Clarke & Ors v Edwards - [2012] SASC 213

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
CLARKE & ORS v EDWARDS
[2012] SASC 213
Reasons of Judge Lunn a Master of the Supreme Court
16 November 2012
PROCEDURE
Application by plaintiffs in claim under Inheritance (Family Provision) Act 1973 that defendant executor and sole beneficiary obtain a valuation of the assets of a company in which the deceased was the major shareholder - extent of duty of executor to assist Court - whether the valuation could be ordered as a report under 6R 251(1) - whether any such valuation should be a current valuation or one at date of trial - duties of defendant to disclose estate assets under 6R 312(11) - whether that duty extends to stating the value of the estate assets - application refused.

CLARKE & ORS v EDWARDS
[2012] SASC 213
JUDGE LUNN:
Reasons on plaintiffs’ application for the defendant/executor to obtain a valuation of an estate asset
Abbreviations
“The deceased” is Michael Vincent Edwards, who died on 13 October 2008;
“the plaintiffs” are the adult children of the deceased by his first marriage;
“the defendant” is the second wife of the deceased, the executor of his will and the sole beneficiary of his estate;
“Micden” is Micden Pty Ltd, a company in which 65 of the issued shares were held by the deceased and the remaining 35 by the defendant, and in which they were both directors;
“the Albion” is the Albion Hotel/Motel in Casterton in Victoria;
“Negara” is Negara Pty Ltd, the trustee of the Augusta Hotel Trust. The deceased and the defendant each held 10 shares in it. It owns the land which is occupied by the Albion; and
“Hutchelle” is Hutchelle Pty Ltd, which is now in liquidation.
Background

In 2004 Micden purchased the business of the Albion and Negara purchased the land on which it was conducted. On 23 December 2005 Micden sold the business of Albion to Hutchelle for $250,000. On settlement on the sale, Micden gave vendor finance of $150,000 to Hutchelle, which was secured by a mortgage over the lease which Hutchelle took from Negara for the premises. At that time the deceased and the defendant ceased working in the Albion.
Hutchelle defaulted in the payment of interest on the loan from Micden and in its rental payments to Negara. After the death of the deceased, and in early 2009, Negara re-entered the leased premises and Micden took back the business of the Albion under an agreement in which it forwent payment of the balance of the monies owing on the loan from Hutchelle. Hutchelle went into liquidation on 3 August 2009. Since early 2009 Micden had conducted the business of the Albion. The defendant alleges that it has continued to trade at a loss. In June 2010 Micden was allocated entitlements for 14 gaming machines, but it is unclear on the evidence what, if any, part of their purchase price it has paid.
On 6 July 2010 this Court, in its Testamentary Causes Jurisdiction, granted probate over…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Clarke & Ors v Edwards

Details

AGLC: Clarke & Ors v Edwards [2012] SASC 213
Case: [2012] SASC 213
Decision Date: 16 November 2012

CaseChat Overview and Summary

In Clarke & Ors v Edwards, the plaintiffs, who were the deceased's children from his first marriage, sought an order from the Supreme Court of South Australia that the defendant, who was the deceased's second wife, executor of his will, and sole beneficiary of his estate, obtain a valuation of the assets of Micden Pty Ltd, a company in which the deceased was the majority shareholder. The plaintiffs sought a valuation of the business and assets of the Albion Hotel Motel, owned by Micden, which they believed had substantial value not accounted for in the estate's valuation. They also sought an order for a current valuation of the assets of Micden, to be conducted by an independent expert valuer. The plaintiffs argued that the defendant, as executor, had a duty to provide all possible assistance to the Court, including obtaining a valuation of the estate assets. They further argued that the valuation should be a current valuation to reflect the true value of the assets at the time of the trial.

The court examined the legal issues concerning the executor's duty to provide information about the estate's assets, the appropriateness of ordering a valuation at this stage of the proceedings, and the applicability of certain rules in the Supreme Court Rules 1936. The court considered whether the duty of an executor to provide information about the estate's assets extended to requiring the executor to expend a significant proportion of the estate funds on obtaining expert evidence to fulfil a duty to provide admissible expert evidence of value to the Court. The court also considered whether the order for a valuation could be made under 6R 251 of the Supreme Court Rules 1936, which deals with orders for accounts or reports relevant to a question in issue in an action.

The court found that the duty of an executor to provide information about the estate's assets was limited to situations where that evidence was reasonably available to the executor. The court also found that 6R 251 was not an appropriate rule under which to make the order for a valuation, as it was not a request for a judicial determination of the issue of the value of the shares of Micden, but an attempt to have valuation evidence produced which would then be available for use at the trial if either party chose to tender it. Furthermore, the court held that there was no justification at this stage of the action for any order to be made for a report as to value under 6R 251, as it was a matter to be determined at the trial of the action.

The court dismissed the plaintiffs' application for an order that the defendant obtain a valuation of the assets of Micden. The court found that there was no money available in the estate to pay for the valuation, and it would not be prudent to incur a substantial valuation fee at this point in time, as the value of the assets may change before the trial. The court also held that there was no justification for requiring the estate to bear the cost of a current valuation of the Albion business at this stage of the proceedings. The court granted the alternative orders sought by the plaintiffs, allowing them to obtain a valuation at their own expense if they wished to do so.

The final orders of the court were as follows: 1) The application for an order that the defendant obtain a valuation of the assets of Micden was dismissed; 2) Orders were made in terms of paragraphs 2 and 3 of the plaintiffs' application, allowing them to obtain a valuation at their own expense if they wished to do so; 3) The costs of the application were to be borne by the defendant; 4) The application was certified fit for counsel; and 5) A next directions hearing was set for 31 January 2013 at 10:40 am.

Orders