Re Parsons
[2014] VSC 244
•30 May 2014
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
PROBATE LIST
No. 5002 of 2013
IN THE MATTER of Pt IV of the Administration and Probate Act 1958
-and-
IN THE MATTER of the estate of NOEL PARSONS, deceased
| JEAN MACK | Plaintiff |
| v | |
| ALAN FRAZER PARSONS (who is sued as the executor of the will and estate of Noel Parsons, deceased) | Defendant |
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JUDGE: | McMillan J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 23 May 2014 | |
DATE OF JUDGMENT: | 30 May 2014 | |
CASE MAY BE CITED AS: | Re Parsons | |
MEDIUM NEUTRAL CITATION: | [2014] VSC 244 | |
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CONTRACT — Terms of settlement — Interpretation — No point of principle
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APPEARANCES: | Counsel | Solicitors |
| For the plaintiff | No appearance | Arnold Thomas & Becker |
| For the defendant | Mr M Morrison | Robertson Hyetts |
| For Jane Piconi | Mr J Smith | Slater & Gordon |
HER HONOUR:
Background
Noel Parsons (‘the deceased’) died on 8 February 2013 leaving a will dated 13 October 2006. Probate of the deceased’s will was granted to the defendant on 16 April 2013.
Pursuant to Pt IV of the Administration and Probate Act 1958, Jean Mack, a daughter of the deceased, made a claim seeking provision for her maintenance and support. The Pt IV claim was mediated successfully on 11 December 2013 by way of judicial mediation. Both parties were represented at the mediation by solicitors and counsel. Jean Mack was too ill to attend the mediation. It was agreed that Jean Mack should sign the terms by 16 December 2013. Jean Mack signed the terms of settlement on 12 December 2013 at the Alfred Hospital.
That same day, Jean Mack executed a will naming Jane Piconi as her executrix. The validity of that will is challenged by the defendant.
The terms of settlement provided that the defendant agreed to pay and Jean Mack agreed to accept, in full settlement of her claim, the sum of $72,500 payable by two payments, one of $25,000 and the other of $47,500. The settlement was inclusive of her costs (defined as the ‘settlement sum’). The terms of settlement are a binding and enforceable agreement, and there is no allegation of mistake or undue influence in their execution.
The clauses relevant to payment of the settlement sum are clauses 3 and 10:
3.Subject to paragraph 10, the settlement sum shall be paid [Jean Mack’s] solicitors, Arnold Thomas & Becker, for [Jean Mack] as to $25,000 by 18 December 2013 and as to the balance by 31 January 2014.
…
10. (a) the payment of $25,000 referred to in paragraph 3 is not subject to and conditional upon [Jean Mack’s] survival to receive the payment;
(b)the payment of the balance of the settlement sum is subject to and conditional upon [Jean Mack’s] survival to receive the balance of the settlement sum.
A dispute has arisen concerning the interpretation of paragraphs 3 and 10 of the terms of settlement in relation to the payment of the balance of the settlement sum of $47,500 to Jean Mack.
Both clauses were handwritten amendments to a typed terms of settlement prepared prior to the mediation. The dates, including the date of 31 January 2014, were negotiated by the parties at the mediation. Clause 10 was included at the request of the defendant because there was a concern that the medical condition of Jean Mack may have been such that she might pass away in the near future.
On 17 December 2013, the solicitors for the defendant sent a letter and a cheque for $25,000 to the solicitors for the plaintiff, which cheque was banked. On 13 January 2014, the solicitors for the defendant sent a letter and a cheque in the amount of $47,500 to the solicitors for Jean Mack, which cheque was banked and is held in trust by the solicitors for Jean Mack.
Jean Mack died on 26 January 2014.
On 28 January 2014, the defendant was informed of the death of Jean Mack. On 29 January 2014, the solicitors for the defendant sought repayment of the sum of $47,500 from the solicitors for Jean Mack. On 31 January 2014, the solicitors for Jean Mack informed the solicitors for the defendant that the $47,500 would not be disbursed other than with the agreement of the parties or by order of the Court.
On 13 March 2014, Jane Piconi filed an originating motion seeking a grant of probate of the will of the deceased dated 12 December 2013.[1] The defendant, having lodged a caveat against the grant on 5 March 2014, was given notice of the application by the Registrar on 14 March 2014, and on 11 April 2014 filed a statement of grounds of objection.
[1]Victorian Supreme Court proceeding number S PRB 2014 03535. That application is an application by Jane Picone who is in the will called Jane Piconi. I was informed by counsel upon handing down the judgment that her name is Jane Piconi, and have referred to her as such throughout my reasons.
On 17 April 2014, the defendant filed a summons for directions in the probate application. Pursuant to that summons, the parties appeared on 16 May 2014 in the Probate List. At that hearing, they sought orders in respect of the terms of settlement of the Pt IV claim that:
(a)Jane Piconi have leave to appear at the hearing concerning the terms of settlement pursuant to r 16.03 of the Supreme Court (General Civil Procedure) Rules 2005;
(b)The parties file an agreed statement of facts and a copy of the terms of settlement, and the matter be adjourned to the following week for hearing.
The defendant has formed the view that he is entitled to the sum of $47,500 held by the solicitors for Jean Mack under the terms of settlement. Jane Piconi has formed the view that, as the executrix of the will of Jean Mack, she is entitled to the sum.
The interpretation of the terms of settlement
The parties agreed that the principles to be applied to the interpretation of the terms of settlement are succinctly set out by Hargrave J in Buxton Constructions Pty Ltd v Golf Australia Holdings Ltd:
It is necessary to construe the relevant provisions of the terms of settlement in accordance with general principles of contractual interpretation. This requires the Court to consider what reasonable persons in the position of the parties would have understood the words to mean, by reference to the text of the agreement, the surrounding circumstances known to the parties and the purpose or object of the transaction. Further, in interpreting the words and resolving any ambiguity, the Court should proceed in a common sense and non-technical way and give the agreement a commercially sensible construction.[2]
[2][2007] VSC 10 (15 February 2007) [19]. See also the cases cited by his Honour in assembling that succinct statement: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165; Cohen & Co v Ockerby & Co Ltd (1917) 24 CLR 288; Hillas & Co Ltd v Arcos Ltd [1932] All ER 494, 499, 503–4; Upper Hunter County District Council v Australian Chilling and Freezing Co Ltd (1968) 118 CLR 429, 437; Australian Broadcasting Commission v Australasian Performing Right Association Ltd (1973) 129 CLR 99, 109–10; Di Dio Nominees Pty Ltd v Brian Mark Real Estate Pty Ltd [1992] 2 VR 732, 740; MLW Technology Pty Ltd v May [2005] VSCA 29 (28 February 2005) [76]–[81]; Mannai Investments Co Ltd v Eagle Start Life Assurance Co Ltd [1997] AC 749, 770–1.
The defendant’s submissions
Counsel for the defendant submitted that the sum of $47,500 should be repaid to the estate of the defendant because clause 10(b) of the terms of settlement should be interpreted to mean that Jean Mack would be paid or be entitled to the balance of $47,500 on 31 January 2014 only if she survived to that date.
In response to the submissions of counsel for Jane Piconi that survival means survival until payment and not survival until 31 January, counsel for the defendant submitted that:
(a)if that were the case, there would have been no point in inserting clause 10(b) in the terms of settlement;
(b)it should be assumed that the parties drafted and inserted clause 10(b) into the terms for some purpose or reason. When the terms were written it was not known then that the cheque would be sent early, therefore, ‘survival’ refers to 31 January 2014 and not a date of payment; and
(c)it would be illogical for the payment of $25,000 not to be subject to and conditional on the survival of Jean Mack, but the balance to be subject and conditional upon her survival. There would be no need to have this distinction if the second payment was not subject to her survival.
Jane Piconi’s submissions
Counsel for Jane Piconi submitted that:
(a)clause 1 of the terms of settlement contained an obligation on the defendant to pay and an entitlement by Jean Mack to be paid the sum of $72,500;
(b)clause 3 of the terms was a stipulation for the time by which the obligation under paragraph 1 was to be completed; and
(c)clause 10(b) imposed a condition on receipt of payment and was not a condition of entitlement or timing.
This meant that, if Jean Mack were alive at the time the payment was received, then the condition was satisfied.
The sum of $47,500 was received by the solicitors for Jean Mack, as her agents, on 13 January 2014. At that date, Jean Mack was still alive. On counsel for Jane Piconi’s interpretation, the estate of Jean Mack is entitled to retain the payment.
It was also submitted by counsel for Jane Piconi that the authorities are clear that the interpretation of the terms of settlement are not concerned with the subject of intention. As the defendant does not seek rectification of the terms on the basis that they do not reflect the common intention of the parties, there is no need to consider that intention.
Conclusions
In my view, there is no ambiguity in the relevant paragraphs of the terms of settlement. Applying the principles set out in Buxton Constructions Pty Ltd v Golf Australia Holdings Ltd,[3] reasonable persons in the position of the parties, by reference to the text of the agreement, the surrounding circumstances known to the parties and the purpose of the transaction, would understand the words in clauses 3 and 10 of the terms of settlement to mean that Jean Mack must be alive to receive the sum of $47,500.
[3][2007] VSC 10 (15 February 2007) [19] (Hargrave J).
Clause 3 and clause 10 are separate, but related clauses. Clause 3 provides that the sum of $47,500 must be paid no later than 31 January 2014. Clause 10(b) provides that the payment of the sum was conditional upon Jean Mack surviving to receive that sum, that is, it was a condition that she be alive to receive the sum of $47,500. Clause 10(b) does not require that Jean Mack be alive at 31 January 2014.
The requirement in the terms for the payment of the $47,500 should not be read as providing an entitlement that arises only on 31 January 2014. Instead, the terms stipulate that the payer is to pay the settlement sum by that date. If survival to 31 January 2014 were a condition of the payment, the payment could not take place until after 31 January 2014. This does not accord with the obligation to pay at the latest by 31 January 2014.
As the sum was received by Jean Mack’s solicitors on 13 January 2014 when she was alive, it follows that the $47,500 should now be paid to her estate.
Costs
The defendant submitted that he had a duty to try to reclaim the sum of $47,500 in his capacity as executor, and that accordingly his costs of doing so should be paid out of the estate. It was submitted that he has not been negligent in his duty and nor is he guilty of misconduct, he has acted in good faith, and should not be deprived of his costs in the absence of an active violation or some culpable or gross neglect of duty. The defendant conceded that, if Jane Piconi were successful, her costs should also be paid out of the estate.
It is not clear from the submissions, but is assumed (by reference to the fact that the defendant refers to himself as the trustee) that the estate referred to is the estate of Noel Parsons, not the estate of Jean Mack. In my view, this proceeding is akin to litigation between estates. The appropriate order is that costs should follow the event, that is, the estate of Noel Parsons should pay the costs of Jane Piconi on the standard basis. If the defendant has acted inappropriately in pursuing the litigation, and beneficiaries of the estate of Noel Parsons seek to recover the costs of the litigation against him in his personal capacity, that is a matter for them. It is not for this Court to delve into that question only on the agreed facts before me.
I shall hear the parties as to appropriate orders to be made.
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