Stubberfield v Brown

Briginshaw v Briginshaw (1938) 60 CLR 366 CASES CITED : Browne v Dunne (1893) 6 R 67 Upton v Downie [2007] NSWSC 1095

PARTIES : Bruce Stubberfield (Plaintiff) Robyn Brown (Defendant)

COUNSEL : M A Friedgut (Plaintiff) T J Morahan (Defendant)

SOLICITORS : Colin Quinn Daley (Plaintiff) Brydens (Defendant)

• 17 - IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

2008/309551 BRUCE STUBBERFIELD v ROBYN BROWN JUDGMENT 1 HIS HONOUR: This case raises two issues. One is whether the Defendant should be removed as an Executor of her father's Will. The other is whether the Defendant has failed to account to the estate for an amount of $100,000 in cash which it is said was in her possession at the time of her father's death. 2 Harry James Stubberfield ("the Deceased") made his last Will on 22 October 2000. By that Will, he appointed the Plaintiff, his son, and the Defendant, his daughter, as Executors of the Will. Under the Will, he left each of his three grandchildren (all of whom are children of the Defendant) $3,000. He made a number of other small specific bequests. He left the residue of his estate to be divided equally between the Plaintiff and the Defendant. Leaving aside the $100,000 cash to which I will return shortly, the estate consisted largely of a residential property in Peakhurst. 3 Up until late 1999 the Deceased lived at the property in Peakhurst - for a number of years with a boarder. In late 1999, he collapsed due to low blood pressure. He lived with the Defendant and her husband from that time until 17 June 2004, when he moved into a nursing home. He also stayed with the Plaintiff and his wife at their place at Uralla on a number of occasions during the time that he lived with the Defendant. 4 On 8 June 2005, the Deceased met with Mr Timothy Daley ("Mr Daley"), a director of Colin Daley Quinn Solicitors, at the "Second Cup" coffee shop in Kogarah. The Deceased had known Mr Daley for a number of years and had expressed in his Will a desire that Colin Daley Quinn be employed in connection with the administration of his estate. Also present at the meeting were Ms Christine Webber, a senior probate paralegal employed by Colin Daley Quinn, the Defendant and the Defendant's husband. There is a dispute about what happened at that meeting and how it came about. 5 In her affidavit, the Defendant says that she arranged the meeting because her father had told her that he wanted to change his Will. According to the Defendant, the Deceased said that he was considering amending his Will to leave his estate to be divided equally between his three grandchildren or leaving it to be divided equally between them, the Plaintiff and the Defendant. She said in cross-examination that the Deceased was not happy with the way the Plaintiff and his wife had treated him on his trips to Uralla. 6 Although Mr Daley did not keep a file note, he gave a clear account of what happened at the meeting. He said that he observed that the Deceased appeared to be comfortable and relaxed, but the Defendant appeared to be agitated and that she spoke quickly and loudly and at times over statements made by both himself and the Deceased. Mr Daley asked the Deceased whether he wanted to change his Will. According to Mr Daley, the Defendant interjected and said that the Deceased wanted to leave everything to his grandchildren. The Deceased then said that he had promised the Plaintiff that his estate would be divided equally between the Plaintiff and the Defendant and that there was a house and $100,000 in cash. According to Mr Daley, the Deceased said that the Defendant had the cash and that he wanted his son to get half of it. The Defendant replied that she would see to it. Mr Daley then asked the Defendant and her husband to go for a walk so that he could speak privately to the Deceased. He gave evidence that he spoke to the Deceased at length and that, during the course of the conversation, the Deceased said words to the following effect: "I promised Bruce that it would go equally between Robyn and himself and I will not go back on that. Robyn's got the money and she must give Bruce half of that money. The rest of the Will as it is at the moment is exactly as I want it except that I want Darryl [the Defendant's husband] to have my shares in Stockland Holdings. I have a lot of time for Darryl." 7 Following that conversation, Mr Daley arranged for a Codicil to be prepared at his office (which was close by) which was consistent with those instructions. The Codicil was then brought to him at the meeting. He read the Codicil to the Deceased. The Deceased said that the Codicil was what he wanted and signed it. No other changes were made to the Will. There is no suggestion that the Deceased did not understand what he was saying or doing at the meeting. 8 Ms Webber gave evidence which corroborated the evidence given by Mr Daley. In particular, she had a specific recollection of the Deceased saying words to the effect of: "I have promised Bruce that everything will go equally to him and to Robyn. I have a house and $100,000 in cash that Robyn has. Robyn must make sure that she gives Bruce half the money after my death." 9 The Defendant gave a completely different account of the meeting. She said in cross-examination that the Deceased was in a great deal of pain and that he was "cranky" at the meeting, although she later accepted that he appeared to be comfortable and relaxed. She denied that her father said anything about the $100,000. She said that she may have referred to the sum of $100,000, but that that was a reference to settlement moneys which were payable to her following a motor vehicle accident and that she was confused. She denied that Mr Daley explained the change that the Deceased had asked to be made to his Will. She said that when they got back into the car to go home the Deceased said that Mr Daley had told him that he could not change his Will and that the law in New South Wales required that the estate be divided equally between his son and daughter. She said that the Deceased expressed dissatisfaction with Mr Daley. Throughout her cross-examination, the Defendant vehemently denied that there ever was $100,000 in cash. 10 The Defendant's husband (Mr Brown) also gave evidence concerning the meeting. An affidavit was not filed from him before the hearing commenced and he was in court throughout the Defendant's cross-examination. After that cross-examination was completed, the Defendant sought leave to file an affidavit from him which had been prepared overnight. I granted that leave. Mr Brown could shed little light on what happened at the meeting. He said in cross-examination that "I stepped back. I didn't want to be involved in what was happening. It's not my business". He could recall the Defendant saying that the Deceased wanted to change his Will and Mr Daley asking him and the Defendant to leave the meeting, but ultimately he accepted that he could not deny Mr Daley's and Ms Webber's account of the meeting (or confirm that it was correct). 11 The Deceased died on 5 July 2005. 12 On 10 April 2006, Mr Daley and Ms Webber met with the Plaintiff, the Defendant and her husband. Mr Daley and Ms Webber gave evidence that, during the course of that meeting, the Defendant said that she had $100,000 in cash from her father in a box. Mr Daley thought she was referring to a shoe box. Mrs Webber thought she referred to a safety deposit box. The Defendant gave evidence that what she said was "I think I have $100,000 in cash from our late father in a safety deposit box." She says that she told Mr Daley and Ms Webber that she would check the safety deposit box soon thereafter. Mr Brown also recalls the Defendant saying that she had cash, although he could not remember the amount. In cross-examination, his evidence was in the following terms: Q. You recall that she [the Defendant] mentioned that there was a substantial sum in cash which she had of the deceased. She mentioned that at the meeting? A. Yes, I think it was, yes.

The Plaintiff did not give evidence. However, having regard to the evidence given by the others, I do not think that any adverse inferences should be drawn from that fact. 13 Colin Daley Quinn prepared the probate application on 3 August 2006. After some correspondence, the affidavit of the executors was sworn by the Defendant on 12 February 2007 and by the Plaintiff on 8 March 2007. The Inventory of Property made no reference to the $100,000. Mr Daley gave evidence that it was his practice not to include cash on an Inventory of Property until the cash had been paid into Colin Daley Quinn's trust account. 14 Probate was granted on 23 March 2007. 15 At the time the Defendant signed the probate application she expressed an interest in purchasing the Peakhurst property from the estate. There was then considerable correspondence from Colin Daley Quinn to her concerning that proposal. Mrs Webber also spoke to her on several occasions about it. It appears that the Defendant was trying to raise finance to purchase the property, but was having difficulties doing so. In addition, she was ill in August 2007 with pneumonia and pleurisy and, at about that time, her and her husband's business experienced serious financial difficulties. Ultimately, it went into administration on 17 October 2008. 16 While the Defendant was trying to raise finance, she resisted putting the property on the market. Eventually, on 5 September 2007, the Defendant made an offer to buy the Plaintiff's interest for $180,000. That offer was rejected by a letter dated 25 September 2007 from Colin Daley Quinn. In that letter Colin Daley Quinn suggested that an offer should be put (for the whole property) in the range of $430,000 to $460,000. The letter said that, if the Plaintiff did not receive a response within 14 days, he would make an application to have the Defendant removed as an executor. 17 The Defendant met with Ms Webber and Ms Narelle Alexander of Colin Daly Quinn on 12 October 2007. At that meeting, she put a further offer of $215,000 for the Plaintiff's half share. There was also a discussion at that meeting about the $100,000. According to the evidence of Ms Webber, the Defendant said "The $100,000 in cash was expended on our late father during his lifetime". According to the Defendant, she said that she thought that that was the case. Following the meeting she says that she went to the St George bank to see whether it held a safety deposit box in the name of the Deceased, her own name or her husband's name - to no avail. 18 The Defendant's offer of $215,000 was rejected by Colin Daley Quinn in a letter dated 16 October 2007. That letter said that the offer was unacceptable because it assumed a transfer to the Defendant in specie, leaving no funds to pay any adjustments arising from the fact that the Defendant had $100,000 cash belonging to the estate. The letter went on to say that the Plaintiff would only consider the offer once the $100,000 had been produced. It said that the explanation that the Defendant had given in relation to the $100,000 was inconsistent with the Defendant's original statement that she had that amount of cash. The letter also sought an explanation of deductions from the Deceased's account during the time that he was in a nursing home. The Defendant did not respond to that letter. 19 On 2 November 2007, Ms Webber had a further conversation with the Defendant in which she asked, among other things, for an accounting for the $100,000 cash and for details of moneys spent by the Defendant on behalf of the Deceased over the last few years of his life. The Defendant accepts that she responded in the following terms: "I feel like Old Mother Hubbard, I went to the cupboard and the cupboard was bare - there is no money". 20 In response to a question from Ms Webber, the Defendant went on to say that she thought she had the money, but that the Deceased had given it away. When asked to whom he had given it, the Defendant said and admitted in cross-examination that she said: "I don't know, I don't want to say anything at this time." 21 During the telephone conversation on 2 November 2007, Ms Webber also says, in the context of the discussion about the $100,000, that the Defendant said: "I'm still trying to find two folders of my father's which had bank statements in them. I have also lost my 2004 diary. There was a note from my father, which gave me all his money. This should have been in the Will." 22 The Defendant also confirmed in cross-examination that she said words to that effect. The note she says she was referring to was a note dated 23 January 2000 written by the Deceased which said: "I, Henry James Stubberfield, do hereby authorise my daughter Robyn Brown to use at her distretion [sic] all of my pension and disability alance [sic] to look after me." 23 Ms Webber had a number of other conversations with the Defendant. In one the Defendant told Ms Webber that she suggested Ms Webber tell the Plaintiff that the Deceased gave the money to his grandchildren. In another, she said that she was still trying to reconcile the bank statements in order to account for money spent on the Deceased's behalf during the last few years of his life. When giving evidence, the Defendant said that she was half way through that process. 24 On 29 March 2008 Colin Daley Quinn wrote to the Defendant again. They said that no definite offer had been made to purchase the Plaintiff's share of the Peakhurst property and again asked about the $100,000. The letter enclosed a proposed Statement of Claim. 25 The Plaintiff finally commenced these proceedings on 28 October 2008. There was a mediation in September 2009. As a result of that mediation, the parties agreed to put the property up for auction. It was sold at auction on 28 November 2009 for $530,500. The net proceeds of sale are currently held in the estate's account. On 22 April 2010, Colin Daley Quinn wrote to Brydens, the solicitors acting for the Defendant, suggesting that there be an interim distribution from the estate. On 6 May 2010, Brydens asked for a formal proposal in relation to a partial distribution. On 7 May 2010, Colin Daley Quinn replied saying that, in view of the closeness of the hearing, they no longer pressed their request for agreement on an interim distribution. Did the Defendant have $100,000 cash belonging to the Deceased? 26 It is clear that this question must be answered having regard to the principles in Briginshaw v Briginshaw (1938) 60 CLR 366. The Court must be satisfied (in the sense of feeling an actual persuasion) that the allegation is made out; and, in considering whether it is satisfied, it must bear in mind the gravity of the allegation. There can be no doubt that the allegation in this case is serious. It amounts to an allegation that the Defendant has misappropriated money belonging to the estate. 27 Applying that standard, I am satisfied that the Defendant did have $100,000 cash which belonged to the Deceased. That conclusion seems to me to be inescapable having regard to the conversations on 8 June 2005 and 10 April 2006 and the Defendant's later inconsistent and implausible attempts to explain away her earlier admissions. 28 The starting point is the conversation on 8 June 2005. I accept Mr Daley's and Mrs Webber's account of that conversation. Both were clear in their recollection. Neither has anything to gain from the evidence they gave. On the other hand, the Defendant gave inconsistent accounts not only of what happened at that meeting, but also inconsistent accounts about the existence of and what might have happened to the $100,000. I do not think any reliance can be placed on her denial that the Deceased referred to $100,000 cash at the meeting. 29 Mr Morahan, who appeared for the Defendant, suggested that little reliance could be placed on the Deceased's statements at the meeting on 8 June 2005. He pointed out that the Deceased was approximately 87 years old and had been very sick from at least 2000. The Deceased's only income was a pension of approximately $20,000 per year. It is unlikely that he had worked for a number of years and it was unlikely that he would have accumulated $100,000 in cash. Moreover, when the Deceased referred to $100,000 at the meeting he could have been intending to refer to the $100,000 that the Defendant had withdrawn from his account on his behalf during the 5 years after he left the Peakhurst property. 30 In my opinion, these points do not undermine the force of the evidence concerning the meeting on 8 June 2005. It is, of course, unusual for anyone to keep $100,000 cash at home. But it is not so unusual that I should not accept what he said at the meeting. It does not strike me as inconceivable that someone of that age and generation would, over a substantial number of years, accumulate that amount of cash and prefer to keep it at home rather than put it in a bank. Although the Deceased may have been physically frail, there is no evidence to suggest that he was not mentally alert at the meeting. His statements concerning the existence of the $100,000 as Mr Daley and Mrs Webber recalled them were clear. Even more importantly, the Defendant did not query the Deceased when he referred to the $100,000 cash in her presence. Rather, she said that she would see to her father's wish that the money be distributed equally between herself and the Plaintiff. 31 The conversation on 8 June 2005 also needs to be considered with the one that occurred at the meeting on 10 April 2006. It is not disputed that the Defendant referred to her having $100,000 in cash at that meeting. Everyone who gave evidence concerning that meeting, including the Defendant and her husband, can recall the Defendant referring to a substantial sum in cash. Everyone apart from the Defendant's husband, can recall that the amount referred to was $100,000. The only difference in the evidence given by the other three witnesses is that the Defendant says that she said that she thought that she had $100,000 in cash. She says that she did not actually say that she had it. If that was intended to be a qualification on the precise amount she had, I can understand it. However, if it was intended to be a qualification on whether she had any cash at all - as the Defendant now appears to suggest - I find it highly implausible. The Defendant would have known whether or not she was holding a substantial amount of cash belonging to her father at that time. 32 The conclusion that the Defendant held $100,000 cash belonging to the Deceased is reinforced by her later conduct in which she seeks to explain why she never had the $100,000 cash. One explanation she gave was that she was confused and that her references to $100,000 were references to $100,000 payable to her in connection with her motor vehicle accident. In my opinion, that explanation cannot be accepted. I cannot see how the Defendant could confuse the two amounts of money, particularly in the context in which the $100,000 was discussed. 33 The Defendant's evidence concerning the meeting with Ms Webber and Ms Alexander on 12 October 2007 is equally odd. In that meeting the Defendant asserted that the $100,000 in cash was expended on the Deceased during his lifetime. Again, however, the Defendant sought to qualify the statement she made by saying that what she said was that she thought the money had been spent in that way. How that qualification helps her is not clear. The Defendant says that immediately after the meeting on 12 October 2007, she went to the Bank to see whether she could find a deposit box containing the $100,000 to no avail. Her evidence that she did that makes no sense. 34 In the conversation on 2 November 2007 with Ms Weber, the Defendant came up with yet another explanation. In that conversation her explanation was that the Deceased had given the money away although the Defendant admits that she said she did not know to whom and did not want to say anything more at that time. Later still, she suggests that it may have been her children. In support of that version, the Defendant sought to attach to one of her affidavits statements from her children to the effect that the Deceased had given them money. I rejected that evidence but gave the Defendant leave to call oral evidence from each of her children on that issue. Despite that, none of her children gave evidence. The only conclusion that can be drawn from this is that the Deceased did not give the grandchildren $100,000 cash during his lifetime, and that the Defendant's suggestion that he did so is nonsense. 35 There are two other matters which are relevant in this context. 36 First, it seems to be clear that it was the Defendant who wanted the Deceased to change his Will, not the Deceased. For whatever reason, she thought that it was appropriate that her father's estate should go to her children. The Defendant suggests that the Deceased ultimately did not change his Will because he was advised by Mr Daley that he could not do so. I do not accept that Mr Daley gave that advice. It is possible that the Deceased told the Defendant that Mr Daly gave him that advice. However, if the Deceased did so, I think that that was simply a means employed by the Deceased of appeasing the Defendant. 37 Secondly, I think it is relevant that the Defendant and her husband were facing serious financial difficulties at the time because of the difficulties with their business. 38 These two matters, of course, fall a long way short of establishing that the Defendant had $100,000 cash belonging to the Deceased for which she has not accounted. However, they help to explain why the Defendant might have kept the $100,000 for herself and why she thought she might have had some entitlement to do so. To that extent, I think they support the conclusion that the Defendant did have $100,000 in cash belonging to the Deceased. 39 There is one final point on this aspect of the case which I should mention. Mr Morahan submitted that it was not specifically put to the Defendant that she had used the $100,000 for her own purposes or that she now holds the $100,000 and that, in those circumstances, the Plaintiff was not entitled to make those assertions now: see Browne v Dunne (1893) 6 R 67. I do not think there is any merit in that submission. The Defendant was clearly on notice that it was the Plaintiff's case that she had in her possession $100,000 for which she must account to the estate. Whether she has it now or whether she has spent it does not matter for that case. Nor does the fact that she was not asked those specific questions. 40 The order sought by the Plaintiff in respect of the $100,000 was a declaration that the sum of $100,000 is owed by the Defendant to the estate of the Deceased. In the circumstances of this case, I think that that is an appropriate order to make. Normally, the Defendant would be liable to pay the estate $100,000 in an action for money had and received. However, in circumstances where the estate has not been distributed and where it is possible to make adjustments to the distributions to allow for the fact that the Defendant has $100,000 belonging to the estate, I think it is sensible simply to make the declarations sought by the Plaintiff. Should the Defendant be removed as an executor of the estate? 41 This question is to be answered by asking whether: "… the due and proper administration of [the] estate [has] either been put in jeopardy or [has] been prevented either by reasons of acts or omissions on the part of the executor or by virtue of matters personal to [her], for example, mental infirmity, ill health, or by virtue of the proof of other matters which established that the executor [is] not a fit and proper person to carry out the duties [she has] sworn to perform": see Mavrideros v Mack (1998) 45 NSWLR 80 at 108 per Sheller JA.

The fact that there is a conflict between the executor's interest and duty is not sufficient. It must be shown that the executor has preferred her interest over her duty: Upton v Downie [2007] NSWSC 1095 at [48]-[51] per Gzell J. 42 The Plaintiff advances three grounds for why the Defendant should be removed as an executor. The first is her failure to give an account of moneys spent by her on behalf of the Deceased over the last few years of his life. The second is the delay she is said to have caused in relation to the administration of the estate. The third is the Defendant's failure to account for the $100,000 cash. 43 In considering these matters, it is important to bear in mind that the administration of the estate is almost complete. There are some expenses to be determined and paid, including expenses incurred by the Defendant in preparing the Peakhurst property for sale. There is also some tax payable by the estate which must be calculated and paid. Other than those matters, all that is left is for the estate to be distributed. 44 During the course of the hearing, I expressed some concern that, if the Defendant were removed as an executor, there could be no certainty that the Plaintiff, as sole executor, would not continue to spend money of the estate on investigating expenditures made by the Defendant on behalf of the Deceased during his lifetime, and that there would be no fetter on his ability to do so. In response to those concerns, the Defendant offered the following undertaking to the Court: "[I]f he obtains the relief sought by him in the Amended Statement of Claim filed in these proceedings, then in that event he will not press for any accounting from the Defendant in relation to the expenditure of funds by the Defendant from the Deceased's St.George bank account number [xxxxxxxxx] nor will he institute any proceedings against the Defendant in relation to the expenditure of funds by the Defendant from that account". 45 Having regard to these matters, I think it is appropriate that I make orders the effect of which is to remove the Defendant as an executor of the estate. 46 I do not think that the Defendant's failure to account for money spent by her on the Deceased's behalf during his lifetime is a ground for removing her as an executor. To give such an account would be difficult and time-consuming. The Deceased lived with the Defendant for several years before going into a nursing home. His income during that time was approximately $20,000 per year. It may be that the Defendant's money and the Deceased's income became intermingled to some extent. But even then, I do not think that some form of accounting from the Defendant would be justified. The Defendant undoubtedly incurred substantial costs in providing accommodation and looking after the Deceased. It is likely that the Deceased also had some expenses of his own. It would not be surprising if those amounts came to or exceeded $20,000 per year. In those circumstances, I do not think that the Defendant was obliged to account for that expenditure. 47 Taken alone, I would not regard the delay in the sale of the Peakhurst property as a reason now for removing the Defendant as an executor. In my opinion, the Defendant did delay too long in agreeing to the sale of the property. She did that because of her own interest in trying to acquire the property. It is unclear for how much longer she would have delayed if the Plaintiff had not commenced these proceedings; and that question is complicated by the fact that her proposal to acquire the property became tied up with the existence of the $100,000 cash. Ultimately, however, the Defendant did agree to the sale of the Peakhurst property and that has occurred. If that were the only conduct of the Defendant of concern, there is no reason to suppose that it would continue in the future and, consequently, there would be no reason to think that the due and proper administration of the estate would be placed in jeopardy if she remained an executor. 48 In my opinion, however, the Defendant's conduct in relation to the $100,000 cash makes it inappropriate for her to continue as an executor. One question is whether the Defendant is a fit and proper person to remain as an executor having regard to her conduct in relation to the $100,000 cash. However, even if I were to accept that she was, I think that there is another difficulty. One of the last remaining activities of the executors is to distribute the estate having regard to this judgment. In circumstances where the Defendant throughout the case has vehemently denied that there ever was $100,000 cash, and having regard to her past delays, there seems to me to be a substantial risk that the Defendant will be reluctant to distribute the estate promptly and in accordance with this judgment. 49 I am conscious that if the Defendant is removed as an executor of the estate, the sole executor will be the Plaintiff; and that there is a question in those circumstances of whether the Defendant receives the protection as a beneficiary that the Deceased thought was appropriate by appointing both the Plaintiff and Defendant as executors. However, in circumstances where the administration of the estate is almost finalised and the Defendant has the benefit of the undertaking given by the Plaintiff to which I referred earlier, I do not think that this consideration should prevent me from making the orders the Plaintiff seeks. 50 One final claim made by the Plaintiff is for interest on his share of the estate from 5 January 2006 or 23 March 2007 or some other date that the Court considers to be appropriate. The parties did not address submissions to me on this order. I do not think that I should make an order of this type. I would want to hear submissions from the parties before I did so. Moreover, as a result of the delay that has occurred, the estate has received significantly more for the Peakhurst property than the amount that Colin Daley Quinn indicated to the Defendant that the Plaintiff would be prepared to accept. For that reason alone, I think it is doubtful that this is an appropriate case in which to make an order for interest. 51 In case there is any doubt, I should make it clear that I do not believe that the fact that I have not made an order in relation to interest means that the undertaking given by the Plaintiff is not operative. Orders 52 I make the following orders and declarations:

a That the grant of probate to the Defendant made on 23 March 2007 be revoked. b That the Defendant deposit the grant in the Registry. c That administration of the estate of the Deceased be granted to the Plaintiff. d That as at the date of the death of the Deceased, the Defendant was indebted to the Deceased in the sum of $100,000. e That the $100,000 is owed by the Defendant to the estate. f The Defendant pay the Plaintiff's costs of the proceedings. **********

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.