Mr Imad Bittar is one of three sibling beneficiaries under the will of their mother, Mrs Wardi Al Sharwa ("the deceased"). The executor of his mother's estate, Mr Nazrie Bitar (one of Mr Imad Bittar's siblings) settled a Succession Act 2006, Part 3 family provision claim brought against the estate by one of the deceased's grandchildren, Ms Melody Bitar. The settlement orders required the estate to pay Melody $80,000 inclusive of a fixed sum for costs. Mr Imad Bittar now applies by motion to set aside those settlement orders, on the basis that "sufficient cause has been shown" that they were "irregularly illegally or against good faith" within Uniform Civil Procedure Rule 2005 ("UCPR"), r 36.15. Melody opposes the application arguing that the orders were entered regularly, legally and in good faith.
Mr Imad Bittar, the applicant on the motion, appears for himself. Mr G.P. McNally SC, instructed by Finn Roache Lawyers, appears for the respondents. The application was heard on 23 and 24 May 2019. Some limited further background to the application is required.
[2]
An Estate, a Settlement and a Beneficiary's Application - 2017 to 2019
The late Wardi Al Sharwa, the deceased, had five children. From eldest to youngest, they are Ziad Bitar, Imad Bittar, Iyad Al Bittar, Rana Abo Asali and Nazrie Bitar. Due to the sounding out of the consonant "T" in the Arabic language, the surnames of the children are spelt slightly differently on their birth registration, some with a double "T" and some with a single "T". Without intending any disrespect to any family members for convenience, the Court will refer to all family members and mere relations by their first names in these reasons.
The deceased's daughter Rana took no part in the proceedings. The eldest son, Ziad, was married to Maryam Al Chahaf.
Maryam and Ziad's daughter, Melody Bitar, is the plaintiff in these proceedings. At the time she commenced the proceedings in 2017, she was a minor and appeared by her tutor, her mother Maryam. But she stepped aside due to alleged conflicts of interest which was said to arise out of Maryam's conflict with Ziad in the Family Court proceedings. Dalida Dagher became her tutor. The deceased's will made no provision either for Ziad or Rana. The deceased gave the whole of her property to Imad, Iyad and Nazrie.
At the time of her death on 8 April 2016, the deceased owned three separate parcels of real estate: a property in Crows Nest, Queensland said to be worth $500,000; a property in Arthur Street, Ashfield said to be worth $1.6 million; and a property in Punchbowl said to be worth $900,000.
Under her will, 28 February 2016, the deceased appointed Nazrie as her executor and trustee and made the following dispositions of her property: the Crows Nest, Queensland property to Nazrie; the Punchbowl property to Nazrie; 80 per cent of the Ashfield property to Imad; and 20 per cent of the Ashfield property to Iyad.
The deceased did not dispose specifically of any personal or residuary estate and there does not appear to have been much of any significance in her estate, apart from these identified parcels of real estate.
By the time the administration of the deceased's estate was underway, Ziad and Maryam had separated and proceedings were on foot between them in the Family Court of Australia. Among other issues in those proceedings, Maryam claimed that Ziad had transferred the Queensland property to his mother, the deceased, prior to the separation and she sought orders for its return to him, to be distributed as part of the matrimonial pool of assets in dispute between them.
These proceedings were originally commenced by Summons on 18 October 2017. Extensive evidence was filed in the proceedings on both sides prior to the appointment of a Judicial Settlement Conference, before Hallen J on 7 May 2018. On that occasion, the solicitors Maatouk & Associates represented the estate, instructing Mr A. Paterson of counsel and Mr D. Warren of counsel, Anthony Ziade Solicitors appeared for Maryam and Mr McNally SC appeared on Melody's behalf, instructed by her tutor.
The Judicial Settlement Conference on 7 May 2018 was not a contested final hearing of the proceedings on the merits. It was instead an important pre-trial management process in which the Court seeks, through judicial management and intervention to give effect to the intent of Succession Act, s 98 to see if proceedings can be resolved before hearing. But the process is formal and a full transcript was kept, which is in evidence now before the Court. That transcript, and other evidence on this application, reveals that also present on 7 May 2018 at Court were Nazrie, the executor of the estate, Ziad and Imad. But Iyad, who resided in Queensland, was not present. Thus of the three beneficiaries of the will, Nazrie, Imad and Iyad, only Iyad was absent.
At the Judicial Settlement Conference, the parties were present and generally seated at the Bar table. His Honour explained the nature of the process and the counsel concerned explained the issues from each of their client's points of view. The Court was told about the costs incurred to date and the probable costs to be incurred at hearing. His Honour was made aware of the Family Court proceedings between Ziad and Maryam, and made procedural suggestions for the possible joinder of Maryam into these proceedings.
But his Honour made clear that he was not a mediator and was merely providing to the parties an opportunity to resolve the proceedings between themselves. The parties were then given an opportunity to see if they could negotiate a resolution. The parties took the opportunity of doing just that and terms of settlement were reached between the estate and Maryam, in relation to her application to bring the Queensland property back into the pool of disputed matrimonial assets. In addition, a further $40,000 was sequestered so that it did not form part of the deceased's estate but formed part of a pool of matrimonial property belonging to Ziad and/or Marayam.
And as earlier indicated, the principal settlement between Melody and the estate was for provision out of the estate of $45,000 to her and the allocation of a further $35,000 in costs, on account of her claim, making a payment to her or on her behalf of a total of $80,000.
The combined settlement had the obvious advantage of eliminating contested proceedings, both in the Supreme Court and in the Family Court of Australia. Once his Honour was told that proceedings had settled he was given a "Settlement Checklist", which identified: the plaintiff's affidavits to be relied upon; the defendant's affidavits to be relied upon; sought a response as to whether notices of eligible persons had been served; and whether Practice Note SC Eq 7 had been complied with. The document also in the Settlement Checklist asked the question, "Who is to bear the burden of provision being made?" To that the response given, under the hand of Mr Paterson and Mr McNally SC was, "The three names beneficiaries, Nazrie, Imad and Iyad, pro rata". This reflected the internal agreement within the estate that counsel at least thought had been made at the time of settlement and that was later expressed in open Court. The checklist is important: listing the affidavit material for his Honour's attention when orders were later made in chambers.
His Honour did not make orders that day. In fact, orders were not made until shortly after 11am on 9 May 2018. The best way to understand the course of events between 7 and 9 May 2018 is to start with the orders that were ultimately entered on 9 May 2018, which are reproduced below:
"1. Orders that the settlement of the claim by the Plaintiff, who is a person under a legal incapacity (a minor), be approved pursuant to s 76(4) of the Civil Procedure Act 2005 (NSW).
2. Orders, sufficient cause having been shown, that the time for the making of the Plaintiff's application be extended until 18 October 2017, the date of the filing of the Summons herein.
3. Orders that the Plaintiff receive by way of provision out of the estate of Wardi Al Sahwa ("the deceased") a lump sum of $45,000.
4. Orders that no interest is to be paid on the lump sum if it is paid within 3 months of the date of the making of these orders; otherwise interest is to be paid calculated from that date at the rates prescribed for interest on unpaid legacies by s 84A(3) of the Probate and Administration Act 1898 (NSW) on any unpaid part of the lump sum until paid in full.
5. Orders that the Plaintiff's costs assessed and agreed at $35,000 of the proceedings be paid out of the estate of the deceased.
6. Orders that the Defendant's costs, calculated on the indemnity basis, of the proceedings, be paid out of the estate of the deceased.
7. Orders, pursuant to s 77(3) of the Civil Procedure Act 2005 (NSW) that the lump sum payable to the Plaintiff out of the estate of the deceased, be paid to the solicitor for the Plaintiff, Mr Ken Scully, and thereafter be paid into a controlled monies account, or interest bearing deposit, in the name of the Plaintiff's solicitor and the tutor, to be held on trust for the Plaintiff until she attains the age of 18 years (11 March 2019).
8. Notes that the tutor, the mother of the Plaintiff, Maryam Al Chahaf, and the advisers of each have considered the compromise and believe it to be beneficial to, and in the interests of, the Plaintiff.
9. Orders that the burden of the payment of the lump sum and the costs of the proceedings be borne by the beneficiaries Nazrie Bitar, Imad Bittar and Iyad Bitar, pro rata in proportion to their respective entitlements under the Will of the deceased.
10. Notes that there is an agreement now reached between the Defendant, Maryam Al Chahaf and the tutor of the Plaintiff, that the property situated at and known as [address not published], Crows Nest, Queensland plus a lump sum of $40,000 does not form part of the deceased's estate but forms part of a pool of property belonging to Ziad Bitar and/or Maryam Al Chahaf.
11. Notes that the beneficiaries named in the Will of the deceased have consented to the settlement of these proceedings and the proceedings between the estate and Maryam Al Chahaf in the Family Court of Australia."
The making of these orders was reached by further steps between 7 and 9 May 2018.
On the afternoon of 7 May 2018, the settlement was reported to the Court in the following way. Imad asked his Honour what was expected of him and his Honour explained that Mr Paterson was representing the estate and that, in that role, Mr Paterson would be "representing your interests or the interests of the three beneficiaries". Mr Imad expressed concern about the costs being incurred in the proceedings, including his costs, a theme to which he returned in his submissions on this application. The barristers then reported to his Honour that a settlement had been achieved. Consequent upon that, affidavits of the plaintiff, Melody, of 14 November 2017 and 16 April 2018 were read, together with affidavits of her solicitor, Mr Kenneth Scully of 15 November 2017 and 17 October 2017. An affidavit of Maryam was also read, and an affidavit of the tutor and three affidavits of Nazrie, each of 12 March 2018. In addition, two affidavits of Peter Maatouk of 12 March 2018 were read.
The material before his Honour was quite substantial and sufficient for him to deal with the requisite issues to find the necessary Succession Act, Part 3 jurisdiction in the case.
Mr Paterson then declared to the Court the position about the absent beneficiary, Iyad, explaining that he was in Queensland and that Nazrie had not been able to get in touch with him.
His Honour was informed that the burden of the settlement would be borne equally among the beneficiaries. For the Court's present appreciation, of what that meant in economic terms for the beneficiaries, Mr McNally SC explained the effect in his written submissions on this application as follows:
"14. The combined effect of the Succession Act settlement and the Family law agreement was that Nazrie (the executor) gave up his right to 100% of the Queensland property. That, coupled with the extra $ 40,000.00 referred to in the Family law settlement then reduced the size of the net estate from $ 2.8m to $ 2.26m, from which the plaintiff was to receive her legacy. The readjusted legacies under the will were:
Nazrie, receives Punchbowl valued at $ 900,000- say 36% of the estate;
Imad receives 80% of Ashfield valued at $ 1.6m (or $ 1.28m)- say 51% of the estate;
Iyad receives 20% of Ashfield valued at $ 1.6m (or $ 320,000)- say 13% of the estate.
On those figures the burden of the total payment of $ 80,000.00 for the plaintiff would be borne pro rata by those beneficiaries as follows:
Nazrie $28,800.00
Imad $ 40,800.00 and
Iyad $ 10,400.00"
A curiosity of this case is that Imad's economic interest in overturning this decision is not large, compared with the overall risks of costs from contested litigation. But Imad explained his reasons for bringing this application was not so much about its economic effect on him, but on the way that his brother Ziad had been treated and that Ziad's interests had been subordinated to those of Maryam in a way that he thought was unfair.
When the terms of settlement were handed up to his Honour, they only contained Orders 1 to 9 (Exhibit 2). His Honour added notations 10 and 11 in the course of discussion between the parties, as follows. His Honour explained that to overcome the problem of the absent beneficiary, he would allow the matter to sit overnight to see if the beneficiary, Iyad, could be contacted:
"WARREN: No, there are proceedings between husband and wife in the Family Court. No agreement has been reached, so the only agreement is between the estate setting aside a transaction so it now goes into the matrimonial pool.
HIS HONOUR: I see, all right. Well, I don't need to be troubled about that, do I?
PATERSON: No.
HIS HONOUR: And you do not need to be troubled about that.
PATERSON: No, we're out of here. We're out of there.
HIS HONOUR: I see, all right. I will have to note, won't I, that the beneficiaries named in the will of the deceased have consented to the settlement of these proceedings and the proceedings between the estate and Maryam Al Chahaf in the Family Court proceedings.
PATERSON: I don't think you strictly need to note that.
HIS HONOUR: I do because it affects the size of the estate, does it not? And it affects their interests under the will.
PATERSON: What it does, I suppose it-
HIS HONOUR: Is there any likelihood that there's going to be any dispute about it, Mr Paterson?
PATERSON: No.
HIS HONOUR: We won't enter these orders today. I will give you the opportunity to send me an email overnight confirming that the person in Queensland consents to the orders being made.
PATERSON: Yes.
HIS HONOUR: How's that?
PATERSON: Yes.
HIS HONOUR: All right. Can we make those a form of orders. We will print this out and give it to everyone."
His Honour then added the additional notations 10 and 11 that are recorded in the final form of orders, noting the substance of the settlement in the Family Court proceedings and the consent of the beneficiaries to the settlement of both proceedings.
On this application, the evidence of Mr Scully, the solicitor for Melody, was read. It is a sufficient basis for the Court to infer that, in negotiations, Mr Paterson was conferring with the executor Nazrie and the beneficiary Imad. Imad does not deny this.
Once the affidavit was read in the proceedings, and after the terms of settlement had been handed up, including Order 9, which provides that the burden of the settlement would be borne pro rata between the beneficiaries, his Honour made the observation "everyone agrees to that". This was really the time for Imad to speak up and say that he did not agree with the settlement. He was present in Court throughout the whole of process of discussion of the terms of the settlement and the arrangement of the mechanics of the entry of orders.
He says that he thought he would be able to dispute the orders later if he was unhappy with them, referring to discussions that he had with Mr Paterson. But the course of the transcript strongly suggests that any regrets that Imad had with the settlement developed after the Court proceedings adjourned. Imad gave some evidence about expressing his disagreement with the terms to the lawyers for the estate. It can be accepted that he developed doubts about the settlement, which he expressed to his lawyers afterwards. This can be inferred from the next course of events.
Imad says that he was misled about the terms of the settlement. But even on the limited one sided version of what he said was explained to him, the Court does not accept his evidence on that subject. Sufficient was said about the settlement in open Court for a man of Imad's general fortitude to stand up and say that he disagreed. Imad, both in the witness box and at the Bar table in these proceedings, presented as an intelligent, capable person who had a better understanding of legal concepts than the general community. He gave a competent account of himself in the courtroom, a matter upon which the Court remarked on a number of occasions.
But late on 7 May 2018, when contact was made with Iyad, away from the courtroom, the beneficiaries started having doubts. This is reflected in what followed.
By an email dated 8 May 2018 at 4.15pm, the solicitor for the estate, Mr Peter Maatouk, notified the Court that although attempts had been made to contact the Queensland beneficiary, Iyad, they had not been successful. Mr Maatouk expressed the wish that the Court proceed to make the orders circulated the previous day, notwithstanding the lack of consent from the outstanding beneficiary, Iyad. In reply, the Associate to Hallen J indicated that the orders would be entered into Justicelink the following morning. And they were so entered shortly after 11am.
In his oral evidence, Imad gives a strong account of consulting with his brothers, and then contacting Mr Peter Maatouk and saying that he did not want the orders entered. It can be accepted that Imad spoke to Iyad and between them they formed the view that they had doubts about the settlement and communicated that to Mr Peter Maatouk. But I infer from Mr Maatouk's email to the Court that he had instructions from the executor, Nazrie, to proceed with the settlement, notwithstanding the disagreement of the beneficiaries.
Imad has sought to undermine this conclusion in several ways. He sought to give hearsay evidence about Nazrie's instructions to Mr Maatouk to not file the orders, but in the end he did not read Nazrie's affidavit and the hearsay material was not admitted.
He also sought to rely upon an email from Nazrie on 17 May 2018 suggesting Nazrie sought to revoke instruction to Mr Maatouk on 9 May 2018. But that email of doubtful provenance in Nazrie's absence and is consistent with the conclusion that instructions were sought to be revoked, if at all, after the orders were entered.
But in any event the solicitor's conduct in sending the email to his Honour's Associate late on 8 May 2018, and the failure to call direct evidence from Nazrie to contradict those instructions, means that there is no doubt about the proper authority to enter the orders from the estate's point of view.
Imad further sought to undermine this conclusion by pointing out that, since these events, Nazrie had renounced probate and that he had applied to become an administrator of the estate. But that application has not been heard. Even if Imad were now appointed administrator of the estate, that would not change the instructions that were given to the estate's solicitor on 7 and 8 May 2018 for the entry of the orders.
Imad carried through with his concerns about the orders and filed this application on 23 May 2018.
[3]
Consideration
One preliminary matter should be mentioned. In support of his claim to set aside the orders, Imad argued at one point that Melody's claim was without any merit. In substance, his argument was that her claim had no prospects of success. This submission seemed directed at the idea that the trustee could not validly compromise the claim that was proven to be without substance. But an argument misapprehends the law. An executor's capacity to claim the authority of Trustee Act 1925, s 49(1)(d) to compromise a claim does not depend upon the executor showing that the claim would have succeeded or was likely to succeed: Ridsdel, In re; Ridsdel v Rawlinson (1947) Ch 597.
An executor's duty in exercising the trustee's power to compound claims under Trustee Act, s 49(1)(d) requires the trustee to act "on the balance of possibilities and the balance of apparent advantage": Ezekial's Settlement Trusts, In re; National Provincial Bank Ltd v Hyam (1942) Ch 230. In the present case, the settlement for Melody was relatively modest, expressing perhaps that her claim faced some obstacles. But given the size of the estate, the relative modesty of the settlement also gives some basis to infer that the claim was settled to a degree to the advantage of the estate but not so much to the disadvantage of Melody that the Court should disapprove it.
The regularity of his Honour's decision to proceed to enter the orders on 9 May 2018, despite the indications that Imad did not consent to their entry, depends upon whether Imad's consent was required to the making of the orders. If Iyad's consent was not required, the orders could be entered despite his lack of consent. On the other hand, if his consent was required, the entry of the orders may arguably have been irregular. But even in that situation, the discretionary question would arise whether "sufficient cause has been shown" to set aside the orders; and even then, whether all, or only some of, the orders should be set aside.
Iyad's consent to the entry the settlement orders was not required. He is a beneficiary of the estate. The executor of the estate made the settlement agreement with Melody to compromise her claim against the estate. The conduct of executors is governed by Trustee Act 1925. By reason of Trustee Act 1925, s 5 a trustee includes a legal representative; defined as executor or administrator. The executor has a general power conferred under Trustee Act s 49(1)(d) to compound claims. That power may be exercised by an executor without the consent of beneficiaries: Re-Estate of the Earl of Strafford (1980) Ch 28 ("Earl of Strafford"), at 32 - 33. To the extent that the orders merely compromised Melody's claim against the estate, had Iyad gained an audience with the Court to seek to oppose the entry of the orders, he would have failed. In those circumstances, to the extent that the orders merely compromised Melody's claim against the estate, the Court's failure further to consult Iyad before entry of the orders cannot have been a procedural irregularity.
But do the orders more than just compromise Melody's claim against the estate within the executor's powers under Trustee Act, s 49(1)(d)? The orders also allocate within the estate the burden of the compromise of Melody's claim, such that the compromise would be borne rateably among all three beneficiaries in the proportions in which they each benefited under the will. To the extent the orders deal with the burden of the external compromise with Melody, they represent another compromise (this time a separate internal compromise) between the beneficiaries and the executor. Absent an internal compromise, the beneficiaries could have argued that the burden of the external compromise should be borne in some way other than rateably. But the agreement with the trustee settled that internal dispute by requiring the burden to be borne rateably.
An executor's power to compound claims includes a power to compromise claims by beneficiaries: Irismay Holdings Pty Limited, Re [1996] 1 Qd R 172. Here, the agreed orders as to the burden of the external compromise with Melody represented an exercise of the executor's power to compromise potential beneficiary disputes. The Court's approval was not required for the trustee to validly make that internal compromise of a potential beneficiary dispute. And the compromise that the executor made with Melody could stand whether or not the internal compromise was made. The only parties to the proceedings were the executor and Melody by her tutor. The compromise ended all disputes between all parties to the proceedings. In default of an internal compromise, the general law of estate administration of estates would have applied to allocate the burden of the external compromise.
But the Court was told here that an internal compromise had been made. But by that time that the orders were finally entered, the Court had been informed that the consent of some of the beneficiaries to that internal compromise was doubtful. What was said to the Court might also have been interpreted as a statement that some of the beneficiaries disagreed with the external compromise as well.
But on 9 May 2018, the Court proceeded to enter the orders relating to the external compromise and approving that compromise, because Melody was under legal incapacity. In my view, the Court was entitled to do so. Even if the Court's notation about the consent of all the beneficiaries to the internal compromise was wrong, and even if the Court was aware that the beneficiaries did not agree with the external compromise, the Court's entry of the orders in relation to the external compromise was not irregular, because all the parties' lawyers, namely the executor's legal representatives and Melody's legal representatives, were still asking for the Court to enter the orders. The Court was entitled to rely upon their statements to that effect.
Once the Court was put on notice of any beneficiary disagreement with entry of the orders, then to the extent the expressed disagreement related to the external compromise, if the Court was also still told that the legal representatives for the estate did not withdraw their consent to the external compromise there was no irregularity. Indeed that is still the situation: the legal representatives of the estate have not at the time of the present application withdrawn their consent to the external compromise.
And to the extent the expressed disagreement related to the internal compromise, if the Court was also told that the legal representatives for the estate did not withdraw their consent to the external compromise, there was still no irregularity. The disagreement between the beneficiaries and the estate did not impair the validity of the external compromise or the regularity of the entry of the orders for the external compromise, which were still being supported by the estate's legal practitioners.
But to the extent the expressed disagreement related to the internal compromise, one aspect of the orders is incorrect: Order 11 notes that all the beneficiaries consent to the orders. The latest information the Court had at the time it entered the orders on 9 May would have justified the Court omitting that inaccurate notation. But that is at most a very minor oversight and the record can be corrected on the present motion. It is to be remembered that notations are not orders of the Court and do not found any right of appeal: Re Felicity (No. 3) [2014] NSWCA 226, (at [41] - [42]).
The Court will order that notation 11 of the orders entered on 9 May 2018 will be deleted.
But the Court will not vacate any other orders made on 9 May 2018 and the applicant's motion will otherwise be dismissed.
But Imad's application faces other wider difficulties. The entry of these orders is not the kind of situation that answers the description "irregularly, illegally or against good faith" within UCPR, r 36.15.
The scope of operation of UCPR, r 36.15 was considered in Coles v Burke (1987) 10 NSWLR 429 in the leading judgment of Kirby P, with whom Samuels JA and McHugh JA concurred (see at 436-437G). Kirby P said (at 437):
"The genus which is involved in the phrase "irregularly, illegally or against good faith" appears to me to be misconduct or dishonourable conduct of the person who procured the judgment which it is suggested undermines the authority of that judgment warranting the exceptional course for which r 12A provides. Here, there was no such lack of good faith on the part of the claimants. The signing of the judgment was made in accordance with the authority of the order earlier consented to and after a warning had been given by the letter to which I have referred. It is perhaps undesirable, in the modern practice of the legal profession (where much give and take is required) that judgment should be signed in this way without a final telephone call or other warning. However, the failure to give such a final and further warning could not, on any view, amount to a lack of good faith. Therefore, r 12A, likewise, has no application to these circumstances. "
A difficulty for Imad's application is that he cannot demonstrate misconduct or dishonourable conduct of the kind required that would undermine the authority of the judgment and orders that were entered. Merely for it to be demonstrated that the beneficiaries did not agree with the position of the executor does not mean that when the executor proceeded that the executor was guilty of relevant misconduct. The executor was within his rights under Trustee Act, s 49(1)(d) to proceed to perfect the compromise reached with Melody's legal representatives by the entry of the orders. Melody's legal representatives were equally entitled. The disquiet of the beneficiaries simply meant that the beneficiary would be free to criticise the compromise internally within the estate by seeking to bring the executor to account for the executor's decision to compromise. That merely indicates disagreement within the estate. For an executor to make an external decision to compromise a claim (upon legal advice, which was plainly given) despite the misgivings of some beneficiaries, does not imply misconduct on the executor's part. Sometimes it is the duty of the executor to do just that, on advice, in the face of beneficiaries' criticisms.
Imad's submissions complained that the executor had acted "against good faith". There was no clear suggestion that the executor had acted "illegally". But when analysed down to their core, Imad's submissions based the allegation of want of good faith on a series of extraneous factors that attributed improper motives to Melody and her tutor to which the executor had somehow succumbed. It was difficult to discern in Imad's submissions any active lack of good faith being suggested against the executor. Indeed such an allegation would not sit comfortably with the case that Imad was presenting: he began to read an affidavit from Nazrie (but ultimately withdrew it), to show that Nazrie now supported his position in the proceedings.
But much of Imad's case seemed to contend that Maryam was using her daughter Melody to advance her claims against the property of her former husband, Ziad. Imad seemed to be strongly motivated to protecting his brother, Ziad's financial interests in pursuing this application and to protect his brother from Maryam. None of this subject matter shows anything which would qualify as being "against good faith" in relation to the entry of orders after a settlement negotiated at arms-length between the legal representatives of the estate and Melody's legal representatives.
But even if Imad did demonstrate an "irregularity" within UCPR, r 36.15 here, this is not a case where the Court would exercise its discretion to set aside the orders so entered. This is so for several reasons.
The expression "may, on sufficient cause being shown, be set aside" [emphasis added] in UCPR, r 36.15(1) recognises the "need for finality by protecting judgments from being set aside for slight or uncertain causes": Kendell v Carnegie & Ors (2006) 68 NSWLR 193 (at 204); [2006] NSWCA 302, (at [45]).
Here, one of Imad's complaints as a beneficiary concerning the amended orders has been demonstrated to be misconceived.
There are sound discretionary reasons not to disturb the orders that his Honour made here. First, much of the substance of Imad's concern about the orders entered has now evaporated. In the end, when asked what his complaint was about the orders that were entered, his complaint was not really directed at the payment out of $80,000 by the estate on account of settlement obtained. He had an appreciation of the fact that a payment of $80,000 may save the estate far more in costs that would be incurred by a contested hearing, a matter that had been explained by Hallen J in the Judicial Settlement Conference.
But his real complaint was really that his consent had been ignored. That of course, is a matter which has been dealt with already in these reasons. The executor was entitled to ignore his consent, as was the Court in entering judgment.
But Imad did have a complaint about the substance of the compromise, which as articulated has now turned out to be without merit. His initial complaint was that the $540,000 which had been set aside from the estate as matrimonial property for the resolution of the matrimonial differences between Maryam and Ziad was not a capped sum, and he expressed grave concern that Maryam would be entitled to apply for more funds from the estate to be brought into the pull of matrimonial property to be the subject of the dispute with Ziad.
But that concern was unwarranted. At the same time as issues were settled on 7 May 2019 between the estate and Melody, a parallel agreement was made between the estate and Maryam. Mr McNally SC tendered the orders (Exhibit 4) that constituted that agreement. Maryam had applied in Family Court proceedings to set aside Ziad's transfer of the Queensland property to the deceased. The orders made in the Family Court of Australia set aside the transfer of that property to the deceased pursuant to Family Law Act 1975, s 106B and permitted the transfer of that property to Ziad, together with the payment of a further $40,000 into the matrimonial property pool. At the same time all proceedings between Maryam and the estate were dismissed. Although no formal deeds of release were made between the estate and Maryam so far as can be seen, the dismissal of the application and the consensual grant of the relief would end all prior applications against the estate and would act as estoppel future applications on the same basis, unless circumstances had changed.
Another discretionary reason not to disturb the orders is that the principal external settlement between the estate and Melody was negotiated at arms-length on legal advice on both sides. Imad did not submit that the legal representatives of each of those negotiating parties were acting other than in good faith and there is no basis whatsoever to suggest otherwise. A robust negotiation during a Judicial Settlement Conference process then led to approval under Civil Procedure Act 2005, s 76 of the compromise in the interest of the minor under legal incapacity. Although there was no hearing on the merits, the compromise received sufficient judicial consideration to satisfy the requirements of Civil Procedure Act, s 76 to ensure that the minor's interests were protected. Imad has not demonstrated any defect in that process. The Courts have often emphasised the public benefit in resolution of Family Provision Act proceedings: Bartlett v Coomber & Anor [2008] NSWCA 100 ("Bartlett v Coomber") per Hodgson JA, (at [72]), "agreements to compromise are possible, and indeed are to be encouraged" and see also Succession Act, s 98(2) which requires mediation before a family provision claim can proceed. Nothing, in my view, here causes the Court to doubt that these judgments were entered after and with a proper and robust process.
And this was a matter which on its face received some judicial consideration of the facts before the settlement could be entered. The affidavits noted above were all read. Order 2 extended time for the bringing of the application but the Court was satisfied, "on sufficient cause being shown" within Succession Act, s 58 that the time should be extended. Because Melody was an "eligible person" within Succession Act, s 57(e)(ii) the Court had to be satisfied that before making a family provision order that there were factors which warranted making Melody's application: Succession Act, s 59(1)(b). As Hodgson JA explained in Bartlett v Coomber, even after a compromise a Court "needs to be satisfied that these pre-condition is met before an order for provision is made". Although the orders do not separately refer to Melody being an "eligible person", it can be inferred from the Court's making of Order 3 by way of provision out of the estate of a lump sum of $45,000 that the Court was satisfied that there were factors warranting. But as Hodgson JA explained (at [72]), "the Court will generally be satisfied of these things without the need for any significant investigation of the evidence". The Court can infer that this was done. It adds to the difficulty in setting aside these orders and it neutralises Imad's claim that there was no basis for making any order in Melody's favour. The transcript of evidence of what occurred on 7 May 2018 clearly shows that his Honour closely engaged with the facts of the case and the allegations that Melody was making about residing with, and being dependent upon a grandmother for a period of time.
Imad raised a wide range of arguments in support of his application, which cannot all be included in this judgment. But the Court has judged them to be without merit and inconsistent with the essential reasoning set out above. The arguments have been common defects. They are often based on a misunderstanding of the nature of the proceedings on 7 May 2018, or they fail to appreciate the limited role of beneficiaries in these circumstances, or do not recognise that the beneficiaries may still have rights against the executor for the executor's decision to proceed with the compromise, or otherwise seek to re-open the issues in the principal proceedings. These arguments can generally be dismissed on one or other of these grounds.
[4]
Conclusions and Orders
I see no reason why costs should not follow the event. For these reasons, the Court makes the following orders and directions:
1. Order that notation 11 of the orders entered on 9 May 2018 be deleted.
2. Otherwise dismiss Mr Imad Bittar's motion dated 23 May 2018 to set aside the orders made between Mr Nazrie Bitar and Ms Melody Bittar on 9 May 2018; and
3. The Court will hear argument upon the appropriate order for costs upon the dismissal of the motion.
4. (4) The applicant on the motion filed 23 May 2018, Mr Imad Bittar, will pay the plaintiff/respondents' costs of the motion.
[5]
Amendments
27 May 2019 - [39] second line, "Imad" to "Iyad"
[40] first line, sixth line and second last line, "Imad" to "Iyad"
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Decision last updated: 27 May 2019