Re: Estate of Pettitt & Pettitt (deceased) No. Scgrg-98-651 Judgment No. 6701 Number of Pages 8 Succession

[1998] SASC 6701

RE:  ESTATE OF PETTITT & PETTITT (DECEASED) V MAGAREY & MAGAREY

Application

LANDER J

This is an application by the executors and trustees of the estates of Dorothea Rosalie Pettitt and Dudley Bertram Pettitt for advice and directions pursuant to s69 of the Administration And Probate Act (1919).

Dorothea Rosalie Pettitt died on 24 February 1985 and Dudley Bertram Pettitt died on 17 August 1994.  Both deceased died testate and probate of Dorothea’s will was granted to Brian Attiwill Magarey and Michael Roy Magarey, both solicitors, on 24 April 1985.  Probate of Dudley’s will was granted to Mr Brian Magarey and Mr Michael Magarey on 28 February 1995.

Dorothea Pettitt and Dudley Pettitt were husband and wife.

They had two children, Jill Sykes and Valmai Williams.  Mrs Sykes has five children but Mrs Williams is childless.

After the death of Dorothea Pettitt, Dudley Pettitt married for a second time and his second wife, Marjorie Daisy Pettitt survived him.

Mrs Sykes has brought proceedings in this Court seeking a determination of the true construction of the will and in particular who might be entitled to the income from the residuary estate of Dorothea Pettitt from 30 June 2000 to the date of death of Mrs Sykes and whether the said Dorothea Pettitt died intestate as to part or all of the income of the estate.

She has also sought further provision out of the estate of Dorothea Pettitt and Dudley Pettitt pursuant to the Inheritance (Family Provision) Act “the Act”. 

Those proceedings have been brought against Mr Brian Magarey and Mr Michael Magarey as executors and trustees of the estate of the two deceased; Marjorie Pettitt, Mr Dudley Pettitt’s surviving wife; Valmai Williams, the sister of Mrs Sykes; and Mrs Sykes’ five children.

Mrs Sykes’ claim in those proceedings is many years out of time and she seeks an extension of time within which to bring the proceedings in relation to the claim for further provision out of the estate of Dorothea Pettitt.

Mrs Sykes’ five children have counter claimed but only for the purpose of enabling some proposed terms of settlement to be ordered.

The proposed terms of settlement which are not particularly important for the purpose of this application have been proposed by Mrs Sykes and agreed to by Mrs Marjorie Pettitt and Mrs Sykes’ five children.

As the proposed terms of settlement affect a number of charities who benefit under the will of Dorothea Pettitt an order has been made having one of the charities represent all of the charities in respect of Mrs Sykes’ claims.

It is anticipated that the charities will not stand in the way of the proposed settlement because the terms of settlement do not have a significant impact upon the charities’ entitlements under the wills.

The executors and trustees have made this application to the Court because they are in difficulty and in doubt about:

(a).... Whether they should acquiesce in the proposed terms of settlement or resist settlement.

(b)Whether they should take an active part in the proceedings under the Act by defending them or whether they should simply abide the decision of the Court.

(c).... Whether they should seek a direction of the Court in those other proceedings that some person or persons be appointed to defend the terms of the will and test the evidence presently before the Court in those proceedings.

They previously had advised the Court that they were unsure as to whether or not they should acquiesce in the proposal that one of the charities be appointed to represent the other charities which benefit under the terms of Dorothea Pettitt’s will but that is a matter now which has been resolved and does not need to be considered for the purpose of this application for advice and directions.

The reason why the executors and trustees approach the Court is that Mr Brian Magarey knew both the deceased.  He acted for them and had dealt with them during their lifetimes.  He has sworn an affidavit in which he has said that he is concerned that the proceedings under the Act may be decided on facts about which he has serious reservations.  He is also concerned that some of the evidence presently before the Court in those other proceedings should be tested.

As I have already indicated Mrs Sykes’ children have indicated they are prepared to agree to the terms of settlement and so has Mr Dudley Pettitt’s widow.  It is likely that the charities will also agree.

The executors and trustees have spoken to Mrs Williams and her husband who has been appointed her attorney and who has represented her in relation to the proceedings brought by Mrs Sykes.  The executors and trustees have formed the view from those conversations that Mrs Williams wishes to have the terms of the will adhered to but for other reasons will not present a case in opposition to her sister’s claim.

Apparently her health is such that she is unable to consider the claim without a substantial risk of her breaking down mentally.  Two medical reports have been exhibited from Doctor Barbara Werner, a psychiatrist.  Mrs Williams was apparently diagnosed as suffering from a manic depressive disorder.  She first came under the care of Doctor Werner in about 1983 when she was still suffering from acute episodes of that disorder which required her being hospitalised every one or two years.  Mrs Williams’ mental state improved after that time and she managed to remain reasonably stabilised until late 1995 when she became extremely distressed by Mrs Sykes’ claim for further provision out of her parents’ estates.  On 27 November 1995, Doctor Werner reported:

“In order to preserve Mrs Williams’ good mental health she must not be exposed to the pressures of a court case, whether this case is the result of her sister’s claim or to be a juror (sic).”

Doctor Werner reported again on 26 April 1998.  She said that when she had last seen Mrs Williams, Mrs Williams was suffering from stress and distress.  Her distress was caused apparently by a suggestion made in court that she ran the risk of having to pay costs in the event of an unsuccessful opposition to Mrs Sykes’ claim.  Doctor Werner reported:

“As this type of stress is the sort of precipitating factor that could result in Mrs Williams becoming acutely ill again, I am concerned that the future proceedings, if possible, can proceed without the involvement of either Mr or Mrs Williams, or at least that they be as isolated from the procedures as much as possible.”

Doctor Werner further reported that in order to preserve Mrs Williams’ mental health she must not be exposed to the pressures of a court case or an appearance in court itself.

I was advised by Mr Michael Magarey that he believes that Mrs Williams in order to preserve her good health will consent to the proposed terms of settlement advanced by Mrs Sykes.  The executors and trustees in those circumstances believe that there is a real possibility that the Inheritance (Family Provision) Act proceedings will be settled without the facts advanced by Mrs Sykes being scrutinised by the Court.  In those circumstances, as I have already said, they believe they need the advice and directions of this Court as to whether or not they should take a position in opposition to Mrs Sykes’ claim for the purpose of testing that claim.

In my opinion it would be inappropriate for the trustees to put themselves in a position in opposition to this claim in circumstances where none of the other beneficiaries wish to oppose the application and all of the beneficiaries for different reasons, some better than others perhaps, wished the matter to be compromised.

I am not sure why it is that the children of Mrs Sykes have agreed to the proposed terms of settlement.  It may be that they have because they believe it would be appropriate that their mother receive a further provision out of the estate because insufficient provision had been made for her.  It may be that they have other reasons for agreeing to the settlement terms which she proposes.  It does not seem to me to matter much.  The fact is that they do agree.

Also I am not sure why it is that the widow of Dudley Pettitt is also prepared to agree to the proposed terms of settlement.  She, no doubt, has good reasons.

In the case of Mrs Williams, it is apparent that she will agree to the proposed terms of settlement so as to avoid the proceedings going forward.  She would wish to have the matter settled to preserve her mental health.

Whilst it is unfortunate that the proceedings are a significant threat to Mrs Williams’ mental health the fact that she might settle the proceedings for those reasons is not a reason in my opinion for the executors and trustees to take a position adverse to the remaining beneficiaries of the estate.  Clearly enough it would not be in Mrs Williams’ interests for the proceedings to go forward.  She wishes to settle these proceedings for the purpose of preserving her mental health.  The trustees, if they were to take a position in opposition to Mrs Sykes’ claim, would be in that sense also taking a position adverse to Mrs Williams’ best interests.  Her psychiatrist believes that her best interests are served by preserving her mental health. 

What is the executor’s role in proceedings under the Act?

A person of the class of persons referred to in s6 of the Act can apply to this Court for provision out of the estate of a deceased person.  The application must be served on the administrator of the estate of the deceased person and on such other persons as the Court may direct.

The Rules of Court made under the Act provides that the administrator and every person with a beneficial interest in the estate of the deceased who may be adversely affected by any order sought in the action shall be made a defendant to a summons (application) under the Act [R119.03].  To ensure that all those who might be affected are made parties the plaintiff in any action at the time of issue of the proceedings must file an affidavit deposing to the persons, including any infants, who may be entitled to claim under the Act and all beneficiaries in the estate of the deceased [R119.04].  Within fourteen days the plaintiff must also give a notice to those who might be entitled to claim under the Act stating that the plaintiff has instituted an action and advising those persons if they have an action that they may file a counterclaim and that they should seek legal advice as soon as possible [R119.05].  Any person, other than the plaintiff, who wishes to make a claim may file a counterclaim.

The executor or administrator must within twenty-one days of filing an appearance file an affidavit setting out any facts contradicting the plaintiff’s assertions as to the persons entitled to claim and the beneficiaries in the estate of the deceased.

In that same affidavit the executor or administrator must set out the assets and liabilities of the estate.  Moreover the executor or administrator must, not more than thirty-five days and not less than fourteen days before any pre-trial conference or before the trial date, file a further affidavit setting out any charges in the financial position of the estate since that first affidavit  [R119.12].

The scheme of the Rules requires all those who may be claimants to be brought before the court in the one action.  Moreover all those who may be adversely affected by any claim are made parties to the action.  The Rules provide and suppose that all parties, claimants or otherwise, will be before the court advancing their respective interests.

The Rules require the executor or administrator to provide all information necessary to identify any further claimant and any further beneficiary apart from those identified by the plaintiff.  Moreover the executor and administrator is required to provide all information relating to the assets and liabilities of the estate.

All of the parties who wish to claim against the estate and all those who might be affected by a claim are before the court and in the circumstances it does not seem to me that there is any place for an adversarial role for the executor.

Mr Michael Magarey, who appeared on behalf of his father and for himself, referred the Court to In re Pope, deceased; Pope v Public Trustee (1975) 11 SASR 571. In that case the deceased left an estate of nearly $10,000 which by trial had increased to in excess of $12,000. He was survived by his wife and one child to each of whom he left a legacy of $100. The remainder of the estate was left to the Adelaide Childrens Hospital. The widow made a claim for further provision out of the estate. There was no opposition to the claim. Counsel for the defendant administrator inquired of the Court as to his role. Bray CJ said:

“Mr Willsmore, who appeared for the defendant administrator, asked me what role I thought he ought to play.  He referred to the New South Wales case of In re Newell (deceased) and the New Zealand case of In re McCarthy.  I said that I was inclined to agree with the opinion of Long Innes J in In re Newell (deceased) that, where there is no representation of any party interested to dispute the applicant’s claim, counsel for the executor or administrator should do what he can to assist the court to discharge what the learned Judge described as “its extremely difficult duty” (p 182).  Accordingly Mr Willsmore cross-examined the plaintiff and addressed me.”

That case is different to this one.  In re Pope no party apart from the administrator appeared.  In those circumstances the administrator was bound to assist.  In this case all parties who might be affected by the order have been served and are or will be prepared to agree to the plaintiff’s proposal for further provision.

The case to which Bray CJ referred, In re McCarthy, (1919) NZLR 807 supports, I think, the view which I have taken. In that case the deceased left all of his estate to his two children and nothing to his wife. She was a mental defective resident in an institution. The Public Trustee was executor and trustee of the deceased’s estate. He instituted proceedings as administrator of her estate against himself as executor and trustee of the deceased’s estate. Edwards J said:

“Except in cases of absolute necessity it is, however, undesirable, in my opinion, that an executor should himself undertake the conduct of such a proceeding, which must necessarily be adverse to the interests of the persons beneficially interested in the estate which he is administering.  The executor is by law the guardian of the interests of these persons, and it is contrary to the general principles which regulate the practice in such cases and to R 88 of the Civil Code that he should conduct a proceeding which is adverse to such interests.”

The position is different in New South Wales but that is because the procedure is different.  In the other case to which Bray CJ referred In re Newell (1932) 49 WN NSW 181 Long Innes J said that it was the duty of counsel for executors and trustees appearing in actions of this kind to assist the court. He said:

“It is particularly the duty of counsel for the executor to assist the Court in applications under the Testators Family Maintenance Act, where the executor is frequently the only respondent to the motion.”

In the will of W F Lanfear (deceased) (1940) 57 WN NSW 181 Williams J endorsed the obiter dictum of Long Innes J noting that the Act only required service of the notice of motion upon the executors. He said in those circumstances.

“In an ordinary case, especially where the estate is a small one, it is the duty of the executors either to compromise the claim, or to contest it and seek to uphold the provisions of the will.  For that purpose they should place all the relevant evidence before the Court relating, not only to the case generally, but to any particular circumstances which the Court should take into consideration relating to any particular gift in the will.”

The duty which Long Innes J and Williams J said reposed on administrators arose because the procedure under the Act required only that the administrators of the estate be given notice of the claim.

Williams J went on to say at 183:

“In special cases where for instance the executors are themselves beneficiaries under the will, or where very substantial benefits are conferred upon beneficiaries, it can be proper for beneficiaries to intervene and be separately represented, but as a general rule such separate representation should not be necessary if the executors do their duty.  If beneficiaries desire to intervene an application to do so must be made before or at the hearing, and it is by no means a matter of course that such application will be granted.  If the executors take up an attitude, which compels beneficiaries to seek separate representation to protect their gifts, they run a grave risk of the Court holding that they have acted improperly, and, in a case where the Court considers that only one set of costs should be allowed between the respondents, the result may follow that the Court will order that set of costs to be applied in the first instance on behalf of the beneficiaries who have been forced to intervene, and only the residue to be applied on behalf of the executors.”

Clearly enough the procedure in New South Wales imposed upon administrators in New South Wales obligations not imposed upon administrators by the Rules Of Court in this State.  It can be seen in those two decisions that in New South Wales the legislation and the procedure under it envisaged that beneficiaries who might be affected by a claim were not to play a part in the proceedings.  Their position was to be safeguarded by the administrator:  see also Re S J Hall, deceased (1959) SR NSW 219; Vasiljev v Public Trustee [1974] 2 NSWLR 497.

In Dijkhuijs (formerly Coney) v Barclay (1988) 13 NSWLR 639 Kirby P suggested that the executor’s duty required the executor to place all information before the court whether positive or negative to the plaintiff’s claim, although that dictum has been doubted by Hodgson J in Warren v McKnight (1996) 40 NSWLR 390. In that case Hodgson J said that the underlying principle of the legislation was to put the executor in an adversary role against the plaintiff. He said:

“In my opinion, underlying that principle is the notion that it is the executor who takes an adversary role against the plaintiff, so as to uphold the will and support the interests of beneficiaries.  If it were thought that the executor had a duty to bring forward evidence supporting the plaintiff’s case, then, in my opinion, the principle that normally beneficiaries should be excluded from taking an adversary role in the proceedings would be very seriously undermined.  In my opinion, when one reads the passages relied on by Kirby P in Dijkhuijs (formerly Coney) v Barclay, it is clear that the obligation of the executor to put forward all relevant evidence is qualified by the words which begin the sentence in question, namely “for that purpose”, “that purpose” being to contest the claim and seek to uphold the provisions of the will; and thus it seems to me clear that those three cases all proceeded on the principle that the executor properly takes an adversary role in Family Provision Act proceedings.”

In my opinion the executor’s role in New South Wales is quite different to an administrator’s role in this State.  The Rules Of Court in this State require that the beneficiaries likely to be affected by a claim be served.  They take up the adversarial position.  The administrator in this State must provide the information to which I have referred and then abide the decision of the court and if all parties agree to a settlement the decision of the parties.

Whilst it may be that the executors and trustees are not sure that the evidence brought forward by Mrs Sykes is entirely accurate that is no reason for the executors and trustees to resist or even test the claims made by Mrs Sykes, when all of the beneficiaries for whatever reason, some better than others, wish to settle the matter.

In my opinion it would be inappropriate for the executors and trustees to actively resist Mrs Sykes’ application.  It would not be in the best interests of the beneficiaries of the estate collectively or individually and in those circumstances would be inappropriate.  So also it would be inappropriate for the executors and trustees to apply to this Court for some person to be appointed to defend the terms of the wills and to test the evidence advanced by Mrs Sykes.  That seems to me to be the other side of the same coin and in my opinion, having regard to the attitude of all of the beneficiaries, inappropriate.

The executors and trustees should therefore provide the information which they are obliged to provide pursuant to Rule 119.  They should then, in my opinion, abide the decision of the court or if all parties agree to a settlement of the action under the Act assist in the implementation of that settlement.