Morse v Morse & Anor
[2009] VSC 323
•6 August 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted | |
AT MELBOURNE
PRACTICE COURT
No. 7148 of 2008
| RUSSELL JAMES MORSE | Plaintiff |
| v | |
| DAVID EDWARD MORSE AND RAYMOND JOHN MORSE | Defendant |
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JUDGE: | OSBORN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 July 2009, 5 August 2009 | |
DATE OF JUDGMENT | 6 August 2009 | |
CASE MAY BE CITED AS: | Morse v Morse | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 323 | |
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Proceeding under Part IV Administration and Probate Act 1958 – Dispositive orders sought in accordance with written settlement agreement – Agreement sought to be avoided – No basis established on evidence for avoiding the agreement – Agreement enforced.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | In person | |
| For the Defendant | Mr P Pascoe | Wilmoth Field Warne Lawyers |
HIS HONOUR:
The plaintiff instituted this proceeding in July 2008, seeking further and better provision for himself from the estate of his late mother, Eileen Joyce Morse (‘the deceased’).
The deceased died on 26 September 2007 and on 24 January 2008 probate of her will was granted to the defendants who are the plaintiff’s brothers.
The plaintiff, his two brothers and a sister were adults at the date of their mother’s death.
On 16 September 2008 Master Evans made directions upon a summons issued by the plaintiff and ordered the filing of affidavit material on behalf of the plaintiff on or before 21 October 2008; on behalf of the defendants on or before 25 November 2008; and on behalf of the plaintiff in reply by 9 December 2008.
The Master further referred the proceeding to mediation on or before 23 December 2008 and made consequential directions.
He otherwise adjourned the plaintiff’s summons to a date to be fixed.
By affidavit of 20 October 2008 the plaintiff deposed in part that the primary asset of his mother’s estate was a property in Hawksburn Road, South Yarra (‘the Hawksburn property’). The plaintiff was born in 1952 and has lived in the Hawksburn property since he was six months old.
His mother’s will divided her estate in equal shares between four children.
The plaintiff’s mother lived at the Hawksburn property until February 1988 when she moved to live with her son, David, in Sydney.
The plaintiff further said:
47.Insofar as my financial position is concerned, I own no real estate. As indicated, I am self-employed at doing direct mailing services. My taxable income per annum is approximately $25,000. I have a bank account with a balance of approximately $35,000. I have the usual furniture and effects in the Property. I have no liabilities of any significance and I have no dependents. Were the Property and sold [sic] were I only to receive one quarter of the net proceeds of such sale, I would be left without a roof over my head and with inadequate financial resources to purchase suitable alternative accommodation.
48.It was always understood and it was readily accepted in the family that I was to inherit the Property from my mother when she died. This was the reason that I did not obtain anything from my father’s Will. Had it not been for this agreement I would have shared in the residue of my father’s Estate with my sister Carol and my brothers David and Raymond. This was a matter which everyone in the family understood and which I accepted. It was the reason why I never even considered making a challenge to my father’s Will.
Answering affidavits were sworn and filed by the defendants and the plaintiff’s sister, Carol.
The matter was mediated before a member of counsel on 16 April 2009. The mediation resulted in agreement to settle and terms of settlement were executed by the plaintiff personally on that day at about 7:00 pm. Those terms provided as follows:
1.The parties agree that the deceased estate will be distributed in the following manner:
(a)the estate property located at 55 Hawksburn Road South Yarra in Victoria (“the property”) described in Certificate of Title Volume 2259 folio 764 be sold by public auction forthwith;
(b)the Defendants have the conduct of the sale of the property;
(c)the Defendants will distribute and pay the gross proceeds of sale of the property as follows:-
(i)first, pay all sale costs including agent’s commission, advertising expenses and conveyancing costs;
(ii)second, reimburse to the Second Defendant the sum of $4,200 for funeral and insurance costs;
(iii)third, pay the Plaintiff’s solicitor/client costs of this proceeding fixed at $30,000 (“the Plaintiff’s costs”);
(iv)fourth, pay the Defendants solicitor/client costs of this proceeding and estate administration costs fixed at $50,000;
(v)fifth, pay to the Plaintiff the sum of $90,000 (“the first Settlement Sum”) which is inclusive of the Plaintiff’s entitlement to reimbursement for payment of $1,500 for rates referable to the property;
(vi)sixth, pay the balance of the net residuary estate as to:
a.25% to the Plaintiff absolutely (“the second Settlement Sum”);
b.25% to the First Defendant absolutely;
c.25% to the Second Defendant absolutely;
d.25% to Carol Ann Morse (“Carol”) absolutely;
2.The Defendants agree to arrange the sale of the property as soon as reasonably practicable.
3.The Plaintiff agrees to provide a Removal of Caveat in registrable form lodged on the certificate of title to the property upon receipt of a copy of the said Terms of Settlement countersigned by Carol and the First Defendant and to provide the defendants and their agents with reasonable access to the property throughout the sale period and to provide all other reasonable cooperation and assistance to enable the sale of the property. The plaintiff further agrees to vacate the property by the date of settlement of the sale of the said property.
4.The Plaintiff agrees to accept the Plaintiff’s costs, the first Settlement Sum and the second Settlement Sum as aforesaid:
(a)in full satisfaction of this present claim pursuant to Part IV of the Administration and Probate Act 1958 for further provision to be made for his maintenance and support out of the estate of the Deceased;
(b)in full satisfaction of all claims or rights (including any equitable claims or claims for adverse possession) which he had, now has, or may hereafter have against the estate of the Deceased or to participate in the distribution of the estate of the Deceased, or in any other way whatsoever;
(c)in lieu of and in substitution for his rights and entitlements under the Will;
(d)in full and final settlement of all his solicitor/client costs and disbursements in this proceeding.
5.The plaintiff’s costs and the first Settlement Sum will be paid at settlement of the sale of the property and the second Settlement Sum shall be paid to the Plaintiff’s solicitors within 14 days of the date of settlement of the sale of the property.
6.Subject to the due performance of the terms and conditions of these Terms of Settlement, the parties hereto release each other from all claims, actions, suits, demands, damages, charges, costs and expenses of every description whatsoever which they might have but for these Terms of Settlement in respect of any injury, loss, cost or expense of any kind suffered or incurred by them or otherwise for or by reason of or arising out of or in any way whatsoever connected with the facts or circumstances giving rise to the Will, the administration of the Deceased’s estate or the subject matter of this proceeding.
7.At the adjourned hearing of the Summons for Directions the Plaintiff agrees to be represented and to seek an order as appropriate that:
(a)the proceeding be dismissed without any adjudication on its merits and that there be no order as to costs; or
(b)the proceeding be adjourned to an agreed date on the basis that, if there is no appearance by either party on the agreed date, the proceeding be dismissed without any adjudication on its merits and that there be no order as to costs.
The Defendant’s solicitors will provide to the Plaintiff’s solicitor a letter consenting to such orders being made.
8.The Defendants agree to waive any entitlements to executor’s commission.
It can be seen that the parties agreed to the immediate sale of the Hawksburn property with vacant possession and to the provision from the proceeds to the plaintiff of a greater share from the estate than had been originally made under the will.
Subsequent to the execution of these terms the plaintiff has refused to provide a removal of caveat or otherwise cooperate in the sale of the Hawksburn property as contemplated by the terms.
The caveat in issue was lodged on 6 March 2008 claiming ‘a resulting or constructive trust arising from the caveator’s financial contribution towards the outgoings of the property.’
The defendants now come to this Court seeking orders which will give substantive effect to the terms of settlement. They do so in a proceeding in which no final orders have as yet been made. Accordingly, they in effect seek to dispose of the plaintiff’s original proceeding on the terms agreed at the mediation.
In my view they do not face difficulties of the type which may arise, when a party seeks to revive a proceeding which has been formally disposed of by this Court, and does so by way of summary proceeding in reliance upon terms of settlement.[1] The Court in the present case has an unresolved proceeding before it. The question is whether it should be now resolved in accordance with the terms agreed by the parties or whether the plaintiff should be permitted to continue with it despite the outcome of the mediation. I should add that the plaintiff now seeks to add to his original claim a claim for ownership of the Hawksburn property by reason of adverse possession. Such a claim would in effect amount to an alternative claim to the principal asset in the estate.
[1]See Seachange Management Pty Ltd & Anor v Pital Business Pty Ltd [2009] VSCA 139 (18 June 2009); Roberts v Gippsland Agricultural & Earthmoving Contracting Company Pty Ltd [1956] VLR 555.
The plaintiff contends he should not be bound by the terms of settlement. He contends first that the settlement was flawed because the directions as to the exchange of affidavits made by Master Evans were not strictly or fully complied with. This contention must fail. Procedural irregularity of this type could not invalidate a settlement agreement if such agreement was otherwise valid.
The plaintiff next contends that he should not be held to the terms because:
(a) he was pressured to settle by counsel who appeared for him at the mediation;
(b) he signed the terms without fully understanding them; and
(c) he did not understand that the terms included a release for any claim he might make to the Hawksburn property by reason of adverse possession.
The defendants have sought to meet these contentions by calling evidence from Mr Goldblatt who appeared as counsel for the plaintiff at the mediation.
In turn the plaintiff has called evidence from the solicitor who acted for him and instructed Mr Goldblatt at the date of settlement.
In his evidence Mr Goldblatt was careful to avoid any issue of breach of professional privilege. He was asked to respond to each of the matters directly raised by the plaintiff in the affidavits sworn by him and did so. He did not address some matters of detail subsequently raised in the evidence of Mr Da Gamma but not put to him.
He described the steps he took prior to the mediation which included conferring with the plaintiff and advising him as to the strategy which should be adopted.
He stated that at the mediation he did not speak to the plaintiff other than in the presence of his instructing solicitor Mr Da Gamma.
In respect of the allegation of pressure, Mr Goldblatt denied that he pressured the plaintiff to settle. Mr Goldblatt said that the plaintiff exhibited a clear understanding of the negotiations between the parties. Mr Goldblatt was surprised when the plaintiff agreed to accept the offer which he did. He did not expect the matter to settle at that stage.
Mr Goldblatt did not put undue pressure on the plaintiff to sign the terms of settlement. Quite to the contrary he was very concerned the plaintiff understood the terms. Mr Goldblatt had what he characterised as ‘very colourful’ correspondence in his brief, which made him particularly concerned to ensure the plaintiff understood the terms of settlement.
As to the suggestion Mr Goldblatt took the terms away from the plaintiff before he had time to read them properly, Mr Goldblatt said he read the terms out to the plaintiff. He gave the plaintiff a copy to read and waited while he did so. He did not pull anything away from the plaintiff and there were no time constraints.
The plaintiff did not at the time suggest to Mr Goldblatt that he could not read the terms because of a lack of reading glasses. Mr Goldblatt cannot recall if the plaintiff actually had reading glasses with him or not.
There was a delay at the mediation during which both sides to the dispute waited for the terms of settlement to be typed up by the mediator and then considered the terms produced by the mediator. The delay was not caused by Mr Goldblatt as the plaintiff alleges. When the terms were typed up Mr Goldblatt went through the terms in detail with the plaintiff. This was an interactive process and Mr Goldblatt believes the plaintiff asked questions about the terms although he cannot recollect specifically what those questions were. The plaintiff said nothing about not understanding the terms. Mr Goldblatt would not have allowed the plaintiff to sign the terms unless Mr Goldblatt was satisfied he fully understood them. Mr Goldblatt believes the plaintiff signed the terms of his own free will.
In response to the allegation that Mr Goldblatt put into the terms without instructions a release of all further claims against the estate, ‘including any equitable claims for adverse possession’, Mr Goldblatt’s evidence is that the clause complained of was fully explained to the plaintiff by Mr Goldblatt. Mr Goldblatt told the plaintiff that the terms would result in a ‘total divorce’ between the parties. It was a divorce of all claims and dealings between the parties. There had been discussion at the mediation of the plaintiff’s claim for adverse possession and it was plain that the terms were intended to settle this claim. Mr Goldblatt had advised the plaintiff about the potential claim for adverse possession prior to the settlement.
In cross‑examination Mr Goldblatt denied that he had perjured himself. He said it was his practice to take draft terms of settlement to a mediation of the type in issue. He did so on this occasion but such terms did not form the basis of the settlement. The plaintiff was incorrect in assuming that they did. Mr Goldblatt did not insert the release complained of into the terms of settlement. The mediator did.
The release reflected the settlement agreed.
The agreement was reached about 5:00 pm but the terms were not finalised and signed until about 7:00 pm.
Mr Goldblatt gave advice to the plaintiff about the adverse possession question prior to the mediation. He advised such a claim would require a separate and distinct proceeding and should not be instituted unless the outcome of the mediation was unsuccessful.
He did not draw affidavits in reply to the defendants’ affidavits following a conference with the plaintiff at which it was agreed to limit costs.
It was clear that a cornerstone of the settlement was that the Hawksburn property be sold but the plaintiff would get a greater share of the proceeds than he would under the will.
The plaintiff was also cross‑examined on his affidavit material.
I note that that material in part recognises matters to which Mr Goldblatt and Mr Da Gamma referred. Thus the plaintiff states at one point ‘Mr Goldblatt failed to follow my instructions to only negotiate on life interest and adverse possession at the mediation hearing.’ This implicitly concedes he understood questions relating to adverse possession would be the subject of negotiation.
In cross‑examination, the plaintiff stated that he was scared by Mr Goldblatt’s estimate of costs at the mediation hearing. The plaintiff says Mr Goldblatt gave him an estimate of $20,000 per day for one to three days if the litigation relating to adverse possession proceeded. He says that in correspondence elsewhere Mr Goldblatt has said he estimated $8,000 a day. This discrepancy was not put in cross‑examination to Mr Goldblatt. I do not accept the plaintiff’s version of the conversation. The terms of settlement deal expressly with the parties costs and it is plain there were discussions about costs at the mediation. I am not persuaded however that they were in any way improper.
The plaintiff further stated he did not cross‑examine Mr Goldblatt about pressure because he is not a barrister by profession and forgot to do so. He agreed he did not complain to his solicitor at the mediation about Mr Goldblatt’s estimate of costs.
The plaintiff also agreed that there was discussion about the adverse possession claim with Mr Goldblatt and that he was given advice about this claim prior to the settlement.
The plaintiff denied that he settled and then changed his mind.
Reference was made to a psychologist’s report from 1979. The plaintiff stated he has had no subsequent psychiatric or psychological treatment. He said ‘I am a very unique and special case of having schizophrenia.’
The Court put to the plaintiff each of the principal provisions of the terms of settlement in turn. The plaintiff denies that he understood any of these terms at the time of settlement.
Mr Da Gamma gave evidence about his retainer by the plaintiff at the end of 2007, initial steps taken on behalf of the plaintiff, and the institution of this proceeding. He described the course followed with respect to the filing of affidavits following directions given by Master Evans on 16 September 2008. He said that Mr Goldblatt advised in conference not to file an affidavit in reply unless the mediation proved unsuccessful. This would potentially avoid costs.
He agreed that at the mediation there was discussion between the plaintiff and the mediator as to whether the property could be sold privately or should be sold by public auction.
He agreed that he did not instruct Mr Goldblatt to prepare draft terms of settlement to take to the mediation.
He said that when he first entered the building in which the mediation was conducted he said to the plaintiff ‘don’t let them pressure you’. He was referring to the defendants.
He agreed that in his opening statement Mr Goldblatt said that the plaintiff had a strong case for a life interest in the Hawksburn property and a strong claim for adverse possession of it. This led to a discussion between the plaintiff and the mediator about the claim for adverse possession.
Mr Da Gamma agreed that in the course of the negotiations Mr Goldblatt came down in the figure he sought to obtain by way of settlement. Negotiations commenced with the plaintiff claiming a life interest. This was rejected by the defendants and negotiations then proceeded on the basis of division of the value of the Hawksburn property between the beneficiaries. Mr Goldblatt telephoned various estate agents to find out how much a two bedroom unit in Hawksburn would cost. He tried to recover an appropriate amount to cover the purchase of such a unit. Offers and counter‑offers were put back and forth. The first figure put on behalf of the plaintiff was that as part of a value of $890,000, $100,000 would be applied to costs and of the balance the plaintiff would receive $300,000 before division equally of the balance between the beneficiaries.
During the course of the process of offer and counter‑offer the plaintiff did say to Mr Goldblatt at one point that the figures were below his expectations. Mr Goldblatt responded that if the plaintiff did not go to a lower figure the matter would not settle. Every offer was put to the defendants with the plaintiff’s consent.
Mr Da Gamma agreed that Mr Goldblatt did give the plaintiff an estimate of costs and said that if the matter didn’t settle there would be further costs and that the proceeding could go on for one, two, or three days. Mr Goldblatt also told the plaintiff that if he did not settle Mr Goldblatt would send him a letter saying that the failure to settle was against Mr Goldblatt’s advice.
When Mr Da Gamma and the plaintiff were walking from the mediation centre back to the mediator’s chambers Mr Da Gamma asked the plaintiff whether he was happy with the terms of the settlement. The plaintiff said he was not happy with the figure but had accepted it.
Mr Da Gamma agreed it was some time before Mr Goldblatt arrived after they arrived at the mediator’s chambers. The mediator typed up the terms on her computer. She was not talking on the phone, she was typing up the terms. When the terms were printed out Mr Goldblatt gave the plaintiff a copy. Mr Da Gamma took the plaintiff aside and asked him to read the copy. Mr Da Gamma explained the gist of the settlement and asked the plaintiff to read the document. The plaintiff read the document and signed each page.
After the terms were first brought out Mr Da Gamma had insisted that a clause be inserted requiring each of the beneficiaries to sign the terms and return counter‑signed copies to Mr Da Gamma. Counsel for the defendants said to hurry up, he had a daughter in hospital. Mr Da Gamma agrees that the defendants’ counsel was in a hurry.
When the amended terms were brought back Mr Da Gamma does not remember Mr Goldblatt pulling the papers away from the plaintiff or saying don’t read the terms.
Mr Da Gamma insisted that the plaintiff read the document and understood it.
In cross‑examination Mr Da Gamma said that after the terms were signed Mr Da Gamma and the plaintiff went down in the lift and stood outside Owen Dixon West Chambers. Mr Da Gamma said the matter was over and asked the plaintiff if he was happy with the settlement. The plaintiff said ‘well I have signed the documents now’. Mr Da Gamma believed the plaintiff understood the terms. Mr Da Gamma had explained to the plaintiff that the matter would come to an end and there would be no further claims for adverse possession if he settled. The plaintiff also understood he was getting more than his siblings.
Mr Da Gamma faxed a copy of the terms to the plaintiff shortly thereafter together with a letter which the plaintiff signed and sent back. The letter which was forwarded back at 19:59 hours on 16 April 2009 (ie about an hour after leaving the mediator’s chambers) stated omitting formal parts:
I have further read the contents of the agreement of settlement and I confirm that I agreed to the terms of that settlement.
With thanks,
Russell Morse
Mr Da Gamma had told the plaintiff he could walk away from the settlement before the terms were signed.
Mr Da Gamma’s evidence is further that Mr Goldblatt did say to the plaintiff words to the effect ‘there will be a total divorce’. Mr Goldblatt did tell the plaintiff that there could be no further claims. The plaintiff asked if he could sign the terms and still agitate the question of adverse possession. Mr Goldblatt told the plaintiff that could not be done.
Mr Da Gamma also explained the terms to the plaintiff but the word ‘divorce’ was not Mr Da Gamma’s word. It was Mr Goldblatt’s word. Mr Da Gamma said the same thing to him in different words. He told the plaintiff that he could not claim for adverse possession if he signed the terms.
The plaintiff asked Mr Da Gamma specific questions about the terms before they were signed. He asked about clause 1(c) of the terms (relating to the division of the proceeds of sale) and he asked about clause 4 (the release).
Mr Da Gamma was concerned to explain the terms carefully to the plaintiff partly because of the correspondence which had concerned Mr Goldblatt and which Mr Goldblatt had discussed with him. Mr Da Gamma had told Mr Goldblatt that it was imperative the plaintiff understood the terms before he signed. Mr Da Gamma made sure the plaintiff understood the terms. He then went a step further and got a letter confirming the plaintiff understood the terms that night.
Mr Da Gamma maintained in strong terms in re‑examination that he did explain the terms to the plaintiff. Mr Da Gamma denied he had fabricated his evidence. He further denied that he sent the letter to the plaintiff because he knew that there had been goings on at the mediation which were wrong.
I accept Mr Goldblatt’s evidence as to his dealing with the plaintiff at the time the terms were signed. It is materially corroborated by Mr Da Gamma who gave careful, detailed and circumstantial evidence. Both witnesses gave essentially consistent evidence about events which occurred only three and a half months ago.
The fundamental basis of the settlement was the sale of the Hawksburn property with vacant possession. The plaintiff could not have been taken through the terms without appreciating this fundamental fact and I am satisfied the terms were explained to him.
The terms first provided for the sale of the property by public auction and then for the distribution of the proceeds in shares which increased the amount payable to the plaintiff from that which he would receive under the will. The terms required the defendants to arrange the sale of the property as soon as practicable. The terms required the plaintiff to provide a removal of caveat and take other steps to facilitate the sale. They then provided for a release to be given by the plaintiff in consideration of the moneys payable to him under the terms. The terms provided for payments to the plaintiff to be linked specifically to the settlement of the Hawksburn property. They then provided for a further mutual release on comprehensive terms. The terms provide for the further resolution of this proceeding and record that the defendants waive any entitlements to executor’s commission.
The proposition that the plaintiff did not understand he was giving up a claim to ownership resulting from adverse possession cannot be accepted.
(a) There could be no effective auction sale and hence no effective settlement at all if this was so.
(b) The potential claim for adverse possession was squarely raised during the course of negotiations at the mediation.
(c) I accept Mr Goldblatt’s evidence that he carefully explained the terms to the plaintiff and in particular the fact that they would result in what he called a total divorce preventing further claims by the plaintiff for adverse possession.
(d) I accept Mr Da Gamma’s evidence that he also carefully explained the terms to the plaintiff.
(e) The plaintiff is neither illiterate nor unintelligent.
(f) The terms were signed by the plaintiff personally only after such explanations. He signed each page.
(g) The plaintiff signed the facsimile letter to Mr Da Gamma confirming he understood and accepted the terms very shortly after they had been executed.
The proposition that the plaintiff only entered into the agreement because of pressure particularly as to costs should also be rejected.
(a) It was entirely proper for Mr Goldblatt to give to the plaintiff an estimate of potential costs at the mediation.
(b) That estimate was not the subject of criticism to or discussion with the plaintiff’s solicitors.
(c) There is no basis on which it can be concluded the estimate given was in fact somehow improper.
(d) I accept Mr Goldblatt’s evidence the plaintiff was not pressured and chose himself to accept the settlement offer which surprised Mr Goldblatt.
(e) I accept the evidence of both Mr Goldblatt and Mr Da Gamma that this occurred in the course of progressive negotiations in accordance with instructions from the plaintiff.
(f) There was in effect a cooling off period of some two hours or so after agreement was reached in principle but before the plaintiff signed the terms.
(g) Mr Da Gamma told the plaintiff he could walk away from the settlement during this period.
(h) The terms were then signed only after the plaintiff had been taken through them and he had asked questions about them. In particular I accept Mr Da Gamma’s evidence that the plaintiff asked a question about the division of the proceeds relating to Clause 1(c) which dealt among other things with the question of the parties’ costs to date. I also accept that he asked a question about Clause 4. Mr Goldblatt also recollects the asking of specific questions.
(i) The terms were finally signed only after the plaintiff had been taken through them by his legal advisors.
(j) The plaintiff subsequently confirmed in writing to Mr Da Gamma that he understood and accepted the terms of settlement.
One of the plaintiff’s submission to me is that the law should provide for a cooling off period after mediations result in settlement. There is no statutory scheme to this effect at present. In my view it is plain when the evidence is looked at as a whole that the plaintiff signed the terms understanding their effect and in particular understanding that they prevented a further claim by him to the Hawksburn property and required its sale. Subsequently he has sought to go back and revive that claim. In my view, he has failed to establish facts which would entitle him to avoid the effect of the document which he signed.
Accordingly, the defendants are entitled to rely upon the terms of settlement and the proceeding should be disposed of in accordance with those terms.
I will hear counsel and the plaintiff as to the appropriate orders in the circumstances.
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