Morgan v MacRae

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Judgment 1 His Honour: The present proceedings are essentially a dispute between a daughter and a son of the late William and Jean MacRae. They are associated with Family Provision Act proceedings initiated by another daughter of the same couple. 2 It would seem that the son was closely associated with the business affairs of his parents before they died and is familiar with their affairs and the way in which they were concerned with various trustee or investment companies within the family. 3 The daughter by her summons, and later by an amended statement of claim, has indicated quite plainly that she is dissatisfied with the way in which the son has been handling the estate and she seeks a series of orders against him. 4 I have endeavoured to just sketch the dispute between the parties. However, I will have to descend to detail shortly. It is also necessary to note that William MacRae died on 13 December 1991; probate of his will was duly granted to Jean MacRae. Jean MacRae died on 1 December 1997 and probate of her will was granted to the son plus a chartered accountant against whom nothing is alleged. By virtue of s 13 of the Imperial Acts Application Act 1969, the son and the accountant became the executors of William as well as of Jean. 5 The amended statement of claim, which has to be read with the amended summons because for some curious reason the amended statement of claim refers to the orders sought in the summons, is a veritable hotchpotch of multifariousness. Although some indication of that was given through argument, the only riposte was it has been pleaded to and until senior counsel for the son came into the matter today, no-one had raised any point about it. I assume that the conclusion that must follow is the Court is to be asked to try the various non-issues that are raised by it, but I will just pass that by for the present. 6 The main significance of the statement of claim is that I am today trying an interlocutory motion and it is seldom, if ever, that one can by interlocutory motion:

(b) obtain relief contrary to or in a more expanded form than that sought in the pleadings. 7 The conclusion said to be drawn from the facts pleaded in the amended statement of claim is that the defendants, ie, the son and the accountant, have committed breaches of trust and that they be removed from their position as trustees and some other fit and proper person be appointed, and that an injunction be granted to restrain the dissipation and improper administration. However, the orders contained in the amended summons slide from seeking an order that the first defendants, namely the son and the accountant, be removed from their positions as executors and trustees of the William MacRae estate and that a trustee company be appointed; that a declaration be made that the assets of the William MacRae estate include certain things which are specified. There are also orders sought about the Jean MacRae estate. 8 The notice of motion essentially seeks three orders:

1. That these proceedings and the Family Provision Act proceedings be tried at the same time.

2. The son be removed forthwith from his positions as executor and trustee of the estate of (a) William and (b) Jean.

3. That there be an order for discovery made against both the son in his personal capacity, and the son and the accountant as executors. 9 The motion names as parties the parties to the suit as well as the other daughter, who has commenced the Family Provision Act proceedings, even though she is not a party to this suit. 10 Today Mr P W Gray of counsel appeared for the plaintiff. Mr B J Miller, solicitor, appeared for the plaintiff in the other suit, but was excused after he made his position clear that he did not consent to the order that the proceedings be heard together. 11 Mr J B Whittle SC and Mr R Wilson appeared for the third defendant and the executors were actually unrepresented, though Mr Whittle SC in his submissions did cover much of the ground which would have been covered by them. 12 Dealing first with the question as to whether these proceedings and the Family Provision Act proceedings should be tried at the same time, the answer is it is clearly impossible to do this. One can try Family Provision Act proceedings only when one has worked out what is in the estate. One can do this by two methods:

(a) by first allowing proceedings dealing with disputed aspects of the estate to be completed; or

(b) by someone making a proper estimate of the value of the estate. 13 Situation (b) often occurs in cases where the estate has a third party claim against a tortfeasor, in which case it may not be appropriate to wait until the District Court has made an award, but it may be more appropriate to make a proper estimate with the advice of a lawyer practising in that field as to the likely result of the action. Otherwise usually the thing to do is to wait until one can see of what the estate consists, before one proceeds with Family Provision Act proceedings. 14 The present suit, however, is not really one which will ascertain what is the value of the estate. Parts of it seek to do that, but its main thrust is to remove the son, at least, and for either the accountant, or alternatively a trustee company to administer the estate. That will not necessarily in the future produce the situation where the value of the estate will be established. 15 Accordingly, there will be a tension between resolving the present suit and the Family Provision Act proceedings and the applicant in the second proceedings may wish to get her suit on more quickly. She knows that in that suit the executor will have to swear to the value of the estate and her counsel will be able to cross-examine the executor on the value of the estate and the matter will be decided between her and the executor in the Family Provision Act proceedings. However, as the present plaintiff is not a party to those proceedings, at least theoretically she will not be involved. 16 Accordingly, I decline to make the order that the proceedings be tried at the same time. 17 The second order seeks an order that the son be removed forthwith as executor and trustee to both estates. There is a whole series of theoretical reasons why that cannot occur on this motion and, if one were to look at the merits, I would come to the view that it is premature to do it anyhow. 18 First of all, this is, as Mr Whittle SC put, really a motion for summary judgment. On such motions, no order is made unless when one looks at it, the case is unarguably clear or depending on who makes the application is unarguable. The present case is not in such a situation. The plaintiff just does not have enough information at this stage, she merely has suspicion. 19 Secondly, there is great doubt as to whether s 13 of the Imperial Acts Application Act 1969 permits the Court to remove a person who is an executor by representation, and it does not necessarily follow, though it might, that removing the executor also removes that person from being an executor by representation. 20 Thirdly, it is unclear as to whether the defendants are executors or trustees. The probabilities are that they are only executors in view of the outstanding Family Provision Act claim. 21 The only way one can remove an executor is by revocation of the grant and the making of a fresh grant. I note there is a decision of Bryson J in Profilio v Profilio [1999] NSWSC 657 which appears to go to the contrary, but, with respect, it must have been decided per incuriam. In Mavrideros v Mack (16 June 1997, unreported) I decided this point. Although my decision was reversed in the Court of Appeal, see (1998) 45 NSWLR 80, the present point was in no way questioned by the Court of Appeal. 22 The position in Victoria may be different because of statute. There, s 34 of the Victorian Administration & Probate Act 1958 is in different terms to the New South Wales Wills Probate & Administration Act 1898. The New South Wales Act by s 66(c) limits jurisdiction to removal of administrators. The Victorian Act, section 34 is wider. In any event, it should be noted that the fate of the Victorian case of Monty Financial Services Limited v Delmo [1996] 1 VR 65 has already not been a particularly happy one; see the judgment of Crispin J in the Supreme Court of the ACT in Titterton v Oates (1998) 143 FLR 467. 23 One cannot, in New South Wales, simply strike out the name of one executor from a grant and continue on without revoking the grant. This is for a number of very, very basic reasons. First, one cannot even renounce an executorship once probate has been granted. The Court has relaxed this rule to a very slight extent by allowing people to renounce who have taken probate under pressure, or by some sort of mistake, and who have not administered the estate at all. 24 Generally speaking, the proposition is clear. Even if an executor is removed there needs to be a consequential order which requires the filing of accounts, and deals with the transfer of the property from the old executor to the new executor. It may be that the power to vest property from one trustee to another is not sufficient to cover the situation. In any event, the order is only made as a very last resort when there is no other appropriate method of dealing with a problem that may have emerged. That is why it is not made on motion except in the clearest case. The clearest case is as in Re Hardy [1967] 1 NSWR 638 where the executor had disappeared, I think, with the money. 25 The present case is merely a dispute between the beneficiaries, or possible conflict of interest and duty. As said in the leading commentary on the New South Wales Probate and Administration Act by Geddes and others Wills, Probate and Administration Law in New South Wales (LBC, Sydney, 1996) at page 330: "A mere conflict of interest and duty will not result in restraint or removal of a personal representative. It must be shown that the personal representative prefers interest to duty, and intends to neglect duty." 26 One reason for this in the case of an executor is that the testator by choosing the executor and knowing the relationship with the executor as to his own personal situation must appreciate that there will be a conflict between interest and duty. Cases such as Vyse v Foster (1874) LR 7 HL 318, 332 and Hordern v Hordern [1910] AC 465, 475, clearly show that this is the law. 27 Accordingly, for both technical and reasons of merit, order 2 cannot be made. 28 Orders 3 and 4 seek discovery. Because there has throughout the common law world been such abuse of discovery, courts now limit discovery severely to cases where it is necessary. The way in which one finds out whether discovery is necessary is to analyse the issues in the case and ask, "Are the documents being sought relevant to these issues?" When one looks through the amended statement of claim, it is extremely difficult to find out what the issues are. Mr Whittle SC was not far wrong when he said there seems to have been thrown into the melting pot almost all of the complaints the sister has against her brother, without differentiation as to whether they are against the executors, against her brother personally, with respect to an alleged undue influence of the brother over his father whilst the father was still alive, or what. 29 As the issues are so ill defined, it is not really possible to grant any discovery. To that, Mr Gray has made two answers:

(a) no-one before today has ever found fault with the statement of claim;

(b) his solicitor has been asking for months and months and months for discovery and has been fobbed off. 30 The answer to (a) is that lawyers should be able to recognise a defective statement of claim and it is necessary to define proper issues for trial and they just have not yet been presented. 31 As to (b), if you keep asking in a belligerent way with a four day period for an answer, the odds are you will get no response. 32 Accordingly, I would not grant any discovery. 33 I do not want it to be thought I am saying the plaintiff's case is one which may not succeed at the trial once the pleadings are put in proper order. Nor do I want to be thought to be saying that I approve the way in which the son has given unhelpful replies to his sister's solicitor's letters. However, I am trying a notice of motion and it seems to me, as I said some three hours ago, that in its present form it must fail and must be dismissed with costs. 34 I suggested this morning that it would be necessary for the statement of claim to be amended. Mr Gray declines to do so. Mr Whittle SC may or may not seek to strike parts of it out. Mr Gray may or may not seek accounts from the executors under s 85 of the Wills Probate and Administration Act 1898, which would seem the obvious thing to do. I can leave those to another day. 35 Mr Whittle SC has indicated that he would not be adverse to an order for discovery in respect of the documents which I have hatched blue on MI03 and MI04. However, Mr Gray does not think that that is satisfactory. I will make that order if someone asks me to do so. I will just leave it to the parties to spend another $10,000 the next time they want to have a technical debate before the Court. 36 The thing to do is to dismiss the current notice of motion of 20 July 2001. 37 By consent I order that by 19 November 2001 the second defendants supply the verified list of documents as marked blue on document MI04 with inspection to take place on or before 3 December 2001. I make a similar order against the third defendant in respect of the same documents mutatis mutandis with the same dates. I note the Court may consider whether further discovery is necessary when the issues have been more properly defined. 38 I stand both suits over to the Registrar's list for mention at 9.30 am on 3 December 2001.

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