Court of Appeal (Qld)|2008-08-01|Before: McMurdo P, Keane JA and Mackenzie AJASeparate reasons for judgment of, each member of the Court, each concurring as to the orders made
McMurdo P, Keane JA and Mackenzie AJASeparate reasons for judgment of, each member of the Court, each concurring as to the orders made
Catchwords
PROFESSIONS AND TRADES – LAWYERS – DUTIES AND LIABILITIES
– SOLICITOR AND CLIENT – NEGLIGENCE – GENERALLY
– where
the appellant was engaged by the respondent to act in a claim under Pt 4 of the
Source
Original judgment source is linked above.
Catchwords
PROFESSIONS AND TRADES – LAWYERS – DUTIES AND LIABILITIES– SOLICITOR AND CLIENT – NEGLIGENCE – GENERALLY– wherethe appellant was engaged by the respondent to act in a claim under Pt 4 of theSuccession Act 1981 (Qld) – where the appellant filed theapplication but failed to serve it on the executor – where the appellantclaimedto be acting on the advice of Counsel – whether the appellantacted negligently in failing to serve the application –whether anynegligent conduct on the part of the appellant was excused by reliance on theadvice of CounselPROCEDURE – SUPREME COURT PROCEDURE – QUEENSLAND –PROCEDURE UNDER RULES OF COURT – PLEADING – GENERALLY– wherethe trial judge found that the land which formed part of the estate had not beendistributed to the executor –where the trial judge nonetheless held theappellant to an implied admission said to be contained in the pleadings that theland
had been distributed – where both parties at trial led evidence on
the question of whether the land had been distributed –
whether the fact
was impliedly admitted on the pleadings – whether the decision of the
court should be restricted by the implied
admission in spite of evidence led at
trial to the contrary
SUCCESSION – EXECUTORS AND ADMINISTRATORS – ADMINISTRATION
– DISTRIBUTION – GENERALLY – where the executor
of the estate
was also the sole beneficiary under the will – where the executor
transferred two pieces of real property that
comprised the estate to himself
– whether the transfer amounted to a final distribution of the
estate
Succession Act 1981 (Qld), s 41(8), s 44(3)
Anderson v AON Risk Services Australia Ltd & Anor [2004] QSC
49, citedAttenborough v Solomon [1912] UKHL 4
[1913] AC 76,
appliedAustralian Energy Limited v Lennard Oil NL [1986] 2 Qd
R 216, citedBanque Commerciale SA, En Liquidation v Akhil Holdings
Ltd (1990) 169 CLR 279
[1990] HCA 11, consideredBarker v
Linklater & Anor [2007] QCA
363, citedDamberg v Damberg (2001) 52 NSWLR 492
[2001]
NSWCA 87, appliedDavies v Burton [1829] EngR 848
(1829) 172 ER 654,
citedGilbert v Goodwin (No 3) [2006] 1 Qd R 499,
citedGould v The Mount Oxide Mines Ltd (In Liq) & Ors
(1916) 22 CLR 490
[1916] HCA 81, consideredGrey v Australian
Motorists & General Insurance Co [1976] 1 NSWLR 669,
appliedHorne v Comino
ex parte Comino [1966] Qd R 202,
citedInland Revenue Commissioners v Smith [1930] 1 KB 713,
appliedPublic Trustee v Kidd [1930] NZGazLawRp 134
[1931] NZLR 1,
appliedRe Burgess [1984] 2 Qd R 379, citedRe
Donkin, Deceased
Riechelmann v Donkin [1966] Qd R 96,
appliedRe Hallett's Estate
Knatchbull v Hallett (1880) 13 Ch
D 696, appliedRe McPherson [1987] 2 Qd R 394,
citedRe Oakley [1986] 2 Qd R 269,
citedUniversity of Wollongong v Metwally (No 2) [1984] HCA 74
(1985) 59 ALJR
48, cited
Judgment (305 paragraphs)
[1]
PROFESSIONS AND TRADES - LAWYERS - DUTIES AND LIABILITIES - SOLICITOR AND CLIENT - NEGLIGENCE - GENERALLY - where the appellant was engaged by the respondent to act in a claim under Pt 4 of the Succession Act1981 (Qld) - where the appellant filed the application but failed to serve it on the executor - where the appellant claimed to be acting on the advice of Counsel - whether the appellant acted negligently in failing to serve the application - whether any negligent conduct on the part of the appellant was excused by reliance on the advice of Counsel
[2]
PROCEDURE - SUPREME COURT PROCEDURE - QUEENSLAND - PROCEDURE UNDER RULES OF COURT - PLEADING - GENERALLY - where the trial judge found that the land which formed part of the estate had not been distributed to the executor - where the trial judge nonetheless held the appellant to an implied admission said to be contained in the pleadings that the land had been distributed - where both parties at trial led evidence on the question of whether the land had been distributed - whether the fact was impliedly admitted on the pleadings - whether the decision of the court should be restricted by the implied admission in spite of evidence led at trial to the contrary
[3]
SUCCESSION - EXECUTORS AND ADMINISTRATORS - ADMINISTRATION - DISTRIBUTION - GENERALLY - where the executor of the estate was also the sole beneficiary under the will - where the executor transferred two pieces of real property that comprised the estate to himself - whether the transfer amounted to a final distribution of the estate
N M Cooke RFD QC, with D J Morgan, for the respondent
[27]
**[1] McMURDO P: The appeal should be allowed, the judgment below set aside and the action of the respondent plaintiff, Margaret Elizabeth Holdway, dismissed for the reasons given by Keane JA.
[28]
[2] I agree with all that Keane JA has written, but wish to make some brief additional observations about an issue at the heart of this appeal.
[29]
[3] Ms Holdway brought an action against the appellant defendant, Arcuri Lawyers, for damages for professional negligence. Arcuri Lawyers had acted for Ms Holdway in her claim for family provision under Pt 4Succession Act 1981 (Qld) out of the estate of her deceased de facto partner, Mr Frank Virgona.
[30]
[4] Arcuri Lawyers admitted in paragraph 11 of their further amended defence that the deceased's estate was distributed on 25 July 2003 when the relevant real property transfers from the name of the deceased into the name of Mr Frank Virgona Jnr were registered in the office of the Registrar of Titles. (Mr Virgona Jnr was both the executor and the sole beneficiary under the deceased's will.)
[31]
[5] Such an admission usually narrows the issues in dispute between the parties and restricts contrary evidence being called at trial. But in the present case, despite the pleaded admission, the parties called evidence on that issue at trial without objection. The question whether the estate was distributed on 25 July 2003 or whether, at least initially, the real property was transferred to Mr Virgona Jnr for the purposes of the continuing administration of the estate was, despite the admission, a contested issue between the parties at trial. A court is not bound to act on an admission where persuasive contradictory evidence called at trial demonstrates that the admission is wrong: Damberg v Damberg.[1] The primary judge concluded on evidence called at the trial "that at all material times the house property remained part of the estate and would have been available for the purposes of satisfying any order made under the [Succession Act]".[2] The evidence at trial fully supported that finding. In these circumstances, the judge erred in deciding that he was bound by Arcuri Lawyers' pleaded factual admission when it was inconsistent with evidence led without objection about an issue litigated by the parties at trial.
[32]
[6] I agree with the orders proposed by Keane JA.
[33]
[7] KEANE JA: The respondent to this appeal was the plaintiff in an action against the appellant (to whom I will refer as "the defendant") for damages for professional negligence. The defendant had been engaged by the plaintiff to act as her solicitors in a claim under Pt 4 of the Succession Act 1981 (Qld) ("the Act") for provision out of the estate of her late de facto spouse, Mr Frank Virgona ("the deceased"). On the plaintiff's behalf, the defendant filed an application for family provision, but did not serve the application on the executor of the deceased or inform him of the pending application before the executor transferred to himself the principal assets of the estate of the deceased. As a result, so the plaintiff alleged, she lost all prospect of being awarded further provision from the estate of the deceased.
[34]
[8] At the trial of the plaintiff's action against the defendant, the learned trial judge held that the defendant was negligent in failing to serve the plaintiff's application upon the executor of the deceased, and that this negligence was not excused by the defendant's reliance on the advice of Counsel. His Honour found that the major assets in the estate of the deceased had not, in truth, been distributed when the plaintiff agreed to abandon her claim against the estate of the deceased, and that she was, therefore, the author of her own loss. Notwithstanding this conclusion, the learned trial judge went on to hold that the defendant had impliedly admitted in its defence that the major assets in the estate had been distributed, so that, even though any loss suffered by the plaintiff by reason of her compromise of her claim against the estate of the deceased had not, in truth, been caused by the negligence of the defendant, the defendant was liable to the plaintiff for substantial damages for the loss she suffered as a result. Judgment was given in favour of the plaintiff for $233,000 together with interest.
[35]
[9] The defendant appeals against this judgment on two principal bases. The first is that the learned trial judge erred in failing to give effect to his Honour's finding of fact in favour of the defendant that the defendant's failure to serve the plaintiff's application on the executor of the deceased's estate had not caused the plaintiff the loss in respect of which she claimed against the defendant. I shall refer to this issue as "the causation issue". The second principal challenge to the decision of the learned trial judge involves the contention that his Honour erred in failing to conclude that the defendant was not guilty of negligence because it was acting upon the advice of Counsel when it failed to serve the plaintiff's application upon the executor. The defendant also complains that the learned trial judge erred in quantifying the plaintiff's damages by failing to take into account the value of benefits received by the plaintiff under the terms of the compromise of her claim against the estate of the deceased.
[36]
[10] I propose now to set out the uncontroversial facts which form the background to the issues which arise on the appeal. I will then summarise the course of the trial before turning to set out the detail of the learned trial judge's crucial conclusions. I will then discuss the arguments agitated on the appeal.**
[37]
**[11] The deceased died on 4 June 2002. By his will, he left his estate to his son, who was also his executor. The plaintiff and the deceased had been in a de facto relationship for some 10 years.
[38]
[12] The plaintiff consulted the defendant for the first time on 18 June 2002 when she discussed making a claim under the Act for provision out of the estate with
[39]
[13] On 31 July 2002 the solicitors for the executor wrote to the defendant enclosing a copy of the deceased's will and advising that the deceased had, prior to his death, asked the executor to make provision for the plaintiff by way of $100,000 in cash and, in relation to rent free accommodation for Robina Property World Pty Ltd, a company in which the deceased and the plaintiff were shareholders, and which was a tenant in a small commercial building of which the deceased owned the freehold. The letter proposed that the deceased's shareholding in the company be transferred to the plaintiff, and that these and other benefits be accepted by the plaintiff in satisfaction of any claim she felt she might have against the estate.
[40]
[14] On 1 August 2002 the plaintiff instructed Mr Pearson to proceed with her claim against the estate of the deceased. Correspondence ensued between the parties. On 28 August 2002 Mr Pearson formally notified the executor's solicitors of the plaintiffs' intention to make a claim for provision out of the estate under the Act. Mr Pearson's letter requested the executor's confirmation that he would take no steps to distribute the assets of the estate without first notifying him. No such confirmation was given on behalf of the executor. A conference was held on 4 October 2002 to pursue the possibility of a settlement of the plaintiff's claim against the estate. The conference was not successful. On 22 November 2002 the plaintiff instructed Mr Pearson to commence proceedings.
[41]
[15] On 2 December 2002 Mr Pearson sent a brief to Mr Eastwood of Counsel to settle an originating application, a supporting affidavit and a draft directions order. Counsel conferred with the plaintiff and Mr Pearson on 29 and 30 January 2003. Next day, Counsel sent Mr Pearson an email in the following terms:**
[42]
"I attach herewith a list of those matters which need to be attended to prior to the giving of my advice.
[43]
The limitation period contained in the Succession Act is 9 months from the date of the death of the Deceased. This should be borne in mind when obtaining the necessary information. Should it not be obtained before the expiry of the limitation period then proceedings should be instituted regardless."
[44]
The "list" referred to in this email consisted of 29 questions. Mr Pearson faxed this list of questions to the plaintiff .
[45]
**[16] On 10 February 2003 the executor's solicitors wrote to Mr Pearson asking for information from the plaintiff to enable Counsel engaged on behalf of the executor to advise in relation to the plaintiff's claim upon the estate.
[46]
[17] On 27 February 2003 Mr Pearson telephoned Counsel and discussed his concern that the time limited by s 41(8) of the Act for the bringing of a claim by the plaintiff under the Act was approaching, and that any material which the plaintiff might file at that time might be insufficient. Counsel advised him to "file it and see what happened". Counsel wrote to Mr Pearson on 27 February 2003 confirming his advice that "it may be best, should the Registry allow it, to simply file the application and not the Affidavit which I have drafted".
[47]
[18] On 3 March 2003 the defendant filed on behalf of the plaintiff an application and an affidavit supporting her claim under Pt 4 of the Act for provision out of the estate of the deceased. The application was not served on the executor, and the defendant did not notify the executor that the application had been filed.
[48]
[19] The plaintiff returned Counsel's list of 29 questions with a number of answers written in some time between 20 March and 2 April 2003. There were further discussions between the plaintiff and the defendant. The defendant and the plaintiff were unable to finalise an affidavit by the plaintiff in support of her claim against the estate of the deceased.
[49]
[20] The major assets of the estate were the house where the plaintiff was living, which was valued by valuers engaged by the executor at $490,000, and the small office building in which Robina Property World Pty Ltd was a tenant. The office building was valued at $310,000.
[50]
[21] On 25 July 2003 the executor's solicitor filed applications on behalf of the executor for registration of the executor as devisee (as opposed to registration as personal representative) in respect of both of the parcels of land to which reference has been made. The instruments were registered on that day. Only one of these transmission applications was tendered in evidence at the trial. In that application, the executor declared that "all just debts and funeral expenses have been paid". That declaration was not accurate in that, as at that date, the estate had not been fully administered. The deceased's debts included a debt to the plaintiff for a loan of $15,000 which she had made to the deceased and a debt to the Bank of Queensland under a guarantee for $95,000 which, with interest, grew to a sum of about $115,000 by the time it was paid. The assets of the estate were not sufficient to pay the deceased's debts without recourse to one or other of those pieces of land.
[51]
[22] In August 2003 the plaintiff sought advice from other solicitors who requested the plaintiff's file from the defendant by letter dated 18 August 2003.
[52]
[23] By letter dated 1 September 2003, the plaintiff's new solicitors wrote to the defendant advising that the "estate has now been largely distributed". The plaintiff's new solicitors referred to s 44(3) of the Act which was in the following terms:**
[53]
"No action shall lie against the personal representative by reason of the personal representative having distributed any part of the estate if the distribution was properly made by the personal representative-
[54]
(a) not earlier than 6 months after the deceased's death and without notice of any application or intended application under section 41(1) or 42 in relation to the estate; or
not earlier than 9 months after the deceased's death, unless the personal representative receives written notice that the application has been commenced in the court or is served with a copy of the application."
[57]
**[24] I pause here to record that s 44(3) of the Act had no operation in relation to the claim against the estate of the deceased which the plaintiff had foreshadowed. Section 44(3) serves to provide a defence to a personal representative against whom a claim is made on the basis of some default by the personal representative in the administration of the estate: it is not concerned to erect a bar against claims for provision out of the estate. The gravamen of the plaintiff's claim against the defendant, as it was put before the learned primary judge, was that, the major assets of the estate having been distributed, the assets left in the estate were insufficient to meet her claim. On the findings made by his Honour, the undistributed assets of the estate, which included the two pieces of real property to which I have referred, were more than ample to meet the plaintiff's claim.
[58]
[25] The plaintiff's application and a re-sworn affidavit by the plaintiff were served on the executor on 8 October 2003. Thereafter, negotiations proceeded between the plaintiff and the executor. These negotiations culminated in a deed of compromise which was signed on 21 November 2003. The plaintiff, in return for abandoning her claim against the estate, received the benefits originally offered by the executor. The terms of the deed of compromise are important. It is, therefore, desirable to set it out in its entirety:**
[59]
The late Frank Virgona died on the 4th June, 2002 ('the Deceased').
The Executor is the Executor of the Will of the late Frank Virgona dated the 30th January, 1992.
[60]
Probate of the said Will was obtained in favour of the Executor on the 30th September, 2002.
[61]
The Claimant commenced proceedings on the 3rd March, 2003 but proceedings were not served. The Claimant should have commenced proceedings for family provision pursuant to Part 4Succession Act1981 and served the Executor by no later than the 3rd March, 2003.
The Executor was not served nor notified of proceedings on behalf of the Claimant within the period of nine months from the death of Frank Virgona, notwithstanding that proceedings dated the 3rd March, 2003 were instituted within nine months of the date of death of the Deceased.
[62]
That the Claimant acknowledges that the estate of the Deceased has been lawfully distributed by the Executor and that the Claimant no longer has any basis to make any claim against the Executor or the assets of the estate.
The Executor (without any obligation to do so) and the Claimant agree as follows:
[63]
(i) The Executor shall transfer all of the Deceased's shares in the company Robina Property World Pty Ltd to the Claimant and shall resign from the office of Director of that company;
[64]
(ii) The Executor shall transfer the ownership of the Toyota Camry motor vehicle registered number
[65]
to the Claimant and the Claimant shall be responsible for all costs and expenses relating to the motor vehicle, including registration and any costs required to make the vehicle roadworthy;
[66]
(iii) The Executor will grant the Claimant a lease of the business premises situated at Shop 16C Robina Quay Shopping Centre for twelve months or if no Lease is sought by the Purchaser of that property then the Executor will pay a sum of $10,000.00 to the Claimant to subsidise the Claimant's rent in alternate premises.
[67]
(iv) The Executor will not claim any rent for the Claimant's occupation of the commercial premises or the residence of the deceased from the date of the death of the Deceased until the date of this Deed.
[68]
(v) That the Claimant shall vacate the residential property at 17 Long Island Court, Robina within fourteen (14) days of the date of this Deed, and the Claimant undertakes to ensure that the property is in a good state of repair, condition and cleanliness and is of attractive presentation upon vacating it so as to facilitate a quick sale of the property at the best possible market price.
[69]
(vi) The Executor will transfer ownership of all furniture and chattels in both the house property and the business premises to the Claimant with the exception
[70]
of the smoking chair and stained hall vase stand which are to be returned to the Executor.
[71]
(vii) The Executor will proceed to sell the property situated at 17 Long Island Court, Robina forthwith and shall pay to the Claimant from the proceeds of sale the sum of $100,000.00 less any further expenses incurred by the estate in relation to such other assets which are being used or enjoyed by the Claimant until her surrender of those assets or their disposition.
[72]
The Claimant will discontinue her proceedings against the Executor.
Both parties agree that this Deed represents a full and final settlement of the Claimant's Claim against the Executor and that no further proceedings shall issue with respect to this matter against the Executor.
Each party shall bear its own costs in this matter.
[73]
**[26] It may be noted here that the deed of compromise was signed by the executor as such, and that, in return for the benefits promised to the plaintiff by the deed, the plaintiff agreed to discontinue her claim for provision under Pt 4 of the Act. These points are important because the plaintiff was at pains to argue on the appeal that the deed of compromise was merely an ex gratia payment by the executor, in his own right, to the plaintiff who had no prospect of recovering anything from the estate because it had been denuded of assets. It is clear from the terms of the deed of compromise that the plaintiff gave up her claim against the estate in return for the benefits payable under the deed by the executor.
[74]
[27] On 4 February 2004 the residential property was sold, and, out of the proceeds of sale, the debt to the Bank of Queensland was repaid and the $100,000 due to the plaintiff under the deed of compromise was paid to her. At this time, the executor's solicitor continued to maintain the executor's trust account under the name "Estate of Frank Virgona, Probate/Estate".
[75]
[28] The plaintiff commenced her action for damages against the defendant on 13 April 2004.**
[76]
[29] It is desirable at this point to refer to the material aspects of the formulation of the plaintiff's claim. Paragraphs 11, 12 and 13 of the statement of claim were in the following terms:
[77]
"11. The defendant was negligent and in breach of their contractual duties to the plaintiff in that they failed to serve within the time limits prescribed in Part 4 of the Act:
[78]
(b) notice on the solicitors for the executor that an originating application under Part 4 of the Act had been filed in the Supreme Court at Brisbane.
[79]
12. The executor, as he was entitled to do, distributed the estate.
[80]
As a result of the defendant's negligence the plaintiff suffered loss and damage.
[81]
The plaintiff has lost all prospects of successfully prosecuting the Application and being awarded further provision from the estate of the deceased.
[82]
Having regard to the size of the estate and the merits of the application, the plaintiff would have received an award of up to $540,000."
[83]
[30] In response to these allegations, the defendant ultimately pleaded by its further amended defence:
[84]
"5 In relation to the allegations contained in paragraph 11 of the statement of claim, the defendant:
[85]
(a) Cannot admit the allegations contained therein until further and better particulars have been provided and the specific provision of the Act relied upon has been specified pursuant to rule 149(e) of the Uniform Civil Procedure Rules 1999, save that the defendant says that the two principal assets of the estate of the deceased, being the real property described as Lot 1 on Survey Plan 124775 County of Ward Parish of Gilston and the unit described as Lot 1 on BUP 104934 County of Ward Parish of Gilston, were not distributed by the personal representative of the said estate until 25 July 2003 when transfers of each of the said properties from the name of the deceased into the name of Francis John Virgona were registered in the Office of the Registrar of Titles;
[86]
The defendant does not admit the allegation in paragraph 12 of the statement of claim, and cannot admit same unless and until the plaintiff provides proper particulars of the matters alleged therein, save to the extent that the defendant says that the two principal assets of the estate of the deceased, being the real property described as Lot 1 on Survey Plan 124775 County of Ward Parish of Gilston and the unit described as Lot 1 on BUP 104934 County of Ward Parish of Gilston, were not distributed by the personal representative of the said estate until 25 July 2003 when transfers of each of the said properties from the name of the deceased into the name of Francis John Virgona were registered in the Office of the Registrar of Titles.
The defendant denies the allegations in paragraph 13 of the statement of claim, and believes those allegations are untrue or cannot be admitted because:
[87]
(a) for the reasons pleaded above, the defendant was not negligent as alleged;
[88]
(b) even if the plaintiff had prosecuted the Application and been awarded further provision from the estate of the deceased, the amount awarded to the plaintiff would have been nothing like the $540,000.00 claimed by the plaintiff;
[89]
(c) the plaintiff has failed to account for the value of a settlement reached by the plaintiff with the personal representative of the deceased's estate, full particulars of which the defendant is unable to give until after completion of disclosure."
[90]
[31] On the first day of the trial, during the course of the opening of the plaintiff's case, the learned trial judge engaged Counsel for each side in debate about the state of the pleadings. In relation to the defendant's attitude to paragraph 12 of the statement of claim, the following exchanges occurred between his Honour and the defendant's Counsel:
[91]
"HIS HONOUR: Now, you plead in paragraph 12 that the executor - I'm sorry, the plaintiff pleads that the executor distributed the estate as entitled to do - in paragraph 12 of the statement of claim. And you say that you can't admit that allegation without particulars. Now, it's a dual allegation. First of all, did he distribute. By now, surely, the question whether he distributed is a known fact.
[92]
MR DERRINGTON: Well, I don't want to agitate your Honour again, but your Honour heard from my learned friend's opening that the plaintiff, Mrs Holdway, negotiated a resolution or compromise of her claim. Your Honour-----
[93]
HIS HONOUR: But you plead yourself that the house was distributed.
[94]
MR DERRINGTON: Yes, it's not a good pleading. And it wasn't responded to so it seems to be in issue whether it was or not.
[95]
HIS HONOUR: No, you plead, don't you - somewhere - I thought I saw that. You've pleaded-----
[96]
MR DERRINGTON: At the very end, your Honour. It simply - it makes an assertion-----
[97]
MR DERRINGTON: ----- Yes. It makes the assertion-----
[98]
MR DERRINGTON: ----- that - it denies - sorry, I'll just - it makes a non-admission and says 'Oh, but we do say-----
[99]
MR DERRINGTON: Yes. And then it wasn't responded to. It's still in issue. But your Honour heard that the executor was negotiating with the plaintiff after the new solicitors had come on board and this is-----
[100]
HIS HONOUR: All right. Well, you're not disputing - indeed, you're asserting - no, you're admitting that the land was distributed on the 25th of July 2003.
[101]
MR DERRINGTON: You know, the pleading is as it is that the allegation of the distribution of the estate cannot be admitted.
[102]
HIS HONOUR: Yes. But you're asserting that the land was distributed on the 25th of July.
[103]
MR DERRINGTON: Well, no, say - we were saying it wasn't until a date, but there's no positive - sorry, yes, yes-----
[104]
HIS HONOUR: You don't say until not earlier than 25th of July. You say not until the 25th of July.
[105]
HIS HONOUR: I take that to mean you're asserting that's when it happened? What about the allegation that he was entitled to do it?
[106]
MR DERRINGTON: Well, that's part of the non-admission, your Honour. Because as your Honour heard, the plaintiff - and it's a question - and that's a question of law as well I should add.
[107]
HIS HONOUR: Well, it is a question of law, but what's your attitude to it?
[108]
MR DERRINGTON: The executor had notice of our claim originally. The executor had notice of the claim, the part of the debt, and the executor had notice via virtue of the letter pleaded that we asked him not to take any action in further distribution of the estate without informing us, and that's what we say our actions proceeded to. Now, they went ahead and distributed, and that might be a consequence that comes back to the executor.
[109]
HIS HONOUR: But are you saying that the executor was entitled to distribute or wasn't entitled to distribute.
[110]
MR DERRINGTON: We don't think the executor was entitled to distribute.
[111]
MR DERRINGTON: There may well be other rights to pursue.
[112]
HIS HONOUR: Well, wouldn't that need to be positively pleaded?
[113]
MR DERRINGTON: Well, no. The core issue is whether or not the executor was entitled to distribute and did distribute. And that's put in issue by-----
[114]
HIS HONOUR: But, if you're putting up a positive case that they should have proceeded against the executor and that the executor didn't have a defence under section whatever it was that Mr Cooke was on about for wrongful distribution, shouldn't you be pleading that?
[115]
MR DERRINGTON: Well, if we wanted to - when the Judge agitate that directly, I suppose so.
[116]
HIS HONOUR: But you're not agitating that and I was not saying that there's a break in the causation by reason of that.
[117]
MR DERRINGTON: Well, at the case put against us, we say that question doesn't arise simply because at no point in time can it be shown that the executor had distributed the estate and was entitled to do so. And, indeed, an action could still be brought because it's still said that there were assets left in the estate.
[118]
HIS HONOUR: Yes. But the point is that the estate would have been worth a lot less than enough.
[119]
MR DERRINGTON: Well, it was enough to provide the $100,000 and the cars and the business as well.
[120]
HIS HONOUR: Yes. But not enough to provide what they say they're entitled to.
[121]
MR DERRINGTON: Well, that may or may not be right. It's of a question of-----
[122]
HIS HONOUR: Yes. That may or may not be right, but their case is that there wasn't enough left. But if your case is that the plaintiff was not entitled to distribute it - I'm sorry, that the executor was not entitled to distribute, that the plaintiff should not have compromised and should have pursued the executor. That would need to be pleaded. That would take someone by surprise. I'll tell you now, subject to any argument you may address-----
[123]
HIS HONOUR: ----- I won't let you run that case unless you plead it."
[124]
**[32] It should be noted here that the argument which was being put on behalf of the defendant did not involve any contention that the "plaintiff should not have compromised and should have pursued the executor". The defendant was not seeking to advance a case of contributory negligence against the plaintiff. The case which the defendant's Counsel was seeking to agitate was simply that the assets of the estate had not been distributed and, accordingly, were available to meet the plaintiff's claim against the estate. Because sufficient assets remained in the estate to satisfy the plaintiff's entitlement, under Pt 4 of the Act, the defendant's failure to serve the application for provision out of the estate earlier caused her no loss. Further, and in any event, it was not necessary for the defendant to "run that case" because the learned trial judge himself pursued the plaintiff's Counsel in relation to the question of distribution, and the plaintiff responded to his Honour's pressing of the issue by going into evidence on the issue which the defendant's Counsel had adverted to.
[125]
[33] Later on the first day of the trial, in the course of the plaintiff's case, an affidavit of the plaintiff was tendered in which it was asserted: "On or about 1 September 2003 [the plaintiff's new lawyers] were advised by [the executor's solicitor] that my claim was out of time and that the Estate had by this time been largely distributed." His Honour noted that this assertion was "plainly hearsay to the extent that it is relied on to prove that as a matter of fact the estate had been largely distributed." The following exchange between his Honour and Counsel for the parties ensued:**
[126]
"HIS HONOUR: It seems to me that while that is in, I nonetheless wouldn't be inclined to give it much weight given that that's a fact which is eminently provable, or not, as the case may be, and that direct evidence would be much more convincing.
[127]
MR COOKE: Yes. Your Honour, I propose to tender a letter from the executor's solicitors in due course.
[128]
HIS HONOUR: Yes, well, the mere assertion of the fact in a letter might not persuade me.
[129]
MR DERRINGTON: I make an objection to it now in any event, your Honour. Paragraph 73 - I overlooked it as one of the ones we object to.
[130]
HIS HONOUR: Yes - no, well, I've admitted it now, it's too late. It's in, but you've heard what I've had to say so I don't think you're going to be too prejudiced by it."
[131]
[34] After lunch on the first day of the trial, the plaintiff's Counsel informed the court that the plaintiff intended to call the executor's solicitor to give evidence that the estate was distributed. The following exchange occurred:
[132]
MR COOKE: Your Honour, we've rescheduled Mr Whitney for 2.30 tomorrow and I should announce that we will be calling Mr Bow, the solicitor for the executor, and I expect him to be here at 10 o'clock tomorrow.
[133]
HIS HONOUR: Can you give us a rough idea of what he might be going to tell us?
[134]
MR COOKE: Well, he's going to tell us that the estate was distributed on that date, that he notified people and really that's about all. The estate - the contents of the estate and distributions remain.
[135]
MR COOKE: Yes. What distributed? No, not by the 23rd of whatever. And he's going to tell me, also, when the distributions had been made. He's filed a couple of affidavits that are on the file in this proceeding, and that would be basically-----
[136]
HIS HONOUR: I see. So Mr Derrington knows what he's going to say even if I don't.
[137]
MR DERRINGTON: I've not seen any affidavit yes, your Honour, but I'll-----
[138]
HIS HONOUR: I'll have the interesting experience tomorrow no doubt then.
[139]
MR COOKE: Well, your Honour, I'll lead it viva virto and I'm sure your Honour will follow very quickly.
[140]
MR COOKE: The land was distributed to the son, yes.
[141]
HIS HONOUR: Yes. And your case is that that prevents any action being brought-----
[142]
HIS HONOUR: Oh, yes. I look forward to hearing about the law on that topic."
[143]
**[35] The executor's solicitor, Mr Bow, gave evidence that the two pieces of land were transferred on 25 July 2003 by the transmission application. Mr Bow gave evidence that, in his opinion, the estate was largely administered by 12 October 2003. He was cross-examined, without objection, to the effect that the estate was still being administered well into 2004, and that the executor, in negotiating and entering the deed of compromise in November 2003, was dealing with the real property of the estate, and especially the house in which the plaintiff had been residing since the death of the deceased as part of the estate and not as his own property. It is unnecessary to set out here the detail of the evidence elicited from Mr Bow because it is sufficiently summarised in the reasons of the learned trial judge to which I will refer in due course.
[144]
[36] The executor, Mr Frank Virgona Jnr, was called as a witness by the defendant. Without objection from the plaintiff, he gave evidence, and was cross-examined, about the sufficiency of the assets in the estate after 25 July 2003 to meet the estate's debts without the need to sell either of the pieces of real property transferred to him on 25 July. Mr Virgona's evidence was to the effect that he needed to sell part of the land transferred to him on 25 July 2003 in order to pay the debts of the estate.
[145]
[37] During the course of the final address on behalf of the plaintiff, ie after the taking of evidence had been concluded, it was submitted that there were sufficient liquid assets available to the estate to meet the debts of the estate without recourse to the land transferred to the executor. The following exchange ensued:**
[146]
"HIS HONOUR: Well, the one thing that Frank Junior was quite clear about was that he needed to sell the land in order to pay the Bank of Queensland.
[147]
HIS HONOUR: Except that they support him to the extent that they clearly show an excess of liabilities over assets if you leave out the land.
[148]
MR COOKE: Well, let me say in regard to that we refer to the pleading where the issue wasn't raised and then the issue wasn't put to Mr Bow when he was in the witness box. This sort of confusion has come around when Frank Junior has given some evidence of which we had a very scant opening and certainly I don't think it was open - that this particular aspect of his evidence was open. So he pops into the box and makes these statements, without reference to documents, of things which should have been put to Mr Bow if that was part of their case. And Mr Bow swore that he had distributed those and that the debts - there was sufficient cash over a period of time progressively paying the bills apart from 100,000 that was paid to Mrs Holdway.
[149]
HIS HONOUR: Well, the force of your point is, of course, that on the pleadings there was no occasion to put it to Mr Bow because the distribution had been admitted.
[150]
MR COOKE: Yes. And there was, you know - under the rules of pleading if it's a non-admission they can't advance positive evidence against-----
[151]
HIS HONOUR: But it's more than that, it's a positive admission.
[152]
MR COOKE: Yes, positive admission in relation to the two principal assets, the real estate, the prime real estate.
[153]
Now, your Honour, right from the beginning the first letter that
[154]
Mr Phillip Roberts' solicitors wrote to Bow indicating that they had instructions to act and they were going to file the - serve the proceedings on him the reply was that the estate was distributed. That was communicated to Arcuri Lawyers as well very early on, but were left high and dry because the solicitors had said the estate has been distributed.
[155]
HIS HONOUR: Well, you didn't seek to recall Mr Bow. The evidence went in without objection from Frank Junior and you didn't then seek to recall Mr Bow.
[156]
HIS HONOUR: It does seem to me a very serious point, I don't want you to think that it's a minimised point at all.
[157]
MR COOKE: Well, the other aspect of it, your Honour, is what is the claimant to do if they're told by the executor that the estate has been administered and we know that the two major assets, being the real estate have been transferred to the beneficiary by memorandum of transmission by death.
[158]
HIS HONOUR: But the beneficiary is the executor here.
[159]
HIS HONOUR: I don't see why. Have you got any authority for that?
[160]
MR COOKE: Yes. Your Honour, in the passages of text books to which we refer there's a case, a Victorian case, which says quite clearly that even if you've got the same person as the executor and the beneficiary once the document and the memorandum of transmission by death has been lodged it's been passed to the beneficiary and is no longer an estate asset and the reason being that if you - you can't be a trustee for yourself.
[161]
HIS HONOUR: Well, why don't we adjourn for lunch now and - I hate to say it, but I think you ought to consider whether or not you want to reopen.
[162]
HIS HONOUR: Because Mr Frank Junior's evidence was very explicit and if it ends up in the Court of Appeal it will be there in black and white.
[163]
MR COOKE: Thank you, your Honour, well we'll do that.
[164]
HIS HONOUR: And any other cases on the point will be gratefully received. It's never attractive to resolve points like this on a pleading basis. If I have to I will.
[165]
[38] After lunch on the fourth day of the trial, the plaintiff applied to re-open her case. The following exchange ensued:
[166]
MR COOKE: Your Honour, I may have given your Honour some incorrect information earlier this morning. I think I said that the mortgage to the Bank of Queensland was registered over the shop. That is not correct. It is registered over the house property. And, your Honour, I would ask leave to re-open and recall Mr Bale.
[167]
MR COOKE: The evidence that he will give is to this effect, that when the property was - the matter over the transfer, transmission by death to Frank Junior was subject to the real estate mortgage.
[168]
MR COOKE: When the property was sold, the proceeds were distributed, some portions to pay Mrs Holdway's balance of the 100,000 was paid into the trust account of the estate, the other monies were paid into a separate ledger account for Frank Junior and he was paid the balance 550-odd thousand after the Bank of Queensland had been satisfied.
[169]
MR COOKE: Section 61 of the Succession Act provides that where a person dies possessed of or entitled to any interest in property which at the time of the death is charged with a payment of any debt and the deceased has not by will signified a contrary or other intention, the interest so charged shall, as between the different persons claiming through the deceased be primarily liable for the payment of the debt.
[170]
So that in this case, under the will, the deceased left all his 'all my real and personal property' to his son - 'give devise and bequeath all my real and personal property to my son absolutely.' And there's no contrary intention expressed in the will, consequently the debt, the mortgage debt which is presently charged, or was presently charged on the house property becomes a liability of the beneficiary, because he takes the real estate subject to the mortgage.
[171]
HIS HONOUR: Well, that's something we can debate in due course.
[172]
HIS HONOUR: Mr Derrington, what do you say about the application to reopen.
[173]
MR DERRINGTON: My learned friend - well, there are two points, one as to the [indistinct] fund and I can show him some documents, one - I can accept the point, I don't need a witness to prove those points. He says that the transfer was subject to real estate mortgage - that's quite clear in the paragraph in the title deed.
[174]
He says the proceeds were distributed by the paying the Bank of Queensland out, yes, that's what happened, and a hundred thousand dollars went into the executor's account, that's what happened, that seems - doesn't call a witness to that, it's stamped on the documents before your Honour, so, I'm content with his statement of what the evidence is.
[175]
HIS HONOUR: The question really, Mr Cooke, was whether the estate was administered, and the inference, or partially administered, and the inference that Mr Derrington wants to draw is that the bank hadn't been paid out, therefore there was a large debt that hadn't been paid, and since it was to come primarily from the land under the Section you've just drawn my attention to, really it ought to have been paid before the land was distributed.
[176]
MR COOKE: With respect, not, your Honour. The memorandum-----
[177]
HIS HONOUR: Anyway, does that give rise to any evidence, that's so we don't keep Mr Bow waiting if you're going to do that. What do you say about his point, that there's no need to call evidence on the points you've raised?
[178]
MR COOKE: Well, your Honour, these documents would suggest a contrary view.
[179]
HIS HONOUR: Well, do you want to call evidence, in the light of what he said?
[180]
MR COOKE: Well, he's prepared to accept the documents I think, as I understand it.
[181]
MR COOKE: Well, that's - is an unqualified acceptance.
[182]
HIS HONOUR: He's prepared to accept them for what they are, and as evidence of the truth of their contents, as I understand it.
[183]
MR DERRINGTON: Just so long as there's no further evidence.
[184]
MR DERRINGTON: I've accepted the point that he wants to call the evidence on. I've accepted the documents. Is there something else?
[185]
HIS HONOUR: He's worried that you're going to lead some other evidence. Is there anything else you're intending to lead?
[186]
MR DERRINGTON: And I - there's no point in calling Mr Bow.
[187]
MR COOKE: I don't understand what my learned friend's point is then. Does he accept that the property was distributed or not?
[188]
HIS HONOUR: I think he's saying the facts that are listed are accepted, that corollary, the consequences, the legal consequences that you draw from those facts are a different matter.
[189]
MR COOKE: I don't know what he means by that, but anyway, could I have a moment to confer?
[190]
MR COOKE: All right. Well, your Honour, I'll content myself with tendering the documents."
[191]
**[39] The address for the plaintiff then continued, with Counsel for the plaintiff making the submission that the transfer of the two pieces of real property to the executor was a "distribution" to the executor of those assets. It was not said that it was not open to the defendant to contest that submission.
[192]
[40] The plaintiff's written submissions contained the following:**
[193]
"6. It will be noted that the defence does not set up a positive case which:
[194]
(c) denies that the estate was lawfully distributed;
[195]
(d) denies that the plaintiff lost her chance to seek further provision from the deceased's estate." (emphasis in original)
[196]
[41] The defendant's written submissions included the following propositions:
[197]
"3. Even if there were a breach of duty as alleged, no loss flowed from the breach. The material before the Court reveals that at the time the action was taken away from [the defendant] the major assets of the estate (or at least one of them) had not been distributed."
[198]
The defendant's written submissions went on to elaborate extensively upon these propositions.
[199]
[42] Notwithstanding his Honour's intimation at the outset of the trial that he would not allow the defendant to run such an argument in the absence of an amendment to the defendant's pleadings, it does not appear that it was suggested by the plaintiff or by his Honour that it was not open to the defendant to advance this argument. Having regard to the course of the trial, this is understandable. The plaintiff had not taken the position that evidence on the issue as to the cause of the plaintiff's loss was irrelevant: indeed, the plaintiff had actively called evidence bearing on the question whether the two pieces of real property had been "distributed" on 25 July 2003. It may be that this evidence was adduced by the plaintiff with s 44(3) of the Act in mind, but it was also relevant to whether the pieces of real property had been removed from the assets of the estate by a "distribution" so that they were no longer available to meet the plaintiff's claim under Pt 4 of the Act.
[200]
The relevant findings of the learned trial judge
[201]
[43] The learned trial judge held that the defendant could not escape a finding of breach of professional duty on the basis that his reliance on the advice of Counsel that the plaintiff's application for provision under the Act did not need to be served upon the executor excused his negligence in not taking steps to prevent the transfer of the assets of the estate. His Honour found that the issue on which Counsel's advice was sought and given was within a more narrow focus. His Honour said:
[202]
"Mr Pearson decided not to serve the application and any supporting affidavit and, it seems, not to give the executor notice that the application had been made. The essence of the negligence alleged against him is that the implementation of that decision gave the executor time to distribute the land, which left insufficient assets in the estate to cover Mrs Holdway's claim. There is no doubt that if the land is excluded from the estate and it is assumed that the value of the claim was substantial, the assets were insufficient. Conversely there seems little doubt that had service been effected or notice given, the executor would not have distributed the land; and even if he had done so, he would have been liable either for devastavit or under the Act. (Re Hill (Unreported, Supreme Court of Queensland, Carter J, 17 June 1988); Re Faulkner [1999] Qd R 49.) The questions which arise are, first, did Mr Eastwood advise Mr Pearson that it was sufficient to protect Mrs Holdway's interests to commence an application, and that it was not necessary to serve it or to do so promptly or to give notice of it; and second, if he did, should Mr Pearson, by the exercise of independent judgment to the extent that it was reasonable to require this, have reached a different conclusion.
[203]
Mr Eastwood advised Mr Pearson that there was nothing within the Act which required that the application and supporting material be served within nine months of the date of death. In my judgment that is a significantly different proposition from the one implemented by Mr Pearson. It is different in several respects. It dealt with whether the Act contained a requirement for service, not with whether, for other reasons, prompt service or service within nine months was desirable; it did not address the possibility of giving notice; it did not advise Mr Pearson not to serve, but only referred to his decision, already made, not to do so; and it did not address the wider question of how to protect Mrs Holdway's interests generally. It is, moreover, in terms correct. Mr Pearson extrapolated from that narrowly expressed advice and in doing so went beyond what Mr Eastwood had said. He deferred service of the application indefinitely and gave no notice of it. Mr Eastwood did not advise him to do this.
[204]
Even if Mr Eastwood's advice should be understood in the sense for which the defendant contends, the defendant is not exculpated.
[205]
Mr Pearson was obliged to exercise his own professional judgment on the question of whether service or notice of the application should be withheld. He did not do so. Delay in serving the application or giving notice of it exposed Mrs Holdway to the risk that the estate, or its major assets, would be distributed, thus leaving nothing or next to nothing as potential subject matter for an order for family provision. The executor's year (The existence of the executor's year is acknowledged by the Act: s 52(1A)) was allowed to pass without service being effected. Of course, even if the application had been served or notice been given promptly the executor might still have distributed the land; but it is unlikely that this he would have taken such a course and even had he done so he would have acted at his peril. (Re McPherson[1987] 2 Qd R 394 at p 399; Succession Act 1981ss 52(2) and 44(3); Preece A A, Lee's Manual of Queensland Succession Law 6th ed (2007) at para [9.340]).
[206]
Family provision is covered in a mere six sections of the Act
[207]
Mr Pearson did not say whether he read the Act in relation to
[208]
Mrs Holdway's application, but he did say that he was unaware of and had not read s 44(3). Nor, it seems, did he consult the leading textbook:
[209]
"[4.3] In Queensland, it is essential that written notice of the intention to make an application be given to the personal representative within six months of the date of death and thereafter the application made and written notice of this (or the application) served on the personal representative within nine months of the date of death of the deceased. (5. Qld Acts 44(3), (4))." (De Groot, J K and Nickel, B W: Family Provision in Australia 2nd ed (2001), p 157.)
[210]
That arguably overstates the position, but reference to it would have alerted Mr Pearson to the relevant law.
[211]
This was not a case of a solicitor deferring to counsel's opinion on competing, arguable interpretations. This was a case where the solicitor did not apply his mind to the problem. Mr Pearson had acted for the executor or administrator in 100 or so matters and was 'aware that there [were] limits on the time period after which the deceased dies that an executor may distribute the estate without any repercussions'. The possibility of the claim being defeated by distribution of assets does not appear to have occurred to him in early 2003. This is remarkable, since in late August 2002 he had sought an assurance from Bow & Company that the executor would not distribute the assets without notice. (No such assurance was forthcoming, but this does not seem to have occasioned him any alarm or induced additional caution.)
[212]
Even as late as the first half of June 2003 the loss which
[213]
Mrs Holdway suffered could have been avoided had Mr Pearson obeyed her instructions to proceed with the claim. He accepted those instructions, but without further reference to Mr Eastwood, did nothing to implement them.
[214]
In my judgment Mr Eastwood's advice provided no defence."[3] (emphasis in original)
[215]
**[44] The learned trial judge thus rejected Mr Pearson's evidence as to the terms in which he had been advised by Mr Eastwood. His Honour held that Mr Eastwood's attention had been focussed by Mr Pearson's instructions upon whether the time limit in s 41(8) of the Act could be accommodated while at the same time avoiding committing the plaintiff to an inaccurate affidavit in support of her application. Given that focus, Mr Eastwood's advice was correct, but Mr Pearson could not reasonably rely upon it as addressing the risk that the executor might act to denude the estate of assets and so render the plaintiff's application for provision nugatory.
[216]
[45] The learned trial judge held that the pieces of land which were transferred to the executor on 25 July 2003 had not been distributed to the executor. This meant that negligence on Mr Pearson's part had not caused the loss of the value of the plaintiff's claim against the estate of the deceased. That was because the pieces of land were still in the estate of the deceased to meet any claim which the plaintiff might have established against it. To the extent that the plaintiff abandoned her claim against the estate on the erroneous understanding that the estate had been distributed, this was not something for which the defendant could be held liable. In truth, the estate of the deceased had not been fully distributed, notwithstanding the terms of cl 1 of the deed.
[217]
[46] I pause here to note that, remarkably, the plaintiff gave no evidence at all to suggest that she signed the deed of compromise, thereby abandoning her claim against the estate, in the belief that the assets remaining in the estate were insufficient to meet her claim for provision. One is left to wonder how the plaintiff could, in these circumstances, have expected to establish that the defendant's negligence had caused her any loss. It may well be that it was thought that the terms of s 44(3) of the Act served automatically to defeat her claim pro tanto in respect of any assets which had been distributed by the executor; but, as I have noted, s 44(3) is concerned to afford the personal representative of an estate a defence to an action based on the alleged default of the personal representative; it does not itself provide a defence to an application brought under s 41 of the Act for further provision from the estate of the deceased. In any event, whatever strategic thinking informed the presentation of the plaintiff's case against the defendant, there was a gap between proof of the defendant's negligence in failing to prevent the transfer of assets and the conclusion that the transfer of the two pieces of real property deprived the plaintiff's claim against the estate of the deceased of any value it might have had.
[218]
[47] His Honour concluded that the executor continued to hold the real property transferred to him on 25 July 2003 for the purposes of administering the estate of the deceased. His Honour said:**
[219]
"In the present case, at the time the transmission applications were lodged, the other assets of the estate were insufficient to meet its liabilities. At that time, the executor was planning to sell the house in order to pay off a major part of the estate debts, as well as the $100,000 which he had promised his father to pay to Mrs Holdway, and had told his solicitor of that plan. Even without taking the latter amount into consideration, the assets were still insufficient. That being so it is curious that, shortly after the expiry of his year, the executor applied for registration of the house property under s 112 of the Land Title Act 1994 (registration as devisee) rather than under
[220]
s 111 (registration as personal representative). Unusually, the application was, as Mr Bow testified, made after taking counsel's advice:
[221]
'[W]hat led you to lodge that transfer? I presume you had instructions to do so from your client?-- Yes, your Honour. Your Honour, look, in the normal course we - we effect - we attend to those things as quickly as possible. The normal procedure is the deceased died, the death certificate's forwarded to us, we advertise the property, we've got the documents signed to obtain probate, we lodge the documents for probate. That was all done promptly. And normally following that we pay the debts and we collect in the assets and we distribute them as soon as possible. In this case we'd received notice from Arcuri Lawyers that there was going to be a claim and the administration of this estate was delayed for - oh, 15 months or more ending seeing what happened there. So in this case that - dealing with the assets was delayed by - by a longer time than normal. But-----
[222]
And what led to the cessation of the delay and the - and the processing of these documents?-- Certain advice I received from my counsel and certain instructions I received from my client and then that - that led to us then progressing the administration of the estate.
[223]
Notwithstanding knowledge of the fact that there was - there were letters asserting a claim?-- There'd been a letter about a year previously stating that there would be a claim and maybe, you know, for a few weeks after that. Yes, after receiving certain advice from our counsel, perusing the relevant sections of the Succession Act and obtaining instructions from my client we then proceeded with - with starting to distribute and administer the estate.'
[224]
I infer that the application was made as part of a deliberate attempt to create the appearance or perhaps even the reality of a distribution; but without the intention to do immediately all those things which necessarily fell to be done if the property were truly to cease to be part of the estate and be held by the executor in his own right. In saying that I imply nothing improper about those who were involved. They were entitled to act as they saw fit to avoid the administration of the estate dragging on. I am satisfied that at all material times the executor intended to and did hold the house property in his capacity as such, and not in his own right. As late as February 2004 the cost of rates, swimming pool treatment and lawn mowing for the house property were paid by the estate. The transmission application did not affect proprietary rights, and when the land was sold, the proceeds were used to pay the debt to the Bank of Queensland and to pay the amounts which the estate had become liable to pay under the Deed of Compromise.
[225]
Mrs Holdway sought to discount the evidence of the debt owing to the Bank of Queensland by reference to s 61 of the Act. That section is concerned with the position as between multiple beneficiaries. It has no relevance to the issue presently under discussion.
[226]
I am satisfied that at all material times the house property remained part of the estate and would have been available for the purposes of satisfying any order made under the Act. It is unnecessary to determine the position in relation to the land on which the shops were erected. Mrs Holdway did not need to compromise her claim for the reason she thought. She was the author of her own loss."[4]
[227]
[48] Despite these findings on the evidence, his Honour went on to hold that the defendant had impliedly admitted in its defence that the blocks of land had been distributed to the executor to be held beneficially by him on 25 July 2003. His Honour said:
[228]
"In the alternative, Mrs Holdway submitted that it was not open to the defendant to rely upon this point because it had not been raised by the defence, in which distribution of the land had been admitted. The course of the pleadings was that by her statement of claim,
[229]
Mrs Holdway pleaded, '12. The executor, as he was entitled to do, distributed the estate.' The defendant pleaded in response:
[230]
'The defendant does not admit the allegation in paragraph 12 of the statement of claim, and cannot admit same unless and until the plaintiff provides proper particulars of the matters alleged therein, save to the extent that the defendant says that the two principal assets of the estate of the deceased, being the real property described as
[231]
Lot 1 on Survey Plan 124775 County of Ward Parish of Gilston and the unit described as Lot 1 on BUP 104934 County of Ward Parish of Gilston, were not distributed by the personal representative of the said estate until
[232]
25 July 2003 when transfers of each of the said properties from the name of the deceased into the name of Francis John Virgona were registered in the Office of the Registrar of Titles.'
[233]
In my judgment the last two clauses of that paragraph constitute a clear, although implied, admission that the land was distributed.
[234]
No application to withdraw that admission has been made and I very much doubt whether any such application could at this late stage succeed. In my judgment I should decide the case on the basis of the admission. I do not think that any failure by Mrs Holdway to object to evidence relating to the question of distribution can be construed as a tacit acceptance of a withdrawal of the pleading in the defence. I therefore hold that as between the parties, the land was distributed."[5]
[235]
**[49] As to the negligence issue, the defendant contends that Mr Pearson was excused of what would otherwise have been negligence on his part by his reliance on the advice of Counsel.
[236]
[50] On the causation issue, the defendant argues that there was no implied admission in the defence that the pieces of real property had been distributed. This argument is that the reference in paragraphs 5 and 11 of the defence to the distribution of assets to the executor is not an admission, but part of the explanation for a non-admission. It may be said immediately that this argument is less than compelling. While an explanation of a non-admission does not amount to a pleading of a fact,[6] in this case the assertions in paragraphs 5 and 11 of the defence that the pieces of real property had been distributed to the executor, can hardly be said to be part of the explanation for the non-admission of the allegations in paragraph 12 of the statement of claim. In truth, they were a qualification of the defendant's non-admission.
[237]
[51] Of more substance is the defendant's submission that, notwithstanding the pleadings, the issue as to whether the blocks of land had been transferred beneficially to the executor (subject to the mortgage) was fully litigated and that it would be a travesty if the decision of the court did not recognise the true position found by the trial judge to have been evidence.
[238]
[52] The defendant also contends that, in quantifying the plaintiff's damages, the learned trial judge failed to take into account benefits which the plaintiff received under the deed of compromise of 21 November 2003.
[239]
[53] On the plaintiff's side, it is said that the plaintiff never abandoned reliance on the pleadings as defining the issues between the parties. It is said that the notion that the blocks of land had not been "distributed" from the estate when the plaintiff compromised her rights against the estate was a "red herring" drawn across the path of justice by the learned trial judge himself.
[240]
[54] Alternatively, pursuant to a notice of contention, the plaintiff argues that the judgment can be sustained on the bases, first, that the learned trial judge erred in finding that the house property remained part of the estate and would have been available for the purposes of satisfying any order for further provision, and, secondly, that his Honour erred in finding that the plaintiff did not need to compromise her claim for further provision for the reason she thought and that she was the author of her own loss.**
[241]
[55] I shall discuss these arguments in turn.
[242]
**[56] The evidence did not suggest that Mr Pearson sought Mr Eastwood's advice on how to protect the plaintiff's interests, save in relation to the looming deadline under
[243]
s 41(8) of the Act. In particular, there was nothing to suggest that Mr Pearson sought advice about how to protect the plaintiff's interests against the possibility of a distribution of the assets of the estate by the executor, or that Mr Eastwood purported to give any advice at all on that subject. So far as Mr Eastwood's advice confirmed that s 41(8) of the Act did not require that the application be served on the personal representative of the deceased in order to stop time running under
[244]
s 41(8) of the Act, it is not suggested that this advice was wrong. But, on the defendant's behalf, it is said that the defendant was entitled to rely on
[245]
Mr Eastwood's advice as addressing the risk that the executor might defeat the plaintiff's claim by distributing the estate. In my respectful opinion, this argument cannot be accepted.
[246]
[57] The risk to the plaintiff's interests against which Mr Eastwood was asked to advise, was not that the executor might defeat the plaintiff's claim by distributing assets to himself; the risk against which Mr Eastwood was asked to advise was that the plaintiff might fail to meet the deadline for bringing an application for provision out of the state of the deceased.
[247]
[58] Mr Pearson did not seek, and Mr Eastwood did not give, advice as to how to protect the plaintiff against the risk of a prompt distribution of the assets of the estate by the executor. The advice which Mr Eastwood gave on the issue in respect of which his advice was sought, was, as his Honour found, correct.
[248]
[59] The defendant's challenge to the judgment on this ground must be rejected.**
[249]
[60] Discussion of the causation issue must commence with an appreciation of the purposes served by the system of pleadings in civil litigation, and the consequences of parties choosing to broaden the issues in dispute beyond the scope of the pleadings. In Gould v The Mount Oxide Mines Ltd (In Liq) & Ors,[7] Isaacs and Rich JJ said:
[250]
"Undoubtedly, as a general rule of fair play, and one resting on the fundamental principle that no man ought to be put to loss without having a proper opportunity of meeting the case against him, pleadings should state with sufficient clearness the case of the party whose averments they are. That is their function. Their function is discharged when the case is presented with reasonable clearness. Any want of clearness can be cured by amendment or particulars. But pleadings are only a means to an end, and if the parties in fighting their legal battles choose to restrict them, or to enlarge them, or to disregard them and meet each other on issues fairly fought out, it is impossible for either of them to hark back to the pleadings and treat them as governing the area of contest. There is abundant authority for this, even if the matter were required to rest on authority only. See, for instance, Nevill v Fine Art and General Insurance Co ((1897) AC 68 at 76); Browne v Dunn (6 R 67 at 75), the relevant passage being quoted fully in Rowe v Australian United Steam Navigation Co[1909] HCA 25; (9 CLR 1 at 24). There are qualifications, no doubt, and each case must depend for the proper application of the principle upon its own facts. It has been laid down by the Privy Council that 'As a rule relief not founded on the pleadings should not be granted.' 'But in this case' (said their Lordships) 'the substantial matters which constitute the title of all the parties are touched, though obscurely, in the issues; they have been fully put in evidence, and they have formed the main subject of discussion and decision in all three Courts. The High Court are right in treating the case as not within the rule': Sri Mahant Govind Rao v Sita Ram Kesho(25 Ind App 195 at 207). Nocton v Lord Ashburton ((1914) AC 932) is a decisive authority that even where fraud is charged and the charge fails, the plaintiff does not necessarily fail. He may still have a sufficient cause of action left. But in the present instance the defendants, whatever course might have been open to them at the hearing, unquestionably adopted that of fighting the claims as presented in argument upon the evidence as if the particular claims made had been specifically alleged, and as if there were no other evidence upon those claims which the defendants desired to adduce. There is no suggestion even now that other evidence would have been available; and it is perfectly obvious that any objection raised could have been instantly met by a formal amendment, and that no further evidence would have been offered. The case has been fully tried out, as far as the parties desired, on the three matters before us, and the only question is whether the judgment appealed from as to the challenged items should be affirmed, modified or reversed on the merits."
[251]
[61] More recently, in Banque Commerciale SA v Akhil Holdings Ltd,[8] the High Court reiterated that observance of the rules of pleading is intended to facilitate the fair determination of the real issues in dispute between the parties, and is not an end in itself. Their Honours said:
[252]
"The function of pleadings is to state with sufficient clarity the case that must be met: Gould and Birbeck and Bacon v Mount Oxide Mines Ltd (In liq) ((1916) [1916] HCA 81; 22 CLR 490 at 517), per Isaacs and Rich JJ. In this way, pleadings serve to ensure the basic requirement of procedural fairness that a party should have the opportunity of meeting the case against him or her and, incidentally, to define the issues for decision. The rule that, in general, relief is confined to that available on the pleadings secures a party's right to this basic requirement of procedural fairness. Accordingly, the circumstances in which a case may be decided on a basis different from that disclosed by the pleadings are limited to those in which the parties have deliberately chosen some different basis for the determination of their respective rights and liabilities. See, eg, Browne v Dunn ((1893) 6 R at 76); Mount Oxide Mines ((1916) 22 CLR at 517 - 518) .
[253]
Ordinarily, the question whether the parties have chosen some issue different from that disclosed in the pleadings as the basis for the determination of their respective rights and liabilities is to be answered by inference from the way in which the trial was conducted. It may be that, in a clear case, mere acquiescence by one party in a course adopted by the other will be sufficient to ground such an inference ..."
[254]
**[62] In the present case, both the plaintiff and the defendant called evidence on the issue whether the two parcels of land had been distributed to the executor by the transmissions of 25 July 2003. The plaintiff did not seek to suggest, either at first instance or on appeal, that further evidence might have been called on this issue on her behalf. The position is then that, insofar as the purpose of a party's pleading is to notify the other side of the case it has to meet so that any evidence relevant to that case can be addressed, that purpose would not be disserved by giving effect to the findings made by the learned trial judge on the evidence.[9]
[255]
[63] Having regard to the way in which both sides conducted the trial, it cannot be said that the question whether the pieces of real property had been distributed to the executor on 25 July 2003 was not a matter presented by the parties for determination by the learned trial judge. To the extent that a party's pleading serves to confine the issues in dispute, it is apparent that, in this case, the plaintiff did not rest content with the position which it now says was established on the pleadings. The plaintiff did not seek a ruling from the trial judge that the defendant's admission precluded the defendant taking the position adopted by the defendant's counsel,
[256]
ie that the transfers of real property on 25 July 2003 were distributions of the estate of the deceased which the executor was entitled to make. Rather, the plaintiff sought to prove that the pieces of real property had been distributed. Accordingly, insofar as the purpose of pleadings is to confine the issues to be decided by the judge at trial, that purpose would not be disserved by giving effect to the findings made by the learned trial judge on the evidence adduced by both plaintiff and defendant on the issue.[10]
[257]
[64] If an allegation of fact is admitted in a pleading, there is no issue as to the truth of the fact and evidence to prove the fact is unnecessary and, indeed, irrelevant. But if the parties, by their conduct of the trial, open the issue up by calling evidence upon it, then the admission does not become entirely irrelevant. It affords a basis on which the court may conclude the issue in favour of the party which has the benefit of the admission. Thus, an admission of an allegation of fact by a party in a pleading will usually suffice to establish that fact against the party making the admission; but an admission of a matter of law or of mixed fact and law will not necessarily be decisive if other evidence in the case shows that the admission was made in error and the circumstances are such that the party who made the error can advance the true position consistently with procedural fairness to the other party.[11] Indeed, on one view, the defendant's implied admission was of no probative value at all. In Grey v Australian Motorists & General Insurance Co,[12] Glass JA said that:**
[258]
"... in point of principle ... a party cannot be asked to admit a conclusion depending upon a legal standard. By extorting from a party an admission that he was negligent, or that he was not provoked, or that his grandfather possessed testamentary capacity, there is added to the record something which is, not merely of dubious value, but by definition valueless, owing to the witness' unfamiliarity with the standard governing his answer."
[259]
If this absolutist view is rejected, and the admission of a matter of law or of mixed fact and law is accorded probative value, its probative value may vary: it may or may not be sufficient to support a conclusion on matters such as an entitlement to property; whether it is sufficient will depend on the circumstances of the case.[13]
[260]
**[65] Subject to the requirements of natural justice, if evidence admitted without objection demonstrates that an admission of mixed fact and law is erroneous, then the admission will not be decisive against the party making it. Usually, of course, if an allegation has been admitted, evidence tendered to prove or disprove that allegation will be irrelevant and will, upon objection being taken, be excluded on that ground. But, in this case, evidence was admitted, both to prove and to disprove, the due distribution of the two pieces of land; and that occurred without objection. Once that occurred, the question for the learned trial judge was whether the proposition that the two pieces of real estate had been duly distributed was established or not. In deciding that question, the admission was relevant but it could no longer be decisive. It is clear, though, that his Honour treated the admission as decisive. In this regard, his Honour erred in that he had come to the conclusion, applying the law to the facts as he found them to be, that, in truth, the two pieces of land had not been distributed by the transfers on 25 July 2003.
[261]
[66] There is force in the point made on the appeal by the plaintiff's Counsel that the evidence which the plaintiff called on this issue was adduced in response to the learned trial judge's unsolicited expressions of interest in the point. One may sympathise with the plaintiff's Counsel's apparent decision to refrain from confronting his Honour with a steadfast refusal to entertain any suggestion that evidence bearing on the distribution of the two pieces of land was necessary or even relevant because the implied admission in the defence meant that there was no issue on which evidence was relevant. It may have seemed important, in terms of the plaintiff's credibility generally, that she not be seen to be less than frank about the circumstances of the case; and it may have seemed undesirable to risk antagonising the trial judge by declining to act upon the judge's intimations.
[262]
[67] In any event, while it is now said that his Honour should have left the point alone and allowed the plaintiff to present her case as she saw fit free of judicial agitation, the plaintiff does not seek to contend that the learned trial judge's intrusions into the conduct of her case were such as to have resulted in a miscarriage of justice. Of course, if such a submission had been made and accepted, that could only have resulted in orders setting aside the judgment and requiring a new trial.
[263]
[68] It should also be said here that there might have been reasons, apart from the uninvited judicial prompting of which the plaintiff now complains, which could explain why the trial was conducted as it was. First, it is apparent that, running through the skirmishing about the adequacy of the defendant's pleading in response to paragraph 12 of the statement of claim, was an appreciation that, on no view, could the defendant's pleading be taken to have admitted the allegation that the executor was "entitled" to distribute the estate. That "entitlement" was in issue. In this regard, the transmission which was registered was, on its face, registered on the basis of the assertion in the executor's declaration that all the debts of the estate had been paid; and this assertion was plainly erroneous as the evidence adduced from the executor's solicitor demonstrated. It must also be said that the allegation in paragraph 12 of the statement of claim that the estate had been "distributed" involves a legal characterisation of the facts relating to the transfer of the assets. It was apparent from the exchanges which occurred during the course of the trial that the defendant was advancing an argument that, as a matter of law, an asset cannot be said to be distributed out of the estate where the executor intends to, and does have, recourse to that asset to facilitate the payment of debts of the estate in the course of the ongoing administration of the estate of the deceased.
[264]
[69] In the end, however, whatever reasons led to the positions adopted by the parties in conducting the trial, the fact remains that the plaintiff did not take the position that the defendant's implied admission was conclusive of the causation issue, but sought to prove the matters alleged by her; and the defendant was permitted to seek to contradict the evidence adduced for, and the case made by, the plaintiff.
[265]
[70] The learned trial judge proceeded to determine the issue rather than treating it as foreclosed by the state of the pleadings. The learned trial judge determined the issue in favour of the defendant. There is no suggestion that the plaintiff could have adduced any evidence to improve upon the position so found. In these circumstances, I conclude that I must accept the defendant's submission that it would be an affront to the due administration of justice to hold that the court should not give effect to the true position established by the evidence.**
[266]
**[71] The question here is whether there was a distribution of the two pieces of real property which was effective to take them out of the estate of the deceased. In this regard, particular attention was focussed upon the house property.
[267]
[72] A transfer of real property of a deceased by an executor to himself as a beneficiary under the will, will usually be regarded as effecting a distribution of the asset to the beneficiary. That is because the asset transferred is to be held beneficially by the transferee in his own right and not for the purposes of administering the estate. As Lord Haldane explained in Attenborough v Solomon:[14]**
[268]
"The executors had ... lost their vested right of property as executors and become, so far as the title to it was concerned, trustees under the will. Executors they remained, but they were executors who had become divested by their assent to the dispositions of the will, of the property which was theirs virtute officii; and their right in rem, their title of property, had been transferred into a right in personam - a right to get the property back by proper proceedings against those in whom the property should be vested if it turned out that they required it for payment of debts for which they had made no provision."
[269]
[73] The question whether there has been an assent by the executor such as will effect a distribution of beneficial title to an asset is, as Lawrence LJ said in IRC v Smith,[15] "a question of fact to be determined on the special circumstances of the particular case." In Re Donkin, Deceased; Riechelmann v Donkin,[16] Gibbs J (as his Honour then was) considered that the question of fact as to whether there has been the requisite assent by an executor to an asset becoming vested in equity in a beneficiary under the will is to be decided on the basis explained by Adams J in Public Trustee v Kidd.[17] Gibbs J referred specifically to the following passage from the judgment of Adams J in that case:
[270]
"These authorities establish the proposition that when executors who are also trustees have got in the estate and performed the duties of their office they thenceforth hold the property remaining vested in them as trustees for the beneficiaries under the will. It has then ceased to be part of the estate of the testator. If separate trustees are named by the testator, it is the duty of the executor to do everything necessary to vest the trust property in those trustees. If no such trustees are appointed the executors then hold the trust property as trustees for the beneficiaries upon the trusts of the will."
[271]
**[74] The judgment of Gibbs J in Re Donkin has, in turn, been referred to with approval and followed in a number of decisions of the Supreme Court.[18] The point of the passage cited by Gibbs J from the earlier decision of Adams J is that a beneficiary under a will does not enjoy sole beneficial title to property which continues to be held by him or her for purposes which include the payment of the debts of the estate.
[272]
[75] It seems to me, with respect, that this view accords with the general principle that it must be presumed, in the absence of proof to the contrary, that a trustee or personal representative intends to deal with assets held in a representative capacity in accordance with his or her obligations as such before asserting his own beneficial interest in respect of those assets. This general principle was stated in Re Hallett's Estate; Knatchbull v Hallett[19] by Baggallay LJ who said:**
[273]
"And Lord Justice Knight Bruce, in the course of his judgment, after some previous suggestions leading up to that to which I am about to refer, put the case of a trustee placing in a particular repository, such as a chest, certain moneys held by him in trust, and also certain other moneys of his own, and of his so mixing and blending the two that the particular notes or coins of which each consisted could not be identified, and of his taking a sum of money from the repository after such mixing and blending and applying it to his own purposes, and in expressing his opinion as to the conclusion to be arrived at in such a case the Lord Justice used the following language (4 DM & G 382): 'I apprehend that, in Equity at least if not at Law also, what he so took would be solely or primarily ascribed to those contents of the repository, which were in every sense his own. He would in the absence of any evidence that he intended a wrong be deemed to have intended and done what was right, and if the act could not in that way be wholly justified, it would be deemed to have been just to the utmost amount possible,' The Lord Justice added, and no one will, I think, dissent from what he said, that the proposition which he had just stated was founded on principle and supported by authority. But is there any reason why, if the proposition is founded on principle, it should be limited to moneys placed in and taken out of a particular repository?" (emphasis in original)
[274]
**[76] In this case, the two pieces of real property, and particularly the house property, were transferred, as his Honour found, on the footing that they remained available to meet the debts of the estate. That being the case, there was not the assent to a distribution which is essential to a distribution of the beneficial interest in the asset to the devisee under the will.
[275]
[77] The view taken by the learned trial judge in this regard accords with that taken in de Groot and Nickel, Family Provision in Australia,[20] where the following is said:**
[276]
"In Re Lago ([1984] VR 706) it was held that, once the transmission documents have been lodged in the Titles Office and if the beneficiary and personal representative are one and the same person, the estate has been effectively distributed and an extension of time will, at that point, be refused.
[277]
It would seem that, if a transmission application but no memorandum of transfer has been lodged, and the personal representative and ultimate transferee are one and the same person, then the estate is no longer in existence and an application for extension will be refused (Re Heberley[1971] NZLR 325 at 333-4, 345-6). The position is likely to be different if the transmission was lodged to enable the personal representative and sole beneficiary to sell the property to pay debts of the estate. In these circumstances, the administration of the estate is clearly continuing." (emphasis added)
[278]
**[78] In the present case, the terms of the deed of compromise and the facts as to the executor's recourse to the sale of the house property to meet the debts of the estate amply support the conclusion of the learned trial judge that the transfer of the real estate to the executor was not a final distribution but a transfer provisional on, and subject to, the completion of the administration of the estate. As at 25 July 2003, that administration was far from complete.
[279]
[79] The terms of the deed of compromise show that it is idle for the plaintiff to contend that the transfer of assets to her pursuant to that deed was an ex gratia benevolence on the part of the executor acting in his personal capacity as opposed to his representative capacity. It is simply impossible to regard the dealings effected by the deed of compromise as having been effected by the executor in his personal capacity, or as a voluntary benevolence on his part. The terms of the deed of compromise show that the plaintiff and the executor were explicitly agreeing to extinguish the plaintiff's claim against the estate of the deceased in return for the provision of benefits to the plaintiff appropriate from the estate.
[280]
[80] For these reasons, I reject the arguments advanced by the plaintiff pursuant to its notice of contention that his Honour erred in his conclusions on the evidence.**
[281]
[81] Because of the conclusion I have reached upon the causation issue, it follows that I consider the plaintiff's action should have been dismissed in its entirety. As a result, it is unnecessary to deal with the arguments advanced by the defendant on the issues of quantification.
[282]
**[82] The appeal should be allowed. The judgment below should be set aside and the plaintiff's action dismissed.
[283]
[83] In accordance with the request of the parties at the conclusion of the hearing of the appeal, each party is at liberty to make written submissions in relation to the question of costs in accordance with the practice direction.
[284]
[84] MACKENZIE AJA: The comprehensive exposition in Keane JA's reasons of the factual and legal issues and of the course the trial took inevitably leads to the conclusions succinctly expressed by him in his discussion of the critical issues in the appeal.
[285]
[85] I agree with his reasons and with the orders he proposes.**
[18]Re Burgess[1984] 2 Qd R 379; Re Oakley[1986] 2 Qd R 269; Re McPherson[1987] 2 Qd R 394; Re Prufert, unreported, Master White, Supreme Court, Qld, 123 of 1991, 4 April 1991; Re Parry, unreported, Justice Kneipp, Supreme Court, Qld, 89 of 1989, 11 March 1991 and Baker v Williams & Brunner (as executors of the estate of Baker)[2007] QSC 226.