Krol v Australian Executor Trustees Ltd - [2010] SASC 302

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
KROL & ANOR v AUSTRALIAN EXECUTOR TRUSTEES LTD & ANOR
[2010] SASC 302
Reasons of Judge Lunn a Master of the Supreme Court
25 October 2010
PROCEDURE
Action claiming provision under Inheritance (Family Provision) Act 1973 - application more than six months after Probate by non-party under s 8(7) of that Act to be joined as an additional plaintiff so that he could make his own claim - held joinder under s 8(7) did not require the applicant first to obtain an extension of time under s 8(2) of the Act - held in circumstances it was "just and expedient" under s 8(7) for joinder to be allowed.
Inheritance (Family Provision) Act 1973 s 1, s 8; Supreme Court Act 1981 s 27; Evidence Act 1929 s 67C; Supreme Court Civil Rules 2006 r 312; Testator's Family Maintenance Act 1918 (repealed), referred to.
Western v Male [2010] SASC 163; In Re Tiller; Gum v Tiller [1963] SASR 116, applied.

KROL & ANOR v AUSTRALIAN EXECUTOR TRUSTEES LTD & ANOR
[2010] SASC 302
JUDGE LUNN:
Reasons on application Ronald Hicks to be joined as a second plaintiff

The deceased Lorna Hicks (“the Deceased”) died on 30 May 2009. Probate over her Will was granted to the first defendant on 2 September 2009. The second defendant is the residuary beneficiary in her estate. For probate purposes the net estate was valued at $264,446.[1]
[1] This is subject to debt which was forgiven by the will which is mentioned below.
The second defendant and Ronald Hicks (“Ronald”) were children of the deceased. On 1 March 2010 the plaintiff instituted this action,[2] claiming additional provision for herself under the Inheritance (Family Provision) Act 1973 (“the Act”). The plaintiff elected to file a statement of claim. The second defendant has filed an affidavit in opposition to the claim, but not as yet a defence.
[2] This was two days before the six month period under s 8(1) of the Act, quoted below, expired.
At the initial status hearing on 5 May 2010 I directed the plaintiff to file her 6R 312(2) affidavit within 14 days and to serve the required notices on other potential claimants under the Act “ASAP”. That notice was posted to Ronald on 13 May 2010. On 18 June 2010 Ronald filed his own statement of claim pursuant to 6R 312(5) claiming additional provision for himself under the Act.[3] On the same day Ronald filed an application (FDN9) seeking an extension of time within which to make his claim under the Act and to be allowed to file a statement of claim in these proceedings:
[3] This was filed within the 28 day period allowed by 6R 312(5).
Rule 312 provides, inter alia:
(4)By no later than 14 days after the commencement of the action the claimant must serve on each of the other potential claimants by prepaid post sent to their last known addresses notice of the action and a statement in an approved form of his or her right to make a concurrent claim.
(5)Within 28 days after service of a notice under subrule (3), a potential claimant may file a statement of claim in the Court making, and stating the basis of, a claim for provision out of the estate.
(6)When a potential claimant files a statement of claim the defendants to the action, and any other potential claimants, may file a defence pursuant to Rule 92 to that statement of claim.
(7)If the action is proceeding on the basis of affidavits rather than formal pleadings, a statement of claim under subrule (5), or a defence under subrule (6), should be in the form of an affidavit.
(8)Each of the following is a plaintiff in an action for provision out of the estate of a deceased person under the Act—
(a)     the initiating claimant;
(b)     any of the other potential claimants who files a statement of claim under this rule.
(9)Each of the following is a defendant to an action for provision out of the estate of a deceased person under the Act—
(a)     the executor of the will, or the administrator of the estate, of the deceased person;
(b)     any person who files a defence to a claim under this rule.
On the face of these Rules, Ronald had become a second plaintiff in the action by having filed his statement of claim and he did not need any permission of the Court to do so. However, counsel for the second defendant contended these Rules were ultra vires insofar as they permitted an additional claimant under the Act to be joined into the existing proceedings without the Court having given permission to do so under sub-s (7) of s 8 of the Act. Section 8 of the Act provides:
(1)Subject to this section, an application shall not be heard by the Court at the instance of a person claiming the benefit of this Act unless the application is made within six months from the date of the grant in this State of probate of the will, or letters of administration of the estate, of the deceased person.
(2)The Court may, after hearing such of the persons affected as the Court thinks necessary, extend the time for making an application for the benefit of this Act.
(3)     An extension of time granted pursuant to this section may be granted—
(a)     upon such conditions as the Court thinks fit; and
(b)     whether or not the time for making an application pursuant to subsection (1) of this section has expired.
(4)An application for extension of time pursuant to this section shall be made before the final distribution of the estate.
(5)Any distribution of any part of the estate made before the application for extension of time shall not be disturbed by reason of that application or any order made thereon.
(6)An application for the benefit of this Act shall be deemed to be made on the day when the summons by which it is instituted is served on the administrator of the estate.
(7)Where an application has been made for the benefit of this Act, the Court may, if satisfied that it is just and expedient to do so, permit at any time prior to the final determination of the proceedings, the joinder of further claimants as parties to the application.
I indicated that any questions about the validity of the rule would need to be stated to the Full Court for determination.[4] Ronald did not wish to incur the expense of a case stated to the Full Court, and elected to be disjoined as a second plaintiff, but to pursue an order for his joinder under s 8(7) of the Act. Neither the existing plaintiff nor the first defendant opposed this application and they took no part in the argument on it.
[4] Applying the practice followed in Western v Male, Full Court, 28 May 2010, SASC 163.
I am not aware of any authority on the meaning or operation of s 8(7) of the Act. It is peculiar to this State. Ronald submitted that it was sufficient for him to obtain an order for his joinder under sub-s 8(7) and that in order to do so he did not also first require an extension of time s 8(2) of the Act. The second defendant disputed this.
I accept the second defendant’s initial contention that the jurisdiction of the Court to entertain a claim by Ronald is subject to his claim under the Act being brought within the time requirements of s 8 of the Act.[5]
[5] In Re Tiller; Gum v Tiller [1963] SASR 116. This was a decision under s 4 of the former Testator’s Family Maintenance Act 1918 and the difference between that s 4 and s 8 of the Act will be dealt with below.
Section 8 of the Act follows in s 4 of the Testator’s Family Maintenance Act 1918 (“the TFM”) which provided:
No application shall be heard by the Court at the instance of a party claiming the benefit of this Act unless the application is made within six months from the date of the grant in this State of probate of the will …. of the testator: provided that –
(a)subject as hereinafter mentioned, the Court or Judge after hearing such of the parties affected as it or he deems necessary may extend the time for making an application for the benefit of this Act ….
Of significance is that what is the equivalent of the present s 8 of the Act was not predicated, as is s 4 of the TFM, with the words “subject to this section” and that there was no equivalent in the TFM of s 8(7) of the Act. The decision in Re Tiller was that additional claimants under the TFM, who had joined in the proceedings for the initial claim after the expiration of the six month period, but without themselves obtaining any extension of time for their claims, were barred by its s 4 from pursuing those claims. Thus, if Ronald had been pursuing his claim under the TFM, he would have failed as he would have been out of time.
Section 8 of the Act is obviously a modified and expanded version of s 4 of the TFM. It is to be interpreted in the light of its historical evolution and the interpretation given to s 4 in Re Tiller.[6]
[6] Pearce and Geddes, Statutory Interpretation in Australia, 6^th Edition [3.31]-[3.32].
The addition of s 8(7) into the Act over what had previously been in s 4 of the TFM was to reverse the effect of Re Tiller and to allow additional claimants “at any time prior to the final determination of proceedings” to be joined as further parties to existing proceedings brought within time, if the Court considered it was “just and expedient” to do so. The fact that s 8(1), the equivalent of the preamble to s 4 of the TFM, is expressly made “subject to this section” shows that s 8(7) is not limited to a claim made within the time period laid down in s 8(1) or extended by sub-s (2). The effect of s 8 is that once any claimant under the Act has instituted proceedings in respect of a deceased estate within the time limits imposed by s 8(1) and (2) then the Court has a discretion, where it is just and expedient, to allow any other claimants under the Act to be joined as additional parties to the existing action. This is consistent with s 27 of the Supreme Court Act which requires the Court to avoid a multiplicity of proceedings. Hence, on the proper construction of s 8 of the Act it is not necessary for Ronald to obtain an extension of time under s 8(2) in order to be joined as an additional claimant under s 8(7) of the Act.
The criteria for an extension of time under s 8(2) of the Act, and for the joinder of an additional claimant under s 8(7) of the Act, are not the same. The express criteria under s 8(7) are that it is “just and expedient”. This confers a broad judicial discretion upon the Court. If the criteria under s 8(2) and (7) were the same, there would not seem to be any point in s 8(7) being included in s 8. Whether Ronald also requires an extension of time under s 8(2) is a defence which can be raised to his claim and, if raised, can be left for determination by the trial Judge.
Counsel for the second defendant made three principal submissions about why the discretion of the Court should not be exercised in favour of Ronald. The submissions were primarily directed to why no extension of time should be granted, but they also extend to the exercise of any discretion under s 8(7).
Not sufficient prima facie case
While it would be “unjust” to allow a claim which is clearly untenable to be pursued, the strength of that case for the purposes of s 8(7) need not be necessarily be as great as that which is needed for an extension of time under s 8(2). In any event, the arguments about the merits, or lack of them, of the claim, are essentially for the trial.
I am satisfied that paragraph 5 of Ronald’s affidavit filed on 18 June 2010 (FDN10) is sufficient evidence of the basis of his claim because of its reference to his Statement of Claim, FDN8.
Under clause 7 of the will, the deceased forgave a loan, and the interest on it, owed to her by Ronald and his wife. The uncontradicted evidence of the second defendant was that there was a loan owing by Ronald and his wife which amounted to about $80,000 including interest at the date of death. However, as it was jointly owed by Ronald and his wife, only half of it can apparently be treated as a benefit to Ronald, ie. about $40,000. If the loan and interest is taken into account, the gross estate for distribution as at the date of death would have been about $344,000. I do not consider that the case of Ronald to seek more than $40,000 from his mother’s estate is so weak that it would be unjust for him to be allowed to pursue that claim in conjunction with the plaintiff’s claim.
Delay in making the application
Ronald consulted solicitors soon after the death of his mother. I accept the evidence of his solicitor that he intended to “piggyback” the making of any claim which he might make on that of the plaintiff. This had the significant advantage for Ronald that the plaintiff, and not him, had to pay the significant filing fee of $1740. The solicitor for Ronald presumably acted on the face of Rule 6R 312, as quoted above, and not unreasonably assumed that provided the plaintiff instituted her claim within the requisite period, he could make the claim for Ronald by filing Ronald’s Statement of Claim within 28 days of the service of the Notice upon Ronald, which is what he did. This course of action would have backfired on Ronald if the plaintiff had not filed her claim within time. That was a risk he was entitled to take in the light of the reasonable legal advice which he had received. No factor of undue delay is to be held against Ronald.
Prejudice
Some of the documents filed by the second defendant suggested she had reached a settlement with the plaintiff before she was served with Ronald’s statement of claim. However, her counsel did not assert this, but only that she had been impeded in settling the plaintiff’s claim by a further claim against the estate being made by Ronald. I accept that on the correspondence in evidence before me, there was not quite a concluded settlement agreement between the plaintiff and the second defendant. If it had been concluded, it probably would have contained a provision that it was subject to Ronald not making any successful claim against the estate under the Act. Both the plaintiff and second defendant had been on notice for some time that there was a potential claim under the Act from Ronald. They were aware that on the directions which I had given, and on the relevant parts of 6R 312, Ronald had until 18 June to file his statement of claim. It would seem likely that they would have negotiated a settlement between themselves if Ronald had not filed his statement of claim. Whether it is unjust to the second defendant now to allow Ronald’s claim to proceed will depend in part upon whether his claim is meritorious and whether her anticipated settlement with the plaintiff was advantageous to her. These issues can only be resolved by a trial of the action.
In the circumstances, it is expedient that Ronald’s claim should be dealt with in conjunction with that of the plaintiff. On the evidence before me, the justice of the case is also in favour of Ronald now being joined as a party to the action.
Ronald has applied to be joined as an additional plaintiff. I am not aware of any precedent under 6R 74 for joining an additional plaintiff other than on the application of an existing plaintiff. Usually if non-parties apply to be joined, they are joined as additional defendants and then claim their relief by cross-action. However, here the existing parties did not oppose the joinder of Ronald as an additional plaintiff if he obtained the necessary permission for it. 6R 312, as quoted above, makes special provision in it for claims under the Act and the validity of that part of 6R 312 has not been called into question. Accordingly, I will allow his joinder as a second plaintiff.
The affidavit of the second defendant sworn on 27 August 2010, FDN13, contains evidence and exhibits about her negotiations with the plaintiff which should not be before the Justice or Master who is to determine this action. It reveals both what the plaintiff offered to accept and what the second defendant offered to pay her. The plaintiff’s solicitors were not present at the argument and so did not take any objection under s 67C of the Evidence Act to this material being put before the Court. On the next hearing I will give directions about removing the offending material from the file. I will then consider whether I should be disqualified from conducting any summary determination of the claim.
I have today made the following orders:
1Insofar as Ronald Hicks has become a second plaintiff in this action, that he be disjoined as a second plaintiff.
2That Ronald Errol Hicks be joined as an additional plaintiff to this action and that FDN8 filed by him on 18 June 2010 be deemed to be his statement of claim as such plaintiff.
3Question of costs reserved.
4Fit for counsel.
5Further directions hearing to be held on Thursday 2 December 2010 at 11.20am.