Patterson v Halliday [2003] VSC 298

Supreme Court of Victoria|2003-08-18|Before: SMITH J

[2003] VSC 298 1ST REVISION 22 AUGUST 2003

Executor - commission - appeal from Master - stay application.

By notice of appeal dated 1 May 2003, Susan Halliday as executrix of the estate of Hilda Jean Stone, deceased, has attempted to appeal against orders made by Master Evans on 23 April 2003 that her co-executor Barry Rossmore Patterson be allowed executor's commission in the sum of $120,000 together with his costs of his application for such commission, on a solicitor client basis, to be paid out of the estate of the deceased.

I note that it is clear from the terms of the order that the Master did not fix commission for both executors. I note also that Ms Halliday has renounced her entitlement to commission.

By summons filed 28 July 2003 Mr Patterson seeks orders staying the appeal on the ground that pursuant to a deed of settlement of proceedings between Mr Patterson and Ms Halliday, she agreed to take no further part in the proceeding in consideration of, inter alia, the payment to her of the sum of $30,000. He seeks an order that she pay his costs of that application.

It is first necessary to consider the stay application. To understand the issues relevant to that application it is necessary to refer to the history of the matter.

On Friday 2 July 1999, Hilda Jean Stone died aged 87 leaving an estate worth approximately $6,000,000. By her will, executed 23 November 1995, she appointed Mr Patterson and Ms Halliday executors of her will. In her will she provided for a legacy of $5,000 to Mr Patterson, various gifts of furniture and personal chattels to two nieces, Robyn Rehn and Ms Halliday, and a nephew, Andrew Lucas and a legacy to the Peter Mac Callum Cancer Institute. The residue of the estate was to be

divided between her two nieces and nephew.[1]

The will expressly provided in cl 5(1) that her executors could apply to the Court for commission for their pains and troubles in addition to accepting any gift given to them under the will.

It appears that Mr Patterson had been a personal friend of the late Mrs Stone and her late husband, Mr Lindsay Stone, for approximately 40 years. During the last two or three years of Mr Stone's life, he being in his 80's and less able to do things independently, Mr Patterson helped him in various ways; for example, taking him to see his yacht and to doctors and hospitals. He also assisted Mrs Stone in caring for Mr Stone when she had difficulty coping, visited him in hospital and drove Mrs Stone to hospital to visit him. When Mr Stone died on 2 August 1995 he gave her considerable assistance and advice, often driving her to doctors and medical specialists and other people. Most of the journeys were from Sorrento to Frankston or Mornington. Mr Patterson's business was in Mornington and his home was in Rosebud. He also bought food for her and for her two dogs and delivered it, helped her pay her accounts and managed some financial matters for her. He also took her out on Christmas day to places in Sorrento or McCrae.

In April 1999 he had mentioned to Mrs Stone that the home he was living in was up for sale. He and his brother owned it as tenants in common. His brother wanted to obtain his share of the value of the property and so it had been put on the market. Later in April 1999 during a weekly visit to her home she gave him a cheque for $250,000. He deposed that she insisted on giving it to him because he helped her and did so much for her.

In June 1999 he tried to telephone her, as he did daily to check that she was alright, but the phone was engaged. He asked the police to visit. The police said they had found her in the bedroom and that she was okay and wanted to be left alone. The next morning he rang again and could not raise her by phone. He drove to her home. He found her conscious on the floor but in need of medical assistance. After consulting with the doctor, he called an ambulance and she was taken to the Frankston hospital. She died there about two days later.

Following her death a dispute arose with Ms Halliday about the payment of the $250,000. Clayton Utz, on behalf of Ms Halliday wrote a letter dated 21 February 2000 setting out the issues and seeking clarification of certain matters. On 8 March 2000, her solicitors stated that she intended to commence court proceedings to recover the $250,000 plus interest. They demanded that Mr Patterson resign as executor forthwith. They also told him that Ms Halliday was refusing to pay the $5,000 legacy under the will until the outcome was determined of the foreshadowed proceedings to recover the gift. At one point, through her solicitors, she sought costs on an indemnity basis and a costs order against his solicitors personally. Proceedings were not issued and to resolve the deadlock, Mr Patterson commenced proceedings, number 7486/2000, seeking a declaration that the money received was a gift and that he was entitled to the legacy and an order for payment of that legacy. On the next day, Ms Halliday filed her own proceeding, number 2100/2000, seeking the return of the $250,000.

Shortly before the trial of the two proceedings, negotiations occurred which resulted in the execution of a deed settlement on 19 April 2002.

The terms of the settlement dealt with several matters:

1. Ms Halliday undertook as executrix to pay the legacy to Mr Patterson by paying the amount to his solicitors on or before 5.00pm on 3 June 2002. Mr Patterson undertook to pay a sum of $30,000 to the estate by paying it to Clayton Utz on or before 5.00pm on 3 June 2002.

2. Effectively Ms Halliday abandoned her case relating to the gift of $250,000 and that aspect was dealt with in the deed of settlement by the provision of mutual releases and terms as to orders disposing of the two proceedings.

3. So far as executor's commission was concerned, the following was provided:

"7. Subject to clauses 8, 9, 10 and 11 being satisfied and the material in support of the claim being legally sustainable and except as required by any order of the Court: (a) Susan Halliday, in her capacity as a beneficiary of the estate; and (b) the estate will take no further part in the proceeding for executor's commission. 8. Barry Patterson covenants to disclose the extent of the gift the subject of these proceedings to the Court in the proceeding for executor's commission. 9. Barry Patterson covenants to provide copies of any further affidavits which he might file in the proceeding for executor's commission to Susan Halliday by providing them to Clayton Utz on the day that they are filed. 10. The parties agree that the affidavits already filed on behalf of the estate in the proceeding for executor's commission will be brought to the attention of the Master at the hearing of that proceeding. 11. Barry Patterson covenants that he will not make any claim for commission based on his involvement in these proceedings. 12. Barry Patterson covenants that he will prosecute his claim for commission with expedition."

It should be noted that the deed also provided that Barry Patterson "hereby resigns as executor of the estate".

The affidavits filed in the application for commission were affidavits by Mr Patterson sworn 2 November 2000 and 25 February 2003 and an affidavit sworn by Ms Halliday dated 7 March 2002.

Following the execution of the deed of settlement and prior to the hearing of the application for commission there were directions hearings before the Master at which the following occurred:

* On 28 February 2003 counsel representing Ms Halliday objected to the content of an affidavit of Mr Patterson sworn 1 November 2002 remaining on the file. It allegedly contained scandalous and irrelevant material which was not, it was argued, "legally sustainable" within the meaning of cl 7 of the deed of settlement and therefore should not be before the Master on any claim for commission. The Master made an order on that day that that affidavit be uplifted.

* At the same directions hearing counsel for Ms Halliday raised issues as to the relevance of paras 25 - 51 of the affidavit of Mr Patterson sworn on 25 February 2003. Those paragraphs referred initially to the obligation in cl 8 of the deed of settlement imposed on Mr Patterson to disclose to the Master the extent of the gift he had received from the deceased. The affidavit went on to give a detailed history of the relationship between Mr Patterson and Mr and Mrs Stone and referred in part to the dispute that had arisen. Counsel for the appellant submitted to Master Evans that this material was not relevant. It appears that the Master indicated that he believed he was capable of disregarding any material in the affidavit which was irrelevant and pointed out that if all the appellant wished to do at the hearing of the application was to object to the affidavit material there was a risk that the Court might order costs against her personally, he being able to assess what was relevant and what was not.

It should be noted that no objection was taken to the involvement of Ms Halliday through her counsel at the directions hearing on 28 February 2003.

It appears that when the application for commission was ultimately heard by the Master, a representative of Clayton Utz was present but did not take part. The Master had before him the affidavits I have mentioned. He was, or had been, informed of the terms of the settlement and had a written submission prepared by counsel for Mr Patterson. Little was said by counsel for Mr Patterson and the Master read the material above mentioned. Having done so he stated in substance that he was minded to make a global award and was thinking of a figure of $120,000 which was just about two per cent of the capital value of the estate. He also indicated that he was not minded to give any commission on income because the work in that regard was done by the estate solicitor, Mr Daniels. Finally, he said that in fixing the amount at $120,000 he was having regard to the unreasonable conduct of the beneficiaries. He also required Mr Patterson to file an affidavit to the effect that he had met his obligation under the terms of settlement to pay a nett amount of $25,000 to Ms Halliday.

Ms Halliday has lodged a notice of appeal to challenge this decision. Mr Patterson seeks a stay of that appeal on the basis that she is bound by the agreement under which she agreed to take "no further part in the proceeding for executor's commission".

For Ms Halliday it is put that the agreement does not prevent her bringing an appeal from the decision for three reasons.

(a) Mr Patterson breached cl 11 of the agreement which required that he make no claim for commission based on his involvement in the proceedings in relation to the inter vivos gift (the earlier proceedings which were settled).

(b) Mr Patterson had breached cl 7 in that he had relied upon evidence that was irrelevant in relation to his claim for commission.

(c) The Master erred in law in awarding $120,000 commission in that it was so excessive that no Master could lawfully award that amount.

Issue - claim for commission based on involvement in the earlier proceedings

Counsel for Ms Halliday submitted that paras 25 - 50 of Mr Patterson's affidavit of 25 February 2003 referred to the gift of $250,000 and the subsequent proceedings and that he had in fact sought commission on the basis of his involvement in those proceedings.

I am not persuaded that there is evidence upon which it can be found that Mr Patterson sought commission on the basis of his involvement in those proceedings. It is true that he referred to the gift and to the proceedings. The relevance of that material was in fact raised before the Master as noted above. Counsel for Mr Patterson expressly drew the Master's attention to the fact that his client was not seeking commission on the basis of his involvement in that litigation. Ms Halliday faces a further problem that if she took the view that Mr Patterson was in breach of the agreement she had, at that time, the option of intervening and arguing that she was no longer bound by her undertaking to take no further part in the proceeding. She could then have participated to make sure that cl 11 was complied with by Mr Patterson. That opportunity also existed at the actual hearing because she had a legal representative present observing what occurred. She should be regarded as having elected to keep the agreement on foot and remained bound by it.

Issue - material relied upon that was not legally sustainable

The affidavit of 1 November 2002 having been removed, the issue raised here relates to paras 25 - 50 of the affidavit of 25 February 2003 of Mr Patterson. It is submitted that this was not relevant to any claim for commission and therefore, to the extent that it was relied upon by Mr Patterson and placed before the Master he had sought to rely upon material that was not "legally sustainable".

In my view, the material was relevant for at least two reasons. First it was relevant in establishing the context in which Mr Patterson was expected to undertake his duties as executor. In particular, the problems in the relationship with his co-executor and the allegations being made against him arguably made the discharge of his obligations as executor more onerous, stressful and difficult. Secondly, cl 8 of the deed of settlement required that the "extent of the gift" the subject of the earlier proceedings be disclosed in the proceedings for executor's commission. While it is common ground that this was not relevant to the commission claim, nonetheless, as part of the terms of settlement, Mr Patterson was obliged by Ms Halliday to disclose the "extent of the gift". Thus, by agreement between the parties the "extent of the gift" was a matter to be mentioned at the proceeding. Ms Halliday can hardly complain, having required him to raise the issue of the gift, if he then placed evidence before the Master explaining the background to that gift and, in particular, stating what he had done for Mr and Mrs Stone and so demonstrating one aspect of the "extent" of the gift.

In any event, Ms Halliday is faced again with the problem of election; for she had the opportunity to opt out of the deed of settlement, if her argument is correct, when Mr Patterson made it clear that he was wishing to rely on this material. She elected not to do so. The presence of her lawyer at the hearing also gave her a final opportunity to elect to opt out of the deed of settlement if there had been a basis for doing so. Again this did not occur.

While I think it debatable, I will proceed on the basis that Ms Halliday's undertaking to take no further part in the proceedings for commission would not prevent her from appealing the decision if it emerged that the Master in reaching his decision had not acted in accordance with the law.

The argument put is that a commission of $120,000 was excessive and that no Master acting in accordance with the law could have awarded such an amount.

The amount allowed for commission was a little under two per cent of the value of the corpus of the estate.

The applicant did not seek a specific amount from the Master. Written submissions, however, contained a number of calculations which applied various formulae to be found in the text Vance, Executor's Commission.[2] The examples used tables from that work which applied, inter alia, to simple estates of substance. I note that the highest amount identified in those submissions was $62,045 - approximately one per cent of the corpus.

In assessing commission it was common ground that the Master had to consider at least the following:

(a) the work and judgment involved in the realisation of assets and earning income,

(b) the extent of administrative activities,

(c) the responsibility generally,

(d) the amount of work done not reflected in financial terms,

(e) how long the estate was administered,

(f) the size of the estate and its capacity to pay,

(g) the work of a non-professional character not undertaken by the applicant and performed by professionals, and

(h) executors' pains and troubles relative to the result.

In the present case, much of the administration work was done by the solicitors and this was reflected in the Master's remarks disallowing commission on income. The estate, too, was relatively simple in the sense that the assets were easily identifiable and realisable. It is also true that the bulk of estate administration was completed in approximately seven months. The affidavits filed indicate that Ms Halliday also did some duties as co-executor. It was Mr Patterson, however, who organised the funeral, and its re-scheduling, had the deceased's dogs put down, secured the home and provided details of the property and its contents to Ms Halliday and the estate solicitors. He checked the mail for some months. He also collected the ashes and held them for approximately 8 months at his home. As to responsibility, the estate was a large one.

Commission for executors is provided for in s 65 Administration of Probate Act 1958. It provides:

"It shall be lawful for the Court to allow out of the assets of any deceased person to his executor, administrator or trustee for the time being such commission or percentage not exceeding five per centum for his pains and trouble as is just and reasonable."

In Vance, "Executor's Commission", citing re Allan McLean deceased[3], the learned author states that:

"the expressions 'pains' and 'trouble' have been defined in the New Zealand case of re Allan McLean deceased, 'pains' - as responsibility, anxiety and worry, and 'trouble' - as covering the work done." [4]

Considering the material before the Master, I could well understand if commission had been awarded for a significantly lower amount. I am not prepared to conclude, however, that the amount awarded was outside the range of commission that could properly be awarded in all the circumstances.

Due allowance had to be made for the responsibility of administering a $6,000,000 estate. Further, due allowance had to be made for "pains and trouble". If one has regard to the Master's comment about the unreasonable conduct of the beneficiaries, it is reasonable to conclude that he took the view that the "pains and troubles" relative to the result were significant for Mr Patterson because of the difficulty in the relationship with Ms Halliday and the anxiety and stress of attempting to discharge his duties as an executor knowing that Ms Halliday and, in all probability, the other beneficiaries viewed him with antipathy and suspicion.

It was open to the Master to draw the conclusion that the beneficiaries, in particular the co-executor, had acted as they did, in challenging the gift and the claim for commission and then effectively withdrawing, because of an unreasonable and hostile attitude to Mr Patterson. I express no views myself on the reasonableness or otherwise of their conduct, but am satisfied that it was open to the Master to take the view that their conduct was unreasonable.

It was, therefore, open to the Master to conclude that it was particularly arduous for Mr Patterson to act as an executor in an atmosphere of undeserved hostility and distrust. He was entitled to take the view that the executorship was a period of considerable unease and stress.

In view of the fact that the application was unopposed he cannot be, and has not been, criticised for the paucity of reasons given.

Ultimately Ms Halliday made the choice not to participate in the proceeding. That had implications for the fact finding process. Unhappy with the result she now wishes to challenge it. It seems to me that the only way she can do so is if she can demonstrate that it was not reasonably open to the Master to allow the amount of $120,000 in commission for Mr Patterson. For the reasons I have given I am satisfied that while the award of commission seems generous it was open to the Master to award that figure.

Ms Halliday has failed to establish the grounds upon which she relies to enable her to take further steps in the proceedings. Accordingly, her appeal proceedings should be stayed.

[1] I note that by notices filed 29 July 2003 Robyn Rehn and Andrew Lucas indicated that they wished to be heard at the hearing of the appeal commenced by Ms Halliday. They did not appear at the hearing.

At a glance

Court

Decision date

Before

Source

Judgment (55 paragraphs)

Parties

Legislation Cited (2)