MATTER : Inheritance (Family and Dependants Provision) Act 1972

GEORGE NITSOS (As Executor of the Estate of Athanasois Nichos)

Succession - Executors and administrators - Proceedings against executors and administrators - Extension of time within which to bring a claim under s 7(1) of Inheritance (Family and Dependants Provision) Act 1972 - Whether "justice of the case" required Court to grant leave to file application out of time where delay caused by solicitor and not client

Professions and trades - Lawyers - Extent to which solicitor's fault affects client's rights in proceedings - Conduct of client where solicitor caused delay

Procedure - Supreme Court procedure - Exercise of discretion in granting leave to adduce further evidence in appeal on interlocutory application - Extent to which solicitor's fault affects client's rights in proceedings - Conduct of client where solicitor caused delay

Procedure - Costs - Liability of solicitor - Order 66 r 5(1)(b) Rules of the Supreme Court

Inheritance (Family and Dependants Provision) Act 1972 s 7(1) s 7(2)

First Respondent (First Defendant) : Ms C H Thompson

Second Respondent (Second Defendant) : No appearance

Third Respondents (Third Defendants) : Ms C H Thompson

Fourth Respondent (Fourth Defendant) : No appearance

First Respondent (First Defendant) : Freehill Hollingdale & Page

Second Respondent (Second Defendant) : No appearance

Third Respondents (Third Defendants) : Freehill Hollingdale & Page

Fourth Respondent (Fourth Defendant) : No appearance

Black v City of South Melbourne [1963] VicRp 7; [1963] VR 34

Christie v Harvey (1900) 2 WAR 146

Esther Investments v Markalinga (1989) 2 WAR 196

Farr v Shire of Manjimup, unreported; SCt of WA; Library No 930349; 15 June 1993

FCT v Brambles Holdings [1991] FCA 122; (1991) 99 ALR 523

Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458

Gamble v Killingsworth [1970] VicRp 22; [1970] VR 161

Ketteman v Hansel Properties Ltd & Ors [1987] 1 AC 189

Lord v Australian Safeway Stores Pty Ltd [1995] VICSC 212; [1996] 1 VR 614

Mategna v Seafeast Sales unreported; FCt of WA; Library No 950497; 24 August 1995

Nenke v Nunn (1967) WAR 79

Sophron v The Nominal Defendant [1957] HCA 27; (1956) 96 CLR 469

The State of Western Australia v Bond Corporation Holding Ltd (1991) 5 WAR 40

Tointon v H W Greenham & Sons Pty Ltd [1986] VicRp 65; [1986] VR 666

1 IPP J: On 10 May 1999 this Court heard, together, an application for leave to appeal and the appeal against a decision of the learned Master refusing an application by the applicant for an extension of time within which to bring a claim under s 7(1) of the Inheritance (Family and Dependants Provision) Act 1972. At the conclusion of argument the Court granted the application, upheld the appeal, and granted the applicant leave to bring a claim under s 7(1) out of time. In addition, the Court made an order in terms of O 66 r 5(1)(b) calling upon E N Stamatiou & Co, the applicant's former solicitors, and Mr Martin Segler, a consultant or counsel retained by them, to show cause why an order should not be made requiring them to pay all the costs of the applicant and of the respondent, both on an indemnity basis, and to repay any costs already paid to them. I set out below my reasons for joining in the decision of the Court to the aforegoing effect.

2 At the outset, it would be appropriate to record that the second respondent was not served with the appeal papers. However, by reason of various undertakings given on behalf of the applicant and the first and third respondents, the Court was satisfied that the second respondent would not be affected by any order that might be made in these proceedings. Further, the Court was informed that the second respondent had intimated that she did not wish to be involved in the case. Accordingly, argument proceeded without the papers being served on her.

3 Section 6 of the Act empowers the Court in defined circumstances to order that provision be made out of the estate of a deceased person to persons falling into a stipulated category. Section 7(1) provides for the making of an application by persons falling within that category "for provision out of the estate of any deceased person". An application under s 7(1) may only be heard if the application is made within six months "from the date on which the administrator becomes entitled to administer the estate of the deceased" (s 7(2)(a)), or if "the court is satisfied that the justice of the case requires that the applicant be given leave to file out of time" (s 7(2)(b)).

4 The applicant is the daughter of the deceased who died on 11 November 1997. The principal asset in the estate consisted of a property in East Perth worth about $300,000. The balance of the estate was worth about $27,700. In terms of the will of the deceased the applicant received one third of that part of the estate not including the property, in other words, about $9300. The main beneficiaries under the will of the deceased were the third respondents (who are the sons of the applicant's brother): they became entitled to the property.

5 Before this Court it was not disputed that the evidence of the applicant established, at least, an arguable case that by his will the deceased did not make adequate provision for her proper maintenance, support, education or advancement in life. Further, it is at least arguable that the applicant has a moral claim for relief under the Act.

6 On 4 December 1997 Stamatiou & Co, as the applicant's then solicitors, wrote to the first respondent, in his capacity as the executor of the deceased's estate, foreshadowing a claim under the Act by the applicant. Stamatiou & Co also informed the first respondent that they had lodged a caveat in the probate division of this Court preventing probate of the will being granted. On 21 January 1998 Freehill Hollingdale & Page ("Freehills"), the first and third respondents' solicitors, replied. They expressed doubts as to the strength of the applicant's claim. They proposed that the caveat be withdrawn so that probate could be granted and offered an undertaking on behalf of the executor that, provided application under the Act was made immediately, the executor would not move to distribute the estate.

7 Stamatiou & Co did not reply to this letter. On 16 February 1998 Freehills telephoned Stamatiou & Co to ascertain why no response had been forthcoming. They were unable to speak to the solicitor handling the matter and their telephone call had not been returned. On 3 March 1998 Freehills wrote to Stamatiou & Co calling for a response and referring to the telephone call of 16 February 1998. On 4 March 1998 Freehills telephoned Stamatiou & Co but were, again, unable to speak to the solicitor concerned. That day, Freehills wrote to Stamatiou & Co recording that an attempt had been made by them earlier that afternoon to speak to the solicitor dealing with the matter on the applicant's behalf, but he was "busy". The letter complained about the delay in responding to Freehills' previous letters. On 5 March Freehills again unsuccessfully attempted to speak to Stamatiou & Co. On 12 March a discussion at last took place and an agreement was arrived at in terms of the proposal put by Freehills in their letter of 21 January 1998.

8 On 26 March 1998, Mr Segler telephoned Freehills and advised them that instructions had been received to remove the caveat and that steps would be taken to do so forthwith. As the learned Master pointed out, "how this sits with what appears to have been a firm agreement reached on 12 March between the solicitors is not entirely clear". Notwithstanding Mr Segler's promise, nothing was done to remove the caveat and on 22 April 1998 Freehills wrote to Stamatiou & Co, raising the issue. Freehills followed this up by telephoning Stamatiou & Co on 24 April 1998, but to no avail. By letter written that day, they requested a response. Eventually, on 28 April 1998, Stamatiou & Co wrote to Freehills confirming that a withdrawal of caveat had been executed and stating that it would be lodged as soon as the executor undertook in writing not to distribute the estate pending an application by the applicant under the Act. On 30 April 1998 Freehills provided an appropriate undertaking to Stamatiou & Co. The withdrawal of caveat was duly lodged and on 1 May 1998 the caveat was withdrawn. On 7 May 1998 probate of the will was granted.

9 By this stage, some five months had passed since Stamatiou & Co had first been involved, but nothing had been done about making an application under s 7(1).

10 On 26 May 1998 Freehills wrote to Stamatiou & Co, urging that the contemplated application by the applicant under the Act be filed forthwith. That letter read in part:

"As you are aware, our client has undertaken not to distribute any part of the Estate pending final determination of an inheritance application 'provided such application is pursued promptly and with due diligence' (these words were used in the written undertaking given by the first defendant to the plaintiff).

To date, we have had great difficulty getting responses from your office which has delayed, unreasonably, progress to the present stage. Our client is not prepared to allow any delay in future.

When the writer spoke with Mr Segler of your office on 19 May, the latter indicated that your client's affidavit in support of the inheritance application was awaiting signature. There would seem no reason, therefore, why the originating summons and affidavit cannot be filed forthwith.

Unless the proceedings are commenced within 14 days from today's date, we will advise our client that the application has not been pursued promptly and with due diligence and that he may proceed to distribute the Estate."

11 There was no reply to this letter. On 15 June Freehills again wrote to Stamatiou & Co pointing out that no action had been taken. The letter stated that in consequence of the delay:

"Our client is relieved of his undertaking previously given and now intends to proceed with distribution of the Estate in terms of the deceased's last Will.

If there is any reason why distribution should not proceed, then no doubt you will contact us."

Stamatiou & Co continued to do nothing. They did not reply to Freehills and they did not issue proceedings.

12 The six month time limit under s 7(2)(a) of the Act expired on 7 November 1998. No application had by then been made. In the proceedings before the learned Master, Mr Stamatiou of Stamatiou & Co attempted to explain this failure by blaming Mr Segler. He testified that on 4 March 1998 Mr Segler was instructed by his firm "to prepare the necessary court documents for initiating proceedings on [the applicant's] behalf". According to Mr Stamatiou:

"Despite repeated requests directed to Mr Segler to complete the task and return [the applicant's] file Mr Segler failed to do so until 10 November 1998 by which time the application was out of time, probate having been granted on 7 May 1998. The reasons for Mr Segler's inadvertence is outlined in his letter to me dated 26 November 1998."

In Mr Segler's letter of 26 November 1998, he stated that on 4 May 1998 Freehills had provided him with a copy of the deceased's will and the statement of assets and liabilities in respect of the estate. According to Mr Segler's letter:

"Thereafter on a date which I am not able to recollect I advised you that it would be necessary to obtain a proof of [the applicant's] evidence because that had been taken previously from her was insufficient for the purposes of the claim under the Act. I further offered to take such proof of evidence but by inadvertence which can only ultimately be attributed to me that appointment was not arranged until after the expiry of the limitation period for the claim."

"[The letter] makes no real effort to explain why no action was taken between March and November of 1998. Further, and in my view significantly, it makes no attempt to explain why it was that the [respondents'] solicitors were told by Segler on 19 May that the application and an affidavit in support had been prepared and would be filed as soon as the affidavit had been signed. If this account of the conversation between Segler and the [respondents'] solicitors was not accurate, then it should have been disputed on affidavit. It suggests that not only has there been inexplicable and inexcusable delay on the part of the [applicant's] solicitors, but that they actively misled the [respondents'] solicitors."

13 On 4 December 1998, Stamatiou & Co, acting on behalf of the applicant, filed a notice of originating motion seeking leave (pursuant to s 7(2)(b)) to file an application under the Act out of time. In this regard the learned Master noted:

"It is not entirely clear why [Stamatiou & Co] waited some three weeks after the expiration of the time for making the application before bringing this application for the extension of time. Stamatiou was aware, as of 10 November 1998 at the latest, that an application for an extension of time was required. I would have expected an application to be made forthwith. Although in the context of the delay as a whole an extra three weeks is of little significance, it demonstrates that, faced with a situation of some urgency, the [applicant's] solicitors failed to act promptly."

14 The learned Master was severely critical of the conduct of Stamatiou & Co. He stated:

"Counsel for the [applicant] made no attempt to disguise the fact that [Stamatiou & Co] had not acted in a timely manner. He freely admitted that the solicitors were entirely responsible for the delay and made the point that no blame should be sheeted home to the [applicant] herself. He described the conduct of [Stamatiou & Co] as a 'shambles'. With respect, I would agree with him. Nothing more needs to be said."

15 The learned Master did not examine the question whether the applicant should be held responsible for the delay and neglect on the part of Stamatiou & Co. It appears from his reasons that he assumed that this would automatically follow. He posed the question: "Should the delay by [Stamatiou & Co], their complete failure to look after the interests of their client, be excused?" He answered this question in the negative and refused the application for the extension of time.

16 Section 7(2)(b) lays down that the "justice of the case" is the determining factor in regard to whether leave should be given to file an application out of time. The essential question in the case is therefore to be cast in these terms. In Re Salmon (deceased) [1981] Ch 170 (at 175) Megarry VC laid down certain "guidelines" or "points" relevant to the jurisdiction to extend time and these were reiterated by Malcolm CJ (with whom Rowland and Franklyn JJ agreed) in Clayton v Aust (1993) 9 WAR 364. The learned Chief Justice pointed out (at 367), "his Lordship has made it plain that these considerations are not exhaustive." In substance, the guidelines make it clear that, in determining an application for extension of time under s 7(2)(b), a judicial discretion must be exercised and all the relevant circumstances must be taken into account in order to assess the justice of the particular case under consideration.

17 In my opinion, where delay in making an application in terms of s7(1) is due to the conduct of an applicant's solicitors, the "justice of the case" requires all the relevant circumstances to be examined to determine the extent to which the solicitors' fault is to be attributed to the applicant. It should not automatically follow that the solicitors' neglect will be visited upon the applicant: after all, that might not meet the justice of the case. This underlies the approach in Brown v Holt [1961] VicRp 69; [1961] VR 435 and Re Traeger deceased [1948] SASR 248, both being cases involving a failure by solicitors to give timeous notice of applications under legislation similar to the Inheritance (Family and Dependants Provision) Act. In both cases the reasonableness of the conduct of the applicant, as well as that of the applicant's solicitors, was regarded as relevant. See also Bourke v Kecskes [1967] VicRp 117; [1967] VR 894 (which was an application for the dismissal of an action for want of prosecution), where Lush J examined the question whether "it is fair to place on the facts the interpretation that the plaintiff was passively accepting a situation which he ought to have realised was wrong" (because of unreasonable delay on the part of his solicitor).

18 The material before the learned Master contained no evidence as to the steps taken by the applicant herself (as opposed to Stamatiou & Co) in attempting to ensure that her application was brought within time. For the reasons that I have explained, this was of fundamental importance. The Court raised this issue with counsel when argument on the application for leave to appeal commenced. At the invitation of the Court, counsel for the applicant thereupon applied for leave to lead the evidence of the applicant in this respect.

19 As is pointed out in Seaman Civil Procedure Western Australia par 63.10.4A, the discretion to grant leave to adduce further evidence in appeals upon interlocutory applications is "broad and general." Counsel for the applicant and counsel for the respondents both accepted that the order of the learned Master, dismissing the application for an extension of time, was interlocutory in character. There is authority that supports this proposition: see Dousi v Colgate Palmolive Pty Ltd (1987) 9 NSWLR 375; Sanderson v Metropolitan (Perth) Passenger Transport Trust, unreported; FCt SCt of WA; Library No 950185; 22 March 1995.

20 In the very nature of this case, it seemed to the Court that justice demanded that a decision be made on all the relevant facts. No prejudice would be suffered by the respondents if the evidence in question were to be led, Accordingly, the applicant was granted leave to adduce her testimony dealing with the steps she had taken to prosecute her application under s7(1). She gave evidence in chief and was cross-examined. The following facts emerged.

21 On 4 December 1997, the applicant consulted Mr Stamatiou in connection with her claim against the estate of the deceased. She asked him to handle the claim on her behalf. He did not tell her that there was any time limit in regard to the claim.

22 Thereafter, the applicant on several occasions telephoned Mr Stamatiou to find out "what's going on" and also wrote him a letter or letters. She received no reply to these communications. The applicant persisted and called on Mr Stamatiou at his offices. She said:

"I used to go there speaking to him and I asked, 'What's going on?' He says, 'Leave it to me. Don't worry. Everything fine'."

On other occasions he told her not to worry as "he knew what he was doing". She was asked why she left the matter in Mr Stamatiou's hands. She replied "Well, he's a lawyer. How shall I know? I trusted him". Mr Stamatiou had been recommended to her as an appropriate lawyer.

23 Under cross-examination, the applicant said that she had seen Mr Stamatiou more than five times in attempts to find out what progress he had made. She saw him at least every month to ask "what's going on". It was on these occasions that he told her not to worry (although he did say, on all these occasions, that the file was with Mr Segler).

24 The extent of the applicant's reliance on Mr Stamatiou was apparent when she revealed under cross-examination that, as an immigrant to Australia from Europe, she could not read English and had very little education. For this reason, when she needed to understand something that had been written in English, she would ask her daughter to explain the material to her.

25 The gravity of the inappropriateness of the conduct of Stamatiou & Co was underlined by the applicant's testimony in regard to the manner in which she executed her affidavit that was filed in the proceedings before the learned Master. She was sent an affidavit by Stamatiou & Co for signature by her. This affidavit was lost. Stamatiou & Co drafted another and requested the applicant to sign it. The applicant was hesitant about doing so and said to the person concerned at Stamatiou & Co: "But my daughter is not here. I can't read English. I don't know what it is". She was informed, however, that the affidavit was "the same as the first one" and, although it was not read to her, she was told to sign it, which she did.

26 The first time that the applicant learnt that time limits had to be met for the bringing of her claim under the Act was after the learned Master had delivered his judgment refusing the extension of time. Until then, the applicant had been completely ignorant of the provisions of s 7(2)(a) of the Act, despite her several discussions with Mr Stamatiou.

27 In summary, the evidence established that the applicant, disadvantaged as she was by her lack of ability to read English and her rudimentary education, retained what she believed to be an apparently competent firm of solicitors and she relied on them to protect her interests. She requested them at regular intervals for information as to what they had done and were doing, and was constantly reassured that everything was in order. It was only after the learned Master handed down his reasons that she discovered that over a period of several months her solicitors had done nothing to prosecute her case and had allowed the time period stipulated by s 7(2)(a) of the Act to expire. As counsel for the respondents rightly conceded, the applicant could not have done more to protect her own interests.

28 The aforegoing evidence was powerful material which weighed heavily in favour of granting an extension of time under s 7(2)(b). As mentioned, this material was not before the learned Master. In the circumstances, the issues had to be considered afresh.

29 Were the applicant not to be granted leave to bring her application out of time, she would be left with a claim for damages against Stamatiou & Co and Mr Segler. As the learned Master pointed out, the applicant's damages in such a case would be based on the loss of the chance of succeeding in her claim under s 7(1): Instant Nominees Pty Ltd v Redmond (1987) WAR 218 (at 226) per Burt CJ. On this basis there is a real prospect of the applicant obtaining an order for damages that would be less than the amount she could recover under s 7(1). Further, the prosecution of such a claim would take far longer and be far more expensive than the prosecution of her claim under the Act. The aforegoing represented a serious degree of prejudice to the applicant. This has to be seen in the light of the fact that the new evidence established that no blame whatever attached to her in respect of the failure to bring the application within the six month period required by s 7(2)(a). On the contrary, as mentioned, she had done everything that could have been expected of her.

30 The first and third respondents have not altered their position to their prejudice in consequence of the applicant's delay in bringing her claim under s 7(1). The property which is the principal asset in the estate of the deceased has been transferred to them. While they may have incurred costs in maintaining the property, this is an issue which can be catered for in any order that is made in determining the applicant's claim under s 7(1). In addition, were the application to be granted, the first and third respondents would have to face the inconvenience and uncertainty of further litigation. However, this would be an inevitable consequence of the applicant's claim, in any event. Counsel for the first and third respondents submitted, further, that Freehills had been misled by Stamatiou & Co or Mr Segler or both. This may be so, but the first and third respondents suffered no direct detriment in consequence.

31 In my opinion, the aggregate prejudice the first and third respondents would suffer were the application to extend time to be granted would be substantially outweighed by the prejudice that the applicant would suffer were it to be refused. In all the circumstances, it seemed to me, on balancing all the relevant factors, the justice of the case required leave to be given under s 7(2) for the applicant to make her application under s 7(1) out of time.

32 In the light of the conduct of Stamatiou & Co and Mr Segler, which I have described above, it also seemed to me to be appropriate for a notice to be sent to them in the terms I have referred to above.

33 WHITE J: I have read the reasons to be published by the Hon Ipp J. They adequately relate the reasons for my having joined in the decision and I have nothing further to add.

34 STEYTLER J: I have had the advantage of reading the reasons for decision proposed to be published by Ipp J. They reflect my own reasons for arriving at the conclusions to which his Honour has referred. I have nothing to add.