Re Wood
[2018] VSC 597
•9 October 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY & PROBATE LIST
S PRB 2017 08232
IN THE MATTER of the Will of DENNIS EDWARD WOOD (also known as DENNIS WOOD)
| SHANDEL LEA JAMES (as executor of the estate of DENNIS EDWARD WOOD, deceased) | Plaintiff |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 9 October 2018 |
CASE MAY BE CITED AS: | Re Wood |
MEDIUM NEUTRAL CITATION: | [2018] VSC 597 |
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PROBATE — Where caveator alleges deceased lacked testamentary capacity
— Where caveator and plaintiff executed terms of settlement before determination of prima facie case for grounds of objection — Where caveator sought approval of compromise
— Dowling v St Vincent de Paul Society of Victoria Inc [2003] VSC 454 — Robinson v Jones (No 3) [2015] VSC 508 — Supreme Court (General Civil Procedure) Rules 2015, r 15.08, r 54.02(2)(c)(i) — TrusteeAct 1958, s 19(1)(f).
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms R G Morison | O’Farrell Robertson McMahon |
| For the Caveator | Mr J Rizzi | McKean Park |
HER HONOUR:
Introduction
Dennis Edward Wood, died on 24 January 2017, aged 86 years.[1] The deceased’s last will is dated 29 June 2016 (‘the 2016 will’) and his penultimate will is dated
4 August 2009 (‘the 2009 will’).
[1]The deceased’s legal name at death was Dennis Edward Wood. The deceased’s birth name was changed by deed poll declaration dated 29 September 1966 from Dennis Edward Hickey.
The inventory of assets and liabilities filed with the plaintiff’s application for a grant of probate values the estate at $210,115.62 comprising a property in Eaglehawk valued at $204,000 and $6,115.62 in the bank.
Plaintiff’s application for a grant of probate
By originating motion filed 26 May 2017, the plaintiff sought a grant of probate of the 2016 will.
Prior to the filing of the plaintiff’s application for a grant, Kylie Maree O'Connor
(in her capacity as litigation guardian for Emily Maree O'Connor, an infant) filed a caveat with the Registrar of Probates (‘the caveator’). The caveator was born on 17 June 2007 and is aged 11 years. Her litigation guardian is her mother, who is a niece of the deceased. The minor is a beneficiary of the estate under the 2009 will.
The caveator’s grounds of objection allege that the deceased lacked testamentary capacity and did not know and approve of the contents of the 2016 will.
The 2016 will
The 2016 will appoints the deceased’s ‘good friend’, the plaintiff, as his executor and left the estate to her, with a gift over to the plaintiff’s daughter, Emily Adele Cowling.
The plaintiff was the deceased’s neighbour and friend, and ‘in more recent years, [the plaintiff] and her family [had] provided support and company to the deceased’.
The 2009 will
The 2009 will appointed the deceased’s niece, Kathleen Kendall, and her husband, Gordon Kendall, as the executors and trustees of his estate. The deceased left ‘any tools and trailers owned at the time of [his] death’ to Gordon Kendall,
and ‘any car that [he might] own at the time of [his] death to Kathleen Kendall’.
The deceased’s sister-in-law, Lillian Elsie Geff (‘Elsie’), was permitted to remain as sole occupant of the Eaglehawk property until her death or departure for other reasons.
The deceased had a relationship many years ago but his partner died when the deceased was aged about 50 years. After his partner’s death, the deceased lived with Elsie for almost 20 years in a platonic relationship. Elsie died prior to the execution of the 2016 will. Pursuant to the 2009 will, the executors were empowered to sell items not required by Elsie, with the proceeds to be placed in a trust fund together with any funds from the deceased’s bank account, for the purpose of assisting with the upkeep of the property (house, land, animals) and to pay the costs incurred by Elsie by way of utilities, and other incidentals. If the funds proved insufficient to maintain the property, then the property was to be sold, and alternative rental accommodation located for Elsie. When the property was sold, the remaining moneys were to be ‘equally distributed’ between the caveator, who is a great-niece of the deceased, and Alana Heaft, a great-niece of the deceased on his late partner’s side.
Caveator’s particulars of grounds of objection
On 26 June 2017, the caveator filed her grounds of objection. The caveator advanced the following particulars in support of her claim that the deceased lacked testamentary capacity shortly before, and at the time, the 2016 will was executed:
(a) that the deceased had been suffering from end-stage renal failure in the five years prior to his death, and that the symptoms of such a condition include confusion and difficulty concentrating;
(b) that, at the relevant time, the deceased was also showing symptoms consistent with uremic encephalopathy; a condition that can include ‘loss of memory, impaired concentration, depression, delusions, lethargy, irritability, fatigue, insomnia, psychosis, stupor, catatonia, and coma’;
(c) that, at the relevant time, the nurses treating the deceased at the dialysis clinic did not believe that he had testamentary capacity;
(d) that the deceased was behaving erratically at the time of making his will;
(e) that the solicitors who prepared the 2016 will obtained two separate medical certificates: one which appeared to indicate that the general practitioner had not assessed the deceased at the relevant time; and another, from a different general practitioner who had seen the deceased over a 22-year period, but in which it was not clear that an assessment had been conducted at the relevant time, and which did not appear to have applied the test for testamentary capacity outlined in Banks v Goodfellow.[2]
[2](1870) LR 5 QB 549, 565.
The caveator’s particulars in support of her ground that the deceased lacked knowledge and approval of the contents of the will and matters surrounding the creation of the will that ‘excite suspicion that the deceased did not know and approve of its contents’ were as follows:
(a)
the deceased made the 2016 will at a time when he was elderly,
experiencing end-stage renal failure, and was in physical and mental decline;
(b) the deceased changed his will to favour the plaintiff, and departed entirely from the contents of his previous will. The plaintiff had ‘influence and authority over the deceased at the relevant time’;
(c) there are inconsistencies associated with the 2016 will, including the deceased’s subsequent statement that the caveator would benefit from the will (which she did not), and the references to a minor beneficiary;
(d) the executor has been provided with various irrelevant powers ‘given the nature of the estate and considering that the will provides for direct gifts to the beneficiary’; and
(e) references to defined terms, such as ‘child, children, grandchild[,] grandchildren and balance of the estate’, as well as to a ‘marital, domestic or family relationship’, which do not appear elsewhere in the will.
Terms of settlement
After these particulars were filed, the plaintiff and the caveator commenced negotiations. Terms of settlement were executed by the plaintiff and the caveator on 24 October 2017, whereby they agreed how the estate should be administered, ‘in order to avoid further expense and the inconvenience of litigation’.
The terms of settlement were ‘subject to and conditional upon’ the approval of the Court, pursuant to Order 15 of the Supreme Court (General Civil Procedure) Rules 2015 (‘the Rules’). Within 14 days of the Court’s approval of the proposed compromise,
the caveator agreed to withdraw her caveat with the plaintiff’s consent. The terms provided that the plaintiff, in her capacity as executor of the estate, would then administer the estate in accordance with a schedule of payments and distributions appended to the terms, and that the caveator would accept the benefit of the agreed distribution ‘in full satisfaction of all claims or rights which she had, now has, or may hereafter have against the estate of the deceased’. Following the agreed distribution, the terms also contain a mutual undertaking that both parties ‘agree to release and forever discharge each other and the estate of the deceased, from all actions claims and demands which they had, now have, or may hereafter have’. The terms also include a confidentiality clause.
The schedule appended to the terms of settlement provide for the deceased’s estate to be administered as follows:
(a)
within 30 days of the Court having approved the compromise, the plaintiff shall pay $20,000 to the caveator, grant a non-enduring power of attorney to the caveator’s litigation guardian for the purposes of selling the Holden vehicle registered XYQ869 and transferring the proceeds to the caveator’s solicitor’s trust account, execute a transfer of the vehicle registration at the direction of the caveator and make the vehicle available for collection by the caveator.
The $20,000 and the proceeds of the vehicle sale were to constitute the ‘settlement sum’;
(b) the settlement sum includes the caveator’s legal costs;
(c) the plaintiff shall do ‘any such things’ as are necessary to assist the caveator with sale of the Holden vehicle;
(d) the plaintiff and caveator to pay their own legal and incidental costs; and
(e) the estate of the deceased shall otherwise be administered in accordance with the will.
This latter provision is presumably read in conjunction with Recital B of the terms of settlement, that refer to the deceased’s last will dated 29 June 2016. Taken together, both statements indicate that the effect of the settlement is to vary the 2016 will in accordance with the terms of settlement.
Caveator’s application for approval of compromise
By summons filed 17 January 2018, the caveator ‘sought/requested’ the following:
(a) further directions pursuant to r 8.07 of the Supreme Court (Administration and Probate) Rules 2014;
(b) joinder of the caveator as a defendant to the proceeding;
(c) approval of the compromise embodied in the conditional terms of settlement dated 24 October 2017, pursuant to Order 15 of the Rules;
(d) the plaintiff pay $11,075.30 to the Senior Master of the Court to be invested for the benefit of the caveator;
(e) the plaintiff pay $8,924.70 to the caveator’s lawyers to cover the caveator’s legal costs, which comprise $207.70 in filing fees, $3,824 in counsel’s fees, $4,000 in solicitor’s fees, and a further filing fee of $893 with the filing of the summons; and
(f) the litigation guardian for the caveator to pay the proceeds of the sale of the deceased’s Holden vehicle registered XYQ869 to the Court to be invested for the benefit of the caveator.
The caveator’s proposed orders approving the compromise provide for the affidavit in support of the approval application to remain confidential, noting also that the terms of settlement contain a confidentiality clause. The orders do not refer to the withdrawal of the caveat notwithstanding the terms of settlement provide for the filing of a notice of withdrawal of caveat within 14 days of the Court having approved the proposed compromise.
The caveator submitted a confidential advice by counsel regarding the appropriateness of the proposed compromise for her. Counsel assessed the compromise as ‘appropriate and in the best interests of [the caveator]’. In the memorandum, counsel noted that the plaintiff and her family intend to vacate their rental accommodation and then move into the deceased’s property at Eaglehawk. This was advanced as the reason for the ‘modest’ size of the settlement sum,
in addition to the plaintiff’s ‘precarious financial position’.
Submissions
The caveator filed submissions on 7 May 2018 and further submissions on 29 May 2018.
The Court queried the application for approval where no grant of probate had been made by the Court. The caveator initially submitted that:
It is common practice to settle a proceeding concerning the validity of a will prior to probate being granted.
Usually such a compromise is premised upon a caveator withdrawing his or her caveat to allow the plaintiff, as the propounder of the will, to complete his or her application for a grant at the office of the Registrar of Probates.
The mechanism for settlement in the present matter follows this usual practice.
In support of this point, the caveator highlighted that clause 2 of the terms of settlement provides for the caveator to file a notice of withdrawal of caveat within 14 days of the Court having approved the proposed compromise. The caveator also submitted that r 54.02(2)(c)(i) provides the basis upon which the Court has power to approve the proposed compromise, ‘rather than the grant of probate’ and, on this basis, the Court may approve the compromise prior to probate being granted.
By email dated 16 May 2018, the Court informed the parties that r 54.02(2)(c)(i) is not available for such an application in the absence of a grant of representation for the following reasons:
Her Honour notes that a grant of probate of neither the deceased’s last will nor his penultimate will dated 4 August 2009 has been made. The parties seek orders that the compromise be approved before a grant of representation is made and the caveator submits that the Court has power to approve the compromise pursuant to r 54.02(2)(c)(i) of the Supreme Court (General Civil Procedure) Rules 2015. However, that rule provides for an order approving any compromise by an executor, administrator or trustee. As no grant has been made, there is currently no legal representative of the deceased’s estate that may seek an order under that rule.
The Court is unable to consider the compromise reached between the plaintiff and the caveator until a grant of probate is made. On the basis that the deceased’s last will is sought to be propounded and the caveator no longer maintains her allegations of lack of testamentary capacity and lack of knowledge and approval with respect to the deceased’s last will, a withdrawal of the caveat may be filed.
Once a grant has been made, any terms of compromise that have been properly executed by the parties with standing to do so may be brought before the Court for approval under r 54.02(2)(c)(i) of the Supreme Court (General Civil Procedure) Rules 2015 in a separate proceeding.
The caveator accepted that the Court’s power to approve the compromise prior to probate being granted might not have resided in r 54.02(2)(c)(i) and advanced an alternative submission, relying on r 15.08 of the Rules. The caveator submitted that, once the caveator is joined to the proceeding as a defendant, the Court’s power to approve the compromise derives from r 15.08(1), which states:
Where in a proceeding a claim is made by or on behalf of or against a person under disability, no compromise, payment of money or acceptance of an offer of compromise under Order 26, whenever entered into or made, shall so far as it relates to that claim be valid without the approval of the Court.
The caveator submitted that the approach that a grant of probate is required prior to the Court’s consideration of a proposed compromise is contrary to r 15.08(1) as it would ‘require the litigation guardian to enter into a new compromise with the plaintiff and then carry out that compromise by withdrawing her caveat prior to the compromise being approved by the Court’, which would ‘offend rule 15.08(1) as the litigation guardian is effectively compromising a minor’s claim (by withdrawing her caveat) without the approval of the Court’.
In support of this submission, the caveator relied on Dowling v St Vincent de Paul Society Victoria Inc,[3] in which contested probate proceedings were settled prior to probate being granted. In this respect, the caveator notes that the dispute settled at mediation, with settlement subject to the Court confirming that the executors had power under s 19(1)(f) of the Trustee Act 1958 to enter into the compromise,
in anticipation of probate being granted.
[3][2003] VSC 454 (20 November 2003) (‘Dowling’).
The caveator submitted that the Court should use its power under r 15.08 to approve the compromise on behalf of the minor, and that the use of this power does not depend upon probate having been granted. In this respect, the caveator submits that the proposed compromise does not seek to infringe the Court’s power to determine the validity of the will sought to be propounded and, in any case, that issue ‘will be left to the Registrar of Probates, after the caveator’s caveat is withdrawn’.
Consideration
Where a person under a disability, in this instance a person aged less than 18 years,
is a party to a proceeding or has an interest affected by the proceeding, any settlement must be subject to, and then approved by the Court in order to be valid, pursuant to
r 15.08 of the Rules.
At the time the terms of settlement were executed, the caveator was not a party to the proceeding. The compromise was reached before a determination of the caveator’s prima facie case to challenge the validity of the 2016 will. In seeking to challenge the 2016 will, the caveator bears the initial evidentiary burden in establishing a prima facie case, that is, she must point to circumstances that require an investigation as to whether or not there are sufficient grounds to challenge the validity of the 2016 will.
The caveator’s grounds allege the deceased lacked testamentary capacity and did not know and approve of the contents of the 2016 will. The deceased’s death certificate records the causes of death as end stage renal failure over five years and abdominal pain for one week. The solicitors who prepared the 2016 will obtained two separate medical certificates from the deceased’s long standing medical practitioners, both of which point to the deceased having testamentary capacity when he executed his will. The caveator’s particulars include some facts and many broad allegations without the necessary causative link between the allegations and the grounds relied on to challenge the 2016 will. This would have necessitated a hearing of the caveator’s prima facie case to determine whether she would be joined as a party to the proceeding. Unless the particulars provided a sufficient factual basis to support the grounds, the caveator would not be joined as a defendant to the proceeding.
The next issue in the caveator’s application for approval is that she has not notified the persons with an interest in the proceeding, namely, the executors and the other residuary beneficiary under the 2009 will, of her challenge to the 2016 will or the proposed compromise. On this point, the caveator adopted an unacceptable position, maintaining that the terms of settlement require the plaintiff and caveator to keep the terms confidential.
There is also an issue with the terms of the compromise insofar as the assets of the estate are concerned. Any compromise in respect of a deceased’s estate would ordinarily deal with the assets of the estate. This compromise primarily concerns a Holden vehicle registered XYQ869. There is no evidence that this vehicle is an asset of the estate. It is not listed as an asset in the inventory of assets filed in the application for a grant of probate. In submissions responding to the Court’s enquiry, the caveator stated that the vehicle was transferred by the deceased while he was alive to the plaintiff and ‘as part of the settlement, the plaintiff has granted the caveator a specific power of attorney to allow her to sell the car and pay the proceeds into Court’. This does not mean the vehicle forms part of the estate.
The next issue is whether a contested probate proceeding can be compromised where the validity of the 2016 will remains in issue. The caveator relies on the decision in Dowling v St Vincent de Paul Society of Victoria Inc[4] in support of an executor having power pursuant to s 19(1)(f) of the Trustee Act 1958 to enter into a compromise in anticipation of probate being granted. While the statutory powers to compromise under s 19 in relation to estates are wide, they are not open ended and there is no power to compromise a proceeding contesting the validity of a will.[5]
[4][2003] VSC 454 (20 November 2003).
[5]G E Dal Pont and K F Mackie, Law of Succession, (LexisNexis Butterworths, 2nd ed, 2017) [13.29].
Specifically, in Dowling v St Vincent de Paul Society of Victoria Inc, Nettle J stated:
I do not consider that s 19(1)(f) empowers an executor as such to compromise a probate proceeding in which the validity of the will is contested.
…
Even allowing for the apparent amplitude of the expression ‘claim or thing relating to the estate’, I think that [the defendant’s counsel] is correct when he says that an attack upon the validity of a will is properly to be characterised as a claim relating to the plaintiff’s entitlement to probate, or as a claim relating to the validity of the last will, and that as such it is outside the reach of the section. I doubt it matters that [the defendant in the probate proceeding’s] claim to the residuary estate under the earlier will may not yet be enforceable. I see no reason to exclude contingent claims from the reach of the section.
The real point, in my opinion, is that neither [the defendant in the probate proceeding’s] claim to the residuary estate nor any other putative beneficiary’s claim upon the testator’s bounty is in issue in the probate proceeding. The issue is the validity of the will.[6]
[6]Dowling [2003] VSC 454 (20 November 2003) [20].
Further, in Robinson v Jones (No 3), the role of the Court in determining the validity of the will was stated as follows:
It is undisputed that where the validity of the will or an informal document is an issue, it is the Court that determines the validity of the testamentary documents … Where there has been opposition to a grant of probate and that opposition is withdrawn, the Court will still be asked to make a grant of probate. The Court will not make a grant because the parties have reached an agreement but must be satisfied on the evidence that either a will or an informal document represents the last valid testamentary wishes of the deceased. [7]
[7]Robinson v Jones (No 3) [2015] VSC 508 (20 November 2015) [29].
The caveator’s submission that the validity of the will is an issue ‘left to the Registrar of Probates, after the caveator’s caveat is withdrawn’ is misconceived. The Court does not ‘rubber stamp’ a grant of probate, or any such changes to a testator’s dispositions that an administrator, executor, beneficiary or any other party may desire. A grant of probate is a public act giving power to a person or persons to distribute the assets of the deceased according to his or her last valid will or pursuant to the intestacy provisions.[8] By seeking the approval of the terms of settlement, the caveator is requesting the Court to approve a distribution of the deceased’s estate that is beyond the power of the plaintiff to enter into and which purports to distribute the estate in a manner that does not reflect the provisions of whatever might be the last valid will of the deceased.[9]
[8]Re Podger (dec’d) [1957] VR 275, 278; Re Smith (dec’d) [1978] VR 596, 601; Re Irving (dec’d) [2003] VSC 351 (11 September 2003); Phillpot v Olney [2004] NSWSC 592 (6 July 2004).
[9]Robinson v Jones (No 3) [2015] VSC 508 (20 November 2015) [36].
Orders
The caveator’s application for approval of the proposed compromise, as embodied in the terms of settlement dated 24 October 2017, is dismissed.
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