 the Court may make any order and grant any relief to which the plaintiff is entitled by reason of any breach of trust, wilful default or other misconduct of the defendant, notwithstanding that the proceeding was commenced by originating motion.[34]
[33]LexisNexis, Civil Procedure Victoria, vol 1 (online at 3 March 2023) [54.01.0].
[34]Emphasis added.
All words in legislation are to be given effect and cannot be treated as superfluous.[35] Therefore, as stated three times in the text of ord 54 of the Rules, there are two types of proceeding under this order, proceedings for any relief that may have been granted in an administrative proceeding and proceedings under r 54.02(2) of the Rules.
[35]Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355 per McHugh, Gummow, Kirby and Hayne JJ at 382 [71]; Leon Fink Holdings Pty Ltd v Australian Film Commission (1979) 141 CLR 672 at 679 (‘Leon Fink’).
Rule 54.02(2)(a) of the Rules is expressly drafted as giving mere examples of questions that could be determined in an administration proceeding.
On the other hand, r 54.02(2)(b) of the Rules operates independently of any need to show the relief that may be sought under this paragraph could be granted in an administration proceeding.
However, r 54.02(2)(c) of the Rules is split into two subparagraphs. The second subparagraph, r 54.02(2)(c)(ii), like r 54.02(2)(a) of the Rules, is limited to relief which could be determined in an administration proceeding. The first subparagraph, r 54.02(2)(c)(i) has no such limitation. It simply permits the making of orders approving various transactions by a legal personal representative of a deceased estate (‘LPR’) or a trustee.
The words ‘without limiting paragraph (1)’ at the start of r 54.02(2) of the Rules also must be considered. These words do not connote that all the various proceedings permitted by r 54.02(2) of the Rules are examples of ‘administration proceedings’ as argued by the defendants. Rather, the opposite. These words confirm that the purpose of r 54.02(2) is not to limit r 54.02(1) of the Rules. From time to time, similar words are inserted into legislation for ‘more abundant caution to guard against the possibility that the general might be read as not including the particular’.[36] Such words may be sometimes treated at surplusage.[37] These words do not restrict the scope of r 54.02(2) of the Rules as a whole, but ensure it is not mistakenly applied to restrict the scope of r 54.02(1) of the Rules. That is, a plaintiff may bring an application under r 54.02(1) for relief that is not listed in r 54.02(2) of the Rules.
[36]Leon Fink (n 35) [13].
[37]Ibid; Western Australian Planning Commission v Southregal Pty Ltd (2017) 259 CLR 106 per Kiefel, Bell, Gageler, Keane and Nettle JJ.
The scope of r 54.02 is expanded further by r 54.05 of the Rules, which permits, among other things, a plaintiff to apply under r 54.02 of the Rules for any relief the plaintiff may be entitled due to breach of trust or other misconduct by a defendant, despite commencing by originating motion. This suggest the jurisdiction of the Court under ord 54 of the Rules might be broader than some equivalents in interstate Trustee legislation. Clearly, r 54.02 of the Rules is unconstrained in applications involving allegations of misconduct by any necessity that such relief be available in an administration proceeding.
The defendants rely on the decision of the New South Wales (‘NSW’) Court of Appeal in Gonzales v Claridades, which concluded that the particular rule of court under consideration in that case did not confer jurisdiction to decide questions which could not have been decided in an administration suit.[38] This case was an application for an interim distribution by the sole named beneficiary under a will for the purposes of paying legal costs of defending himself on a charge of murder of the testator (and another family member). If found guilty of the testator’s murder, the benefit under the will would be forfeited. The primary judge and the Court of Appeal refused the application for an interim distribution as, until the administration of the estate was complete, a beneficiary has no right to distribution.[39]
[38]Gonzales v Claridades (n 7) per Mason P, Beazley JA and Foster AJA agreeing [30] – [34].
[39]Commissioner of Stamp Duties (Qld) v Livingston (1964) 112 CLR 12; Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; Barns v Barns (2003) 214 CLR 169 [50].
Gonzales v Claridades does not require a limitation be read into r 54.02(2)(c)(i) of the Rules that does not appear in the text. Gonzales v Claridades was handed down before Macedonian Church-HCA overturned the NSW Court of Appeal in its restrictive application of similar powers (although under different legislation). Gonzales v Claridades did not involve an application for approval of compromise, so may not be dealing with a direct equivalent to r 54.02(2)(c)(i) of the Rules. It was not determined on the basis that the rule in question in that case was limited to relief that could be granted in an administration suit, but on other grounds.[40] It is ‘quite inappropriate’ for a court to make implications or impose limitations which are not found in the express words.[41] The text of r 54.02(2)(c)(i) of the Rules must receive a broad, facilitative interpretation which promotes its purpose.
[40]Gonzales v Claridades (n 7) [19], [40] - [41].
[41]Macedonian Church-HCA (n 26) [55].
The defendants also point to the Victorian Court of Appeal decision in Morris v Smoel. This appeal involved an application by a LPR for orders for sale of a ‘holiday home’ held in the estate to pay estate expenses, including substantial legal costs arising in separate litigation involving the life tenant of the holiday home. The primary judge made orders for the sale of the holiday home and the disappointed life tenant (and adversary in separate litigation) appealed. The question of the power of the judge to order the sale under r 54.02(2)(c)(i) of the Rules was not in contention, at first instance or on appeal. The issue on appeal was the primary judge’s refusal to permit into evidence an affidavit filed the evening before the hearing by the life tenant.[42] The appeal was dismissed, but in the course of the judgment the history and purpose of ord 54[43] of the Rules was set out. A short description of r 54.02(2) of the Rules[44] is included in that judgment, which the defendants say indicates that r 54.02(2)(c)(i) of the Rules is restricted or limited to approvals of sales of estate properties that could be granted in an administration proceeding. For example, the defendants’ submissions include the following passage from the Court of Appeal decision (certain text is shown in bold font in their submissions, not the judgment):[45]
Under r 54.02(1) such an application may be brought for any relief which could be granted in an administration proceeding. Without limiting those very general words, r 54.02(2) lists a number of purposes for which such a proceeding may be brought, including the obtaining of an order ‘approving any sale by an executor[46]
[42]Morris v Smoel (n 6) [27].
[43]Ibid [22].
[44]Ibid [24].
[45]Defendants’ Submissions (n 4) [44].
[46]Morris v Smoel (n 6) [24].
By contrast, as set out above, the opening words of r 54.02(2) of the Rules are:
Without limiting paragraph (1), a proceeding may be brought for —
Morris v Smoel was not concerned with the scope of r 54.02(2)(c)(i) of the Rules, but with the application of this rule in the particular case before the Court of Appeal. The words extracted from this judgment that are relied on by the defendants in their submissions vary slightly, but significantly, from the actual text of the rule. The rule is summarised, in circumstances where the point being taken in these applications before me was not argued. The principles of legislative interpretation do not permit a precis contained in a judgment to override the actual text of ord 54 of the Rules. On this basis, I do not consider Morris v Smoel binds me to accept the defendants’ submissions.
Therefore, this Court may make an order approving the compromise of family provision litigation under r 54.02(2)(c)(i) of the Rules, even if such an order is not relief which could be granted in an administration proceeding.
The jurisdictional question[47] is whether, in the defendants’ administrations of these estates, where family provision litigation has been brought against them and a compromise has been reached, but not all beneficiaries affected by the proposed compromise are legally capable of providing consent, an order of the Court ought be made approving the compromise.
[47]Macedonian Church-HCA (n 26) [58].
What is the relief that could be granted in an ‘Administration Proceeding’?
If the defendants are correct that r 54.02 of the Rules is restricted only to relief that could be granted in an ‘administration proceeding,’[48] they are incorrect that an approval of compromise of family provision litigation cannot be given under this rule. As noted, the defendants submit that r 54.02(2)(c)(i) of the Rules is limited only to approvals of compromises that could be granted in an administration proceeding, as at 1883 when the United Kingdom (‘UK’) precursor to ord 54 commenced.[49] For this proposition they rely on a line of UK cases from the 1880s in respect to the UK precursor to ord 54.[50] Therefore, they argue, as the legislation permitting such family provision claims against estates was first passed in Victoria in the early part of the 20th Century, it is not relief that could be granted in an administration proceeding.
[48]Which includes the execution of trusts in this context: r 54.01 of the Rules.
[49]Defendants’ Submissions (n 4) [41] – [47].
[50]Re Wilson (1885) 28 Ch D 457, 460; Re Robinson (1885) 31 Ch D 247, 249; Re Davies (19888) 38 Ch D 210, 212. See also Re Royle (19889) 43 Ch D 18, 21-22.
Although such ‘limitation was recognised in the 1880s,’[51] with respect to the UK precursor of ord 54, legislation is deemed to be ‘always speaking.’[52] For example, an argument that the Copyright Act 1912 (Cth) did not apply to radio broadcasts as radio had not been invented when the Act was passed, failed in Chappell and Co Ltd v Associated Radio Co of Australia Ltd.[53] The words of ord 54 of the Rules read today, applying a purposive interpretation, include an approval of compromise of litigation arising in the administration of estates, including litigation involving statutory remedies created within the last 140 years.
[51]Defendants’ Submissions (n 4) [45].
[52]Pearce and Geddes (n 24) [4.9].
[53][1925] VLR 350.
Further, as counsel for the defendants readily conceded, this Court might make a valid order approving the compromise of a trustee of a superannuation fund in litigation involving the Superannuation Industry (Supervision) Act 1993 (Cth) or related legislation, although this statutory regime or even the concept of compulsory nationwide superannuation where the bulk of funds are held in trust, did not exist in in the UK in 1883.[54] In addition, judicial advice may be given to trustees or an LPR in respect to litigation involving a trust or estate under the Family Law Act 1975 (Cth) (‘FLA’) or other modern statutes. The FLA includes statutory remedies that can affect third parties’ property rights, including property held on trust, which did not exist prior to being created by Parliament in recent decades. Yet, an approval of compromise may be sought under r 54.02(2)(c)(i) of the Rules, if required by a LPR or trustee in respect to rights of persons incapable of consent affected by litigation under the FLA.
[54]Exxonmobil (n 9).
Relief that might be granted in an administration proceeding, even in the 19th century, included judicial advice regarding the conduct of litigation, for example Re Beddoe.[55] An approval of compromise is a specific example of giving judicial advice regarding conducting litigation as trustee or LPR in the administration of an estate or trust. If approval is given to a compromise, the litigation ends on the terms of the compromise, and if not, the trustee or LPR continues the litigation (even if this continuation takes the form of resumed negotiations toward an approvable compromise).
[55][1893] 1 Ch 547; see also McKinnon v Samuels [2000] VSC 393 (‘McKinnon v Samuels’).
The submission that judicial advice regarding family provision litigation is excluded from r 54.02(2)(c)(i) of the Rules is rejected. Family provision litigation arises in the administration of estates. An approval of a compromise of such litigation is relief that could be granted in an administration proceeding.
Power of a LPR to enter and to ‘give effect to’ compromises of family provision litigation
The defendants submit that they lack power to ‘give effect to’ the compromises or to ‘vary’ the wills without an order of variation by the Court. This lack of power is said to bind the Court, as ‘if the trustee cannot do it, neither can the Court.’[56]
[56]Defendants’ Submissions (n 4) [48].
Section 19 of the Trustee Act empowers a LPR, among other things, to ‘compromise’ any claim relating to an estate, including in the course of administration of an estate, and for this purpose enter into any agreement or give any release.[57] A LPR who is the named defendant to a family provision claim in Victoria undoubtedly has power to enter a compromise of the claim.[58] Indeed, such a defendant has a duty to the beneficiaries to pursue beneficial settlements of such litigation[59], in addition to their obligations to resolve if possible under the Civil Procedure Act (Vic).[60]
[57]Sections 19(1) and 19(2) of the Trustee Act, abbreviated and blended.
[58]Hodge (n 5); Re Evans (n 13) [59].
[59]Re Evans (n 13) [60].
[60]Ibid.
The LPR who enters a binding compromise, is obliged by the other parties to that compromise to carry it out, or ‘give effect to’ the compromise. For example, in Hodge[61] a LPR entered a compromise of family provision litigation that provided for payment of $250,000.00 to the plaintiff. The compromise directed the payment to be made from the share of the estate that, by the will, went to a capable adult beneficiary who had not consented to the compromise. On the other hand, the compromise preserved the benefits under the will that were left to the LPR (and another beneficiary). The adversely affected beneficiary applied to the Court for relief. The Court held that:
(a) the LPR was bound by the compromise, so that $250,000.00 paid to the family provision plaintiff could not be clawed back; and
(b) the LPR is also bound by the will, unless all affected beneficiaries consent to a variation, or an order of the Court is made, so that the LPR was ordered to reimburse $250,000.00 to the estate, for the benefit of the beneficiary who had not consented to the compromise.
[61]Hodge (n 5).
As can be seen from Hodge, a LPR has power to enter and ‘give effect to’ a compromise that is binding on the LPR. What the LPR lacks, in the absence of consent from all affected beneficiaries, is protection from later complaint. The defendants in these proceedings are able to give effect to the compromises, if they accept personal responsibility of the risk of subsequent claims by the minor beneficiaries. Protection from personal responsibility is the purpose of seeking an approval of the compromises.[62] Obtaining judicial advice resolves doubt about whether it is ‘proper’ for a trustee to pursue a course of conduct.[63]
[62]Macedonian Church-HCA (n 26) [45]; Re Care Super Pty Ltd [2021] VSC 805 [23] per Lyons J (‘Re Care Super’); Re Balsa Rejus Pty Ltd and Anor [2002] VSC 223 [14] per Delany J.
[63]Macedonian Church-HCA (n 26) [71].
Where a LPR has consent to a compromise of litigation from all affected beneficiaries, the protection of the Court is unnecessary and no application for approval ought be made.[64] The LPR is protected from later complaint by the valid consent.
[64]Tritt v Hoskins (n 12); Re Evans (n 13); Hodge (n 5).
The Purpose and Effect of a TFM Approval of Compromise
The defendants essentially challenge the effectiveness of an approval of compromise under r 54.02(2)(c)(i) of the Rules for the defendants in these proceedings. For example, counsel for the defendants, in oral submissions, stated that even if the Court made an order approving the compromises in these proceedings under ord 54 of the Rules, the defendants could not ‘rely on this approval’[65] unless the Court also made an order either under s 63A of the Trustee Act or Pt IV of the Act varying ‘the trusts contained in’ the wills. This underestimates effect of judicial advice.
[65]Transcript (n 15) 76 [4] – [8], ‘… you can approve the compromise, but under Order 54 you can’t give effect to the compromise by varying the beneficial interest in the trust, you can approve the decision to compromise.’
The effect of judicial advice is that a trustee is not only protected from later complaint that the trustee ought to have acted otherwise, but also from personal liability for costs incurred.[66] The protection of the defendants in these proceedings by the court’s approval of the compromise provides clear benefit to the minors who are affected. As explained in Macedonian Church-HCA, judicial advice protects both the trustee and the trust by ensuring that ‘the interests of the trust will not be subordinated to the trustee’s fear of personal liability for costs.’[67] Similarly, in these proceedings, an approval of compromise will ensure that the interests of the minor beneficiaries will not be subordinated to the defendants’ fear of personal liability for giving effect to the compromise without consent from all beneficiaries. This enables the litigation affecting their interests to be concluded on beneficial terms. [68]
[66]Macedonian Church- HCA (n 26) [45].
[67]Ibid [71] per Gummow ACJ, Kirby, Hayne and Heydon JJ; see also [196] per Kiefel J.
[68]Ibid [72], [73].
As set out by Kiefel J in Macedonian Church-HCA at [196]:
In exercising the discretion the Court should be guided by the scope and purposes of the section. The principal purpose of the section, and the opinion, advice or direction given under it, is the protection of the interests of the trust. Another purpose is the protection of a trustee who is acting in that regard and upon advice. Securing the latter purpose may ensure the attainment of the principal purpose, by removing the concern of a trustee about exposure beyond their usual indemnity. (citations omitted)
Due the nature of an applications for an approval of compromise of family provision litigation under r 54.02(2)(c)(i) of the Rules, there are few published judgments. Two recent decisions dealing with approvals of compromise in family provision litigation are included in the defendants’ submissions, Tritt v Hoskins and Re Evans. Re Finnie[69] is another. In all three cases, the Court declined the application, and published a decision. In all three cases, the Court considered r 54.02(2)(c)(i) of the Rules applicable. All three applications were considered on the basis that an approval of compromise is a meaningful and necessary step where family provision litigation is resolved on terms that affect beneficiaries who are legally unable to consent.[70]
[69][2020] VSC 9 (Ierodiaconou AsJ) (‘Re Finnie’).
[70]Re Evans (n 13) [59].
Inherent Jurisdiction
Some consideration must be given to the power of the Court to approve these compromises arising from its inherent jurisdiction. Inherent jurisdiction is not set out in any statutes, but is derived from the nature of the Court itself. [71] It includes many different aspects of the administration of justice by the Court, including contempt of court or principles of natural justice,[72] as well as permitting trustees to approach the Court for advice.
[71]PT Bayan Resources TBK v BCBC Singapore Pte Ltd (2015) 258 CLR 1 [37] per French CJ, Kiefel, Bell, Gageler and Gordon JJ.
[72]Hycenko v Badge [2023] VSC 19 [35] - [39].
French CJ explained in Condon v Pompano Pty Ltd[73] that:
[73](2013) 252 CLR 38.
[41]The inherent jurisdiction of superior courts of record was described in Master Jacob's frequently cited Hamlyn lecture on the topic as something which flows from the essential character of such courts:
“the essential character of a superior court of law necessarily involves that it should be invested with a power to maintain its authority and to prevent its process being obstructed and abused. Such a power is intrinsic in a superior court; it is its very life-blood, its very essence, its immanent attribute."
Another explanation proffered in another influential article is that "inherent powers arise at common law when they are necessary if the court or tribunal in question is to be able to manage its activities appropriately.”
[42]The extent, if any, to which the inherent powers of the Supreme Courts of the States are protected from statutory derogation by Ch III of the Constitution, was not in issue in these proceedings. However, the nature and purpose of those powers indicate that they are not, as a rule, displaced or abrogated by general words in a statute nor by statutory provisions or rules which overlap with them. Rich J said in Cameron v Cole:
“in the absence of clear words, a statute should not be treated as depriving a court of the inherent jurisdiction possessed by every court to ensure that trials before it are conducted in accordance with the principles of natural justice.”
Early in the life of this Court Griffith CJ remarked that:
"Rules and forms of procedure are not ends in themselves, but means to an end, which is the attainment of justice."
It follows from that uncontroversial proposition, as Mr Keith Mason observed in an article on the topic of inherent jurisdiction in the Australian Law Journal:
"that the mere fact that a statute or rule of court addresses itself in a particular way to a particular matter does not usually exclude by implication a superior court's wider inherent powers relating to that matter if they are appropriate."
The High Court in Macedonian Church-HCA excluded the inherent or implied powers of the Court from its discussion of the history of s 63 of the Trustee Act 1970 (NSW).[74] However, leading decisions on approvals of compromise in this State rely both on the inherent jurisdiction and ord 54 of the Rules.[75] Indeed, in McKinnon v Samuels[76], Eames J, after observing that there was ‘no statutory basis’ for an application for approval of a compromise by a trustee in this State, approved a compromise only under the inherent jurisdiction of the Court.[77] His Honour deals at [16] with various authorities which make clear an approval of compromise of litigation is a form of judicial advice regarding litigation.
[74]Macedonian Church-HCA (n 26) [37].
[75]Exxonmobil (n 9) [86], Re Centro (n 27) [17].
[76]McKinnon v Samuels(n 55).
[77]Ibid [8].
The power to approve compromises in r 54.02(2)(c)(i) of the Rules does not detract from the inherent power to give judicial advice by way of an approval of a compromise which resolves litigation affecting persons who are incapable of giving consent.
The ‘Protective Jurisdiction’ of the Court
A particular form of inherent jurisdiction called ‘parens patriae’ is relevant to these applications. This doctrine deals specifically with minors and adults who lack legal capacity to make their own financial and legal decisions, rather than the broader concepts of inherent jurisdiction that might apply, for example, to ‘unascertained beneficiaries’ as that term is applied by ord 16 of the Rules.
The ‘parens patriae’ power is a protective jurisdiction of the Court that arises from the responsibility of the Court to take care of those who cannot take care of themselves. This responsibility, exercised in England some centuries ago by its sovereign, became to be vested in courts in that country prior to the 18th Century,[78] is now vested in this Court.
[78]Falkland v Bertie (1696) 23 ER 814, 818; Eyre v Shaftsbury (1722) 24 ER 659 at 664; It has been exercised since ‘time immemorial’: R v Gyngall (1893) 2 QB 232 at 239 per Lord Esher; The true origins of this power may be ‘lost to antiquity’ but could go back as far as the time of the Roman empire: The Law Relating to Lunacy by Sir Henry Studdy Theobald (1924) p 1.
The principles of the protective jurisdiction is reflected in legislation such as the Guardianship and Administration Act 2019 (Vic). It is part of the fabric of ord 54 of the Rules. However, this responsibility of the Court is not limited by such legislation. As the power is derived from a delegation of the ’prerogative of the Crown’ to the Court, this jurisdiction could only be taken away by a statute, if the statute does so ‘expressly or by necessary, indeed inescapable, implication’.[79] This jurisdiction, by definition, is unlimited, although, of course, to be exercised in accordance with principle.[80]
[79]Carseldine and Anor v The Director of the Department of Children’s Services (1974) 133 CLR 345 [8] per McTiernan J.
[80]Secretary, Department of Health and Community Services v J.W.B. and S.M.B.(Marion’s case)(1992) 175 CLR 218 [70] – [71] per Mason CJ, Dawson, Toohey and Gaudron JJ.
Exercising the Court’s protective jurisdiction places the focus of the applications on the interests of the minors, rather than the interests of the beneficiaries as a whole, as might arise in other circumstances.
There is nothing express or necessarily implied in r 54.02(2)(c)(i) of the Rules which reduces the essential, ancient, serious responsibility vested in the Court to protect the interests of the minors affected by these compromises.
The protective power of the Court to approve a compromise of litigation in the interests of a minor or adult beneficiary who cannot consent, includes, necessarily, the power to effectively exonerate the trustee or LPR from later complaint. Otherwise the benefit of the compromise may be lost to the minor or adult beneficiary for the sole reason that they have a legal disability.
Equally, requiring court approval of compromises before a LPR or trustee may be relieved of personal responsibility, protects minors and adults who cannot consent from non-beneficial compromises. If the compromise is not beneficial, approval will not be granted.[81]
[81]Re Finnie (n 69).
Section 63A of the Trustee Act inapplicable
There is a fundamental difference between an estate in its administration phase and a trust.[82] Counsel concedes that at least those parts of the estates which are subject to the on-going litigation in these two proceedings remain held by the defendants as executors for the administration of the estates.[83] I will ignore for present purposes any parts of these estates which are held on trust as, if such parts are not subject of these proceedings, they are not subject of these reasons.[84]
[82]Heydon and Leeming (n 32) [2] – [40].
[83]Transcript (n 15) 41.
[84]Counsel for the defendants informed the Court that parts of the estates are fully administered and in his view are held by the defendants as trustees, but could not identify such parts with certainty. Transcript (n 15) 41.
If a trust requires variation to the benefit of persons who cannot consent and the power to vary is absent, then s 63A of the Trustee Act is clearly applicable, whether the trust came into existence by a deed or by a will.[85] On the other hand, when an estate is in its administration phase, any trust contained in that will is not yet in existence.
[85]Section 63A Trustee Act; Perpetual Trustees Victoria Ltd v Barns (2012) 34 VR 387.
No authority was provided which showed s 63A of the Trustee Act can be applied to vary a will during the administration phase of the estate. Further, no authority was given to establish s 63A of the Trustee Act is applicable to compromises of family provision litigation (or other litigation involving estates). On the other hand, s 19(f) of the Trustee Act is the relevant section for a LPR’s power to compromise litigation, as has already been discussed.
I was not directed to any authority that an application under s 63A of the Trustee Act may be made for the benefit of a stranger to the trust, that is the plaintiffs.
Even where a trust is in existence, the Court may prefer to rely on the ‘ample power’ in r 54.02 of the Rules rather than make orders under s 63A of the Trustee Act.[86]
[86]Re Hest Australia Ltd [2021] VSC 809 [129] – [130]; See also, Exxonmobil (n 9), Re Care Super (n 62).
For these reasons, I do not consider that orders under s 63A of the Trustee Act ought be made in these proceedings.
Joining the Minor Beneficiaries
As an alternative to an order under s 63A of the Trustee Act, the defendants seek to join the minor beneficiaries to the proceedings as parties, then seek an approval of the compromise under ord 15 of the Rules.
This alternative is not explored in the written submissions, but counsel was instructed not to abandon it and made oral submissions in support.
This alternative accepts as a first step that an approval under ord 15 of the Rules is sufficient to protect the defendants, whereas an approval under r 54.02 of the Rules is not. The power of the Court to approve a compromise under ord 15 of the Rules is the same as its power to approve a compromise under ord 54 of the Rules. It is sourced from the Rules of Court, the general inherent jurisdiction and the protective jurisdiction.
The minors, or more exactly a suitable adult for each of them:
(a) have no notice of the defendants’ applications to join them;
(b) have no course of action against them (that is, there is no present question between them and the plaintiff);
(c) they have no proposed litigation guardians and no proposed legal representation.
If the minors were joined as parties, the existing defendants fall away as the applicants for approval, as it would be for the minors’ litigation guardians to make the applications. The defendants cannot press for an approval of their compromise by way of ord 15 of the Rules in this way, as it would no longer be their application to make.
The joining the beneficiaries as parties to the proceedings is both unwieldy and unwarranted. The defendants, on legal advice, have represented the interests of ‘the estate’ in these proceedings. Representing ‘the estate’ means representing the interests of all the beneficiaries, including the minors, in opposition to the plaintiff’s claim. This is appropriate and in keeping with their responsibilities in the administration of the estates and as litigants in the proceedings.[87]
[87]Smith v Whittaker [2016] VSC 287 [37].
An Order under Pt IV of the Act
As can be seen, the defendants do not seek an order under s 91 of the Act (‘provision order’), which has effect as a codicil to the wills[88] and therefore would address their concern regarding administering the estates at variance from the wills. The defendants submit that the Court ‘lacks the power’ to make an order for provision in these proceedings as the parties elected not to file evidentiary material.[89] This raises two issues.
[88]Section 97(4) of the Act.
[89]Transcript (n 15) 54 [20] – [ 31], 55 [1] – [6], 57 [6] – [10].
First, if the Court requires material to be filed, it will so order. The Court has control of its own processes. The Court may order any material be filed, whether affidavit, submissions, joint memorandum, valuation, report or any other relevant material. The parties cannot bind the Court to any agreement reached between them regarding filing material.
Second, as indicated, the approvals of the compromises will be granted on their merits. To reach this level of satisfaction, the Court must have before it sufficient material. The material required to approve a compromise is no less (and at times more) than that which is required in order to consider making a provision order which is sought by consent. The material filed in support of these compromises is affidavits from the defendants’ solicitors, exhibiting counsel’s opinions in support. This material is accepted and relied on unreservedly on by the Court.[90]
[90]Macedonian Church-HCA (n 26) [60], [61], [64], [79].
A provision order may be necessary when an approval of compromise is sought that involves the payment of money to a child or an adult who lacks legal capacity.[91] However, in these proceedings, the plaintiffs are capable adults who will receive provision by the compromises. The defendants propose to administer the provision that will flow to the minors within the estates. A provision order may be made, but is not necessary.
[91]Supreme Court Act 1986 (Vic) s 51A; Guardianship and Administration Act 2019 (Vic) s 179 re adults.
The most common final order in a family provision claim in this court is a dismissal order sought by consent of the parties. The court satisfies itself that no minors or adults who lack legal capacity are affected by the resolution of the proceeding and that the costs appear reasonable, and thereafter, makes dismissal orders on a regular basis. There are often benefits to this approach to litigants and beneficiaries of estates, including preserving the benefit of matters in the terms of settlement beyond the scope of judgment in the proceeding by way of a provision order[92], avoiding the costs of drafting often complex orders and privacy to the family involved.
[92]Sometimes, this is as simple as extremely broad releases, that may effected by the doctrine of merger; as ‘the rendering of a final judgment in an adversarial proceeding has consequences’: Clayton v Bant (2020) 272 CLR 1 [50].
A provision order might (or might not) change in a fundamental way the agreement entered by the parties that is represented by the proposed compromises. Further advice and consent may be required. Like joining the minors as parties, seeking a provision order is unwarranted and unwieldy. The compromises may be approved under r 54.02(2)(c)(i) of the Rules and the proceedings be dismissed.
Conclusion
Orders will be made in each proceeding granting an approval of each compromise pursuant to r 54.02(2)(c)(i) of the Rules.
The orders will reserve the costs, to allow prompt payment to the plaintiffs and substantial distributions to the adult beneficiaries of the provision they stand to receive. The defendants may provide their written submissions as costs within 14 days of the handing down of these reasons.
SCHEDULE OF PARTIES
| S ECI 2021 04515 | |
| BETWEEN: | |
| JACQUIE CASSIN | Plaintiff |
| - v - | |
| GRAEME ROBERT PEAK (as executor and trustee of the Estate of GEOFFREY MICHAEL CASSIN, deceased) | Defendant |
| - and - | |
| S ECI 2022 01632 | |
| BETWEEN: | |
| LEIGH JAMES TONZING | |
| - v - | |
| LINDA JANE CALDWELL and LORETTA JOYCE TONZING (as executors of the Estate of RONALD JAMES TONZING, deceased) |
0
32
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