Hammond v Hammond

INTRODUCTION 1 HIS HONOUR: This is a claim by a beneficiary against the executor of his father's will for breach of trust in paying $62,409 out of the estate to himself instead of to the beneficiary in contravention of orders made on 15 March 2007 in other proceedings between them under the Family Provision Act 1982. The relief claimed is an order that the executor pay the beneficiary that sum with interest or alternatively that the executor be replaced as trustee and an accounting conducted in respect of the trust.

2 The plaintiff beneficiary is John Joseph Hammond who is mildly intellectually impaired by reason of Down's syndrome. He sues by his tutor and brother, Luke John Hammond (Luke), who is a solicitor. Luke is also the plaintiff's financial manager appointed by order of the Guardianship Tribunal. The defendant executor is the plaintiff's uncle, Terence John Hammond. 3 The defendant seeks to justify most of the said payment to himself by cross-claiming for: (a) a declaration that on the proper construction of the agreement between the parties in their short minutes of order of 15 March 2007 the phrase "residue of the estate" in paragraphs 1 and 3 included a death benefit payable from the Catholic Schools Superannuation and Retirement Fund ( the Fund ); (b) alternatively, a declaration that the common intention of the parties was that that phrase included the death benefit and an order that the short minutes be rectified to give effect to the common intention.

4 The cross claim also prays for an alternative declaration that the agreement in the short minutes included an implied term to the same effect, but this was abandoned in closing submissions.

5 In fact, the death benefit was not an asset of the estate. At the time of his death, the deceased was a member of the Fund. It was a discretionary fund, in that its trustee had a discretion to pay the death benefit to the estate of the deceased or to other potential beneficiaries. In June 2006 the trustee had resolved to pay the death benefit to the plaintiff, as the defendant and his solicitor at all times knew. The death benefit was $374,516.12 and was eventually paid by the Fund to the plaintiff on 3 December 2007.

6 The short minutes of order of 15 March 2007, pursuant to which orders were made on that day, were in the following terms:

On the true construction of the will dated 10 May 2004, the residue of the estate of Donald John Hammond Deceased passes to Terence Sydney Hammond absolutely.

the agreement of the parties whereby each of Luke John Hammond and Chere Ann Hammond receive additional provision out of the Estate of the Deceased pursuant to the orders made in proceedings 4486 of 2005.

In addition to the provision made for the Plaintiff John Hammond in the will of the Deceased the Plaintiff is to receive 85% of the residue with the Defendant to receive the remaining 15%.

The Plaintiff John Hammond's costs on the party/party basis be paid out of the Estate of the Deceased.

The Defendant's costs on the indemnity basis be paid out of the Estate of the Deceased.

The undertaking of the Defendant to pay to the Estate of the Deceased any monies received by him from the Catholic Superannuation Retirement Fund.

The agreement of the parties that pending the appointment of a financial manager pursuant to the protected Estates Act 1983, any monies due to the Plaintiff John Hammond are to be paid to the Public Trustee on his behalf.

The agreement of the parties that in consideration of each consenting to the orders herein, the defendant is entitled to estate commission of 1%."

BACKGROUND 7 The plaintiff's father, Donald John Hammond, died on 25 March 2005. 8 At the date of his death, he was divorced from his wife by whom he had three children: Chere, Luke and the plaintiff, John.

9 By his holograph will, he appointed his brother Terence (the defendant) his executor, listed his assets (including "Super with Catholic Schools Super and Retirement") and dealt with his estate as follows:

(a) to a friend of his, $30,000 and a caravan with its contents; (b) to each of his three children $100; and (c) to his brother Terence (the defendant) the remainder "on the condition that he ensures John my youngest son [the plaintiff] never wants for anything". 10 Unsurprisingly, each of the three children brought Family Provision Act claims. The plaintiff's proceedings were bought by his next friend, his mother. The present defendant, as executor, was the defendant in each of those claims.

11 On 1 July 2005, the defendant completed the inventory of property for the purposes of applying for probate. He included the value of the death benefit as an asset in that inventory.

12 On 30 March 2006, the Fund gave the parties notice of a resolution to pay the death benefit to the estate of the deceased.

13 In April 2006, the plaintiff's mother and Luke wrote to the Fund objecting to its decision and asking the Fund to prefer the plaintiff instead.

14 In May 2006 the defendant was told by his solicitor that the decision was the subject of an objection.

15 By letters dated 28 June 2006, the Fund notified the defendant and Luke that it had reversed its earlier resolution and resolved instead to pay the death benefit to the plaintiff. The defendant gave the letter to his solicitor, Mr Marando. In cross-examination the defendant said that this letter changed his previous thinking that the death benefit would go to him.

16 This resolution appears to have rendered the death benefit a prescribed transaction for the purposes of Family Provision Act claims pursuant to s 22(4)(e). The Court was thus empowered to make an order designating the death benefit "as notional estate" (s 23) thereby extinguishing the plaintiff's right to the death benefit (s 29) but only to the extent necessary to allow the Court to make the provision the Court opined should be made (s 28).

17 In the absence of any such order or an assignment by the plaintiff to the estate, the estate had no right or title to the death benefit.

18 On 21 July 2006 the defendant, through his solicitor, objected to that latest resolution.

19 On 13 September 2006 the Fund sent the defendant and Luke letters confirming the resolution to pay the death benefit to the plaintiff. 20 On 30 November 2006 all three claims by the children under the Family Provision Act were listed for hearing before Young CJ in Eq (as his Honour then was).

21 The plaintiff's solicitor and counsel were Michael Corrigan and Eric Petersen respectively. Luke and Chere's solicitors and counsel were Livingstone & Company and David Liebhold respectively. The estate's solicitors and counsel were Marando Solicitors and Lindsay Ellison SC and Paul Bolster in both proceedings.

22 Before 30 November 2006, Mr Bolster, as he agreed in oral evidence, probably saw the Fund's letter of 27 June 2006. Mr Ellison did not recall in evidence ever receiving instructions that the Fund had resolved to pay the plaintiff. Both counsel understood that the death benefit was not part of the estate.

23 Earlier, on 24 November 2006, the defendant's solicitor sent the defendant a copy of an email from the defendant's junior counsel to himself stating that the defendant's senior counsel had suggested, subject to the defendant's instructions, that he accept a settlement offer put by Luke and Chere's counsel conditional upon Luke and Chere assigning any interest they might have in the deceased's superannuation to the executor. In cross-examination, the defendant agreed he understood that he could have no comfort that Luke and Chere would not receive the superannuation fund unless they agreed to the condition. 24 On 30 November 2006 the claims brought by Luke and Chere (proceedings 4486 of 2005) settled on the basis that each would receive a payment of $65,000 with no inter-party order for costs. In those proceedings Young CJ in Eq made orders in accordance with the following agreed short minutes of orders:

"1. Each of the Plaintiffs is to receive provision out of the estate of the deceased in the sum of $65,000.00 2. No Order as to the costs of the Plaintiffs to the intent each bear his/her own costs. 3. Defendant's costs on the indemnity basis to be paid out of the estate of the deceased. 4. Interest to run on so much of the provision herein as remains unpaid on the first to occur of the following dates: (a) 7 days after the completion of the sale of the estate realty; (b) 4 months after the making of the order herein; or (c) 7 days after the receipt by the defendant as executor of the estate of the deceased of the deceased's entitlement in the Catholic Superannuation and Retirement Fund ("the fund"). 5. the Court notes the agreement of the Plaintiffs whereby the Plaintiffs abandon and disclaim any entitlement to the fund or any monies forming part thereof, and to the extent necessary and in consideration of the defendant consenting to these orders the plaintiffs assign their interest in the fund to the defendant as executor of the estate of the deceased." 25 In cross-examination the defendant agreed (contrary to his written evidence) that on 30 November 2006 there was no basis for him to think that the settlement monies payable to Luke and Chere would come from the Fund.

26 On the same day, the plaintiff's claim (No 3490 of 2005) was heard and judgment was reserved.

27 The written submissions of the plaintiff's counsel on that day recited the defendant's affidavit that the assets of the estate included the death benefit. The submissions distinguished the plaintiff's position which was that there may be doubt as to whether the death benefit will be paid to the estate and that the Court should declare it as a notional estate and reduce the plaintiff's provision by any of the death benefit he received. 28 On 21 February 2007 his Honour delivered reasons for judgment: Hammond v Hammond [2007] NSWSC 106. His Honour considered the condition in the will that the remainder of the estate go to the defendant "on the condition that he ensures John my youngest son never wants for anything". After reviewing the authorities, his Honour concluded that: (a) if the defendant had accepted this gift, as it seemed he had, it imposed on him a binding equitable personal obligation to support the plaintiff "even over and above the estate assets": at [38]; (b) therefore there had been no failure to provide for the plaintiff as he had as much out of the estate as he could get, and the proceedings should be dismissed with no order as to costs: at [39]; (c) in that event, although the superannuation fund death benefit was not an asset in the estate, he probably would be prepared to make an order declaring it as notional property: at [45]. (d) if the defendant had not accepted this gift, then presumably there would be a partial intestacy with the result that the residue would pass to the three children in equal shares: at [40]; (e) because the parties had not addressed the question of an equitable personal obligation on the defendant, the proceedings were stood over to give them an opportunity to do so: at [48]-[49]. 29 The effect of the judgment was that, if the defendant had accepted the gift of the residue, as it seemed he had, he would have incurred an equitable personal obligation to support the plaintiff forever, even out of the defendant's own assets. Given that the plaintiff was disabled, the practical effect was that the defendant would receive nothing under the will for his own benefit.

30 On 26 February 2007 the defendant met with his solicitor and counsel who explained the effect of the judgment. In oral evidence Mr Ellison agreed that he would have told the defendant that in net terms he would get nothing. 31 Thus, the legal landscape, as it had been perceived by the parties, changed dramatically upon publication of his Honour's judgment.

32 Against that background, instead of making further submissions the parties proceeded to negotiate a settlement. 33 On 28 February 2007, the defendant, through his junior counsel, sent the plaintiff's counsel, Mr Petersen, the first draft of "Terms of Settlement". It had been drafted wholly within the defendant's camp. It was not relevantly different from the final 15 March 2007 "Short Minutes of Order" (as it was re-entitled) albeit the percentage distribution of the residue as between the parties changed as a result of negotiations.

34 On or about 7 March 2007 Mr Wilson SC replaced Mr Petersen as the plaintiff's counsel. On 15 March 2007 Mr Wilson and Mr Ellison had settlement discussions but not about the assets which constituted the estate or how the death benefit was to be treated for the purposes of the agreement. Their discussions concerned the percentages of distribution of the residue between the parties.

35 On 15 March 2007 the proceedings were listed before Young CJ in Eq. The parties had agreed short minutes of orders that they would ask the Court to make, set out at [6] above.

36 The Court had to exercise two discretions before making the orders proposed in the short minutes. One was under the Family Provision Act. The other was because the plaintiff was under a legal incapacity: Civil Procedure Act 2005, s 76(3). His Honour made the consent orders in accordance with the short minutes. The orders were entered on 21 March 2007.

37 The kernel was that the plaintiff would receive 85 per cent of the residue of the estate plus costs and the defendant would receive 15 per cent of the residue plus indemnity costs.

38 As at 15 March 2007 the Fund had not distributed the death benefit. The defendant, his solicitor and junior counsel knew that the Fund had resolved to distribute the death benefit to the plaintiff.

39 In the context of the rectification cross claim, the subjective intentions of the parties or those representing them are relevant. Importantly, the defendant's evidence in cross-examination was that throughout the whole period from October 2006 to October 2007 he always expected the Fund to pay the death benefit to the plaintiffs and he was content with that. In contrast, the evidence of the defendant's two counsel was that they believed at all times prior to the commencement of these proceedings that the estate included the money in the Fund, that the proceedings were conducted on the basis that provision for the plaintiff would be realised from (inter alia) that money, and that the defendant as executor would receive that money and utilise it to effect the orders in these proceedings and in Luke and Chere's proceedings. The defendant's solicitor was not called to give evidence.

40 In paragraph 6 of the short minutes the defendant undertook to pay the estate any monies received by him from the Fund. In oral evidence Mr Ellison indicated that he did not include an equivalent undertaking by the plaintiff because the only person he then believed who had made a claim or who could receive the death benefit was the defendant and he did not know the plaintiff had made a claim.

41 As at 15 March 2007 the plaintiff's counsel, Mr Wilson SC, believed that the short minutes did not affect the death benefit and gave advice to that effect in conference prior to the mention on that date to Luke, the plaintiff's mother and Mr Corrigan, the plaintiff's solicitor. Mr Wilson, Mr Corrigan and Luke all gave unchallenged evidence of that advice. The mother was not called to give evidence. 42 On 27 March 2007 the Guardianship Tribunal ordered that the estate of the plaintiff be subject to management under the Protected Estates Act 1983 and that Luke be the manager of the estate.

43 By letter dated 10 October 2007 the Fund notified the defendant that it had again considered the matter and resolved to pay the death benefit to the plaintiff to the Office of the Protective Commissioner. The letter said that the defendant had 28 days to complain to the Superannuation Complaints Tribunal. The defendant gave a copy of the letter to his solicitor and made no such complaint. 44 In cross-examination the defendant agreed that this letter did not come as a surprise to him. 45 After: (a) the payment of debts and costs; (b) the payment of the legacy of $30,000 to the deceased's friend; and (c) the payment of the settlement sum of $130,000 in total to Luke and Chere; the residue of the estate was $73,605.09. 46 On 15 October 2007, the defendant paid the whole of that $73,605.09 to himself. He admits that, in paying this money to himself, he left the trust with no further amount to distribute. 47 On the plaintiff's case, in breach of trust and in breach of the orders of 15 March 2007, the defendant distributed to himself a total of $62,609.33 to which he was not entitled, comprising:

(a) three sums of $100 due to each of the deceased's children; and (b) 85 per cent of the remainder ($73,305.09) due to the plaintiff, that is, $62,309.33. 48 On the plaintiff's case, the defendant was only entitled to $10,995.76 being 15 per cent of the residue ($73,605.09 less $62,609.33). 49 On the defendant's case, the residue of the estate inclusive of the death benefit was $447,821.21. On that premise, the defendant's share of the residue (15 per cent) was $67,173.18. Thus, even on his own case, the defendant has distributed to himself $6,431.91 more than his entitlement ($73,605.09 less $67,173.18). 50 The defendant failed to provide accounts to his fellow beneficiaries when they asked for them. He was asked to account for the proceeds of the estate by letters dated 1 February 2008, 18 February 2008, 20 June 2008 and 1 December 2008, and then by the summons which was filed on 16 December 2008. It was only pursuant to directions made in the course of these proceedings that the defendant finally prepared verified accounts on 29 July 2009. It was only after the summons was filed that the plaintiff and his financial manager learned that the residue of the estate had been fully distributed to the defendant.

51 The authorities relating to the construction of written contracts were exhaustively reviewed in Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407, 264 ALR 15 (Allsop P, Giles and Campbell JJA), from which the following relevant principles may be identified: (a) the underpinning legal theory concerning the formation and construction of contracts is the objective theory whereby the parties' intentions are objectively assessed and their subjective intentions are irrelevant: at [4]-[6], [50], [322]; (b) the construction of written contracts is to be undertaken by determining what a reasonable person would understand by the language in which the parties have expressed their agreement, not by determining what the parties subjectively intended. That requires consideration of the text in the context of the surrounding circumstances known to the parties, including the purpose and object of the transaction. The identification of ambiguity is not a precondition to examining legitimate surrounding circumstances: at [14]-[16], [49], [289]-[292], [305], [322]; (c) surrounding circumstances that can be taken into account must be relevant to a fact in issue, probative of the surrounding circumstances known to the parties or of the purpose or object of the transaction, including its genesis, background, context and (where relevant) the market in which the parties are operating. It is impermissible to take into account evidence which is probative of, or led so as to understand, the actual intention of the parties, including evidence of negotiations and drafts. Statements by contracting parties about their subjective intentions in entering the agreement do not assist in ascertaining the meaning of words: at [24], [51], [287]-[292], [337]; (d) regard cannot be had to anything which the parties said or did after the contract was made: at [10], [322], [327]; (e) if there is an ordinary grammatical meaning of the words used that meaning must be given significant force although read with admissible evidence of surrounding circumstances. The words used may be intractable and not to admit of departure from the conventional and grammatical use: at [53]; (f) commercial contracts should be construed in a way that does not flout business common sense. But that does not provide a licence for judicial rewriting of the contract: at [22]-[23], [360]-[361].

52 The authorities concerning rectification of written contracts were considered in Franklins and more comprehensively in the Court of Appeal's earlier decision in Ryledar Pty Ltd v Euphoric Pty Ltd [2007] NSWCA 65, 69 NSWLR 603 (Mason P, Tobias and Campbell JJA), from which the following relevant principles may be identified: (a) when a party to a contract argues that the known context and common purpose of the transaction gives the words of the contract a meaning which, by no stretch of language or syntax they will bear then, in truth, one has a rectification suit, not a construction suit: Ryledar at [1], [108]-[109], [257]. (b) the rationale of rectification of a written contract in equity is that it is unconscientious for a party to the contract to seek to apply the contract inconsistently with what that party knows to be the common intention of the parties at the time that the written contract was entered: Franklins at [1], [444], [511]; Ryledar at [1], [189], [315]; (c) it is the subjective intention of the parties that matters for rectification (as is shown by parol evidence being receivable to establish such intention in a rectification suit), but that subjective intention must be shown to be common through the parties coming to know, by some means, of each other's intention: Ryledar at [1], [189], [267]-[269], [281]-[316]. Thus, the common intention must be a consensual one: Ryledar at [1], [189], [290], [293]; (d) parties may come to know of each other's intentions through those intentions being expressly communicated or inferentially communicated by acts or words: Ryledar at [1], [189], [281]; (e) the misrecording of the common intention in the written contract may be because of a mistake as to the meaning or effect of the chosen words: Ryledar at [1], [122]-[128]; (f) the fact that words used in a contract convey a clear, unambiguous and unmistakable meaning or legal effect renders it less likely that the parties were mistaken as to that meaning or effect and less likely that they had a common intention which was fundamentally inconsistent with the words they had deliberately employed, particularly where the wording was proffered by the party seeking rectification of the contract: Ryledar at [1], [162]-[165], [257]; (g) where a written agreement results from negotiations in which the parties have been advised by lawyers, to conclude that the parties have misrecorded their common intention involves the lawyers on each side having been mistaken in expressing the intention of their client and, furthermore, mistaken in the same way. There is a measure of inherent unlikelihood of such an event happening, which is compounded if the words of which rectification are sought are clear in meaning on their face: Franklins at [460]-[461]; (h) rectification is granted only upon "clear and convincing proof" or "convincing proof": Ryledar at [1], [161], [163], [182], [186] and [225]; Franklins at [451].

53 The defendant's closing written submissions included a submission that it was the common intention "or alternatively the intention of the defendant known to the plaintiff" that the phrase "residue of the estate" in the short minutes of 15 March 2007 included the death benefit. This alternative submission goes outside the relief claimed in the cross claim and the pleading of the cross claim if it is intended to be directed to rectification for unilateral mistake rather than rectification based on inconsistency with the common intention. In the case of unilateral mistake, rectification is generally not permissible except when the party not labouring under the mistake is guilty of fraud, whether actual, constructive or equitable: Taylor v Johnson (1983) 151 CLR 422 at 432-433; Smith v Smith (now Vocalan) [2004] NSWSC 663 at [48] and [50] (Barrett J). As there is no pleading, evidence or submission of fraud, unilateral mistake is irrelevant.

DEFENDANT'S SUBMISSIONS 54 The defendant's cross claim is expressly concerned only with the construction or rectification of the short minutes of order of 15 March 2007, which contained the agreement between the parties. In contrast, the defendant's closing written submissions tended to speak in terms of the construction or rectification of the actual orders made on that date, yet relied on contractual principles of construction and rectification. The distinction between the agreement in the short minutes and the orders subsequently made and perfected should not be blurred. In accordance with the pleading, I propose to treat the submissions as directed to the agreement reflected in the short minutes. I understood the defendant to proceed in that way in closing oral submissions. However, the defendant contends that if he is successful on his case for construction or rectification of the agreement in the short minutes, the Court is empowered to set aside the order under s 73 of the Civil Procedure Act 2005. I disagree, as discussed at [82]-[83] below.

55 The evidence upon which the defendant relies is largely the same for his construction case as for his rectification case.

56 The defendant makes the following submissions in support of his construction case that the phrase "residue of the estate" in the 15 March 2007 short minutes includes the death benefit.

57 First, the defendant submits that the object of the March 2007 transaction was to compromise the plaintiff's claim for additional provision out of the estate of his father and that, importantly, the circumstances of the compromise included the following:

(a) the compromise of Luke and Chere's proceedings on 30 November 2006 was predicated upon receipt by the defendant of the death benefit and their abandoning, disclaiming and assigning any entitlement to the death benefit in favour of the defendant as executor; (b) on 30 November 2006 the plaintiff's former counsel, Mr Petersen, communicated to the defendant and to the Court in his written submissions, that the value of the estate included the death benefit and should be treated notionally as an asset of the estate and, thus, available to the estate to make provision for the plaintiff. 58 Secondly, the defendant submits that the plaintiff's failure to adduce positive evidence from his former counsel, Mr Petersen, and his former next friend, his mother, tends to confirm that their evidence would not have assisted the plaintiff in making a positive case against the defendant's claim that for the purposes of the compromise agreement on 15 March 2007 the deceased estate included the death benefit.

59 Thirdly, the defendant submits that the fact that Luke and Mr Wilson held uncommunicated beliefs that the terms of settlement did not effect the death benefit does not tend against or alter the premise, understood by the defendant, that the compromise of the plaintiff's proceedings was conducted on the basis that the estate included the death benefit.

60 Fourthly, the defendant submits that the parties' actions after 15 March 2007 admits of an arrangement that the death benefit was intended to be included in the phrase "residue of the estate" in the short minutes of 15 March 2007. The defendant points to his solicitor's letter of 19 March 2007 to the Fund which enclosed the short minutes of 30 November 2006 and 15 March 2007 and requested a cheque in favour of their trust account so that they may distribute "in accordance with the enclosed order". A copy of that letter was copied to the plaintiff's solicitor and Luke and Chere's solicitor. The defendant submits that (a) there is no evidence of any communication by those solicitors taking any issue with his solicitor's letter, and (b) his solicitor's letter admits of an intention that resolution of the proceedings would prompt a redetermination by the Fund so that the death benefit would be paid to the estate as envisaged by the orders in both proceedings. The defendant refers also to a letter of 11 May 2007 from the plaintiff's solicitor to his solicitor seeking advice as to whether the estate had received the death benefit; a letter of 16 May 2007 from the Fund to the defendant stating that its trustee had again considered the claim and had resolved to pay the death benefit in trust for the plaintiff to the Public Trustee; and a letter of 18 May 2007 from his solicitor objecting to its determination of 16 May 2007, a copy of which was sent to the three children's respective solicitors. The defendant says that the contents of his solicitor's letter of 19 March and 18 May 2007 were not disavowed or commented upon by those solicitors and that that constitutes an admission by those acting for the plaintiff that they understood that the phrase "residue of the estate" in the 15 March 2007 short minutes included the death benefit.

61 Fifthly, the defendant submits that the fact that the death benefit was paid directly to the plaintiff does not tend against the fact that the plaintiff's proceedings were compromised on the basis that the death benefit formed part of the estate.

62 I reject the defendant's construction case for the following reasons.

63 First, the death benefit did not in fact form part of the estate. By no stretch of language or syntax can the phrase "residue of the estate" be construed so as to include an asset that was not in fact an asset of the estate. In seeking to rely on surrounding circumstances and other matters to support such a construction, the defendant, in truth, does not have a construction case but, if anything, a rectification case. That is sufficient, in my view, to dispose of the construction case. If it is necessary to go further, my additional reasons are as follows.

64 Secondly, the parties and their lawyers (except, it seems, the defendant's senior counsel) knew that the Fund had resolved to pay the death benefit to the plaintiff, yet the short minutes of the 15 March 2007 contained no undertaking by the plaintiff equivalent to the defendant's undertaking to pay the death benefit, if received, to the estate. That tends to suggest that if it were to be paid to the plaintiff he was entitled to keep it and that it would not form part of the estate.

65 Thirdly, the events of 30 November 2006 noted at [57] above, on which the defendant relies, do not establish the defendant's proposed construction and, in any case, are partly misstated.

66 The contention in [57(a)] above is based on paragraph 5 of the short minutes of 30 November 2006 in Luke and Chere's proceedings, set out at [24] above, whereby they agreed to abandon and disclaim any entitlement to the death benefit and assign any interest in it to the estate. The absence of an equivalent provision in the 15 March 2007 short minutes in the plaintiff's proceedings tells against the defendant's case, particularly as the defendant, as well as his solicitor and junior counsel, knew that the Fund had resolved to pay the death benefit to the plaintiff.

67 The defendant's submission noted at [57(b)] above concerning the plaintiff's counsel's submissions on 30 November 2006 is, I think, inaccurate. The submissions of the plaintiff's counsel on 30 November 2006 recounted that, according to the affidavit of the defendant as executor, the estate included a superannuation fund, but then went on to say that it had not been disbursed, that there may be some doubt that the Fund would pay it to the estate, and that the Court should declare it as notional estate and order that further provision to be paid to the plaintiff be reduced by its amount designated in the notional estate. In fact, it never was declared notional estate. 68 The circumstances changed unexpectedly and dramatically for the parties when judgment was delivered on 21 February 2007: see [28]-[31] above. According to the judgment, if the defendant had accepted the gift under the will, as seemed likely, the practical effect was that he would receive nothing under the will for he had come under a personal equitable obligation to look after the disabled plaintiff forever, even out of the defendant's own assets. 69 Particularly when regard is had to this change of circumstances, I do not think that the events of 30 November 2006 are of much significance when construing the 15 March 2007 short minutes.

70 Fourthly, in my opinion, the alleged post 15 March 2007 admissions by the plaintiff referred to in the defendant's submission noted at [60] above are irrelevant to the objective construction of the agreement in the 15 March 2007 short minutes. Parties' "admissions" as to the meaning of words of a contract do not assist in determining their meaning. Nor can post contract events be taken into account when construing a contract: see [51(c) and (d)] above.

71 In any event, in my opinion, no admission on behalf of the plaintiff of such an intention should be inferred from those post 15 March 2007 events. They overlook the letter dated 27 March 2007 from the plaintiff's solicitor, Mr Corrigan, to the Fund enclosing a copy of the orders of 15 March 2007 and stating: "The Court made no order as to the superannuation held by your fund; accordingly, I am of the opinion the Fund is now at liberty to exercise its discretion as to the payment of the funds held". This is clear evidence as to his understanding of the 15 March 2007 orders and irreconcilable with the alleged admission.

72 Fifthly, I do not accept the defendant's submission noted at [58] above that the defendant's failure to call evidence from Mr Petersen or the plaintiff's mother tends to confirm that their evidence would not have assisted the plaintiff in making a positive case against the defendant's case that the estate included the death benefit. The submission does not spell out what evidence Mr Petersen and the mother could have given in that regard. If the suggestion is that they could have given evidence as to their understanding as to the terms of settlement, then the submission is misplaced in the context of a construction argument where subjective intentions are irrelevant. In any case, I decline to draw the proposed inference. Mr Petersen's role in the post-judgment negotiations leading to the 15 March 2007 settlement was very limited. It appears to have been confined to receiving the first draft of the terms of settlement from the defendant's counsel on 28 February 2007: see [33] above. By 7 March 2007 he had been replaced by Mr Wilson SC as the defendant's counsel. Mr Wilson and the plaintiff's solicitor, Mr Corrigan, as well as Luke, each believed that the 15 March 2007 settlement did not affect the death benefit and did not believe that the defendant understood that the residue of the estate included the death benefit.

73 The defendant's submission invokes the principles in the rule in Jones v Dunkel (1959) 101 CLR 298. The first and fifth of those principles are relevantly summarised in J Heydon, Cross on Evidence, 8th ed (2010) LexisNexis Butterworths at [1215] as follows (omitting citations): "First, unexplained failure by a party to…call witnesses…may (not must) in appropriate circumstances lead to an inference that the uncalled evidence…would not have assisted that party's case. The rule can operate against parties not bearing the burden of proof and parties whichdo bear it as well.

Fifthly, the rule does not operate to require a party to give merely cumulative evidence. If five people attend a relevant meeting and some are called, no Jones v Dunkel inference can normally arise in respect of those who are not: the rule does not compel time to be wasted by calling unnecessary witnesses. This is particularly so where no challenge is made to the evidence of those who are called".

74 The fifth principle applies in the present case. Accordingly, I decline to draw the inference that the defendant invites. Even if I had drawn the inference, having regard to the weight of the other evidence I still would have rejected the defendant's construction case.

75 Finally, the references in the defendant's submissions to the subjective beliefs or understandings of the parties or their representatives are irrelevant to the objective construction of the 15 March 2007 short minutes.

76 For these reasons, I reject the defendant's construction case.

77 On rectification, the defendant repeats his submissions noted at [57]-[61] above and refers to the evidence of the defendant's counsel and the written evidence of the defendant that they believed on 15 March 2007 that the defendant would receive the death benefit.

78 I reject the defendant's rectification case for the following reasons.

79 First, in cross-examination the defendant agreed that throughout the whole period from about June 2006 to October 2007, he always expected the Fund to pay the death benefit to the plaintiff and he was content with that. That evidence, in my view, is fatal to the defendant's pleaded rectification case that the defendant intended the death benefit to be included in "the residue of the estate" referred to in the short minutes of 15 March 2007. His lawyers may have had a different view but it is his state of mind that is relevant.

80 Secondly, in my opinion, there was no communication expressly or by inference by the defendant or his lawyers to the plaintiff or his lawyers or decision makers that the "residue of the estate" referred to in the short minutes included the death benefit. No-one from the defendant's camp ever asked anyone in the plaintiff's camp to seek instructions about giving an undertaking such as that given by the defendant in paragraph 6 of the short minutes of 15 March 2007 to pay to the estate any monies received from the Fund.

81 Thirdly, in my opinion, it has not been established that the plaintiff's representatives had the alleged common intention at 15 March 2007 (the intention of the plaintiff himself is not suggested to be relevant given that he is under a legal incapacity). The plaintiff's senior counsel considered that the short minutes of order of 15 March 2007 did not affect the death benefit and gave advice to that effect to Luke, the plaintiff's mother and the plaintiff's solicitor in conference before the mention on 15 March 2007.

82 Had I construed or rectified the agreement in the short minutes of 15 March 2007 in the way for which the defendant contends, in my opinion that would not, of itself, affect the orders thereafter made on 15 March 2007, which have been perfected by entry. At best, it might provide a basis for an application in the original proceedings to set aside those orders on the ground that they were irregularly obtained. The defendant submitted that if he were to succeed in the present proceedings, the Court would have power to set aside the 15 March 2007 orders pursuant to s 73(1) of the Civil Procedure Act 2005 which provides: " 73 Power of court to determine questions about compromises and settlements

(1) In any proceedings, the court: (a) has and may exercise jurisdiction to determine any question in dispute between the parties to the proceedings as to whether, and on what terms, the proceedings have been compromised or settled between them, and (b) may make such orders as it considers appropriate to give effect to any such determination. (2) This section does not limit the jurisdiction that the court may otherwise have in relation to the determination of any such question." 83 I disagree. In my opinion, in its terms s 73 is directed towards enforcing a settlement agreement in the proceedings to which the agreement relates. The present proceedings are not those proceedings. Had I found for the defendant, it would seem that the defendant would still have to move in the original proceedings to set aside the orders made on 15 March 2007. If they were then set aside, the plaintiff's Family Provisions Act proceedings presumably would be part heard before Young CJ in Eq.

84 For these reasons I propose to order the defendant to pay the plaintiff the sum of $62,409 plus interest.

85 The parties made no submissions as to the calculation of interest. The defendant wrongly paid the sum of $62,409 to himself on 15 October 2007, approximately 2.5 years ago. The statutory rate of interest on judgment debts changed during that period. I propose to calculate interest at the statutory rate of 10 per cent per annum for the first 1.25 years ($7,800) and at the statutory rate of 9 per cent per annum for the next 1.25 years ($7,021): Civil Procedure Act 2005, s 100; Ritchie's Uniform Civil Procedure NSW, s 100.80; Uniform Civil Procedure Rules 2005, Schedule 5. Accordingly, I propose to order the defendant to pay the plaintiff, inclusive of interest, the sum of $77,230.

ORDERS 86 For these reasons, the orders of the Court are as follows: (1) Order the defendant to pay the plaintiff $77,230. (2) Order that the cross claim be dismissed. (3) Order the defendant to pay the plaintiff's costs of the proceedings. (4) The exhibits may be returned.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.