Re Sheppard; Heathcote v Sheppard
[2020] VSC 829
•9 December 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2020 02398
IN THE MATTER of the will and estate of ROBERT DIGBY HALBURTON SMITH SHEPPARD, deceased
| BERNARD DAVID HEATHCOTE (who sues in his capacity as executor of the estate of the above named deceased) | Plaintiff |
| v | |
| SUZANNE LOUISE SHEPPARD | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF RULING: | 9 December 2020 |
CASE MAY BE CITED AS: | Re Sheppard; Heathcote v Sheppard |
MEDIUM NEUTRAL CITATION: | [2020] VSC 829 |
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JUDICIAL ADVICE – Whether beneficiary must accept transfer of property in Toorak – Where entitlement to property derives from signed terms of settlement – Summary nature of judicial advice proceedings – Supreme Court (General Civil Procedure) Rules 2015 (Vic) r 54.02 – Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr R Wells | Ellinghaus Weill Lawyers & Consultants |
| For the Defendant | Self-represented |
HER HONOUR:
Background
Robert Digby Haliburton Smith Sheppard (‘the deceased’) died on 13 June 2004 leaving a will dated 1 October 1991 (‘the will’).
Probate of the will was granted to the plaintiff, the deceased’s son-in-law, on 9 September 2004.
The deceased was survived by:
(a) his ex-wife of his second marriage, Ms Suzanne Sheppard (‘Ms Sheppard Senior’), who lived with him at the date of his death;
(b) his daughter from his first marriage, Ms Beverley Heathcote, who is the plaintiff’s wife; and
(c) his two daughters from his second marriage, being Ms Suzanne Sheppard (who is also known as ‘Suzanne Louisa Sutcliffe’) (‘the defendant’) and Ms Diane McDonald.
The deceased’s will provided $50,000 for Ms Sheppard Senior and for the balance of the estate to be transferred to his three children in equal shares.
Since the deceased’s death, the estate has been subject to various proceedings, including:
(a) a testators family maintenance claim initiated by Ms Sheppard Senior.[1] This proceeding was compromised, with parties entering into terms of agreement (the ‘2008 terms’). The 2008 terms provide Ms Sheppard Senior with the right to use and occupy the estate property at 671 Orrong Road, Toorak (‘the Orrong Road property’) until her death, and the sum of $215,000 to be paid to Ms Sheppard Senior’s administrator for her benefit during her lifetime, and the sum of $100,000 to her administrator for any required property improvements, with any remaining amount to be then repaid to the estate upon her death;
(b) a proceeding initiated by the defendant, in which she claimed she was the beneficial owner of a property in South Yarra.[2] This proceeding was dismissed, with Harper J delivering an ex tempore judgement; and
(c) a testators family maintenance claim initiated by the defendant.[3] The parties entered into terms of settlement on 30 November 2010 (‘the 2010 terms’). The 2010 terms provide that all residual rights, title and interest that Diane McDonald and Beverley Heathcote have in relation to the Orrong Road property are transferred to the defendant and that upon the death of Ms Sheppard Senior the property would be voluntarily transferred to the defendant, whereupon she would relinquish all of her rights to receive an equal share in the deceased’s estate.
[1]Proceeding S CI 2004 08598.
[2]Proceeding S CI 2005 09556.
[3]Proceeding S CI 2008 08243.
Ms Sheppard Senior passed away on 30 September 2018. The Orrong Road property remains in the name of the plaintiff as executor of the estate to be dealt with in accordance with the 2010 terms.
The plaintiff is desirous to complete the administration of the estate. From October 2018 to March 2020, he made numerous attempts to have the defendant sign the necessary documents to effect the transfer of the Orrong Road property to her. The estate is still paying the municipal and water rates and the insurance in relation to the Orrong Road property. The defendant intimated that she did not accept the 2010 terms, would not comply with the plaintiff’s request and foreshadowed further proceedings in respect of the plaintiff’s administration of the deceased’s estate. To date, no such proceedings have been filed and the Orrong Road property has not yet been transferred.
Plaintiff’s application
On 26 May 2020, the plaintiff commenced this proceeding, seeking orders:
(a) pursuant to r 54.02(2)(c)(ii) of the Supreme Court (General Civil Procedure) Rules 2015:
(i) directing the defendant to sign and return within three days to the plaintiff’s solicitors the transfer of land and any other documents prepared by them necessary to enable the Orrong Road property to be transferred to her;
(ii) directing the defendant to do all things necessary to enable the Orrong Road property to be transferred from the executor to her;
(b) in the alternative, pursuant to s 22 of the Supreme Court Act 1986, authorising the Prothonotary of the Supreme Court to sign any documents on behalf of the defendant as are required to enable the Orrong Road property to be transferred from the plaintiff as executor of the estate to the defendant;
(c) that the plaintiff’s solicitors lodge such documents for registration at the Titles Office (including paying any necessary stamp duty and lodgement fees associated therewith) on behalf of the defendant;
(d) that the defendant reimburse the estate for all rates and insurances paid by the estate in relation to the Orrong Road property since the date of death of Ms Sheppard Senior;
(e) that the defendant reimburse the estate for any stamp duty and Titles Office fees paid by the estate necessary to enable the transfer of land for the Orrong Road property to be registered in the Titles Office; and
(f) the defendant pay the plaintiff’s costs of and incidental to this proceeding calculated on an indemnity basis, or such other basis as the Court may think fit.
Procedural history
The proceeding was listed for preliminary directions before Judicial Registrar Keith on 19 June 2020. The plaintiff was represented by counsel while the defendant was self-represented. The Court made orders that the parties file any further affidavits on which they intended to rely, returning the proceeding for directions on 31 July 2020.
On 31 July 2020, upon receipt of written submissions by the plaintiff, the Court made orders the defendant file written submissions and then for the proceeding to be determined on the papers. The defendant subsequently filed written submissions.
Submissions
The plaintiff’s submissions
The plaintiff submits that, under the 2010 terms, the defendant (being the plaintiff in that proceeding) gave full releases to the plaintiff herein (both personally and in his capacity as executor of the estate) for all matters connected with the estate and the assets of the deceased in consideration of the benefits contained in those terms. The defendant was legally represented by counsel and solicitor at the time she entered into the 2010 terms.
The defendant, in her affidavit sworn 13 June 2020 in opposition to this proceeding, alleges that:
(a) the plaintiff, as executor of the estate, was in breach of the 2008 terms (in relation to the settlement of the plaintiff’s mother’s claim); and
(b) when she signed the 2010 terms, she was not aware of those purported breaches by the executor and that therefore she had executed the 2010 terms without genuine consent.
In response to these allegations, the plaintiff submits that the defendant is bound by the 2010 terms and that she has no rights or standing now to make any other claim against the estate, other than to enforce her rights pursuant to the 2010 terms.
The defendant submits that the only remaining entitlement that the defendant has pursuant to the 2010 terms is to have the freehold of the Orrong Road property transferred to her, and yet the defendant has refused to co-operate to enable the transfer. This has necessitated the plaintiff bringing this proceeding and seeking orders from the Court enabling him to carry out his obligations pursuant to the 2010 terms and complete the administration of the estate.
The plaintiff submits that he has at all times acted conscientiously and diligently as executor of the estate, including by continuing to pay the rates, insurances and outgoings on the Orrong Road property following the death of Ms Sheppard Senior pending the transfer of the property to the defendant. Accordingly, the plaintiff seeks orders that the defendant repay him those amounts.
The defendant’s submissions
In her affidavits[4] and submissions, the defendant makes a number of allegations in respect of the deceased’s estate and the plaintiff’s conduct as executor in respect of the estate administration and compliance with the 2008 terms.
[4]Unsworn affidavits of Suzanne Louise Sheppard filed 17 June 2020 and 24 Jul 2020.
The defendant alleges, inter alia, that:
(a) the deceased did not have testamentary capacity at the date the will was executed;
(b) in respect of the 2008 settlement terms, the plaintiff was required to pay to the administrator of Ms Sheppard Senior the sum of $215,000, plus $100,000 to be used for the maintenance of the Orrong Road property. The amounts were not held by the administrator, but by the plaintiff and Ms Beverley Heathcote and Ms Diane McDonald in breach of the terms;
(c) she has never been able to obtain a full accounting of the plaintiff’s administration of the deceased’s estate, despite numerous requests; and
(d) the plaintiff wrongfully transferred the deceased’s property located at 28/530 Toorak Road, Toorak (‘the Toorak Road property’) to Ms Heathcote, following probate being granted, when he was not entitled to do so.[5]
[5]The plaintiff has filed a responding affidavit sworn 8 July 2020 refuting these allegations and the suggestion the estate had not been administered properly. In particular, the plaintiff deposes that the $215,000 payable to Ms Sheppard Senior following the 2008 settlement were paid to her administrator, with the balance only transferred back following her death, and that the $100,000 held for maintenance property was made available for any request issued by her administrator.
The defendant denies that the 2010 terms give a full release to the plaintiff for all matters connected with the estate and the assets of the deceased, and notes that she is entitled to have the Court properly examine the matters she has raised at a full hearing.
The defendant contends that, on 30 November 2010, when the terms were executed, she was not, nor could she have been, aware that the 2008 terms had been breached by the executor. Further, she submits that she was not aware that the executor was not properly adhering to the 2008 terms. Finally, she states that she was not aware that the plaintiff had potentially wrongfully transferred the Toorak Road property from the deceased’s estate.
The defendant submits that, since becoming aware of these breaches, she has repeatedly sought accounting from the plaintiff in relation to the administration of Ms Sheppard Senior’s estate. She states that, other than a bare denial, the plaintiff has not provided any cogent evidence to address these concerns. The defendant submits that she has also sought an explanation in relation to the Toorak Road property, but that the plaintiff has simply dismissed these request without providing any explanation or evidence.
According to the defendant, the plaintiff, in this proceeding, seeks to permanently, and on a summary basis, shut out the defendant from arguing her position in relation to potential breaches of the 2008 terms, the enforceability of the 2010 terms and any other matters concerning the conduct of the administration of the deceased’s estate. To do so, she submits, would be an injustice to the defendant and deny her the right to properly argue her claim. She submits that it would be akin to giving final relief in circumstances where there is a real issue in dispute.
The defendant seeks orders that the matter not be determined on the papers or summarily, that there ought to be a proper accounting of the deceased’s estate, and that the matter proceed to trial.
Consideration
The plaintiff, as executor of the deceased’s estate, and the defendant, executed the 2010 terms to resolve the defendant’s pt IV claim. The settlement is in writing and was executed by both parties at a time when they were both represented by legal practitioners. The terms provide that, upon the death of Ms Sheppard Senior, the plaintiff was to transfer the Orrong Road property to the defendant in lieu of any claim or entitlement the defendant has to the estate of the deceased. The defendant consented to the settlement.
The plaintiff now seeks orders to ensure compliance with those terms and provide the defendant with the benefit she receives under the settlement, so as to bring to an end the lengthy administration of the estate.
The 2010 terms are unequivocal and there is nothing before the Court to suggest they are not valid. The parties are bound by them.
The defendant raises a number of allegations in respect of the administration of the estate. These issues are not directly responsive to the plaintiff’s application and do not fall within the scope of this proceeding. The defendant does not contend she is not entitled to the property or provide any explanation as to why the property should not be transferred to her.
Instead, the defendant seeks to raise a number of concerns with respect to the administration of her father’s estate. This proceeding is not the proper forum to raise such issues. While, as a beneficiary, she is entitled to accounts in respect of the estate administration, there are other legal avenues in which to obtain this information. In respect of her allegations concerning the 2008 terms, the defendant is not a party to that settlement, having been explicitly removed as a party to that proceeding by the Court. Therefore, the defendant is unlikely to have standing to issue any legal proceeding to impugn that agreement. This proceeding is certainly not the appropriate vehicle to do so and her allegations in respect of that settlement do not relieve the parties of their obligations under the 2010 terms. The allegations in respect of testamentary capacity and the transfer of the Toorak Road property are similarly not germane to the relief sought by the plaintiff in this proceeding. Those allegations do not cause the Court to consider that the parties are not bound by the obligations under the 2010 terms.
The defendant’s claim that these issues should not be subject to a summary decision but should be explored at a full trial are misconceived. The proceeding before the Court is an application for judicial advice or directions to enable the executor to transfer to the defendant her entitlement under the 2010 terms. The High Court has stated that the procedure under such judicial advice provisions are summary in nature.[6] The tangential issues raised by the defendant are not issues requiring the Court’s adjudication in this proceeding.
[6]See Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Dioceve of Australia and New Zealand (2008) 237 CLR 66, 90 [61] (Gummow ACJ, Kirby, Hayne and Heydon JJ), in relation to the interstate equivalent of Trustee Act 1925 (NSW) s 63.
The administration of the deceased’s estate is nearing its sixteenth year, and the second year since Ms Sheppard Senior’s death. During this time, the estate has been subject to multiple, and ultimately fruitless, proceedings. It is in the interests of the parties to finalise this matter, especially since the estate is now almost entirely distributed.
The Court will make the orders sought by the plaintiff, subject to the following matters.
The plaintiff seeks an order directing the defendant to do certain things, including sign and return the transfer of land. The plaintiff seeks these orders pursuant to r 54.02(2)(c)(ii), which empowers the Court to make an order:
directing any act to be done in the administration of an estate or in the execution of a trust which the Court could order to be done if the estate or trust were being administered or executed under the direction of the Court.
In the context of a deceased estate, the provision is regularly relied upon by executors seeking advice or to authorise their proposed course of action. Under r 54.02, the Court has a broad jurisdiction and power to advise and direct executors in relation to the performance of the estate and, where appropriate, to approve their entering into and performance of any transaction.[7] However, the plaintiff has not directed the Court to, and the Court is not aware of, any authority to suggest that the Court has the power to order that a beneficiary perform tasks such as the execution of documents. Clearly, a trustee does not have the power to compel a beneficiary to do so and, following the rule in Re Hazeldine’s Trusts, ‘if the trustees cannot do it, neither can the Court’.[8]
[7]Hornsby v Playoust (No 2) [2005] VSC 125, [10] (Mandie J), referring to Re Green (dec'd)[1972] VR 848, 850 (Crockett J); Templeton v Leviathan Pty Ltd (1921) 30 CLR 34, 74; Re Atkinson (dec'd)[1971] VR 612, 615 (Gillard J).
[8][1908] 1 Ch 34, 40–1 (Farwell LJ), cited in Gonzales v Claridades (2003) 58 NSWLR 211, 218 (Mason P).
It is sufficient for the administration of justice and the resolution of the issues in dispute between the parties in this proceeding that, in light of these reasons, the defendant be given the opportunity to do all things necessary to effect the transfer and, failing that, for the Prothonotary to take the necessary steps in her place. Thus, the orders as they relate to the defendant will be voluntary, rather than coercive.
Orders
The Court orders that:
(a) Pursuant to r 45.05 of the Supreme Court (General Civil Procedure) Rules 2015, the plaintiff be authorised to commence this proceeding by originating motion in Form 5C, and that the requirements of rr 5.03(1) and 8.02 be dispensed with.
(b) The defendant be given the opportunity to properly execute and return, within 14 days of receipt of same, to the plaintiff’s solicitors the transfer of land and any other documents prepared by them necessary to enable the Orrong Road property to be transferred from the plaintiff as executor of the estate to the defendant.
(c) In the event that the defendant fails to comply with paragraph (b) of these orders, upon the solicitor for the plaintiff swearing an affidavit deposing to such failure by the defendant, then, pursuant to s 22 of the Supreme Court Act 1986, the Prothonotary of the Supreme Court be authorised to sign any documents on behalf of the defendant as are required to enable the Orrong Road property to be transferred from the plaintiff as executor of the estate to the defendant.
(d) The plaintiff’s solicitors be authorised by the Court to lodge such documents for registration with the Registrar of Titles (including paying any necessary stamp duty and Titles Office or other lodgement fees associated therewith) on behalf of the defendant.
(e) The defendant reimburse the estate for any amounts paid by the estate pursuant to paragraph (d) of these orders.
(f) The defendant reimburse the estate for all rates and insurances paid by the estate in relation to the Orrong Road property since the date of death of the late Ms Sheppard Senior, being $1,079.30 for South East Water Rates and $5,251.00 for annual building insurances commencing 31 July 2019 and 31 July 2020, for a total of $6,330.30.
(g) The defendant pay the plaintiff’s costs of and incidental to this proceeding calculated on an indemnity basis.
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