KENNEDY v HILL & ORS No. SCGRG-98-156 Judgment No. S122

KENNEDY v HILL & ORS
[1999] SASC 122

Civil: DOYLE CJ.

Introduction

The plaintiff is the executor of the will of Thelma Joyce Hill (“the deceased”).
The plaintiff has applied to the court for approval of a course of action that he proposes to take in performing his obligations as executor of the will of the deceased.
As will appear, I consider that the parties have not adequately distinguished between the different powers of the court that have been invoked. By this I mean the distinction between the power of the court to give advice and directions under s69 of the Administration and Probate Act 1919, and under s91 of the Trustee Act 1936 on the one hand, and the power to make a final determination of rights as between parties under r63.04 and r103.02 of the Supreme Court Rules: see generally In the estate of Hunter deceased [1957] SASR 194 and In the estate of Martin deceased [1958] SASR 365. However, all of the relevant parties are before me and there has been no suggestion that I should not decide the issue presented to me. Accordingly, I propose to do so.
The issue is whether an agreement entered into between the executor and Mrs Keast, a beneficiary under the will, has been repudiated by Mrs Keast, and whether the executor should now proceed on that basis, and carry out contracts with two other beneficiaries.
The agreement is for the sale to Mrs Keast of certain shares and an interest in land.
The parties have put before me correspondence that has passed between them. I heard brief oral evidence of a conversation between the executor’s solicitor and Mrs Keast’s solicitor. I will summarise that evidence shortly.

Legal Principles

To provide a background for what follows, I propose to say something first about the issue of law that arises.
A party to a contract is said to repudiate the contract if the party indicates, before the time for performance arrives, that the party will not be ready and willing to perform at the appointed time. If that occurs, the other party can accept that repudiation and terminate the contract without waiting for the time for performance to arrive. Such a repudiation, occurring before the time for performance has arrived, is called an anticipatory breach of the contract.
In the present case the issue is whether Mrs Keast, through her solicitor, has refused to perform obligations to which she agreed, or has attached conditions or qualifications to her agreement that amount, in substance, to a refusal to perform according to the tenor of the agreement.
The case is not one in which there is a refusal to perform, or an argument about, a particular condition. The executor’s case is that Mrs Keast has wholly repudiated her obligations.
In deciding whether there has been an anticipatory breach of the contract, the court must assess the conduct of the parties in its context, but must judge it objectively, or as a reasonable person would. It is important to bear in mind that the approach that a party takes to performance of the party’s obligations may amount to a repudiation, even though the party intends to perform the agreement and says that the party intends to perform it. As Lord Wright said in Ross T Smyth & Co Ltd v T D Bailey Son & Co [1940] 3 All ER 60 at 72:
“I do not say that it is necessary to show that the party alleged to have repudiated should have an actual intention not to fulfil the contract. He may intend in fact to fulfil it, but may be determined to do so only in a manner substantially inconsistent with his obligations and not in any other way. However, a mere honest misapprehension, especially if open to correction, will not justify a charge of repudiation.”

As this statement indicates, and as appears from other cases, while the issue is largely one of fact, some care is required in situations of the type identified by Lord Wright. The reason that the party gives for not performing may be relevant, and the manner in which or the ease with which the misapprehension or dispute about the contractual obligation may be resolved is a relevant factor.

There is another point to be borne in mind. In cases in which there is a disagreement between parties about the manner in which or the circumstances under which an obligation is to be performed, and the anticipatory breach or repudiation is said to lie in the approach to performance taken by one of the parties, the impact of the alleged repudiatory conduct on the putatively innocent party has to be considered. It may be no answer to a claim of repudiatory contract for the defendant to say that the defendant wished to maintain the contractual arrangements on foot and was willing to initiate procedures to resolve the dispute or to set in place alternative arrangements that would, on a without prejudice basis, enable the parties to continue to perform. The court must consider the impact upon the putative innocent party of the allegedly repudiatory conduct by the other party. Conduct which will substantially deprive the innocent party of the benefit of an arrangement will be repudiatory, and it may be repudiatory even though the repudiating party indicates that it will not pursue its threatened course of action if the other party gives way in some respect: see Federal Commerce and Navigation Co Ltd v Molena Alpha Inc [1979] AC 757.
But, having said that, and to emphasise the importance of a careful consideration of the facts, one must bear in mind what was said by Stephen, Mason and Jacobs JJ in DTR Nominees Proprietary Limited v Mona Homes Proprietary Limited (1978) 138 CLR 423 at 432:
“No doubt there are cases in which a party, by insisting on an incorrect interpretation of a contract, evinces an intention that he will not perform the contract according to its terms. But there are other cases in which a party, though asserting a wrong view of a contract because he believes it to be correct, is willing to perform the contract according to its tenor. He may be willing to recognize his heresy once the true doctrine is enunciated or he may be willing to accept an authoritative exposition of the correct interpretation. In either event an intention to repudiate the contract could not be attributed to him. As Pearson LJ observed in Sweet & Maxwell Ltd v Universal News Services Ltd [1964] 2 QB 699, at p734:
‘ In the last resort, if the parties cannot agree, the true construction will have to be determined by the court. A party should not too readily be found to have refused to perform the agreement by contentious observations in the course of discussions or arguments ...’
In this case the appellant acted on its view of the contract without realizing that the respondents were insisting upon a different view until such time as they purported to rescind. It was not a case in which any attempt was made to persuade the appellant of the error of its ways or indeed to give it any opportunity to reconsider its position in the light of an assertion of the correct interpretation. There is therefore no basis on which one can infer that the appellant was persisting in its interpretation willy nilly in the face of a clear enunciation of the true agreement.”
The issue of repudiation was considered more recently by the High Court in Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623. In that case a lessee argued that the conduct of the lessor, in failing to deliver a registrable lease as agreed, the failure having persisted over some time, amounted to a repudiation of the agreement for lease. Mason CJ drew the distinction (at 634) between
“evincing an intention to carry out a contract only if and when it suits the party to do so and evincing an intention to carry out a contract as and when it suits the party to do so.”

He said that it was easier to make out repudiatory conduct in the first case, but emphasised that in the end everything turned on the facts. Brennan J emphasised that the test was (at 648):

“Would a reasonable person in the shoes of the innocent party clearly infer that the other party would not be bound by the contract or would fulfil it only in a manner substantially inconsistent with that party’s obligations and in no other way?”

He went on to make the point that when the contract was one under which something had to be done within a certain time, it was not necessary to give an effectual notice to complete before the issue of repudiation could arise. If the relevant conduct gave rise to a clear inference of repudiation, then the innocent party was entitled to accept that repudiation, even though an effectual notice to complete had not been given. An important point, to my mind, in relation to the assessment of the facts was made by Deane and Dawson JJ at 658-659. They said:

“It is not necessary for repudiation of a contract that the repudiator make plain that he will never perform his contractual obligations at all. What Lord Dunedin described (Forslind 1922 SC, at p190) as the assumption of ‘a shilly-shallying attitude in regard to the contract’ and what Lord Shaw of Dunfermline (1922 SC, at p192), called ‘procrastination ... persistently practised’ can, in some circumstances, reach the stage of repudiation even though accompanied by assurances of ultimate performance at some future time. In that regard, the law was correctly stated by Lord Shaw in the following extract from his judgment in Forslind, (1922 SC, at pp191-192) which is directly in point to the circumstances of the present case:
‘If, in short, A, a party to a contract, acts in such a fashion of ignoring or not complying with his obligation under it, B, the other party, is entitled to say: “My rights under this contract are being completely ignored and my interests may suffer by non-performance of A of his obligations, and that to such a fundamental and essential extent that I declare he is treating me as if no contract existed which bound him.” ... In business over and over again it occurs - as, in my opinion, it occurred in the present case - that procrastination is so persistently practised as to make a most serious inroad into the rights of the other party to a contract. There must be a stage when the person suffering from that is entitled to say: “This must be brought to an end. My efforts have been unavailing, and I declare that you have broken your contract relations with me.” ’

Lord Shaw (1922 SC, at pp191-192) went on to point out that ‘the question whether the stage has been reached when procrastination or non-performance’ constitutes repudiation is essentially one of fact. That question will, as has been said, only be properly answered in the affirmative when procrastination or non-performance has marked the stage of conveying to a reasonable person, in the situation of the other party, repudiation or disavowal either of the contract as a whole or of a fundamental obligation under it.”

The passages to which I have referred indicate the care with which the facts must be considered. I proceed on the basis that what must be considered is whether the conduct of Mrs Keast, viewed in context but by a reasonable observer, does amount to a statement that she will not perform the substance of her obligation, or will perform the substance only if and when it suits her to do so or in a manner or under circumstances such that the innocent party will be deprived of the substance of the relevant contractual benefit.
Finally, the cases establish that acceptance of the repudiation is necessary before the contract is terminated. If the repudiation has not been accepted, the party at fault can withdraw a repudiation, at least a repudiation constituted by words, and the contract remains on foot.
Having indicated the basis upon which I consider I should proceed I now turn to the facts.

Facts

I make the following findings. The facts are largely non-contentious. What is in issue is the legal effect of statements made by Mrs Keast’s solicitors.
The deceased held shares in Sidney Harrison Pty Ltd (“SH”). She also had an interest in land occupied by SH. Clause 3 of the will directs the executor to raise the amount of any debt owed by the deceased to SH by selling shares in SH and her interest in the land occupied by SH. The proportion of her shares and of her interest in the land to be sold was to be determined in accordance with the fraction D/T. D is the amount of the debt to SH, and T is “the total value of the shares and the said land as at the date of my death as shall be determined by my trustee.”
Clause 3 of the will then goes on to provide:
“AND I FURTHER DIRECT my trustee to first offer in writing to be made within two (2) calendar months of the date of my death such of the shares and my interest in the said land as required to satisfy the above fraction for sale to my children BRENTON SCOTT HILL (“Brenton”) WENDY JOYLENE BLADES (“Wendy”) and SUZANNE MARGARET KEAST (“Sue”) and Brenton Wendy and Sue shall have the right at any time within one (1) calendar month of the date of such notice to accept in writing the offer PROVIDED that if only one of them accepts the offer he or she shall be entitled to purchase such of the shares and my interest in the said land but if one or more of them accept the offer he she or they shall be entitled to purchase such of the shares and my interest in the said land in equal shares as tenants in common with such payment to be made within one (1) calendar month of the date of acceptance of the said offer referred to herein.”
Some knowledge of the other provisions of the will helps to provide an understanding of what comes later. The will refers to the shares in SH, moneys owed by SH to the deceased and her interest in the land occupied by SH as “the business assets”. Under the will the business assets pass to the trustee as to one-third for Brenton Hill absolutely if he survives the deceased (as he did), as to one-third absolutely for Wendy Blades if she survives the deceased (as she did) and as to the remaining one-third to a different trustee to hold on trust for Mrs Keast. Under that trust, Mrs Keast has a life interest only in the business assets. However, Mrs Keast can at any time elect to have the bequest sold, and in that event the proceeds of sale become hers absolutely. The residue of the estate is divided equally among the three children, Mr Hill, Mrs Blades and Mrs Keast.
This is a very short summary of the will. The scheme of the will is to give Mrs Keast only a life interest in the business assets, with the ability to convert that into an absolute interest but only if the business assets are sold. Apparently the deceased did not wish Mrs Keast to play a significant part in the affairs of SH. However, any shares in SH and interest in land occupied by SH that are acquired by Mrs Keast under clause 3 of the will are hers absolutely, and shares and land passing under this clause will reduce the business assets which are divided equally. Although I heard no evidence on the matter, I assume that this scheme is in some way related to the present dispute.
The executor formed the opinion that, at her death, the deceased owed SH the sum of $246,939. When the accounts of SH for the year ending 30 June 1997 were finalised, the amount increased to $254,552.00. In about June 1998 it was discovered that due to an accounting error the amount owed had been overstated by $20,000. I gather that the amount is now, in the executor’s opinion $234,552.00. I mention these changes to explain why different amounts appear in some of the correspondence.
Be that as it may, on 6 August 1997 the executor wrote to each of the three children offering them a portion of the deceased’s shares in SH and of her interest in certain land. The letter referred to the amount of the debt, as it was then thought to be. The letter went on to say:
“The portion of shares and property offered to you will be determined in accordance with the Price Waterhouse Chartered Accountants valuation dated 6 June 1997 and on a pro rata basis if applicable.”
I think that the will envisaged an offer of a precise number of shares and an identified interest in land. The letter indicates that the executor has identified the amount of D, and refers to a valuation to ascertain the amount of T. All parties have treated the offer in the letter as sufficiently certain to give rise to an agreement, and accordingly I will proceed on that basis.
Mr Hill and Mrs Blades accepted promptly, indicating that they were prepared to purchase all of the shares and land offered, or their proportion thereof if the offer was also accepted by other offerees.
There had already been some correspondence between Mrs Keast’s solicitor and the executor about the offer to be made under clause 3. It is apparent from that correspondence that Mrs Keast believed and claimed, from about July 1997 that SH was, or the shares in SH were worth a lot more than the executor was indicating. Complaint was made about the scheme of the will in relation to the business assets, and there was an indication that Mrs Keast would be commencing proceedings to challenge the will, although whether that was a challenge to the validity of the will or to the adequacy of the provision made for Mrs Keast was left unclear.
With that background, the solicitor for Mrs Keast wrote to the executor on 15 August 1997. This was a reply to the executor’s letter of 6 August 1997. The relevant part of the letter is as follows:
“I am also concerned about the ambiguity in your correspondence. The words ‘accordingly, you are offered a portion of the land and shares to the value of $246,939.00’ is ambiguous.
My client also disputes that the amount of the debt owed by the deceased to Sydney (sic) Harrison Pty Ltd is $246,939.00. My previous correspondence directed to your solicitor seeking to enquire into that matter is at present unanswered.
My client, reserving her rights in respect of the above, excepts (sic) the offer contained in your letter of the 6th August 1991 (sic).”
The executor’s solicitors replied, denying any ambiguity. They referred to some earlier correspondence about the amount of the debt. They noted that Mrs Keast had not particularised the basis of her dispute. They sought clarification of the last of the paragraphs set out above.
They made it clear that they sought a “clear and unconditional acceptance.”
By letter dated 4 September 1997 Mrs Keast’s solicitor replied as follows, after referring to the most recent letter from the executor’s solicitors:
“I am bewildered by its terms. My previous correspondence is quite self explanatory. My client accepts the offer to acquire her fair pro rata share of her mothers (sic) estate. My client also disputes that her late mother owed the amount that is claimed that she owed to Sydney (sic) Harrison Pty Ltd at the time of her death. My correspondence of the 15th August is not difficult to understand. My client exercises the option given to her in the will but disputes that the debt is the amount claimed.
If you have difficulty understanding that I shall seek the appropriate Court Order to make it clearer. The suggestion that my client is bound unconditionally to accept the debt in the amount stated is disputed.
I note that my previous correspondence sent in July seeking details of the debt has not yet presently been answered. I ask that this matter be attended to immediately.”
The executor has treated that letter as an acceptance of his offer. In my opinion it was. At the hearing before me Mr Rochow, counsel for Mr Hill and Mrs Blades, argued that there was no valid acceptance because it was for the executor, in his discretion, to determine the amount of the debt, and that accordingly the challenge to the amount of the debt was a rejection of the price fixed by the executor. I do not accept that submission. First of all, under the will, in my opinion, the determination of the executor related only to the value of the shares and the land, not to the amount of the debt. The amount of the debt would be determined, for the purposes of calculating D/T, by the executor making a judgment as to what he believed was the true amount owing, not by exercising the sort of judgment that he might exercise in determining the value of shares and land. As well, as I read the letter from Mrs Keast’s solicitor it does no more than reserve the right to verify the amount of the debt. Such a request is not unreasonable, and in my opinion does not amount to a failure to accept the offer.

I appreciate that if the executor had called for payment promptly, and the dispute over the debt had not been resolved, further difficulties would have arisen. Any such difficulties probably could have been resolved by the making of an application to the court but, in any event, the executor did not call for payment.
The next thing to occur was a written proposal by the executor to Mr Hill, Mrs Blades and Mrs Keast. By letter dated 23 October 1997 the executor suggested a variation to the transaction, involving the selection of particular land to be sold, which variation would reduce the amount of capital gains tax (“CGT”) to be paid.
I conclude from what happened at this stage that the executor was not calling for payment within one month of the date of acceptance. I consider that this had the effect that payment was now due within a reasonable time of the executor calling for payment. I so conclude in the absence of any material put before me about the matter, but on the assumption that if there was any relevant material it would have been brought to my attention.
What happened next is not clear, but tendered before me was a letter of 13 November 1997 from the executor to Mrs Keast’s solicitor. This letter says that Mrs Keast had asked for documents to be forwarded to the solicitor for her execution. These documents apparently implement the varied proposal and reduce the amount of CGT.
Mr Davis, the solicitor with the conduct of the matter on behalf of the executor, gave evidence that on 26 November 1997 he was informed by the executor that Mrs Keast had “pulled out”. The executor wanted him to clarify matters with Mrs Keast’s solicitor.
Mr Davis gave oral evidence about a telephone conversation that he had on 26 November 1997 with Mr Scragg, the solicitor for Mrs Keast. Mr Scragg also gave evidence about this conversation. To the extent that there is a difference, and it is relatively minor, I accept the evidence of Mr Davis. His memory was assisted by a contemporaneous file note.
I find that Mr Davis said to Mr Scragg that Mr Davis had been told by the executor that Mrs Keast had pulled out of the present arrangements, and that Mr Davis wanted to know what the position was.
I interpolate that there was room for ambiguity there. Was the reference to “present arrangements” a reference to what I will call the original agreement of September or the variation proposed in October, which obviously the executor thought was acceptable to Mrs Keast? This point was not explored in evidence. When Mr Davis gave his evidence I had not noticed the letter of 13 November 1997 among the documents, and so did not raise the significance of the executor’s apparent belief that Mrs Keast had agreed to the variation.
I return to the telephone conversation. The effect of Mr Davis’ evidence was that Mr Scragg said that Mrs Keast had not “pulled out” but that instead of going through “the current process” she wanted to be bought out entirely by her brother and sister, for something of the order of $500,000. If a Deed of Family Arrangement were executed, that would be the end of the matter. In cross-examination Mr Davis denied that Mr Scragg had confirmed that Mrs Keast wished to proceed in accordance with the original arrangement. He said that if that had been said, he would have made a note of it. I accept that evidence.
The substance of Mr Scragg’s evidence was to the same effect, although he added some detail that was not put to Mr Davis in cross-examination. He also said that he told Mr Davis that his client was still prepared to participate “in the original proposal.”
On that latter point, as I have already said, I prefer the evidence of Mr Davis. I consider that Mr Davis would have made a note of this if it had been said, and apart from that I found Mr Scragg’s evidence not as clear as that of Mr Davis.
In any event, things did not stop there. Mr Scragg agreed to write to Mr Davis confirming the effect of the conversation. He did so by letter dated 28 November 1997. Because of the importance of the letter I will set it out in full. After formal matters it stated:
“RE: ESTATE OF THELMA JOYCE HILL
I refer to the above matter and to our telephone conversation of the 26th November and confirm that my client is not prepared to enter into the present convoluted arrangement to identify and finance her purchase of shares in the funeral company. She actually believes that the arrangement is a sham being a device to exclude her from her fair entitlement of her shares and based on the anticipated assumption that she could not afford to contribute her fair share of the debt reduction in question.
The scheme incurred Capital Gains Tax. The quality of the advise (sic) which lead (sic) to its creation, from a taxation point of view, is questionable. The bona fides of the individuals who constructed it must also be questionable. My client very much doubts that her late mother fully understood the implications of what was involved.
My client is not prepared to endure any fetter on her present entitlement to her legitimate inheritance. There is absolutely no reason why any such fetter should occur and it is my client’s intention to apply to vary the Will to the extent that the restraint exist (sic).
My client does not believe that the company is worth the amount of money set out in the accounting appraisal. My client believes that the company is worth significantly more than that sum. I am instructed that there was recently an offer to purchase the whole of the company for approximately $2,000,000.00. My client further denies that her mother is indebted to the company in the amount claimed. She believes that the debt in question was mostly an artificial accounting device created to secure taxation and capital advantages for the other shareholders, mainly, her brother. My client is not prepared to tolerate the present statue (sic) quo.
My client is prepared to sell her legitimate entitlement in the company, being a one-third interest, for one-third of the previous offer, namely, one-third of $2,000,000.00 less her pro rate (sic) share of any proper indebtedness owed to any third party institutional lender. I ask you to take instructions in those terms. If the matter can not (sic) be resolved then I am instructed to institute proceedings.
Please be assured that my client has the financial capacity to pursue this matter to its proper conclusion.
I await your reply.”
As can be seen, the letter criticises the scheme of the will, the advice upon which it was based, it disputes the valuation of the shares in SH, it disputes the amount of the debt owed by the deceased to SH. It raises the prospect of a claim by Mrs Keast under the Inheritance (Family Provision) Act 1972. It repeats what the parties called the “buy-out” proposal, under which Mrs Keast would sell her interest in the business assets to her brother and sister.
It is not surprising that the executor, after receiving this letter, would be uncertain about the attitude of Mrs Keast to the original arrangement, and about her willingness to complete under it. A new complication arose. The solicitors for Mr Hill and Mrs Blades promptly wrote to Mr Scragg purporting to accept the offer to sell one-third of her entitlement in SH for the amount indicated in the letter of 28 November. A dispute then arose as to the ascertainment of the amount. I put that to one side, because it is not before me.
On 24 December 1997 Mr Davis wrote to Mr Scragg referring to the acceptance by Mr Hill and Mrs Blades of Mrs Keast’s offer. He said:
“The terms of your letter of 28 November 1997 indicate a repudiation of the acceptance by Mrs Keast to acquire sufficient shares and land from the estate to enable the repayment of the indebtedness of the deceased to Sidney Harrison Pty Ltd.”

By letter dated 14 January 1998 Mr Scragg replied:

“The suggestion of the repudiation as set out in the correspondence is rejected.”

By letter dated 15 January 1998 (which might have crossed with the last letter) the solicitors for the executor set out some of the history of the matter, stated that the executor believed that a buy-out agreement had been reached by Mrs Keast with Mr Hill and Mrs Blades, repeated the executor’s belief that Mrs Keast had repudiated the original arrangement but added:

“Whilst noting that your letter indicated a repudiation it is not a repudiation which has yet been accepted by our client.”

The solicitors then went on to call for settlement of the buy-out agreement within fourteen days, and stated that failing that the executor would accept Mrs Keast’s repudiation of the agreement of September 1997 and terminate the contract with her. He would then sell the shares and land to Mr Hill and Mrs Blades.

I point out that, at this stage, any repudiation of the original arrangement by Mrs Keast has not been accepted by the executor.
By letter dated 19 January 1998 Mr Scragg again wrote to Mr Davis. The letter again complains about the advice given to the deceased and about the way in which SH is being managed. With reference to the claim that the letter of 28 November 1997 was a repudiation of the original agreement of September 1997, the letter states:
“The reference in my previous correspondence to the ‘present convoluted arrangement’ refers to the scheme to circumvent capital gains liabilities. It is not in, any circumstances, a rejection by my client of her right to participate under the original scheme set out in the Will, should that ultimately be regarded as a proper and valid scheme. My client does challenge that validity of the scheme and believes that it was a devise (sic) to exclude her from her fair share of the company. Again, as already stated, my client challengers (sic) the basis of that scheme, being the amount of the debt owed by her mother to the company.”

It is to be noted that in this letter Mr Scragg is asserting that his client adheres to the original arrangement, but is indicating that there are issues to be raised by his client that could prevent the original arrangement ever being implemented.

By letter dated 22 January 1998 the solicitors for the executor wrote to Mr Scragg again. They asked point blank if Mrs Keast intended to perform the buy-out contract. If not, they asked if she proposed to perform the original arrangement. They stated that if she did propose to perform the original arrangement, “the documentation has been prepared and the matter can be settled immediately.”
Mr Scragg did not reply to this letter or to a follow up letter, and on 30 January 1998 these proceedings were issued. In his affidavit of that date the executor states that he believes that Mrs Keast has repudiated the original contract, and that he considers that he should accept that repudiation and proceed with the original transaction with Mr Hill and Mrs Blades. He seeks the court’s approval for that course of action.
The solicitors for the executor wrote to Mr Scragg again on 2 March 1998, referring to an affidavit sworn by his client in the matter. The affidavit is not before me. They asked if she considered that she was bound to pay one-third of $254,552.11 to purchase one-third of the shares and land. By letter dated 2 March 1998 Mr Scragg replied:
“My clients (sic) does not regard itself (sic) as being obliged to pay one third of $254,552.11, provided she can attain the appropriate declarations sought by her in paragraphs 2 and 3, (as to liability) and 5 (as to the quantum of her application). If my client is completely unsuccessful in respect to all of those matters, she acknowledges that she is bound to pay one-third of the sum referred to.”

The reference in the letter is to an application made in the present proceedings for provision for Mrs Keast under the Inheritance (Family Provision) Act and for an inquiry and account as to the amount of the indebtedness of the deceased to SH. I was informed by the parties that there was an inquiry as to the amount of the indebtedness, and that by an order of 25 March 1998 that indebtedness was confirmed at the amount of $254,552.11. (I mentioned earlier that the amount has since been reduced.) On 9 October 1998 the application for provision under the Inheritance (Family Provision) Act was dismissed as incompetent in these proceedings.

It remains to record that in an affidavit sworn on 4 November 1998 Mrs Keast stated that she still did not accept the amount of her mother’s indebtedness to SH. She stated that she did not accept the executor’s valuation of the shares. At the hearing before me, and during the course of final addresses, I asked Mr Evans, counsel for Mrs Keast, what his client’s attitude was. It was necessary for me to grant a short adjournment so that my question could be answered. He then informed me that Mrs Keast now accepts the amount of the debt and the valuation placed on the shares and land by the executor.

Was there a repudiation by Mrs Keast?

It was submitted for the executor that the telephone conversation of 26 November 1997 constituted a repudiation by Mr Scragg on behalf of Mrs Keast. I do not agree. I consider that the statement to the effect that she did not want to go through the “current process” was a reference to the varied arrangement that would reduce the amount of CGT. The statement, which it was common ground was made, that she had not “pulled out” suggests that. I do not consider that expressing a preference to be bought out by her brother and sister of itself amounted to a repudiation. To the extent that what Mr Scragg said was confusing or contradictory, in my opinion an inference of repudiation could not reasonably be drawn from it.
I also reject the submission that the letter of 28 November 1997 constituted a repudiation in terms of the earlier arrangement. I agree that the first paragraph of the letter, set out above, is confusing. But I consider that the first sentence tends to confirm that what Mrs Keast did not want to go ahead with was the arrangement to reduce CGT. I agree that the reference to “the arrangement” in the second sentence is probably a reference to the provisions of the will, and casts some doubt on the meaning of “arrangement” in the first sentence. Nevertheless, I am satisfied that this paragraph could not reasonably be construed as a repudiation of the contract.
Nor, in my opinion, does the proposal of a “buy-out” constitute a repudiation. I regard that as no more than a preferred alternative, put forward as a proposal, not as a replacement for a repudiated arrangement.
But the question arises of whether the letter raises qualifications to and conditions on any performance of the original arrangement such that it can be said that Mrs Keast is, in effect, prepared to perform the original arrangement only if and when she is satisfied that it is in her interests to do so. Alternatively, does it state that she will perform only on terms or under circumstances substantially inconsistent with her obligations?
The letter, while vaguely expressed, raises a possible challenge to the validity of the will (in part at least), appears to dispute the value of the shares and the amount of the debt, and foreshadows an application for better provision under the will. In combination, these things could take considerable time. The challenge to the validity of the will could result in the original arrangement being invalid. Other than threatening proceedings, the letter contains no proposal whereby the matters can be resolved reasonably expeditiously. These matters had been a contention for several months.
To my mind, there is a real question whether, by this letter, Mrs Keast is in effect saying that she will only perform the original arrangement if and when she is satisfied that all of her disputes and grievances related to the will have been resolved.
It is necessary now to look at what happened after that. As appears from what I have set out above, the executor made it plain that he considered that Mrs Keast was repudiating the original arrangement. Mr Scragg denied this, but his letter of 19 January 1998 raises all the same matters, and now more clearly threatens a challenge to the validity of the will. When called upon by letter dated 22 January 1998 to state Mrs Keast’s attitude clearly, Mr Scragg said nothing further.
When the proceedings were issued, Mrs Keast’s attitude appears to have been that she was definitely not willing to pay the amount that the executor called upon her to pay. She would pay that amount only if her concerns about the amount of the debt and the value of the shares were satisfied. They were matters that could have been referred to the court, and dealt with reasonably quickly. It was not unreasonable for her to seek to satisfy herself on those matters. On the other hand, she had been disputing these matters for some six months, without doing anything to bring matters to a head. It also seems that she reserved the right to challenge the validity of the will, and until that challenge was disposed of or abandoned, one would reasonably infer that she was not willing to proceed. Certainly, she did not make any offer to proceed reserving her right to challenge the validity of the will. Finally, there are the references to a claim under the Inheritance (Family Provision) Act. She appears to say that she will not proceed until that is resolved. I can think of no reason why she could not have proceeded with the transaction and pursued her claim for better provision at a later time.
This was not a case in which the obstacles to performance raised a mere question of interpretation, on which minds might differ, and which once resolved was likely to lead to performance of the arrangement: cf DTR Nominees Pty Ltd v Mona Homes Pty Ltd (1978) 138 CLR 423. There were means by which the executor could get the amount of the debt and the value of the shares resolved, but he had so far been unsuccessful in satisfying Mrs Keast about them. When the proceedings were issued, Mrs Keast had still done nothing about her claim for further provision or her threatened challenge to the validity of the will. There was every reason to think that a good deal of time would pass before all of Mrs Keast’s concerns were resolved. Mr Scragg did not accept the invitations to state Mrs Keast’s position without equivocation.
I realise that minds might differ about all this. However, my conclusion is that a reasonable person in the shoes of the executor would infer from all that happened up to 30 January 1998 that Mrs Keast was willing to perform the original arrangement, but only if and when all of her concerns were resolved to her satisfaction. There was no reason to think that if the executor had fixed a reasonable date for settlement, that Mrs Keast would have been willing to settle. One could anticipate that even if she were to settle she would have wanted the moneys held and the debt to SH not paid, until she was satisfied about the amount of the debt. So, in the end, the scheme of the will still could not proceed, because payment of the debt owed to SH was part of the scheme.
In short, Mrs Keast has persisted in her challenges and objections for about 6 months. She had had a fair opportunity to reconsider. Her challenges to the will and to the adequacy of the provision for her meant that there was no prospect of an early resolution of the disputes. She had done nothing effectual to bring matters to a head. The executor was unable to implement the arrangement contained in clause 3 of the will.
In my opinion a reasonable person would have concluded that Mrs Keast was not willing to perform the arrangement other than on her own terms, and that she was merely seeking to hold the executor to the arrangement as a fail-safe, should all of her attempts to better her position come to nothing.
I have come to the conclusion that Mrs Keast was repudiating the fundamental obligation to make payment within a reasonable time, and to accept a transfer of the relevant number of shares and of the relevant interest in the land. I do not come to this conclusion lightly, because the court would not too readily deny a person in Mrs Keast’s position the opportunity to exercise her rights, but, for the reasons that I have attempted to indicate, it seems to me that Mrs Keast was really saying that she would decide if and when she would perform the arrangement, and that it was up to the executor to clear away any obstacles that Mrs Keast found.

It follows that it was open to the executor to accept that repudiation, terminate the contract with Mrs Keast, and settle with Mr Hill and Mrs Blades.

Procedural matters

I referred earlier to the statutory provisions and rules under which these proceedings came before me. In my opinion the substance of what is before me is a claim by the executor that Mrs Keast has repudiated a contractual obligation. I am not satisfied that a simple claim in contract like this is appropriately raised in proceedings such as these: see Hudson v Gray (1927) 39 CLR 473 at 502 Higgins J, but see also the differing views expressed by other members of the court. But, as I said earlier, all of the parties are before me and no-one objected to me resolving the issue, and so I consider that it is appropriate to do so.
I consider that it is appropriate for the court to declare that Mrs Keast repudiated the contract by 30 January 1998. I express it that way because it is only then, in the light of what her solicitor said and did not say, that I conclude that she repudiated the contract. I consider that the court can and should also declare that the executor accepted that repudiation by the institution of these proceedings. His solicitors said that he would accept the repudiation, and that is what he appears to have done.
If that is the order that should be made, I do not consider it appropriate to make the order sought, which is an order that it was appropriate for the executor to accept the repudiation by Mrs Keast and to perform the contracts with Mr Hill and Mrs Blades. It was this matter that I had in mind when I said earlier that I consider that the parties have not adequately distinguished the different functions of the court. There is, to my mind, some confusion caused by the form of the summons, and its use to resolve what is, in effect, a contractual dispute. If I make the declaration that I propose to make, the contract with Mrs Keast is at an end as a result of an earlier acceptance of the repudiation. It seems to me, although the parties did not direct submissions to the point, that there is no need for me to give the executor directions about the matter, and no point in doing so.
If the executor’s attitude was or is that he will not accept Mrs Keast’s repudiation until authorised or directed by the court to do so, then a further difficulty arises. In that event, the consequence must be that the repudiation has not been accepted unless and until I advise the executor on the course of action that he should follow. It was with that in mind that I asked Mr Evans, near the end of the submissions, what his client’s attitude was. Although the form of the proceedings is, to my mind, ambiguous, as is the executor’s affidavit, my understanding is that the matter has proceeded before me on the basis that the issue is whether or not there has been a repudiation that has already been accepted by the executor, and accordingly I am prepared to approach the matter on that basis. Until I asked the relevant questions of Mr Evans, there was no indication that Mrs Keast had renounced any of her challenges to the will or to the scheme under it. In fact, all of the indications were to the contrary. I therefore consider that there is no injustice in proceeding on the basis on which I propose to proceed.
However, subject to any further submissions, I would be prepared to authorise and direct the executor to proceed with the contracts with Mr Hill and Mrs Blades, subject to being satisfied that they do wish to proceed and that there is agreement between the parties as to the number of shares and interests in land to be transferred. I understand that to be so, but it is a matter that should be put beyond doubt.

Conclusions

Subject to further submissions as to the form of the order, I am prepared to declare that Mrs Keast has repudiated her contract with the executor, that that repudiation was accepted by the executor by the institution of these proceedings, and to declare that the contract between the executor and Mrs Keast has been terminated. I am prepared to advise and direct the executor to complete the contracts with Mr Hill and Mrs Blades. This will, of course, leave Mrs Keast at liberty to pursue her claim for further provision under the will.

[1999] SASC 122

29 March 1999