Equity Trustees Limited as administrator of the estate of Robert Martindale Smith v John Martindale Smith as executor of the will of Janice Alice Smith

[2020] WASC 301

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   EQUITY TRUSTEES LIMITED as administrator of the estate of ROBERT MARTINDALE SMITH  -v- JOHN MARTINDALE SMITH  as executor of the will of JANICE ALICE SMITH  [2020] WASC 301

CORAM:   MASTER SANDERSON

HEARD:   6 AUGUST 2020

DELIVERED          :   7 AUGUST 2020

PUBLISHED           :   20 AUGUST 2020

FILE NO/S:   CIV 1399 of 2020

BETWEEN:   EQUITY TRUSTEES LIMITED as administrator of the estate of ROBERT MARTINDALE SMITH 

Plaintiff

AND

JOHN MARTINDALE SMITH  as executor of the will of JANICE ALICE SMITH 

First Defendant

GLEN MARTINDALE SMITH  as executor of the will of JANICE ALICE SMITH 

Second Defendant

SUSAN GENEVIEVE MARSH

Third Defendant

GLEN MARTINDALE SMITH

Fourth Defendant

JOHN MARTINDALE SMITH

Fifth Defendant

HEATHERMARJORIE GRAETZ

Sixth Defendant

KATHRYN JANE SMITH

Seventh Defendant

Catchwords:

Probate - Application for judicial advice - Turns on own facts

Legislation:

Nil

Result:

Advice given

Category:    B

Representation:

Counsel:

Plaintiff	:	R Nash
First Defendant	:	SD Hicks
Second Defendant	:	SD Hicks
Third Defendant	:	MS Macdonald
Fourth Defendant	:	In Person
Fifth Defendant	:	In Person
Sixth Defendant	:	In Person
Seventh Defendant	:	In Person

Solicitors:

Plaintiff	:	McFarlane Lawyers
First Defendant	:	Lawfield Legal Practice
Second Defendant	:	Lawfield Legal Practice
Third Defendant	:	Macdonald Rudder
Fourth Defendant	:	In Person
Fifth Defendant	:	In Person
Sixth Defendant	:	In Person
Seventh Defendant	:	In Person

Case(s) referred to in decision(s):

Nil

MASTER SANDERSON:

1. This was the plaintiff's application for judicial advice.  By originating summons filed 19 March 2020 the plaintiff sought directions in relation to the following matters.

   (1)Whether the Heads of Agreement (HOA) signed by the Plaintiff and the Defendants at mediation on 8 February 2019 is, on its terms, an enforceable agreement.

   (2) If the HOA is, on its terms, an enforceable agreement, whether it has since been been repudiated, rescinded or abandoned by the parties, such that the Plaintiff, as Administrator of the Deceased's estate, is entitled to proceed to administer the Deceased's estate on the basis that the HOA has no force or effect.

   (3) If the HOA has no force or effect:

   (a)whether the Plaintiff, as Administrator of the Deceased's estate, should transfer to the estate of Janice Alice Smith (Janice) a sum that reflects the value of the remaining assets comprised in Janice's estate, that were appropriated to the Deceased following Janice's death on or about 8 August 2008.

   (b) if the answer to question (3a) is 'Yes', what sum, if any, should be transferred by the Deceased's estate to Janice's estate.

   (c) whether the Deceased's estate is liable to indemnify the executors of Janice's estate pursuant to the Deed of Indemnity (Indemnity) dated 8 August 2008 made between Robert Martindale Smith and John Martindale Smith and Glen Martindale Smith.

   (d) if the answer to questions (3a) and (3c) are 'Yes', whether the liability under the Indemnity ceases upon the transfer of a sum reflecting the value of the remaining assets comprised in Janice's estate.

2. For present purposes it is not necessary for me to detail the interests that each of the defendant has in the estate of Robert Martindale Smith.  It is enough if I say that as at the date of hearing, all parties accepted that the Heads of Agreement (HOA) was, when signed, an enforceable agreement.  Without detailing the evidence on that question, it is clear that is the case.  The plaintiff thought so and sought directions because, at one time, this appeared to be an issue between the parties.  I am satisfied there is no doubt on this issue and accordingly the answer to question one ought be 'yes'.

3. In relation to question 2, all of the defendants, save the third defendant, maintained the HOA had been repudiated, the repudiation had been accepted and the administrator was entitled to proceed to administer the deceased's estate on the basis the HOA had no force or effect.  The third defendant maintained the HOA was still on foot and governed the relationship between the parties.  These reasons deal with that issue. 

4. Early in this application an issue arose between the third defendant and the other parties as to whether or not questions 1 and 2 should be dealt with as preliminary matters, with question 3 stood over until those issues had been determined.  After giving the matter consideration, I determined all questions ought be argued together.  By dent of circumstance only questions 1 and 2 were dealt with at the hearing.  In retrospect that was probably the better approach.

5. In dealing with question 2, the starting point is the HOA was enforceable.  All parties agree that the third defendant repudiated the agreement.  In support of this application, the plaintiff relied on an affidavit of Mercia Diane Chapman filed 19 March 2020.  Appearing as attachment MDC21 to that affidavit is an email sent by the third defendant to the plaintiff's solicitor.  In that email the third defendant advises her former solicitors were no longer acting.  She then goes on to say:

   Susan will not sign the Deed of Settlement and Release.  Susan will seek independent legal advice on this Deed as per clauses 9.8, page 9 of this Deed.

6. The fact that the third defendant's former solicitors had ceased to act complicated matters somewhat.  There was some correspondence between the plaintiff's solicitors and the third defendant's former solicitors as to whether or not the plaintiff's solicitor could contact the third defendant directly.  When that issue had been clarified, the plaintiff's solicitor determined she should ascertain whether all parties were of the view the HOA was intended to be a binding agreement.  In taking that step she was acting prudently.  On 17 April 2019 the plaintiff's solicitor sent a letter by email to all of the defendants.  This letter appears as attachment MDC26 to Ms Crawford's affidavit.  The plaintiff's solicitor recounts what had occurred.  She then says:

   We are instructed to ascertain from the parties whether they accept that the Heads of Agreement constituted a binding agreement capable of enforcement.

   If any of the parties are of the view that the Heads of Agreement is not binding on the parties then we are instructed to seek an opinion from Counsel in respect of this question and as to whether proceedings should be commenced seeking a declaration in relation to that issue.

7. All of the defendants, save the third defendant, responded in the same way.  For instance, on 22 April 2019 the second defendant responded by email (attachment MDC27).  He said:

   With reference to your letter 17^th April, I confirm I signed the Heads of Agreement based on it being binding and enforceable.

8. On 7 June 2019 the plaintiff's solicitor sent an email to the third defendant (attachment MDC34).  Relevantly it read as follows:

   We have now been advised by the other beneficiaries of the two estates that unless Mrs Marsh remains willing to carry out the terms of the Heads of Agreement (HOA) as negotiated a mediation, they will not press Equity Trustees Limited (EQT) to seek a declaration as to the legal enforceability of the HOA and are willing to accept, in that circumstance, that the underlying matters the subject of the Supreme Court proceedings will still need to be litigated.

9. Accepting, as the third defendant does, that her conduct amounted to a repudiation of the HOA, the question is whether that repudiation has been accepted by the other defendants or whether the contract has been affirmed and remains on foot.  In the circumstances of this case that is a question of fact.  All parties accepted it was open to the remaining defendants to accept the third defendant's repudiation of the HOA or confirm it was still on foot.  What is clear is that this question was not directly put to the remaining defendants.  Nowhere in the correspondence did the plaintiff's solicitor ask the direct question – do you accept the repudiation or will you seek to enforce the HOA?  But the surrounding circumstances make it plain that all defendants, other than the third defendant, thought first, there was a binding HOA, second, the third defendant had decided not to be bound by the HOA and, in the circumstances, the issues they thought had been settled by the HOA would have to be litigated.  In other words, they accepted the repudiation by the third defendant of the HOA.

10. On that basis I foreshadowed to the parties I would answer question 2 'yes'.  The matter was then adjourned sine die with costs reserved so that matters in relation to question 3 could be determined at a later date.

I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.

CB
Associate to Master Sanderson

20 AUGUST 2020