Kennedy v Hill & Ors No. Scgrg-98-156 Judgment No. S440

KENNEDY V HILL & ORS

[1999] SASC 440

Full Court: Mullighan, Lander & Martin JJ

MULLIGHAN J I agree with the orders proposed by Lander J and with his reasons.
LANDER J: This is an appeal by a beneficiary of an estate against a decision and orders made in this Court on an application made by the trustee of the estate for directions under the Trustee Act and Administration of Probate Act.

Orders Under Appeal

Apart from the orders for costs, which are not relevant, the orders complained of are:
“The Court declares and orders:
1.That the contract made by exchange of letters made by the plaintiff, Robert Michael Kennedy and the defendant Suzanne Margaret Keast entered into on or about 4 September 1997 for the sale and purchase of an interest in land and shares, was terminated on 30 January 1998 by the institution of these proceedings.
2.That the plaintiff, Robert Michael Kennedy proceed to settlement with contracts made by an exchange of letters between the plaintiff, Robert Michael Kennedy and the defendants, Brenton Scott Hill and Wendy Joylene Blades and entered into respectively on about 11 August 1997 and 13 August 1997 for the sale and purchase of an interest in shares and land.”
By way of explanation the contract referred to in paragraph 1 of the Judge’s orders was both during the trial and on appeal called ‘the Keast Contract’.

Procedure Adopted

The first respondent is the plaintiff in these proceedings. He is a practising Chartered Accountant and the sole executor and trustee of the last Will and testament Thelma Joyce Hill, whose Will was executed on 15 February 1995. Mrs Hill (the deceased) died on 7 June 1997 and probate of her Will was granted to the first respondent on 11 August 1997.
The appellant is a daughter of the deceased. The second respondent is a son of the deceased and a third respondent, another daughter of the deceased.
The proceedings between the parties are somewhat unusual. The plaintiff brought an application in which he named the three children of the deceased as defendants seeking orders in the following terms:
“1..... An order that it is appropriate for the plaintiff to take the following actions in performing his obligations as executor and trustee of the Will of Thelma Joyce Hill executed 15 February 1995 (“the Will”):
1.1Accept the repudiation by Suzanne Margaret Keast of her contract with the plaintiff to purchase shares in Sidney Harrison Pty Ltd and land occupied and tenanted by or leased to Sidney Harrison Pty Ltd from the estate of Thelma Joyce Hill in accordance with clause 3 of the Will; and
1.2Settle Brenton Scott Hill and Wendy Joylene Blades contracts with the plaintiff to purchase shares in Sidney Harrison Pty Ltd and land occupied and tenanted by or leased to Sidney Harrison Pty Ltd from the Estate of Thelma Joyce Hill in accordance with clause of 3 of the Will.”
The originating proceedings which were instituted on 30 January 1998 were brought pursuant to ss59B, 90 and or 91 of the Trustee Act, 1936 and or s69 of the Administration and Probate Act, 1919 and or Rules 63.04 and or 103.02 of the Supreme Court Rules.
The procedure is quite important in this case because as can be seen from the orders appealed against the Trial Judge held that the contract referred to in paragraph 1 of his order was terminated on 30 January 1998 by the institution of these proceedings.
Section 59B of the Trustee Act confers jurisdiction upon this Court to authorise a trustee to do or abstain from doing any act or thing which if done or omitted to be done by a trustee without that authorisation or the consent of the beneficiaries would be a breach of trust. This Court is then given specific powers.
Section 90 of that Act is a procedural enabling section.
Neither section is appropriate for the purpose of the determination of the two issues raised in this matter.
Section 69 of the Administration of Probate Act 1919 allows an executor or trustee “when in difficulty or doubt” to apply to a judge for advice or direction as to matters connected with the administration of any estate or the construction of any will, deed or document.
The section allows for an application to be made ex parte or inter partes. Section 69(4) provides:
“A Judge may, upon the hearing of an application under this section, make any order, declaratory or otherwise, that he sees fit as to the administration of the estate or the construction of the will, deed, or document, which is the subject of the application, and also as to the cost of the application.”
The section further provides that any order made ex parte shall have the same effect in so far as it protects the trustee as if the same had been made in an inter partes action. Rule 63.04 of the Supreme Court Rules allows executors and other parties under a trust to take out a summons for the determination of any question relating to such an estate or trust and the declaration of rights of persons interested.
The rule is complimentary to the right given to a trustee under s69 of the Administration of Probate Act: Re Mallen, Executor Trustee and Agency Company of South Australia Limited v [1929] SASR 154.
Rule 103.02 also allows proceedings to be brought by an executor for any relief which could be granted in administration proceedings and for the determination of any question in that class of proceedings.
Administration proceedings are a vehicle to obtain a decision “affecting the administration of an estate or a trust would previously have been necessary to have a decree or judgment for the administration of the estate or execution of the trust”: Re Davies; Davies v Davies (1888) 38 Ch D 210 at 212.
The purpose of r103.02 is to allow a party to obtain in a summary way determinations of questions which would otherwise have required a decree or judgment in the administration of the estate or the execution of the trust.
The proceedings, however, are limited to disputes which were capable of decision in administrative actions. The rule cannot be used for proceedings which would otherwise not have formed part of an administration action.
In my opinion, the dispute which the first respondent brought before the Court was not a dispute of the kind which would have been subject to an administration action. It was an ordinary contractual dispute in which one party happened to be the trustee of an estate. Pursuant to s69 of the Administration of Probate Act the trustee might have been entitled to obtain protection in relation to a course of conduct but the procedure adopted, in my opinion, was not appropriate for the resolution of the determination of issues between two parties. The order made by the Judge includes in effect a declaration that the Keast Contract was terminated on 30 January 1998. The second order provides a direction and, I suppose, personal protection for the first respondent in relation to a future course of action.
The first respondent did not seek a declaration. The first respondent sought an order “that it is appropriate” for him to accept the repudiation by the appellant of her contract with the plaintiff. I do not think that the procedure adopted was appropriate. The respondent was entitled to accept the appellant’s repudiation and then seek a declaration from the Court. It was not appropriate to seek a direction as to whether or not he should accept a repudiation and at the same time argue he had.
The appellant was not put on notice by way of pleadings; as such, no issues were identified between the parties. The only attempt to identify issues was in the originating proceedings. Indeed the first respondent did not seek the orders which were made. The first order is a declaration which is in terms quite different to the direction sought. The matter proceeded without discovery and without any other interlocutory process.

The Deceased’s Assets And The Terms Of Her Will

At the time of her death, the deceased held shares in Sidney Harrison Pty Ltd (“the Company”). The deceased beneficially owned 77.5 per cent of the shares of the Company. She held the remaining 22.5 per cent of the shares on trust for the second and third respondents. The second respondent was beneficially entitled to 8.5 per cent of the shares and the third respondent 14 per cent.
The deceased died possessed of land situated at 173 Port Road, Queenstown (the Queenstown land) which was, at the time of her death, leased to the Company. The deceased was also beneficially entitled to 77.5 per cent of the Queenstown land. Her two children, the second and third respondents, were beneficially entitled to the remaining 22.5 per cent of the land in the same proportions as their shareholdings in the Company.
At her death the deceased was indebted to the Company in the sum of $234,552. During the relevant period it was incorrectly claimed by the first respondent that the deceased was indebted to the Company in the sum of $254,952. The lesser sum was fixed after an inquiry by an independent chartered accountant. The Company had made an error in its records and failed to credit a payment of $20,000 to the Company by the deceased. The independent assessment of the deceased’s indebtedness to the company was carried out and on 15 April 1998 Mr Don Shammall, chartered accountant of KPMG reported to the Court that the debt was overstated by $20,000.
In his report, he said:
“I received a facsimile transmission from Mr R M Kennedy on 14 April 1998 advising me that as a result of an accounting error, Mrs Hill’s loan account with the company should be reduced (credited) by $20,000 and Mr Brenton Hill’s loan account should be debited by $20,000. I attach a copy of the letter to this report.”
On 8 April 1998, the first respondent had written to Mr Hill in the following terms:
“I advised that an inadvertent error has been made in the accounting entries in the books of the company in the year ended 30 June 1995. The advance made by you to enable your mother to repay the Horne loan account was inadvertently credited to your loan account instead of to Mrs Hill’s loan account. As a result, Mrs Hill’s loan account should be reduced by $20,000.”
It is not clear when it was that the first respondent first became aware of that accounting error. It is the case, however, that the independent assessment of the debt arrived at the conclusion upon the evidence produced by the first respondent.
By the terms of her Will, the deceased bequeathed one undivided third part in respect of all of her shares in the Company and all debts due to her by the Company at the date of her death and her interest in the Queenstown land to each of the second and third respondents absolutely.
The remaining one-third, she bequeathed to a solicitor to hold as trustee upon trust for the appellant, Susan Keast for her life with remainder to any children of the appellant.
The Will provided that the appellant could request the trustee to sell her one-third interest held on her behalf and if such a sale was effected then the trustee was to stand possessed of the cash on behalf of the appellant absolutely.
It was a condition of the Will that, if the appellant requested the trustee to sell the one-third interest, the trustee would first have to give the second and third respondents the option of purchasing that interest and, if both of them accepted that offer they would be entitled to take up that one-third interest between them as tenants-in-common or, if only one of them decided to purchase that interest, that child could purchase an interest for himself or herself.
The intention of the Will was clear enough. It was the deceased’s intention to divide her estate in equal parts between her three children. Her intention however was to preclude the appellant from becoming absolutely entitled to any shares in the Company or the Queenstown land upon which the Company conducted its business, except as the beneficiary of a life interest held by the trustee on her behalf.
The deceased however provided that the appellant could become absolutely entitled to the cash proceeds of the sale of that one-third interest provided that one third interest was first offered to the deceased’s other children.
The Company was not indebted to the deceased at the time of her death so that this part of her estate comprised her shares in the Company and the Queenstown land.
A separate provision was made in the deceased’s Will in respect of any moneys due by the deceased to the Company. Any debt was to be paid in the following manner:
“...my trustee shall sell such proportion of my shares in Sidney Harrison Pty Ltd (‘the shares’) and my interest in the land situated at 173 Port Road Queenstown in the said State and in any other land which may be occupied or tenanted by or leased to Sidney Harrison Pty Ltd (‘the said land’) respectively as shall accord with the following fraction;
D
T
where
D = the debt; and
T = the total value of the shares and the said land as at the date of my death as shall be determined by my trustee.”
It can be seen from that provision that the shares and the land upon which the Company conducted its business were to be sold to satisfy any debt owed by the deceased to the Company.
There being such a debt it meant that if that debt was repaid the one-third provision to each of the children would be reduced by as much as was necessary to repay the debt to the Company.
The Will further provided for the sale of the shares and the land in the following manner:
“AND I FURTHER DIRECT my trustees 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 and if one or more of them accept the offer he, she or they shall be entitled to take up 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.”
The deceased’s intention therefore was to provide for the sale of her shares and land to satisfy her debt by offering those shares and the land in the relevant proportions to each of her children.
It can be seen that in so far as the satisfaction of the debt was concerned, if any of the three children accepted the trustee’s offer that child or if more than one, those children, would become absolutely entitled to the shares and the interest in the Queenstown land. In the case of the second and third respondents it makes no difference. They were to become absolutely entitled to the deceased’s shares in the company and interest in the Queenstown land in any event because the deceased left them each one third of her interest in those shares and land. But the position is different with the appellant. She was not otherwise to receive any absolute interest in the shares or land. She was only to receive a life interest which could be converted into cash in the manner provided. She therefore stood in a different position to her siblings in respect of this clause of the Will. It was only by this clause that she could take a direct and absolute interest in the shares of the company and an interest in the Queenstown land upon which the company conducted its business.

The Correspondence

In a letter dated 27 July 1997 the appellant’s solicitor wrote to the first respondent advising of his instructions to act. The letter is undoubtedly incorrectly dated. It must have been written on 27 June 1997 because it was replied to on 2 July 1997. He advised the first respondent that he was aware of the provisions of the Will and that no offer had been then made pursuant to clause 3 of that Will.
In that letter the appellant’s solicitor advised that he had seen a statement, prepared by the first respondent, of the debt said to be owed by the deceased to the Company and that his client disputed the amount of that debt. At that stage the first respondent had asserted that the deceased was indebted to the Company in the amount of $254,552.
The appellant’s solicitor sought production of ledgers and other documents which would permit a more detailed assessment of the debt to be calculated.
A number of other matters were raised in the letter including a claim that the assets of the company had been undervalued.
The letter continues:
“I am concerned that the terms of the Will appear to be oppressive. It seems that an attempt is being made to drastically discount the value of the shares, and then prevent the beneficiaries claiming a fair prorate (sic) share of those shares (in the case of my client a 1/3 interest), by imposing a requirement before they can gain that entitlement that they are obliged to repay to Sydney Harrison Pty Ltd any moneys allegedly owed by Mrs Hill deceased at the time of her death. Why has the requirement to repay the money been imposed before the entitlement to have a share of assets is given? It seems to me that this is a scheme designed to radically discount that value of the company and give my client’s brother, Brenton Hill, the option to purchase at that discount, because he would be the only person with the financial capacity to do so. Is that so?
Finally, I am instructed that there are American interest (sic) who are prepared to purchase the company for in the region of $2.6 million. Has that offer been considered in arriving at the values at question? If so, could you explain how, and if not, why not?
Please note that my client holds very grave reservations about what is being done in respect of her mothers (sic) estate. She believes that an elaborate scheme has been concocted to exclude her from her fair entitlement of her mothers (sic) estate. It is likely that my client will be commencing her own proceedings to challenge the will under the appropriate legislation.”
There are a number of matters raised in that part of the letter to which I have referred. I think it can be said that the letter identifies a number of misconceptions on the part of the appellant or her adviser in relation to the appellant’s entitlement under any testamentary disposition by her mother. The letter also confuses, in my opinion, the executor and trustee’s identity with that of the Company.
There may be a reason for the latter confusion. Not only is the first respondent a chartered accountant but he also provides accounting and secretarial services to the Company. In that respect he has a dual role. He would have to act in the best interests of the estate as executor and trustee of that estate. He also owed professional duties to the Company which was the significant asset in the estate.
It is not suggested that the first respondent has confused his responsibilities but I mention the conflicts, which confronted the first respondent, because those conflicts appear to have confused the appellant.
I cannot understand why the appellant would complain to the first respondent as executor and trustee about the terms of the Will. The executor, of course, is not responsible for the terms of the Will. The executor is responsible for carrying out the terms of the Will and administering the trusts in the Will.
The first respondent as executor and trustee had a responsibility, of course, to bring in the assets of the estate and deal with them in accordance with the terms of the Will. In doing so the first respondent had an obligation to obtain a valuation of those assets so that he could apply his mind to the provisions of clause 3 of the Will. In so far as there is a complaint about the value of the company I suppose that could be made to the first respondent.

If the appellant believes that the terms of the Will are oppressive then she could exercise whatever rights are available to her including those rights given to her by the Inheritance (Family Provisions) Act 1972.
Apart from giving notice to the first respondent that she might exercise those rights it seems to me pointless to complain to the first respondent in the manner in which her solicitors did.
There is no doubt that there must have been tensions in the family prior to the death of the deceased. Clearly the deceased was concerned to ensure that the appellant was not put in the position whereby she could influence or take part in the carrying on of the business. There were clearly enough tensions between the appellant and the second and third respondents who in fact played a part in the business.
Since the death of her mother the appellant has failed to understand the respective roles of the parties. She has failed to understand that the executor and trustee of her mother’s estate is not responsible for the terms of the Will. That is a matter for which her late mother has responsibility. She has failed to understand the limited role which the executor and trustee has in the administration of the estate.
She has failed to exercise the rights which have been available to her under the law and under the Inheritance (Family Provisions) Act 1972. She has attempted to exercise rights not available to her.
In a sense she has been obstructive in relation to the administration of the estate without in any way attempting to be constructive.
Her attitude has been unhelpful.
In any event the first respondent’s solicitor replied to that letter on 2 July 1997.
The first respondent’s solicitors advised the appellant’s solicitor that the first respondent was responsible to the Company for the debt owed by the deceased. The first respondent noted that the amount was disputed and sought particulars of the basis of the dispute. He advised that he was not in possession of the ledgers and other documents of the Company and that the appellant’s solicitor ought to take up his request with the Company. He provided the appellant’s solicitor with an independent valuation of the Company and the Queenstown land, prepared by Price Waterhouse dated 6 June 1997. The first respondent’s solicitors denied that any of the terms of the Will were oppressive and claimed that that statement had been made without any basis. The first respondent sought “the basis upon which you make this assertion”.
He also denied that there was any form of conspiracy to financially injure or prejudice the appellant and he sought provision of details of the form of the conspiracy or “elaborate scheme” and particulars of the persons who were involved and the details by which the scheme or conspiracy was or is to be implemented. He denied that he was involved in any such scheme or conspiracy.
The first respondent’s reply is, in a sense, rather an overreaction to the allegations made in the appellant’s solicitors of 27 June 1997.
As I have remarked the appellant indicated by her solicitor’s letter that she misunderstood the respective roles of the particular parties. The allegations made by her solicitors are wide ranging and unaccompanied by any particulars.
However, that did not, in my opinion, mean that the first respondent needed to respond in the way that he did.
The first respondent is the executor and trustee of the estate of the deceased. He is not in a position of an adversary to any of the beneficiaries of the estate. The beneficiaries may between themselves take adversarial positions. It is not, however, a position that the executor or trustee needed to take. In my opinion the response of 2 July 1997 was an over reaction to the claims made by the appellant’s solicitor. The first respondent needed only to wait upon any action by the appellant either at law or under the Inheritance (Family Provisions) Act 1972 or if no such action was taken then to deal with the estate in accordance with the terms of the Will.
On 6 August 1997 within the two month period provided for in the deceased’s Will, the first respondent wrote to each of the deceased’s three children in the same terms:
“OFFER FOR SHARES AND PROPERTY
As you are aware, I am nominated as the executor and trustee of the Estate of Thelma Joyce Hill in her will dated 15 February 1995.
I am instructed under the will to offer for sale a portion of her shares in Sidney Harrison Pty Ltd owned by the deceased and also her interest in the land at 173 Port Road Queenstown South Australia.
As at the date of death, the deceased owed to Sidney Harrison Pty Ltd an amount of $246,939. The terms of the will state that I am required to raise funds sufficient to extinguish this debt from the sale of shares and land. The terms of the will provide that I am to offer in the first instance to each of Mrs Hill’s children shares in the company and interest in the land to raise these funds. If more than one of you and your brother and sister accept my offer, the shares and interest in the land are offered on a pro rata basis. Accordingly, you are offered a portion of land and shares to the value of $246,939. This offer and any resulting contract is subject to me being granted probate of the Estate.
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 pro rata basis if applicable.
An application for probate has been lodged at the Supreme Court of South Australia and I anticipate receiving the grant of probate within the next 3 weeks.
Should you wish to partake in this offer, under the terms of the will of the deceased you must notify me within one month of the date of this letter if you accept the offer.
If you have any queries, please do not hesitate to contact me.
I look forward to hearing from you.
Kind regards
Yours sincerely”
On 11 August 1997, the second respondent replied accepting the offer and on 13 August 1997, the third respondent also wrote accepting that offer.
On 15 August 1997, the appellant’s solicitor, Mr Scragg, wrote on behalf of the appellant in the following terms:
“RE: THELMA JOYCE HILL - (deceased)
As you are aware I act for Mrs S M Keast. I am concerned that your letter of 6th August was not forwarded direct to me.
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 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.
Yours faithfully
PETER SCRAGG”
On 20 August 1997, the first respondent’s solicitors replied by letter to the appellant’s solicitors denying any ambiguity in the letter of 6 August and denying the accuracy of the third paragraph of Mr Scragg’s letter. The first respondent’s solicitor’s letter noted that the appellant continued to fail to particularise the basis of the dispute in relation to the debt. They sought a clarification as to what was meant “by your client ‘excepts’ the offer”.
That letter was apparently not replied to because on 2 September 1997, the first respondent’s solicitor wrote to Mr Scragg:
“Estate Thelma Joyce Hill
We refer to our letter of 20 August 1997. We have not yet received a response.
Under the terms of the Will you (sic) client has the right at any time within one calendar month of 6 August 1997 to accept in writing the offer contained in our client’s letter of 6 August 1997.
Your letter of 15 August 1997 to our client is unclear in two respects:
1.... Your client continues to dispute the amount of the debt owed to Sydney Harrison Pty Ltd but fails to particularise the basis of that dispute; and
2.We do not know what you mean by your client ‘excepts the offer’.
Our client takes the view that under the terms of the Will for any party’s acceptance to be valid and effective it must be clear and unconditional. Our client does not consider that your letter of 15 August 1997 constitutes an unconditional and clear acceptance. Please can you clarify as a matter of urgency the two points raised above. If your client fails to do so our client gives notice that he will not treat your letter of 15 August 1997 as an acceptance of the offer for the purposes of the Will.
Yours faithfully
PIPER ALDERMAN”
That brought a further reply from Mr Scragg on 4 September 1997 which was in the following terms:
“RE ESTATE OF THELMA JOYCE HILL
We refer to the above matter and to you (sic) letter of 2nd September 1997.
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 estate. My client also disputes that her late mother owed the amount that is claimed that she owed to Sydney 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.
I await your reply.
Yours faithfully
PETER SCRAGG”
There does not seem to have been any reply to that letter. Particularly, there was no suggestion by the first respondent that there had not been an acceptance of his offer made on 6 August 1997. The Trial Judge found that the first respondent treated that letter as an acceptance of his offer. He rejected an argument from the second and third respondent that, because of the terms of the letter, there was never any valid acceptance. In that respect his Honour was, in my view, right. The letter of 4 September constituted an acceptance of the offer contained in the letter of 6 August and therefore the appellant had complied in so far as she was required with Clause 3 of the Will.
It is that contract, which the parties subsequently refer to as the Keast Contract, which was the subject matter of the proceedings before the Trial Judge. The first respondent asserted that the appellant repudiated that agreement and that the repudiation was evidenced by a letter of 28 November 1997 from the appellant’s solicitor to the first respondent’s solicitor. The first respondent does not seem to have asserted that there was any other repudiatory act.
The appellant, on the other hand, denied that she had repudiated that agreement either in the letter of 28 November 1997 or at all.

The Questions At Trial

There were two principal questions to be decided in this matter. First had the appellant repudiated the Keast Contract. Secondly, in the event that she had, had the first respondent accepted that repudiation.
Because of the way in which the proceedings were formulated, if the answers to the two principal questions were in the affirmative a subsidiary question needed to be addressed and that was whether the first respondent was then entitled to proceed to settle contracts with the second and third respondents.
In the circumstances of this case the first question required a consideration of the appellant’s conduct to determine whether that contract amounted to a repudiation. The appellant was never called upon to perform the Keast Contract. The first respondent did not seek payment pursuant to clause 3 of the Will.

The Keast Contract

The Keast Contract came into being with the appellant’s acceptance in her solicitor’s letter of 4 September. Strictly payment was due within one month. However, the first respondent did not identify the number of shares and particular interests in land to the appellant at any time, except in an alternative proposal put in a letter of 23 October 1997, to which I will refer. It could not be said, and indeed no party maintained, that the appellant was in default of the Keast Contract by failing to make payment within one month.
If she was in default it was because by her conduct she manifested an unwillingness to perform the contract so as to allow it to be said that she was in anticipatory breach of the contract and had repudiated it. If, by her conduct, she had repudiated the contract then the first respondent was entitled to accept the repudiation and treat the contract as terminated. The first respondent was not obliged, if the appellant had manifested an intention to repudiate the contract, to actually call for payment pursuant to clause 3 of the Will.

The Legal Principles

If the appellant had repudiated the contract and the first respondent had accepted the repudiation that was the end of the matter and the appellant would not thereafter have been entitled to insist on the first respondent’s performance, even if she later said she was ready and willing to perform her part of the bargain: Ogle v Comboyuro Investments Pty Ltd (1976) 136 CLR 444 at 451.
The contract is terminated by acceptance of the repudiation otherwise it remains in existence and for the benefit of both parties: Foran v Wight (1989) 168 CLR 385 at 395.
In this case the appellant never claimed that she would not make payment in accordance with the Keast Contract. However, the first respondent submitted that the appellant’s conduct was such that the appellant had evinced an intention to repudiate the contract. That gave rise to the first issue whether she had repudiated. If she had then the second issue was whether the respondent had accepted the repudiation. If he had not the contract remained on foot for the benefit of both the appellant and the first respondent.
The first issue required an objective assessment of the appellant’s conduct. A party who professes to intend to perform a contract may still conduct himself or herself in such a way that it may be objectively determined that the party has repudiated that party’s obligations.
Indeed the party may intend to perform the contract but insist on a construction of the contract which shows an intention not to perform the contract according to its terms: DTR Nominees Proprietary Limited v Mona Homes Proprietary Limited (1978) 138 CLR 423.
It is a question of fact whether a party has evinced an intention not to be bound.
A party may claim that he or she intends to perform the contract but only upon such terms or conditions as demonstrate that he or she is not intending to perform the contract as to its true terms at all. That may be manifested by the party indicating a belief in the construction of the contract or terms in the contract which shows that the party will not perform the contract according to its true terms.
However, a court must be careful to ensure that the party is irresolute about that party’s wrong interpretation and not simply putting forward an argument which the party would abandon in order to perform the contract according to its terms.
In Laurinda Pty Ltd v Capalaba Park Shopping Centre Pty Ltd (1989) 166 CLR 623 at 648 Brennan J formulated the test thus:
“The question whether an inference of repudiation should be drawn merely from continued failure to perform requires an evaluation of the delay from the standpoint of the innocent party. 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? Different minds may easily arrive at different answers.”
That was the question which needed to be answered to determine the first issue.
The second issue only arose if the first question was answered affirmatively and if it were it was merely a question of fact. Had the first respondent accepted the appellant’s repudiation?

The Letter Of 23 October 1997

On 23 October 1997 Mr Kennedy wrote to Mr Scragg answering a number of the matters raised in Mr Scragg’s letter of 15 July 1997. On the same day, the first respondent wrote directly to the appellant, at the same time sending a copy of the letter to Mr Scragg, providing valuation information in relation to the real estate and the shares.
Mr Kennedy advised the appellant that the deceased was indebted to the company in her loan account in the sum of $254,552. He set out details of the amount of that loan which he said had been provided in response to Mr Scragg’s request.
He indicated that repayment of that loan would require the sale of assets in accordance with clause 3 of the Will which would trigger capital gains tax “which could otherwise be avoided”.
In that letter he suggested that the deceased’s three children could enter into a transaction as between themselves which would avoid payment of capital gains tax. The proposal would have advantaged each of the three children by the amount of $4198 or, in total, $12594 in an asset sale of about $740000. The proposal was to sell other land and other shares and use the proceeds of that sale to satisfy the debt owed by the deceased to the Company.
The proposal in Mr Kennedy’s letter is extraordinarily complicated and, with respect, not well explained. It is not easy to understand from the proposal how the appellant’s position is in any way different except that it is suggested she will save something in the order of $4,198 in capital gains tax.
Having regard to the tensions which were evident in the family it was unwise and an error of judgment on the part of the first respondent in putting forward the proposal of 23 October 1997.
The first respondent’s position was to act in accordance with the Will. With the benefit of hindsight the proposal of 23 October 1997 was always only ever going to complicate matters.
In the end the proposal only served to heighten the tension between the parties.
It would have been better if the first respondent had simply made the offer pursuant to clause 3 of the Will and required the appellant to address the offer directly.
If the appellant had not then tendered payment in accordance with that clause the first respondent could have treated that as a repudiation and elected to accept that repudiation if he thought an acceptance was appropriate.
Instead he adopted a procedure which, in my opinion, was inappropriate.
I believe that the procedure which was adopted by the first respondent gave rise to the disagreement which finally culminated in Mr Scragg’s letter of 28 November 1997.
Clause 3 of the Will provided that if any of the children accepted the trustee’s offer pursuant to that clause then payment had to be made within one calendar month of the date of acceptance of the offer.
The learned Judge did not treat the letter of 23 October 1997 as being a call for payment pursuant to clause 3. In my opinion that is clearly correct. The letter of 23 October 1997 not only does not call for payment pursuant to clause 3 but it suggests that the parties may wish to enter into a separate arrangement apart from the provisions of clause 3.
I agree with the Judge that as at 23 October 1997 the trustee had made no call for payment in accordance with clause 3.
On 13 November 1997, Mr Kennedy wrote to Mr Scragg enclosing transfer documents and a Deed of Family Arrangement to effect the sale of Mr Scragg’s client’s interests in the estate. The letter states that “Mrs Keast has requested that the documents of transfer and the deed of family arrangement to effect the sale of the interest in the above estate to her be forwarded to you, as you will arrange for the execution of these documents.”

That statement and the enclosures with the letter suggest that there had been communications directly between the first respondent and the appellant.
Neither the first respondent nor the appellant have deposed to any communications between themselves at any time, but particularly during this period. Neither was called either for examination or cross examination.
Whether there was a conversation and its terms can only be inferred from the correspondence.
One would have thought, however, that if the appellant had unequivocally agreed in a conversation with the first respondent to the proposals in the letter of 23 October 1997 the first respondent would have said so. Because he has not, I am not prepared to draw that inference.
The Deed of Family Arrangement acknowledged a debt by the deceased to the company of $254,552.
It was proposed in the Deed that it would be executed by the appellant’s trustee under the Will, Mr McGovern, a solicitor. It is not clear to me why Mr McGovern was to play any part in the proposed Deed of Family Arrangement.
As I have already observed the provisions of clause 3 allowed for the sale of shares in the company and interests in the Queenstown land directly to the appellant and were not subject to the trusts in the remainder of the Will.

Conversation Of 26 November 1997

In any event, on 26 November 1997, Mr Scragg spoke to Mr Davis, the first respondent’s solicitor, about the proposal.
Both Mr Scragg and Mr Davis gave evidence of the conversation. They each filed affidavits deposing to the conversation. They were both called, examined and cross examined. The Judge preferred the evidence of the first respondent’s solicitor, Mr Davis, and found that that solicitor was told by Mr Scragg that Mrs Keast had pulled out of the present arrangements. He found that the first respondent’s solicitor inquired of Mr Scragg, the present position.
The Judge observed that such a statement was, in the circumstances, somewhat ambiguous. I agree. The letters of 6 August and 4 September 1997 constituted an offer and an acceptance. The proposal in the letter of 23 October 1997 differs from the agreement contained in those two letters. It is not clear whether Mr Davies was told that the appellant had pulled out of the arrangements contained in the offer and acceptance in those letters or the further proposal in the letter of 23 October 1997. That further proposal had been reduced to writing in the proposed Deed of Arrangement accompanying the letter of 13 November.
There was a further topic discussed in that conversation. The Judge found that the first respondent’s solicitor was told by Mr Scragg that whilst his client had not pulled out, instead of going through the current process she wanted to be bought out entirely by her siblings for in the order of $500,000.
The Judge found that Mr Scragg did not confirm that his client wished to proceed with the original arrangement.
In the end result, I do not think the disagreement as to what was said is very important. In any event I accept the Judge’s findings in relation to that conversation.
The important aspect of the conversation is that there was no suggestion by either solicitor that the proposal, put by Mr Scragg to be bought out, meant that his client thereby withdrew the acceptance which had been contained in his letter of 4 September 1997.
The learned Judge made no finding in respect of this. Particularly he made no finding that the appellant ever sought to withdraw her acceptance contained in her solicitor’s letter of 4 September 1997. In that respect, I agree. The evidence does not support a finding that the appellant ever withdrew or purported to withdraw the acceptance contained in that letter.
At the end of the conversation, it was expected by both solicitors that Mr Scragg would write to Mr Davis putting a proposal on behalf of his client.

The Letter Of 28 November 1997

On 28 November 1997, Mr Scragg did write to Mr Davis and, in that letter advised that his client would not accept the proposal made by the first respondent to avoid capital gains tax because she believed “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”.
In my view, the terms of the letter indicate the meaning of Mr Scragg’s statement in the telephone conversation of 26 November 1997. I think it is clear from his letter that he was indicating that his client would not agree to the first respondent’s proposal of 23 October 1997 and the Deed which had accompanied the letter of 13 November 1997.
He wrote:
“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”.
Although the letter is not clear, I think that Mr Scragg is there referring to the fact that his client did not become entitled absolutely to one third interest in the shares and land but only by way of life interest.
He wrote:
“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.”
The letter then concluded:
“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 be resolved then I am instructed to institute proceedings”.
The letter again indicates a degree of confusion on the part of the appellant. The first respondent was the executor and trustee of the Will of the deceased. He was not responsible for the terms of the Will. He could not place, or indeed remove, any ‘fetter’ on the appellant’s entitlement.

The Two Letters Of 24 December 1997

The first respondent’s duty was to get in the assets, pay the debts and distribute the balance in accordance with the terms of the Will. He was not responsible for any arrangements that the deceased may have entered into prior to her death nor for the terms of the Will. More particularly, he was not the alter ego of the company. The company was a separate entity. The appellant seems to have taken the position that the executor was responsible for the circumstances to which I have referred. If, in fact, the appellant had any disagreement it was probably more with her siblings rather than the executor.
The first respondent did not reply to that letter. Apparently, although it is not explained how, the second and third respondents became acquainted with the terms of that letter. Their solicitors, Montgomery & Co wrote to Mr Scragg on 24 December 1997.
They wrote inter alia:
“We have been handed a copy of your letter to Piper Alderman dated 28 November 1997 wherein you have stated that your client is prepared to sell her entitlement for one third of $2M less a pro rata share of any proper indebtedness owed to any third party institutional lender.
We do not agree with your assertion that your client is entitled to a one-third interest in Sidney Harrison Pty Ltd. We have perused the Will and are of the opinion that the bequest in favour of your client amounts to one third of the business assets as defined in the Will after payment of the indebtedness of the deceased to the company.
However, having stated the above, we inform that our clients have instructed us to accept the offer as formulated in your letter, namely that our clients will purchase from your client her bequest as set out in Clause 4(c) of the Will on the basis that price payable is to be the sum of one third of $2 million less a pro rata share of any proper indebtedness owed to any third party institutional lender”.
The letter then set out some calculations and offered to pay the appellant the sum of $258,696.34 upon the appellant releasing the second and third respondents from any claim in respect of her bequest.
The letter concluded:
“In order to effect the above we consider it necessary that a Deed be entered by each of our respective clients, Mr McGovern and Mr Kennedy whereby the contract be confirmed and whereby your client release or clients and the estate from her claim in respect of the bequest upon payment of the said sum.
We shall now attend to the drafting of the Deed and forward the same to you in the New Year.”
The first respondent’s solicitors also wrote to the appellant’s solicitor on 24 December 1997 in the following terms:
“Our client has been advised that Mrs Keast’s offer has been accepted by the other two beneficiaries of the estate. 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.”
The letter of 28 November 1997 was, of course, written to the first respondent’s solicitor seeking to sell the whole of the appellant’s interest in her mother’s estate for the price mentioned. It is not easy, I must say, to understand how it could be said that that letter amounted to a repudiation in the terms mentioned by the first respondent’s solicitors.
If the first respondent believed that the letter of 28 November 1997 amounted to a repudiation why was it that he did not say so until the other beneficiaries had purportedly accepted the offer which was the act of repudiation? The timing of his claim of an act of repudiation rather suggests that he had had some contact with the other beneficiaries and that he acted in concert with them. That is confirmed by a letter of 15 January 1998 to which I will shortly refer.
If it was a repudiation by the appellant, why was the acceptance by the second and third respondents of the offer in the letter of 28 November 1997 not also a repudiation by the second and third respondents of their contracts and why did the first respondent not claim so?
If the letter of 28 November 1997 and Montgomery & Co’s reply of 24 December 1997 amounted to an agreement then the three beneficiaries had apparently come to an agreement which differed from the terms of the Will. In that respect they all evinced an intention not to be bound by the terms of the Will.
It was no more a repudiation by the appellant than it was a repudiation by the second and third respondents.
Whether the letter of 28 November 1997 amounted to an act of repudiation or not one thing is clear. That repudiation was not accepted by the first respondent by 24 December 1997. Whilst the letter of 24 December 1997 claims that there has been repudiation the letter does not indicate an acceptance of that repudiation by the first respondent.

The Correspondence in January 1998

On 12 January 1998, Mr Scragg wrote again to the first respondent’s solicitor this time seeking information about the company. Apparently he again assumed that the first respondent’s solicitors acted for the Company.
On 14 January 1998, Mr Scragg wrote to the respondents’ solicitors advising them that any suggestion of a repudiation was rejected.
On 15 January 1998, the first respondent’s solicitor wrote to the Mr Scragg in the following terms:
“Estate of Thelma Joyce Hill
We refer to your letter of 12 January 1998. If your client seeks information in relation to the affairs or finances of Sidney Harrison Pty Ltd those enquiries should be directed to the company. They are not a matter with which our client can deal as the executor of Mrs Hill’s estate.
In relation to the estate, our client considers that he cannot allow matters to continue in their presently unresolved state.
Pursuant to the terms of the Will our client made an offer to all beneficiaries by letter dated 6 August 1997 offering for sale a pro rata proportion of shares in Sidney Harrison Pty Ltd and the land at Port Road owned by Mrs Hill. The moneys raised by way of that sale are to be used by the executor to repay to Sidney Harrison Pty Ltd the sum of $254,552.00 owed to it by Mrs Hill.
By letter dated 15 August 1997, whilst disputing the quantum of the debt owed to Sidney Harrison Pty Ltd by Mrs Hill, your client accepted the offer made by the executor in his letter of 6 August 1997. The executor considers a valid and binding contract then formed between him and your client (‘the Keast contract’).
The other two persons to whom the same offer was made (Messrs Hill and Blades) also accepted. Again, the executor considers valid and binding contracts then formed between him and Mr Hill and Mrs Blades (‘the Hill and Blades contracts’).
By letter dated 28 November 1997, you informed us that your client was ‘not prepared to enter into the present convoluted arrangement to identify and finance her purchase of shares in the funeral company.’. That letter went on to set out a proposal by which your client would sell her entitlement in the company. That proposal was not something with which the executor could deal. He conveyed it to the other two beneficiaries. The executor is aware that those two beneficiaries accepted that proposal by letter dated 24 December 1997. It appears to the executor that a valid and binding contract then formed between your client and Mr Hill and Mrs Blades (‘the Buy Out contract’).
In our letter to you of 24 December 1997 we noted the terms of your letter of 28 November 1997 indicated a repudiation by your client of the Keast contract. Whilst noting that your letter indicated a repudiation it is not a repudiation which has yet been accepted by our client.
If it is the wish of all beneficiaries that the executor accept your client’s repudiation of the Keast contract and that the Buy Out contract be performed then the executor has instructed that he will do so. He has instructed, however, that he will only do so if the Buy Out contract is settled within 14 days of todays (sic) date.
If the Buy Out contract is not performed within 14 days of todays (sic) date the executor has instructed that he will accept your client’s repudiation of the Keast contract and terminate it. He will then, after the expiration of a further 7 days, perform the Hill and Blades contracts subject to your client taking any action in the intervening 7 day period to prevent him from doing so.
Yours faithfully
PIPER ALDERMAN
Per:
Glenn Davis”
The first paragraph of that letter deals with the misconception contained in Mr Scragg’s letter of 12 January 1998. However, the remaining paragraphs are more important. In the fourth paragraph of that letter the first respondent asserts unequivocally that an agreement was reached between himself and the appellant in relation to his offer made on 6 August 1997. In fact he asserts that the agreement was entered into on 15 August 1997 rather than 4 September 1997. Nothing turns on that. What is more important is the assertion that a binding agreement had been reached.
It can be seen from that letter that the first respondent took the position that he had reached binding agreements with the appellant and with the second and third respondents which he treated as three independent and binding contracts. He referred to the agreement with the appellant as “the Keast Contract”.
In the sixth paragraph, the first respondent‘s solicitors noted that the appellant had advised that she was “not prepared to enter into the present convoluted arrangement to identify and finance her purchase of shares in the funeral company”.
By that, I think, all parties understood the appellant to refer to the proposed arrangements to avoid capital gains tax. That proposed arrangement was not in accordance with the terms of the Will. It was a suggestion made by the first respondent to avoid the incidence of capital gains tax. However, it cannot be said, on any understanding of the terms of the Will or the offer made to her, that the appellant had any obligation to accept such a proposal. The proposal disentitled her to a direct interest in shares to which she would otherwise be entitled if the terms of the Will were performed.
In the next paragraph, the first respondent’s solicitor said that the terms of Mr Scragg’s letter of 28 November 1997 indicated a repudiation of the contract entered into between the appellant and the first respondent.
For reasons which I have given I do not agree that is so, but accepting that it was, it is important to note that the repudiation had still not then been accepted by the first respondent.
Mr Davis then asserted that the appellant has entered into “a valid and binding contract” with her siblings (the “Buy Out Contract”).
The next paragraph indicates some confusion, in my opinion, on the part of the first respondent. He says that it is a wish of all beneficiaries that he accept the appellant’s repudiation of the Keast Contract and that the Buy Out Contract be performed. Whilst it may have been the wish of the second and third respondents it was not the wish of the appellant.
The first respondent then indicated that he would accept the repudiation of the Keast contract if the appellant failed to settle on the terms proposed by the second and third beneficiaries in their letter of 24 December 1997. Lastly, and most importantly, the first respondent indicated what would happen if the appellant failed to settle on proposal put by the second and third respondents on 24 December 1997. The first respondent indicated that, if the appellant did not settle on the contract, which he asserted had been entered into between the appellant and the second and third respondents, within 14 days, he would accept the appellant’s repudiation of the Keast contract and terminate it. He would then, after the expiration of a further seven days, settle with the second and third respondents.
The first respondent made it clear, by that letter, that the repudiation of the Keast contract had not been accepted to that point of time. He also made it clear the manner in which the repudiation would be accepted and the manner in which that acceptance would be carried out.
The demands in the letter are rather curious. Whilst the first respondent made it clear that he has not accepted the repudiation of the Keast Contract he claimed that he would if the appellant did not complete the Buy Out Contract. In other words the demand was to perform a contract which would have meant the Keast Contract would not be performed. It was only if the demand was not met that the Keast Contract could be performed. The demand made by the first respondent of the appellant was that the appellant should perform a contract which would have unequivocally been a repudiation of the Keast Contract. The first respondent was demanding the appellant unequivocally repudiate. If she did not unequivocally repudiate he would accept her earlier repudiation.
The position taken by the first respondent is somewhat bizarre. He was prepared to claim that the letter of 28 November 1997 was an act of repudiation. He demanded that the appellant unequivocally repudiate the Keast Contract by performing the Buy Out Contract and threatened that if she failed to unequivocally repudiate he would then, in the manner described, accept an earlier repudiation.
The attitude displayed by the first respondent, having regard to his position as a trustee is a little unusual. It was not for him to adopt, support or oppose one or other of the beneficiaries. His position was simply to administer the estate. Why he so quickly wrote the letter of 24 December and followed with this letter is not explained. The appellant would have this Court infer that the respondent did what he did because he was the accountant and an adviser to the Company, which was controlled by the second and third respondents. It was in their interests to ensure that the appellant obtained no shares in the Company. I do not think this Court needs to resolve why the first respondent adopted the attitude he did. It may, contrary to the appellant’s assertion, be simply as a result of the appellant’s argumentative attitude expressed in her solicitor’s letters.

In any event, as it happens, the first respondent has never indicated an acceptance of any repudiation in the terms in which he indicated he would.
That letter was responded to by Mr Scragg on 19 January 1998.
After making it clear that the “convoluted arrangement” referred to in the earlier correspondence related to the scheme to circumvent capital gains tax liabilities, a number of complaints were made about the advice given to the deceased before her death in relation to capital gains tax and the fact that the company was now massively in debt.
The letter concluded in the following terms:
“The situation is compounded by the purported deadlines set out in your correspondence, where you claim the right to deal with the assets of the company by rejecting my clients’ rights (sic) and demanding that she institute proceedings if she is not satisfied with the situation.
The purpose of this letter is to state clearly my client’s position and to inform you that should your client persists (sic) with his intended course of conduct, proceedings will be instituted.
Before my client issues those proceedings, she seeks to be advised as to whether or not you acknowledge that she still has an entitlement in the company in accordance with the manner proposed by the Will and whether or not your client intends to carry his threat to deal with the assets of the estate as set out in the ultimate paragraph of your letter .”
On 19 January 1998 Mr Scragg also responded to Montgomery & Co’s letter of 24 December 1997. The figure contained in the letter of 24 December 1997 was rejected upon the basis that the institutional debt referred to in Montgomery & Co’s letter related to loans incurred after the offer of purchase referred to in the previous correspondence. For those reasons it was said that the appellant did not agree to the deduction for the purpose of calculating the purchase price, but sought $667000.
Mr Scragg’s letter then complained about debt incurred by the company since the death of the deceased which debt it was claimed had been incurred without any reference to the appellant.
Mr Scragg advised the second and third respondents’ solicitors that the appellant had good grounds for bringing proceedings in equity for the winding up of the company and unless a realistic offer was placed within seven days they could expect such proceedings.
On 22 January 1998, the first respondent’s solicitors responded to Mr Scragg’s letter of 19 January 1998. They wrote inter alia:
“Our client instructs us as follows:
1.He does not accept any of the assertions contained in your letter.
2.If your client has concerns about the company and its affairs, those concerned should be directed to the company, not our client.
3.Our client has claimed no right to deal with the assets of the company.
4.Our client has not rejected your client’s rights.
5.Our client has certain obligations under the terms of the Will which he intends to perform.
Our client is confused by your client’s position. Can you please answer the following two questions?
1...... Does your client intend to perform the Buy Out Contract as referred to in our letter of 15 January 1998?
2. If not, does your client intend (despite what our client maintains as her previous repudiation of it) to perform the Keast Contract as referred to in our letter of 15 January 1988? (sic). If so, the documentation has been prepared and the matter can be settled immediately.
Until the answers to these questions are provided our client maintains the position set out in our letter of 15 January 1998. The above two questions should not be taken in any way by your client as our client having resiled from his position that your client has repudiated the Keast Contract.
Please provide the information sought.”
The letter then went on to discuss other matters which are not important.
Again the position is clear, in my view. If there has been a repudiation by the appellant to that point of time it had not yet been accepted by the first respondent. Indeed the first respondent said in that letter that documentation had been prepared for the purpose of performance of the Keast Contract and the matter could be settled immediately.
The next day the second and third respondents’ solicitors responded to Mr Scragg’s previous letter advising, in greater particularity, how the figure, which they said constituted an acceptance, in their letter of 24 December 1997 had been arrived at, and advising the appellant’s solicitor that their clients were willing and ready to perform their bargain.
They further advised that the second and third respondents regarded the appellant’s refusal to perform the Buy Out Contract be a repudiation by her of the agreement evidenced in the letter of offer and letter of acceptance, referring apparently to the letter of 28 November 1997 and response of 24 December 1997. They said that their clients elected to accept the repudiation of that agreement and that their clients reserved their rights to commence proceedings against the appellant to recover loss and damage suffered.
The second and third appellants claimed that the agreement between them and the appellant was at an end. They had, they said, accepted the appellant’s repudiation.
Assuming that to be the case then the only contract capable of performance at that time was the Keast contract. Whilst the first respondent had, in his solicitor’s letter the day before, claimed that the appellant had repudiated that agreement the first respondent had made it clear that he was still ready and willing to complete. He had said in that solicitor’s letter of 22 January 1998 that the contract could be settled immediately. Because there had been no acceptance of the repudiation the contract remained in existence for the benefit of both parties; Foran v Wight (supra).
The first respondent’s solicitor’s letter of 22 January 1998 was not replied to by Mr Scragg or by the appellant. The first respondent’s solicitor wrote again on 28 January 1998 seeking a reply but again no reply was forthcoming.
Other correspondence had passed between the parties to that point of time but that other correspondence was relevant only to the affairs of the estate and was not directly relevant to the questions posed on this appeal and may be ignored.
By the end of January 1998 the first respondent maintained that the appellant had repudiated the contract entered into between him and her in August/September 1997. The appellant on the other hand maintained there had been no repudiation.
I think it is clear from the correspondence that the first respondent asserted that the repudiatory act lay in the writing of the letter of 28 November 1997. It was never asserted that there was any subsequent single act which amounted to a repudiation.
Whether there had been a repudiation in that letter or by subsequent conduct up to this point of time the first respondent had not accepted the repudiation. He had indicated in the letter of 15 January 1998 that he would accept a repudiation if an event did not occur; i.e. performance of the Buy Out Contract within fourteen days. He extended the time for the acceptance of that repudiation in the letter of 22 January 1998. It must follow from the fact that he offered to immediately settle the Keast Contract on 22 January 1998 there had been no acceptance of the repudiation to that point. Of course, after the second and third respondents’ solicitor’s letter of 23 January 1998, the event i.e. settlement of the Buy Out Contract, could not take place. It was in that letter that the second and third respondents claimed that the appellant had repudiated the Buy Out Contract and had elected to accept that repudiation.
Therefore, after 23 January 1998, the appellant was not in a position to compel the second and third respondents to settle on the Buy Out Contract.
However, the first respondent’s solicitor still insisted, as at 22 January 1998, that their client’s position was as stated in the letter of 15 January 1998.
It may have been that the first respondent was not then aware that the second and third respondents had elected to accept the appellant’s repudiation of the Buy Out Contract. In any event the appellant was not in a position on 23 January 1998 to require the second and third respondents to settle on the Buy Out Contract. However, if she had repudiated the Keast Contract at that time the first respondent had not elected to accept the repudiation of that contract.

Conclusion On Repudiation

The Trial Judge concluded, as I have, that the letter of 28 November 1997 did not in its terms amount to repudiation. He, however, concluded that the appellant’s conduct after that time indicated repudiation on her part. He held that a reasonable person in the shoes of the executor would infer from all that occurred up to 30 January that the appellant was willing to perform the contractual obligation but only if and when all of her concerns were resolved to her satisfaction.
I agree with that conclusion. I think that after 28 November 1997 the correspondence emanating from the appellant’s solicitor indicates that the appellant was not prepared to complete the Keast Contract except upon being satisfied of the various matters to which her solicitor has referred in those letters. She has shown in that correspondence a continuing reservation of her rights which was inconsistent with a willingness on her part to complete her contractual obligations.
I therefore agree with that finding of the Trial Judge. Indeed the finding is consistent with an affidavit sworn by the applicant on 4 November 1998. In that affidavit she said that she instructed her solicitors to accept the first respondent’s offer of 1 August 1997 and at no stage has she instructed her solicitors not to accept that offer. However she then said that she continues to dispute the amount of the indebtedness of her mother to the Company and still does not accept that the figures stated are accurate. She no doubt means by that that she does not accept the amount of her mother’s indebtedness to the Company. She also says she does not accept that the value arrived for the shares by the executor is a correct valuation of the shares in the Company.
I think that affidavit showed the continuing reservations on the part of the appellant even after the issue of these proceedings and the independent assessment by Mr Shammall. The appellant had always indicated that she did not believe that the deceased was indebted to the company in the amount claimed by the first respondent. In that respect she was proved at one stage to be partially right. As I have mentioned an independent assessment of the indebtedness of the deceased to the Company arrived at a figure $20,000 less than the first respondent had maintained was the correct amount. That independent assessment was not carried out until April of 1998 well after these proceedings were commenced. However, her affidavit was sworn nearly six months after she was made aware of the independent assessment. She was still not satisfied, even by November 1998, with the independent assessment of the deceased’s indebtedness to the company. She remained dissatisfied with the valuation of the shares in the company.
I think that affidavit confirms the appellant’s attitude as at January 1998, which was that she would not complete her obligations under the contract except upon her own terms.
For all of those reasons I agree with the Trial Judge that by the end of January 1998 the appellant had evinced an intention to repudiate the Keast Contract.
I therefore reject the first of the appellant’s argument put on this appeal that the trial Judge was wrong to conclude that the appellant had repudiated the Keast Contract.

Has The Repudiation Been Accepted?

The second argument advanced was that if the appellant had repudiated the Keast Contract the first respondent never accepted that repudiation. It was argued that the finding of the trial Judge’s finding to the contrary was wrong.
The Judge found that it was open to the executor to accept that repudiation, terminate the contract with the appellant and settle in accordance with clause 3 of the Will with the second and third respondents. Indeed he found that the institution of these proceedings was the act of acceptance by the first respondent of the appellant’s repudiation.
The question then which remains to be determined is whether before the commencement of these proceedings or by reason of the commencement of these proceedings the first respondent accepted the repudiation by the appellant.
By the end of January 1998 the parties’ rights had crystallised. It was an ordinary contractual dispute. In my opinion if the first respondent believed that the contract entered into between himself and the appellant had been repudiated and that he had accepted that repudiation, he was entitled then to deal with the second and third respondents in accordance with the terms of the Will and that was to offer to them the shares and land to the exclusion of the appellant.
Alternatively he was entitled to apply to the court for a declaration that there had been a repudiation and an acceptance of that repudiation. With that declaration in hand he could have then dealt with the second and third respondents with impunity.
He did not adopt either of those courses of action.
Instead he applied to the Court, purportedly under s 59B, 90 and/or 91 of the Trustee Act and/or s 69 of the Administration and Probate Act, and/or r 63.04 and/or r 103.02 of the Supreme Court Rules.
It was the issue of those proceedings which allowed the Trial Judge to conclude that the repudiation had been accepted by the first respondent. In his conclusions he said:
“Subject to further submissions as to the form of 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 over the will.”
Because it was the issue of these proceedings which allowed the Trial Judge to conclude that there had been an acceptance of the repudiation, these proceedings must be examined.
I have already referred to the orders sought in the originating proceedings.
The application itself in my opinion presupposes that the repudiation has not been accepted by the first respondent. Indeed the first respondent applied to the court for directions to allow him to accept that repudiation. He sought the permission of the Court to accept the repudiation.
I do not think that the first respondent can say that he was entitled on the one hand to seek an order that it was appropriate for him to accept the repudiation by the appellant and on the other hand argue that he had accepted the repudiation.
If he had accepted the repudiation then he would have sought a declaration in the terms which I have mentioned. There was no evidence that the first respondent had, apart from the institution of these proceedings, accepted the appellant’s repudiation. The directions and orders sought do not, in my view, suggest that the first respondent intended thereby to accept the repudiation.
I think therefore at the time these proceedings were issued on 30 January 1998 that the first respondent had not accepted the appellant’s repudiation of the contract entered into between the appellant and the first respondent in August/September 1997.

Correspondence After The Institution Of Proceedings

On 2 February 1998, after the issue of these proceedings, the first respondent’s solicitors wrote to the second and third respondent’s solicitors in the following terms:
“We have been advised by Suzanne Keast’s solicitor, Peter Scragg, that Miss Keast is ready and willing to perform the Keast contract, being the contract formed in accordance with clause 3 of Thelma Hill’s Will on the following basis:-
1.Strictly in accordance with the terms of Thelma Hill’s Will and not in accordance with the arrangement proposed by Mr Kennedy to each of Miss Keast, Miss Blades and Mr Hill in his letter dated 23 October 1997 and
2.That the funds required to settle on the Keast contract be held in escrow pending resolution of the dispute as to the amount of the debt owed by Thelma Hill to Sidney Harrison Pty Ltd.
The arrangement set out in our client’s letter dated 23 October 1997 was proposed in the best interests of Ms Keast, Ms Blades and Mr Hill. To comply with his obligations as executor and trustee of Thelma Hill’s Will, our client requires Mr Hill and Ms Blades’ consent before he can settle the Keast, Hill and Blades contracts strictly in accordance with clause 3 of Thelma Hill’s Will and not in the manner proposed in his letter dated 23 October 1997. Could you please advise whether Mr Hill and Ms Blades are prepared to provide that consent to our client.”
That letter is important. First it acknowledges that the appellant was prepared to settle the Keast contract in accordance with the terms of Thelma Hill’s Will. She was prepared to settle that contract on the basis that the funds required to settle be held in escrow pending resolution of the dispute as to the amount of the debt owed by the deceased to the company.
This letter was written before the independent assessment of the amount of the indebtedness of the deceased to the Company.
More importantly the letter is inconsistent with any prior acceptance by the first respondent of any repudiation. If the proceedings had been the act of acceptance of the repudiation then this letter would not have been written in those terms. The first respondent would not have sought the agreement of the second and third respondents to settle the Keast Contract, if he had already accepted the appellant’s repudiation.
I do not know why the first respondent believed it was necessary to obtain the second and third respondent’s consent to act in accordance with the terms of the Will. Unless all beneficiaries agreed he simply could not act other than in accordance with the terms of the Will. The appellant had always made it clear that she did not agree to the proposal contained in the letter of 23 October 1997. It seems to me that the first respondent had no obligation to seek the concurrence of the second and third respondents as he did in that letter of 2 February 1998, unless he had previously agreed with the second and third respondents to implement the proposal contained in his letter of 23 October 1997.
In any event the second and third respondents replied through their solicitors, Montgomery & Co on 4 February 1998.
I set out the terms of their reply:
“Dear Sir
Re: Estate of Thelma Joyce Hill
We refer to your letter to us dated 2 February 1998.
We are instructed to inform that our clients are not prepared to provide the consent you have sought by your client.
The reasons why our clients are not prepared to provide the consent are as follows:
1Our clients had in good faith agreed to accept the variation of the contracts formed in accordance with Clause 3 of the Will on the basis that such variation was in the best interests of all beneficiaries under the Will.
In our clients’ view any reversion to strict accordance with the terms of the Will is not in their best interests, nor in the best interest of the beneficiaries as a whole. Indeed, we are instructed our clients will be prejudiced by such reversion.
2The condition imposed by Mr Scragg to the effect that the funds required to settle on the Keast contract be held escrow pending resolution of the dispute as to the amount of debt owed by Thelma Hill to Sidney Harrison Pty Ltd means that the settlement of the contracts our clients have entered with Mr Kennedy is uncertain. If the debt owed by the deceased to the company is to be made the subject of a dispute, then obviously our clients will not be able to settle the contracts they have entered.
More importantly, we do not believe that Ms Keast herself has any standing to dispute the debt owed by the deceased to Sidney Harrison Pty Ltd. If any person has the standing to do so, then it is your client. We consider that if Mr Kennedy has satisfied himself as to the amount of that indebtedness then there does not exist any dispute.
3The behaviour of Ms Keast leaves our clients with little confidence that matters will be resolved promptly or at all. It appears to our clients that Ms Keast wishes to embark upon expensive and protracted litigation which would not be to the benefit of the estate or the beneficiaries. Our clients are most concerned that a considerable portion of the estate has now been consumed by legal and other costs as a result of the behaviour of Ms Keast. If Mr Kennedy were to now entertain an argument in respect of the debt owed by the deceased to the company then further costs would be incurred and our clients’ interests further diminished.
4It appears to our clients at this stage Ms Keast wishes to “have her cake and eat it as well”. In that regard we note that on the one hand Ms Keast has challenged the validity of the Will and has refused to accept Mr McGovern as being the trustee of her bequest. On the other hand, she wishes that in respect of the Keast contract Mr Kennedy to perform “strictly in accordance with the terms” of the Will. Our clients believe that Ms Keast must accept the Will and the fact that her bequest is held in Trust, and allow your client to act in the best interests of the beneficiaries.
5Ms Keast has previously repudiated the Keast contract. In our view the latest correspondence does not evidence that Ms Keast is ready and willing to perform the Keast contract as agreed. On the contrary, she wishes to have that contract varied by the imposition of a condition inconsistent with the agreed terms.
If Ms Keast is not prepared to perform the Keast contact on the terms agreed, or as varied, then our clients are entitled to acquire the relevant shares and interest in land and they wish to do so. Our clients’ ability and right to take up what Ms Keast has repudiated should not be delayed.
Our clients are of the view that Mr Kennedy should elect to accept the repudiation and enable them to acquire what Ms Keast has repudiated. If Mr Kennedy is reluctant to do so then we consider that the appropriate course for him to take is to seek directions from the Supreme Court of South Australia as a matter of urgency.”

That letter is also important.
A number of the reasons given by the second and third respondents why they would not agree to the request made to the first respondent seem to me to be irrelevant.
The matters in paragraph one on their face could not be a reason why the trustee should not accept settlement on the basis of the Keast Contract. If, of course, Mrs Keast had agreed to such a variation that would be another matter, but that is not what is asserted.
The matters in the third and fourth paragraph are also not reasons why the first respondent should have refused to settle on the Keast Contract.
If Mrs Keast was entitled to bring a claim against the estate for further provision out of the estate under the Inheritance (Family Provisions) Act 1972 that would not be a reason to disentitle her from settling in respect of the Keast Contract or, more particularly, taking her entitlement under clause 3 of the Will.
Any benefits that the appellant was to obtain under clause 3 of the Will were not, as was claimed in paragraph 4 of that letter, to be held on a trust for her. Under clause 3 of the Will she was entitled to any shares and any interest in land absolutely.
However most importantly, the second and third respondents did not believe, as at 4 February 1998, that the first respondent had accepted the appellant’s repudiation. The last paragraph of the second and third respondents’ solicitors make it clear that they believed that the first respondent had not elected, at that stage, to accept the repudiation.
On 10 February 1998, the first respondent’s solicitors wrote to the appellant’s solicitors in the following terms:
“Dear Sir
Estate Thelma Joyce Hill
We refer to our telephone conversation on 2 February 1998. During that conversation, you advised us that your client, Suzanne Keast, is ready and willing to perform the Keast contract, being the contract formed in accordance with Clause 3 of Thelma Hill’s Will, on the following basis:-
1...... Strictly in accordance with the terms of Ms Hill’s Will and not in accordance with the arrangement proposed by Mr Kennedy to each of Ms Keast, Ms Blades and Mr Hill in his letter dated 23 October 1997; and
2. That the funds required to settle on the Keast Hill and Blades contracts be held in escrow pending resolution of the dispute as to the amount of the debt owed by Ms Hill to Sidney Harrison Pty Ltd.
This would involve the purchase by your client of 1/3 ordinary share, 4,467 & 1/3 “A” class shares and 2,457 “B” class shares in Sidney Harrison Pty Ltd and 8.9351% of Thelma Hill’s portion of land contained in Certificate of Title Register Book Volume 2099 Folios 154 & 153, Volume 4336 Folio 18, Volume 4025 Folio 535 and Volume 1068 Folio 35 for the sum of $84,850.67. Please confirm that this is your client’s position.
We would appreciate your response by return facsimile.
Yours faithfully
PIPER ALDERMAN
Per:
Jayne Stiller”
Clearly, again the first respondent believed that he had not then accepted the appellant’s repudiation. If he had, he would not have written a letter in those terms.
It appears that there was no response to that letter. Instead on 13 February 1998 the appellant swore and filed an affidavit in these proceedings. The Court is unaware of the contents of that affidavit. An application was made by the respondents to have that affidavit uplifted. The affidavit was uplifted and was therefore not tendered in these proceedings.
On 25 February 1998, the appellant issued an application seeking the following relief:
“1..... Leave to the third defendant to institute a third party notice seeking the winding-up of Sidney Harrison Pty Ltd pursuant to Section 461 (e) and (f) of the Corporations Law.
2.A declaration that the third defendant, by reason of the testamentary disposition of Thelma Joyce Hill, deceased, is left without adequate provision for her proper maintenance, education and advancement within the meaning of Section 7 of the Inheritance (Family Provision) Act 1972 as amended.
3...... An order that the third defendant receive one third of the net estate of the said Thelma Joyce Hill, deceased, or such other provision as this Honourable Court thinks fit.
4.An order declaring that there is at present no contractual relationship between the third defendant and the first and second defendants in respect of the third defendant’s interest in the company Sidney Harrison Pty Ltd.
5...... Enquiry and account as to the indebtedness of Thelma Joyce Hill, deceased, and its extent, to Sidney Harrison Pty Ltd.
6.Discovery of the financial records of Sydney Harrison Pty Ltd for a period of five (5) years prior to the 30th June 1997.
7...... To the extent that is necessary an enlargement of the time in which to bring the application pursuant to the Inheritance (Family Provision) Act 1972 as amended.
8.Such further and other orders as this Honourable Court thinks fit.
9...... The costs of this application.”
It is not necessary to spend too much time in relation to this application which was entirely misconceived. I am not sure why the appellant would have issued an application in these proceedings for leave to institute third party proceedings for winding up the Company under the Corporations Law. The other declarations are entirely inappropriate in these proceedings.
I suppose it can be said, in the absence of any evidence to the contrary, that the failure by the appellant to reply to the first respondents letter of 10 February 1998 indicates the continued intention on the part of the appellant to repudiate the Keast Contract. But, of course, I have already agreed with the Trial Judge that there was the evidence upon which it could be said that the appellant had previously repudiated that contract. More important, in my opinion, is the relevance of that correspondence to the second question.

Conclusion On Acceptance Of Repudiation

There is no evidence, apart from the issue of these proceedings themselves, that the first respondent ever elected to accept the repudiation. The Trial Judge was content to find that acceptance was implicit in the issue of proceedings. With respect I cannot agree with that. I think the very orders sought in the proceedings indicate an unwillingness on the part of the first respondent to accept the appellant’s repudiation. The orders sought, in my opinion, indicate that the first respondent was not prepared to accept that repudiation without the Court’s approval.
The exchange of correspondence which followed the issue of these proceedings is also inconsistent with an acceptance by the first respondent of any repudiation.
During the hearing of these proceedings there was discussion between the Trial Judge and the appellant’s counsel in relation to her then position. Counsel advised the Trial Judge that following Mr Shammall’s report Mrs Keast was prepared to settle on the agreement on the basis of the revised amount of the debt in accordance with clause 3 of the Will.
He stated further that ever since Mr Shammall’s report she had been prepared to perform the contract on that footing.
I am not sure if that submission could be correct. It is inconsistent with the contents of the appellant’s affidavit of November 1998.
In the end, however, I think nothing turns on the Judge’s questions or the answer. At best from the appellant’s point of view it indicates a change of heart in performance of the Keast Contract. It may indicate a willingness to now complete in accordance with the terms of that contract.
If, however, the earlier repudiation had already been accepted by the first respondent then her change of heart in relation to the performance of the Keast Contract is irrelevant. For the reasons I have already given, in my opinion, however, the first respondent has never accepted the repudiation by the appellant.
I differ, with respect, from the Trial Judge in concluding that these proceedings do evidence acceptance by the first respondent of the appellant’s repudiation. They do not do so because of the orders sought in the proceedings.
The subsequent correspondence between the parties also makes it clear, in my opinion, that the issue of these proceedings did not amount to an acceptance by the first respondent of the appellant’s repudiation.
It therefore follows that the appeal must be allowed and the orders made by the Trial Judge set aside.
The fate of these proceedings remain to be considered.
As, in my opinion, these proceedings are procedurally flawed, subject to any argument advanced by the first respondent, I would, simply dismiss the proceedings.
MARTIN J I agree with the orders proposed by Lander J for the reasons that he has given.

[1999] SASC 440

25 November 1999