Boardman v Boardman

Judgment 1By a notice of motion filed on 19 July 2012 the defendant has invoked the jurisdiction of the court, under s 73 of the Civil Procedure Act 2005 (NSW), to enforce Heads of Agreement signed by the plaintiff, the defendant and lawyers acting for them respectively at the conclusion of a court appointed mediation (on 12 December 2011) in proceedings instituted by the plaintiff for Family Provision relief under the Succession Act, 2006 (NSW). 2On the hearing of the motion, the plaintiff appeared in person. The defendant was represented by Mr Hodgson of counsel, instructed by Mr SH Williams. 3The late Jim Boardman ("the Deceased") died on 2 August 2009 leaving a will dated 2 November 2006, probate of which was granted by this court to his widow (the defendant) on 23 December 2009. 4The Deceased was twice married. By his first marriage he had three sons: Kevin (the plaintiff), Stanley and Allan. His second marriage, to the defendant, brought to his family her children by a previous relationship: Vicki and Daniel. In his will, he acknowledged all five as "my children". 5The Deceased left his estate to the defendant and the five (adult) children. There were no other beneficiaries named in the will. 6The Deceased left a substantial estate. His principal asset was "The Jim Boardman Centre", a seven level retail, commercial and residential building situated within the central business district of Port Macquarie. For probate purposes, it was valued at $4.25 million or thereabouts. Other assets worthy of particular notice comprised a bank account with approximately $170,000.00 standing to its credit, and an interest in a mortgage over property at Tugan, in Queensland, with an estimated value of $90,000.00. 7At the time of his death, the Deceased and the defendant owned their matrimonial home (a rural property known as "Tara" at Sancrox in New South Wales) as joint tenants. It passed to the defendant as the surviving joint tenant. 8The present proceedings were commenced by way of a statement of claim filed on 28 July 2010. The plaintiff sought against the defendant relief that included: (1) orders for Family Provision relief under s 59 of the Succession Act; and (b) declarations that, in breach of fiduciary obligations allegedly owed to the Deceased, the defendant had misapplied assets of the Deceased and was liable, in effect, to bring them to account as a constructive trustee. 9On 2 February 2011 the Defendant filed a Defence in which, in substance, she joined issue with the plaintiff. 10The parties engaged in an interlocutory contest about the production of documents, an outcome of which was that, on 5 April 2011, the plaintiff was, by consent, ordered to pay costs of the defendant. 11Practice Note SC Eq 7 - Family Provision (which commenced operation in 2009) requires that, unless ordered otherwise, all proceedings involving Family Provision applications must be mediated before they proceed to a final hearing. 12This is consistent with s 98 of the Succession Act, which is in the following terms: "98 (1) The object of this section is to encourage the settlement by affected parties of disputes concerning the estate of a deceased person. (2) Unless the Court, for special reasons, otherwise orders, it must refer an application for a family provision order for mediation before it considers the application. (3) The Court may make a family provision order in terms of a written agreement (a consent order) that: (a) is produced to the Court by the affected parties in relation to an application after mediation, or on the advice of a legal practitioner, and (b) indicates the parties' consent to the making of the family provision order in those terms. (4) The regulations may make provision for or with respect to the following: (a) mediations and consent orders under this section, (b) regulating or prohibiting advertising concerning the provision of legal services in connection with mediations and other proceedings under this Chapter in relation to the estate or notional estate of a deceased person. (5) In this section, legal services has the same meaning as in the Legal Profession Act 2004." 13No regulations have yet been made by reference to s 98(4). 14On 18 October 2011 the court made an order (under s 26 of the Civil Procedure Act) for the proceedings to be referred for mediation before a mediator appointed by the court. 15That mediation took place on 12 December 2011. 16At the time of the mediation, the plaintiff was the donee of an enduring power of attorney (under the Powers of Attorney Act 2003 (NSW) granted to him by his brother Stanley on 8 June 2010. The evidence establishes that Stanley not only entrusted to the plaintiff the task of dealing with their father's Estate on his behalf, but expected that the plaintiff would do so, and the plaintiff accepted that responsibility. To all intents and purposes, the plaintiff was the alter ego of Stanley in relation to matters relating to the mediation. 17At the mediation, the plaintiff was personally present, and was represented by solicitors and counsel. His solicitor was Mr AA Corbould, a solicitor in the employ of Turnbull Hill Lawyers. His counsel was Mr Raoul Wilson. Also present, on his instructions, was Mr MP Bestic, a solicitor retained, in particular, to protect the interests of Stanley. The plaintiff's partner, Clare Holmes, was also in attendance. 18The defendant was personally present at the mediation, and represented by a solicitor (Mr Williams) and counsel (Mr Hodgson). 19As has been noted, the mediation concluded with the execution of a document entitled "Heads of Agreement". Mr Wilson counter signed the document on behalf of, and with, the plaintiff. Mr Williams counter signed it on behalf of, and with, the defendant. 20The Heads of Agreement contemplated that "Consent Orders" would be prepared after the conclusion of the mediation to give effect to the "settlement in principle" achieved at mediation. In anticipation of all beneficiaries named in the will signing a copy of those Orders to signify their agreement with them, the proceedings were (at the mediation) listed before the Registrar on 13 March 2012. 21Following the mediation, each and every one of the Deceased's beneficiaries (other than the plaintiff) executed a form of "Consent Orders" that, in my opinion, faithfully reflects the terms of the Heads of Agreement. 22Allan signed a copy of the Consent Orders on 30 January 2012. On 27 February 2012 Vicki did likewise, as did Mr Williams on behalf of the defendant. On 12 March 2012 Daniel signed up as well. 23On 27 April 2012, in the presence of Stanley's solicitor Mr Bestic, the plaintiff himself signed a copy of the Consent Orders in his capacity as Stanley's attorney for the purpose of signifying Stanley's agreement with the proposed orders. 24The only beneficiary not to have signed the Consent Orders is the plaintiff. 25Having duly complied with requirements of the Uniform Civil Procedure Rules 2005 (NSW), on 12 June 2012 the plaintiff's solicitors (Turnbull Hill Lawyers) filed a Notice of Ceasing to Act. 26On the hearing of the defendant's Motion, evidence was given by each of the two solicitors who attended the mediation on the plaintiff's instructions: Messrs Corbould and Bestic. 27Their evidence (which I accept) was to the effect that the plaintiff executed the Heads of Agreement freely and voluntarily after a regular process of mediation that included a precautionary process in which the document was read out to the plaintiff by Mr Wilson; to ensure that he understood it and to obtain (as was in fact obtained) express confirmation of his instructions to enter into the settlement for which the Heads of Agreement provided. 28There was a point during the mediation process when the plaintiff indicated to his team that he wanted to terminate the mediation and to leave the parties' disputes to the court for determination after a contested hearing. At that point, at the suggestion of Mr Bestic, the plaintiff and Mr Bestic engaged in a private discussion that lasted about five minutes. 29The evidence of Mr Bestic, which I accept, included the following: "Towards the end of the Mediation [the plaintiff] indicated that he intended to leave. I asked [him] to come outside the room with me which he did, alone. We had a private conversation regarding the terms of settlement which were proposed, including the benefits in it for him, and the possible adverse ramifications if the matter was not resolved at the Mediation on the terms being proposed. He then decided to accept the settlement proposal. We returned to the Mediation Room and [the plaintiff] advised that he agreed to the proposed settlement. Subsequently, after handwritten Heads of Agreement had been prepared and read to him, he accepted the settlement set out therein and signed them. [He] did not express any dissent to signing the Heads of Agreement when signing the agreement." 30Mr Bestic also deposed to having had "many discussions" with the plaintiff after the conclusion of the mediation in which he acknowledged that he had said to the plaintiff words to the effect, "I am sorry for pressing you so hard at the mediation but it was absolutely in your interests to settle the matter" for reasons articulated in conversations between the two men and set out in an affidavit sworn by Mr Bestic in support of the defendant's motion. 31On a fair reading of the evidence, there is no basis for any finding other than that the plaintiff signed the Heads of Agreement freely and voluntarily. 32On the hearing of the defendant's motion, the plaintiff had an opportunity to cross examine each of the solicitors in attendance at the mediation (namely, Messrs Corbould, Bestic and Williams) and the defendant. Nothing emerged from that process to lead me to do otherwise than to accept their evidence, the effect of which was that the plaintiff signed the Heads of Agreement freely and voluntarily. 33In reaching that conclusion, I make allowance for the fact that the plaintiff appeared at the hearing without legal representation, but with the benefit of active assistance from his partner. Neither of them appears to have had legal training. 34For the record, I also note that, during the course of the hearing, the plaintiff was given an opportunity to object to evidence of what occurred at the mediation and what passed between him and the lawyers instructed by him to appear at the mediation. He expressly declined to take any objection based upon a claim of privilege. He and his partner themselves tendered as evidence witness statements that traversed topics that might have been the subject of a claim of privilege. Whether or not any claim of privilege might otherwise have been effectively advanced, the plaintiff must be taken to have waived such, if any, entitlements to privilege as may have resided in him. 35From statements of the plaintiff and his partner admitted into evidence on the hearing of the Motion, it appears that the plaintiff may have executed the Heads of Agreement with a mental reservation, and a subjective intention not to sign any copy of any form of Consent Orders prepared to give effect to the Heads of Agreement. He apparently regarded himself as free to withhold Stanley's consent to the proposed Orders as a means of frustrating the settlement; by clause 2 of the Heads of Agreement the agreement was conditional upon the Plaintiff's four "siblings" agreeing to it on or before 12 March 2012. 36If the plaintiff did, in fact, harbour such a mental reservation or a subjective intention at the time he execution the Heads of Agreement, he did not disclose that state of mind to anybody at the mediation. 37The plaintiff's execution of the Heads of Agreement, in the context of a formal mediation at which he and the defendant were both represented by lawyers, must be taken, upon any objective assessment, as evidence of assent to the terms of the Heads of Agreement. The court assesses contractual intent by the application of an objective standard: Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 at [20]-[22]; Equuscorp Pty Ltd v Glengallan Investments Pty Ltd (2004) 218 CLR 471 at [33]-[35]; Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd (2004) 219 CLR 165 at [35]-[50]. 38If (contrary to my findings) there was anything untoward about the mediation process, the evidence establishes that neither the defendant nor her lawyers were on notice of it. To all intents and purposes, from their perspective the mediation process leading to execution of the Heads of Agreement was entirely regular. Moreover, the settlement agreement had the appearance of being a fair compromise. The plaintiff had received an agreement on the part of the defendant to a sale of the Jim Boardman Centre earlier than contemplated by the will, with a consequence that there would be an acceleration in his receipt of benefits under the will; the defendant had agreed that the costs order made against him should be vacated; and she had agreed that he should receive from the deceased's estate a contribution of $25,000.00 to his costs of the proceedings, together with a further $25,000.00 as an advance payment of his accelerated entitlements under the agreed arrangements. 39There is no basis to withhold enforcement of the settlement agreement on the ground that the plaintiff's execution of the Heads of Agreement was a result of a mistake induced by the defendant (Easyfind (NSW) Pty Ltd v Paterson (1987) 11 NSWLR 98 at 105-108) or on the broader ground that it would be contrary to the interests of justice to enforce it against him (Lewis v Combell Constructions Pty Ltd (1989) 18 NSWLR 528; Bartlett v Coomber [2008] NSWCA 100 at [28], [56]-[60] and [88]). 40It was not open to the plaintiff to frustrate the settlement agreement by withholding his consent to the Consent Orders prepared to give formal effect to the settlement or by declining to sign the Consent Orders on behalf of Stanley until after expiry of the time within which the Heads of Agreement contemplated that the plaintiff's siblings would agree to the settlement: Suttor v Gundowda Pty Ltd (1950) 81 CLR 418 at 440-442; Bragg v Alam [1981] 1 NSWLR 668 at 673-674. As the attorney in power of Stanley, in circumstances in which Stanley's solicitor had advised him that it was in Stanley's best interests to agree to the settlement, he could not properly withhold Stanley's imprimatur in pursuit of his own interests. He cannot take advantage of his breach of obligations to contend that the settlement agreement must be taken to have lapsed for non-occurrence of a contingent condition to which it was subject and which he had impliedly promised to use his best endeavours to bring about. 41Independently of these considerations, any materiality attaching to the date 12 March 2012 at the time of the mediation ceased to be relevant in consequence of post-mediation dealings between solicitors. The course of their dealings between early January 2012 and mid-May 2012 demonstrates that the defendant's solicitors provided a copy of the proposed Consent Orders to all prospective signatories, including the plaintiff in his personal capacity and as attorney for Stanley; a day before the proceedings were due to be mentioned before the Registrar on 13 March 2012, the plaintiff's prevarication was brought to the attention of Mr Williams and all three solicitors (Messrs Williams, Bestic and Corbould) agreed that the proceedings be adjourned so as to facilitate execution of the Consent Orders; subsequent adjournments, on a similar basis, were agreed on or about 10 April, 8 May and 22 May 2012, with the solicitors in the meantime working towards the preparation of documentation in support of a joint application for final orders to be made. In my opinion, this conduct of the solicitors retained by the plaintiff was both within the scope of their ongoing retainers and appropriate to the circumstances. 42On 5 April 2012 Mr Corbould noted, in a letter addressed by him to Mr Williams, that Mr Bestic had that day advised that the plaintiff had instructed Mr Bestic that he would sign the Consent Orders as attorney for Stanley, and for himself as plaintiff. It was on the basis of that representation, by solicitors instructed by the plaintiff, that the defendant agreed to adjournment of the proceedings on 10 April 2012. 43On the whole of the evidence of dealings between solicitors, in my view the plaintiff and the defendant must be taken to have effected a variation to the Heads of Agreement to extend, for a reasonable but indefinite time, the time for execution of the Consent Orders contemplated by the settlement agreement. Adjournments of the proceedings on and after 13 March 2012 (with the consent of both the plaintiff and the defendant, for the purpose of facilitating execution of the Consent Orders and for the purpose of preparation of documentation to be placed before the Court on a joint application for final orders) must be taken as having effected a variation of the Heads of Agreement. 44Any protest by the plaintiff, now, that he did not agree to such a variation would be in vain. Principles of estoppel would, in my view, preclude him from resiling from his representations, on and after 12 December 2011, that he would sign Consent Orders as agreed at the mediation. He cannot, belatedly, resile from the settlement because of a change of mind or mental reservations that he held, but did not communicate to the defendant, at the time he signed the Heads of Agreement. 45The plaintiff was under a contractual obligation to use his best endeavours to obtain his sibling's consent and, himself, to sign the Consent Orders contemplated by the Heads of Agreement: Secured Income Real Estate (Australia) Limited v St Martins Investments Pty Limited (1979) 144 CLR 596 at 610 and 615. 46He can derive no advantage from characterisation of the Heads of Agreement as a mere "agreement in principle" to settle the proceedings. Clause 2 of that document expressly provided that, subject to the siblings agreeing to their terms, the Heads of Agreement were "intended... to be immediately binding upon [the plaintiff and the defendant]" albeit that it was "nevertheless intended that they be replaced by Consent Orders recording in more detail, but without material variation, the agreement between [the plaintiff and the defendant]". In terms of the observations made in Masters v Cameron (1954) 91 CLR 353 at 360, the Heads of Agreement fall into the first class of cases. The parties had reached finality in arranging all the terms of their bargain and they intended to be immediately bound to the performance of those terms, but at the same time they proposed to have the terms restated in a form which would be fuller or more precise but not different in effect. 47The fact that a settlement agreement such as the Heads of Agreement is, expressly or by implication, subject to the approval of the court does not, of itself, mean that the parties' agreement is not a contract. On the contrary, the parties may generally be regarded as having a contractual obligation, in good faith, to apply for the court's approval: Smallman v Smallman [1972] Fam 25 at 31-32. 48By his execution of the Heads of Agreement, the plaintiff placed himself under such an obligation in relation to the settlement agreement evidenced by it. That obligation is continuing. 49Where (as in these proceedings) an agreement is made for the compromise of a claim for Family Provision relief on terms that include an application to the court for the making of an order for such relief, allowance needs to be made for the following factors. First, the jurisdiction of the court to make such an order is statutory (governed, in this instance, by chapter 3 of the Succession Act). Secondly, that jurisdiction permits, and requires, an exercise of judicial discretion. Thirdly, the court must be satisfied that it has jurisdiction to make an order in the particular case. Fourthly, it must be satisfied that it is appropriate to make the particular order sought by the parties. 50The court is not bound to make a Family Provision order merely because it is sought on the joint application of all parties to the proceedings or with the consent of the parties affected by it: Bartlett v Coomber [2008] NSWCA 100 at [38]-[39], [72]-[73] and [84]-[91]. 51The fact that one of the terms agreed upon in the Heads of Agreement was that the parties' agreement, and the settlement of the proceedings, was contingent upon the court approving, pursuant to s 95 of the Succession Act, a release of rights by the plaintiff to make any further claim for provision against the estate of the Deceased is a hurdle, but not an absolute impediment to a grant of the relief sought by the defendant in her Motion. 52Section 95 is in the following terms: "[s 95] Release of rights ... 95 (1) A release by a person of the person's rights to apply for a family provision order has effect only if it has been approved by the Court and to the extent that the approval has not been revoked by the Court. (2) Proceedings for the approval by the Court of a release of a person's rights to apply for a family provision order may be commenced before or after the date of the death of the person whose estate may be the subject of the order. (3) The Court may approve of a release in relation to the whole or any part of the estate or notional estate of a person. (4) In determining an application for approval of a release, the Court is to take into account all the circumstances of the case, including whether: (a) it is or was, at the time any agreement to make the release was made, to the advantage, financially or otherwise, of the releasing party to make the release, and (b) it is or was, at that time, prudent for the releasing party to make the release, and (c) the provisions of any agreement to make the release are or were, at that time, fair and reasonable, and (d) the releasing party has taken independent advice in relation to the release and, if so, has given due consideration to that advice. (5) In this section: release of rights to apply for a family provision order means a release of such rights, if any, as a person has to apply for a family provision order, and includes a reference to: (a) an instrument executed by the person that would be effective as a release of those rights if approved by the Court under this section, and (b) an agreement to execute such an instrument." 53Upon a consideration of s 95, including the specific factors identified in the sub paragraphs of s 95(4), the appropriate course, in my view, is to approve the release of rights to which the plaintiff agreed in the Heads of Agreement. I do not take that course lightly. An application to the Court to approve a release of rights is not a mere formality. 54At the time the plaintiff signed the Heads of Agreement he had the benefit of legal advice. That advice was to the effect that it was to his advantage to execute the Heads of Agreement, including a term providing for the plaintiff to release any right to make further claims for provision against the estate of the Deceased. As has been previously noted, in paragraph 38, the settlement agreement had the appearance of being a fair compromise. The plaintiff has adduced no evidence to suggest otherwise. 55One of the factors to be taken into account in the context of s 95 is t he fact that the Heads of Agreement were executed at the conclusion of a formal mediation (within the contemplation of s 98) and the Consent Orders produced to the Court faithfully reflect the terms of the Heads of Agreement. 56The plaintiff's refusal to join in the defendant's application for approval of his release of rights is not based upon any particular disinclination to grant a release. His objection is not to the release, but to the idea that the settlement should be given effect at all. 57The plaintiff's opposition to enforcement of the settlement appears, generally, to be based upon an unsubstantiated, vague, but recurrent, suspicion that the defendant somehow misappropriated funds of the Deceased in his declining years. That suspicion appears, from time to time, to have fed the plaintiff's resentment that the defendant stands to obtain a capital sum from the Deceased's estate upon the making of the Consent Orders agreed upon at the mediation. 58The facts, that the plaintiff agreed to settle the proceedings at mediation; that the settlement appears to have commended itself to his legal advisers as fair and reasonable; that the plaintiff's siblings have been prepared to join in the settlement; and that there appears to be no objective foundation for the plaintiff's darker forebodings about the defendant, all point towards the decision (which I make) to give effect to the settlement, including approval of the plaintiff's release of rights to seek further provision from the Deceased's estate. 59Accordingly, I make orders as sought in paragraphs 1, 3 and 4 of the defendant's Notice of Motion. 60The order made by reference to paragraph 1 of the Motion is an order that, pursuant to s 73 of the Civil Procedure Act, the Court makes orders in accordance with paragraphs 1-8 and 11 and notes the agreement between the parties set out in paragraphs 9, 10, 12, 13 and 14 of the Consent Orders prepared to give effect to the Heads of Agreement. 61The order made by reference to paragraph 3 of the Motion is an order that the plaintiff pay the defendant's costs of the Motion on the indemnity basis. 62The order made by reference to paragraph 4 of the Motion is an order that the defendant's costs of the Motion, to the extent not recovered from the plaintiff, be paid on the indemnity basis out of the estate of the Deceased. 63The plaintiff must pay the costs of the Motion because there is no basis upon which to depart from the general rule that "costs follow the event" and the defendant has been successful on the Motion. Costs should be assessed on the indemnity basis because the Motion was necessitated by unreasonable conduct on the part of the plaintiff, and he persisted in unreasonable opposition to the Motion, apparently determined to maintain an attitude of stoic intransigence. 64To the extent that the defendant does not recover her costs of the Motion from the plaintiff, she should be entitled to recover them from the Deceased's estate because, in filing her Motion, she was acting as the Executor and Trustee of the Deceased named in his Will.