Dunne v Radburn

[2019] NSWSC 607

Supreme Court

New South Wales

Medium Neutral Citation:	Dunne v Radburn [2019] NSWSC 607
Hearing dates:	13, 14, 15 August 2018; 17 October 2018; further written submissions ending 30 November 2018
Date of orders:	24 May 2019
Decision date:	24 May 2019
Jurisdiction:	Equity
Before:	Parker J
Decision:	The amounts shown in the inventory of property for the estate of Joan Evelyn Radburn, as annexed to the Court’s grant of probate dated 12 August 2008, as loans to the defendant ($408,545.72) and the plaintiff ($71,183.09) are debts owing to the estate. The cross-claim is dismissed.
Catchwords:	SUCCESSION - executors and administrators – administration – proceedings brought by a joint executor against a second joint executor – whether amounts paid by deceased to one joint executor were repayable as loans to the estate – alleged binding and enforceable contract for the distribution of certain estate assets in fact constituted a claim seeking to oblige an executor to exercise their powers subject to contract.   CONTRACTS — Formation — Incompleteness – alleged oral agreement said to be later affirmed was not established by evidence before the Court – alleged agreement would require executor to administer estate according to terms of alleged contract – office of executor cannot be bound by contract in absence of all affected parties’ agreement.
Legislation Cited:	Partnership Act 1892 (NSW), s 33(1).
Cases Cited:	None
Texts Cited:	None
Category:	Principal judgment
Parties:	Vanessa Rose Dunne (Plaintiff) Brett Morten Radburn (Defendant)
Representation:	Counsel: A Kuklik (Plaintiff) R Weaver (Defendant)   Solicitors: Irongroup Lawyers (Plaintiff) Higgins Lawyers (Defendant)
File Number(s):	2017/95022
Publication restriction:	Nil

Judgment

1. These proceedings concern the estate of Joan Evelyn Radburn, late of Rydal near Lithgow, who died in March 2008. For convenience and without disrespect, I will refer to the members of the deceased’s family by their first names.

2. The deceased was survived by her two children. Brett Morten Radburn is her son. He is the defendant. Vanessa Rose Dunne is the deceased’s daughter. She is the plaintiff.

3. The deceased’s last will was made in 1991. Under that will, the deceased left the whole of her estate to Brett and Vanessa in equal shares. Probate of the will was granted to Brett and Vanessa in August 2008. They have since fallen out over the administration of the estate. These proceedings were commenced by Vanessa in 2017.

4. The hearing took place before me over three days, beginning on 13 August last year. At the end of the hearing, amendments to the pleadings were foreshadowed. The amendments were later made by consent. In the meantime, in early September, I had noticed that the documentary evidence concerning the administration of the estate was incomplete. Correspondence in evidence referred to earlier apparently relevant correspondence that was not in evidence, and there were some other obvious gaps. I sent a memorandum to counsel for the parties drawing their attention to this. This resulted in an application to tender further evidence.

5. There was a further hearing on 17 October to deal with these matters. Further documents were tendered by consent. No application was made, however, to cross-examine any of the witnesses any further. The parties presented supplementary submissions, including on the issues raised by the amendments. Even after that hearing, there still remains some loose ends. On 16 November I made orders in chambers, by consent, admitting a further supplementary tender bundle of documents and providing for further written submissions. Those submissions ended on 30 November.

Issues for determination

6. During her lifetime, the deceased’s accountants maintained a set of accounts which included loan accounts from the deceased to Brett and Vanessa. At the time of the deceased’s death those accounts showed Brett as owing approximately $410,000 and Vanessa as owing approximately $70,000. Vanessa contends that these monies must be repaid, or allowed for as liabilities to the estate, as part of the process of administering the estate. Brett disagrees. His contention is that these amounts represent monies paid by way of gift.

7. As well as seeking repayment of the loans to the estate, Vanessa seeks orders removing Brett as an executor, so that she can complete the administration as sole executrix. Alternatively, she proposes that an independent administrator be appointed.

8. The deceased lived at a property at Rydal called “Naringla”. She also held a one-third interest in a cattle grazing partnership called the “Farnleigh partnership” with her sisters, Coral Kable and Robyn Hadley. The assets of the partnership included six blocks of rural land. Following the grant of probate, Brett and Vanessa as executors transferred Naringla to Vanessa. Brett contends, by way of cross-claim, that this was part of a binding and enforceable contract under which Vanessa was to receive Naringla and he was to receive two of the partnership properties out of the estate’s share on dissolution of the partnership. Vanessa disputes that any such agreement was made, or that, if made, it is enforceable.

9. In the course of the hearing, it became clear that the Court’s decision on the loan issue and on the cross-claim would have an important bearing on what needs to be done to complete the administration of the estate. It was agreed by the parties that Vanessa’s application to have Brett removed or an independent executor appointed should be held over and dealt with by the Court in light of its decision on these questions.

Summary and analysis of evidence

10. In the plaintiff’s case, evidence was given by Vanessa and by her husband, John Michael Dunne. In the defence case, evidence was given by Brett and by one of his daughters, Laura Jessie Collins.

11. Relations between Brett and Vanessa were apparently good during the deceased’s lifetime and this continued for several years after her death. That changed following an incident when Brett was having dinner with Vanessa and John at Naringla in January 2014. Also present were another of Brett’s daughters, Isabelle, and Vanessa’s daughters. A violent altercation took place between Vanessa and Brett. It is not necessary to go into the conflicting evidence as to exactly what happened. Since then Brett and Vanessa have been estranged.

12. In the course of the trial, an affidavit was filed for Brett from Ross Higgins, solicitor. Mr Higgins is the principal of a firm known as Higgins Lawyers which has offices, among other places, in Lithgow. Mr Higgins acted for Brett and Vanessa in obtaining probate and administering the estate. He also acted on the winding up of the partnership (which was very protracted). After these proceedings were commenced, Mr Higgins acted for Brett in defending the proceedings.

13. Mr Higgins’ affidavit annexed copies of notes from his file which refer to instructions received by him in the course of applying for probate and administering the estate. Ultimately, counsel for Brett did not seek to rely upon the affidavit and Mr Higgins did not give evidence in the proceedings. The file notes which had been annexed to his affidavit were tendered by counsel for Vanessa. I say more below about the consequences of this for the findings which I must make.

14. Among the documents tendered at the hearing on 17 October was a bill rendered by Mr Higgins for work on the estate. The bill is in narrative form and allows some reconstruction of the steps taken to administer the estate. But it seems that from early 2011 the partnership work was billed separately, and the estate bill is less useful from that point onwards.

The deceased’s loan accounts

15. Balance sheets showing the deceased’s assets and liabilities at the end of the financial year were in evidence for the 1992 to 2005 financial years. These balance sheets came from financial statements prepared for the deceased. The full financial statements for 2006 and 2007 were also in evidence (along with the deceased’s tax returns for those years).

16. These documents were prepared by a firm of accountants in Lithgow, Robson & Co (Lithgow) Pty Ltd (“Robsons”). The balance sheets appear to have been generated from account books kept by Robsons to enable the preparation of the deceased’s tax returns. The loans to Brett and Vanessa were described as unsecured loans. From 1998 they were classified as non-current assets.

17. The figures shown for Brett’s loan account in the balance sheets over the period from 1992 to 2007 were:

1992   $40,000.00      2000   $273,888.00

1993   $185,000.00      2001   $317,488.00

1994   $185,000.00      2002   $313,888.00

1995   $185,000.00      2003   $313,888.00

1996   $185,000.00      2004   $321,888.00

1997   $185,000.00      2005   $381,888.00

1998   $205,000.00      2006   $395,222.31

1999   $263,888.00      2007   $408,545.72

18. Also in evidence were three cheque butts and four payment advices from accounts maintained by the deceased, recording payments to, or for the benefit of, Brett. Brett acknowledged that the handwriting on the cheque butts was his mother’s; one of the payments was described as a loan and the others were not. One of the payment advices was annotated “Brett” and another was annotated “Brett loan”. Brett’s evidence was that the handwriting was either that of his mother or of her accountant (which he described as being similar to his mother’s).

19. No one from Robsons gave evidence. A letter from Robsons was tendered. Apart from a few passages which were successfully objected to, it was admitted by consent. The letter stated that Robsons had acted for the deceased for more than 20 years and confirmed that Robsons had prepared financial statements for the deceased. But the letter stated that the practitioner in charge of the file had subsequently died, so that Robsons had no information bearing on the dispute apart from the financial statements themselves.

20. The financial statements for 2006 and 2007 contained a compilation report from Robsons which stated that the accounts had been compiled in accordance with certain accounting standards “on the basis of information provided by” the deceased. They also contained a “proprietor’s declaration” which relevantly stated:

The proprietor has determined that the proprietorship is not a reporting entity and that this special purpose financial report should be prepared in accordance with the accounting policies outlined in Note 1 to the financial statements:

The proprietor declares that:

(1)   The financial statements and notes have been drawn up so as to present fairly the proprietorship’s financial position as at 30/06/2007 and its performance for the year ended on that date in accordance with the accounting policies described in Note 1 to the financial statements, and

…

21. The 2006 financial statements and tax return were unsigned but the 2007 compilation report and tax return were. The compilation report was signed on behalf of Robsons; the return was signed by Brett and Vanessa, who also signed the proprietor’s declaration in the financial statements on behalf of the deceased. These documents were apparently prepared, or at least completed, after the deceased’s death. Brett and Vanessa signed in April 2008.

22. On 31 July 2008, Brett and Vanessa swore a joint affidavit in support of their application for probate. Annexed to that affidavit was an inventory of assets and liabilities of the deceased’s estate. The inventory included the following loans:

1. Brett         $408,545.72

2. Vanessa      $71,183.09

3. C&V Bourke      $9,234.70

23. These figures were the same as the figures in, and were presumably taken from, the deceased’s 2007 balance sheet. There was no evidence at the August hearing about who “C&V Bourke” were and neither Brett or Vanessa was asked about the matter. The loan to them first appeared in the 1998 financial statements as a loan of $10,000. At one point it reached almost $20,000 but it had reduced to $9,234.70 by 2001 and remained unchanged thereafter. The supplementary bundle of documents tendered at the hearing on 17 October contained deposit records of the deceased showing payments from the Bourkes in 2001 and 2002, and a further payment in 2003 which was apparently dishonoured in 2004. As these amounts do not seem to have figured in the Bourkes’ loan account, they do not take matters any further.

24. From an electronic message on the file, it appears Brett called into the office of Higgins’ lawyers to sign “paperwork” on 30 July 2008 but Mr Higgins was not available. A note of Mr Higgins for the following day records:

“signed probate doc”.

25. I infer this is a reference to the affidavit annexing the inventory, which was dated 31 July. Mr Higgins’ note also recorded:

Brett – lent money for house new line excavator, business

26. Another note records a conversation with Brett on 5 August, a few days later. It states:

No way she lent me that much – dispute amount.

Gave mother $300 per week when farm earning [nothing] for 8 years

27. The reference to the amount being disputed does not seem to have held up the probate application. That application was filed on 8 August. The joint affidavit of 31 July was filed unchanged in support of the application. Probate was granted on 12 August.

28. During her lifetime, the deceased had contributed to a pension fund, resulting in a benefit as at the date of her death of approximately $30,000 (it seems that this in fact may have been recorded in the inventory as cash on deposit). It was possible for the benefit to be paid to Brett and Vanessa if they could satisfy the trustees that they were, in whole or part, dependent upon the deceased. Mr Higgins lodged a form on their behalf but was told that more evidence of dependency was required. In response, he prepared supplementary statutory declarations from Brett and Vanessa and lodged them. This was in September 2008.

29. Brett’s statutory declaration (which was in the same terms as Vanessa’s) stated that the deceased had provided financial assistance to him, “the same as any other mother would provide for her child”. It then annexed a copy of the balance sheet from the deceased’s 2007 financial statements and stated:

Disclosed in the non-current assets is the aggregate of monies that have been advanced to me by my late mother.

This satisfied the trustees, and the pension monies were paid out to Brett and Vanessa.

30. The correspondence with the trustee and the statutory declarations were only identified as a result of the tender of Mr Higgins’ bill, and the documents themselves were only tendered as part of the supplementary tender after the hearing had ended. There was no evidence from Brett or from Mr Higgins about them.

31. Mr Higgins’ bill records some correspondence with Robsons about the loans in August 2008. On 5 August, the day of the conference at which Brett raised the question about the amount of the loan, Mr Higgins wrote to Robsons seeking details of when the monies recorded in the loan of accounts were advanced. Robsons responded asking that further correspondence be directed to Brett and Vanessa as executors. Mr Higgins replied noting Robsons had prepared the deceased’s tax returns for many years and requesting information about how the figures were derived. The bill does not refer to any further response. The only other reference to the loans is an entry in the bill from July 2009 referring to a conference (with whom is not identified) which noted a need to chase up Robsons about “issues pertaining to tax returns, loans and cheque books”. The loan issue is not referred to again.

32. A further note by Mr Higgins, made in November 2009 after Brett had separated from his wife, stated:

Money loaned to Brett – house, earthmoving business.

[illegible] Robson

Wife / partnership

Land/home $560 – owe $400k

Owe mother 400

- repaid mother $300 pw 6/7 years

Total debt $800k!

33. In an affidavit sworn in July 2017, Vanessa gave evidence of conversations she said she had with her mother in which her mother spoke of lending money to Brett for equipment or otherwise for business ventures over the years. She said there had been at least twenty such conversations. This was not challenged in cross-examination.

34. Vanessa said in her February 2017 affidavit that Brett stated, on “numerous” occasions “between 2008 and 2014”, that he would not be repaying his loan because the money he had received from the deceased was a gift. In oral evidence she said that she first raised “the issue of repayment” some time before the birth of her second daughter in April 2009. Vanessa placed it around “middle to late 2008”. There is no documentary evidence of Brett disputing liability to repay the loan before the disputes about the estate arose in 2014.

35. In his affidavit sworn in September 2017, Brett said:

I acknowledge that reference has been made in both the probate inventory and in mum’s accountant’s balance sheets from June 1993 to June 2005 to an unsecured loan to me the final balance which was $38,188.00. I acknowledge that over the years mum gifted me approximately $408,000. At the same time the inventory refers to an unsecure loan to Vanessa of $73,383.09. During her lifetime mum said to me regularly words to the effect:

“Those amounts I have given you and Vanessa over the years are gifts to both of you.”

36. He said he discussed the loans “on several occasions” with Robsons and was told by someone from Robsons:

Those amounts listed on your mother’s balance sheet as being loans to avoid you having to pay any income tax on them. She made it clear to me that those amounts were gifts only.

37. In cross-examination, Brett said that he had never seen his mother’s financial statements until after her death. He was then cross-examined on what he said in his affidavit about this topic. He sought to explain his affidavit by saying that it referred to his own accounts not his mother’s.

38. Brett’s affidavit did not refer to Mr Higgins’ notes, which only emerged at the hearing. Brett was cross-examined on the notes. As I understood his evidence, he maintained that the amounts he had received from the deceased were not repayable. In particular, he denied in November 2009 he owed his mother $400,000 as apparently recorded in Mr Higgins’ notes. In cross-examination, he said, in effect, that he signed the affidavit attaching the inventory without appreciating its significance. He was not asked about signing the proprietor’s declaration in the 2007 financial statements.

39. On his own account, Brett was aware that amounts he had received from the deceased had been recorded as loans. I do not accept the evidence Brett gave to explain this away. I found his attempt to reconcile what he said in his affidavit with his statement in his evidence that he had never seen the accounts prior to his mother’s death completely unconvincing. In any event, the important point is that the figures were recorded as a loan and that it does not matter for present purposes whether they were so recorded in Brett’s financial statements or his mother’s. The explanation that gifts were recorded as loans for tax purposes makes no sense. Gifts would not have been taxable in Brett’s hands, and indeed Brett accepted there were gifts made to him which were not so recorded.

40. In signing the deceased’s 2007 financial statements in April 2008, Brett in effect acknowledged that the monies recorded in the deceased’s accounts as loans to him were in fact loans. His verification of the deceased’s inventory of assets for the probate application in July 2008 carried the same acknowledgment.

41. Mr Higgins’ notes of 31 July and 5 August 2008 also record acknowledgements by Brett that he owed his mother money. The issue raised by Brett was about the quantum recorded, not its status as a loan. Brett may have thought that the money provided by him to support his mother at an earlier point should have been credited but he did not dispute that the payments which had been made and recorded in his mother’s accounts had been made on the basis that they were loans.

37. Counsel submitted that the reference to the loans in the inventory was a mistake or misunderstanding on Brett’s part. But I think the inferences from Mr Higgins’ notes are clear and if there were some mistake then Mr Higgins should have been able to give evidence to support it. I infer that Mr Higgins’ evidence would not have assisted Brett on this point.

38. I also found Brett’s attempt to explain away the reference to him owing money in the November 2009 file note unconvincing. Again, this is a matter on which Mr Higgins could have given evidence had he been able to put some other interpretation on the note.

39. On the face of it, Brett’s September 2008 statutory declaration was also an acknowledgement of the loan, including the amount. Counsel for Brett pointed out that the term used in the statutory declaration itself was “advanced”, and submitted that this term was consistent with a gift. This would have been more convincing if it had been accompanied by evidence from Brett that that was how he understood it. In my view the term is at best ambiguous. But given the other evidence on the question, which was the subject of cross-examination, there seems little point in considering it any further.

Course of administration of estate

45. The total value of the deceased’s property was estimated in the inventory attached to the 31 July affidavit at approximately $1.9 million. The assets identified, together with their approximate estimated values, were:

(1)   Naringla, $600,000;

(2)   cash at bank or on deposit, $41,000;

(3)   shares, $6,000,

(4)   one-third interest in Farnleigh partnership consisting of three parcels of real estate and two bank accounts $708,000;

(5)   three farm vehicles, totalling $24,000;

(6)   plant and equipment, $20,000;

(7)   loans, totalling $488,000.

46. Following the grant of probate, the cash and deposit accounts and the shares referred to in the inventory were realised, and a half share of the proceeds distributed to each of Brett and Vanessa.

47. Mr Higgins’ bill records that in November 2008 he issued to Brett and Vanessa what was described as “Interim Cash Statement No. 1”. The statement itself is not in evidence, and there is no evidence of any subsequent statement of receipts and payments on behalf of the estate. Mr Higgins’ bill records the payment of some funeral expenses on behalf of the estate, and also disbursements incurred by his firm. The evidence does not indicate how these were funded, and the disbursements may remain unpaid.

48. The major asset of the Farnleigh partnership was a property known as “Farnleigh” about 5km south of Rydal. It appears originally to have belonged to Eric James Morten, the father of Coral, Robyn and the deceased. On his death in 1992 they could not agree on a division of the property and so operated it in partnership. The property consisted of five blocks known as “House Paddock”; “Big Paddock”; “Martin’s Country” or “Martin’s”; “the Lease”; and “Fletcher’s Country” or “Fletcher’s”. Also part of the partnership was a separate block about 10km away known as “Tarana”.

49. Before the deceased’s death, the Farnleigh partnership was being managed by Coral’s son, Nigel. He was paid a wage for doing so. The partnership’s main source of income was cattle trading.

50. The effect of the deceased’s death was that legally the partnership came to an end: Partnership Act 1892 (NSW), s 33(1). But in fact the partnership business continued under Nigel’s management. In the partnership accounts, the deceased’s one-third share of income and capital was carried forward as two one-sixth shares of Brett and Vanessa.

51. In September 2008, Mr Higgins wrote to Vanessa advising of a visit from Brett. The letter stated:

Brett confirmed that he had met with Coral and Robyn, and subject to agreement on valuations, with subsequent adjustments, the proposal in relation to the transfer and disposition of the real estate is as follows:

1.   Tarana (330-360 acres) to yourself and Brett.

2.   Martins (320-400) acres) to Brett and yourself.

3.   170-200 acres (Fletcher country?) to Brett.

4.   The big paddock 700-800 acres to Robyn.

5.   The main block (approximately 600 acres) to Coral.

6.   The lease (approximately 330 acres) to Coral.

52. Mr Higgins’ bill records that discussions concerning the division of the partnership assets continued sporadically thereafter through 2009 and 2010 and into 2011. During this period, valuations of the properties were obtained by Mr Higgins. The partnership accountants, a firm called McGregor & McGregor in Newcastle, also appear to have been involved at times. So was Mr Higgins. The precise extent of his role in the discussions is not clear. His firm was of course acting on behalf of the estate. But there is a suggestion in later correspondence that he was acting for the partnership as well. There is no evidence of any other lawyers being involved.

53. In April 2011 Mr Higgins wrote to Mr Ken Cross of McGregor & McGregor. He said:

… We are pleased to inform you that the parties have agreed upon the allocation of parcels of land as follows:

●   Fletcher property      Brett Radburn

●   House paddock      Coral Kable

●   Martins property      Brett Radburn and Vanessa Dunne

●   The big paddock      Robyn Hadley

●   The lease         Brett Radburn and Vanessa Dunne

●   Tarana            Robyn Hadley

We are further instructed that there will be no cash adjustment in relation to the allocation of the above parcels of land.

We have been instructed to ascertain from you when it would be a convenient and appropriate time for the partnership to be wound up. In relation to the other partnership assets, we are instructed as follows:

1.   The cattle and livestock to be divided between the parties.

2.   The machinery to be valued and any party wishing to acquire same, to purchase same from the partnership.

3.   The remaining items to be the subject of a clearing sale.

We look forward to receipt of your advice in relation to any capital gains implication that may arise from the proposed transfers. We can confirm that valuations are held.

It is also intended to prepare a Deed dissolving the partnership unless you advise to the contrary (for taxation purposes). Because there will in effect be a partition of the real estate, we believe that full ad valorem duty should not be assessed and we are currently looking in to that aspect.

54. Unlike earlier correspondence concerning dissolution of the partnership, this letter was not referred to in Mr Higgins’ April 2018 bill. It appears that from 2011 onwards, that bill only records charges relating directly to the administration of the estate. Presumably Mr Higgins’ work on partnership issues was billed separately. There is no partnership bill in evidence.

55. The capital gains tax advice requested by Mr Higgins in April 2011 was provided in July. But for reasons which are not explained in the evidence the agreement to which Mr Higgins referred was not formalised and discussions continued between the parties.

56. It was common ground between Vanessa and Brett that in late 2011 agreement was reached with Coral, Robyn and Nigel to divide the partnership’s cattle. The estate’s share was three hundred and sixteen head. These cattle were grazed on Fletcher’s, Martin’s and the Lease. Most were sold in a series of sales which took place between March 2012 and February 2014. The remainder were sold in May 2014.

57. Financial statements for the partnership from 2012 to 2016 are in evidence. The 2012 financial statements also contain figures for the 2008 to 2011 financial years. The financial statements confirm that the cattle were transferred out of the partnership in the 2012 financial year. The result of this was that the partnership’s cattle trading income ceased. There was some small ongoing income from rent and interest but thereafter the partnership operated at a loss. Some of the expenses would have been holding costs for the properties such as rates, but there were other expenses as well, including a continuing wage and superannuation for Nigel.

58. There remained, apart from the land, other assets on the partnership balance sheet. These included plant and equipment and cash on deposit. Although there was talk of a clearance sale for the plant and equipment, this did not happen. The cash on deposit (which at the end of the 2012 financial year was several hundred thousand dollars) declined, presumably as a result of the ongoing losses.

59. Issues concerning dissolution of the partnership remained unresolved. Why that is so is not directly addressed in the evidence. For some unexplained reason, the deceased’s share of the partnership properties had not been recorded in the inventory of property lodged with the probate application. That was corrected in December 2014 and Mr Higgins’ bill records that in June 2015 transmission applications were lodged so as to transfer the deceased’s shares in the properties to Brett and Vanessa.

60. Eventually, following a mediation in November 2017, the deceased’s sisters, Brett and Vanessa entered into a Deed of Dissolution of Partnership and Partition Agreement. This Deed was executed in February 2018.

61. The Deed provided for the partnership properties to be partitioned with Coral receiving the House, Robyn receiving the Big Paddock and Tarana and Brett and Vanessa receiving Martin’s, Fletcher’s and the Lease. The Deed also provided for financial adjustments and releases between the parties. Coral, Robyn and Brett agreed to pay Vanessa $150,000. For her part, Vanessa released Coral, Robyn and Brett from any claims “against the Farnleigh partnership” and acknowledged that monies held “in the Farnleigh partnership” remained the property of Coral, Robyn and Brett. She also agreed to forego any entitlement she might otherwise have “pursuant to the financial accounts of the Farnleigh partnership”.

Alleged agreement to exchange properties

62. In 1996, a 7 acre block of land had been subdivided from Farnleigh and given to Brett. Brett had used the land to build a house for himself. This block adjoined, and may originally have been part of, Fletcher’s.

63. Although this was not referred to in the will, Brett acknowledged that his mother had always intended that Vanessa would receive Naringla from her estate. It seems that the deceased considered that it would balance out the block which Brett received from Farnleigh.

64. Preparations to transfer the property to Vanessa began in December 2008. Mr Higgins’ bill records that the transmission application was signed by Vanessa on 23 December. The bill does not record when the application was signed by Brett, but it must have been before 22 January when the application was stamped. It was lodged for registration on 27 January.

65. Vanessa had in fact moved into Naringla in mid-2008, only a few months after her mother died. It appears she did indeed obtain finance and undertake some renovations after the property was transferred into her name. Since 2016 she has leased the property out.

66. Mr Higgins’ notes include a note of the conversation with Vanessa in January 2012 which indicates that Brett and Vanessa were to receive three properties from the partnership, namely “house”, Martin’s and the Lease. This differed somewhat from Mr Higgins’ letter of April 2011 which referred to Fletcher’s going to Brett alone. Mr Higgins’ note continued with a proposal for the division of the three properties to be received from the partnership. The proposal was that Brett was to receive “house”, Vanessa was to receive Martin’s; and “top lease” was to go to Vanessa and “bottom lease” to Brett. This suggests that it was contemplated that the Lease might be subdivided. Mr Higgins’ note also stated that Vanessa would “not agree to a transfer of parcels without cash adjustment”.

67. The reference in Mr Higgins’ note to Brett and Vanessa receiving “house” is puzzling. It cannot mean the House Paddock which was never at any stage going to go to Brett and Vanessa. I think that it must mean Fletcher’s, and “house” refers to the house built by Brett on the block adjacent to, and perhaps originally part of, Fletcher’s on which Brett built his house.

68. Meanwhile, Brett’s daughter Laura and her husband Nathan Collins wanted to build a house for themselves on some of the land which Brett was to receive from the dissolution of the partnership. This was the subject of discussion beginning in about 2012.

69. In February 2013 a development application was lodged by Laura and Nathan to build a house on the Lease. One of the deceased’s sisters prepared a handwritten consent note granting consent as “the owners of the property the subject of this application”. The consent was signed by Coral, Robyn, Brett and Vanessa. The project was later abandoned after it became clear that the Lease would not necessarily be available.

70. In his September 2017 affidavit, Brett confirmed he had agreed to transfer Naringla before the administration of the estate was completed. He said that the purpose of the transfer was to allow Vanessa to get a loan so as to be able to do renovations. Brett said that at the time he and Vanessa had a conversation to the following effect:

Brett:   I’m happy to transfer “Naringla” now because that’s what Mum wanted. But I’d do it on the proviso that I get “Fletchers” and “the Lease” and you can get “Martins”.

Vanessa:   Yes, that’s agreed.

71. Vanessa denied the conversation alleged by Brett. So did her husband. He said he was present when the transfer of Naringla was agreed in late 2008 and there was no mention of any partnership properties He added that in 2009 or 2010 there was still discussion about Brett and Vanessa receiving Tarana rather than the Lease. His evidence on this was not challenged in cross-examination.

72. Laura’s evidence was that at a family barbeque there was a discussion between Brett and Vanessa in which it was agreed that Vanessa would receive Naringla and Martin’s and that Brett would receive Fletcher’s and the Lease. Laura said she subsequently spoke to Vanessa because she (Laura) wanted to build on Martin’s. She said Vanessa told her that this would not be possible. According to Laura, Vanessa said that Fletcher’s, which was the best property, was going to Brett, she (Vanessa) would receive the second-best property which was Martin’s, and the Lease would go to Brett. Laura said that on the strength of this she obtained the consent document and made her development application in February 2013.

73. Vanessa denied that she told Laura that Brett would get the Lease; she said that, instead, she warned Laura against building on the Lease because she did not know how much of it would go to Brett and how much would go to her. She said that conversations to this effect continued up until 2015.

74. Vanessa acknowledged that she signed the consent. But her evidence was that she did not know exactly where Laura would be building; she thought it might be on part of Fletcher’s or on a part of the Lease that Brett would eventually receive. She said that at that stage she did not think that Brett would necessarily receive the whole of the block and that it might need to be subdivided to ensure an even distribution.

75. I cannot accept Brett’s account of the conversation allegedly pre-dating the transfer of Naringla. On the documentary evidence, all that had been discussed prior to the transfer in January 2009 was the September 2008 “proposal”. Under that proposal the Lease was to go to Coral not to Brett and Vanessa. There is no reason to accept Brett’s evidence when his account is denied by other witnesses and is inconsistent with contemporaneous documents.

76. Furthermore, Mr Higgins’ note of January 2012 shows that as at that date Vanessa, at least, still contemplated the possibility that the Lease, when received from the dissolution of the partnership, would be subdivided.

77. But Vanessa’s account of signing the consent, and of conversations with Laura allegedly warning her about the uncertainties in building on the Lease, also has its difficulties. The consent expressly referred to “this application”, so it is difficult to accept that Vanessa would have signed it without any understanding that the application involved building on the Lease. Also, any conversations must have taken place before February 2013 when the application was lodged. They cannot have extended to 2015 as Vanessa claimed. And it is hardly likely that Laura would have proceeded with the application if Vanessa had warned her beforehand; this was not suggested to Laura in cross-examination.

78. Laura’s response was that Vanessa did warn her about building on the Lease, but only in 2015, well after the barbeque “agreement” and the lodging of the development application. Laura’s credit was not challenged in cross-examination. I think I should accept her account. What consequence that has for Brett’s cross-claim will be considered below.

Disputes concerning administration

79. Following the altercation at Naringla in January 2014, Vanessa retained Mr Peter Cain, solicitor, to act for her. Mr Cain’s firm is called “Irongroup Lawyers”. At the beginning of May 2014 Mr Cain wrote to Mr Higgins. The letter noted that Mr Higgins acted for the estate, for Brett in his capacity as a beneficiary of the estate, and for one of the deceased’s sisters and co-partners, Coral. The letter raised issues, among others, concerning the sale and division of cattle owned by the estate; the transfer of properties from the Farnleigh partnership; and the realisation of plant and equipment owned by the Farnleigh partnership.

80. Correspondence ensued between Mr Cain and Mr Higgins in which Mr Cain alleged that Mr Higgins take action to resolve the distribution of the partnership assets and divide the estate assets. Eventually these proceedings were commenced in March 2017.

81. As already noted, the cash on deposit and shares recorded in the inventory were sold and divided between Brett and Vanessa. But the evidence at the hearing showed that there remained other areas of dispute between Brett and Vanessa apart from whether the loans in the inventory were repayable.

82. Vanessa said that one of the three farm vehicles in fact belonged to her and was included in the inventory by mistake. It was in fact purchased by the deceased for Vanessa but charged to Vanessa’s loan account. Brett did not dispute this. But there was a dispute about the other vehicles.

83. It appears that Brett took possession of the other two vehicles on his mother’s death. According to Brett’s affidavit, one of the vehicles, a Toyota RAV 4, was transferred into his name but his daughter, Laura, had the use of it. Brett said that Laura had spent more time than anyone with the deceased in her later years and that the deceased had wanted Laura to have the car. Brett said that the other vehicle, a Toyota Landcruiser, had been half paid for by him when purchased in 1982 and was “now” (September 2017) virtually worthless. The precise implications of all of this were not drawn out. But it seems that Brett does not accept that the two vehicles should be charged against his share of the estate, or, if they are, that they should be charged at the value set out in the inventory.

84. Vanessa said that Brett took the items of plant and equipment as well. Brett acknowledged that he retained some of the items which he said Vanessa agreed she had no interest in. But he said that some of the items listed in the inventory did not exist or did not belong to the deceased. He also said that the figure in the inventory grossly exceeded the real value of the items he received. The inventory figure was apparently based on a depreciation schedule. For that reason it may well not have been a proper guide to the market value of the items shown in it at the date of the deceased’s death. What is clear is that there is no agreement about which of the items Brett should be charged with, or the value of those items.

85. Vanessa said she received approximately $83,000 from Brett for the sales of the estate’s share of the partnership cattle between March 2012 and February 2014, leaving her underpaid by approximately $19,600. In his affidavit in response, Brett acknowledged that the money was paid to him in the first instance. He said that his practice when receiving money from the stock and station agents was to send Vanessa a cheque for half of the amount received, but that he kept one small cheque for himself to cover livestock and fencing expenses, with Vanessa’s agreement. He said he no longer had bank records for the relevant period and had applied for replacement statements. But this was taken no further at the hearing. There is no dispute that Vanessa received half the proceeds of the remaining cattle sold in May 2014.

79. There also appeared to be a dispute between the parties about the proper valuation of Naringla. Counsel for Brett indicated that if his cross-claim fails, there would need to be an adjustment of some sort to reflect that Vanessa has received from the early occupation, and transfer to her, of Naringla when the rest of the estate has not been finalised. This was resisted by counsel for Vanessa.

Repayability of Loans

87. The evidence that the deceased intended the payments the subject of these proceedings to be loans to Brett and Vanessa is overwhelming. They were recorded in the deceased’s financial statements as such for a period of 15 years. There is no reason at all to think that this did not accord with the deceased’s understanding. Even if the book keeping was done by an accountant from Robsons, the recording of certain payments as loans would not have been done without instructions from the deceased.

88. In fact, the cheque butt evidence shows that the deceased distinguished between payments to Brett some of which she herself recorded as loans and others which she did not. She may not have expected that the amounts she treated as loans would be repaid in her lifetime but she must have intended that if they were not they would be taken into account in dividing up her estate. There would otherwise have been no point in keeping a record of them.

89. There is also the fact that the loans to Brett and Vanessa were recorded alongside the loan to C&V Bourke. No one has suggested at any stage that the amount recorded as owing by the Bourkes was in fact a gift to them.

90. It is of course conceivable the deceased recorded the payments as loans without telling Brett. But I disbelieve Brett’s claim that he was unaware of the loan account during the deceased’s lifetime. For reasons I have already given, I think Brett’s evidence on this point lacks all credibility. I think that he was well aware during his mother’s lifetime that she was recording as loans some of the payments he and Vanessa were receiving.

91. Admittedly, there is Vanessa’s evidence acknowledging a refusal by Brett to repay the loans, on the basis that they were gifts. On Vanessa’s account this went back to 2008. But her evidence was not very precise and it may be that the “issue” actually raised by Brett was about the amount rather than about repayability. And whatever position Brett may have taken in his dealings with Vanessa, he had earlier acknowledged the debt in financial statements, the affidavit filed in support of the application for probate and in his discussions with Mr Higgins.

92. In any event, once it is accepted that the deceased intended the payments to be loans, then, if that view was not shared by Brett, the monies provided by the deceased to Brett would have been repayable as a debt on restitutionary grounds. Counsel for Vanessa submitted that unless it could be established that the deceased had paid over the monies intending them to be a gift, they were repayable as a matter of law. Counsel for Brett did not dispute this analysis.

93. For these reasons, I conclude that the amounts paid to Brett (and those paid to Vanessa) were loans and are repayable to the estate. Vanessa succeeds on this issue.

Agreement for allocation of properties

94. Brett’s cross-claim pleads an agreement to transfer Naringla to Vanessa in exchange for Brett receiving the Lease and Fletcher’s, and Vanessa receiving Martin’s, from the deceased’s share of the partnership. The agreement is pleaded as an oral one made early in 2009 before the transfer of Naringla (consistently with Brett’s affidavit evidence) but the particulars also stated that the agreement had been “made and confirmed” in front of other witnesses, including Laura and had been “affirmed” in Mr Higgins’ letter of 26 April 2011 and “further affirmed” by Vanessa signing the consent to Laura’s development approval in February 2013.

95. For reasons I have already given, I am not satisfied that a conversation took place prior to the transfer of Naringla in the terms alleged by Brett. On any view, Mr Higgins’ April 2011 letter said nothing about the division of the Lease and Martin’s between Brett and Vanessa following distribution. Laura’s evidence suggests an understanding was reached at a later time, although, given that Naringla had by then been transferred, problems of consideration for the alleged contract might arise. But it is unnecessary to consider these matters further.

96. It is important to analyse what Brett’s case is on the cross-claim. His claim is that Vanessa is obliged by contract to exercise her powers as executor to join in a transfer of the specified partnership properties to him. He contends that consideration for this obligation was the exercise of his powers as executor to join in the transfer of Naringla to Vanessa.

97. An executor’s duty is to administer the testator’s estate in accordance with the terms of the will and any other applicable legal requirements. The executor cannot, by contract, bind himself or herself to administer the estate, or divide the proceeds, in some different fashion, at least unless all the affected parties agree. Those affected parties may include the creditors of the estate as well as the beneficiaries.

98. To illustrate the problem for Brett’s case, suppose that in the present case the agreement Brett alleges had been made. If a third party creditor had then emerged, and there had been insufficient remaining assets in the estate to pay that creditor, the agreement between Brett and Vanessa could not have prevailed over the creditor’s entitlement to payment. It would have been the obligation of Brett and Vanessa, as executors, to satisfy the creditor from the assets of the estate. If the properties had actually been transferred, that would have made no difference. The creditor would still have been entitled to payment out of the estate assets in Brett’s and Vanessa’s hands.

99. Furthermore, given the terms of the will, the executors’ duty was to distribute the net assets of the estate equally between Brett and Vanessa. If properties were distributed in specie, then unless there was some agreement to the contrary, there would need to be a cash adjustment so as to ensure that the overall distribution was equal.

100. This shows that it is not sufficient for Brett to establish merely an agreement between himself and Vanessa that he should receive specified properties out of the estate as “consideration” for Vanessa receiving Naringla. Until the administration of the estate was completed, all distributions were subject to adjustment, and possibly even reversal. Brett’s case must be that there was a binding agreement, express or implied, on a formula for distributing all of the assets of the estate, which covered not only assets or liabilities already identified but also any other assets or liabilities that might later emerge in the course of the administration.

101. Brett’s cross-claim did not actually plead that it was part of the alleged agreement that there would be no adjustment as between Brett and Vanessa for the value of Naringla and Martin’s on the one hand, and Fletcher’s and the Lease on the other. But even if not expressed, that was a necessary part of what Brett was asking for. His whole case was premised on receiving Fletcher’s and the Lease as his share, without adjustment.

102. At the time of the alleged agreement, even if it was as late as February 2013, the administration of the estate was still incomplete. Most obviously, the deceased’s share of the partnership had not been finally determined. Whatever discussions and preliminary agreements had been reached, it was not even certain that the three properties nominated by Brett would form part of the estate. That did not become certain until agreement was reached at the mediation in November 2017.

103. In addition, the loans issue, whether properly characterised as a dispute as to amount or as a dispute as to repayability, had not been dealt with. And, as subsequent events have shown, there remained other areas of dispute, or potential dispute, concerning the motor vehicles, the plant and equipment, and the proceeds of sale of the estate’s share of the partnership cattle.

104. The administration was also incomplete in less obvious ways. Mr Higgins had undertaken work for the estate and was continuing to do so. Completing the administration would involve obtaining a final bill from Mr Higgins and settling it. Mr Higgins’ work was incomplete and was not in fact billed until April 2018. By then, these proceedings had been instituted. It may be that some of the costs of the proceedings will be a further charge to the estate.

105. These matters probably did not even occur to Brett and Vanessa at the time. Certainly there is no evidence that there was any agreement which would have provided a mechanism for them to be dealt with. In my view, any agreement or understanding between Brett and Vanessa falls far short of being a complete and enforceable contract for the distribution of the estate. Brett’s cross-claim cannot succeed.

106. On behalf of Vanessa, provisions of the Statute of Frauds were pleaded as a defence to this alleged agreement. In reply, Brett relied on the doctrine of part performance. The conclusions I have reached about the validity of the agreement make it unnecessary to consider the complex questions which would arise under this head.

Conclusions and orders

107. I have concluded that:

1. Brett and Vanessa are indebted to the estate for the amounts of the loans shown in the inventory of assets;

2. Brett’s contention that he is entitled to receive Fletcher’s and the Lease without adjustment to reflect the value of the other estate assets and liabilities fails.

108. It follows that Vanessa is entitled to a declaration in her favour on the loan issue, and Brett’s cross-claim must be dismissed.

109. In accordance with the agreement of the parties, Vanessa’s application for orders that Brett be removed as executor, or that an independent executor be appointed, will be held over for consideration until after the parties have had an opportunity to consider this judgment. No doubt it will also be necessary to consider the question of costs.

110. The orders of the Court are:

1. Declare that the amounts shown as loans to the defendant ($408,545.72) and the plaintiff ($71,183.09) in the inventory of property for the estate of Joan Evelyn Radburn, as annexed to the Court’s grant of probate dated 12 August 2008, are debts owing to the estate.

2. Order that the cross-claim be dismissed.

3. Direct that the proceedings be listed for further directions for resolution of issues not dealt with by this judgment (including costs) on a date to be fixed by arrangement with my Associate.

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Decision last updated: 29 May 2019