Fisher as Co-Executor of the Estate of Donald Robert Fisher (Dec) v Fisher as Co-Executor of the Estate of Donald Robert Fisher (Dec) - [2002] WASC 253

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: FISHER as Co-Executor of the Estate of DONALD ROBERT FISHER (DEC) -v- FISHER as Co-Executor of the Estate of DONALD ROBERT FISHER (DEC) [2002] WASC 253

CORAM: HASLUCK J

HEARD: 30 AUGUST 2002

DELIVERED : 30 AUGUST 2002

FILE NO/S: CIV 2191 of 2002

MATTER :Section 92 of the Trustees Act
and
Order 62 of the Rules of the Supreme Court
and
Estate of DONALD ROBERT FISHER (DEC)

BETWEEN: SHIRLEY FRANCES FISHER as Co-Executor of the Estate of DONALD ROBERT FISHER (DEC)
Plaintiff
AND
GEOFFREY ARCHIBALD FISHER as Co-Executor of the Estate of DONALD ROBERT FISHER (DEC)
Defendant

Catchwords:

Trustees - Trustees of deceased estate - Response to claim against the estate - Lack of unanimity as to whether claim should be defended - Application to Court for directions - Direction that claim be defended by estate but with each trustee being at liberty to make submissions

Legislation:

Inheritance Act 1972

Trustees Act, s 92

Result:

Application allowed

Category: B

Representation:

Counsel:

Plaintiff: Mr J C Curthoys
Defendant: Mr B P Wheatley

Solicitors:

Plaintiff: Kaeser Kroon
Defendant: Nicholson Clement

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

Re Atkinson [1971] VR 612

Case(s) also cited:

Harrison v Mills [1976] 1 NSWLR 42
Marley v Mutual Security Merchant Bank & Trust Co Ltd [1991] 3 All ER 198

HASLUCK J: This is an application by Shirley Frances Fisher as one of the executors of the estate of Donald Robert Fisher. The defendant is her co‑executor Geoffrey Archibald Fisher. The order sought is a direction that the executors defend a claim brought by Kerry Anne Grove in CIV1247 of 2002 and that Shirley Frances Fisher conduct the defence to the exclusion of her co‑executor.
The issue before the Court in the collateral action CIV1247 of 2002 concerns the proper disposition of certain funds forming part of the estate of Donald Robert Fisher. It appears from the pleadings in the collateral action that the terms of a bequest meant that $250,000 was due and payable to the plaintiff in the relevant proceedings, Kerry Anne Grove, by 23 August 2000.
The pleadings show that the sum was not paid by the prescribed date. It is said that the first-named defendant, Shirley Frances Fisher, did not pay the sum by reason of the fact that Kerry Anne Grove, together with Brian Peter Fisher, had instituted proceedings seeking relief under the Inheritance Act 1972.
The amount in question was paid eventually, after a judgment was handed down in the Inheritance Act proceedings, but Ms Grove has now advanced a claim for interest on the amount. The proposed line of defence is that in circumstances where litigation was current and there was a degree of ambiguity as to what funds were available to pay the bequest, the estate should not be held liable for interest.
Put shortly, the issue before the Court in the collateral action is whether a payment of interest is due to Ms Grove having regard to the terms of the Will and the grounds relied upon for withholding payment of the bequest. It is immediately obvious that there is no significant controversy as to the facts of the situation. Essentially it is a legal point.
I understand from the evidentiary materials and from the submissions put to me that there is a division of opinion between the co‑executors as to whether the claim of Kerry Ann Grove should be defended. Shirley Frances Fisher is of the view that the claim for interest is not justified. Her co‑executor holds a different opinion.
Against the background of that difference of opinion, Shirley Frances Fisher has put up an originating summons in these proceedings, CIV2191 of 2002, pursuant to s 92(1) of the Trustees Act. The provision reads as follows:
"Any trustee may apply to the Court for directions concerning any property subject to a trust or respecting the management or administration of that property or respecting the exercise of any power or discretion vested in the trustee."
The stance of Mr Geoffrey Fisher, as reflected in a letter written by his solicitors dated 5 August 2002, is that if each of the defendants acts separately, the Court should not recognise either line of argument as trustees must act unanimously or not at all. Hence, in a situation in which there was no unanimity, it was not open to the co‑executor Shirley Frances Fisher to advance the proposed line of defence to the claim for interest.
The application before me is made with a view to resolving the difference of opinion.
It seems to me that the executors must have a standing before the Court in regard to the claim, for if the amount claimed by way of interest is not be paid, the claimant for the interest will be entitled to approach the Court for relief. The executors will inevitably be named as defendants. The controversy would then have to be resolved, and any order made will be binding upon the executors of the estate.
Further, where there is a lack of unanimity, the status quo will prevail. The amount claimed by way of interest will not be paid unless the Court makes an order against the estate. The Court will be obliged to resolve the matter in issue and, in doing so, it will essentially have to rule upon the dispute arising from the desire of Shirley Frances Fisher, as one of the co‑executors, to contest the claim.
This view of the matter is borne out by a passage in Ford and Lee Principles Of The Law Of Trusts, par 955, where it is said:
"The duty to act personally is further exemplified by the rule that where there is more than one trustee, the trustees' decisions must be unanimous. One product of this rule is that where trustees consider whether they should adopt a particular course or not but cannot agree, the status quo prevails. The Court has no right to intervene or to exercise a casting vote which itself is incompatible with unanimity merely because trustees cannot agree. The Court may intervene, however, if inactivity as a consequence of lack of unanimity constitutes a breach of trust; that is, where the trustee should act but cannot agree or if disagreement is so frequent as to constitute an impediment to efficient administration."
It might be thought, in the light of my analysis, that there is no need for a direction of the kind sought in this application because the Court will be required to rule upon the claim to interest in any event. In doing so, it will have to inquire into the reasons why one of the trustees was opposed to the payment of interest. That inquiry, in a sense, will draw out of the trustee in question some understanding of the legal principles and line of argument upon which her stance is based. There is therefore no need for a specific direction that one of the co‑executors be granted leave to defend the claim.
However, upon reflection, and upon taking account of the submission made by Mr Wheatley on behalf of Geoffrey Fisher that the co‑executors may not have standing before the Court where there is a lack of unanimity, I consider that the matter should be put beyond doubt. A direction of the kind proposed will remove the possibility of any debate about the right of one co‑executor to raise arguments against the claim where there is a lack of unanimity.
I must therefore return to the facility allowed to trustees by s 92. Section 92 clearly contemplates that if there is some dilemma confronting the trustees or any trustee, an application may be made to the Court for directions.
This provision is consistent with the common law principles which are manifested in various decided cases. One such case is Re Atkinson [1971] VR 612 in which Gillard J said this at 615:
"Where an executor or trustee is in doubt as to the course of action it should adopt, it is always entitled to take the opinion of the Court as to what it should do. If in doubt as to whether or not it should take legal proceedings, then it is entitled to apply to the Court for directions on the matter… In cases of real doubt, the proper course for a personal representative or trustee to adopt is to seek the Court's decision as to whether or not action should be brought; otherwise the representative or trustee might find itself paying the costs of any proceedings which a Court might subsequently say were not 'properly incurred'. See Re Beddoe; Downes v Cottam (1893) 1 Ch 547 at pp 558 and 562."
A decision as to whether an action should be defended or not will obviously be subject to the same line of reasoning.
Against this background, it seems to me that, in the circumstance of the present case, orders should be made which will allow Shirley Frances Fisher to defend the claim on behalf of the estate. It follows from my earlier observations that in a situation in which the amount claimed cannot be paid because the status quo prevails, the Court will have to determine the merits of the claim in any event. Further, there appears to be an arguable basis for defending the claim for interest.
In making that observation, I stress that I have a completely open mind as to what should be the outcome of the claim for interest. However, upon the basis of the submissions that have been filed and the cases referred to therein, it strikes me that there is a serious issue to be tried. The stance adopted by Shirley Frances Fisher is understandable and the dilemma giving rise to the application pursuant to s 92 of the Trustees Act appears to be a real one.
In summary, then, an order of the kind sought will put beyond doubt the question of whether the co‑executor Shirley Frances Fisher does have standing to advance an argument against the claim. Such an order will utilise the facility allowed to trustees by s 92 so as to ensure that an argument is heard in a proper and orderly way, being an argument which, to my mind, for the reasons I have previously given, is bound to be inquired into in any event.
Counsel for the co-executor Geoffrey Archibald Fisher opposed the order sought. It seems to me, in order to produce a fair result, that a direction should be made also that the co‑executor Geoffrey Archibald Fisher be at liberty to be heard at the hearing of the matter and to make submissions to the Court.
It follows from what I have said that I am not prepared to make an order in the terms sought, that is to say, that Shirley Frances Fisher has the conduct of the estate's defence to the exclusion of her co‑executor. There will be a direction that the executors defend the claim brought by the plaintiff, Kerry Anne Grove, in CIV1247 of 2002 and that each executor be at liberty to be heard and to make submissions to the Court.