Plaintiffs v Defendants

1 This is an application for summary judgment by the executors of a deceased estate against whom an application has been made for testator's family maintenance under the Administration and Probate Act 1958 (Vic) ("the Act").

2 Daniel North died a widower on 30 January 2010, aged 64. His wife Kathleen died on 11 June 2007. They had no children.

3 Mr North made his last will on 20 January 2010. The estate is currently valued at $900,000. The executors are his nephews. The will divides the entire estate equally between 14 nieces and nephews of the deceased and his late wife.

4 The six plaintiffs are Graeme Cooper Webb, his wife Valda May Webb and their four adult children, Melissa May Webb, Jason Cooper Webb, Matthew Alexander Webb and Rene Elizabeth Webb ("the Webb children").

5 The Webbs are not related by blood to the Norths. The parties agree that there was a longstanding friendship between the plaintiffs and the Norths as well as a longstanding business relationship. The plaintiffs submit that the relationship was more than this.

6 The defendants bring a summary judgment application against the Webbs pursuant to s 62 of the Civil Procedure Act 2010 (Vic) ("CPA") and r 23.01(1) of the Supreme Court (General Civil Procedure) Rules 2005 (Vic).

7 The defendants submit that the Webb claims fall "way outside" even the extreme margin of relationships which might, under the relevant statutory provisions of the Act, establish a responsibility for the deceased to make provision. The defendants submit that there is no reasonable prospect of the Webb claims succeeding and that it should be summarily dismissed.

8 For the reasons set out below an order for summary dismissal of the Webb claims is not appropriate. The Webb claims should proceed to trial.

9 For the defendants to succeed in a summary judgment application, they must satisfy the Court that the plaintiffs' claim has no real prospect of success.[1]

10 Even if the Court is satisfied that the civil proceeding has no real prospect of success, it may refuse an application for summary judgment under s 64 because:

(a) it is not in the interests of justice to do so; or

(b) the dispute is of such a nature that only a full hearing on the merits is appropriate.

11 Both parties relied on the decision of his Honour Dixon J in Ottedin Investments Pty Ltd v Portbury Developments Pty Ltd.[2] His Honour provided a summary of the principles applicable to summary judgment pursuant to s 63 of the CPA:

In summary I consider the principles which now apply, in the context of this application, to be:

1. If a proceeding or defence or any particular claim, cause of action or ground of defence ("claim") is hopeless, untenable, bound to fail, or could not possibly succeed, then it ought be summarily dismissed. In other words, a claim which ought be dismissed under the old test will be dismissed under s 63.
2. Section 63, however is less stringent. It does not direct an inquiry into whether a certain concluded determination could be made that the proceeding, or a claim, would necessarily fail. What is required is a practical judgment by the Court as to whether a claim has more than a "fanciful" prospect of success.
3. The Court's discretion whether to exercise the power of summary dismissal is very wide. Section 64 of the Act expresses that the power is based in a consideration of the interests of justice. The Act provides direction in Part 2.1. The discretion is to be exercised to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute between the parties. The Court's powers in furthering the overarching purpose are facilitated by having regard to the objects and matters set out in s 9 of the Act.
4. The Court may be satisfied, on an interlocutory application, that there is no real prospect of success in a civil proceeding but nevertheless consider the dispute to be of such a nature that only a full hearing on the merits is appropriate. Whether a full hearing on the merits is appropriate is a relevant discretionary consideration in the circumstances of each proceeding.
5. The power to order summary dismissal is to be exercised with great care, as a trial upon evidence of issues raised is the wellsettled approach to the determination of litigation. When proceeding on a summary application to assess the prospect of success, a judge ought to feel confident that an assessment can be properly made and whether the overarching purpose is facilitated on dismissal of the impugned claim.
6. That argument directed to the issues relevant on the application, perhaps even extensive submissions, may be necessary to demonstrate that the case of the plaintiff has no real prospect of success is not ordinarily a relevant consideration.[3]

12 I would add to the principles in Ottedin two further principles identified by his Honour Forrest J in Matthews v SPI Electricity Pty Ltd v Utility Services Corporation Ltd (Ruling No. 2).[4] Matthews' case is a group proceeding arising out of the Black Saturday bushfires in February 2009. In addition to the matters considered by his Honour Dixon J in Ottedin's case his Honour said:

The less complex the issue in a case then the easier it is for a court to take the view that such a proceeding is capable of being determined on summary judgment; and

Whatever the test to be applied the power to order summary dismissal of a claim must be exercised with care. This is particularly so where a case may involve issues of contested fact, or where its consequences may affect a large number of persons.[5]

13 The defendants accept for the purpose of this application the evidence filed by the Webbs in support of their application under Part IV of the Act. There is no suggestion by the plaintiffs that they intend to file further affidavit material.

14 The defendants have filed 23 affidavits in opposition to the Webb affidavits. Even though the defendants do not rely upon these affidavits in the summary judgment application, the number of affidavits and detailed evidence contained within the defendants' affidavits is significant.

1. Graeme and Valda Webb ("the parents") knew the Norths since the 1960s. They first worked together in the early 1970s and eventually bought into a business called Norwebb Pty Ltd in 1999.
2. The Norths owned 52% of the shareholding and the Webb parents 48%. Shortly after his death, Mr North sold his 52% shareholding to the Webb parents for $1 per share.
3. Mr Webb and Mr North spent a significant part of their life together, six days a week, 50 weeks a year at their joint business. When Mr North was unable to work due to his cancer (shortly after Mrs North died), the Webbs allowed Mr North to draw his full employment entitlements from Norwebb Pty Ltd.
4. Three of the Webb children (plaintiffs 4, 5 and 6) and a partner of one of them progressively became involved in Norwebb Pty Ltd and worked in the business in various capacities.
5. Mr North informed Mr Webb that he had made the Webb children beneficiaries of his will along with his nieces and nephews but was later influenced by his brother to delete the Webb children from his will.
6. Keyman Insurance was purchased by the Webb parents, and the Norths, with an agreement that upon the death of any of them, the policy proceeds would be paid to others. However, the policy proceeds passed to Mr North's estate.
7. The Norths had a surrogate attachment to the Webb children. The Webb parents and the Norths were best friends for decades. The Webb children equally looked up to the Norths as parent figures and had an extremely loving and close relationship, akin to a family relationship. Mr North was proud of the Webb children just like a father. The two families shared Christmas and met every Friday evening up to a few years before Mr North's death.
8. Mr and Mrs North showed generosity towards the third plaintiff and were known to her as Uncle Dan and Auntie Kathy. The third plaintiff assisted the Norths when Kathleen North became ill and continued to do so after Mr North moved into a retirement village apartment.
9. The fourth plaintiff describes the relationship with the Norths as a "strong family bond" and that he saw the Norths more than his other relatives. The fourth plaintiff described the presence of the Norths shortly after delivery of their fourth child as an occasion that demonstrated the close bond. The Norths referred to themselves as family to gain entry to the hospital.
10. Mr North worked with the fourth plaintiff for 16 years and the fourth plaintiff considered Mr North a mentor. Mr North treated him as if he was his own son.
11. Mr North offered to lend the fourth plaintiff $10,000 after the bushfires in February 2009. The offer was declined.
12. The fifth plaintiff describes spending time with Mr North talking about things of mutual interest and being taught by Mr North and his own father how to use tools.
13. The sixth defendant believed that the Norths were her aunt and uncle. Such was the closeness with them and growing up with them. The Norths shared activities and interests in the Webb children and the grandchildren as expected from a parent or grandparent.
14. The sixth defendant assisted Kathleen North when she became unable to do housework by cleaning the home. She gave Mrs North a lot of leg massages.
15. When Mr North moved to a retirement village the sixth defendant continued to help clean until she gave birth to her second child at which time Mr North started to use the inhouse cleaning from the village.
16. The Webbs' evidence in relation to the blood relatives of the Norths was varied from not being aware of any family, to occasionally seeing family members at special events such as 60th birthday parties.

Legal Principles - Administration and Probate Act 1958 (Vic) s 91

16 The defendants' application for summary judgment concentrates on the first jurisdictional requirement under s 91(1) of the Act, that the Court may order that provision be made out of the estate of a deceased person for the "proper maintenance and support" of a person "for whom the deceased had responsibility to make provision". Under s 91(3), the Court must not make an order pursuant to subs (1), unless the Court is of the opinion that distribution of the estate of the deceased person affected by his or her will does not make "adequate provision for the proper maintenance and support" of the person making the claim.

17 Section 91(4)(e) to (p) specifies 12 matters to which the Court must have regard in determining, first whether the deceased had a responsibility to make provision for the claimant; secondly, whether the distribution of the estate of the deceased person affected by his or her will makes adequate provision for the proper maintenance and support of the claimant; and thirdly, the amount of provision (if any) which the Court may order for the claimant.

18 The only issue raised in the summary judgment application before the Court is, whether Mr North had a "responsibility" to make provision for the "proper maintenance and support" of the Webbs.

19 The defendants provided detailed written submissions and the summary judgment application took a full day's hearing. The Court was taken to numerous authorities setting out the law since the 1997 amendments to the Act.

20 Section 91 as amended in 1997, does not specify any particular category or categories of persons, who may make a claim under Part IV. The section is expressed in terms entitling any person "for whom the deceased had responsibility to make provision" under Part IV. The decision of a court on the first issue, whether the plaintiff has established, on the balance of probabilities that the deceased had a responsibility to make provision for his or her proper maintenance and support, requires a court to reflect on the nature and extent of any such responsibility and the question whether that responsibility was discharged by the deceased.

21 Recently, his Honour Kaye J in Unger v Sanchez[6] said:

As amended in 1997, s 91(1) does not specify any particular category or categories of person, who may make a claim under Part 4. Rather, the section is now expressed in terms entitling any person "for whom the deceased had a responsibility to make provision", to make a claim under Part 4. The Second Reading Speech of the AttorneyGeneral, introducing the amending legislation, makes it plain that the decision, not to specify a list of eligible applicants, was a considered one, leaving to the Court the question whether provision should be made in the case of any particular applicant. Thus, as Harper J observed in Schmidt v Watkins, the two-stage process, under the provisions of Part 4, now involves three questions, which are expressed in sections 91(4)(a), (b) and (c). The first issue is whether the plaintiff has established, on the balance of probabilities, that the deceased had a responsibility to make provision for his or her proper maintenance and support.

22 In Blair v Blair,[7] Nettle JA said that the approach of the Court in answering the three questions required the following:

The Court is bound in answering each of those questions to have regard to the matters mentioned in ss 91(4)(e) to (o) and pursuant to s 91(4)(p) to any other matters considered to be relevant. Self-evidently, such matters are of themselves incapable of providing an answer to either question. To reason from the matters mentioned in ss 91(e) to (p) to a conclusion that a testator had a responsibility to make a provision for a claimant, or that the testator failed to make adequate provision for the claimant, necessitates the application of a test or standard to the matters considered. The test remains one of whether and if so what provision a wise and just testator would have thought it his moral duty to make in the interests of the claimant.

23 Recently his Honour Mukhtar AsJ in Jackson v Newns described moral duty to mean: "the norm to be found in society's reasonable expectations of what a wise and just person would do in the circumstances, by reference to contemporary community standards (footnote omitted)".[8]

24 In Schmidt v Watkins, his Honour Harper J expressed the view that the amendments, affected by the 1997 Wills Act were "part of a continuum rather than ... a complete break from the past".[9] The limitations of the moral duty of the wise and just testator in a case of a claimant, who is not a family member, were discussed at length by his Honour Harper J in Schmidt v Watkins[10] and more recently in the decision of Whitehead v State Trustees Limited.[11]

25 Regardless of whether the plaintiff is a child, a blood relative, a carer or de facto partner of the deceased, the starting point for the Court in a Part IV application is the first jurisdictional fact of "responsibility" to make provision.

1. a mere business relationship would not of itself be enough to give rise to a moral duty to make provision for the plaintiffs;[12]
2. the Webbs' close, longstanding friendship with the Norths involving weekly socialising, sharing milestone events and Mr North's generosity towards the Webb children does not give rise to a moral duty to make provision for the Webbs;
3. the third and sixth plaintiffs' role as carers of Mrs North is insufficient to establish the beginning of a moral responsibility owed by Mr North to make any provision;
4. the third to sixth plaintiffs had their own parents at all times and there is no evidence before the Court of the Norths assuming the parental role for the Webb children. The defendants submit that much more is needed than a mere relationship between the Webb children and the Norths to elevate it to something giving rise to a moral duty for the purpose of a Part IV application;[13]
5. the promise by the Norths to remember the Webb children in their wills does not of itself create any relevant obligation or responsibility.[14] Further, there is no evidence before the Court that the promise extended to the Webb parents;
6. in relation to the Keyman Insurance, if the allegation is that Mr North broke a promise to the Webb parents, then a Part IV application is an inappropriate manner of enforcing such a promise. If it involved a payment to Norwebb Pty Ltd, then it is a matter for the company to pursue against the estate and not by way of attack on the will itself.

27 The defendants conclude that none of the plaintiffs have established any basis for the "rare or exceptional case" required to elevate any of them from nonrelative of the deceased to a person to whom the deceased owed a moral duty to provide for their maintenance and support. In doing so, the defendants rely upon a number of decisions principally, Schmidt v Watkins,[15] Unger v Sanchez,[16] Corbett v State Trustees Ltd,[17] and Forsyth v Sinclair.[18]

28 The plaintiffs submit that the concept of the moral obligation of the testator is not fixed or static but changes with community standards as observed by in Unger v Sanchez.[19] The plaintiffs submit that the reasoning process when examining the various factors under a Part IV application as enumerated in s 94(4)(e) to (p) of the Act is one of "instinctive synthesis".[20]

29 The plaintiffs submit that the evidence which is accepted for the purpose of this application demonstrates a relationship which is unusually extensive and strong and that it is impossible to characterise it as a mere business relationship of the kind that his Honour Harper J made general reference to in Schmidt v Watkins.

30 The plaintiffs' principal submission is that an application such as this is not one which is appropriate to be determined at a summary stage. This would deny the plaintiffs the opportunity to have all of the relevant facts fully and carefully considered at trial. The plaintiffs submit that it is recognised that cases such as a Part IV claim in the ordinary course are "best left to trial to determine their sustainability" and that the Court must at all times remember that the power to summarily dismiss ought to be exercised with great care.

31 The plaintiffs note that the claims are unusual and that the issues are correspondingly complex, covering the field of personal and business relationships in the context of a family business.

32 The plaintiffs submit that the summary judgment application has been made too late and that the case should now proceed to trial.

33 The plaintiffs note that if their claim is determined to be without merit upon a full and proper consideration of all the evidence, the Act can be called upon to recompense the estate's costs.[21]

34 The submissions before the Court focussed primarily on the merits of the plaintiffs' case and whether the plaintiffs' case has any real prospect of success if the matter proceeds to trial.

35 In the recent decision of Jackson v Newns,[22] his Honour Mukhtar AsJ considered summary dismissal against the plaintiff was appropriate. In doing so, his Honour made some relevant observations for the purpose of this case and applications for summary judgment generally in Part IV claims:[23]

What can be said at the outset is that summary disposals in this type of case are rare. That is because facts in family claims are invariably in dispute to some appreciable degree, and a fair bit is at large in a field of discretion. The claims usually involve a close examination of human relationships, interpersonal affairs, family stories, beliefs, perceptions, expectations, people's station in life and impalpabilities in life. The Court's evaluation of the testator's moral duty (about which, more later) and the exercise of a discretion that involves some value judgment means that ordinarily family claims are best left to trial to determine their sustainability.

36 While the statutory framework of s 91 of the Act is not controversial, the application of the discretion allowed in determining cases under s 91 of the Act and particularly since the amendments in 1997, have given rise to a wide spectrum of decisions which turn on their own facts, and which demonstrate a constantly evolving body of case law reflecting society's reasonable expectations of what a wise and just person would do in the circumstances, by reference to contemporary community standards.

37 The 1997 amendments and removal of category-based legislation, requires the Court to look at each individual case, consider and assess the evidence of each witness so as to form a view on whether a deceased had a moral duty to make provision for the applicant. What the Court must do in each case is make, to an extent, a value judgment based on the evidence of witnesses as to the nature of the relationship and all the factors set out in s 91(4)(e) to (p). The Court will then decide on the first jurisdictional fact of responsibility to make provision for the plaintiff in the will.

38 There is force in the defendants' submissions that the relationship between the plaintiffs and the deceased does not sit comfortably with the cases determined by this Court post the 1997 amendments.[24]

39 There is a vast amount of evidence and detail before the Court on affidavit. Even though the Court has not had an opportunity to assess the plaintiffs and to hear their viva voce evidence, the plaintiffs' case sits at the very margin of cases where this Court has determined that the testator had a responsibility to make proper and adequate provision.

40 Part IV claims under the Act proceed by originating motion, not pleadings. So defendant/executors cannot assess and take advice on the merits of the claim until plaintiff affidavits are produced.

41 Summary judgment, in whatever field, is to be pursued at the earliest stage. Summary judgment has been granted in Part IV cases such as Jackson v Newns where:

1. facts are confined;
2. parties are limited;
3. the defendant/s do not dispute the facts; and
4. the defendant acts early.

1. the facts are vast;
2. the defendants have filed materials;
3. the litigation is advanced; and
4. the plaintiffs have the expectation this case will proceed to trial.

43 The plaintiffs' case may be weak and it may even fail. However, it is an unfair use of the summary procedure to now deprive the plaintiffs of a trial, when facts and applicable law can be extensively examined. Otherwise, granting summary judgment may well lead to appeals de novo, which only prolongs justice and eats away at the estate.

44 There is a strong desire by the Court to find a practical solution which will minimise the erosion of the estate by the costs of litigation. The overarching purpose of the CPA and the rules of court in relation to civil proceedings is to facilitate the just, efficient, timely and cost effective resolution of the real issues in dispute.[25]

45 The defendants' application was filed after all interlocutory steps were completed, including mediation. The defendants submit that it was not appropriate to bring a summary judgment application until the affidavits in opposition and any in reply had been finalised. Further, the defendants submit that only after mediation was completed was it appropriate for a summary judgment application to be made. I consider these submissions to be unconvincing. Ultimately, the defendants relied on nine affidavits initially filed by the plaintiffs in support of their claim. Therefore, this claim could have been brought some time in April this year rather than incurring the significant costs of preparing responding affidavits and proceeding to mediation. The defendants could have simply communicated with the plaintiffs and informed them that they intended to make a summary judgment application based on the plaintiffs' own material. The simple point is that this matter is ready for trial, which of itself puts into question the appropriateness of asking the Court to determine this matter summarily.

46 The summary judgment procedure is being used by the defendants as a surrogate early trial. I consider this to be procedurally unfair and a misuse of summary judgment procedure when all the evidence is in. It is not in the interests of justice to summarily dismiss the plaintiffs' claim at this stage. The defendants could have and should have moved for summary judgment at the close of the plaintiffs' evidence. Instead they filed extensive affidavit materials attended mediation and this all bespeaks of a case going to trial. To now seek summary judgment is unfair. What now prevails is the plaintiffs' right to go to trial.

47 Regrettably, significant costs have been incurred to date and further costs will be incurred if the matter proceeds to trial. If the matter proceeds to trial the plaintiffs may fail; but that is another matter. The plaintiffs proceed knowing that there are possible cost consequences if they fail. The Court must balance the need to minimise costs and delay with what is in the interests of justice. I think having come this far, it would be unjust to deprive the plaintiffs of their right to have their case investigated at trial.[26]

48 Accordingly, I dismiss the defendants' application for summary judgment.

49 I would be inclined to follow the practice of ordering costs in the cause, but am willing to hear the parties on costs.

[1] Section 63 of the Civil Procedure Act 2010 (Vic).

[2] [2011] VSC 222.

[3] Ottedin Investments Pty Ltd v Portbury Developments Pty Ltd and anor [2011] VSC 22 at [18].

[4] [2011] VSC 168.

[6] [2009] VSC 541 at [59].

[7] [2004] VSCA 149 at [41].

[8] [2011] VSC 32 at [52].

[9] [2002] VSC 273 at [12].

[10] [2002] VSC 273 at [23].

[11] [2011] VSC 424 at [49].

[12] Schmidt v Watkins [2002] VSC 273 at [22], [48] and [52]; Forsyth v Sinclair [2010] VSCA 147 per Naeve JA at [85].

[13] Corbett v State Trustees Ltd [2010] VSC 481 at [76]- [80].

[14] Sanderson v Bradley [2004] VSC 231 at [16].

[15] [2002] VSC 273.

[16] [2009] VSC 541.

[17] [2010] VSC 481.

[18] [2010] VSCA 147.

[19] [2009] VSC 541 at [66].

[20] Grey v Harrison (1997) 2 VR 359 at 367 per Callaway JA.

[21] IMO Moerth (No 2) [2011] VSC 275.

[22] [2011] VSC 32.

[23] Jackson v Newns [2011] VSC 32 at [11].

[24] Unger v Sanchez [2009] VSC 541; Schmidt v Watkins [2002] VSC 273; Whitehead v State Trustees Limited [2011] VSC 424.

[25] Civil Procedure Act 2001 (Vic) s.7.

[26] Civil Procedure Act 2010 (Vic), s 64(a).