Catherine Louise Faulds v Robert James Faulds as trustee for the Estate of the Late Brian Charles Faulds and the Estate of the Late Robert Scott Faulds
[2013] ACTSC 165
•15 August 2013
CATHERINE LOUISE FAULDS v ROBERT JAMES FAULDS AS TRUSTEE FOR THE ESTATE OF THE LATE BRIAN CHARLES FAULDS AND THE ESTATE OF THE LATE ROBERT SCOTT FAULDS [2013] ACTSC 165 (15 August 2013)
PRACTICE AND PROCEDURE – application by defendant for summary judgment pursuant to Rule 1147(2) of the Court Procedure Rules 2006 (ACT) – where plaintiff sought declarations and orders in relation to her father’s will – where plaintiff’s uncle is defendant and executor of the will – whether the plaintiff’s construction of the testator’s will is simply untenable – whether the plaintiff’s claim is frivolous or vexatious – whether the defendant has a good defence – whether the plaintiff’s claim is barred by delay, acquiescence or laches – whether the claim is properly constituted – whether the “pleadings” are fundamentally defective.
PRACTICE AND PROCEDURE – application by defendant to strike out parts of the plaintiff’s affidavits pursuant to Rule 425(1) of the Court Procedure Rules 2006 (ACT) – where issue not decided after summary judgment awarded.
Held: There be judgment for the defendant on the plaintiff’s claim.
Court Procedures Rules 2006 (ACT) rr 425(1), 6142, 1147(2)
Family Provision Act 1969 (ACT)
Limitation Act 2005 (WA) s 13
Wills Act 1968 (ACT) s 12B
Brennan v Permanent Trustee Company of New South Wales Limited and Others (1945) 73 CLR 404
Cood v Cood (1863) 33 ER New Series 273
Darling v Palm Springs Ltd [2002] NSWSC 793
Dey v Victorian Railways Commissioners (1949) 78 CLR 62
General Steel Industries Inc v Commissioner for Railways (NSW)and Others (1964) 112 CLR 125
John Dyneley Fell and Another v David Fell and Another (1922) 31 CLR 268
Lamshed v Lamshed (1963) 109 CLR 440
Orr v Ford and Another (1989) 167 CLR 316
Pringle v Pringle [2010] WASC 206
Rawack v Spicer [2002] NSWSC 849
The Countess of Bective v The Federal Commissioner of Taxation (1932) 47 CLR 417
No. SC 580 of 2011
Judge: Besanko J
Supreme Court of the ACT
Date: 15 August 2013
IN THE SUPREME COURT OF THE )
) No. SC 580 of 2011
AUSTRALIAN CAPITAL TERRITORY )
BETWEEN:CATHERINE LOUISE FAULDS
Plaintiff
AND:
ROBERT JAMES FAULDS AS TRUSTEE FOR THE ESTATE OF THE LATE BRIAN CHARLES FAULDS AND THE ESTATE OF THE LATE ROBERT SCOTT FAULDS
Defendant
ORDER
Judge: Besanko J
Date: 15 August 2013
Place: Adelaide via video link to Canberra
THE COURT ORDERS THAT:
There be judgment for the defendant on the plaintiff’s claim.
INTRODUCTION
In this proceeding the defendant has issued an application seeking, relevantly, the following relief:
(1) An order pursuant to r 1147(2) of the Court Procedures Rules 2006 (ACT) that summary judgment on the further amended originating application dated 7 December 2011 be entered in favour of the defendant.
(2) An order pursuant to r 425(1) and r 6142 of the Court Procedures Rules 2006 (ACT) that those parts of the affidavits filed by the plaintiff which the Court determines frivolous, scandalous, unnecessary or vexatious or otherwise an abuse of process be struck out.
The rules referred to in the proposed orders are in the following terms:
425 Pleadings—striking out
(1)The court may, at any stage of a proceeding, order that a pleading or
part of a pleading be struck out if the pleading—
(a) discloses no reasonable cause of action or defence appropriate
to the nature of the pleading; or
(b) may tend to prejudice, embarrass or delay the fair trial of the
proceeding; or
(c) is frivolous, scandalous, unnecessary or vexatious; or
(d) is otherwise an abuse of the process of the court.
Note 1 The registrar may also reject a document that is filed if it does not
comply with these rules (see r 6140 (Rejecting documents—
noncompliance with rules etc) or if it is an abuse of the court’s process
or is frivolous or vexatious (see r 6142 (Rejecting documents—abuse of
process etc)).
Note 2 Pt 6.2 (Applications in proceedings) applies to an application for an
order under this rule.
Note 3 Rule 6901 (Orders may be made on conditions) provides that the court
may make an order under these rules on any conditions it considers
appropriate.
1147 Summary judgment—for defendant
(2) The court may give judgment for the defendant against the plaintiff
for the plaintiff’s claim for relief (or part of it) if satisfied—
(a) that the claim (or part of it) is frivolous or vexatious; or
(b) that there is a good defence to the claim (or part of it) on the
merits; or
(c) that the proceeding should be finally disposed of summarily or
without pleadings.
There is no need for me to set out Rule 6142 because the defendant no longer relies on it for the purposes of seeking the second proposed order.
The defendant’s application is supported by an affidavit of Mr Gregory Thomas Brackenreg sworn on 30 March 2012. Mr Brackenreg is a partner of the firm of lawyers representing the defendant. Mr Brackenreg’s affidavit contains material in support of the defendant’s contention that the plaintiff’s proceeding is “a futility and doomed to fail”.
I received evidence on the hearing of the application. For the defendant and in addition to receiving parts of Mr Brackenreg’s affidavit, I received parts of the defendant’s affidavits previously filed in the proceeding sworn on 1 December 2011 and 29 September 2011 respectively. For the plaintiff, I received parts of affidavits previously filed by her in the proceeding and, in particular, parts of her affidavits sworn on 21 September 2011, 1 November 2011 and 4 March 2012 respectively, and parts of the affidavit sworn by her mother (Ms Pamela Ellis-Kane) on 2 November 2011.
As it happens, and for reasons I will give, other than establishing uncontentious surrounding circumstances, the affidavit evidence has not played a part in my decision in this proceeding. Almost all of the affidavit evidence was directed to the issues of delay, acquiescence and laches which I hold are not issues appropriate for determination on an application for summary judgment.
BACKGROUND
On 10 December 1991 Mr Brian Charles Faulds (“the testator”) completed a holograph will. By the will, he appointed his brother, Mr Robert James Faulds, his executor. Mr Robert James Faulds is the defendant to this proceeding. The testator directed that all funeral and testamentary expenses and all of his debts be paid as soon as conveniently may be after his death. He made two specific bequests, one to his son, Mr Christopher Scott Faulds, and the other, to his daughter, Ms Catherine Louise Faulds. Ms Catherine Louise Faulds is the plaintiff to this proceeding. The relevant part of the testator’s will for present purposes was his gift, devise and bequest to his mother (Mrs Elizabeth Proven Faulds) and father (Mr Robert Scott Faulds) in the following terms:
I Give, devise and bequeath unto
my mother Elizabeth Proven Faulds and my father Robert Scott Faulds all of my estate including money received from superannuation, cash in the bank and all of my personal property, apart from that listed below which is to go to the named benefactors. A condition of this will is that at least fifty per cent (50%) of my estate after disbursement of associated funeral costs and discharge of debts, is to be held in trust for my daughter, Catherine Louise Faulds and my son Christopher Scott Faulds until they are both Eighteen years of age with both my parents acting as trustees for the children. They (my parents) have the sole power to disburse monies from the trust fund for the education of my children at their respective schools and any further education.
Should my parents (both) predecease my children then all of my estate as mentioned is to be left to my children in a trust account until they are eighteen years of age and conditions as above to apply with my brother Robert Charles Faulds to be trustee.
Although these two paragraphs are not numbered in the holograph will, for ease of reference I will refer to the first paragraph as clause 1 and the second paragraph as clause 2. The will, it must be remembered, must be read as a whole.
The testator was a police officer who lived in Yokine, Western Australia. He died while in Thailand on 17 February 1996. Probate of his will was granted to the defendant by the Supreme Court of Western Australia on 6 June 1997. A statement of the testator’s assets and liabilities as at 23 April 1997 showed that he had net assets of approximately $490,000.
After the testator’s death and sometime in 1996 the testator’s ex-wife, Mrs Pamela Faulds, instructed Peter A. Brindal & Co., lawyers in Western Australia. The testator and Mrs Pamela Faulds were divorced in late 1990. On 25 October 1996 Mr Brindal wrote to Mr Peter Ward, a solicitor practising in Western Australia. It seems that at that time Mr Ward was representing the defendant. Mr Brindal stated that the two children of the testator’s marriage resided with Mrs Pamela Faulds. He said that his instructions were to clarify with Mr Ward matters relating to the estate which bore upon the children’s best interests. He said the following:
It is our understanding that the children have got, between them, a 50% interest in the residue of the estate.
…
As matters presently stand with Mrs Faulds, we are instructed she makes no claim in relation to the Will, and has no intention of contesting the Will.
Mr Brindal advised Mr Ward that the plaintiff was born in 1978 and had recently had her eighteenth birthday, and that her brother, Christopher, was born in 1982.
In 1997 the defendant engaged Gibson Tovey & Associates, lawyers practising in Western Australia. They provided advice to him in a letter dated 5 January 1998. The written advice included the following:
We confirm your instructions to reiterate the writer’s verbal interpretation of the Will of your late brother of which you are the Executor.
From the paperwork shown to us, it would appear that the last Will and testament of your late brother was a hand-written self prepared Will dated 10 December 1991. Probate of this Will was granted to you on 6 June 1997. In his Will your brother leaves all of his real and personal estate, other than that listed later in the Will which was to go to the named beneficiaries, to your parents Elizabeth and Robert Faulds on condition that at least fifty per cent of his estate, after payment of associated funeral costs and debts, is held in trust by your parents for your brother’s two children, Catherine and Christopher, until they each attain the age of eighteen years.
It would appear that, apart from setting a minimum provision of fifty per cent for his children, your brother’s Will gave your parents discretion to give the children a larger percentage or all the Estate should they wish to do so.
We confirm your instructions that although the Will names your parents as trustees of the childrens’ trust funds, that they may seek to have corporate trustees appointed. We confirm our advice that it may be beneficial for your parents to seek financial planning advice from a qualified accountant or financial planner before making any final decisions in this regard.
In late 1998, the defendant wrote to the plaintiff advising her that he proposed to distribute the estate of the testator within thirty days. Shortly after that advice, he sent the plaintiff the sum of $133,335.83. That amount was in addition to a prior advance of $11,600.
On 30 November 1998 Mr Robert Scott Faulds (“grandfather”) and Ms Elizabeth Proven Faulds (“grandmother”) executed a deed of appointment of new trustee. Under the deed, Mrs Pamela Faulds was appointed the new trustee of the trusts under the will of the testator in place of the grandparents. One of the recitals in the deed was in the following terms:
B. The said CATHERINE LOUISE FAULDS has now attained the age of eighteen (18) years, but the sum of ONE HUNDRED AND FORTY THREE THOUSAND SIX HUNDRED AND FIFTY ONE DOLLARS AND FIVE CENTS ($143,651.05) still remains in trust for the said CHRISTOPHER SCOTT FAULDS until he attains the age of eighteen (18) years on 14 March 2000 (“Trust”).
The plaintiff’s mother was appointed trustee of the trust created by the testator’s will in place of the grandparents and the monies remaining in the trust were those to which the plaintiff’s brother was entitled when he turned eighteen years of age in March 2000.
The sum of $143,651.05 was distributed to the plaintiff’s brother in March 2000. In total, approximately fifty eight per cent (58%) of the testator’s residuary estate was distributed to the plaintiff and her brother and approximately forty two per cent (42%) was retained by the grandparents.
The grandmother predeceased the grandfather and she left her estate to him. The grandfather made a will on 27 May 2010 in which he appointed his son, the defendant, as his executor. He gave a legacy to the plaintiff of $5,000, and a similar legacy to her brother. He gave the balance of his estate to the defendant. The grandfather died on 24 June 2010 and on 13 August 2010 this Court granted probate of his will to the defendant. The grant of probate states that the estimated gross value of the grandfather’s estate in the Australian Capital Territory was $876,880.30. The evidence establishes that the estate consisted of a house property at Melba valued at $510,000 and funds of $361,000. The defendant contends that the grandfather’s estate was distributed before he received notice of the plaintiff’s claim.
On 12 August 2011 solicitors acting for the plaintiff wrote to the defendant’s solicitors advising them that they had instructions to act for her. On 26 August 2011 the plaintiff issued an originating application in this Court supported by an affidavit of her solicitor sworn on 12 August 2011. Mr Christopher Scott Faulds was named as the second plaintiff in the proceeding. In the originating application the plaintiff sought a number of declarations and orders and she set out the grounds of her application. In essence, she claimed relief against the defendant for his alleged failure to administer a trust created by her father’s will and for further provision from the grandfather’s estate under the Family Provision Act 1969 (ACT). The originating application was amended by an amended originating application and that in turn was amended by a further amended originating application.
On 15 September 2011 the plaintiff’s brother appears to have signed a document in the following terms:
To whom it may concern
I Christopher Scott Faulds disassociate myself with case 580/2011 and the estates of Brian Charles Faulds and the estates of Robert Scott Faulds. I have not authorised any party to act on my behalf and want NO involvement in any proceedings.
Please do not contact me regarding these matters.
In her amended originating application dated 26 September 2011 the plaintiff deleted any reference to her brother, Christopher. She maintained her claim for provision under the Family Provision Act 1969 (ACT). In her further amended originating application dated 7 December 2011 the plaintiff deleted her application for an order for provision under the Family Provision 1969 (ACT). A summary of the orders sought in the further amended originating application is set out below (at [23] – [34]).
THE APPLICATION FOR SUMMARY JUDGMENT
The defendant’s application for summary judgment is based on three grounds. First, he contends that the plaintiff’s cause of action against him relies on a construction of the testator’s will which is simply untenable. He relies on Rule 1147(2)(a) and submits that the plaintiff’s claim is frivolous or vexatious or both. Secondly, he contends that even if the plaintiff has a claim against him he has a good defence to the plaintiff’s claim on the merits within Rule 1147(2)(b) in that the plaintiff’s claim is barred by delay, acquiescence or laches. Thirdly, he contends that the plaintiff’s claim is not properly constituted in the absence of her brother and furthermore, her “pleadings” are fundamentally defective.
The appropriate starting point is an examination of the plaintiff’s claim as contained in the further amended originating application.
The Plaintiff’s Claim
The further amended originating application which, for convenience, I will refer to hereafter as the “originating application”, is the key document. There is no statement of claim. The following features of the grounds of the plaintiff’s claim as identified in the originating application should be noted. First, the plaintiff does not complain of the distribution from the testator’s estate to her of $144,935.83 in September 1998, nor, it may be assumed, does she complain of a similar distribution to her brother in March 2000. She claims that the balance of the testator’s residuary estate i.e., approximately $193,700 or forty two per cent (42%) of the residuary estate was “remaining trust property” to which she had an “absolute, vested and indefeasible half interest”. Secondly, she sues the defendant in his capacity as the trustee of the testator’s estate and as the trustee of the grandfather’s estate and the gravamen of her case is that the remaining trust property is or was in the grandfather’s estate and was subject to a trust in the testator’s will which had the effect that upon the death of the grandfather, the remaining trust property or some part of it should have been distributed to the plaintiff. In fact, at one point the plaintiff claims that she is entitled to all the remaining trust property but that cannot be correct because, even if her construction of the testator’s will is correct, half of the remaining trust property belongs to her brother, Christopher. The plaintiff claims that a breach of trust or liability to account occurred or arose when the defendant failed to distribute part of the grandfather’s estate to her. I interpolate to say that probate of the grandfather’s estate was granted by this Court on 13 August 2010 so that on the face of it the breach of trust or obligation to account occurred or arose at about that time. The grandfather resided in the Australian Capital Territory at the time of his death and his estate (estimated to be worth $876,880.30) was in this jurisdiction. Fourthly, it is apparent from the grounds in the originating application that on the plaintiff’s case, her brother, Christopher, has exactly the same entitlement as she has. As I have said, he was a party to the proceeding but is no longer a party. Fifthly, the plaintiff claims that she can trace the remaining trust property into the defendant’s hands who, as it happens, was the beneficiary of the grandfather’s residuary estate. Alternatively, she claims that he is liable to account for the remaining trust property.
The above can be gleaned from the grounds in the application. It is also necessary to consider the relief sought in the originating application. It consists of claims for declarations and orders.
The first declaration sought is as follows:
A declaration that the late Elizabeth Proven Falls (sic) and the late Robert Scott Faulds held the whole of the estate (the ‘trust property’) of the late Brian Charles Faulds (the ‘deceased father’) on express trust (the ‘express trust’) for each of his children, the plaintiff, Catherine Louise Faulds and Christopher Scott Faulds (the beneficiaries) until the death of the last of them, the late Robert Scott Faulds in June 2010.
This declaration is to the effect that the grandparents were bound to hold all of the testator’s estate (presumably meaning his residuary estate) on trust until the death of the last of them. This declaration is difficult to reconcile with the second declaration sought in the originating application which is as follows:
A declaration that the late Elizabeth Proven Falls (sic) and the late Robert Scott Faulds had distributed, in accordance with the express trust, 58% of the trust property when the said Christopher Scott attained his majority.
This declaration is quite clearly a declaration to the effect that the distributions to the plaintiff and her brother were in accordance with the terms of the express trust.
The next two declarations sought are as follows:
A declaration that the balance of the (sic) of the trust property, being 42% of the trust property with compound interest accumulating at the trustee rate of 8% per annum from 14 March 2000 until the date of hearing was held on express trust by the late Elizabeth Proven Falls and the late Robert Scott Faulds for each of the beneficiaries until the death of the last of them, the late Robert Scott Faulds in June 2010.
In the alternative, a declaration that the balance of the (sic) of the trust property, being 42% of the trust property with simple interest accumulating at the trustee rate of 8% per annum from 14 March 2000 until the date of hearing was held on express trust by the late Elizabeth Proven Falls and the late Robert Scott Faulds for each of the beneficiaries until the death of the last of them, the late Robert Scott Faulds in June 2010.
The significance of the date of 14 March 2000 is that that is when Christopher Faulds turned eighteen years of age. The claim for interest (compound or simple) from 14 March 2000 is confusing. The declarations suggest that the grandparents were entitled to hold the property until the death of the last of them. It is difficult to know then on what basis the plaintiff claims interest before then. The actual interest earnt might be claimed (if there was an entitlement to it) but there is no such claim or there might be (but again there is not) a plea of a breach of a trustee’s duty to invest trust monies properly. There is a more fundamental problem with the plaintiff’s claim for interest in that her construction of the will was to the effect that the grandparents had a life interest (i.e., a right to enjoy the income during their lives) of the remaining trust property.
Finally, I note the plaintiff seeks a declaration in the following terms:
A declaration that the Defendant held the balance of the assets of the estate of the late Brian Charles Faulds (42% thereof) plus accrued interest at the Supreme Court rate up until the date of the death of the late Robert Scott Faulds of filing in the sum of $236,079.43 on express trust for the First Plaintiff and the Second plaintiff (the ‘Trust Property’).
Not only is this declaration confusing to read, but it suggests that the defendant was the trustee and that the plaintiff is entitled to interest on the remaining trust property prior to the grandfather’s death.
There are other declarations and orders claimed in the originating application, but they do not warrant separate examination.
The grounds of the originating application are not as clear as they ought to be. They should clearly identify the terms of the trust which is alleged and the manner in which the defendant is said to have acted in breach of trust. Some of the declarations sought by the plaintiff are confusing and apparently inconsistent with the construction of the testator’s will advanced by her. Nevertheless, it is possible, with the aid of the plaintiff’s submissions on the present application, to discern the key elements of the plaintiff’s claim. It is based on a construction of the testator’s will which has the following consequences:
(1) the distributions totalling fifty eight per cent (58%) of the testator’s residuary estate to the plaintiff and her brother when they each reached eighteen years of age were valid, effectual and in accordance with the express terms of the trust;
(2) in circumstances where both grandparents predeceased the plaintiff and her brother, the grandparents had a life interest (i.e., a right to income) in the balance of the testator’s residuary estate;
(3) on the death of the grandfather, the plaintiff and her brother were entitled to the balance of the residuary estate in equal shares; and
(4) had the grandparents survived the children then they would have taken the balance of the residuary estate.
The plaintiff summarised her construction of the testator’s will in her written submissions as follows:
At least 50% of the estate was to be held by Elizabeth and Robert snr on trust for the plaintiff and Christopher Faulds until each of them attained the age of 18 years.
The balance of the estate was given, devised and bequeathed to Elizabeth and Robert snr during their life (as life tenants) and to the plaintiff and Christopher on the death of the last of Elizabeth and Robert snr. If the plaintiff and Christopher predeceased their grandparents, then Elizabeth and Robert snr would then take the remainder of the Estate absolutely.
Jurisdiction
The defendant suggested in his written submissions that this Court may not have jurisdiction to determine the plaintiff’s claim or, in the alternative, might decline jurisdiction in the exercise of a discretion. During oral submissions, the defendant’s counsel made it clear that neither of these submissions were being pursued. Both parties agreed that the law to be applied in determining the proper construction of the testator’s will was the law of Western Australia.
I had difficulty following the defendant’s written argument as to jurisdiction. The plaintiff’s cause of action is allegedly based on a breach of trust or a failure by the defendant to administer the terms of an express trust and the relief sought is based on an alleged right to trace trust property into the hands of the defendant, or a liability to account by the defendant. The defendant resides in the Australian Capital Territory. On the face of it, the breach or failure arose in the course of his administration of the grandfather’s estate which was located in the Australian Capital Territory and which was the subject of a will in respect of which probate was granted by this Court. The defendant was served with this proceeding and has participated in it.
The argument that jurisdiction should be declined in the exercise of a discretion was not developed and, as I have said, it was ultimately abandoned. If the nature of the proceeding, the amount involved and the events to date are relevant to the exercise of the discretion, it seems to me that there would be every reason not to decline jurisdiction so that the plaintiff was forced to commence and maintain proceedings in the Supreme Court of Western Australia.
The Proper Construction of the Testator’s Will
The defendant submitted that the plaintiff’s construction was untenable and that on the correct construction of the will, he had acted in accordance with the terms of the trust and the plaintiff had no cause of action against him.
The defendant submitted that the correct construction of the will was as follows. First, clause 2 is engaged only if both of the grandparents died before the testator. If one or both of the grandparents were alive at the testator’s death, then the clause would not be engaged and would never be engaged. Secondly, if both of the grandparents were dead at the date of the testator’s death, then his residuary estate would go to his children on trust with the defendant acting as trustee if the children had not reached eighteen years of age. If both or either of the grandparents were alive at the date of his death, then they took his residuary estate subject to a trust of “at least fifty per cent (50%)” of his residuary estate or an equitable charge over the residuary estate in favour of the testator’s children or a gift of the testator’s residuary estate to his parents subject to a condition that at least fifty per cent (50%) of that estate was to be paid to his children.
The defendant identified an alternative construction of clause 2 which he submitted also meant that the plaintiff had no cause of action against him. He submitted that it is possible to construe clause 2 as being engaged if neither of the grandparents, although alive at the testator’s death, were alive at the time his children turned eighteen years of age. In other words, if both grandparents were dead before the children turned eighteen years of age, then the testator’s residuary estate would be held on trust by the defendant as trustee until the children attained their majority.
As I have said, on either of the constructions advanced by the defendant and on the facts, clause 2 was not engaged. The testator’s parents survived him and both were alive at the time his children turned eighteen years of age. In those circumstances, the defendant submitted, the plaintiff has received her entitlement under the testator’s will and she has no cause of action against him.
The plaintiff’s construction of the testator’s will is set out above (at [33] and [34]).
This is an application for summary judgment. During submissions, I did raise with the parties the possibility of the application for summary judgment being converted into one for the determination of a separate question but that proposal was not embraced, at least by the defendant.
The test on an application for summary judgment where it is alleged that a claim is frivolous or vexatious is well known and clear. It is stated in the two High Court authorities of Dey v Victorian Railways Commissioners (1949) 78 CLR 62 (“Dey”) and General Steel Industries Inc v Commissioner for Railways (NSW) and Others (1964) 112 CLR 125 (“General Steel”). Three matters are important in the circumstances of this case. First, the applicant’s burden is a heavy one and the case must be “very clear indeed” (Dey at 91 per Dixon J (as his Honour then was)), or “so clearly untenable that it cannot possibly succeed” (General Steel at 130 per Barwick CJ). Secondly, the test is the same whether the matter in issue is one of law or fact. A party whose claim turns on a matter of law is as entitled to have his or her claim determined in accordance with the ordinary procedures of the Court as a party whose claim or defence turns on a matter of fact (Dey at 91 per Dixon J). Thirdly, an application for summary judgment is not to be dismissed merely because argument, even of an extensive kind, is needed to show the futility of a party’s claim (Dey at 91 per Dixon J; General Steel at 130 per Barwick CJ).
This ground of the application for summary judgment was fought on the basis that it was to be determined by reference to the written terms of the testator’s will. The plaintiff did not suggest that there was extrinsic evidence consisting of words or conduct of the testator which was arguably admissible and which bore upon the proper construction of the will and the plaintiff’s evidence on the application was primarily directed to the issues of delay, acquiescence and laches. The defendant submitted that the common law governed the position in Western Australia (which was the applicable law) unlike, for example, the position in this jurisdiction (Wills Act 1968 (ACT) s 12B). In the result, as I have said, neither party identified a piece of extrinsic evidence which was arguably admissible and which might have a bearing on the proper construction of the will. I will proceed accordingly.
The general principles of construction are well known and clear. They were stated by Isaacs J in John Dyneley Fell and Another v David Fell and Another (1922) 31 CLR 268 at 273-276. I set out the following relevant principles (citations omitted):
(1) “Every will must by law be in writing, and it is a necessary consequence of that law that the meaning must be discovered from the writing itself, aided only by such extrinsic evidence, as is necessary in order to enable us to understand the words which the testator has used” (Lord Cranworth in Abbott v. Middleton (3); Lord Wensleydale in the same case (4)).
(2) “The instrument . . . must receive a construction according to the plain meaning of the words and sentences therein contained. But . . . you must look at the whole instrument, and, inasmuch as there may be inaccuracy and inconsistency, you must, if you can, ascertain what is the meaning of the instrument taken as a whole in order to give effect, if it be possible to do so, to the intention of the framer of it” (Lord Halsbury L.C. in Leader v. Duffey (1); Ward v. Brown (2); Buckley L.J. in Kirby-Smith v. Parnell (3)).
…
(6) “If the contents of a will show that a word has been undesignedly omitted or undesignedly inserted, and demonstrate what addition by construction or what rejection by construction will fulfil the intention with which the document was written, the addition or rejection will by construction be made” (Knight Bruce L.J. in Pride v. Fooks (9) ).
I have set out the sixth principle because the plaintiff contends that the defendant’s constructions of the will require the Court to adopt the unusual but not necessarily impermissible course of reading words into the will.
In Brennan v Permanent Trustee Company of New South Wales Limited and Others (1945) 73 CLR 404 Dixon J said (at 414-415) (citation omitted):
But, to determine the meaning of the will, the language of the testator must be read in the sense which he himself appears to have attached to the expressions he used, that is, unless a rule of law gives them some fixed operation. When the main purpose and intention of the testator are ascertained to the satisfaction of the court, if particular expressions are found in the will which are inconsistent with that intention, though not sufficient to control it, such expressions must be discarded or modified. The language of the testator should be moulded to carry into effect as far as possible the intention which, in the opinion of the court, the testator has, on the whole will, sufficiently declared. That is the rule of interpretation expressed in the well-known passage in the judgment delivered in the Privy Council by Lord Kingsdown in Towns v. Wentworth. Further, the court may take into account the circumstances to which the will is to be applied as they existed at the time it was executed.
(see also Pringle v Pringle [2010] WASC 206).
The plaintiff relied on the decision of Campbell J in Rawack v Spicer [2002] NSWSC 849 at [1] and [16]. One of the clauses of the will in issue in that case read as follows:
(e) To divide the net residue into three (3) equal parts and pay one (1) such equal part to each of the following beneficiaries:-
(i) As to one (1) such equal part to my friend ERICH SOMMER (Also known as ERIC SOMMERS) of Unit 7A, 45 Ocean Avenue, Double Bay in the State aforesaid for his sole use and benefit absolutely.
(ii) As to another one (1) such equal part to my sister RUTH DECKERT of 1A Aubrey Street Stanmore in the State aforesaid for her sole use and benefit absolutely.
(iii) As to the remaining one (1) such equal part for my brother WALLACE SPICER of 7 Nicol Avenue, Maroubra in the State aforesaid for his sole use and benefit absolutely.
PROVIDED that in the event of either my friend the said ERICH SOMMER (Also known as ERIC SOMMERS) or my sister the said RUTH DECKERT predeceasing me or failing to survive me for a period of one (1) calendar month from the date of my death or dying after my death THEN such bequests to my friend ERICH SOMMER or my sister RUTH DECKERT shall lapse and the same shall accrue to and be paid by my Trustees to my brother WALLACE SPICER for his sole use and benefit absolutely ...
In construing this clause, Campbell J said (at [16] and [17]):
There is some tension between the suggestion that Mr Sommers and Mrs Deckert receive a life estate by virtue of the construction of the proviso, and the fact that the gift to each of them in clause 6(e)(i) and (ii) is said to be for “his [/her] sole use and benefit absolutely”. However I do not see that tension as providing a reason for not construing the gifts to Mr Sommers and Mrs Deckert as a life estate. The logical form of the gifts made by clause 6(e) to Mr Sommers and Mrs Deckert is, ”this interest in property is all yours, except that if you die after I do, it stops being yours and goes to Wallace.” A gift like that may be somewhat clumsy, but is still intelligible – and the manner in which it is intelligible is that it creates a life estate.
Even if it were to be the case (contrary to my view) that the gift to Mr Sommers and Mrs Deckert for his or her sole use and benefit absolutely was inconsistent with the proviso saying that if they died after the testatrix’s death the bequest would lapse and accrue to Wallace, the same result would follow. Jarman on Wills, 8th edition, page 576 says there is:
“... an established rule in the construction of wills, that where two clauses or gifts are irreconcilable, so that they cannot possibly stand together, the clause or gift which is posterior in local position shall prevail, the subsequent words being considered to denote a subsequent intention: Cum duo inter se pugnantia reperiuntur in testamento, ultimum ratum est. Hence it is obvious that a will can seldom be rendered absolutely void by mere repugnancy: for instance, if a testator in one part of his will gives to a person an estate of inheritance in lands, or an absolute interest in personalty, and in subsequent passages unequivocally shows that he means the devisee or legatee to take a life interest only, the prior gift is restricted accordingly.”
On the face of it, the problem of construction in Rawack v Spicer bears some similarity to the problem of construction in this case. However, on closer examination I think the apparent similarity disappears. First, I do not think this is a case of two clauses or gifts which are irreconcilable. The two clauses must be read together in order to discern the testator’s intention. Secondly, the gift in clause 1 is not simply a gift of the residuary estate to the grandparents. It is a good deal more complicated than that containing as it does a gift or provision for a minimum specified amount but an uncertain maximum amount for the children. The two paragraphs must be read together to discern the testator’s intention and I do not find the rule of construction that the clause or gift which is posterior in local position shall prevail to be applicable having regard to the terms of this will.
In my opinion, the plaintiff’s construction of the testator’s will is plainly untenable. It may be inferred, I think, that the testator would have assumed that his parents would die before his children. On the plaintiff’s construction, the testator intended to give all of his residuary estate to his children, subject to the following:
(1) At least fifty per cent (50%) would be held on trust and then given to the children when they reached the age of eighteen;
(2) Up to fifty per cent (50%) would be given to the children on the death of the last of the grandparents assuming they died before the children;
(3) The income on the corpus referred to in paragraph (1) would be used for the benefit of the children’s education; and
(4) The income on the corpus referred to in paragraph (2) would be for the benefit of the grandparents during their lives.
It seems to me unlikely the testator would wish to dispose of his property in that way. Why, one might ask, would he wish to give an income stream to his parents for their lives and why, if his overall intention was to benefit the children, would he make their receipt of up to half of his residuary estate contingent on, not the decision of his grandparents (which might be understandable), but on the date of death of the last grandparent? It seems to me the plaintiff’s construction becomes untenable when, with the matters I have already identified, the structure of clauses 1 and 2 is considered. If the plaintiff’s construction was correct, the structure of the clauses would be quite different.
The structure of the will strongly supports the defendant’s principal submission as to the proper construction of the will. Clause 1 is the main provision in the will and it gives the testator’s residuary estate to the grandparents subject to an obligation to give at least fifty per cent (50%) to the children when they turned eighteen years of age and to use the income on that part in the meantime on the children’s education. In essence, the testator stipulated that at least fifty per cent (50%) would go to his children leaving it to his parents to decide if they should be given any more. Clause 2 operates as a substitute gift and trustee provision and it is designed to operate if the gift in clause 1 cannot operate in the manner intended and I think that means if the grandparents predecease the testator. There is a further argument which I think supports the defendant’s construction. Clause 2 refers to “all of my estate as mentioned” and the meaning of this according to the will would be “my estate including money received from superannuation, cash in the bank and all of my personal property, apart from that listed below”. The defendant’s construction of the will enables one to give that meaning to the expression “all of my estate as mentioned”. By contrast, the plaintiff’s construction means that it must be read as fifty per cent (50%) or less of the estate, or that the will as a whole confers no beneficial interest of any sort including a life interest on the grandparents where they predecease the children.
In reaching this conclusion I have not decided whether the stipulation in clause 1 in favour of the children gives rise to a trust or an equitable charge. That is a difficult question which I would hesitate to decide on the submissions thus far presented. A third alternative, submitted the defendant, is that it is a gift subject to a condition. The defendant suggested but did not advance as one of his arguments, that if it was not a gift subject to an equitable charge for the maintenance of children, the gift could be void for uncertainty because of the stipulation “at least fifty per cent (50%)”.
There does appear to be a good deal to be said in favour of the defendant’s contention that the stipulation in clause 1 gives rise to an equitable charge in light of the following observations of Dixon J (as his Honour then was) in The Countess of Bective v The Federal Commissioner of Taxation (1932) 47 CLR 417 at 419:
(3) The first person may take the gift beneficially, but the statement of the purpose, particularly if it involves the payment of money, may operate as an equitable charge thereon in favour of the other or others. Bequests and devises to parents for the maintenance and benefit of their children are from their very nature peculiarly susceptible of this interpretation. “Where a fund is bequeathed to a parent, subject to a trust to maintain and educate his children, the surplus will belong to the parent; it is a gift subject to a charge” (Spence’s Equitable Jurisdiction (1849), vol. II., p. 466). … If a testamentary gift is made to a parent for the benefit both of himself and of his children, it appears from the decided cases that such a construction is usually adopted. Whenever a gift is made to one person beneficially, subject to his paying money to another, the provision takes effect as a charge, notwithstanding that words of condition are used, unless an intention clearly appears that it should operate by way of condition. The second object of the disposition thus obtains proprietary and not merely personal rights and is not left in danger of losing the intended benefit through the donee’s electing to reject the gift with its attendant condition, rather than to accept it cum onere. Of the decided cases upon dispositions stating a purpose that includes the maintenance or benefit of children, the greater number gives to the provision an operation, which, under one description or another, amounts to a gift subject to a charge.
However, I do not need to decide the point and I refrain from doing so.
I acknowledge that it is a large and serious step to conclude that the plaintiff’s construction of the testator’s will is untenable. However, the competing constructions were clearly identified and the matter fully argued. Extensive argument is not of itself a bar to summary judgment and, in my opinion, once the precise implications of the plaintiff’s construction are identified and the structure of the whole will considered, it seems to me clear that the construction is untenable. I acknowledge that the defendant’s construction involves reading “my children” as “me” in clause 2, but that can be done in an appropriate case and I think that this is an appropriate case when the matters I have identified are taken into account.
The effect of the above conclusion is that the defendant is entitled to summary judgment and it is not strictly necessary to consider the other grounds upon which the defendant put his application for summary judgment. However, as the other grounds were the subject of submissions, I will say something about them.
Delay, Acquiescence or Laches
The second basis upon which the defendant contends that he is entitled to summary judgment is that he has a good defence on the merits to the plaintiff’s claim because of her delay in bringing this proceeding (Rule 1147(2)(b)). To make good this basis the Court must be satisfied that there is a good defence on the merits to the claim. Where there are disputed issues of law or fact then summary judgment should not be granted.
The defendant referred to the decision of the High Court in Orr v Ford and Another (1989) 167 CLR 316 and, in particular, the discussion of the principles of acquiescence and laches by Deane J (at 337-341); Lamshed v Lamshed (1963) 109 CLR 440 at 452-453 per Kitto J; and Cood v Cood (1863) 33 ER New Series 273; 33 Beav. 388. I do not need to examine these principles because I have reached the clear conclusion that this ground for summary judgment should be rejected on grounds other than the application of the correct legal principles.
The starting point of the defendant’s submission is his allegation that in late 1998 the plaintiff knew that the defendant considered that she had received her full entitlement under the testator’s will. The contention was that with that knowledge the plaintiff nevertheless stood by and did nothing until she instituted this proceeding in 2011. The defendant’s argument assumed that the plaintiff’s cause of action (assuming for present purposes that she had a cause of action) accrued before what he contended was a six year time limit introduced by s 13 of the Limitation Act 2005 (WA). He therefore relied on the doctrines of delay, acquiescence and laches.
The difficulties with this argument are as follows. The first issue is to determine when time began to run for the purposes of applying the principles. On the plaintiff’s construction of the will, the breach of trust or actual failure to administer the trust occurred when the grandfather died in 2010. I think the defendant accepted that if that was the appropriate starting point, there would be no argument of delay, acquiescence or laches. The defendant seemed to suggest at one point that even if the plaintiff’s cause of action did not accrue until 2010, nevertheless, the doctrines of acquiescence and laches still applied because the plaintiff should have taken action in 1998. All I need to say is that the plaintiff’s approach, that only her conduct after 2010 is relevant, is not untenable. Secondly, and more importantly because I would refuse summary judgment on this ground, is that the defence of delay, acquiescence and laches can raise fact laden inquiries inappropriate for determination on application by way of summary judgment. Whether the plaintiff’s evidence with respect to these issues be weak or strong, in my opinion it does raise contentious factual issues inappropriate for determination on an application for summary judgment.
Procedural Deficiencies
The defendant submits that he is entitled to summary judgment because of what he characterised as fundamental procedural deficiencies in the plaintiff’s claim. There are two important procedural deficiencies in the plaintiff’s claim, but I would hesitate to enter summary judgment before hearing from the parties as to whether I should give the plaintiff an opportunity to see if they could be remedied. For example, the plaintiff submits that the defendant could have, but did not, seek an order that she file and serve a statement of claim. I do not need to do that because summary judgment should be granted for reasons previously stated.
The first procedural deficiency is that the plaintiff’s brother is not a party to the claim. It seems to be accepted by the plaintiff that he is a necessary party and indeed, the plaintiff has foreshadowed an application to join him as a defendant.
The second procedural difficulty is that despite three attempts the grounds in the originating application do not clearly identify the terms of the trust alleged by the plaintiff and the breach of trust or failure to administer it according to its terms. Furthermore, as I have said, the claims for relief are confusing and inconsistent.
THE APPLICATION TO STRIKE OUT PARAGRAPHS IN THE PLAINTIFF’S AFFIDAVITS
The defendant submits that parts of the plaintiff’s affidavits should be struck out as an abuse of process of the Court under Rule 425(1)(d) (see Darling v Palm Springs Ltd [2002] NSWSC 793). As I understand it, the defendant contends that a number of allegations are irrelevant in view of the abandonment of the plaintiff’s claim under the Family Provision Act 1969 (ACT). They have caused distress to the defendant and his family. If this proceeding was going to trial, then this application would need to be considered and I would require more detailed submissions on the issues to go to trial than I have received to date before ruling on it.
ORDERS
There will be judgment for the defendant on the plaintiff’s claim. I will hear the parties as to costs.
I certify that the preceding sixty-eight (68) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Besanko.
Associate:
Date: 15 August 2013
Counsel for the plaintiff: Ms Thomas
Solicitor for the plaintiff: Baker Deane & Nutt
Counsel for the defendant: Ms Stuckey-Clarke
Solicitor for the defendant: Meyer Vandenberg
Date of hearing: 27 May 2013
Date of judgment: 15 August 2013
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