CASSEGRAIN v CASSEGRAIN & ORS [2003] NSWSC 402 | Case summary

The plaintiffs seek a declaration to establish that these controls relate only to acts of the plaintiffs in execution of the trust created by cl.12, and do not relate to or affect powers which they have as executors. 14 The affidavit of Mr McCarron the plaintiffs' solicitor sets out dealings with estate assets. In the course of so doing he attributes values and amounts to many assets and liabilities. I was informed by counsel for the defendants that some of these values, and the existence and amounts of some liabilities, are contentious, and that the defendants are not in a position to admit or agree on them. Decision in principle on matters in issue before me does not turn on any finding attributing a particular value or amount to any asset or liability, and I have treated the figures in the affidavit as no more than illustrations. Mr McCarron gives a list of assets which are not the subject of specific gifts in the Will and were held by the estate as at March 2003. The values attributed to these total $854,443.20, but this figure is of little use as some assets are very difficult to value while some have proved difficult to realise. The figure included $107,115.48 described as "cash moneys" which was available at March 2003 and consisted of deposits in a solicitors' trust account and in St George Bank; transactions since March 2003 have reduced this amount. It is Mr McCarron's evidence that the other assets have not been able to be converted to cash by the executors. 15 Mr McCarron goes on to give a list of current liabilities of the estate as at March 2003 totalling $632,372.23. Again some of these may well be disputed or not admitted by the defendants, and I refer to the figures only to show the position maintained by the plaintiffs when they set out to establish a need for a declaratory order establishing what their powers are. These include debts for money said to have been borrowed for estate legal fees in the Family Provision litigation, executors' commission, legal costs relating to estate administration and a number of smaller obligations. 16 Mr McCarron then sets out the history of administration by reference to the probate inventory and what has been done with various items of property referred to in the Will or otherwise within the responsibility of the plaintiffs as executors. Although some items have been dealt with in the manner for which the Will provided, others remain in the hands of the executors and cannot be transferred because of various kinds of business outstanding; such as a caveat by a bank over some land the subject of specific bequests. 17 As presented by the plaintiffs, estate affairs are at an impasse in which they do not have ready means available to raise money either to meet existing obligations or to enforce various claims which they say are estate assets. Consideration of what the executors may do appears, from Mr McCarron's narration of estate affairs, to lead back to a need to make an effectual realisation of money out of the principal asset not disposed of specifically in the will, that is the Expressway Spares shares owned by the estate. From a point of view which to me appears obvious, but has not exerted itself in the actual conduct of estate affairs, it would be in the interests of all six beneficiaries to work together co-operatively so as to make an effectual realisation of the true value of the shares, or of some of the shares, sufficient to enable executorial duties to be completed. It is surprising that this has not happened in the period of well over three years since my orders were made; the fifth anniversary of the death of the testatrix is to occur soon. Disposition of the shares is subject to the approval of directors - see s.1072F of the Corporations Act 2001. Disputes arising out of refusal of consent to transfers are subject to remedies under s.1071G. The constitution of Expressway Spares as a private company means that some measure of co-operation between trustees and directors of Expressway Spares would be to the economic advantage of all. In the absence of co-operative action it cannot be expected that much will be achieved. Comments of these kinds have already been made in observations by Davies J and by myself in judgments in earlier litigation. See paragraphs 16 and 18 of my judgment of 1 December 1999. Another repetition may not achieve anything, but it is still true that the family's prosperity could easily be brought down. 18 In support of the view of the meaning of the orders put forward by the plaintiffs, their leading counsel Mr Rayment QC referred to the terms of the Will and of the orders, and observed that cl.12 disposes of the rest and residue, showing contemplation of what assets remained after a process of administration. Counsel observed that the general subject dealt with by cl.12 is clearly to be distinguished from discharge of executorial duties. He submitted that cl.12 deals with the position of trustees in a way which is distinguished from the position of executors. It was contended that the matters dealt with in cl.12 and the position of trustees in the ordinary concept of what trustees are to do are distinguished from what executors are to do, and arise once the debts, funeral and testamentary expenses and other obligations arising out of administration of the estate have been paid and the functions of executorship have been performed; it is then that the rest and residue of the estate can be identified and disposed of. He contended that this point has not been reached in the respects that some specific bequests have not been carried out by transfers, and that some debts have not yet been paid; (or it might be better said that the question whether some debts are payable both to and by the estate has not yet been resolved.) Counsel contended that cl.12 operates so as to affect what is to happen in the future rather than what has happened and what is now happening, and operates to do so in a way which can only be applied to the position of trustees. In substance he claimed that the literal meaning of the Court's order, together with the considerations I have mentioned, supports the reading for which the plaintiffs contend. In that literal meaning majority control is imposed in terms of how the trustees must act, and as executors are not mentioned in the order, the control is not imposed on executors, although on executors as well as trustees may have occasion to do some of the things to which the control applies: they may dispose of shares, cast votes and act to issue new shares, although as executors they would not exercise powers conferred by cl.12. 19 Mr Coles QC of counsel for the second, third and fourth defendants referred to subs.14(1) of the Family Provision Act, which is in these terms: s14 (1) An order made by the Court for provision out of the estate of a deceased person (whether or not an order made in favour of an eligible person) shall, except in so far as the Court otherwise directs, take effect as if the provision had been made: (a) where the deceased person died leaving a will - in a codicil to the will, or (b) where the deceased person died intestate - in a will of the deceased person. 20 Mr Coles QC contended that subs.14(1) has the effect that the order should be read with all the provisions of the Will including cl.2 and its provision that executors and trustees are referred to as "my Trustees." The consequence he asked the court to draw from this was that cl.12 of the Will, and also the order of 1 December 1999 which refers to cl.12, when they refer to trustees, should be understood as referring to executors and trustees. In my view, even if cl.12 is read with the extended meaning, it still deals, according to its own terms, only with execution of the trust created by cl.12, and not with other or earlier stages in the performance of duties of the plaintiffs under the Will and under the general law. Mr Coles contended that the few references found in cl.14 to executors are of no particular import and that cl.14 on its own terms extends both to trustees strictly so identified and also to executors. By its introductory words cl.14 refers in terms to executors as well as to trustees. The apposition of reference to trustees only in cl.12 with reference to executors and trustees in cl.14 could suggest that cl.12 was intended to be limited so as not to relate to executors. Given the general approach to this terminology exhibited in the drafting of the Will throughout, any inference of that kind would be faint. Mr Coles referred to common usage in which references to trustees and executors frequently appear in contexts where there is no need to insist on the distinction, and often they are used interchangeably. He pointed to the definitions of "trusts" and "trustees" in the Trustee Act 1925 s.5 and submitted that there is no need for great linguistic rigour in approaching the use of these expressions in the Court's order. In the Trustee Act 1925, s.5, "trustee" is given a meaning which includes legal representative; with corresponding extension in the meaning attributed to "trust," while "legal representative" means executor or administrator. Instances where these words are used in ways for which the distinction is not treated as significant are very common. 21 Mr Coles contended that when the order was read in the context of the terms of the Will and of the reasons given for the order, it should be seen that the order was intended to make a provision which was immediately operative at the time of the order and in the situation which then existed, and that what was intended was not what he called a deferred construction. He contended that on its proper construction there was no intention that the effective provisions of the order should be indefinitely deferred until some unknown date when all executorial duties had been completed. Mr Coles contended that the immediate application of the order should be seen as a real component in the advantages conferred by the terms of the order. 22 Mr Coles contended that his position was assisted by referring to the provision in cl.2 of the order and to the requirement of contributing to liability to the bank as at the date of the order. Plainly this part of the order was intended to have and on its terms had immediate effect; but this does not, in my view, serve to indicate the intended meaning of the first clause of the order. 23 Mr Coles also contended to the effect that the present case is not an appropriate one for making a declaratory order; he contended that no frustrating element or impediment in the application of the order has been demonstrated, and that it is not necessary for the court to revisit or restate its terms. 24 Mr Cashion SC for the first defendant adopted the submissions of Mr Coles and made some further observations to the effect that there was room for the court to vary or amend the orders of 1 December 1999 to make sure that they gave effect to the court's true meaning and intention. He contended that the terms of the reasons for judgment, particularly paragraphs 40 to 44 make it clear that the court's intention in making its orders was that the reference to trustees was to extend to the plaintiffs in their characters as executors as well as trustees, and he further contended that the outcome intended by the court would be thwarted if the reference to trustees were confined to the plaintiffs' position as trustees of the discretionary trust created by clause 12. In my view these paragraphs, especially paras.42 and 43, of the reasons for judgment show that I expressed particular concerns about exercise of powers in the residuary trust; they do not show that the operation of the powers over the residuary trust was my only concern. Mr Cashion contended that the court should make what he said was the intended outcome manifestly plain, that the court should either adopt and declare the view that the orders in the current form show that the court intended to refer to the plaintiffs in both capacities, or that if there is any doubt the court can and should make further orders to put the matter beyond doubt, and should act in this way under the Slip Rule, and should vary the order accordingly. Counsel referred me to judicial consideration of the Slip Rule, including observations of Kinsella J in Ex parte Herman re Mathison (No. 2) [1961] NSWR 1145 (which related to an order for costs made against all respondents, without advertence to the fact that the submitting magistrate was one of the respondents in a claim for prohibition or mandamus.) Mr Cashion also referred to the extensive review of the law relating to the Slip Rule in the judgment of Einstein J in Currabubula & Payla v State Bank of New South Wales [2000] NSWSC 232 [37] to [53]. 25 On whether declaratory relief was appropriate Mr Cashion referred me to the observations Gray J in Mees v Road Corporation [2003] FCA 410 at paragraphs 6-8. His Honour's observations were directed to the rather unusual situation before him and his view at [8] that "… it is inappropriate to grant a declaration for the purpose of clarification of reasons for judgment of the Court" is not applicable to the controversy before me, which relates to the order made and not to the underlying reasons. On the material before Gray J, the considerations against embarking on making a further declaration and the lack of utility of doing so were, I would respectfully say, quite compelling, but the situation before me does not include any usefully analogous material. 26 To my mind the existence of this litigation and the terms of submissions put to me from one side and the other show the reality of the dispute and the need for and the utility of a declaration establishing what the true position is. 27 It does not appear to me from the terms of the reasons for judgment that there was any slip or error in the choice of words in the order. I find it remarkable that there has been difficulty about effecting a proper realisation of the value of the estate assets so as to complete executorial duties. This is particularly remarkable if there is a need to realise the value of some of the estate's shares in Expressways Spares; which it is the shared interest of all to maximise. It is surprising that there are still any executorship duties to perform after such an interval of time; it seems possible that this is to be explained by the state of conflict evidenced by the existence of this litigation. It seems to me that the terms of my order contribute to circumstances generally which create incentives for all the sons and daughters of the testatrix to act in ways which would facilitate bringing executorship to completion and embarking on the stage of trust administration for which clause 12 provides. 28 Nowhere in the Will were the plaintiffs expressly directed to pay debts, funeral and testamentary expenses, expenses or obligations related to the administration of her estate, no trust for payment of such obligations was created and no part of the estate was expressly indicated in any way which makes it subject to such obligations. The subject is simply not mentioned. The power of sale in cl 14(b)(ii) is not expressly related to payment of debts and obligations: its purpose is not expressly stated at all, but it is conferred on executors and trustees. The power of an executor to sell assets of the testator for the purpose of carrying out the executorship is well recognised and long has been. Recognition of this power underlay the decision of the High Court in Union Bank of Australia v Harrison, Jones and Devlin Ltd. (1910) 11 CLR 492, which related however to the position of one of two executors in so doing. A clear statement of the amplitude of the power was made by Isaacs J at 522. This power of an executor was established in earlier ages when executorship related only to personal property, and the power is assumed rather than conferred again in provisions of the Wills Probate and Administration Act 1898 which establish that the same power applies to real property; see sections 40 and 48. (The later enactment of s 153 of the Conveyancing Act 1919 has affected some aspects of the holding in Union Bank v Harrison, Jones and Devlin; see Colytons Investments Pty Ltd. v McSorley (1962) 107 CLR 177; but not the aspects to which I have referred.). Under the general law there are real controls over the exercise of the powers of executors; the powers of executors must be exercised in good faith for the purpose for which they were conferred. This is no small limitation and is reasonably open to testing. 29 Powers of various kinds are conferred on the plaintiffs in a number of ways, and qualified in a number of ways. Under the general law and provisions of the Wills Probate and Administration 1898 executors have power to sell assets for the purpose of administration of an estate, irrespective of whether the will confers such powers. Trustees are also given powers by statute, and may be given further powers by orders of the court under s.81 of the Trustee Act 1925 or under general powers of the court. 30 Clause 14 of the Will gives the executors and trustees many powers, and the terms of cl.14 show expressly that it was intended that they be conferred on executors and trustees; there are minor anomalies created by internal references to executors only. By cl.14(b) discretionary power is conferred on the plaintiffs, who are executors and trustees, to exercise the power of trustees for sale in respect of any assets in the estate. 31 What distinguishes the powers in subclauses 12(iii) and (iv) of the Will from the powers which trustees and executors have generally is that they are made discretionary in language which is so wide as practically to make them exempt from control - they may make choices under cl.12(iii) "As my Trustees think fit … without any obligation to make payments … or to ensure equality …". This was of importance as appears from [29] of the reasons for judgment. This is a wider exemption from control than is achieved simply by making a power discretionary, as are the powers in cl.14, including the power of sale in cl.14(b)(iii). 32 On a whole view of the will, the language used in it does not give significance to the distinction between references to the plaintiffs as executors and references to them as trustees; and does not give much significance to reference to both capacities together. Clause 12 refers to the trustees, clause 14 refers to the executors and trustees, and an internal reference in subclause 12(iv) seems to show that this difference was adverted to in the drafting; here and there in clause 14 there are references to executors and not to trustees, in contexts which make it difficult to suppose that it was intended to be important that powers should be exercised as executors as distinct from their exercise as trustees. Clause 12 is the only provision of the will which expressly creates a trust; it speaks throughout of the plaintiffs as trustees, and the provisions of clause 12 are such that it would not be appropriate to speak of them as executors for its purposes. Clause 12 creates a trust of the rest and residue of the estate, which can be identified in a clear way only by carrying out the tasks of executors, meeting estate obligations, and establishing what the residue is. 33 Drafting machinery employs a mnemonic in clause 2 under which the plaintiffs as executors and trustees are thereinafter referred to as "my Trustees." In my opinion the drafting machinery in clause 2 is no more than convenient drafting machinery. The adoption of this drafting device would not have been appropriate if in the usage of language throughout the Will the choice between references to executors and references to Trustees was charged with significance. There is no sign that in the drafting of the Will the distinction was important. 34 The order required that a number of acts and things be controlled by the requirement that the trustees must act in accordance with the written direction of the majority. The order sets out a list of the acts and things which are so controlled; I made a table of those acts and things in para.13 higher in these reasons. The first of those matters - the exercise of the powers conferred on the trustees by cll.12(iii) and 12(iv) - could only arise in the execution of the trust created by cl.12, and the powers referred to could only be exercised when the executorial duties have been completed, the rest and residue had been ascertained and cl.12 came into operation. The next matter in the list, the transfer, disposition or encumbrance of shares in Expressway Spares forming part of the estate, is referred to without the use of any expression referring in particular to the plaintiffs or to the plaintiffs in any capacity; the words "trustees" "executors" or for that matter "defendants" are not part of the specification of the acts and things which are controlled, and transfers, dispositions or encumbrances are placed under control irrespective of the stage at which and in execution of what powers the transfer, disposition or encumbrance is to take place. The word "trustees" occurs three times in cl.2 of the order, but does not occur at any point which serves to identify, point out or qualify which transfers, dispositions or encumbrances are referred to. Similar observations apply to "casting any vote in respect of those shares". For "any act of the trustees relating to new issue of shares", the word "trustees" creates room for the contention that it is only acts in the capacity of trustees that are referred to. Then too, when the control is specified, the persons whose acts are controlled are referred to as "the trustees," again creating room for the contention that it is only when the executors and trustees act in the capacity of trustees that the control is intended to apply. 35 In the terminology used in the Family Provision Act 1982, which it would be good practice to carry over into orders made under that Act, the person responsible for the administration of the estate is referred to as the administrator; there are indeed very few references to that person in the Act, but "executor" and "trustee" are not used. 36 In interpreting the order regard should be paid to the operation of the order under s.14 as if the provision in the order had been made in a codicil to the Will. Terminology used in the Will has, in the absence of some contextual reason for thinking otherwise, the same meaning in a codicil, or in an order under the Family Provision Act, as it has in the Will. The order must be applied to and read with the Will and should be understood as using language in the same way as it is used in the Will. The terms of the Will generally show no high advertence and indeed almost indifference to the distinction between references to the executors and references to trustees; so much so that a drafting technique of referring to them all as trustees was adopted. Even in cl.12, which deals only with matters relating to a trust, there is an adoption in subcl.12(iv) of powers given to executors and trustees in cl.14 as applicable to powers of trustees. Except as to the powers conferred on the trustees by cll.12(iii) and 12(iv), which could only be exercised in the capacity of trustees, the acts and things on which controls were imposed were less and no more appropriately the subject of controls at one stage of carrying out the dispositions of the Will than at another. In the context, the burden of implication required to educe from the reference to "the trustees" in the words by which the control was specified the view that the acts and things under control were controlled only when they were performed in the exercise of functions and trustees, but were left uncontrolled when performed in the capacity of executors, is a burden of implication which the language cannot reasonably support; if it were intended to leave a large area of conduct uncontrolled, that intention could and, in an order of the Court, with fair certainty would have been indicated by clear language, without resort to subtle implication. 37 Overall I regard it as quite clear that the meaning and effect of the order are that, where acts and things controlled can be done in characters other than as trustees, the control extends to them. 38 For these reasons I propose to make a declaratory order, not in the terms claimed by the plaintiffs but in terms which will resolve the controversy. The parties should consider these reasons and prepare minutes of a declaratory order giving effect to them.

CASSEGRAIN v CASSEGRAIN & ORS

At a glance

Court

Decision date

Before

Source

Judgment (9 paragraphs)

Parties

Cases Cited (5)