Re Wood (No 2)
[2023] VSC 163
•14 April 2023
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND 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: | 14 April 2023 |
CASE MAY BE CITED AS: | Re Wood (No 2) |
MEDIUM NEUTRAL CITATION: | [2023] VSC 163 |
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PROBATE — Where caveator alleges deceased lacked testamentary capacity and did not know and approve of will — Where caveator and plaintiff executed terms of settlement before determination of prima facie case for grounds of objection — Where caveator sought approval of compromise — Where caveator appealed primary decision — Where appeal dismissed — Where caveator seeks approval of compromise for second time —Dowling v St Vincent de Paul Society of Victoria Inc [2003] VSC 454 — Supreme Court (General Civil Procedure) Rules 2015, r 15.08.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | O’Farrell Robertson McMahon | |
| For the Caveator | Mr J Rizzi | McKean Park |
HER HONOUR:
Background
Dennis Edward Wood (‘the deceased’) died on 24 January 2017, aged 86 years. The deceased’s will dated 29 June 2016 (the ‘2016 will’) appoints the plaintiff as his executor and devises and bequeaths his estate to her, with a gift over to the plaintiff’s daughter.
Deceased’s penultimate will
The deceased’s penultimate will is dated 4 August 2009 (the ‘2009 will’). The 2009 will appoints the deceased’s niece, Kathleen Kendall, and her husband, Gordon Kendall, as the executors and trustees of his estate. Under the 2009 will, the residue of the estate passes to Emily O'Connor, a great-niece of the deceased, and Alana Heaft, a great‑niece of the deceased on his late partner’s side, in equal shares.
Plaintiff’s application for grant of probate
By originating motion filed 26 May 2017, the plaintiff sought a grant of probate of the 2016 will. The inventory of assets and liabilities filed with the plaintiff’s application values the estate at $210,115.62 comprising a property at Eaglehawk valued at $204,000 and funds of $6,115.62 in the bank.
Caveator’s grounds of objection
Prior to the filing of the plaintiff’s application, Kylie O’Connor, in her capacity as litigation guardian for Emily O'Connor, an infant, (‘the caveator’) filed a caveat with the Registrar of Probates.
On 26 June 2017 the caveator filed grounds of objection alleging the deceased lacked testamentary capacity shortly before and at the time the 2016 will was executed and that the deceased did not know and approve of the 2016 will.
Terms of settlement
On 24 October 2017, the caveator and the plaintiff entered into terms of settlement that were subject to and conditional upon the approval of the Court, pursuant to ord 15 of the Supreme Court (General Civil Procedure) Rules 2015 (the ‘Rules’).
The terms provided that 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 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 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 [d]eceased, 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 to be read in conjunction with Recital B of the terms of settlement, that refers 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 first summons
On 17 January 2018, pursuant to r 8.07(1) of the Supreme Court (Administration and Probate) Rules2014, the caveator filed a summons for directions for the further conduct of the proceeding (the ‘first summons’), including that the caveator be joined as a defendant to the proceeding and an order pursuant to ord 15 of the Rules that a compromise embodied in the conditional terms of settlement dated 24 October 2017 be approved.
While the caveator’s application for approval was made pursuant to ord 15 of the Rules, the issues relied on by the caveator in the application centred on the Court’s power to approve a compromise prior to probate being granted pursuant to r 54.02(2)(c)(i) of the Rules, alternatively, r 15.08 of the Rules in conjunction with s 19(1)(f) of the Trustee Act 1958 (‘Trustee Act’).
On 9 October 2018 the Court delivered judgment dismissing the first summons for approval of the compromise embodied in the conditional terms of settlement dated 24 October 2017 (the ‘primary judgment’).[1]
Caveator’s appeal
[1]Re Wood [2018] VSC 597 (McMillan J).
The caveator appealed the primary judgment. On 20 November 2019 the Court of Appeal dismissed the appeal (the ‘appeal judgment’).[2]
[2]O’Connor v James [2019] VSCA 265 (Tate, Kyrou and Emerton JJA).
Caveator’s second summons
On 20 April 2021, the caveator filed a second summons seeking the same relief, namely, an order that the compromise embodied in the conditional terms of settlement dated 24 October 2017 be approved, pursuant to ord 15 of the Rules (the ‘second summons’).
In support of the second summons, the caveator relies on the same confidential advice of counsel dated 14 December 2017 filed in support of the first summons and also refers to the following paragraphs in the appeal judgment:
In this case, the applicant filed an affidavit exhibiting the advice of counsel about the merits of the compromise. The memorandum of advice, dated 14 December 2017, concludes that the compromise is appropriate and in the best interests of Emily, having regard to the relevant factors: the size of the estate; Emily’s interest in the estate under the 2009 will; the amount and cost of the legal work that would be required to have her claim adjudicated by the Court; its prospects of success; and the potential costs consequences if the claim is unsuccessful. The memorandum concludes that the compromise is appropriate and in Emily’s best interests because:
(a)it provides [Emily] with a certain fixed sum of money;
(b)it saves the further costs [Emily] would have incurred in running the proceeding to mediation and then trial;
(c)it mitigates the risk that [Emily] might have been unsuccessful in the proceeding;
(d)it mitigates the risk of [Emily] paying [the respondent’s] costs of the proceeding.
In addition, we note that the judge had doubts about the strength of Emily’s claim, observing that it failed to articulate the necessary causative link between the allegations and the grounds relied upon to challenge the 2016 will.
There was (and is), in our view, a basis for the Court to be satisfied that the settlement is of benefit to Emily.[3]
[3]Appeal judgment [60]-[62].
The caveator submits that, assuming the Court continues to accept that the compromise is of benefit to her, the next most significant issue standing in the way of approval of the compromise is that the caveator did not notify all of the persons with an interest in the application for approval of the compromise.
On this issue, the caveator refers to the following paragraphs in the appeal judgment:
The settlement is an agreement entered into by the executor of the 2016 will providing for the distribution of the assets of the estate. The proposed orders assume that the executor of the 2016 will is the person entitled to administer the estate by distributing its assets. Even though the executor and the sole beneficiary of the 2016 will are the same person, and we are told that she consents to the re-distribution of the assets of the estate in her capacity as the sole beneficiary, the orders that the Court is asked to make in order to approve the settlement are directed to her qua executor under the 2016 will and require her in this capacity to distribute the assets of the estate otherwise than in accordance with either of the testator’s wills. The orders, if made, would pre-empt the grant of probate and truncate the rights of others to challenge the grant.
Accordingly, we reject the proposition that the approval sought is purely a matter between the sole beneficiary of the 2016 will (the respondent) and the applicant, and that it does not involve the respondent acting in her capacity as executor of the 2016 will. In our view, it is clear that the proposed orders apply to the respondent in her capacity as executor of the 2016 will and require her to distribute the estate in that capacity.
As discussed, in Dowling [v St Vincent de Paul Society Inc][4] Nettle J concluded that in order that a compromise be binding on absent beneficiaries, it would be necessary to make ‘all affected beneficiaries’ parties to the proceeding. Section 19(1)(f) of the Trustee Act did not authorise an executor to compromise a dispute as to the validity of a will without the consent of affected parties or an order of the court that binds them. A court order will not bind absent beneficiaries unless joined as parties to the proceeding. This would require the giving of notice as contended by Mr Farrands.
We consider that we should adopt the reasoning of Nettle J in Dowling to the following extent. Although the executor of the 2016 will has not made application for approval of the compromise (the application to the Court having being made on behalf of Emily only), in the absence of a court order binding on all ‘affected parties’, the proposed compromise requires the executor to exercise the power conferred by s 19(1)(f) of the Trustee Act in the circumstances of a challenge to the validity of the 2016 will and therefore also to her authority as executor. Until the challenge is withdrawn, or a grant of probate obtained, the respondent’s authority as executor is compromised. What appears at first blush to be a relatively simple application requiring the Court to consider only the position of the minor, in fact carries with it a raft of assumptions about the availability of powers to distribute the estate that cannot, on a proper analysis, be sustained. These difficulties are highlighted by the form of the orders sought in the summons, which themselves effect the distribution of the estate through the agency of the respondent as executor.
In our view, if the Court is to make orders requiring payments from the estate to Emily, ‘affected parties’ must be given notice of the proposed orders and joined as defendants to the proceeding so that they are bound by the orders. The option of obtaining the consent of affected parties to the compromise has been overtaken by the form of the orders that are sought.
The question that is not expressly answered in Dowling is who the ‘affected parties’ are where there is a contest between a last and a penultimate will. In Dowling, MC, who was a beneficiary under both wills, was on notice and obviously consented to the compromise. It is clear that the other beneficiaries of the last will needed to be given notice of the proposed adjustment to the dispositions in the last will and that their consent was required in the absence of an order of the Court. The question remains whether the beneficiaries of the penultimate will were entitled to the same consideration. We consider it to be tolerably clear from Nettle J’s reasoning that they were.
We are persuaded that the same requirement arises in this case, where the Court is asked to make orders distributing the assets of the deceased’s estate assuming the validity of the 2016 will, prior to any grant of probate. Accordingly, we accept Mr Farrands’ submission that the executors and the other beneficiary of the 2009 will should be given notice of the approval application and the proposed orders with a view to being joined as parties to the proceeding.[5]
[4][2003] VSC 454.
[5]Appeal judgment [70]-[76].
The caveator submits that the final paragraph above confirms that the executors and the other beneficiary of the 2009 will, Ms Heaft, should be given notice of the summons filed 20 April 2021 seeking approval of the compromise and the proposed orders sought by the caveator, with a view to being joined as parties to the proceeding.
The caveator relies on affidavits of Nicola Sarvanis,[6] David Brett[7] and Tom Bennett-Mitrovski[8] and submits that notice has been given to the executors and Ms Heaft.
[6]Affirmed 16 April 2021. Ms Sarvanis is an employee of McKean Park, solicitors for the caveator.
[7]Sworn 16 April 2021. Mr Brett is a solicitor employed by McKean Park.
[8]Affirmed 18 April 2021. Mr Bennett-Mitrovski is a solicitor employed by McKean Park.
Specifically Ms Sarvanis deposes that McKean Park sent a letter dated 18 January 2021 to the executors of the 2009 will enclosing: the inventory of assets and liabilities dated 17 May 2017; a copy of the 2009 will; a copy of the 2016 will; the caveator’s grounds of objection dated 26 June 2017; the terms of settlement dated 24 October 2017; the primary judgment; the appeal judgment and a draft affidavit seeking consent to the intended compromise.The letter gave notice of the intended compromise and asked them to sign an affidavit confirming their consent to the intended compromise.
Mr Brett’s affidavit exhibits a letter dated 19 January 2021 in reply, by which the executors of the 2009 will said they did not consent to the proposed compromise, did not want anything from the estate and they did not wish to be contacted again.
Mr Bennett-Mitrovski deposes to unsuccessful attempts made to contact Ms Heaft on Facebook via Facebook messaging and exhibits an electoral role search which confirms an address for her in South Australia. Ms Sarvanis deposes that on 18 January 2021 McKean Park sent by express post a letter to Ms Heaft to her address in South Australia, enclosing: the inventory of assets and liabilities dated 17 May 2017; a copy of the 2009 will; a copy of the 2016 will; the caveator’s grounds of objection dated 26 June 2017; the terms of settlement dated 24 October 2017; the primary judgment; the appeal judgment and a draft affidavit seeking consent to the intended compromise. The letter gave notice of the intended compromise and asked Ms Heaft to sign an affidavit confirming her consent to the intended compromise.Ms Heaft did not respond to McKean Park’s letter.
The caveator submits that as notice has been given to the affected persons under the 2009 will, the Court is now in a position to make the orders sought in the second summons.
Applicable principles
Contested probate proceedings may be compromised where the validity of the will is in dispute. In this regard, the 1927 edition of Mortimer, Probate Law and Practice is often cited:
The power of compromise in probate actions is of great importance. As soon as the writ has been issued, but not before, the parties may come to terms, and these terms may be filed and made a rule of Court, binding upon the parties to the compromise, and enforceable in the same way as any other order of the Court. But if a compromise is to be made a rule of Court, the terms of the compromise must contain an agreement to that effect.
There is practically no limit to the terms upon which parties may agree to compromise; they may in effect make a new will for the testator. Thus an executor may agree that the will he propounds shall be admitted to probate, but that he will administer the estate in accordance with the provisions of a revoked will; or where a will has been invalidly executed, the persons interested on an intestacy may agree that the will shall be pronounced against, but that they will administer the estate in accordance with its provisions; and, provided all parties interested are of full age and are parties to the compromise, such terms would be made a rule of Court.
But if it is part of the terms of the compromise that a will shall be pronounced for or pronounced against, the Court must be satisfied by evidence that the will was duly executed, or is invalid, before it will pronounce its decree.[9]
[9]Clifford Mortimer and Hamish H H Coates, Mortimer, Probate Law and Practice (Sweet & Maxwell, 2nd ed, 1927) 610 (‘Mortimer’), quoted in Re Szylowicz (1978) 19 SASR 263, 270. In Mortimer, cited in support of the proposition that the compromise could become a rule of the Court was Smythe v Smythe (1887) 56 L.T. 197 (a divorce application) in which Sir J Hannen said that the principle was that where all parties were sui juris and capable of managing their own affairs, the relevant agreement could be made a rule of court. Also cited was Harvey v Allen (1858) 1 S & T 151 where a compromise was reached between an executor and the legal personal representative of the sole next of kin after a trial had been started. The compromise involved payment of £2000 to the next of kin. It was held that a judge of the Court of Probate had jurisdiction to make a compromise a rule of the Court and enforced it as such, just as an order is made by a judge at nisi prius.
While courts have proceeded on the basis that compromises could be entered into, the power upon which an executor relies in this regard appears to have received limited attention. Instead, analysis has variously focused on ensuring that all interested individuals consent to the compromise;[10] the protection afforded to the executor;[11] and the court only making orders addressing the issues at hand.[12] In relation to the latter point, in Re Levy, deceased (No 2) (‘Re Levy’)[13] Sholl J said:
Even, however, if the executor were a party to the present compromise, I consider that the persons cited in this case are, according to Victorian practice, parties to the suit, and would be bound in this case by an order made as a result of such a compromise, so long as it was an order in relation to the issues before the Court. In my opinion a person who is a party and does not appear at the hearing takes the chance of what, by agreement of the parties who do appear, the Court may be asked to do, and may do, with relation to, and within the limits of, the issues of which the absent parties have notice. No doubt he would not be bound if the parties present at the trial agreed to travel outside the issues, and purported thereby to affect the absent party’s interests in some way which he could not have anticipated. To take an example, if in this case the parties present agreed that probate of the first will should be granted, but that the costs of the suit should be thrown wholly on the legacies payable to some absent parties under that will, I apprehend they would not be bound by that arrangement as to costs. But a compromise which results in the withdrawal of the opposition to the will is prima facie a compromise in relation to the issues before the Court.[14]
[10]See, eg, Kovacs v Public Trustee [2006] SASC 1, where there was a contest between the last and penultimate will, the estate was small, all beneficiaries of each will consented and there was advice of counsel as to the interests of an individual represented by the public trustee; Re Edwards (1981) 28 SASR 380, an application for revocation and contest between last and earlier will, where the parties were all sui juris and included the executor and sole beneficiary of the later will, the executor and sole beneficiary of the earlier will, and those interested in intestacy.
[11]Re Levy, deceased (No 2) [1957] VR 662 (‘Re Levy’).
[12]Ibid; Re Szylowicz (1978) 19 SASR 263.
[13][1957] VR 622.
[14]Ibid 666.
In the circumstances of Re Levy, during administration of an estate an executor, who had been granted probate of the testator’s last will in common form, started to doubt the last will’s validity and was directed to bring it into court to prove in solemn form. Certain legatees of an earlier will opposed the proceeding, and the parties reached a compromise on the day of the hearing. However, the residuary beneficiary of the earlier will did not appear in the proceeding. Sholl J considered that it was ‘obvious, as a matter of common sense’ that it would be very much to the interests of the persons who would be interested in the residuary estate if the last will were upheld, to compromise or ‘buy out’ the interest of the legatees under the earlier will.[15] Further, his Honour considered that the executor would be protected against persons interested in the earlier will who were not represented at the hearing by a grant of proof in solemn form, even though the matter continued without an active opponent.
[15]Ibid 664.
Re Szylowicz[16] was a case in which the ‘issue before the court’ was also referenced. There, a challenge was brought by the sole interested person upon intestacy against an application for a grant of administration with a copy will attached. The sole residuary beneficiary of the copy will compromised the proceeding, in circumstances where a legacy to another individual (who was not a party to the compromise) was preserved. The Court ordered the grant, but declined to make the compromise a rule of the Court:
[O]nce the Court is satisfied by evidence, not merely of the formal validity of the will propounded, but that it is in all respects the valid and subsisting last will of the testator, and probate thereof is decreed, the power of the Court to sanction in its decree a variation of the terms of the will, by way of compromise, is no longer exercisable. There is no unresolved issue between the parties to support the compromise, and the will so established speaks according to its tenor. What the parties may chose to do by way of family arrangement is a matter for them, but not a matter to which the Court can be called upon to lend its aid.[17]
[16](1978) SASR 263.
[17]Ibid 271.
Re Levy and Re Szylowicz were cited by Nettle J in Dowling v St Vincent De Paul Society of Victoria Inc (‘Dowling’)[18] where his Honour considered whether s 19(1)(f) of the Trustee Act empowered an executor to compromise a probate proceeding where the validity of the will was in dispute.
[18][2003] VSC 454 (‘Dowling’).
Nettle J determined that s 19(1)(f) ‘does not authorise an executor to compromise a dispute as to the validity of a will without the consent of affected parties or an order of the court that binds them’.[19] This conclusion was reached on the basis of four lines of reasoning. First, the language and context of the provision supported an interpretation that limited its application to claims against the estate. It did not apply to claims determining the validity of the will, which was the issue at hand.[20] Second, the legislative history indicated that s 19(1)(f) did not permit the alteration of beneficial interests without the consent of all beneficiaries or court approval. His Honour accepted the submission that whatever the scope of s 19(1)(f), it did not authorise the variation of beneficial interests without the consent of all interested beneficiaries.[21] Next, Nettle J agreed with the submission that the scope of the power afforded in s 19(1)(f) should not be thought to vary according to whether an executor has obtained probate[22] and also discussed the compromise of probate proceedings. His Honour noted that s 19(1)(f) did not authorise an executor to compromise a proceeding in which the validity of the will was in dispute. In this regard his Honour explained:
It is one thing to decide that a will is valid. It could be quite another to determine that it is in order to compromise a claim of invalidity on terms that may allow something in favour of the claimant (and thereby vary beneficial interests).[23] The court may well decide the former question when a grant of probate is sought. But other things being equal, there will be no call to deal with the latter; at least in Victoria.[24]
[19]Ibid [37].
[20]Ibid [20]-[21].
[21]Ibid [22]-[23].
[22]Ibid [26].
[23]Re Szylowicz (1978) 19 SASR 263, 270.
[24]Dowling [2003] VSC 454, [28] citing Re Levy [1957] VR 662, 666.
Echoing the language of Mortimer, Probate Law and Practice, Nettle J continued:
Certainly, there is no question that a probate proceeding may be compromised, or that parties to the probate proceeding may be bound by an order made in the proceeding as a result of the compromise, so long as the compromise is an order in relation to the issues before the court. Practically speaking there is no limit to the terms upon which parties may agree to compromise a probate proceeding and thus it has been said that parties may in effect even make a new will for the testator. An executor may agree that the will which he propounds shall be admitted to probate but that he will administer the estate in accordance with the provisions of a revoked will. But the court retains the power itself to decide what are the valid testamentary dispositions.[25] Thus while a probate proceeding may be compromised and the parties to the proceeding and their privies may be bound by the compromise, they will be bound as parties or privies and not because of any power under s 19(1)(f) to impose a settlement upon them.[26]
[25]Goods of Watts (1837) 1 Curt 594, 595; 163 ER 203; Will of Podger [1957] VR 275, 287; Re Breen [1961] VR 522, 525; cf Re Grey Smith [1978] VR 596, 601-2.
[26]Dowling [2003] VSC 454, [31] citing Re Levy [1957] VR 662, 666; Vandeleur v Franich [1991] 1 Qd R 481, 484-5; Robert S Geddes, Charles J Rowland and Paul Studdert, Wills, Probate and Administration in New South Wales (LBC Information Services, 1996) [40.88]-[40.89].
As recognised by his Honour, probate proceedings could be compromised, but there are associated limits:
(a) parties to a proceeding may be bound by an order made as a result of the compromise, so long as the compromise is an order relating to the issues before the Court;
(b) the Court retains the power to determine valid testamentary dispositions; and
(c) parties to a proceeding and privies will be bound by the compromise, not due to any power under s 19(1)(f), but due to their status as parties and privies.
Consideration
Background
The first summons sought directions for the further conduct of the proceeding, including that the caveator be joined as a defendant to the proceeding. However, on the return date, the caveator only sought approval of the compromise. In doing so, the caveator effectively sought that the plaintiff be bound by the compromise, without herself becoming a party in the proceeding or following the usual procedure when challenging the validity of a will. This requirement was set out in the primary judgment, as follows:
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.[27]
[27]Primary judgment [27]-[28].
On appeal, the caveator’s position appeared to be if joinder stood as an impediment to the approval of the compromise, then the caveator sought to be joined. The Court of Appeal considered that as the orders sought in the approval application effected the distribution of the estate in accordance with the agreed distribution, it was correct to decline to make those orders in circumstances where the validity of the will and identity of the executor remained in issue.[28]
Caveator’s status in the proceeding
[28]Appeal judgment [85]-[87].
The second summons wrongly describes the caveator as ‘the defendant’. The second summons does not seek an order that the caveator be joined as a defendant. If such an order were sought, the caveator would be required to establish a prima facie case. As the caveator has not done so, it remains the case that the caveator is not a party to the proceeding.
Orders sought by the caveator
The Court of Appeal found that the orders sought by the caveator went well beyond mere approval:
[The caveator] seeks orders that themselves effect the distribution of the estate by the respondent, in her capacity as executor of the 2016 will. Thus, it is proposed that the Court order the respondent, as the plaintiff in the probate proceeding, to realise the assets of the estate and pay $11,075.30 to the Senior Master of the Court to be invested for the benefit of Emily and $8,924.70 to her lawyers.
In other words, the proposed orders provide for the distribution of the estate by its putative executor. They require ‘the plaintiff’ — as the person who seeks to propound the 2016 will — to make payments intended to implement the Terms of Settlement, which are expressed to relate to the administration of the estate.
The settlement is an agreement entered into by the executor of the 2016 will providing for the distribution of the assets of the estate. The proposed orders assume that the executor of the 2016 will is the person entitled to administer the estate by distributing its assets. Even though the executor and the sole beneficiary of the 2016 will are the same person, and we are told that she consents to the re-distribution of the assets of the estate in her capacity as the sole beneficiary, the orders that the Court is asked to make in order to approve the settlement are directed to her qua executor under the 2016 will and require her in this capacity to distribute the assets of the estate otherwise than in accordance with either of the testator’s wills. The orders, if made, would pre-empt the grant of probate and truncate the rights of others to challenge the grant.[29]
[29]Ibid [68]–[70].
It was considered clear that the proposed orders applied to the plaintiff as executor, and would require her to distribute the estate in that capacity. Consistent with Dowling, the plaintiff could not compromise a dispute about the validity of a will without the consent of the ‘affected parties’ or an ‘order of the court that binds them’.[30] In order to bind absent beneficiaries, they had to be joined as parties to the proceeding. As such, the Court of Appeal reasoned that if the Court is to make orders requiring payments out of the estate to the caveator, the ‘affected parties’, who were identified as the ‘persons interested’ in both the last will and the penultimate will, had to be given notice and joined as defendants.[31]
[30]Ibid [72].
[31]Ibid [74].
It was considered implicit in the orders sought by the caveator that the 2016 will is valid, notwithstanding that the challenge to that will’s validity had yet to be resolved. The following paragraph from Mortimer, Probate Law and Practice, cited in the appeal judgment, was viewed as a qualification to the ‘power to approve a compromise’:
But if it is part of the terms of the compromise that a will shall be pronounced for or pronounced against, the Court must be satisfied by evidence that the will was duly executed, or is invalid, before it will pronounce its decree.[32]
[32]Ibid [79]-[80].
The application for approval and the grant of probate of the 2016 will are interdependent under the terms of settlement,[33] and it is necessary for the Court to be satisfied on the evidence that the 2016 will is valid. The Court cannot proceed simply on the basis of notice of the terms of settlement to the affected persons, as discussed below.
Affected persons
[33]Ibid [80].
The caveator submitted that as notice has been given to the affected persons under the 2009 will, the Court is now in a position to make the orders sought in the second summons, that is, that the compromise embodied in the terms of settlement be approved pursuant to Ord 15 of the Rules, despite the fact that the affected persons have not been joined as parties to the proceeding.
The caveator relies on notice of the terms of settlement having been given to the affected persons. However, notice assumes there is an issue that requires a response. Until the caveator has established a prima facie case and is joined as a defendant to the proceeding, it is difficult for the affected persons to respond to the notice with any clarity.
Further, as noted in Re Levy, notice to the affected parties in this case needs to be given of something further, that is, ‘all the issues’. In both Re Levy and Re Szylowicz, the order sought went to the validity of the will alone. Sholl J noted in Re Levy that it is necessary to ensure that absent parties have notice of all of the issues.[34] The absent persons are not parties to the proceeding and orders of the Court will not bind them. While notice has been sent to the executors of the 2009 will and Ms Heaft, including the terms of settlement, the executors do not consent to the compromise and Ms Heaft did not respond to the notice.
Plaintiff’s authority to enter into the compromise
[34][1957] VR 662, 666.
The plaintiff is the named executor of the 2016 will. Prima facie, the 2016 will was duly executed in accordance with s 7 of the Wills Act 1997, and the plaintiff, at the very least by seeking a grant of probate, has accepted her office. In accepting her executorial role, the plaintiff is representing the deceased and holds the estate in his right, as his ‘minister and dispenser’. It is her duty to preserve, protect and properly administer the estate.
Clause 4 of the 2016 will leaves the estate to the plaintiff. The estate consists of real and personal property. At the time of the deceased’s death, the funds devolved to the plaintiff in her executorial role as personal property, while the real property devolved to her as the beneficiary of the residuary estate.
Clause 8 of the 2016 will provides that the plaintiff has:
(a)All the capacity and power in respect of [the estate] that a natural person would have if they were the absolute owner of [the estate] and acting in their personal capacity; and
(b)may do anything [the] executor considers appropriate to administer [the estate].
In cl 9, the following specific example is set out:
(v)assert, enforce, negotiate, compromise, release, surrender, assign, resist, defend, negotiate, mediate, compromise or settle any claim concerning my estate.
…
My executor may do, or decline to do, each of these things in their discretion without consulting with, or seeking the consent of any beneficiary. Any action taken by my executor under these powers will be binding on all persons interested in my estate.
The language of the power reflects that used in s 19(1)(f) of the Trustee Act. A claim questioning the validity of the will itself would appear to fall outside the phrase ‘any claim concerning my estate’, as the power presupposes the validity of the executor’s status and ability to administer the estate. In any event, the caveator does not assert that reliance can be placed on cl 9(v) of the 2016 will.
As such, the terms of settlement require the plaintiff:
(a) as executor, to administer the estate in a manner inconsistent with the 2016 will, that is, by varying the beneficial interests; and
(b) to realise funds from the real property or otherwise obtain a loan, given that the deceased’s personal estate comprises less than $20,000.
The cases indicate that the plaintiff’s ability to consent to the compromise as sole beneficiary of the 2016 will is not enough to give her authority to enter into the compromise as executor. Rather, in recognition of the fact that a challenge to a last will casts doubt on the identity of the true executor and beneficiaries, the inquiry is much broader, requiring:
(a) the consent of all ‘affected parties’ who are sui juris;[35] or
(b) an order of the court that binds all ‘affected parties’.[36]
[35]See, eg, Re Edwards (1981) 28 SASR 380.
[36]See, eg, Re Levy [1957] VR 662.
Further, where it is a part of the terms of settlement that a will is pronounced for or against, the Court must be satisfied by evidence that it was duly executed, or is invalid, before it will pronounce its decree.[37] Such an approach looks to facilitate early settlement, protect the executor, and recognise the Court’s role in determining the testator’s valid dispositions.
[37]Appeal judgment [79]-[80].
In Dowling,[38] Re Levy[39] and Re Szylowicz,[40] the focus of ‘the order of the Court that binds’ appears to have been the validity of the will. That was considered the issue before the Court requiring resolution, and within the contemplation of ‘affected parties’. Here, the terms of settlement will not be valid unless approved by the Court. As such, the caveator is unlikely to withdraw the caveat to allow the application for a grant to proceed in common form. However, it is implicit in the orders sought that the 2016 will is valid. Consequently, the Court is required to be satisfied by evidence that it was duly executed, before making the proposed orders. As summarised by Jenkins J in a similar context in Holyoak-Roberts v Ryder:[41]
Although all parties who may have a claim to the estate of the deceased have agreed to the compromise of the action, the parties acknowledge that it must be approved by the court because two of the parties are infants pursuant to the Rules of the Supreme Court 1971 (WA SCR) O 70.
Thus, there are two issues before me. One is whether the compromise of the action on behalf of [the infants] ought to be approved by the court. The other is whether I ought to grant probate in solemn form of the last will. The issues are interdependent on one another. Consequently, I will consider the circumstances relating to them together but make separate findings at the end of these reasons in respect to each issue.[42]
Her Honour pronounced in favour of the last will and approved the compromise.
Conclusion
[38][2003] VSC 454.
[39][1957] VR 662.
[40](1978) 19 SASR 263.
[41][2009] WASC 341.
[42]Ibid [5]-[6].
Despite the extended discussion of the issues of notice and the plaintiff’s (in)ability to consent to the compromise, the fact remains that the caveator is yet to establish a prima facie case and remains a caveator. If the caveator is joined as a defendant in the proceeding, the validity of the 2016 will may then be determined and subsequently so may the approval of the compromise.
Orders
The second summons filed 20 April 2021 for approval of the proposed compromise, as embodied in the conditional terms of settlement dated 24 October 2017, be dismissed.
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