Robinson v Jones

2 In their application for a limited grant, the plaintiffs sought, but were not granted, a specific order to allow them to resolve whether the informal document or the June 2012 will should be admitted to probate as follows:

(c) taking all reasonable steps to resolve the dispute as to whether the informal will approved by the testator on 1 March 2013 should be admitted to probate; or whether the will dated 26 June 2012, and formally executed by the testator, should be admitted to probate...

3 On 11 April 2014, the limited grant was made by the Court, with the order noting in 'other matters' that the plaintiffs would make an application pursuant to s 9(1) of the Wills Act 1997 in respect of the informal document. The limited grant provided for the plaintiffs to:

(a) sell the deceased's real estate in Bayswater;

(b) receive the sale proceeds from the Bayswater property;

(c) pay the costs and expenses associated with the sale and this proceeding;

(d) use the proceeds of sale to meet the liabilities of the deceased and the costs and expenses of the estate; and

(e) invest the sale proceeds of the Bayswater property in an appropriate investment for trust funds.

4 On 29 July 2014, the plaintiffs filed an application for a grant of probate of the informal document, pursuant to s 9(1) of the Wills Act 1997, alternatively, the June 2012 will.

5 Jennifer Lee Jones ('Ms Jones') and Victorian Animal Aid Trust ('the VAAT') are defendants to the proceeding. VAAT was added as a contradictor pursuant to orders made by the Court of Appeal.[2] Ms Jones is named as a beneficiary under the June 2012 will, receiving 20 per cent of the residue of the estate, but is not named as a beneficiary in the informal document. The VAAT and Ms Jones' son-in-law, Mr Robert Alan Couzens ('Mr Couzens'), are named as beneficiaries in the informal document receiving between them the 20 per cent share that was previously left to Ms Jones. Mr Couzens is to receive the sum of $500,000 and the VAAT is to receive the balance of the 20 per cent share. Neither Mr Couzens nor the VAAT are named as beneficiaries in the June 2012 will.

6 After the limited grant was made and just before the trial date for the hearing of the application for a grant of probate of the informal document, the plaintiffs purported to enter into terms of settlement dated 16 April 2015 and described as a deed of settlement with Ms Jones, the VAAT and Mr Couzens that provided for the distribution of the 20 per cent share of the estate of the deceased between them ('the deed of settlement').[3] Ms Jones released the estate of the deceased from any claim she may have under Part IV of the Administration and Probate Act 1958.[4] The plaintiffs released Ms Jones from all actions, claims and demands against her relating to her relationship with the deceased, financial or otherwise and in relation to any inter vivos gifts made by the deceased to her.[5] The plaintiffs also agreed to remove the caveat lodged on the certificate of title to Ms Jones' property in Wantirna.[6]

7 The signatories to the deed represented and warranted that he or she had full power and authority on behalf of the person or entity on whose behalf he or she signs to enter into the settlement.[7]

8 Ms Jones had filed an affidavit in the proceeding objecting to the informal document being propounded, but withdrew her opposition following the purported settlement.[8]

9 The next day, on 17 April 2015, the Court was informed that Ms Jones withdrew her opposition to the informal document being propounded and that she would not appear at the hearing of the proceeding on the following Monday.[9]

10 At trial on 20 April 2015, the plaintiffs took the position that there was adequate evidence to support a grant of the informal document, alternatively, the June 2012 will. The VAAT supported a grant of the informal document.

11 The application for a grant of probate of the informal document was refused and orders were made granting probate of the June 2012 will to the plaintiffs, subject to any requirements of the Registrar of Probates.[10]

12 In the judgment, the Court expressed its concerns regarding the quality of the affidavit evidence that was filed in the proceeding and asked the parties to provide submissions as to costs, taking into account the overarching obligation of the parties under to s 24 of the Civil Procedure Act 2010.[11] The Court also queried the basis of and the power of the plaintiffs to enter into the deed of settlement.[12]

13 On 17 July 2015, the Court published its reasons dealing with issues of costs and the basis of and powers of the plaintiffs to enter into the deed of settlement.[13] The Court determined that the plaintiffs' response to the Court's original enquiry regarding the basis of and power of the plaintiffs to enter into the deed of settlement was inadequate. As such, orders were made that the plaintiffs file an explanatory affidavit and accompanying exhibits. The plaintiffs filed an affidavit on 7 August 2015 that exhibited the deed of settlement. Written submissions dated 12 August 2015 were subsequently filed by the plaintiffs.

14 On 14 August 2015, the parties made submissions in respect of the basis of and the power of the plaintiffs under a limited grant to enter into the deed of settlement, as well as to the reasonableness and proportionality of the costs. Ms Jones took a neutral position and the VAAT supported the plaintiffs' submissions in respect of costs.

15 These reasons address the issue of the power of the plaintiffs to purport to compromise the proceeding where the plaintiffs' application for a grant of probate if the informal document, alternatively, the June 2012 will had not been determined by the Court.

16 The issues concerning the reasonableness and proportionality of the costs of the parties will be affected by these reasons and will be dealt with separately.

Submissions as to the basis of and power of the plaintiffs to settle under a limited grant

17 The plaintiff submitted that the executors had power to settle the proceeding by virtue of the following:

(a) all parties to the settlement were 'potential beneficiaries' who were sui juris;

(b) while the Court must determine what the valid testamentary dispositions are, all affected beneficiaries have power to agree to a variation of the distribution of the estate;

(c) the mutual releases in respect of Ms Jones' potential claim under Part IV of the Administration and Probate Act 1958 was an issue only between the plaintiffs and one beneficiary and did not affect the rights of any other beneficiaries or potential beneficiaries;

(d) the executors interpreted the order made in respect of the ad colligendum bona grant as allowing them to 'get in' the estate but restricting the distribution of the estate.

18 The plaintiffs, in their written submissions, rely upon the remarks of Nettle J in Dowling v St Vincent de Paul Society Victoria Inc,[14] in support of their contention that a limited grant of probate would not prevent a compromise under s 19(1)(f) of the Trustee Act 1958. In Dowling, there had been a compromise of probate proceedings before a grant of probate was obtained - specifically, where a will was contested on the ground of testamentary incapacity. The proceedings were settled at mediation, subject to, inter alia, the Court making orders confirming that the executors had power under s 19(1)(f) of the Trustee Act 1958 to enter into the agreement in anticipation of a grant of probate. The plaintiffs cite his Honour's remarks as follows:

I also acknowledge the force of Dr Hardingham's submission that executors derive their title from the will by which they are appointed and, in that sense, that the plaintiffs have as much power now under s 19(1)(f) as they would have when and if probate is granted. In principle it does not detract from the force of that submission that a grant is necessary in order to establish that the executors were validly appointed. The executors may in some respects have no more power than has been conferred upon them as administrators pendent lite, and their powers under that grant are certainly limited. But as Dr Hardingham submitted, the compromise is not dependent upon any of the things provided for in the grant of administration. Furthermore, if the executors obtain a grant of probate, as is envisaged in the compromise, the grant will confirm that the executors were truly the deceased's personal representatives when they entered into the compromise. In the result I am inclined to agree that the scope of the power conferred upon an executor by s 19(1)(f) should not be thought to vary according to whether the executor has or has not yet obtained a grant of probate.[15]

19 In oral submissions, senior counsel for the plaintiffs expounded on the above submission and said that because the settlement related to the division of 20 per cent of the estate as between potential beneficiaries and not to which will would be admitted to probate, the plaintiffs did not act outside of any power vested in them under the limited grant and exercised pursuant to s 19(1)(f) of the Trustee Act 1958.[16]

20 In the alternative, the plaintiffs submitted that, if the Court considered that the settlement was not within the power of the plaintiffs as the administrators under the limited grant, they seek the approval of the Court or ratification of the compromise upon a grant of probate being made of the June 2012 will.

21 Section 19(1)(f) of the Trustee Act 1958 provides as follows:

Power to compound liabilities

(1) A personal representative, or two or more trustees acting together, or, subject to the restrictions imposed in regard to receipts by a sole trustee, not being a trustee company, a sole acting trustee where by the instrument (if any) creating the trust, or by statute a sole trustee is authorized to execute the trusts and powers reposed in him, may, if and as he or they think fit -

...

(f) compromise, compound, abandon, submit to arbitration, or otherwise settle any debt, account, claim, or thing whatever relating to the testator's or intestate's estate or to the trust;

...

and for any of those purposes may enter into, give, execute, and do such agreements, instruments of composition or arrangement, releases, and other things as to him or them seem expedient, without being responsible for any loss occasioned by any act or thing so done by him or them in good faith.

22 The comments made by Nettle J in Dowling and relied on by the plaintiffs in their submissions remain good law.[17] Specifically, however, in his judgment, his Honour immediately went on to say that:

But all that having been said, I remain of the view that s 19(1)(f) does not authorise an executor to compromise a probate proceeding in which the validity of the will is contested. The first and principal function of the executor is to carry out the wishes of his testator as expressed in the will and thereby to protect the interests of the beneficiaries as determined by the testator. I do not consider that s 19(1)(f) is to be given an interpretation inconsistent with that principle.[18]

23 Earlier in his reasons, his Honour noted as follows:

Despite what has been said about the breadth of s 19(1)(f) I do not consider that s 19(1)(f) empowers an executor as such to compromise a probate proceeding in which the validity of the will is contested.

Even allowing for the apparent amplitude of the expression 'claim or thing relating to the estate', I think that Mr O'Bryan is correct when he says that an attack upon the validity of a will is properly to be characterised as a claim relating to the plaintiffs' entitlement to probate, or as a claim relating to the validity of the last will, and that as such it is outside the reach of the section.

...

The word 'claim' is capable in some contexts of including almost any sort of demand. Equally, according to context, the conception of things which relate to an estate may include a very broad range of possible subject matters. But it requires no recitation of authority to establish that the words of a statutory provision are to be read in context and according to the apparent purpose of the provision. And in their context and according to what I perceive to be the purpose of s 19 of the Trustee Act, 'claims relating to...an estate' appear as limited to claims upon or against the estate...The section is concerned with claims against the estate - be they from the outside world or as between the beneficiaries - not proceedings to determine the title of executor or trustee.[19]

24 Although the circumstances presently under consideration are somewhat different, in that the identity of the executor is not in issue, being the same under either of the propounded documents, this is also an instance in which one of the matters to be determined relates not to a claim against the estate itself, but to the validity of the informal document. That determination identifies the beneficiaries to whom the executors and/or administrators owe duties, including the protection of their interest in an estate.

25 Few other cases have been decided in this jurisdiction that refer to the powers of a trustee under s 19(1)(f) of the Trustee Act 1958. Although authority exists that establishes that the power to compromise claims is generally to be given a wide ambit,[20] in circumstances where the validity of the will is itself contested, an executor moves beyond his or her authority in compromising the proceeding, as the wishes of the deceased regarding the distribution of the estate - which are the very source of the executor's authority - have not yet been determined.

26 An example of the power to compromise claims where the validity of the will or an informal document was not in contest can be seen in the decision of Browne-Sarre v Waddingham,[21] where Habersberger J considered the administrator's power to compromise litigation that had commenced prior to the death of the deceased. The administrator was appointed by order of the Court after a grant of probate had been made due to concerns as to the capacity of the executrix and sole beneficiary to the estate. The litigation related to a debt claim made against the deceased in respect of a guarantee he had signed to allow his son's business to purchase equipment. Following his appointment, the administrator entered into a conditional settlement deed compromising the proceeding and sought approval of the Court in respect of the deed. In deciding to approve the compromise, his Honour noted:

Nothing that I have heard or read suggests any impropriety on the part of the plaintiff in making his decision to agree with the compromise. He acted on the advice of counsel and solicitors and, as his affidavit makes clear, exercised his own judgment in a proper way including considering the particular interests of the sole beneficiary. I further find that the plaintiff exercised his discretion in good faith and that his decision was made after giving fair consideration to the relevant issues. Accordingly, I am prepared to approve the plaintiff entering into the compromise.[22]

27 In respect of the alternative submission by the plaintiffs, the authorities are clear that in determining whether or not to approve the compromise, the Court must consider whether:

(a) the administrator's decision to agree to the (conditional) compromise was within power;

(b) there was any impropriety in the administrator's decision;

(c) the administrator exercised his discretion in good faith; and

(d) the administrator gave fair consideration to the relevant issues.[23]

28 In their submissions, the plaintiffs described the parties to the deed of settlement as 'potential beneficiaries'. In his affidavit dated 7 August 2015, the first plaintiff deposed that 'the settlement is between the competing beneficiaries'. While the proceeding as to whether a grant of probate should be made of either the informal document or the June 2012 will remained undetermined, either Ms Jones on the one hand or the VAAT and Mr Couzens on the other hand were the possible beneficiaries of the deceased's estate. Senior counsel for the plaintiffs conceded that neither the VAAT nor Mr Couzens has standing as beneficiaries to receive any dispositions under the June 2012 will.[24] Equally, Ms Jones does not have standing as a beneficiary to receive any dispositions under the informal document.

29 It is undisputed that where the validity of a will or an informal document is an issue, it is the Court that determines the validity of the relevant testamentary documents, not the administrators under a limited grant. Where there has been opposition to a grant of probate and that opposition is withdrawn, the Court will still be asked to make a grant of probate. The Court will not make a grant because the parties have reached an agreement but must be satisfied on the evidence that either a will or an informal document represents the last valid testamentary wishes of the deceased, alternatively that the estate falls on intestacy. Specifically, in respect of an application for a grant of an informal document, it is only the Court that has the power to decide whether or not an informal will may be admitted to probate,[25] and only the Court that has jurisdiction to grant probate of a will or administration of a deceased's estate[26] thereby determining the beneficiaries and dispositions under the relevant instrument or legislative scheme.

30 The fact that all 'potential beneficiaries' were parties to the deed of settlement and were sui juris and that all affected beneficiaries have power to agree to a variation of the distribution of the estate is not to the point in a proceeding where there are contested testamentary documents. Until the validity of the contested testamentary documents is determined, the identity of the affected beneficiaries remains an issue. As the June 2012 will was determined to be the last valid testamentary document of the deceased, the VAAT and Mr Couzens are not affected beneficiaries. In agreeing to distribute part of Ms Jones' entitlement to these two non-beneficiaries, the administrators were not fulfilling their duty to protect the interests of the beneficiaries of the June 2012 will; namely, Ms Jones.[27]

31 The fact that Ms Jones' potential claim under Part IV of the Administration and Probate Act 1958 was an issue only between the plaintiffs and her and did not affect the rights of any other beneficiaries or 'potential beneficiaries' is irrelevant to the determination of the validity of the deceased's will or informal document.

32 The plaintiffs' submission that they interpreted the limited order as allowing them to 'get in' the estate but restricting the distribution of the estate supports the conclusion that they were well aware that they did not have the power and should not have entered into the deed of settlement. By its terms, the deed does not restrict the distribution of the estate as it is drawn on the basis that the estate is to be distributed as agreed 'irrespective of whichever will is admitted to probate'.

33 Although not specifically addressed in submissions, the plaintiffs are well aware of the orders sought by them in their application for a limited grant and are well aware that the Court refused to make the specific order allowing them to 'resolve the dispute' as to whether the informal document or whether the June 2012 will should be admitted to probate. In the deed itself, however, the plaintiffs represented and warranted that they had full power and authority to enter into the settlement. To my mind, against that factual background, it is incongruous for the plaintiffs to submit now that by entering into the deed of settlement they have acted within power.

34 The plaintiffs also submitted that their position in respect of whichever document was admitted to probate was a 'neutral position' before the Court. This submission is also incongruous in light of the deed of settlement having been entered into before the hearing. If their position were truly neutral, they would not have entered into the deed of settlement as between 'potential beneficiaries' but would have abided the Court's decision as to whether the informal document or the June 2012 will was the last valid will of the deceased.

35 In my view, s 19(1)(f) of the Trustee Act 1958 does not empower an executor, or in this case, administrators acting under a limited grant, to compromise a probate proceeding in which the validity of the will is to be determined by the Court; that is, where the validity of the will is contested.[28] Accordingly, the deed of settlement is beyond the power of the plaintiffs and should not have been entered into in the circumstances.

36 The plaintiffs' alternative submission seeks the Court's approval or ratification of the deed of settlement upon a grant of probate being made of the June 2012 will. The deed of settlement seeks to benefit the VAAT and Mr Couzens who, as a result of the determination of the Court as to the deceased's last valid testamentary document, are not beneficiaries of the estate of the deceased. It is not the role of the Court to 'rubber stamp' a grant of probate, or any such changes to a testator's dispositions that an administrator, executor, beneficiary or any other party may desire. A grant of probate is a public act giving power to a person or persons to distribute the assets of the deceased according to his or her last valid will or pursuant to the intestacy provisions.[29] By seeking the approval or ratification of the deed of settlement, the plaintiffs are requesting the Court approve a distribution of the deceased's estate that is beyond the power of the plaintiff to enter into and which purports to distribute the estate in a manner that does not reflect the provisions of the last valid will of the deceased.[30]

37 In such circumstances, I am satisfied that the deed of settlement should not be approved or ratified by the Court upon a grant of probate being made of the June 2012 will.

[2] Victorian Animal Aid Trust v Robinson [2014] VSCA (Unreported, ex tempore judgment, 28 November 2014) [8]-[15] (Neave JA, Ginnane and Sloss AJJA).

[3] See the deed of settlement (JWR-15 to the Robinson affidavit).

[8] See the deed of settlement (JWR-15 to the first plaintiff's affidavit), cl 1.

[9] Robinson v Jones (No 2) [2015] VSC 334 (1 June 2015) [34].

[10] Robinson v Jones [2015] VSC 222(17 July 2015) [136] ('the judgment').

[13] Robinson v Jones (No 2) [2015] VSC 334 (17 July 2015).

[14] [2003] VSC 454 (20 November 2003) ('Dowling').

[15] Ibid [26]; cited by plaintiffs in their submissions at [14].

[16] Transcript (page 11), lines 23-31; (page 12), lines 1-14.

[17] Dowling v St Vincent de Paul Society Victoria Inc [2003] VSC 454 (20 November 2003) [26].

[20] See Re Earl of Stafford [1980] Ch 1 28, 47 (Buckley LJ); Re Irismay Holdings Pty Ltd [1996] 1 QdR 172; and Re Ezekial's Settlement Trusts [1942] Ch 230; Re Tong [1910] VicLawRp 20; [1910] VLR 110 at 117 (Hood J); Re Brogden (1888) 38 Ch D 546 at 625 (Kekewich J). See also Ford and Lee's Principles of the Law of Trusts (1983), 1248.6; GE Dal Pont and K F Mackie Law of Succession (2013) Chatswood: LexisNexis Butterworths, 13.28-9.

[21] [2012] VSC 116 (30 March 2012).

[23] Re Beloved Wilke's Charity [1851] EngR 375; (1851) 42 ER 330, 333; Gisborne v Gisborne (1877) 2 App Cas 300, 307; Re Allen-Meyrick's Will Trusts; Mangnall v Allen-Meyrick [1966] 1 WLR 499, 503; Re Green, deceased [1972] VicRp 98; [1972] VR 848, 850 (Crockett J); IOOF Australia Trustees Ltd v The Trustee Act 1936 [1999] SASC 461 (Debelle J); McKinnon v Samuels [2000] VSC 393, [14] (Eames J); Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2004) 49 ACLR 1, [50]-[53] and [71] (Goldberg J); Browne-Sarre v Waddingham [2012] VSC 116 (30 March 2012).

[24] Transcript of proceedings, Robinson v Jones (Supreme Court of Victoria, S PRB 2014 11075, McMillan J, 14 August 2015) p 11, 6-14.

[25] Wills Act 1997, s 9(1)-(3).

[26] Administration and Probate Act 1958, s 6.

[27] Dowling v St Vincent de Paul Society Victoria Inc [2003] VSC 454 (20 November 2003) [27].

[28] Dowling v St Vincent de Paul Society Victoria Inc [2003] VSC 454 (20 November 2003) [26].

[29] Re Podger (dec'd) [1957] VicRp 35; [1957] VR 275, 278; [1957] VicRp 35; [1957] ALR 842; Re Smith (dec'd) [1978] VicRp 56; [1978] VR 596, 601; Re Irving (dec'd) [2003] VSC 351; Phillpot v Olney [2004] NSWSC 592.

[30] Re Marsden (1884) 26 Ch D 783, 790 (Kay J) in which case his Honour said, 'in equity the executor is bound by a most direct trust to deal properly with the assets and to apply them in due course of administration of the estate.'