Stone & Drabsch v Pinniger

Judgment 1HIS HONOUR : Mr Ian Landseer Pinniger ("the testator"), a company director, died on 28 March 2009 aged 69 years. He made a will on 2 May 2008 ("the will") which was prepared and held by his solicitor, Mr Peter Buckley. Shortly afterwards, the testator prepared a handwritten document ("the document") which he gave, unsigned, to Mr Buckley to be held with the will. 2By his will, the testator appointed his daughters, Karen Stone and Kerry Drabsch ("the plaintiffs") and his nephew, Wayne Jon Pinniger ("the cross-claimant") as executors. He gave a legacy of $300,000 to Margaret Ann Robinson, and left the residuary estate to his daughters in equal shares as tenants in common. 3The plaintiffs seek a grant of probate in solemn form. Due execution is admitted. 4By his amended cross-claim filed 14 June 2011, the cross-claimant seeks relief under s 8 Succession Act 2006 ("the Act") in respect of that part of the document ("the part") which states: "To be read in conjunction of (sic) will Dated as per will Dear Karen Kerry & Wayne I wish you to carry out instructions as in will, I know you may not like some instructions but due to the complex financial situation I would like you to make sure Patricia is paid 20000 per month from hotel a/c up and until you sell the hotel where she will be paid $3.350000.00 which should be approximately 50% of value & through your shares in Yenlan & IWT Karen 20% Kerry 20% and on the provision that Wayne manages the hotel for five years or until hotel sold he should receive 10% of hotel." 5The cross-claimant seeks declarations that the part forms an alteration, or a partial revocation, of the will, and an order that probate of the will and the part be granted to the plaintiffs and the cross-claimant in solemn form. 6The estate has a gross value of $6,306,663 and a net value of $2,950,575. Liabilities include an unsecured liability to the testator's widow, Mrs Patricia Ann Pinniger, in the amount of $3,350,000 pursuant to an order of the Family Court of Australia made 20 June 2007. 7At all material times, Yenlan Pty Limited ("Yenlan") has been the trustee of the discretionary Pinniger Family Trust, and the proprietor of the property at 51 Durham Street, Bathurst at which is located the Panorama City Hotel (the hotel). At all material times, International Wool Traders (Australia) Pty Limited ("IWT") has been the trustee of the discretionary Pinniger Trading Trust and the proprietor of the business enterprise trading as the Panorama City Hotel/Motor Lodge. The testator's shares in Yenlan and IWT passed to the plaintiffs under the will, and have been transferred to them. The plaintiffs are also directors of Yenlan and IWT. 8Mr Peter Buckley was the testator's solicitor for many years. His evidence, which I accept, established the circumstances in which the will was made and in which the document was given to him. The relevant history is as follows. 9On 10 April 2008, the testator attended Mr Buckley in his office, and gave instructions for the preparation of his will. Mr Buckley explained the distinction between the testator's personal property and the assets owned by each of Yenlan and IWT. The testator expressed a wish to leave to Ms Robinson some land described as the "Troy" property. In response, Mr Buckley advised that as it was owned by Yenlan the property was not his to leave under a will. In his affidavit of 22 July 2010, Mr Buckley deposed: "9. I went on to explain to the testator that, whilst he had control of the Trusts, the assets so held were not his to bequeath by his Will. I believe that my explanation to the testator in this respect, most likely touched on other assets owned by Yenlan, the principal asset of which company, was (and is) the Panorama City Hotel at Bathurst. The discussion that ensued between the testator and me, in relation to this subject matter, included an exchange to the following effect: The testator said: ' How can I leave part of it to Margaret?' I said: ' First of all you would have to get it valued, and you will pay stamp duty on whatever it is valued at, so that you can transfer it out of the trust to yourself. That will involve not only stamp duty, but will probably also put it into the capital gains net' 10. At the request of the testator, I gave to him an estimate of the likely stamp duty payable. My recollection is that I based that estimate on an offer that had been made by a prospective purchaser of the Troy property. Although I cannot now recall the precise offer made by that prospective purchase, I believe that it was in the vicinity of $700,000-$800,000. 11. After informing the testator of my estimate of the stamp duty likely to be payable on any transfer to him, of the Troy property, and having mentioned to the testator, the probability that capital gains tax would be incurred, the testator said to me words to the following effect: 'That's too much. I'll leave her some money then. I'll think about it.' 12. Following this discussion, the testator's instructions to me were to leave the whole of his estate to his daughters Karen Patricia Stone, and Kerry Ann Drabsch, in equal shares. Further, he instructed me to appoint his daughters, and his nephew, Wayne Jon Pinniger, as executors. In the latter respect, the testator remarked to me: 'I wish to appoint Wayne as an executor to keep the peace between the girls.' 13. I arranged for my secretary to type up the testator's Will, which he made before leaving my office on 10 April 2008. 10By his will made 10 April 2008, the testator appointed the plaintiffs and the cross-claimant as executors and trustees, and left the whole of his estate to the plaintiffs in equal shares as tenants in common. 11On 18 April 2008, the testator attended Mr Buckley in his office and informed him that, having reflected on the matter, he had decided to leave Ms Robinson the sum of $300,000, with the rest of his estate to be left to the plaintiffs in equal shares. 12On 2 May 2008, the testator attended Mr Buckley in his office when he made the will the subject of these proceedings. Then followed a discussion to the effect that, as a result of the family law settlement, Mrs Pinniger was to have $3.3 million in addition to other property. The testator also indicated he wanted to transfer to her a one half interest in the hotel, but because of the trust structure could not do so without incurring capital gains tax and stamp duty. Accordingly, he instructed Mr Buckley to write the letter of 2 May 2008 to Mrs Pinniger in the following terms: "Ian has asked us to write to you and confirm that the Family Law Consent Property Orders made on 20 June, 2007 are fully binding on his Estate in the event of his death prior to the terms of the Orders being completed." 13Shortly afterwards, the testator again attended Mr Buckley in this office and gave him the document, saying in effect: "Can you put this in my packet so that the girls and Wayne will know what I've got and where everything is?" There was no discussion, and Mr Buckley placed the document in the testator's safe custody packet. 14Some months later the testator again attended Mr Buckley in his office, and gave him another handwritten document requesting it be put in his packet. Although he found it to be indecipherable, Mr Buckley discerned that it contained a list of assets. He handed it back to the testator saying: "Ian, you have already given to me a list of assets." Mr Buckley then extracted the first document from the packet, and at the testator's request arranged for it to be typed up and placed in the packet. A few days later a copy of the transcription was given to the testator. 15The cross-claimant gave evidence, which I accept, that on 26 June 2006, he became the licensee of the hotel. Thereafter, until 24 June 2009, he and his wife Saada, managed the hotel. It had been agreed with the testator that they would be paid a combined amount of $100,000 net of tax, and would receive benefits including accommodation at the hotel, fuel, and meals. In fact they were paid a gross amount of $60,000 each, for which they worked long hours. The wages were paid by IWT. In the period from 2008 to early 2009 the testator regularly visited him at the hotel, and expressed his satisfaction at the way the hotel was being run. 16The cross claimant also gave evidence of a conversation in mid 2008 in which the testator said to him: "I am leaving 50/50 to Karen and Kerry of my estate, with 10% to you, and Aunty Pat is still to receive $20,000 until the final payment of her money from the divorce settlement." And: "You have got to be looked after. Your (sic) working hard here and really doing a good job for me so it's only fair that I do something for you." 17The document the subject of the cross-claim contains the following (pages 1 and 2): "To be read in conjunction of (sic) will Dated as per will Dear Karen Kerry & Wayne I wish you to carry out instructions as in will, I know you may not like some instructions but due to the complex financial situation I would like you to make sure Patricia is paid 20000 per month from hotel a/c up and until you sell the hotel where she will be paid $3.350000.00 which should be approximately 50% of value & through your shares in Yenlan & IWT Karen 20% Kerry 20% and on the provision that Wayne manages the hotel for five years or until hotel sold he should receive 10% of hotel. When you receive equal shares from super fund your financial situation is assured please invest fixed term deposit which will give you an income for life. Please treat these funds as your capital as I have worked hard and assuredly for our future. As you would appreciate by continuing the trusts you can aportion profits to a range of beneficiary's. (sic) Trusts distribute but don't pay tax. I would suggest you distribute say $50,000.00 to each of the six grandchildren as they reach a certain age eg 20 years from profits of trusts so as to help minimise your tax obligation. I would suggest distribution to grandchildren be on the proviso of their opening a 1 st house buyers ac which complies with government requirements. This a/c can be added too (sic) by their own initiative. 18Page 3 is headed: "Assets Owned by Yenlan Pinniger Property Trust Discretionary Trust" Beneath are listed a number of properties and the approximate value of each. 19Page 4 is headed: "Assets owned by International Wool Traders Aust Pty Ltd Pinniger Trading Trust Discretionary Trust" Beneath are separately listed IWT's liabilities and assets and the approximate value of each. The assets include items of machinery, shares, and cash in a bank account. 20There is no page 5. Page 6 is headed: "Assets owned by Ian Pinniger & Co Pty Ltd" Beneath are listed assets and the approximate value of each. 21Page 7 is headed: "Ian Pinniger" Beneath are listed the testator's assets and the approximate value of each. They include parcels of real property, horses, golf equipment, shares and cash in a bank account. Included is the following: "XXXX XXXX Road (House) Approx 200 acres Please only sell when zoning changed either by council or (Land & Environment Court) This property if held for subdivision or to develop should fetch For from 2, 3, 4, million" 22Page 8 is headed: "Ian Pinniger & Co Staff Super Fund" Beneath are listed its assets, including shares and real property, and the approximate value of each. 23A statement of agreed facts contained the following: