King v Bigg (No 2)

[2022] TASSC 7

[2022] TASSC 7

COURT:  SUPREME COURT OF TASMANIA

CITATION:                King v Bigg (No 2) [2022] TASSC 7

PARTIES:  KING, Jacqueline Louise
  v
  BIGG, Neil Patrick
  WORRALL, Peter Royston
  SJA CUSTODIANS PTY LTD
  ZEALRIDGE CUSTODIANS PTY LTD

FILE NO:  2885/2019
DELIVERED ON:  15 February 2022
DELIVERED AT:  Hobart
HEARING DATES:  20-22 July, 30 August 2021
JUDGMENT OF:  Blow CJ

CATCHWORDS:

Procedure – Costs – General rule: costs follow event – Where actions settled or otherwise determined without hearing – Application for revocation of grant of probate and removal of trustees – Orders initially opposed but later not opposed – Application for former executors and former trustees to pay beneficiary's costs and not to be indemnified from estate and trust assets.

Aust Dig Procedure [1481]

REPRESENTATION:

Counsel:
             Applicant:  S B McElwaine SC
             Respondents:  K E Read SC, J Bloomfield
Solicitors:
             Applicant:  Timothy Williams
             Respondents:  HWL Ebsworth Lawyers

Judgment Number:  [2022] TASSC 7
Number of paragraphs:  106

Serial No 7/2022

File No 2885/2019

JACQUELINE LOUISE KING v NEIL PATRICK BIGG,
PETER ROYSTON WORRALL, SJA CUSTODIANS PTY LTD
and ZEALRIDGE CUSTODIANS PTY LTD (NO 2)

REASONS FOR JUDGMENT  BLOW CJ

15 February 2022

1. This application relates to the costs of an application that was finalised without a hearing. The proceedings concerned the affairs of the late Stephen James Atkinson, who took his life on 14 or 15 July 2018. Some weeks before his death, he made a will by which he appointed the respondents Neil Patrick Bigg and Peter Royston Worrall to be his executors. Probate of that will was granted to them on 15 August 2018. His widow, Jacqueline Louise King, is the principal beneficiary under that will. She is the applicant in these proceedings. On 5 November 2018 she filed an originating application seeking the revocation of the grant of probate, the appointment of someone else to administer the estate, and the removal of the other respondents, SJA Custodians Pty Ltd and Zealridge Custodians Pty Ltd, as trustees of two family trusts that had been established by her husband ("the removal application").

2. In late August 2020 the respondents decided that they would no longer oppose the orders sought by the applicant for the revocation of the grant of probate and the removal of the trustees. On 2 September 2020 I made orders removing and replacing the various respondents as executors and trustees.

3. The applicant is now seeking the following orders as to costs:

   "(i)that the respondents pay the applicant's costs of and incidental to this proceeding on a party and party basis and that they not be indemnified for those costs out of the assets of the estate of Stephen Atkinson, of the SJA Trust and or the S Atkinson Family Trust; and

   (ii)that the respondents bear their own costs of this proceeding personally and not be indemnified for those costs out of the assets of the estate of Stephen Atkinson, the SJA Trust or the S Atkinson Family Trust."

4. The S Atkinson Family Trust is a discretionary family trust that was established by Mr Atkinson in 1997. In August 2018, some weeks after Mr Atkinson's death, Mr Bigg and Mr Worrall became appointors of that trust, caused the respondent Zealridge Custodians Pty Ltd to be incorporated with themselves as its only directors and shareholders, and appointed that company to be the trustee of that trust. Under its trust deed, the applicant and her son are amongst the potential beneficiaries.

5. The SJA Trust is another discretionary family trust. It was established by Mr Atkinson in June 2014. In August 2018 Mr Bigg and Mr Worrall caused the respondent SJA Custodians Pty Ltd to be incorporated with themselves as its only directors and shareholders, and caused that company to be appointed as the trustee of the SJA Trust. The applicant is a potential beneficiary under the trust deed.

6. Mr Atkinson knew a woman named Carly Waszczak-Gadd ("CWG"). He had a sexual relationship with her for about 17 years up to the time of his death. That relationship started in or about 2001, about four years before he married the applicant. On 8 June 2018, the day Mr Atkinson made his will, he arranged for the establishment of another discretionary trust called the Seventeen Trust. It has been described during these proceedings as a "mistress trust". CWG, her children and a number of other women are within the classes of beneficiaries under its trust deed. The applicant and her son are not. Mr Worrall is a legal practitioner. The Seventeen Trust was set up by his firm. In August 2018 Mr Bigg and Mr Worrall caused a company named Seventeen Custodians Pty Ltd to be incorporated with themselves as its only directors and shareholders, and caused that company to be appointed as the trustee of the Seventeen Trust. As at 20 June 2019 it had funds totalling $1,838,958.60. It appears that, after distributions to a number of women in accordance with the wishes of Mr Atkinson, there was to be $1.4 million or thereabouts available for the benefit of CWG and her children.

7. According to an affidavit filed by the executors for probate purposes in February 2020, the net value of Mr Atkinson's estate was $7,866,921. By his will he made some small specific gifts, and left 96% of his residuary estate to the applicant. Her son, Harrison King, is entitled to 2% of the residuary estate, as is Mr Atkinson's niece, Esther Elaine Atkinson.

8. Following Mr Atkinson's death, his executors and the applicant were very concerned about a potential tax debt that was so large that the estate was in danger of becoming insolvent. However the two family trusts had substantial assets. In February 2019 the executors calculated that the net assets of the SJA Trust amounted to about $6.77 million and that the net assets of the S Atkinson Family Trust amounted to about $2.28 million.

9. On 14 November 2018 the applicant made an application to this Court pursuant to the Testator's Family Maintenance Act 1912 ("the TFM Act") for further provision out of the estate. The purpose of her application was to try to get control of the trusts. The immediate effect of the TFM application was to halt the administration of the estate by the executors.

10. There followed a series of four meetings on 7 December 2018, and 12, 26 and 27 February 2019 during which there were discussions between the parties and their lawyers. CWG and her solicitor did not attend any of the meetings. The discussions were undertaken for the limited purposes of arranging for the applicant to have access to some funds (other than estate funds) and attempting to negotiate a resolution of the applicant's TFM claim.

11. As a result of the first meeting, there was a distribution of $125,000 to the applicant from the S Atkinson Family Trust on 8 December 2018. In all other respects, the discussions at the four meetings were inconclusive.

12. There were no more major developments until the applicant instituted the removal application. Her originating application was filed on 5 November 2019. Affidavits from various witnesses on both sides were filed and served over the following months.

13. Meanwhile, on 7 November 2019, the two executors and the trustees of the three trusts applied to the Court in separate proceedings for the determination of questions as to whether the assets of the three trusts and the shares held by Mr Bigg and Mr Worrall in Seventeen Custodians, SJA Custodians and Zealridge Custodians formed part of the estate of the deceased. No steps have been taken in those proceedings since the filing of that originating application.

14. On 27 November 2019 CWG filed an originating application, out of time, seeking an order that provision be made for her out of Mr Atkinson's estate pursuant to the TFM Act. That application was promptly served on the executors, but no further steps have been taken in those proceedings.

15. On 23 April 2020 Mr Bigg, Mr Worrall, SJA Custodians and Zealridge Custodians applied to the Court for the determination of a number of questions, including a question whether they were "entitled to and should defend" the removal application. It might have been prudent for them to have made that application in separate proceedings, filing an originating application not intended to be served. However that is not what they did. They filed and served an interlocutory application. The applicant contended that the Court did not have jurisdiction to give the advice sought. Written submissions as to the jurisdiction issue were exchanged in June 2020. On 7 August 2020 Wood J determined that the Court did have jurisdiction to provide the advice that had been sought: Bigg v King [2020] TASSC 41.

16. Meanwhile there was a costly skirmish as to the admissibility of much of the affidavit evidence that the applicant sought to rely upon in the removal proceedings. Written submissions as to the admissibility issues were filed during June, July and August 2020.

17. On 22 June 2020 Wood J made orders for the delivery of pleadings in the removal proceedings. By the end of July a statement of claim, a defence, and a reply had been filed and served.

18. On 27 August 2020 the applicant's solicitors filed an interlocutory application seeking leave to amend her statement of claim in the removal proceedings. One amendment sought to introduce allegations of negligence against Mr Worrall in respect of Mr Atkinson's superannuation. The proposed pleading contained assertions to the following affect:

    ·     That prior to his death, Mr Atkinson made a binding death benefit nomination in respect of his superannuation, requiring it to be paid to his executors.

    ·     That the executors received such a payment, amounting to $3,264,737.50.

    ·     That tax assessments totalling $6,759,026.16 had been received from the Australian Taxation Office.

    ·     That there was a risk that the superannuation monies would be lost to the ATO or creditors.

    ·     That, but for negligence on the part of Mr Worrall or his firm, the superannuation monies would not have become an asset of the estate, and could not have been available to the ATO or for division among creditors.

19. At this point the respondents decided that they would no longer oppose the removal application. The Registrar was notified of that development on 31 August 2020. Mr Bigg and Mr Worrall each swore affidavits as to their decision and their reasons for it. Then on 2 September 2020 I made the orders removing and replacing the respondents as executors and trustees. I ordered that the grant of probate be revoked; that letters of administration with the will annexed be granted to the applicant; and that Mr Atkinson's accountant, Craig Stephens, be appointed as the trustee of each of the two family trusts.

20. The parties were incapable of reaching any agreement in relation to costs. As I have said, the applicant sought orders that the respondents pay her costs, and not be indemnified from the assets of the estate or the two family trusts. The hearing of her application extended over four days. The evidentiary objections that I referred to at [16] were all abandoned.

21. The applicant's principal contentions as to costs can be summarised as follows:

    · That following the death of Mr Atkinson, there was a possibility that CWG would make an application for provision out of his estate pursuant to the TFM Act, contending that she and he had been in a "significant relationship" for the purposes of the Relationships Act 2003.

    ·     That following the death of Mr Atkinson, there was a possibility that CWG would contend that by virtue of her relationship with Mr Atkinson, she was within the classes of beneficiaries to whom distributions could be made from the assets and income of both of the family trusts.

    ·     That it was improper for Mr Worrall to accept appointment as an executor of the estate of Mr Atkinson, or to be a director of the corporate trustee of either family trust, because of those possibilities, his knowledge of the sexual relationship between CWG and Mr Atkinson, and his directorship of Seventeen Custodians Pty Ltd.

    ·     That it was improper for Mr Bigg to accept appointment as an executor of the estate, or to act as a director of the corporate trustee of either family trust, because he had knowledge of facts relating to the relationship between CWG and Mr Atkinson, and was therefore a potential witness in any TFM proceedings brought by her and any proceedings as to her status in relation to those two trusts.

    ·     That a dispute existed as to whether funds held by Seventeen Custodians Pty Ltd were held upon a constructive trust for the benefit of the applicant and the trustees of the two family trusts, and that Mr Bigg and Mr Worrall owed conflicting duties as a result.

    ·     That during the meetings of December 2018 and February 2019 Mr Bigg and Mr Worrall acted improperly in that they (a) negotiated to achieve an outcome for the benefit of CWG; (b) pressured the applicant to withdraw her TFM claim; (c) failed to seek advice as to the status of CWG for the purposes of a TFM claim and eligibility under the trust deeds of the two family trusts, and (d) failed to disclose information that they were obliged to disclose.

22. The respondents contend that they did not act improperly in accepting appointments as executors and in acting as directors of the relevant corporate trustees. In particular they contend they had no conflicting duties. They rely on the fact that CWG did not ever contend that she was entitled to seek to benefit from either of the family trusts. They deny negotiating to achieve an outcome for the benefit of CWG. They deny applying improper pressure for the applicant to withdraw her TFM claim. They accept that they did not ever seek advice as to the status of CWG in relation to possible claims by her in relation to the estate and the two family trusts, but contend that the absence of any such advice did not result in any impropriety. They deny that any non-disclosure by them resulted in any impropriety.

Relevant legal principles

1. The relevant legal principles are not in dispute in this case. A fiduciary is "obliged not to enter upon conflicting arrangements to several parties" because the fiduciary "may be unable to discharge adequately the one obligation without conflicting with the requirement for observance of the other obligation": Breen v Williams (1996) 186 CLR 71 per Gummow J at 135. Executors and trustees are said to owe a duty of undivided loyalty to beneficiaries: Breen v Williams at 108; Maguire v Makaronis (1997) 188 CLR 449 at 465; Beach Petroleum NL v Kennedy [1999] NSWCA 408, 48 NSWLR 1 at [196]; Bristol and West Building Society v Mothew [1998] Ch 1 at 18-19. Executors are bound as fiduciaries to administer a deceased estate for the benefit of the beneficiaries and in accordance with the terms of the will: Brooks v Young [2018] SASCFC 8, 361 ALR 329. The primary obligation of a trustee of an inter vivos trust is to ensure that the trust is administered strictly in accordance with the terms of the trust instrument: Youyang Pty Ltd v Minter Ellison Morris Fletcher [2003] HCA 15, 212 CLR 484 at [32]-[33]. The learned authors of Jacobs' Law of Trusts in Australia, 8^th ed, state some of the relevant principles as follows at [17-11]:

   "It is the duty of trustees to act fairly by all the beneficiaries. ... Their primary duty is to the beneficiaries as a whole, even where fulfilment of a duty disadvantages one beneficiary and favours another, for example, where the exercise of a power to postpone a sale of trust property on the ground that prices are low reduces the income of the tenant for life. But that duty is subject to another fiduciary duty. 'Any system of trusts which did not require trustees to act with perfect impartiality as between their cestuis que trust and to bring to the management of trust affairs the same care and diligence which a man of ordinary prudence may be expected to use in his own concerns, would be illusory and mischievous'. At a general level, the duty to act impartially merely reflects the duty of trustees to exercise their powers for the purposes for which they are conferred, giving proper consideration to relevant matters and excluding irrelevant matters." [Footnotes omitted.]

2. This Court has inherent and statutory powers to revoke grants of probate and remove trustees: Supreme Civil Procedure Act 1932, s 6(5); Trustee Act 1898, s 32. The applicant made the removal application on the basis that the respondents had breached their fiduciary duties in various respects.

3. Fiduciaries who act in breach of their fiduciary duties can be ordered to pay the costs of proceedings to remove them: Attorney-General v Murdoch (1856) 2 K & J 571, 69 ER 910; Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42, 237 CLR 66 at [151]. The power to make an order for costs is always discretionary. However trustees will commonly be ordered to pay the costs of removal proceedings if, in defending those proceedings, they are acting in their own interests, and not for the benefit of their trusts: Miller v Cameron (1936) 54 CLR 572 at 578-579; Wareham v Marsella (No 2) [2020] VSCA 118 at [16]-[18]. The learned authors of Lewin on Trusts, 18^th ed, state the relevant principles as follows at [21-102]:

   "In a case where a claim for removal of trustees forms part of the relief sought by a breach of trust action, the position as to costs will be governed by the general principles applicable to breach of trust actions. If a trustee is removed on the ground of misconduct, even if some of the charges of misconduct are rejected, the trustee who is removed will normally be ordered to pay the costs of the successful applicant as well as bear his own costs. If a trustee is removed on the ground of conflict of interest and duty, the Court might normally be expected to make an order for costs against the trustee, though might allow the trustee his costs in special circumstances, for example where the conflict is expressly authorised by the terms of the trust, but the Court nonetheless considers that the trustee should be removed. If a trustee is removed on other grounds, the trustee is at less risk of being ordered to pay the applicant's costs, and will obtain an order for costs from the trust fund if he acted reasonably in defending the claim for removal. ... A trustee who is faced with a claim for removal of the instance of beneficiaries who have animosity towards him, but base their claim on allegations relating to his conduct of the trusteeship which are not or may not be well founded, though he may not be anxious to continue in office, will be concerned that if he fails to defend and refute the allegations, he will be taken as acknowledging the allegations." [Footnotes omitted.]

4. Subject to any order of the court, a trustee is entitled to an indemnity out of the trust estate in respect of "all expenses incurred in or about the execution of his trusts or powers": Trustee Act, s 27(2). Executors and former executors have similar rights of indemnity from estate assets pursuant to s 28 of the Administration and Probate Act 1935.

Actual and potential claims by CWG

1. In order to succeed in her TFM application, CWG would need to (a) overcome the fact that her application was filed out of time, (b) satisfy a judge that she and Mr Atkinson were in a "significant relationship" within the meaning of the Relationships Act at the time of his death, and (c) satisfy the judge that she had been left without adequate provision for her proper maintenance and support after his death.

2. By virtue of s 11(1) of the TFM Act, this Court has no jurisdiction to hear a TFM application unless it is made within three months after the grant of probate or letters of administration. As probate of Mr Atkinson's will was granted on 15 August 2018, the application by CWG filed on 27 November 2019 was a little over 12 months out of time. A power to extend time is conferred by s 11(2) of the TFM Act. CWG has sought an extension of time pursuant to that provision. However the applicant's TFM application was within time, and an order can be made under s 3(4) of the TFM Act to the effect that her application was to be regarded as an application on behalf of all persons who are entitled to make applications under that Act. For present purposes, I accept that there is every likelihood that the late filing of CWG's TFM application would not prevent her from obtaining an order under the TFM Act if her application had any merit.

1. There is an open question as to whether the relationship between CWG and Mr Atkinson constituted a "significant relationship" within the meaning of the Relationships Act at the time of his death. If it did, then she was a spouse of his for the purposes of the TFM Act, and became entitled to make a TFM application. These days, for the purposes of the TFM Act, a person can die and be survived by two spouses.

2. There is no definition of "significant relationship" in the Relationships Act. There is no suggestion that the relationship between CWG and Mr Atkinson was registered as a significant relationship pursuant to that Act. For a judge to determine whether their relationship was a "significant relationship", it would therefore be necessary to consider all the circumstances of the relationship, including the circumstances listed in s 4(3) of the Relationships Act. That subsection reads as follows:

   "(3)  If a significant relationship is not registered under Part 2, in determining whether two persons are in a significant relationship, all the circumstances of the relationship are to be taken into account, including such of the following matters as may be relevant in a particular case:

   (a)  the duration of the relationship;

   (b)  the nature and extent of common residence;

   (c)  whether or not a sexual relationship exists;

   (d)  the degree of financial dependence or interdependence, and any arrangements for financial support, between the parties;

   (e)  the ownership, use and acquisition of property;

   (f)  the degree of mutual commitment to a shared life;

   (g)  the care and support of children;

   (h)  the performance of household duties;

   (i)   the reputation and public aspects of the relationship."

3. It is clear that the expression "significant relationship" is a wide one, and that it includes relationships that are not stereotypical de facto relationships: Brownell v Robinson [2017] TASFC 11; Wiggins v Public Trustee [2020] TASFC 13. The circumstances of the relationship between Mr Atkinson and CWG were not fully explored in the costs proceedings, but the evidence established the following facts. The relationship endured for 17 years. It was a sexual relationship. CWG had two children during the 17 years. They were not fathered by Mr Atkinson. CWG and her children were financially dependent on Mr Atkinson. CWG did not take his name. The applicant was aware of the relationship with CWG, but certainly not aware of the financial aspects of the relationship. Mr Atkinson was married to the applicant and cohabiting with her for many years before his death.

4. Mr Bigg was one of Mr Atkinson's close friends. When the meetings of December 2018 and February 2019 took place, Mr Bigg considered it possible that CWG would be regarded as a spouse of Mr Atkinson for the purpose of the TFM Act and the two family trust deeds. However, very little appears to have been said about that possibility during the four meetings.

5. The trust deed of the S Atkinson Family Trust lists several classes of beneficiaries. CWG could be a beneficiary for the purposes of that deed only if she fell within cl 3.1(b), which refers to "any person who shall at any time be or have been a spouse of Stephen James Atkinson ...". In cl 1.1, "spouse" is defined to include "a defacto spouse". The deed does not contain a definition of "defacto spouse".

6. In the trust deed for the SJA Trust, "Beneficiary" is similarly defined to include several classes of beneficiaries. CWG could not be a member of any of those classes unless she fell within par (c) of the definition which reads, "the spouse (including a de-facto spouse) of a Beneficiary within paragraph (a) or (b)". Clause 1.2(l) provides that "a person is a de-facto spouse of another person if at that time they are living together on a genuine domestic basis as husband and wife".  In contrast to the other family trust deed, the relevant definitions do not expressly include past spouses.

7. There is no evidence that it was ever asserted by CWG or anyone on her behalf that she was a spouse for the purposes of either of the two family trust deeds. On the basis of the evidence before me, I am inclined to think that it is extremely unlikely that findings in her favour might be made in relation to that issue. However I accept that Mr Bigg, without the benefit of adequate legal advice, considered it possible that she might be regarded as a spouse of Mr Atkinson for the purposes of the two family trusts.

Conflicting duties from the outset?

1. The applicant contends that Mr Bigg and Mr Worrall should not have taken up their appointments as executors or taken control of either of the two family trusts whilst also acting as directors of the corporate trustee of the Seventeen Trust because the result was that they placed themselves in a situation where they had conflicting duties to her and to CWG. I accept that the interests of the applicant and CWG did not coincide. However I am satisfied that no conflict between duty and duty arose as a result of the two gentlemen taking on duties as Mr Atkinson's executors and as directors of the corporate trustees of the three trusts.

2. Before the TFM applications of the applicant and CWG were instituted or foreshadowed, the duties of the two executors in relation to the estate did not give rise to any conflict. Their duty was to administer the estate for the benefit of the beneficiaries. Taking on directorships of the corporate trustee of the Seventeen Trust did not create a conflict at that stage. The two directors had duties to cause the corporate trustee to give undivided loyalty to the beneficiaries of that trust as a group, and to administer that discretionary trust impartially. The interests of CWG under the trust and the interests of the applicant under the will did not conflict, at least at that stage.

3. It no doubt often happens that there is great hostility and animosity between individuals who are beneficiaries to whom distributions may be made from the funds of a discretionary trust. If Mr Atkinson had arranged for the establishment of a discretionary trust for the benefit of both the applicant and CWG, with an unfortunate trustee having the power to make unequal distributions to them, that trustee would not have had conflicting duties, but would have owed each of them duties to act fairly, impartially, and conscientiously. If, as Mr Bigg thought possible, CWG was a beneficiary to whom distributions could be made under either of the family trust deeds, it follows that that fact alone would not have resulted in the trustee of that trust having conflicting duties.

4. It follows that Mr Bigg and Mr Worrall did not have conflicting duties at the outset unless conflicting duties arose as a result of TFM proceedings being instituted or foreshadowed.

5. In TFM proceedings, it is the duty of executors to uphold the terms of the will: Vasiljev v Public Trustee [1974] 2 NSWLR 497. Once the applicant's TFM application was instituted, the two executors had a duty to resist that application. Subject to that duty, they owed a duty to the beneficiaries to administer the estate in accordance with the terms of the will. As is usual in TFM cases, the applicant's originating application revealed only that she sought that provision be made out of the estate for her benefit, giving no detail as to what orders she wanted. The executors were in precisely the same position as any executors are when a beneficiary seeks greater provision out of an estate than the provision made by the will. They were not placed in a situation where conflicting duties required them to cease to act as executors.

Impact of CWG's claim under the TFM Act

1. As I have said, the applicant contends that it was improper for Mr Bigg to accept appointment as an executor of the estate or to act as a director of the corporate trustee of either family trust because he was a potential witness in any TFM proceedings commenced by CWG. She further contends that Mr Bigg owed conflicting duties because he was a potential witness in TFM proceedings after CWG ultimately instituted them. He certainly had some knowledge of some of the circumstances relevant to the question whether CWG was in a "significant relationship" with Mr Atkinson. However the applicant has not adduced evidence of any controversy as to the facts and circumstances of her late husband's relationship with CWG. The fact that CWG commenced proceedings under the TFM Act did not mean that there would necessarily be a dispute as to the facts and circumstances relevant to the question of whether there was a "significant relationship". A court could well be asked to determine the status of the relationship on the basis of uncontroversial evidence of the relevant facts and circumstances. Similarly, the possibility that CWG might one day assert that she was Mr Atkinson's spouse for the purpose of either or both of the two family trust deeds does not mean that there must necessarily be a dispute as to the relevant facts and circumstances. In the absence of any dispute as to the circumstances of the relationship, the fact that Mr Bigg had personal knowledge of some of the relevant circumstances did not result in him having conflicting duties. The situation might have been different if a dispute had arisen, but one did not.

2. The executors had a duty to resist CWG's application under the TFM Act and to seek to uphold the terms of the will. If that application had proceeded, their duties would have required them to adduce relevant evidence as to the relationship between CWG and Mr Atkinson, contend that that relationship was not a "significant relationship" for the purposes of the legislation, and contend that Mr Atkinson had made adequate provision for the maintenance and support of CWG by establishing the Seventeen Trust for the benefit of her and her children and arranging a substantial payment into the funds of that trust.

3. As directors of the corporate trustee of that trust, Mr Bigg and Mr Worrall had duties to cause the trust to be administered in accordance with the terms of the trust instrument with fairness to all the beneficiaries, taking their circumstances and needs into account in deciding what payments to make to them. The duties of the two men in relation to the administration of the Seventeen Trust were certainly not inherently inconsistent with their duties to uphold the terms of the will by resisting CWG's TFM claim. Their duty of loyalty to the beneficiaries under the will did not conflict with any duties in relation to the distribution of funds not forming part of the testator's estate.

The constructive trust argument

1. In these proceedings the parties have not adduced any evidence as to where the funds of the Seventeen Trust came from. It is possible that Mr Atkinson owned money which he gave to the original corporate trustee, Seventeen Custodia Pty Ltd. There is evidence suggesting that the two family trusts received distributions from a discretionary trust administered on the Isle of Man.  It seems possible that some or all of the funds of the Seventeen Trust came from that source or a similar source.

2. The evidence establishes that Mr Bigg told the applicant about the Seventeen Trust on 13 November 2018, but it is not clear when Mr Williams first learned about it. It appears not to have been mentioned during the first and second of the four meetings. However on 25 February 2019, the day before the third meeting, Mr Williams sent Ms Moss a long email which began with the following paragraph:

   "The convenient starting point is to clear up any issue relating to the 17 Trust. If Jaqi is not a beneficiary, then she has no further interest in it. If she is not a beneficiary, then it is entirely irrelevant to her claim under the Testator's Family Maintenance Act 1912 and the present proceedings were not intended to, nor could they have any application to that trust.

   Please provide a copy of that trust, so it can be confirmed Jaqi is not a beneficiary."

3. It appears that the discussions at the third and fourth meetings proceeded on the basis that the applicant had no interest in the funds held by Seventeen Custodians Pty Ltd, either directly or through either of the family trusts.

4. During 2019 the executors contemplated applying to the Court for the determination of questions whether any of the property of the three trusts or any of the shares in the three corporate trustees were assets in the estate. I infer that this step was contemplated with a view to obtaining determinations that none of that property formed part of the estate and thereby showing that the applicant's TFM claim was misconceived. I infer that the assets of the Seventeen Trust and the shares in its corporate trustee were intended to be included in the proposed application out of an abundance of caution. On 1 July 2019 Ms Moss wrote to Mr Williams about the proposed application seeking a concession that none of the relevant property formed part of the estate. No such concession was given. As I have said, the executors and the three trustees applied to the Court for the determination of the questions on 7 November 2019.

5. Until 30 June 2020, there does not appear to have been any suggestion that any of the funds of the Seventeen Trust were held upon a constructive trust for the applicant or any other entity. However, in the applicant's statement of claim in the removal proceedings that was filed that day, new allegations were made to the following effect:

   ·     That all the trust property held by Seventeen Custodians Pty Ltd as trustee of the Seventeen Trust had been transferred from Mr Atkinson's personal assets and/or the assets of the SJA Trust and/or the assets of the S Atkinson Family Trust.

   ·     That any transfers from either of the family trusts were in breach of the terms of those trusts.

   ·     That any of those assets that would otherwise have formed part of Mr Atkinson's estate were subject to a constructive trust in favour of the applicant, which obliged Mr Atkinson to hold those assets for their joint benefit.

   ·     That it had not been open to Mr Atkinson to transfer any such assets to the Seventeen Trust.

   ·     That Seventeen Custodians Pty Ltd therefore held all the assets of the Seventeen Trust upon a constructive trust for the applicant and the two family trusts.

6. The respondents denied all of those allegations. No particulars of the basis of the allegations were ever provided. No evidence was adduced by the applicant to support the allegations. The allegations were of course very serious. Mr Bigg and Mr Worrall were accused of improperly holding over $1.8 million of misappropriated money.

7. Assertions made in unsworn pleadings do not amount to assertions of belief in the truth of the correctness of those assertions: Boileau v Rutlin (1848) 2 Ex 665 at 680, 154 ER 657 at 663; Buckmaster v Meiklejohn (1853) 8 Ex 634 at 637, 155 ER 1506 at 1507; Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 86; Saxby v The Queen [2011] TASCCA 1, 21 Tas R 123 at [23]-[25]. It follows that, as a general rule, it is open to a plaintiff to make allegations in a pleading without having marshalled evidence to support them. In some circumstances legal practitioners have ethical duties not to take that course, but I need not consider whether any such duties were applicable in this case.

8. If there had been any evidence to support the allegations at the time they were made, I expect that the author of the statement of claim, Mr Williams, would have particularised them. If there had been any basis for the pleaded allegations, the applicant would no doubt have adduced affidavit evidence to support them in the removal proceedings or these costs proceedings. I infer that there was no basis for the allegations, and no real or genuine dispute as to the source of the funds of the Seventeen Trust or as to the existence of any constructive trust.

9. At the time these allegations were made, the respondents' application for judicial advice as to whether they should defend the removal application was pending. The provision of advice was being delayed as a result of the applicant contending, inappropriately, that the Court did not have jurisdiction to give the advice sought. After the allegations were made in the statement of claim, two months passed before the respondents decided that they would no longer oppose the removal application. In my view it was reasonable for the respondents to continue to act as executors and trustees in the months following the making of these new allegations, especially since the judicial advice application was pending. The making of the allegations did not result in them having any duty to cease to act as executors or trustees.

Negotiating for the benefit of CWG?

1. By mid-November 2018 the applicant's solicitor, Mr Williams, had learned that Mr Atkinson's estate might become insolvent because of the potential tax debt. The applicant's TFM proceedings were instituted with a view to her acquiring the shares in the corporate trustees and thus control of the family trusts. There were problems in relation to that strategy. In relation to the S Atkinson Family Trust, there had been a change of corporate trustee. At the time of his death Mr Atkinson was the sole shareholder of the original corporate trustee, Zealridge Pty Ltd, but that trustee was subsequently replaced by the fourth respondent, Zealridge Custodians Pty Ltd. The shares in the original company formed part of Mr Atkinson's estate, but they were worthless, and their acquisition could not give the applicant control of the new corporate trustee. In relation to the SJA Trust, Mr Atkinson was the trustee at the time of his death. The replacement trustee, SJA Custodians Pty Ltd, had not been incorporated at the time of his death, and its shares therefore did not form part of his estate.

2. In the months following Mr Atkinson's death, before there were any meetings between the parties and their lawyers, CWG expressed dissatisfaction to Mr Bigg as to what Mr Atkinson had provided for her. He had told her that she would receive payments from the Seventeen Trust of approximately $1,200 per week as well as the costs of her children's education and any medical expenses. However she made it clear that without more money she did not believe that she would be able to maintain the lifestyle that she had had before Mr Atkinson's death. Mr Bigg told her that the Seventeen Trust had available funds of $1.4 million but she said that that was not enough.

3. A few months before his death, in March or April 2018, Mr Atkinson gave Mr Bigg $100,000 in cash, requesting that he use it to make provision for CWG should she be in need when he was not able to provide for her. Before taking his life he left a note for Mr Bigg asking him to honour their agreement about looking after CWG. In the months following Mr Atkinson's death Mr Bigg made substantial payments to CWG from the $100,000. He observed the money was going quickly. It ran out in or about June 2019. Mr Bigg gave evidence that CWG "would seem like a poor economic manager". He attempted to get her used to living on a budget of $1,200 per week. He noted that CWG had a need for housing, but considered that the terms of the Seventeen Trust did not extend to the provision of housing.

4. The first of the four meetings attended by the parties and their legal representatives occurred on 7 December 2018. The applicant's TFM application had been filed three weeks previously. There is no suggestion that the executors took any steps at that meeting for the purpose of advancing the interests of CWG to the detriment of the applicant. Those present discussed the tax dispute, questions of whether the superannuation monies would be available for the payment of creditors including the ATO, the two family trusts, the basis of the applicant's TFM claim, an application to the coroner for the release of a SIM card that could possibly be used to obtain information as to the wishes of Mr Atkinson, and various amounts of cash, amongst other things.

1. The second of the four meetings between the parties and their lawyers took place on 12 February 2019. Those present at the meeting were Mr Williams, the applicant, her son Harrison King, her friend Eleni Lovell, the two executors, and a solicitor from Mr Worrall's firm, Ms Moss. There is uncontroversial evidence as to the following things being said at that meeting:

   ·     The executors provided summaries disclosing that the net assets of the estate (ignoring the ATO dispute) were about $7.617 million; that the assets of the S Atkinson Family Trust were about $2.286 million; that the net assets of the SJA Trust were about $6.771 million; and that the anticipated ATO assessments amounted to $5.287 million inclusive of penalty tax and interest.

   ·     The executors disclosed that the Seventeen Trust, after some payments to other people, would have a corpus of $1.4 million for CWG and her children and would provide for an income of about $60,000 per annum.

   ·     Mr Bigg disclosed that CWG was dissatisfied with the provision that had been made for her. He mentioned that she had two children to provide for.

   ·     One of the executors said that they wanted an overall compromise.

   ·     Mr Bigg said that what Mr Atkinson used to spend on CWG was substantial.

   ·     Mr Bigg said that the applicant should do the right thing and withdraw her TFM claim and her claim in relation to the trusts.

   ·     Mr Bigg asked the applicant to trust him. He asked whether she trusted him, but did not receive an answer.

   ·     Apparently referring to one or both of the family trusts, Mr Bigg said that there would be a distribution based on "need not want".

   ·     Mr Bigg referred to CWG having no assets. He said that Mr Atkinson would have looked after CWG's two boys.

   ·     Reference was made to CWG possibly being able to pursue a TFM claim as the result of the applicant having instituted TFM proceedings.

2. Much was discussed at that meeting, but there were no negotiations as to any sort of settlement, nor as to any arrangement for more money to be paid to the applicant.

3. The third meeting between the parties and their lawyers was on 26 February 2019. On the previous day, 25 February, Mr Williams sent Ms Moss an email that included the following:

   "I assume the first agenda item involving discussion will be to pick up, where we got to at the last meeting. It appeared to be that a discussion was developing on a very broad brush basis about provision that could be made for Karli and the resources available in the two family trusts in which Jaqi and Harrison are beneficiaries and Karli is not and the one family trust that Karli is a beneficiary and Jaqi and Harrison are not.

   Jaqi and Harrison are the sole beneficiaries (including their descendants) apart from charities in the most valuable trust (SJA Trust net approx. $6,771,015). They were clearly intended to be the primary beneficiaries of the other trust (S Atkinson Family Trust net approx $2,286,360).

   In those circumstances the question arises as to whether there is any useful purpose in Jaqi not having control of those trusts. I note that if any additional provision is to be made for Karli, then there could be a settlement, whereby provision is secured as part of the arrangement under which Jaqi is to have control.

   ...

   If there is no broad-brush resolution then details of the claim by Karli and the communications relating to it need to be advised to Jaqi.

   Any claim is out of time. Any assertion she is an eligible applicant will be the subject of dispute."

4. That third meeting was not attended by Harrison King, but was attended by Mr Broomhall of counsel, briefed by Mr Williams for the applicant. Otherwise the attendees were again Mr Williams, the applicant, Ms Lovell, the two executors, and Ms Moss.

5. Mr Williams gave an account of that meeting in an affidavit. That affidavit included the following:

   "90I raised the issue of the possibility of an overall settlement and referred to the total amount available between the JVA [sic SJA] Trust and the S Atkinson Trust amounting to $9,057,375 ...

   91Neil [Bigg] said to the effect that he had known Stephen [Atkinson] for 40 years, that Stephen had told him an endless amount of things before he died, that he and Stephen had discussed things over many years and a lot during the last 12 months of Stephen's life.

   92Neil then outlined what he considered was fair provision for Carly [CWG].

   93He stated to the effect that the settlement should be like a divorce settlement. He added up the value of assets he said Jaqi [the applicant] had received from Stephen during his life, comprising her house at Mount Nelson and her house at Sandy Bay. He then added the values of those properties to the assets of the estate and the trusts and arrived at a figure of $16,200,000 net.

   94He then said that Carly was provided with $1,000,000 in the 17 Trust and referred to the 17 year relationship with her.

   95Neil then asserted to the effect that the relationship with Carly lasted until Stephen's death.

   96He then put forward the claim that Carly should be provided with one half of the figure of $16,200,000.

   97A general discussion occurred in which someone pointed out that Carly was not in any prior wills. Nor was she in the last will, except as a substitutional beneficiary. Jaqi denied the relationship with Carly that had been asserted. Neil maintained the existing distribution was unfair.

   100Neil referred to the need to avoid Carly going to Court.

   101Neil asked what Jaqi was prepared to accept.

   102The initial offer made by me on behalf of Jaqi was for payment to Carly of an additional $1,000,000 on the basis that Jaqi received the balance of the S Atkinson Trust and the JVA [sic] Trust. The response of Neil to the initial offer made by Jaqi was to the effect that it was significantly inadequate.

   103Neil stated to the effect he wanted a resolution that afternoon.

   104What followed were tense negotiations in which Neil and Peter [Worrall] strongly negotiated for a favourable outcome for Carly. Shuttle diplomacy occurred after the parties broke into separate rooms.

   105Broadly speaking, Neil and Peter's initial position was to refuse any settlement which provided less than one half of the assets in the JVA [sic] Trust and the S Atkinson Family Trust to Carly.

   ...

   107... Jaqi arrived at a position where she was prepared to settle on the basis of a bottom line worst-case scenario, of an after-tax minimum amount she would be guaranteed to walk away with as an absolute payment. That position was put to Neil and Peter.

   108The negotiation went late into the afternoon and involved a number of occasions where I would attend the room housing Peter and Neil to put Jaqi's position as the negotiation evolved.

   109A mechanism was proposed by Neil whereby Jaqi would be paid the superannuation from the estate, but, if the estate, after such payment, had insufficient funds to pay the tax debt and any other liabilities, then the shortfall would be paid from the trusts. ...

   110Finally, a proposal that appeared to be a possible settlement was 'agreed' by Peter and Neil. It was on the basis that it would be subject to further consideration by Jaqi, Peter and Neil. I stated to Peter and Neil that Jaqi needed tax advice to determine what her worst-case scenario would be after tax." [My emphasis.]

6. The assertions made by Mr Williams in pars 96, 104 and 105 of his affidavit as to the executors negotiating for an outcome favourable to CWG, and refusing any settlement whereby she received less than half of the assets of the two family trusts, are disputed. I accept that Mr Williams believes that the two executors negotiated on that basis but, for reasons which I will state, I have concluded that his perceptions were erroneous. His honesty was not questioned.

7. There were seven people at that meeting. Only four of them have sworn affidavits in these proceedings – Mr Williams, Ms Lovell, and the two executors. Ms Lovell and Ms Moss took detailed notes which were in evidence. I have no evidence in any form from the applicant or Mr Broomhall.

8. In essence, the evidence of both executors was that they were not seeking to negotiate for the benefit of CWG, but that they were absolutely unwilling to agree to any short-term arrangement whereby the applicant received more than half of the assets of the two family trusts, for a number of reasons. First, they wished to retain assets in case the estate became insolvent as a result of tax assessments. Also, they considered it possible that CWG might have been a spouse for the purposes of either or both of the family trusts. I accept that each of them understood that, as executors and directors of the corporate trustees, they were required to remain impartial, and not to negotiate on behalf of CWG to the detriment of the applicant.

9. In an affidavit affirmed by him on 17 June 2021 Mr Worrall referred to the four meetings of December 2018 and February 2019 and said the following as to his objectives in relation to those meetings:

   "8I was concerned about the Applicant continuing litigation, and incurring further legal costs. The TFM proceedings taken by the Applicant seemed to me to be pointless and totally premature.

   9After the first meeting, Neil raised the option of seeing if there could be a settlement with the Applicant. This was in the context that any settlement would be subject to a number of contingencies including settlement of the tax debt referred to elsewhere.

   10The possibility of a settlement with the Applicant was initially raised at the meeting on 12 February 2019, but Neil and I had not formulated a specific proposal. We also wanted a better understanding of the Applicant's finances and needs.

   11By the time of the meeting on 26 February 2019, the Applicant was keen to have the superannuation which was to be paid to the estate, released to her. The deceased had made a binding death benefit nomination in favour of the estate.

   12As far as I was concerned, Neil and I were having discussions with the Applicant and her lawyer to explore if the superannuation monies could be released to her. I remained concerned about the risk of a claw-back from the ATO for the tax debt, and that there might not be sufficient funds in the estate to satisfy any taxation liability that the ATO may determine. I was concerned that the size of the residuary estate may be impacted by the tax dispute, and as a consequence that Neil and I may be exposed personally for liability to that tax debt, if we distributed the superannuation to the Applicant.

   13On this basis we sought an indemnity from the Applicant if a settlement on other terms could be achieved, however this did not eventuate as a finalised potential settlement term as the Applicant withdrew from what were, in my view, good faith settlement negotiations by Neil and me.

   14To my recollection, at no time during any of the meetings did Neil, Kate Moss nor I make any offers that involved a payment of a sum of money or distribution to Ms Carly Waszczak-Gadd (Ms Waszczak-Gadd). Neil and I also had no intention of distributing anything from the Trusts to Ms Waszczak-Gadd absent a valid claim from her for further provisions or orders from Court confirming her status as a beneficiary of the Trusts."

10. Mr Bigg provided much more detailed information in relation to the February 2019 meetings in an affidavit affirmed by him on 17 June 2021. The significant points made by him were to the following effect:

    ·     The meeting of 12 February 2019 was arranged at his suggestion.

    ·     He knew that CWG was dissatisfied with the payments that she was receiving from the Seventeen Trust.

    ·     He had received legal advice that she would possibly have the status of a dependent spouse for the purposes of a TFM claim, and considered that there was a possibility that she would make such a claim.

    ·     He was seeking an "overall compromise" to resolve the applicant's claim in her TFM proceedings and her claims relating to control of the trusts.

    ·     He hoped to obtain information as to Mr Atkinson's wishes relating to CWG from the SIM card in Mr Atkinson's mobile phone, which was held by the coroner.

    ·     He said at the 12 February meeting that he and Mr Worrall understood from Mr Williams' correspondence that the applicant maintained that the funds paid into the Seventeen Trust formed part of the estate. (That must have been a reference to the contention that the shares in the corporate trustees were within the scope of the applicant's TFM application. There is nothing in Mr Williams' correspondence to suggest that any funds paid into the Seventeen Trust were the subject of a constructive trust.)

    ·     At the 12 February meeting he invited the applicant to "withdraw the claim she was making in relation to the Seventeen Trust" so that he and Mr Worrall could formulate a proposal as to the timing of the distribution of the applicant's 96% share of the residuary estate as well as payments to her of capital and income from the family trusts.

    ·     The meeting of 26 February was arranged at the suggestion of Mr Worrall and himself.

    ·     At that meeting Mr Williams raised the possibility of an overall settlement.

    ·     He did not outline what he considered to be fair provision for CWG, as asserted by Mr Williams in his affidavit. He outlined a "position" for the applicant.

    ·     He denied Mr Williams' assertion that he spoke of CWG being provided with half of $16.2 million. He said he did not assert or state that CWG should receive half of any figure.

    ·     He was concerned that any legal proceedings commenced by CWG would cause complications, delay and additional costs.

    ·     He was prepared to arrange for at least 50% of the assets of the family trusts to be paid to the applicant if she would agree not to go ahead with any litigation, but was contemplating having to preserve assets of those trusts for provision for other potential beneficiaries, possibly including CWG if it was determined that she was a discretionary beneficiary.

    ·     When Mr Williams made an offer that CWG should receive an extra $1 million and the applicant receive the other assets of the two family trusts, he did not say that $1 million was "significantly inadequate", but responded that the proposal was unfair because it would expose him to potential liability to other persons who may have entitlements pursuant to the two trusts.

    ·     He denied stating that he wanted a resolution that afternoon.

    ·     He denied that he and Mr Worrall "strongly negotiated for a favourable outcome" for CWG. He said, "We simply did not know what, if any claim Ms Waszczak-Gadd would make and there was no reason to negotiate on her behalf and we did not do so."

    ·     He said that the objective of Mr Worrall and himself was to endeavour to reach an agreement that would enable them to distribute the superannuation money to the applicant, while protecting themselves from exposure to the ATO and other claims.

    ·     He asserted that he and Mr Worrall were refusing to commit more than half of the assets of the two family trusts to the applicant because of potential liabilities, rather than refusing to provide less than half of the assets of the two family trusts to CWG.

    ·     He said that he and Mr Worrall had no intention of distributing anything from the two family trusts to CWG "at that time and absent a valid claim for further provision".

11. Mr Williams took notes at the meeting of 26 February but was unable to find them when he swore his affidavit several months later. However he sent an email to the applicant on 19 March 2019 setting out notes summarising the meeting. His notes were added to by Ms Lovell the following day. Their combined notes include the following in relation to the meeting:

    "8Neil outlines what he says is fair provision for Carly by comparing it to a divorce settlement, includes the Mount Nelson and Sandy Bay properties and arrives at $16.2 million net worth but says only $1 million left to Carly. ...

    ...

    12Neil refers to avoiding Carly going to court.

    13Asks what Jaqi is prepared to offer. Offer put for payment to Jaqi of payment of all the two trusts except $1 million for Carly – negotiations commence.

    ...

    TW – is door open for some negotiations re Karli.

    PW – What do you want apart from full control of the trust. Number to be put on table with overall settlement.

    NB – bring forward their guarantee with regards to provision for Jaqi. What will you give us?

    PW – we are here to move it on.

    Query about legal costs to date. PW – judge to decide costs.

    PW and NB asking for a number that J wants.

    Karli has no legal rep yet.

    ...

    Discussions about Sk's relationship with Karli and how it was established or even applied under the Act. Sk asked her to quit her job and has been supporting her for a number of years. J also was asked by SK to quit her job and NB said that K's and J's jewellry [sic] collection were similar. SK fitting out K's house and paid for family holidays 2 times a year.

    NB stated that J would be getting more than if SK had divorced her.

    ...

    Exec propose to put all trust money into one. They are to keep control of the Trusts and any further income still subject to discretion.

    Further discussions re offer/s on the table.

    TW – says Execs under a bit of pressure as 2.3 million Trust needs to be distributed before the end of June 2019.

    Jaqi needs to go to her accountant before agreeing to anyhing [sic] re tax. Craig Stephens advice for financial consequences.

    TW summarised worst case scenario after taking ATO case into account. Karli to kick in 50% towards tax and contribution to disaster with last proposed deal. Described it as the price of getting rid of them as Trustees and get on with her own life.

    Further discussions re offer/s on the table."

12. To some extent those notes contradict Mr Bigg's version of events, but they do not substantiate the allegation that Mr Bigg and Mr Worrall were negotiating for the benefit of CWG. It appears from those notes that there was a proposal to amalgamate all the discretionary trusts, and for Mr Bigg and Mr Worrall to retain control of the new amalgamated trust, but that suggestion simply fell flat. Otherwise those notes are totally consistent with the proposition that the negotiations concerned proposed payments to the applicant and the retention of funds for the benefit of the ATO, other creditors, and beneficiaries of the two family trusts.

13. Ms Lovell made handwritten notes of the meeting of 26 February. They contain much that was not included in the combined notes of herself and Mr Williams. In particular, there is a passage, apparently recording things said by either Mr Bigg or Mr Worrall, as follows:

    "100% stuff in her name

    96% residual

    50% outside estate

    That doesn't mean that when we get to exercise judgement that you wont [sic] be a beneficiary."

14. Clearly that part of Ms Lovell's notes records a proposal that there should soon be a payment to the applicant equal to 50% of the trust assets; that that would be in addition to 100% of the property that was in her name and her 96% interest in the residuary estate; and that that would leave open the possibility that the corporate trustees might make one or more further payments to her from the family trusts. The last sentence that I have quoted was not reproduced in the combined notes of Mr Williams and Ms Lovell.

15. Ms Moss typed notes throughout the meeting of 26 February. The printed version of her notes is 17 pages long. There is nothing in them that substantiates the allegation that Mr Bigg and Mr Worrall negotiated for the benefit of CWG, as distinct from discussing possible arrangements for the benefit of the applicant involving the retention of funds by the two family trusts for possible later distribution.

16. On 27 February 2019, the day after the third meeting, Mr Williams sent an email to Ms Moss, setting out a proposal as to settlement in dot point form. She forwarded Mr Williams' email to Mr Bigg and Mr Worrall. Mr Bigg sent an email to her and Mr Worrall that evening with his comments in relation to Mr Williams' points. There was no suggestion at all in Mr Bigg's email that any payment from either of the family trusts to CWG was contemplated. This email strongly supports the evidence of Mr Bigg and Mr Worrall to the effect that they were not seeking to advance the interests of CWG at the meeting of 26 February.

1. Mr Williams, Mr Bigg and Mr Worrall were all cross-examined during the hearing of this application. Mr Williams was asked about his objectives at the time of the February meetings. He said this:

   "... the reason I was prepared to negotiate was my client wished to be out of the situation where if the estate was bankrupt and she received absolutely no entitlement from the estate in her own right, she was subject to the discretion of Mr Worrall and Mr Bigg as to whether she would benefit from any money that was in the S Atkinson Family Trust or the SJA Trust. In that context it was sensible to negotiate because if she could achieve outright provision by that negotiation, she was then free of that risk."

2. He was cross-examined about the assertion in par 105 of his affidavit that the initial position of Mr Bigg and Mr Worrall was to refuse any settlement which provided less than one half of the assets of the two family trusts to CWG. The cross-examiner asked him whether that was incorrect. He replied, "It's not entirely accurate. It's an assumption on my part that the balance would go to Carly."

3. A little later in his cross-examination Mr Williams said, "There were two relevant parties being considered in the negotiations. One was Jaqi, one was Carly. I approached on the basis that Carly would essentially be the primary beneficiary of what was left over."

4. There is no suggestion that Mr Williams asked Mr Bigg and Mr Worrall whether they were negotiating on behalf of CWG or for her benefit. There is no evidence that he suggested at the time that they seemed to be doing that. He appears to have jumped to an unwarranted conclusion. His conclusion is inconsistent with Ms Lovell's note saying, "That doesn't mean that when we get to exercise judgement that you wont [sic] be a beneficiary." There does not appear to have been any discussion as to whether Mr Bigg and Mr Worrall considered that CWG was or might have been a spouse for the purposes of the family trust deeds.

5. Both Mr Bigg and Mr Worrall were essentially unshaken in cross-examination in relation to the contention that they were seeking to advance the interests of CWG during the meeting of 26 February.

6. The fourth and final meeting occurred on 27 February 2019. It was attended only by Mr Williams, Mr Worrall and Ms Moss. Mr Williams produced a written twelve-point proposal whereby the applicant would have received about $3.2 million in respect of superannuation, and half of the funds of each of the two family trusts. The twelve points included the following:

   "8)The other half of the Stephen Atkinson family trust will be amalgamated with the SJA trust and Jaqi and Harrison will remain potential discretional beneficiaries of the amalgamated trust.

   9)Jaqi and Harrison will retain all their entitlements in the Stephen Atkinson estate.

   10)Carly will be a beneficiary of the amalgamated trust?????"

7. Obviously point 8 in that document is inconsistent with any assumption that all funds left in the two family trusts after a payment to the applicant were intended by Mr Bigg and Mr Worrall to go to CWG.

8. As I have said, the discussions at the four meetings were inconclusive, and there were no more major developments after the fourth meeting until the applicant made the removal application.

9. Obviously it would have been grossly improper for Mr Bigg or Mr Worrall to have preferred the interests of CWG to those of the applicant in negotiations involving proposed distributions from the family trusts. After hearing them all give evidence, it is very clear that Mr Williams, Mr Bigg and Mr Worrall each very well understood the duties of impartiality that apply to trustees, and to the directors of corporate trustees. Although Mr Bigg understood that CWG thought she needed much more money than Mr Atkinson had arranged for her to receive, there is no reason to infer that he was biased in her favour. Mr Worrall certainly had no reason to be biased in her favour. Having regard to the duties of Mr Bigg and Mr Worrall, their obvious understanding of their duties, and the absence of any reason for them to negotiate for the benefit of CWG in breach of their duties, there was absolutely no reason for Mr Williams to jump to the conclusion that they were negotiating for her benefit.

10. The evidence that they were not negotiating for the benefit of CWG is overwhelming. It is clear that they considered it reasonable, in light of the tax dispute, and the possible insolvency of the estate, to embark upon discussions with a view to substantial distributions being made from the family trusts to the applicant. They prudently wished to retain substantial funds in both family trusts having regard to the possible impact of enormous tax assessments and the interests of other beneficiaries. Neither of them had formed a concluded view that CWG was a beneficiary for the purpose of either of the family trust deeds.

Pressure on the applicant to withdraw her TFM claim

1. I accept that Mr Bigg, and possibly also Mr Worrall, strongly encouraged the applicant to discontinue her TFM application during the meetings of 12 and 26 February. There was good reason to do that. The application was misconceived since the shares in the two corporate trustees did not form part of Mr Atkinson's estate. The existence of the application was delaying the administration of the estate. It was causing legal costs to be incurred unnecessarily, and necessitating work to be done in opposing the application. The applicant and her solicitor were negotiating to achieve a short-term payment to her of millions of dollars. It was therefore reasonable for the executors to insist that any arrangement for the benefit of the applicant should be conditional upon her discontinuing the TFM application.

2. There is no reason why settlement negotiations should not be robust, provided they are not too robust. The executors had a duty to resist the TFM application and to prevent the testator's wishes from being frustrated. The applicant was accompanied by Mr Williams at all times, and he was a very experienced probate practitioner. There is no suggestion that either of the executors applied pressure to the extent of becoming overbearing, exerting undue influence, or acting unprofessionally. I am not satisfied that either of them said or did anything improper in the course of the February negotiations in respect of the applicant's TFM application.

Failure to seek advice as to the status of CWG

1. It is true that, prior to their removal as executors and trustees, the respondents did not seek detailed legal advice as to the status of CWG in relation to her application under the TFM Act or any possible future claims based on her being a "spouse" for the purposes of either or both of the family trust deeds. It is true that Mr Bigg spoke of having received legal advice that CWG could possibly have the status of a spouse for the purpose of making a TFM claim. I infer that he was simply warned that that was a possibility, and that legal advice as to the existence or not of a significant relationship or a de facto relationship, based on a thorough analysis of the available evidence, had not been given or sought.

2. There is no suggestion that any assertions were made by or on behalf of CWG that she was eligible to receive distributions from either of the family trusts. It therefore cannot be said that it was improper for the corporate trustees and their directors not to seek legal advice as to the status of CWG in relation to the family trusts in anticipation of such assertions being made in the future. Seeking such advice in anticipation of some sort of claim might have been a good idea, but that is beside the point.

3. So far as CWG's application under the TFM Act was concerned, it is significant that she bore the onus of proof. The executors may have been aware of some of the facts and circumstances relevant to the question whether her relationship with Mr Atkinson was a "significant relationship" for the purposes of the Relationships Act but only CWG had all the information relevant to that question, and it was incumbent on her to present that information in affidavits if she wanted a judge to make an order in her favour. The executors did not have a duty to seek preliminary advice based on incomplete information.

4. As I understand it, the gravamen of the applicant's argument is that Mr Bigg and Mr Worrall negotiated for the purpose of benefiting CWG without first having established whether or not she might be eligible to receive distributions from the family trusts or to make a TFM application. The short answer to that argument is that they were not negotiating for the purpose of benefiting CWG. They were negotiating on the basis that they wished to preserve half of the assets of each family trust so as not to prejudice the interests of the beneficiaries.

5. There was nothing improper in Mr Bigg and Mr Worrall conducting the February negotiations without advice as to the status of CWG. Indeed that is consistent with what the applicant and Mr Williams wanted them to do.

Failure to disclose information

Financial information

1. There was a dispute between Mr Williams and Mr Bigg and Mr Worrall as to the disclosure of financial information relating to the two family trusts. Some information was disclosed to Mr Williams, but he contended that he was entitled to more. In the removal proceedings, the applicant contended that the respondents had a duty to disclose all relevant information to her relating to the administration of the two family trusts. In the costs proceedings she contends that they breached their fiduciary duties in relation to the disclosure of information to her as a beneficiary.

2. The parties appear to have overlooked cl 8.15 of the trust deed of the SJA Trust. That clause relevantly provides as follows:

   "Notwithstanding anything to the contrary in this Deed ... the Trustee shall not be subject to any duty to disclose any matter or document to a Beneficiary."

   The other family trust deed does not contain such a provision.

3. In the statement of claim in the removal proceedings, the applicant relied upon a number of allegations of breaches of fiduciary duties by the respondents, but the allegations relied upon as warranting the removal of the respondents did not include any allegations that any of them breached a duty to provide financial information. The evidence before me in the costs proceedings establishes that Mr Bigg and Mr Worrall expressed willingness to provide the information that they were required by law to provide. However I have no evidence as to how far apart the parties were in their dispute as to what the law required.

4. In all the circumstances, I consider that any failure on the part of the respondents to provide financial information to the applicant is not a factor that weighs in favour of my making the orders that she is now seeking.

The suicide note

1. The applicant contends that, during the discussions between 7 December 2018 and 27 February 2019, the respondents improperly failed to disclose a suicide note left by Mr Atkinson. There were two suicide notes. It appears from the applicant's written closing submissions at [107] that the note relied upon was one provided to Mr Bigg by Mr Atkinson's brother Richard. That note was referred to in Mr Williams' affidavit at [115]. Mr Williams said in that paragraph:

   "That note stated that various amounts of cash held by Stephen in fact belonged to Jaqi (an issue not conceded by the executors)."

2. The note contained information that there was $30,000 in cash belonging to the applicant at a particular bank, and that Mr Atkinson kept it there for safekeeping.  It also stated that there was roughly $40,000 in a small green backpack, perhaps in Mr Atkinson's car, and that that money belonged to the applicant. The note also contained the following:

   "There is $100,000 in the red tool box in my National Storage unit and significant cash in green backpack in boot of my car. This cash belongs to Jaqi. I was just keeping it safe."

3. Mr Williams' notes of the meeting of 7 December 2018 contain the following:

   "I note the parties' positions differ in relation to the cash that was removed from the safe.

   I understand the police have seized the $30,000 contained in an envelope saying it was for Jaqi that was in the boot of the car.

   I note Jaqi's position is that the other cash taken from the safe was joint monies."

4. Mr Williams sent the applicant an email on 13 February 2019 summarising what had been said at the meeting the previous day. It included the following:

   "The executors provided information claimed to be the extent of their knowledge in relation to the cash.

   Cash was found in a storage unit at Derwent Park. That amount was $100,000. Stephen had a safety deposit box at the Commonwealth Bank, which contained $30-$40,000. The $100,000 is now [sic] been united with that amount and it is all held in safe keeping at the Commonwealth Bank.

   In addition, there is the $30,000 in a container, possibly the envelope, in respect of which Stephen left a note saying it was for Jaqi. It may have just been in the boot of the car. I did not get to the bottom of who held the note or indeed whether the note was on the envelope, which may or may not exist. Apparently it and the money was [sic] seized by the police who turned up when the death was reported by a [sic] Stephen's brother.

   The same police apparently seized the money in the hotel room.

   Different money was seized by a different group of police from a lady named Felicity who lives in Acton. Apparently it came from her safe and was in a briefcase."

5. In the course of his cross-examination Mr Williams accepted that it could be said that the issue of ownership of the cash had not been resolved by the executors.

6. The tasks of Mr Bigg and Mr Worrall in administering the estate of Mr Atkinson and the various trusts were complex. At worst they provided the applicant and Mr Williams with information about three stashes of cash at the second meeting when ideally the information should have been provided at the first meeting. Information that the applicant was entitled to $160,000 or thereabouts in cash was information that weighed in favour of a smaller distribution to her from each of the family trusts rather than a larger one. A delay of a couple of months in providing the information does not suggest that the executors were in breach of their duties.

Beliefs as to the status and needs of CWG

1. In relation to the discussions between 7 December 2018 and 27 February 2019, the applicant also contends that the respondents improperly failed to disclose a belief on the part of Mr Bigg and Mr Worrall that CWG might qualify as a beneficiary of the two family trusts as a de facto spouse of Mr Atkinson, and a view on the part of Mr Bigg that it was the wish of Mr Atkinson that the corporate trustees would consider the financial needs of CWG when making decisions about distributions from the family trusts.

2. In particular the applicant contends that Mr Bigg and Mr Worrall failed to disclose information that Mr Williams eventually discovered when he obtained a copy of an affidavit made by Mr Bigg on 21 December 2018 and filed in the Coroner's Court for the purpose of the application for access to Mr Atkinson's SIM card. That affidavit contained the following paragraphs:

   "19    Carly is potentially one of the discretionary beneficiaries of the SJA Trust. Carly is not expressly named as a beneficiary but may qualify as a beneficiary under the class of beneficiaries described in the Deed the Trust as 'any person who shall at any time be or have been a spouse of Stephen James Atkinson'. 'Spouse' under the Trust Deed includes a 'de facto spouse'.

   20Carly is potentially one of the discretionary beneficiaries of the S Atkinson Trust. Carly is not expressly named as a beneficiary but may qualify as a beneficiary under the class of beneficiaries described in the Deed the Trust as 'the spouse (including a de-facto spouse)' of Stephen James Atkinson.

   …

   24It is my belief that Carly needs financial support, and that it was Stephen's clear wish that Peter and I, as the Directors of the Corporate Trustees of the Seventeen Trust, administer the Trust in accordance with the terms of the Trust Deed for her benefit, as a possible beneficiary of the Seventeen Trust.

   25It is also my belief that it was Stephen's clear wish that Peter and I, as the Directors of the Corporate Trustees of the S Atkinson Family Trust, and the SJA Trust, respectively, consider Carly's financial needs for support when making our decision about distributions to be made from those Trusts."

3. Mr Williams' affidavit in the removal proceedings included the following:

   "116I had not been made aware before then, but I became aware from reading affidavit of Neil dated the 21 December 2018, that at least by that date Neil and Peter were taking the position that Carly was a potential beneficiary of the S Atkinson Family Trust and the SJA Trust (paras 19 and 20 of Neil's affidavit) and by virtue of para 25 of Neil's affidavit that it was Neil's belief that it was Stephen's clear wish that Peter and he as directors of the corporate trustees of the S Atkinson Family Trust and the SJA Trust, respectively consider Carly's financial needs for support when making their decisions about distributions to be made from those trusts.

   117The position as expressed in the 21 December 2018 Coroners proceedings affidavit had not been disclosed in the settlement negotiations that occurred in two meetings in February 2019 that are deposed to earlier in this affidavit. The position taken by Neil and Peter during those negotiations was that Carly had been left without adequate provision and hence had a claim under the Testator's Family Maintenance Act.

   118While it was implicit they had the view Carly had been in a significant relationship (disputed by Jaqi) there was no assertion during those negotiations that she was or could be a beneficiary of the SJA Trust and the S Atkinson Family Trust by virtue of qualifying as a spouse. Had that been the case it could not logically have been asserted, as they did that the 17 Trust which Peter described as a 'mistresses trust', was deliberately set up to provide for Carly. If she was also a beneficiary (albeit discretionary) of the SJA Trust and the S Atkinson Family Trust with combined assets of approximately $9 million then there was no need for a separate trust. Nor could it have been put logically by Trustees apparently willing to provide for her that she was in need or had not been adequately been provided for. If she was a beneficiary, then the trustees could have exercised a discretion to provide all of the trusts in her favour."

4. However there was a considerable amount of evidence as to communications between the executors and the applicant and Mr Williams concerning CWG and her status, including the following:

   ·     There is unchallenged evidence in an affidavit of Mr Bigg that he had a meeting with the applicant and her son on 13 November 2018, during which he discussed the two family trusts, said that CWG was catered for under an independent trust, and told her about the tax dispute.

   · On the same day, 13 November 2018, Ms Moss wrote to Mr Williams. Amongst other things she addressed the possibility of the applicant making a claim under the TFM Act, commenting that there were other potential applicants under that Act, including CWG. She of course was writing on behalf of the executors.

   ·     On 14 December 2018 Mr Williams sent Ms Moss a long email in which he summarised the things that had been said during the meeting on 7 December. In relation to the S Atkinson Family Trust he wrote, "You indicated Carly may qualify as also a beneficiary under the category of a spouse." The status of CWG in relation to the SJA Trust was not mentioned in that email, but it was obvious that her status in relation to both family trusts might have to be considered.  A note kept by Ms Moss records that "definition of wife" was mentioned during discussion about the S Atkinson Family Trust during that meeting.

   ·     Ms Lovell's notes of the second meeting on 12 February 2019 record "Neil [Bigg] stated that Carly had let him know that she was dissatisfied and wants more money. She can now put in a TFM claim because Jaqi opened it up and if she claims and whether it extends to her 2 boys." She also recorded, "Execs said that the cash advances to Carly and money Stephen spent on her is substantial. They have seen evidence."

   ·     The notes taken by Ms Lovell and Ms Moss during the meeting of 26 February 2019 contain various references to CWG and her TFM claim, though no notes relating to the possibility that she could be a spouse for the purposes of either of the family trusts. Ms Moss' notes record Mr Bigg as saying at one point, "… should Carly be put in front of a judge, don't know how that would pay [sic] out."

1. Having regard to those pieces of evidence, I am not persuaded that the respondents breached any fiduciary duty by revealing too little to the applicant and Mr Williams as to their apprehensions concerning CWG and her status. The settlement discussions concerned proposals whereby half of the assets of the family trusts would be retained for the time being with a view to future distributions to appropriate beneficiaries, whoever they might be. The negotiations came to nothing. The respondents were not seeking to disadvantage the applicant.

Respondents' reasons for withdrawing opposition to the removal application

1. During August 2020, when Mr Bigg and Mr Worrall decided that they and the two corporate trustees would no longer oppose the application for their removal, they each made affidavits setting out their reasons for their decisions. Those reasons can be summarised as follows:

   ·     Each of them considered that their relationship with the applicant and her legal team had broken down to such an extent that it was no longer in the interests of the estate or the family trusts that they continue in their roles.

   ·     They perceived a risk that adverse costs orders might be made against them personally in respect of the removal application and/or the judicial advice application.

   ·     When the applicant applied to amend her statement of claim in the removal proceedings on 18 August 2020, the proposed amendments included allegations of negligence against Mr Worrall and his firm in relation to the estate. Thereafter, if he had continued to act as an executor, he would have been in a position of conflict. It would have been in his interests to contest those allegations in the removal proceedings, but taking that course would or might not have been in the best interests of the estate. The only appropriate course for him was to bring his role as an executor to an end.

   ·     As a result of the negligence allegations, Mr Worrall's firm ceased to act for the respondents. Mr Bigg said in his affidavit that that reinforced his wish not to continue opposing the removal application.

   ·     Mr Bigg also said that he feared that further allegations of misconduct would be made against him.

Conclusion

1. The evidence does not support the applicant's allegations of impropriety and breaches of fiduciary duty on the part of the respondents. It has not been shown that they failed to act in accordance with their duties. There was no basis for the applicant to seek orders for their removal. Their reasons for withdrawing the opposition to her application were perfectly reasonable. It would therefore not be appropriate to make the orders now sought by her. Her application in relation to costs is refused.