HORNSBY -v- HORNSBY [2014] WASC 256 (21 July 2014)

Supreme Court of WA|2014-07-21|Before: Heenan J

1 EM HEENAN J: This directions hearing, listed at the initiative of the court this afternoon, is to deal with two actions which have been listed for hearing together before this court next week. One is an action by Craig Leonard Hornsby against Sharon Judith Hornsby, brother against sister, CIV1268 of 2011, in which the plaintiff, brother, is seeking to have declared invalid and inefficacious a series of inter vivos transactions entered into by his late mother in either late November of early December 2008. The defendant, his sister, seeks to support the validity of each of those transactions.

2 Until today, the impugned transactions were six in number, which I have listed during the course of submissions today, but as a result of an amendment recently made they have been extended to seven, the seventh being a transfer of some 6,000 shares in Wesfarmers Limited apparently executed by the mother in late November or early December 2008 to transfer those shares directly to her daughter, Sharon Hornsby. That transfer was not immediately registered. It was later registered by the daughter some years after her mother's death and, since then, those shares have been sold at the daughter's directions and certain of their proceeds have been used by the daughter to pay legal fees, giving rise to a foreshadowed application by the solicitors for the brother, which I will mention later. This litigation, CIV1268 of 2011, is what I have been referring to as the inter vivos dispositions action.

3 The earlier action, CIV3045 of 2010, is between the same parties, Sharon Judith Hornsby as plaintiff, and Craig Leonard Hornsby as defendant, and counterclaiming. That concerns applications to prove different wills of their deceased mother, Colleen June Hornsby, who died on 25 April 2009.

4 I need to say a little about what I have been referring to as the probate action. The evidence before the court discloses that the deceased Colleen Hornsby made three Wills, the first on 28 July 1988, by which her son, Craig, was appointed as one of the proposed executors, and under which essentially most of the estate was left to him, but with a residue to be shared equally between Craig and his sister, Sharon.

5 The second will was apparently made on 29 May 1996, appointing Sharon as sole executor, and providing for disposition of property, essentially, in favour of Sharon, except for real estate which was to go to the children and grandchildren as beneficiaries of a nominated trust - the Quinns trust. A third and last will of 1 December 2008, appointing Sharon as the sole executrix and, essentially, providing that all the property in the estate would be disposed of to Sharon or to trusts under which she or her children took an interest, and with no provision for Craig.

6 In the probate action, Sharon, as plaintiff, is propounding the will of December 2008 but not, at least formally, the will of 29 May 1996. The defendant, Craig, is propounding the will of 28 July 1988 and is opposing proof of the 2008 will. There are some apparent deficiencies in the pleadings and structure of the probate action, particularly having regard to the 1996 will which, although not being propounded by Sharon, is relied upon as one of several grounds for the revocation of the will of 28 July 1988. Having addressed this matter in submissions, counsel for Sharon has now foreshadowed an application to amend her statement of claim in the probate action to seek to propound the will of 29 May 1996 in the alternative if the will of December 2008 is found to be invalid. Detailed proposals for that amendment are to be put before the court on Monday if the case proceeds.

7 There are some other apparent deficiencies in relation to the lack of parties, both in relation to the 1988 will and the 2008 will, and potentially in relation to the 1996 will. I have not given detailed consideration to the significance of those deficiencies in relation to the 1996 will, but I do not think that the problems in relation to the 1988 or the 2008 wills are insuperable because of the close proximity of interests between those other beneficiaries and parties presently represented. The present parties have all but expressly acknowledged that those unrepresented beneficiaries have actual notice of these existing proceedings. Should that become a problem, it could be addressed later.

8 It seems that, having regard to the potential to deal with those matters, and subject to the significance of applications to amend in relation to an alternative case by Sharon to propound the May 1996 will, it should be possible to proceed with probate action and counterclaim, if necessary, after some short adjournment.

9 However, as I have already said, these actions have been listed, and the recent case management of the litigation has been on the basis that both matters would proceed together. Yet, there are problems with the inter vivos dispositions action because it is unmistakable that the interests of the deceased, and now her estate, are directly involved in the outcome of that litigation. Yet there is no party to that litigation who has any authority to represent or to bind the estate, or to take a position on behalf of the estate in relation to those matters. There are other difficulties associated with the constitution of the action as to the lack of joinder of other parties associated with those transactions but, again, they may not be insuperable.

10 After the matter had been fully canvassed, counsel for Craig Hornsby, whose position is that both actions should proceed simultaneously, accepted that there was noone presently authorised to represent or bind the estate of the deceased and that the presence of such an interest in the inter vivos dispositions litigation was essential. However, counsel submitted that such were the practical urgencies, and the desires of the parties, and so inconvenient would be the consequences if the joint trial was to be severed, that some practical means should, even at the expense of stretching to bursting point all the flexible powers of the court, be found to avoid this. One suggestion was, and I accept it to be one possible solution to the problem, would be to appoint an administrator ad litem for the estate, and to add that administrator as a party to this litigation. Counsel for Craig Hornsby foreshadowed a possibility, that Craig Hornsby might be that administrator.

11 However, I do not think that that could possibly be an acceptable solution. Both brother and sister are diametrically opposed on the issue of who is entitled to administer their mother's estate, and as to the entitlement and distribution of that estate. To give one, rather than the other, a power of administration, even by a limited grant ad litem, would be to change the balance in this litigation to a significant degree. It would confer powers and advantages on the person so appointed, to the disadvantage, if not prejudice, of the other.

12 If an administrator ad litem were to be appointed, as might have been done had this problem been recognised much earlier, I consider that it would have needed to have been an independent and neutral person who would have needed to take and perhaps retain independent legal advice. That is obviously not possible between now and Monday and, in the absence of such an administrator, or the potential to appoint one, I do not really see how that action can or should proceed.

13 The consequences of this may not be as grave as apprehended by counsel for Craig Hornsby because of factors which I addressed quite extensively in my earlier dialogue with counsel which, because they are recorded in today's transcript, should not be repeated at this late hour.

14 I consider that what I should do is to direct that the action involving the application to set aside the inter vivos transactions, that is CIV 1268/2011, should be adjourned to a date to be fixed, with liberty to all the parties to apply in that regard, and that the trial listed for Monday, 23 June, should proceed, but only in relation to the probate action CIV 3045 of 2010.

15 I note that, in that respect, several applications have been foreshadowed, not necessarily in order of importance or chronology. They are:

(a) the application on behalf of Sharon Judith Hornsby to amend so as to propound, in the alternative, the alleged Will of 29 May 1996;

(b) an application by counsel for Craig Hornsby to adjourn that trial, said only to be for a short time, in order to digest and accommodate the consequences of any amendment seeking to propound the Will of 1996; and

(c) thirdly, a foreshadowed application by counsel for Craig Leonard Hornsby to seek relief, the effect of which would be to prevent the existing solicitors for Sharon Hornsby from continuing to act on account of an alleged conflict of interest arising from the alleged receipt by them as payment in fees of the proceeds of the sale by Sharon of the Wesfarmers shares, earlier mentioned, in circumstances where they knew that there was some question of whether or not that was an asset of the estate, rather than an asset of Sharon Hornsby.

16 I say nothing further about that application because I expect that it will be formally made, and submissions received on it, on Monday.

17 There was another argument raised by counsel for Craig Hornsby, in favour of proceeding with both actions. If I have understood it correctly, it deals with alleged inconsistent decisions by the deceased, Colleen Hornsby, with respect to the disposition of the Wesfarmers shares. These were about 6,000 shares held by the deceased, apparently for many years. The alleged inconsistency is this: that by the inter vivos transaction number 7 on the list of disputed transactions just introduced by an amendment, a transfer of those shares by the deceased direct to her daughter, Sharon Hornsby, was executed either on or about 28 November, or on 1 December 2008, the same day as the will and the other transactions were executed. These are the shares which were not transferred until many years later, and then sold by Sharon in order to provide funds for her legal expenses, which were used to pay her solicitors.

18 The alleged inconsistency is that by the alleged will, of 2008, there is a provision that shares of the deceased were to be left to the Colleen Hornsby testamentary trust, a trust in which her children and grandchildren were the beneficiaries. So the alleged incongruity is that the inter vivos disposition of the Wesfarmers shares by will and by transfer occurred either simultaneously or, at the most, three days apart, in one instance to the daughter alone, and in the other to a trust in which the grandchildren were beneficiaries. It is submitted that this is illustrative of a lack of understanding or perception by the deceased, and provides foundation, so it is contended, for the submission that the deceased did not have testamentary capacity on 1 December 2008 and, by extension, was not fully understanding and comprehending of the transfer of those shares which it is also alleged was procured by undue influence or unconscionable conduct.

19 So much can be readily appreciated. Whether it can be proved remains to be seen. However, so far as present circumstances are concerned, the significance of this line of submissions was that, in order to appreciate fully the claim by Craig that both the will and the disposition of the Wesfarmers shares inter vivos were made without appropriate capacity by the deceased, leaving aside the questions of her alleged lack of capacity in relation to the other inter vivos dispositions, it is necessary for all these matters, including the inter vivos transactions action, to be heard simultaneously. The submission is that it would not be adequate for a proper appreciation of these matters if the contest were to be confined to the probate action.

20 With all respect, I do not accept that submission. I consider that the apparent inconsistency, if there is one, in relation to the treatment of the Wesfarmers shares and, indeed, any incongruities or inappropriateness of the other inter vivos transactions, are all matters which can be raised in relation to the allegation of lack of testamentary capacity of the 2008 will. Were they to be accepted, and that will were to be held to be invalid on that account, that would not in any way inhibit a subsequent resolution of the validity of the inter vivos transactions concerning the Wesfarmers shares or, for that matter, the other transactions.

21 It seems that there is every prospect that a decision relating to the proof of the last valid will of the deceased may go a long way, in fact if not in law, to dispose of the questions of any alleged incapacity at any material date. I will say no more on that point at the moment as it is likely to be an issue in the forthcoming trial. It is enough to observe that I do not perceive this consideration to be one which has any significant bearing on the decision to proceed only with the trial of the probate action and not with the trial concerning the inter vivos dispositions.

22 I will accordingly direct that the trial on Monday shall deal with the probate action alone and that the other action, as I have already said, be adjourned to a date to be fixed with general liberty to apply. I will entertain the foreshadowed applications for amendment, adjournment or restraint against the solicitors on Monday morning. I think the cost of today's proceeding should be reserved generally, unless any counsel wishes to submit otherwise.

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