Re Valkenburg; Valkenburg v Valkenburg
[2019] VSC 550
•16 August 2019
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S CI 2018 00890
IN THE MATTER of the Estate of PETER JOHN VALKENBURG, deceased
-and-
IN THE MATTER of section 15 of the Administration and Probate Act 1958
BETWEEN:
| CLAIRE PATRICIA VALKENBURG (who brings suit as an Executor of the Will of PETER JOHN VALKENBURG, deceased) | Plaintiff |
| v | |
| TIMOTHY MAX VALKENBURG and KATRINA VALKENBURG (who are sued as the substituted Executors of the Will of PETER JOHN VALKENBURG) | Defendants |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 16 August 2019 |
CASE MAY BE CITED AS: | Re Valkenburg; Valkenburg v Valkenburg |
MEDIUM NEUTRAL CITATION: | [2019] VSC 550 |
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PRACTICE AND PROCEDURE — Jurisdiction — Plaintiff’s application for defendants to show cause why they should not prove will in Victoria — Administration and Probate Act 1958 (Vic) ss 6, 15 — Location of shares — Kadac Pty Ltd v Complete Health Products Pty Ltd [2015] VSC 613.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D J Sanders | Suzanne Jones Lawyers |
| For the Defendant | Ms R Grayson Morison | Pure Legal |
HER HONOUR:
Introduction
The deceased, Peter John Valkenburg, died on 5 August 2016. His will dated 19 April 2015 appoints the plaintiff and John James Watson as his executors. The will provides that if either the plaintiff or Mr Watson refuses or is unable or unwilling to act or continue to act as executor then the defendants are appointed jointly in that person’s place. Mr Watson refused to act as executor, with the result that the plaintiff and the defendants are now co-executors of the will.
Mr Watson is a principal of the legal firm Fishburn Watson O’Brien (‘FWO’) and holds the deceased’s original will.
Plaintiff’s application
By originating motion filed 13 March 2018, the plaintiff sought an order under s 15 of the Administration and Probate Act 1958 (‘the Act’) that the defendants show cause why they should not bring the deceased’s will into court.
The defendants resist the application on the ground that New South Wales is the appropriate jurisdiction for the grant of probate.
Factual background
The plaintiff is 73 years old. She was the deceased’s fourth wife. At the time of the deceased’s death, she and the deceased had been married for some 22 years. She had retired from paid employment to care for the deceased full-time and continues to live in the marital home in Camberwell.
The defendants are children of an earlier relationship of the deceased and live in Bali, Indonesia.
The principal assets of the estate are shares in Mewval Holdings Pty Ltd (‘Holdings’) and Mewval Investments Pty Ltd (‘Investments’), personal property in Victoria and money in a bank account. Before his death, the deceased had controlled Holdings and Investments. The shares in Investments are divided into five different classes.
Clauses 4.1 and 5.4 of the will bequeath each of the defendants $50,000, adjusted by inter vivos gifts from the deceased or by the deceased through exercise of control over one of the companies. Clause 5.5 bequeaths shares in Holdings to the plaintiff, Mr Watson and Peter Nevell. Mr Nevell is a principal of the accountancy firm, Crowe Horwath, and was the accountant for the plaintiff, the deceased and the companies.[1] Clause 5.6 bequeaths one class of shares in Investments to Holdings on trust for the plaintiff for her life, and then to Judith Valkenburg (‘the deceased’s sister’) and the defendants. Clause 5.7 bequeaths any other shares in Investments to the defendants, and clause 6 bequeaths the residue to the plaintiff.
[1]Both Mr Nevell and Mr Watson are directors of Holdings.
On 30 June 2017, Mr Watson filed a renunciation of probate in the Supreme Court of New South Wales, leaving the plaintiff and the defendants as co-executors of the deceased’s will.
On 25 July 2017, the defendants filed an application for family provision under the Succession Act 2006 (NSW) in the Supreme Court of New South Wales (‘the NSW proceeding’). The plaintiff was named as the first defendant in the NSW proceeding. She submitted to the Court’s jurisdiction and appeared in that proceeding.
On 28 August 2017, the plaintiff’s solicitor, Suzanne Leigh Jones, advertised notice of the plaintiff’s intention to apply for a grant of probate of the deceased’s will in Victoria. Having learnt that the defendants had brought the NSW proceeding, she informed the defendants’ solicitors, Pure Legal, of the plaintiff’s intention to seek a grant of probate in Victoria and asked whether the defendants wished to join in the application. On 12 September 2017, Pure Legal asked Ms Jones to withhold obtaining probate until the finalisation of the NSW proceeding.
On 19 February 2018, the NSW proceeding was finalised. Final orders were made for further provision to the first defendant and the second defendant for $90,000 and $75,000 respectively, with the estate to pay the costs of the proceeding. The orders also provided that the plaintiff, with her consent, be appointed to represent the estate and notional estate under r 7.10(2)(b) of the Uniform Civil Procedure Rules 2005 (NSW).
On 13 March 2018, the plaintiff filed the originating motion now before the Court. On 15 March 2018, Ms Jones again informed Pure Legal of the plaintiff’s intention to seek a grant of probate in Victoria and asked whether the defendants wished to join in that application. In subsequent correspondence, Pure Legal said that the defendants were ‘not interested in a Victorian probate application’ and maintained that a grant of probate should be obtained in New South Wales.
On 11 April 2018, Ms Jones learnt that Pure Legal had advertised its intention to seek a grant of probate in New South Wales on behalf of the plaintiff and the defendants, apparently without the plaintiff’s authorisation or instructions.
For at least the past two years, the plaintiff and the defendants have been in dispute over the management and operation of the companies. The dispute extends to questions about the validity of certain resolutions, the appointment of some officeholders, the declaration of a dividend by Investments in 2007, and the companies’ registered addresses. For the purposes of this proceeding, it is not necessary to set out all the details of the dispute. However, it is convenient to mention some matters that may bear on the outcome of this application.
From 19 January 1995 to 25 April 2018, the registered address of Investments was the same address as that of FWO in New South Wales. This address was the registered address at the time of the deceased’s death. According to the plaintiff, this address was for convenience only, and the company did not conduct any of its business in New South Wales.
On 26 April 2018, the plaintiff changed the registered address to her home address and Investment’s principal place of business. In May 2018, the plaintiff and her representatives requested that Crowe Horwath deliver Investments’ records to this address.
On 16 January 2019, the defendants changed Investments’ registered address to the address of Crowe Horwath in New South Wales. In written submissions, the plaintiff stated that the defendants did not notify her of this change of address. Crowe Horwath remains in possession of the records of Investments.
More recently, on 18 February 2019, the plaintiff changed the registered address of Investments to the address of SMR & Associates, her accountants, in St Kilda, Victoria.
On 28 February 2019, the defendants, among others, issued a proceeding in the Federal Court of Australia, seeking rectification of the ASIC register to record the defendants and Annabel McLisky, a former director of Investments, as directors of Investments. They also sought a change of Investments’ registered address to New South Wales and rectification of certain changes made by the plaintiff to the ASIC register or, alternatively, the appointment of a provisional liquidator to Investments.
The plaintiff has deposed that the only outstanding matters in the administration of the estate are: the costs in the NSW proceeding; the transfer of shares as set out in the deceased’s will; distribution of the residue, if any, to the plaintiff; adjustments between the estate, Holdings and the plaintiff; and a tax return.
Estate assets
A draft inventory of assets and liabilities filed with the plaintiff’s application lists the net value of the deceased’s estate as $2,286,197.57. The shares in Investments and Holdings comprise approximately 97% of the net value of the estate. The shares in Investments are valued at $1,824,540.49. The estimated value of the four shares in Holdings is $398,602.49.
Investments was incorporated in the Australian Capital Territory on 28 June 1963. The deceased, who had resided in Victoria when he died, had practical control of both Investments and Holdings. At the date of the deceased’s death, he and the plaintiff had been the directors of Investments. The deceased was also the sole director and shareholder of Holdings at this time. The majority shareholder of Investments is Judith Valkenburg, who resides in New South Wales. Its other shareholders include the plaintiff, each of the defendants, Holdings and the estate of Margot Dods, who is the third wife of the deceased.
The assets of Investments include: the marital home in Camberwell, Victoria; shares in Lecusa Pty Ltd, a company whose registered address is in New South Wales; and various shares in publicly listed companies.
Applicable principles
Section 6 of the Act confers jurisdiction on the Court to grant probate of the will of any deceased person leaving property, whether real or personal, within Victoria. The task before the Court now is to determine which of Victoria or New South Wales is the appropriate jurisdiction for the grant of probate of the deceased’s will to be made. In resolving the question, it is necessary to determine the location of the property left by the deceased at the time of his death.[2] The location of a particular piece of property may turn on a variety of factors and depends on the nature of that property.
[2]See Re Pope (dec’d) [1965] NZLR 361, 364 (McGregor J).
The decision of Kadac Pty Ltd v Complete Health Products Pty Ltd involved an application to transfer an oppression proceeding, filed in Victoria, to Queensland.[3] In his reasons, Sifris J applied several principles in determining which jurisdiction was the more appropriate forum for the determination of a proceeding, stating:
(a)[i]t is not necessary that the transferor court be a ‘clearly inappropriate’ forum but only that, in the interests of justice, the transferee court is ‘more appropriate’;
(b)[w]hich court is more appropriate to hear and determine the substantive dispute is a ‘nuts and bolts’ management decision;
(c)[t]he most appropriate court is the natural forum, as determined by factors connecting the proceeding to that forum including matters of convenience and expense, the places where the parties respectively reside or carry on business, and the law covering the relevant transaction;
(d)[t]he list of connecting factors is impossible to state exhaustively and the weight to be given to any particular factor will vary from case to case[.][4]
[3][2015] VSC 613.
[4]Ibid [12] (citations omitted).
The parties accept that, for the purpose of resolving the conflict as to the jurisdiction for the grant of probate, the Court should classify the items of property as movable or immovable.[5] They also accept that shares are generally considered to be immovable, a share in a company being a chose in action. Shares are situated where they can be dealt with.[6] More precisely, they are situated where the company’s register is kept.[7] The rationale is that the register constitutes evidence of title to those shares.[8]
[5]Haque v Haque (No 2) (1965) 114 CLR 98, 109 (Barwick CJ).
[6]Brassard v Smith [1925] AC 371, 376 (Viscount Haldane, Lords Dunedin, Atkinson, Wrenbury and Salvesen).
[7]Haque v Haque (No 2) (n 5) 107 (Barwick CJ).
[8]Attorney-General v Higgins (1857) 2 H & N 339 (Baron Martin), quoted in Brassard v Smith (n 6).
Plaintiff’s submissions
The plaintiff submits that this Court should not place significant weight on the physical location of Investments’ records, including the share register. She says that the location is in breach of both a company resolution and s 172 of the Corporations Act 2001 (Cth) in so far as the company’s records are not located at its registered address or principal place of business. Moreover, the plaintiff points to the fact that she has demanded that these records be delivered to the appropriate accountant.
The plaintiff also submits that the proper location of Investments’ records, its registered address and its registered place of business will remain in flux for as long as the parties are in dispute over the company. The plaintiff argues that taking into account the physical location of Investments’ records would reward the last registration and also reward misconduct on the part of an accounting firm in the position of Crowe Horwath in this instance.
The plaintiff further submits that the Court should determine that the shares are movable and confine this characterisation of the shares to the facts of this proceeding, or place no significant weight on Investments’ registered address or physical location. In the alternative, the plaintiff says the Court should find that the correct registered address and physical location is in Victoria.
The plaintiff contends that similar considerations apply to the shares in Holdings. She also draws attention to the appointment of certain individuals as directors of Holdings while its other directors were indisposed. According to the plaintiff, the Court should exercise its discretion to bring the will into court so that a grant of probate may be made in Victoria.
More broadly, the plaintiff raises the following matters in support of her submissions that the estate has more relevant and practical connections to Victoria than to New South Wales:
(a) the deceased had lived in Victoria for many years in the lead up to his death;
(b) the plaintiff, who is the only executor residing in Australia and a residuary beneficiary, resides in Victoria;
(c) the defendants reside in Indonesia and have given evidence that they have no paid work and no assets in Australia, except for their shares in Investments;
(d) the defendants have no further role to play in the administration of the estate, since they received further provision from the estate in the NSW proceeding and the plaintiff has arranged for them to be paid amounts that are equivalent to the gifts under the will;
(e) a grant of probate in New South Wales would preclude the plaintiff from bringing a Part IV claim against the estate;
(f) in light of their conduct, it is not appropriate for FWO or Crowe Horwath to assist in the administration of the estate;
(g) if a grant is obtained in Victoria, then there will be no need for a reseal in New South Wales;
(h) the plaintiff did not consent to the jurisdiction of New South Wales for the NSW proceeding, and, in any event, the orders in the NSW proceeding are confined to that proceeding alone and should have no bearing on the grant of probate of the deceased’s will;
(i) the deceased operated Investments and Holdings from, and conducted their meetings in, Victoria;
(j) the plaintiff has taken steps to pay debts and legacies of the estate in advance through her personal assets or through Investment, and she should not be subjected to the burden of obtaining the grant in New South Wales or in resealing it in Victoria;
(k) the plaintiff is the only legatee who has not received her benefits under the will, other than the share transfers;
(l) the work to complete an application for the grant of probate in Victoria was finished well before the defendants decided to advertise and prepare the documentation for a grant in New South Wales; and
(m)the defendants will not suffer any prejudice from the grant of probate in Victoria.
Defendant’s submissions
The defendants submit that, when determining the location of a company’s shares, the primary consideration is the registered address and physical location of the company. The defendants contend that the location of the registered address is the deemed location of the company, and it is usual that the company register is kept at that address or where the work in maintaining the register is done. Further, the defendants submit that the register is proof of the matters shown on the registry. On that basis, the deemed location of the shares should be the same as the deemed location of the company, being New South Wales.
The defendants also observe that the plaintiff has attempted to change the location of Investments’ shares by: changing the company’s registered office to Victoria in February 2019; attempting to transfer the books, records and corporate keys from New South Wales to Victoria; opposing meetings proposed by other shareholders in the company; and resisting attempts to amend the ASIC register in accordance with company resolutions. The defendants submit that these matters weigh in favour of finding that Investments’ shares are located in New South Wales.
The defendants rely on several matters in support of their argument that New South Wales is the proper forum for an application for a grant of probate to be made. They submit that the Supreme Court of New South Wales in the NSW proceeding has exercised its probate jurisdiction in respect of the estate, and the plaintiff has not objected to the exercise of this jurisdiction. The Supreme Court of New South Wales has made final orders granting further provision to the defendants, and these orders bind the Crown in right of New South Wales.[9] Moreover, the issue of costs in the NSW proceeding has yet to be finalised.
[9]Succession Act 2006 (NSW) s 56.
The defendants also observe that Investment’s majority shareholders, including Judith Valkenburg, reside in New South Wales. While a certain class of shares in Investments are to be held for the plaintiff beneficially during her life, those shares are eventually to be transferred to the defendants and Judith Valkenburg. The defendants submit that, since most of the administration of the estate after the plaintiff’s death will take place in New South Wales, it is appropriate that the Supreme Court of New South Wales exercise its supervisory jurisdiction in the administration of the estate.
Consideration
This proceeding is not the occasion to determine whether the location of Investments’ records contravenes the Corporations Act 2001 (Cth). It is also not the occasion to pass judgment on other matters raised by the plaintiff, such as the validity of certain resolutions, the appointment of some officeholders and the declaration of a dividend by Investments in 2007. The Court’s task is to determine which of Victoria or New South Wales is the appropriate jurisdiction for the grant of probate of the deceased’s will.
To use the language of s 6 of the Act, the question that arises is whether the deceased left property within Victoria. If so, this Court shall have jurisdiction to grant probate of the deceased’s will.
The relevant time for determining whether there is property in the jurisdiction is the time of the deceased’s death.[10]
[10]See Re Pope (dec’d) (n 2) 364.
At the time of the deceased’s death, the registered addresses of Investments and Holdings were in New South Wales. The location of Investments’ register was in New South Wales. There is no compelling reason to depart from the principle that a company’s shares are situated where the company’s register was kept.[11] Therefore, at the time of the deceased’s death, the shares of Investments and Holdings were located in New South Wales. The fact that the companies’ records are also in New South Wales is another reason to conclude that New South Wales is the appropriate jurisdiction for the grant of probate.
[11]Haque v Haque (No 2) (n 5) 107 (Barwick CJ).
At present, Investments’ registered address is in Victoria. However, the registered address has changed between New South Wales and Victoria three times. In such circumstances, the current registered address is not definitive in determining the location of Investments’ shares.
The fact that the Supreme Court of New South Wales has already exercised its probate jurisdiction in respect of the estate, and the plaintiff has not objected to the exercise of that jurisdiction, also tends in favour of New South Wales being the appropriate jurisdiction for the grant of probate. A grant of probate within New South Wales would authorise the executors to deal with estate property only within that state. However, this Court has the power to reseal a grant of probate made in New South Wales, obviating the need for the executors to apply for a fresh grant in every jurisdiction in which the estate property is situated.
Conclusion
The appropriate jurisdiction for the grant of probate of the deceased’s will is New South Wales. Accordingly, the appropriate order is that the plaintiff’s application be dismissed.
In default of agreement on the costs of the proceeding, the parties are to provide short written submissions to the Court.
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