Fast v Rockman
[2015] VSC 337
•22 July 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
IN ITS PROBATE JURISDICTION
S PRB 2012 7166
| JOHN CLAUDE FAST AND ORS | Plaintiffs |
| v | |
| MATHEW MYER ROCKMAN AND ORS | Defendants |
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JUDGE: | McDONALD J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 29 and 30 April 2015 |
DATE OF JUDGMENT: | 22 July 2015 |
CASE MAY BE CITED AS: | Fast and Ors v Rockman and Ors |
MEDIUM NEUTRAL CITATION: | [2015] VSC 337 |
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Wills and estates —Informal will admitted to probate did not annex schedule of testator’s trusts referred to in Will — Bequests to testator’s children subject to abatement if schedule incorporated into Will — Application for rectification of Will to annex schedule — Application for declaration that schedule be incorporated by reference — Pre-conditions for incorporation by reference of schedule satisfied—Wills Act 1997 (Vic) s 31
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiffs | Mr N O’Bryan SC | Kenna Teasdale Lawyers |
| For the First to Third Defendants | No appearance | |
| For the Fourth Defendant | Mr SF McNab | Park Lawyers |
| For the Fifth and Sixth Defendants For the Seventh Defendant | Dr K Hanscombe QC No appearance | Taussig Cherrie & Fildes Lawyers |
HIS HONOUR:
Irvin Rockman (“Rockman”) died on 30 August 2010. The present proceedings relate to a dispute concerning the construction of his Will, which was admitted to probate on 6 March 2013 (“the final Will”)[1]. Rockman’s final Will was neither seen nor executed by him prior to his death. It was admitted to probate pursuant to s 9 of the Wills Act 1997 (“the Act”) as an informal will.[2]
[1]Exhibit P7: Affidavit of Phillip Carey Brown sworn 20 October 2011, Exhibit PB 14.
[2]Fast v Rockman [2013] VSC 18.
The plaintiffs are the executors of Rockman’s estate. The first to sixth defendants are Rockman’s children. The seventh defendant is Rockman’s former wife. Only the plaintiffs and the fourth to sixth defendants actively participated in the proceedings.[3]
[3]The first and second defendants informed the court that they would abide by the outcome of the proceedings, subject to reserving their right to make submissions on costs.
In clause 16 of his final Will, Rockman made specific bequests totalling $3.710 million to a number of individuals and organisations. In clauses 6 to 10 he also bequeathed $500,000 to five of the six defendants. However, unlike the clause 16 bequests, the bequests to his children were not free from the risk of abatement. Whether there are sufficient funds in the estate to avoid abatement of these bequests depends upon the construction of clause 15 of the final Will, which is in the following terms:
Subject to my Trustees first satisfying bequests provided in Clause 16 of this Will I Give and Bequeath the amount of any and all moneys owing to me or standing to my credit as at the date of my death by each of the entities named in the Schedule, as well as by any other companies, trusts or entities that may be formed or come into existence after the date of this Will which I may directly or indirectly control as the date of my death to The Irvin Peter Holdings Trust, constituted by deed dated 3 June 2008, whereof the current Trustee is Irvin Peter Holdings Pty Ltd to be held as an accretion to that trust fund absolutely and beneficially.
The final Will that was admitted to probate on 6 March 2013 did not annex a schedule of any description. By their original summons dated 24 November 2014, the plaintiffs sought an order pursuant to s 31(1) of the Act rectifying the final Will by annexing the schedule which was annexed to a Will executed by Rockman on 1 April 2010 (“April 2010 Will”). This schedule is exhibit ELC 19 to the Affidavit of Eleanor Coates sworn 20 November 2014 (“Exhibit ELC 19”). I shall refer to it as such in this judgment. By a further amended summons filed in court on 29 April 2015, the plaintiffs sought in the alternative, a declaration that Exhibit ELC 19 be incorporated by reference into the final Will.
It was not in dispute that Rockman’s final Will was capable of operating effectively absent clause 15. If the relief sought by the plaintiffs is not granted, there will be sufficient funds in the estate to grant the bequests totalling $2.5 million to Rockman’s five children. However, if either of the alternative forms of relief sought by the plaintiffs is granted, the $500,000 bequests to Rockman’s children will be reduced to less than $100,000.
It is not in contention that at the time of his death Rockman was owed approximately $42.6 million by two of his family trusts: the 1965 Irvin Peter Rockman Trust and the IPR Gembrook Trust. If the relief sought by the plaintiffs is granted, the sum of $42.6 million will be paid to the Irvin Peter Holdings Trust. This in turn will significantly reduce the quantum of funds available for distribution to the children.
The alternative forms of relief sought by the plaintiffs are of an entirely different character. The application for rectification seeks an order that alters the legal effect of the final Will in the form in which it was admitted to probate. It is premised on the final Will not carrying out Rockman’s testamentary intentions because a clerical error was made or the final Will does not give effect to Rockman’s instructions.[4] On the other hand, the relief sought based on the incorporation by reference of ELC 19 into clause 15 does not alter the legal effect of the final Will admitted to probate. Rather, if Exhibit ELC 19 is incorporated into the final Will it has legal effect as a testamentary disposition in accordance with its express terms.[5]
[4] Wills Act 1997 s 31(1).
[5]Treacy v Edwards (2000) 49 NSWLR 739 [34].
I have concluded that Exhibit ELC 19 is incorporated by reference into clause 15 of Rockman’s final Will. During the proceedings before me on 29 and 30 April 2015, a considerable amount of time was devoted to submissions relating to whether the Court could rectify the final Will by annexing Exhibit ELC 19 to it. However, the effect of my finding that Exhibit ELC 19 is incorporated by reference, is that there is no basis for entertaining the plaintiffs’ alternative claim for rectification. The final Will does carry out Rockman’s intentions, albeit that it is necessary to incorporate Exhibit ELC 19 into the final Will to achieve this outcome.
The doctrine of incorporation by reference
There are three pre-conditions for incorporation of a document into a Will by reference:
(i) the document must be referred to in the Will;
(ii) the reference to the document must be sufficient to identify the document;
(iii) the document must be in existence at the time the Will was made.[6]
[6]Ibid [33]; In the Estate of Mardon [1944] P109, 110, 112; In the Will of Spears (dec) [1959] VR 430, 431.
As to the first pre-condition, “the Schedule” is expressly referred to in clause 15.
As to the second pre-condition, I am satisfied beyond doubt that the reference to the Schedule in clause 15 is a reference to Exhibit ELC 19 which was signed and annexed to the April 2010 Will and which listed fourteen of Rockman’s family trusts as at April 2010.
Prior to his death on 30 August 2010, Rockman was a prolific maker of wills. He executed wills in June 2005, April 2006, July 2008, October 2008, April 2009, June 2009 and April 2010.[7]
[7]Paragraph 9 of List of Agreed Facts dated 24 April 2015.
Dr Hanscombe, who appeared with Mr Dickenson for the fifth and sixth defendants, acknowledged that the evidence established that in August 2010 there was an electronic document in existence in the computer system of Rockman’s lawyers, Kenna Teasdale, which was identical to Exhibit ELC 19. However, Dr Hanscombe submitted that I had to be satisfied beyond doubt[8] that the Schedule referred to in clause 15 was Exhibit ELC 19 and that I could not be so satisfied. Dr Hanscombe placed particular reliance upon the fact that between April 2010 and August 2010 a new family trust, the Silver Valley Trust, had come into existence. Dr Hanscombe submitted that the existence of this trust created uncertainty as to whether, in August 2010, the reference in clause 15 to ‘the Schedule’ was a reference to Exhibit ELC 19.
[8]Fifth and Sixth Defendant’s written submissions dated 27 April 2015 [38].
As at April 2010, Exhibit ELC 19 did not in fact list all of Rockman’s family trusts. Dr Hanscombe submitted, without opposition, that there were four additional trusts which came into existence between March 2006 and November 2008 that were not listed in Exhibit ELC 19.[9] The Silver Valley Trust subsequently came into existence in or about May 2010.
[9]The Cuffylinks Trust created 14 March 2006; The Willowsbend Trust created 27 April 2006; The Quannymore Trust created 27 April 2006 and the Northrock Property Trust created 17 November 2008.
Although Exhibit ELC 19 did not include all of Rockman’s family trusts as at 1 April 2010, it was an agreed matter that Exhibit ELC 19 did identify the two trusts which owed Rockman approximately $42.6 million at the time of his death: the 1965 Irvin Peter Rockman Trust and the IPR Gembrook Trust.
Rockman executed seven wills between June 2005 and April 2010. These included wills executed on 24 October 2008,[10] 3 April 2009,[11] 3 June 2009,[12] and 1 April 2010.[13] Each of these wills contained clause 5 in the following terms:
Pursuant to the powers given to me as the Appointer and Guardian of my Family Trusts I APPOINT my Trustees and if more than one then jointly to be the Succeeding Appointor and Guardian of any Family Trust of which I am the Appointor and Guardian as at the date of my death. FOR THE AVOIDANCE OF DOUBT I have attached to this my Will as a Schedule, a list of my various entities (including my Family Trusts) that are in existence at this time however I DIRECT that my Trustees shall also be the Succeeding Appointor and Guardian of any Trusts (including Family Trusts) formed after the date of this my Will that may contain similar Appointor and/or Guardian provisions, by whatever name they may be described therein.
[10]Exhibit P4: Affidavit of Eleanor Coates sworn 20 November 2014, Exhibit ELC 15.
[11]Ibid Exhibit ELC 16.
[12]Ibid Exhibit ELC 17.
[13]Ibid Exhibit ELC 18.
Clause 5 of Rockman’s final Will is in identical terms. Each of the four wills executed by Rockman between 24 October 2008 and 1 April 2010 annexed a schedule of family trusts, signed by Rockman, listing the fourteen family trusts listed in Exhibit ELC 19. Further, the wills executed on 3 April 2009, 3 June 2009 and 1 April 2010 contained at clause 12, a clause identical to clause 15 of the final Will.
There were no discussions between Rockman and the executors of his estate or his legal advisors between April 2010 and August 2010 regarding the Schedule referred to in clause 15 of his final Will. Ms Coates gave evidence that between 2005 and Rockman’s death in August 2010 she never had any discussion with him regarding the Schedule of family trusts. Ms Coates also prepared the final Will which was admitted to probate on 6 March 2013. Ms Coates gave evidence that, on 6 August 2010, Mr Fast forwarded her a marked-up copy of Rockman’s April 2010 Will to enable her to prepare a new Will. The mark ups did not alter clause 12 of the April 2010 Will, which became clause 15 of the final Will. Ms Coates’ evidence is that she emailed the final version of the Will incorporating the amendments to the April 2010 Will on 25 August 2010. When doing so, she did not turn her mind to Exhibit ELC 19 referred to in clause 15, which remained on the Kenna Teasdale computer system. Ms Coates’ evidence is that had she turned her mind to the question of the Schedule she would have attached an electronic copy of Exhibit ELC 19.[14]
[14]Ibid [4], [10], [12] and [13].
Mr Fast gave evidence that between 10 June 2010 and 6 August 2010 he had several meetings with Rockman during which he discussed amendments which Rockman wished to make to his April 2010 Will.[15] There was no discussion with Rockman about the Schedule referred to in clause 15 of the final Will.
[15]Exhibit P5: Affidavit of John Fast sworn 19 October 2011 at [11] - [17].
Mr Fast gave evidence that he never received any instructions from Rockman regarding the updating of the Schedule of family trusts which was attached to the October 2008 Will.[16] This was notwithstanding the fact that there had been three new trusts which had been created in March and April 2006 which could have been included in the Schedule annexed to the October 2008 Will.[17] To similar effect, Mr Brown gave evidence that he never had any discussions with Rockman regarding the Schedule in clause 15 of his final Will.[18] Each of the Schedules annexed to the four wills executed by Rockman between October 2008 and April 2010 listed the same fourteen family trusts.
[16]Transcript of Proceedings, John Claude Fast and Ors v Matthew Myer Rockman and Ors (Supreme Court of Victoria, S PRB 2012 7166, McDonald J, 29 April 2015) T54 L12-L20.
[17]Ibid T54 L17-L28.
[18]Ibid T71 L1.
In cross-examination, Ms Coates conceded that the Schedule of family trusts which was on the Kenna Teasdale computer system could have been updated between 2005 and August 2010 to include a reference to the four family trusts which were created during this period, but that it never was.[19]
[19]Ibid T40 L18-L21.
The Schedule attached to the April 2010 Will did not strictly comply with clause 5 of the April 2010 Will because it did not list the four trusts which had come into existence between March 2006 and November 2008. However, the fact is that the April 2010 Will annexed a signed Schedule unchanged from that which was annexed to the previous three Wills. There is no evidence of Rockman having given any instructions to his executors or lawyers regarding the Schedule referred to in clause 15 of his final Will subsequent to April 2010. The evidence clearly supports a finding that neither Rockman, his executors, nor his lawyers turned their minds to updating Exhibit ELC 19 at any time post October 2008.
Dr Hanscombe submitted that the creation of the Silver Valley Trust in May 2010 created uncertainty as to the meaning of the Schedule referred to in clause 15 of the final Will. I reject this submission. The Silver Valley Trust falls into the same category as the four trusts created in March and April 2006, and November 2008. Each of these trusts fell within the description of “Schedule” in clause 5 of the respective Wills. However, none of these trusts were referred to in any of the signed Schedules attached to the Wills executed between October 2008 and April 2010.
In addition to being annexed to each of the four wills executed by Rockman between October 2008 and April 2010, the fourteen family trusts listed in Exhibit ELC 19 were also listed in the Letter of Wishes executed by Rockman on 8 December 2008[20] and 1 April 2010.[21] Between October 2008 and April 2010 Rockman executed four wills and two Letters of Wishes which annexed/incorporated the list of fourteen family trusts which is identical to Exhibit ELC 19. There is no evidence that he ever gave consideration to amending the list of fourteen family trusts even though the new trusts were created which could have been added to the list. The evidence clearly establishes that the Schedule referred to in clause 15 of the final Will is Exhibit ELC 19.
[20]Exhibit P6: Affidavit of John Fast sworn 21 November 2014, Exhibit JCF 7.
[21]Ibid Exhibit JCF 10.
As to the third criteria, there is no dispute between the parties that as at August 2010 Exhibit ELC 19 existed on the computer system of Rockman’s lawyers, Kenner Teasdale.
Dr Hanscombe submitted that even if I was satisfied that the three preconditions for incorporation by reference were satisfied, I should nevertheless refrain from construing clause 15 on the basis that the Schedule referred to therein is Exhibit ELC 19. Dr Hanscombe submitted that the paramount consideration in the present proceedings should be to give effect to Rockman’s testamentary wishes. Dr Hanscombe submitted that Rockman’s testamentary wishes as embodied in his final Will included the making of bequests of $500,000 to each of her clients, the fifth and six defendants. Dr Hanscombe pointed to the fact that no such bequests had been made in the April 2010 Will. Further, the final Will increased a bequest in the April 2010 Will to the fourth defendant of $125,000 to $500,000.
Dr Hanscombe submitted that if Exhibit ELC 19 was incorporated by reference into the final Will, Rockman’s testamentary wish of making these bequests to the fourth to sixth defendants would be frustrated. Rather than the children receiving $500,000 they would receive less than $100,000. I accept Dr Hanscombe’s submissions that the final Will must be construed consistently with Rockman’s testamentary intention.[22] However, as McMillan J observed in Jepson v Bowman:[23]
Prima facie, the written words in the will must be given their ordinary meaning, with the court making a determination of the issue by reference to the words used by the testator in the will, having regard to any established rules of construction and construing a “will as trained legal minds would do”.[24]
[22]ANZ Trustees Ltd v Stanley Hamlet and Ors [2010] VSC 207.
[23][2014] VSC 590.
[24]Ibid [7] (citations omitted); See also ANZ Executors and Trustee Co Ltd v McNab [1999] 3 VR 666, 667.
It is clear that Rockman’s final Will increased the bequest to the fourth defendant of $125,000 in his April 2010 Will to $500,000 and made new bequests of $500,000 to each of the fifth and sixth defendants. However, if Rockman had intended that these bequests were not to be subject of the possibility of abatement, they could have been included amongst the specific bequests in clause 16 of the final Will. These bequests are not subject to abatement because they must be satisfied before the bequest in clause 15 to the Irvin Peter Holdings Trust.
Clause 15 expressly records Rockman’s testamentary wish that, subject to satisfying the specific requests of $3.710 million prescribed by clause 16, debts owing to him by the entities in “the Schedule” were to be bequeathed to the Irvin Peter Holdings Trust. For the reasons set out above, it is clear that the Schedule referred to in clause 15 is Exhibit ELC 19. Applying the ordinary meaning of the words in the final Will, I have concluded that it was Rockman’s testamentary intention that only the specific bequests totalling $3.710 million in clause 16 would not be subject to the possibility of abatement. Rockman’s final Will contains two categories of bequests: the specific bequests in clause 16 quarantined from the possibility of abatement; and the remaining bequests (including those to his children) which were subject to the possibility of abatement. I reject Dr Hanscombe’s submissions that incorporating Exhibit ELC 19 into clause 15 is irreconcilable with Rockman’s wishes regarding the bequests of $500,000 to the fourth, fifth and sixth defendants
Conclusion
Exhibit ELC 19 is incorporated by reference into Rockman’s final Will as a consequence of the reference to that document in clause 15. The final Will which was admitted to probate on 6 March 2013 did not annex a copy of Exhibit ELC 19. I propose to make a declaration that the Schedule, being Exhibit ELC 19 to the affidavit of Eleanor Coates sworn 20 November 2014, is incorporated into the final Will of Irvin Peter Rockman admitted to probate on 6 March 2013. This declaration will not alter the legal effect of that Will. Rather, clause 15 has legal effect as a testamentary disposition in accordance with its express terms. I do not consider that it is necessary to make any further orders save as to the question of costs.
Costs
I propose to provide the parties with an opportunity to file submissions as to whether the costs of the plaintiffs’ further amended summons should be paid out of the estate. Plainly, the current proceedings could have been avoided if the plaintiffs had annexed Exhibit ELC 19 to the final Will prepared by Rockman’s solicitors in August 2010 which Habersberger J ordered should be admitted to probate. Presumably Exhibit ELC 19 was not in evidence in the proceedings before Habersberger J because Ms Coates did not annex a copy of that document to the final Will. Ms Coates gave evidence that when she emailed the final Will to Mr Brown, she did not turn her mind to Exhibit ELC 19, which remained on Kenna Teasedale’s computer system.[25] However, whatever the characterisation of Ms Coates’ failure to have annexed Exhibit ELC 19 to the final Will, there is no reason why the plaintiffs could not have tendered Exhibit ELC 19 in evidence before Habersberger J and advanced submissions as to why that document was incorporated by reference into the final Will.
[25]Exhibit P4: Affidavit of Eleanor Coates sworn 20 November 2014, 13.
In support of their application under s 31 of the Act for rectification of the final Will, the plaintiffs contended that Ms Coates’ failure to annex Exhibit ELC 19 to the final Will was a clerical error within the meaning of s 31(1)(a) of the Act. Arguably, this constitutes an admission by the plaintiffs of an error on the part of their legal representatives. I express no concluded view on that question.
It is sufficient to record my view that a substantive question arises as to whether, in the circumstances set out above, all of the costs incurred in the present proceedings should be paid out of the estate.
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SCHEDULE OF PARTIES
No S PRB 2012 7166
BETWEEN:
JOHN CLAUSE FAST
First Plaintiff
MICHAEL DAVID SCHOENFELD
Second Plaintiff
PHILIP CAREY BROWN
Third Plaintiff
FRANCIS ANTHONY FORD
Fourth Plaintiff
-and-
MATTHEW MYER ROCKMAN
First Defendant
EDWARD JACOB ROCKMAN
Second Defendant
RHETT NATHAN ROCKMAN
Third Defendant
ELLE MAY ROCKMAN
Fourth Defendant
ZACHARY PHILIP ROCKMAN
(an infant by Lynette Anna Rockman, his litigation guardian)
Fifth Defendant
RACHEL LILY ROCKMAN
(an infant by Lynette Anna Rockman, his litigation guardian)
Sixth Defendant
LYNETTE ANNE ROCKMAN
Seventh Defendant
3
2
0