Freedman v PartonParton v Freedman, Estate of Ivy Parton

[2005] NSWSC 1101

CITATION:	Freedman v PartonParton v Freedman, Estate of Ivy Parton [2005] NSWSC 1101
HEARING DATE(S):	24 October 2005
JUDGMENT DATE :	24 October 2005
JURISDICTION:	Equity Division Equity Division Probate List
JUDGMENT OF:	Windeyer J at 1
DECISION:	In Probate matter - rectification ordered; In Equity matter - answer to question in paragraph 7 subject to application for judicial advice - "No".

CATCHWORDS:	WILLS PROBATE AND ADMINISTRATION - rectification of will - mistake obvious - EQUITY - trustees - summons for judicial advice - not appropriate procedure - no question of construction - no problem likely to arise on proper construction
LEGISLATION CITED:	Trustee Act 1925, s63
PARTIES:	Harry Norman Freedman (Plaintiff in 1162 of 2005) Neville Parton (Defendant in 1162 of 2005) Neville Parton (Plaintiff in 111910 of 2005) Harry Norman Freedman (Defendant in 111910 of 2005)
FILE NUMBER(S):	SC 1162 of 2005; 111910 of 2005
COUNSEL:	C Harris, SC (Plaintiff in 1162 of 2005; Defendant in 111910 of 2005) C A Vindon (Plaintiff in 111910 of 2005, Defendant in 1152 of 2005)
SOLICITORS:	Gadens (Plaintiff in 1162 of 2005; Defendant in 111910 of 2005) Milne Berry & Berger (Plaintiff in 111910 of 2005, Defendant in 1152 of 2005)

LOWER COURT JURISDICTION:

- 6 -

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION

WINDEYER J

MONDAY 24 OCTOBER 2005

EQUITY LIST
1162/05 HARRY NORMAN FREEDMAN AS EXECUTOR OF THE ESTATE OF THE LATE IVY BERTHA PARTON v NEVILLE PARTON

PROBATE LIST
111910/05 NEVILLE PARTON v HARRY NORMAN FREEDMAN AS EXECUTOR OF THE ESTATE OF THE LATE IVY BERTHA PARTON

JUDGMENT

1 These two matters are connected. Action No 111910 of 2005 in the Probate List is a summons for rectification of a will of which probate has been granted.

2 The deceased Ivy Bertha Parton died on 6 July 2004 leaving a will dated 26 March 1990. The will named Mr Harry Norman Freedman, solicitor, as sole executor and trustee.

3 Clause 3 of the will is as follows:

3 I DIRECT that my Trustee is to offer to my son NEVILLE WILLIAM PARTON at present of Lot 1 Tuncurry Road, Failford, Builder, the opportunity of purchasing my property at 5 Kirrang Street Five Dock. If my said son NEVILLE WILLIAM PARTON so desires to purchase my said property I DIRECT t hat the following procedure shall be put into effect by my Trustee:
(a) Within four (4) weeks of notice of the terms of this my Will the said NEV ILLE WILLIAM PARTON shall provide in writing to my Trustee a notification that he is able to purchase the said property at 5 Kirrang Street, Five Dock. Together with such notification he shall provide a figure equal to fifty per cent of his estimate of the market value of the said property.
(b) W ithin four (4) weeks after receipt of such notification and estimate figure my S aid son JOHN ARTHUR PARTON shall notify my Trustee of his acceptance of the said figure or shall advise the Tr ustee that such figure as provided by the said NEVILLE WILLIAM PARTON does not represent a true estimate, of fifty per cent of the market value of the said property.
(c) I n the event that the market value of the property is disputed I DIRECT then my Trustee shall arrange for a valuation to be prepared of the said property by a nominee of the President of the Real Estate Institute of New South Wales for the time being and the valuation provided by the nomine shall be final. The cost of such valuation is to be paid by my Estate.
(d) Within one (1) week of being informed of the valuation referred to in sub-clause (c) hereof my said son NEVILLE WILLIAM PARTON shall inform my Trustee in writing of his desire to purchase the said property
(e) In t he event that my said son NEVILLE WILLIAM PARTON, elects to purchase the said property he shall pay the the [sic] balance of the sum accepted in: accordance with sub-clause (a) hereof or the valuation referred to in sub-clause (c) hereof whichever is applicable to my Trustee within four (4) weeks of being informed of such acceptance or valuation and I G IVE DEVISE AND BEQUEATH that sum of money to my said son JOHN ARTHUR PARTON.
(f) In the event that my said son NEVILLE WILLIAM PARTON fails to give notification or pay monies as required by this clause I DIRECT that the said property become part of the residue of my Estate and any monies paid by such son to my Trustee shall be refunded to him together with any interest earnt thereon.

4 The will then provided for legacies of $2,000 each to two nieces of the deceased out of the residuary estate and for the balance of residue to be shared equally between the two sons John and Neville Parton.

5 The rectification sought is that the words “one half of” should be inserted before the words “the valuation” in clause 3(e) of the will. Mr John Parton has been served with a citation. The evidence and the words of the will make it clear that clause 3(3) as expressed does not in its form embody the testamentary wishes of the deceased. The order for rectification should be made.

6 Make the order sought in paragraph 1 of the summons.

7 I will return to costs.

8 The Equity action 1162 of 2005 is constituted as an application for judicial advice under s63 of the Trustee Act 1925. It differs from the normal s 63 applications in that a defendant Mr Neville Parton is joined to the proceedings.

9 The question as set out in the statement of facts is whether the trustee would be justified in not following the direction as to giving Mr Neville Parton an opportunity to purchase the Five Dock property pursuant to clause 3 of the will, but in lieu thereof selling the Five Dock property, paying the pecuniary legacies from it with the residue being divided between the two sons. The statement of facts in clause 7 asks for this advice apparently upon the basis of whether on the true construction of the will and the events which have happened that course of action would be justified. There is evidence that Mr John Parton has agreed to pay rent for the property for a certain period of time and it is accepted that rent amounts to about $12,000. Apparently he resided in the property while his mother was alive, at least for some period of time. There is evidence that he made some payments on behalf of the deceased but the evidence in para 15 of Mr Freedman's affidavit of 19 September 2005 was not admitted as to amount but only as some evidence of liabilities in the estate. There are presumably other liabilities such as funeral expenses. There would be legal disbursements and there is some question as to entitlement to legal costs on the basis that Mr Freedman was one of the attesting witnesses to the will. Whether or not the liabilities will exceed the agreed amount for rent, the evidence does not show.

10 It is not, as I understand it, now suggested that there is some need for a construction suit. There is no uncertainty or ambiguity in the provisions in the will as rectified. The recommendations put forward by the executor are really put on the basis of what he considered fair.

11 If there is no residue then there is no fund out of which the will requires the pecuniary legacies to be paid; that is the end of that matter. If it turns out that there is insufficient money in the estate apart from the Five Dock property to pay the liabilities, then the estate will have to be administered in accordance with the will on that basis. In ordinary circumstances if property is specifically devised to a particular beneficiary and that property is the only asset in the estate and there are liabilities in the estate, then the executor would be justified in not handing over the property to the specific devisee unless put in funds to enable all liabilities in the estate to be paid. That is not an unusual circumstance and one which the executor should have no difficulty in putting into effect.

12 If a particular beneficiary who wishes to take property out of which part of the debts would be payable is not willing to arrange payment of that part, that is a matter for that beneficiary who will then not be able to take the property given to him or her under the will. That situation has not yet arisen. In my view there is no reason why it should.

13 I am not asked to decide the question but I think there is little doubt as to the equal responsibility of the two brothers as to the liabilities in the estate. There may of course be some dispute as to the amount of those liabilities. On any basis the matters put forward under the summons were not a proper matter for judicial advice. If it were a construction matter, which it does not appear to be, then Mr John Parton would be a necessary party to the proceedings. I am of course aware that under s63 of the Trustee Act notification would be given to any person affected by the advice so as to give that person the opportunity of coming back to court to contest it. Nevertheless, the s63 procedure is not appropriate where there is some question of that happening.

14 The answer to the question in paragraph 7 is "No". In accordance with the rules that answer will have to be incorporated in the form of an order. I should make it perfectly clear that nothing in this judgment could amount to an estoppel so far as either Mr Neville Parton or Mr John Parton is concerned as to construction or otherwise other than as a determination that it would not be proper for the plaintiff trustee to disregard clause 3 of the will. I answer that question posed in para 7 of the statement of facts "No".

Costs of the Probate matter

15 The final question in this matter is the question of costs. While it is possible that the parties might have been able to agree on a distribution not in accordance with the terms of the will as admitted to probate, it is possible that this might have brought about stamp duty consequences. Thus it seems to me that the application for rectification was justified and was required.

16 In many circumstances an order would be made that the costs of both parties be paid out of the estate. In this case, however, it is said that should not be the position because the defendant is the solicitor who drew the will. It was clearly not the fault of the deceased that the will not embody her testamentary intentions; it was the fault of the solicitor who drew the will. Thus the court has to consider whether or not it is a proper result that the plaintiff's interest in the estate should be reduced by the costs incurred by him in obtaining the order for rectification and any costs of the executor in the action.

17 I wish to make it very clear that there was no opposition to the order and that the time spent today on that matter was very short. I have, however, come to the conclusion somewhat reluctantly that the argument of Mr Harris SC, for Mr Neville Parton, is correct and that the appropriate order in that matter is that the defendant pay the plaintiff's costs and not be entitled to indemnity from the estate in respect of those costs or his costs as defendant in the proceedings. Order accordingly.

Costs of the Equity proceedings

18 As I have said, the proceedings were misconceived albeit I think with the best of intentions. Mr Harris, for the defendant, seeks an order that the defendant's costs be paid by the plaintiff executor on an indemnity basis and that the defendant not be entitled to indemnity out of the estate in respect of his costs. I point out that Mr John Parton is at liberty to come to whatever arrangement he wishes to come to with the plaintiff so far as his share of the estate is concerned.

19 In view of the determination I have made, I have come to the conclusion that the defendant's costs should be paid by the plaintiff though I do not think that the circumstances require an order for indemnity costs and I will not make that order. I order that the plaintiff pay the defendant's costs of the proceedings. I direct that the plaintiff not be entitled to indemnity out of the estate in respect of any costs of the proceedings.

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