GRAHAM ARTHUR ADDISON As Executors And Trustees Of The Estate Of GERTE HOFFMAN

Summary judgment - Application by defendants - Plaintiff's claim arguable - Turns on own facts

Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107

Wilson v Darling Island Stevedoring & Lighterage Co Ltd [1956] HCA 8; (1956) 95 CLR 43

1 MASTER SANDERSON: This was the defendants' application for summary judgment. (In fact, the summons sought to strike out the reply and in the alternative summary judgment. But the matter was argued as a summary judgment application.) After hearing argument I reserved my decision. I subsequently advised the parties that I would dismiss the application and order the costs of the application be costs in the cause. I indicated that I would publish reasons at a later date. These are those reasons.

2 There was no dispute as to the facts. The summary that follows is taken from the pleadings. The plaintiff is the executor of the estate of Morris Steinberg who died on 24 February 2008. Judith Steinberg was Morris Steinberg's wife. The defendants are the executors and trustees of the estate of Gerte Hoffman who died on 11 March 2006. Mrs Hoffman executed her last will and testament on 11 December 1997. She subsequently executed nine codicils to her will on various dates thereafter.

3 By cl 1(c) of the eighth codicil to her will, Mrs Hoffman made a gift of $2 million to Judith and Morris Steinberg in equal shares, or the survivor of them absolutely. By cl 1 of the ninth codicil to her will Mrs Hoffman confirmed the gift to Mr and Mrs Steinberg and included a hotchpot clause.

4 In or shortly after November 2004, Mrs Hoffman instructed her attorney, Mr Silbert, to pay $1 million to Morris Steinberg. This direction was made prior to Mrs Hoffman executing the ninth codicil on 8 August 2005. In fact, the $1 million payment to Mr Steinberg was not made until September 2005. The dispute between the parties is really whether or not the payment of $1 million is caught by the hotchpot clause.

5 (Throughout the will and various codicils, reference is made to 'hotchpotch'. At least for the purposes of this application, it was conceded by the plaintiff that the person who drafted the will and various codicils had simply made a mistake and that the reference was really to 'hotchpot'. While I have proceeded on that basis I did not understand the concession to have been made for all purposes.)

6 The defendants' position was clear. The ninth codicil contained a hotchpot clause and payment of $1 million was made after the ninth codicil was executed. As that payment of $1 million was to be brought into hotchpot, the executors had discharged their obligation by paying to the plaintiff $1 million. It was the plaintiff's position that the $1 million payment was not covered by the hotchpot clause and that the plaintiff was entitled to a further amount of $1 million from the estate.

7 At the commencement of, or just prior to, the hearing of this application, counsel for the plaintiff filed an amended reply. Presumably counsel intended to move for leave to amend the reply in terms of the minute provided. During the course of the hearing counsel provided a further minute which sought to amend even further the reply. As part of the defendants' application, they had sought to strike out the reply and to that extent, given the plaintiff's acknowledgement of need to amend, the defendants could be said to succeed. But for present purposes, quoting from the minute of amended reply really sets out the argument that the plaintiff sought to advance in answer to the defendants' contentions. I will therefore quote in full par 8 of the minute of amended reply (omitting the marking up):

1. The Plaintiff denies each and every allegation contained in paragraph 10 of the Defence. The Plaintiff says that:

8.1 at material times, Mrs Hoffman was aged, frail and confined to bed, resident in a nursing home, and incapable, in a practical way, of operating her own bank accounts;

8.2 as a consequence of Mrs Hoffman's infirmity,

(a) Mr Silbert and Mr Addison were each appointed Mrs Hoffman's agent and attorney (inter alia) with the purpose of enabling each of them to manage her financial affairs and operate Mrs Hoffman's bank accounts: and

(b) Mr Silbert, as Mrs Hoffman's solicitor, agent and attorney, and/or Mr Addison, as Mrs Hoffman's accountant, agent and attorney, operated Mrs Hoffman's bank accounts;

8.3 at all material times, Mrs Hoffman's bankers, including the Bank of Western Australia Limited, acted on Mr Silbert's and Mr Addison's instructions and inter alia, on those instructions disbursed money from accounts held in her name;

8.4 as at 8th November 2004, Mrs Hoffman had on short term (3 months) deposit, the sum of $6,646,439.56 with the Bank of Western Australia Ltd, and other sums on term deposit with financial institutions or loaned to other borrowers;

8.5 shortly after 8th November 2004 Mrs Hoffman gave instruction to her solicitor, agent and attorney, Mr Silbert, that he and Mr Addison were to arrange the payment of the sum of $1 million from the account referred to at paragraph 8.4, alternatively another deposit account held in Mrs Hoffman's name, to Morris Steinberg;

8.6 Mrs Hoffman directed the payment referred to at paragraph 8.5 as a gift to Morris Steinberg, in recognition of the advice, friendship, companionship and personal care referred to at paragraph 5 of the Statement of Claim;

8.7 Shortly after 8th November 2004 Mrs Hoffman informed Morris Steinberg that she had gifted him the sum of $1 million and that Mr Silbert would arrange the payment from one of her bank accounts which Mr Silbert operated on her behalf;

8.8 Shortly after 8th November 2004 Mr Silbert informed Morris Steinberg that Mrs Hoffman had instructed him (Mr Silbert) to arrange the payment of $1 million to him (Morris Steinberg) from Mrs Hoffman's money and that he (Mr Silbert) would make the payment from one of Mrs Hoffman's bank accounts which he operated on her behalf;

8.9 On 7th September 2008 [sic] Mr Silbert and Mr Addison jointly requested the Bank of Western Australia Limited to draw a bank cheque, in favour of Morris Steinberg and to debit the sum of $1 million from the account referred to at paragraph 8.4;

8.10 On the instructions referred to at paragraph 8.7 Bank of Western Australia Limited drew a bank cheque for $1 million in favour of Morris Steinberg and on 9th September 2007, Mr Silbert and/or Mr Addison delivered the cheque to him (Mr Steinberg);

8.11 the payment referred to at paragraph 8.9 was made pursuant to Mrs Hoffman's direction referred to at paragraph 8.5.

8.12 in the premises, the gift of $1 million by Mrs Hoffman to Morris Steinberg was made prior to 8th August 2005, the date of the 9th Codicil.

8 In answer to the defendants' application, the plaintiff advanced three arguments which it said were sufficient to see off the application for summary judgment. The first of these arguments related to a trust. Essentially, what is said is that as at the date Mrs Hoffman instructed her attorney to make the payment of $1 million to Mr Steinberg, there was a trust for that amount created in favour of Mr Steinberg. That, it was said, was so even in the absence of an express declaration of trust or a transfer of property to the donee. In support of this proposition, the plaintiff relied on Wilson v Darling Island Stevedoring & Lighterage Co Ltd [1956] HCA 8; (1956) 95 CLR 43, 67 and Trident General Insurance Co Ltd v McNiece Bros Pty Ltd [1988] HCA 44; (1988) 165 CLR 107, 120 - 121. In the latter case, Mason CJ and Wilson J said:

... the courts will recognize the existence of a trust when it appears from the language of the parties, construed in its context, including the matrix of circumstances, that the parties so intended. We are speaking of express trusts, the existence of which depends on intention. In divining intention from the language which the parties have employed the courts may look to the nature of the transaction and the circumstances, including commercial necessity, in order to infer or impute intention (121).

9 In my view, it is arguable that in the circumstances of this case, Mrs Hoffman did intend to create a trust in favour of Mr Steinberg. Whether that is so or not will need to be determined at trial. But as the matter is arguable, there is no basis upon which summary judgment could be entered for the defendants. Having reached that conclusion I need not deal with the further two arguments put by the plaintiff. However, I am satisfied that both matters are arguable. The plaintiff argues that the circumstances of this case give rise to an attornment. It was the defendants' position that the plaintiff could not succeed in this argument as it was not able to show there was a specific fund actually in existence at the relevant time - that is, 8 November 2004. But as at that date Mr Silbert, who was Mrs Hoffman's attorney, had unfettered powers in relation to Mrs Hoffman's affairs. In my view, it is arguable that the doctrine of attornment might apply. In any event, it is clear the doctrine of attornment is of uncertain ambit. It would be inappropriate to determine an argument in relation to that doctrine on a summary judgment application.

10 The further argument put by the plaintiff was that on its proper interpretation, the provisions of the codicil did not cover a gift which was effectively made before the codicil was signed. Once again, I am satisfied that this point is arguable. It is not clear from the evidence, as it stands at present, whether Mrs Hoffman, as at the date of signing the ninth codicil, was aware the gift she had directed should be made to Mr Steinberg had not in fact been made. In saying this I am conscious of the file note made 8 August 2005 by Mr Silbert and appearing as annexure KEP2 to the affidavit of Karene Elaine Primrose sworn 10 July 2009 and filed in support of this application. I am not satisfied the note is so clear and conclusive that it would rule out the interpretation of the codicil contended for by the plaintiff. That being so, I am satisfied the plaintiff ought be permitted to put this argument.

11 For these reasons I dismissed the defendants' summary judgment application. However, as I have indicated, the present reply ought be struck out. The plaintiff ought provide to the defendants a further minute of proposed reply which deals fully with all matters they seek to raise. If the defendants raise no objection to this document it can stand as the amended reply. Otherwise the matter should be referred back to me in chambers.

1. The plaintiff's reply be struck out.
2. The plaintiff within 14 days of the publication of these reasons provide a minute of amended reply to the defendants.
3. The defendants' application for summary judgment be dismissed.
4. The costs of the defendants' application for summary judgment, including reserve costs, be costs in the cause.
5. The costs of the defendants' application to strike out the reply be reserved.
6. Liberty to apply.