Wilcox v Chapple

Background

1. The proceedings concern the estate of the plaintiff's late mother, who died on 19 August 2014. The plaintiff is one of two sons of the deceased, and the second defendant is the second husband of the deceased. Both the plaintiff and the second defendant are beneficiaries under the wills made by the deceased that are relevant to the plaintiff's claim.
2. The last will of the deceased was made on 30 June 2014 (the June will). The first defendant, who was the deceased's solicitor, was granted probate of the June will by this Court on 12 September 2014.
3. It is not necessary for the purpose of these reasons to relate the full history of these proceedings. The proceedings were commenced by statement of claim filed by the plaintiff on 29 April 2019. The present version of the pleading is an amended statement of claim filed on 21 October 2019 by leave of Kunc J, following an application by the first defendant for an order striking out the statement of claim. The present application is for leave to further amend this statement of claim.
4. The essence of the plaintiff's claim is that the plaintiff, in earlier proceedings, made an application for an order for further family provision out of the estate of the plaintiff's grandfather, who was the father of the deceased. The deceased was the executor of her father's will. The plaintiff claims that he and the deceased came to an arrangement, to use a presently neutral term, following a mediation in the earlier proceedings. The effect of the arrangement was that the deceased would provide the plaintiff with a will that she had executed. If the plaintiff was content with the gifts in his favour in the will, then the plaintiff would then agree to the dismissal of his claim against his grandfather's estate, and bind himself not to make an application for further family provision out of the deceased's estate. The deceased provided her will to the plaintiff and he indicated his consent. The deceased then executed the will on 23 March 2014 (the March will). The plaintiff's claim against his grandfather's estate was subsequently dismissed. The arrangement permitted the deceased to revoke the March will and to make another one, but she was not entitled to make any new will that reduced the value of the gifts made to the plaintiff except with his prior consent. The plaintiff claims that, notwithstanding the terms of the arrangement, the deceased made the June will which revoked the March will. The June will was the last will of the deceased at the date of her death. The plaintiff claims that the deceased thereby breached her arrangement with him, because the value of the gifts made to the plaintiff in the June will was less than in the March will.

Relief sought in amended statement of claim

1. In the amended statement of claim, the plaintiff specifically alleged in par 3 an agreement made between the plaintiff and the deceased on 12 February 2014, and executed in writing on or about 20 February 2014, to settle the family provision proceedings in respect of the plaintiff's grandfather's estate. The written part of the agreement was constituted by heads of agreement (Heads of Agreement). The plaintiff made allegations in pars 4 to 5A as to the terms of the agreement generally as outlined in the preceding paragraph of these reasons. Paragraph 6 contained an allegation that, in breach of the settlement agreement, the deceased died leaving her June will, by which the plaintiff was provided with a lesser bequest than the bequest set out in the March will. The plaintiff claimed in par 7 that, by reason of the breach of agreement, he had suffered loss and damage.
2. This aspect of the plaintiff's claim, as pleaded in the amended statement of claim, was limited to a claim for damages for breach of the agreement between the plaintiff and the deceased, for which the first defendant could only be liable in his representative capacity as the executor of the deceased's June 2014 will.
3. By prayers 3 to 5 of the amended statement of claim, the plaintiff sought an account or inquiry concerning the administration of the deceased's estate, which included claims that the first defendant sold specified assets of the estate at an undervalue
4. By prayer 2 of the amended statement of claim, the plaintiff sought an order that the first defendant be removed as executor and trustee of the deceased's estate. That claim has been deleted from the draft further amended statement of claim.
5. As the second defendant has consented to leave being given for the filing of the draft further amended statement of claim, it is not necessary to refer to the claims made against him in the amended statement of claim.

Relief sought in draft further amended statement of claim

1. By the draft further amended statement of claim, the plaintiff seeks to completely replace the prayers for relief claimed in the amended statement of claim. The new prayers are: 1. A declaration that, upon her death, the late Patricia Anne Wilcox ("the deceased") breached the terms of a Heads of Agreement dated on or about 20 February 2014 between herself and the Plaintiff by revoking a Will made by her on 23 March 2014 ("March 2014 Will") and making a new Will on 30 June 2014 ("June 2014 Will") without the Plaintiff's knowledge or consent. 2. A declaration that, upon the death of the deceased and in the events which have occurred, the deceased's estate was impressed with a constructive trust which imposed upon the First Defendant (as the executor of the deceased's estate) an obligation not to deal with, or distribute, the property of the estate in accordance with the terms of the June 2014 Will and contrary to the terms of the March 2014 Will. 3. A declaration that, upon the death of the deceased and in the events which have occurred, the First Defendant has breached his fiduciary duties owed to the estate and to the Plaintiff, inter alia, by distributing the estate contrary to the terms of the Heads of Agreement and the March 2014 Will. 4. [Relief sought against second defendant only]. 5. An order for damages against the deceased's estate for breach of the terms of the Heads of Agreement made between the deceased and the Plaintiff on or about 20 February 2014. 6. An order that the deceased's estate pay interest on the damages payable to the Plaintiff pursuant to section 100 of the Civil Procedure Act 2005 (NSW) from 19 August 2014 (being the date of death of the deceased) up to the date of judgment. 7. An order for equitable compensation against the First Defendant for breaching his fiduciary duties owed to the estate and to the Plaintiff. 8. An order that the First Defendant account to the deceased's estate for all funds and assets which he has distributed from the estate and all testamentary expenses he has paid from the deceased's estate. 9. An order that the First Defendant deliver up to the Plaintiff's solicitor the original title deeds to the property known as "Barwon Vale". 10. An order that the Plaintiff's costs be paid by the First Defendant and/or the Second Defendant, or alternatively be paid out of the deceased's estate. 11. Such further or other orders as the Court considers appropriate.

Breach of contract claim

1. Prayer 1 seeks a declaration to the effect that, by revoking the March will and making the June will, the deceased breached an agreement constituted by the Heads of Agreement, and prayers 5 and 6 seek damages against the first defendant, in his capacity as executor of the deceased's estate, for breach by the deceased of the Heads of Agreement.
2. The allegations of fact contained in the draft further amended statement of claim relevant to these prayers for relief are primarily found in pars 9 to 16. Paragraph 9 alleges that the plaintiff and the deceased "reached an in-principle agreement regarding the Plaintiff's family provision claim in relation to" (emphasis added) the grandfather's estate, which is defined as "Heads of Agreement". Paragraph 11 commences: "By way of consideration, the Plaintiff agreed to the dismissal of his family provision claim…". Paragraphs 12 to 16 contain allegations that the deceased signed the Heads of Agreement, that the plaintiff was provided with a redacted draft will signed by the deceased, that the plaintiff orally approved of the gifts made to him by the deceased in her draft will, and that the plaintiff and the second defendant then signed the Heads of Agreement.
3. It is not clear why the plaintiff seeks leave to further amend his amended statement of claim in a manner that deletes the express allegation that an agreement was made between the plaintiff and the defendant, and instead alleges an in-principle agreement. Paragraph 4 of the amended statement of claim pleaded the terms of the agreement, as therein alleged, by setting out the legal effect of those terms. Paragraph 10 of the draft further amended statement of claim extracts paragraphs of the Heads of Agreement verbatim, rather than setting out the legal effect of the terms. Notwithstanding this unconventional approach to the pleading of the existence of a contract, it seems clear that the plaintiff wishes to make a claim for breach of contract against the estate, as the plaintiff seeks a declaration that the deceased breached the Heads of Agreement, and the plaintiff seeks damages for breach of contract.

Constructive trust and breach of fiduciary duty claim

1. The most significant proposed change in the plaintiff's claim that would be introduced by the filing of the draft further amended statement of claim is the widening of the claim from one that only sought damages for breach of contract by the deceased to one that also seeks to make the first defendant personally liable for breach of an alleged fiduciary duty that he owed to the estate and the plaintiff, by reason of his having distributed the estate to the beneficiaries when he knew, or should have known, of the basis of the plaintiff's claim.
2. As I consider that the new claims the plaintiff wishes to introduce into the proceedings by filing the draft further amended statement of claim are novel, and of dubious validity under the law of succession, I will start by setting out briefly the relevant principles of that law that may have application to the circumstances of the plaintiff's claim.
3. A contract whereby one party agrees to make a testamentary disposition in favour of the other party may be binding, and if it is breached, the party with the benefit of the agreement may have an action against the other party's estate. In Aslan v Kopf [1995] NSWCA 26 at 5, Gleeson CJ, with whom Kirby P and Priestley JA agreed, said: A person can enter into a binding contract to make a testamentary disposition in favour of another, provided the usual requirements of form or consideration are satisfied. Further, although a will is, by its nature, revocable, a testator may enter into a binding contract not to revoke a will, and breach of such a contract will give to the other contracting party a right of action for damages, and, depending upon the circumstances, a possible claim for equitable relief.
4. The foundation of the claim against the defaulting testator's estate is the existence of a valid contract, and the remedies that may be available against the estate are contractual remedies. As is shown by Megic v Public Trustee for the Australian Capital Territory (1995) 59 FCR 165, damages may be awarded against the estate in a suit against the executor. Equitable remedies may be available but they are remedies for breach of contract. In Megic, Tamberlin J, with whom Gallop and Kiefel JJ agreed, held that an award of damages should be made, but decided that on the facts of the case it was not appropriate for the Court to order specific performance of the contract by the deceased to leave the relevant property to the plaintiff.
5. Breach of contract by the deceased will not in the ordinary case impose any personal fiduciary duty on the executor, as the executor is only liable in a representative capacity for the deceased's breach. Further, the making of the contract does not impose any fiduciary obligation on the deceased, or the executor, from the grant of probate.
6. It follows from the terms of prayer 2 of the draft further amended statement of claim that the plaintiff seeks to establish that the effect of the alleged breach of contract by the deceased was that, upon her death, her estate was impressed with a constructive trust in favour of the plaintiff. Prayer 3 shows that the plaintiff seeks to establish that the first defendant, as executor, became a constructive trustee of the deceased's estate, and breached his fiduciary duty by distributing the estate contrary to the terms of the Heads of Agreement and the March 2014 will. Prayer 7 seeks an order for equitable compensation against the first defendant personally for breaching fiduciary duties claimed to be owed to the estate and to the plaintiff.
7. It is problematic to claim that an executor becomes subject to a fiduciary duty owed to a party to a contract made by the deceased, which the deceased has breached by failing to make a testamentary disposition in accordance with the contract. Although, in the present case, the plaintiff is a beneficiary under both the March will and the June will, his only capacity to enforce the Heads of Agreement is as a contracting party.
8. Having accepted a grant of probate of the June will, the first defendant's duty is to execute that will. In doing so, the first defendant must pay the liabilities of the deceased, where the assets in the estate permit him to do so, but that is a liability on an executor that is imposed by the law of succession, and is consistent with the executor's duty to execute the will of which probate has been granted.
9. It is not the function of these reasons to decide how the principles of succession law concerning the entitlement of creditors of the deceased to be paid out of the deceased's estate apply to the circumstances alleged by the plaintiff. The following is only a rudimentary statement of those principles that is limited to providing an explanation for the observations that I make below. It is primarily taken from G E Dal Pont and K F Mackie, Law of Succession (2nd ed, 2017, LexisNexis Butterworths) at [14.45] and [14.53], and Williams, Mortimer and Sunnucks - Executors, Administrators and Probate (21st ed, 2018, Sweet and Maxwell) at [51-03], [52-02] and [83-07].
10. As any claim that the plaintiff had against the deceased for breach of contract at the time of her death will have survived her death, the plaintiff is entitled to prosecute a claim against the deceased's estate for some appropriate contractual remedy in a suit against the first defendant as the deceased's executor. The claim of the plaintiff, if successful, would take priority over the rights of the beneficiaries under the June will as the first defendant, as executor, must discharge the debts of the estate before he satisfies any legacy or makes any distribution to beneficiaries. In principle, an executor is liable for the deceased's debts, to the extent that the assets in the estate are sufficient to meet them, whether or not the executor has notice of the existence of the debts or the circumstances in which they became payable. An executor can be liable for waste, sometimes called devastavit, if the executor parts with the assets of the estate without paying or adequately providing for its debts. At least where an executor does not have notice of the existence of a debt when the assets of the estate are distributed to beneficiaries, or where, at the time of distribution, the executor has notice of a claim that is at that time contingent, the executor will ordinarily have a right to recover distributed assets in order to pay the creditor, when the existence of the debt becomes known or it ceases to be contingent. Furthermore, if a creditor is unable to secure payment by the executor, the creditor can compel a satisfied beneficiary to refund any distributed asset in an amount that is enough to enable the creditor to be paid.
11. Section 92 of the Probate and Administration Act 1898 (NSW) provides a means for executors to distribute the assets of an estate to beneficiaries free of the risk that the executor will remain liable to pay creditors of which the executor has no notice, by means of publication, as required by the section, of the approved notice, and delaying the distribution of the assets for the period required by the section. It is not known whether, in this case, the first defendant made the distributions of the estate's assets, of which the plaintiff complains, after the first defendant had secured the protection provided by s 92 by complying with its requirements.
12. With these general principles in mind, it is necessary to refer to the more significant allegations in the draft further amended statement of claim that support the plaintiff's prayers for relief against the first defendant based upon trust and fiduciary principles.
13. Paragraph 23 alleges that the first defendant was aware of the execution of the Heads of Agreement and its terms. The particulars given are that the first defendant was a partner of the law firm who acted for the deceased, the first defendant was named as executor in both the March will and the June will, and, in February 2015, the first defendant drafted a deed of acknowledgement in relation to the plaintiff's family provision claim against his grandfather's estate, which contained a statement to the effect that the "proceedings were settled on certain terms as between" the deceased and the plaintiff.
14. These allegations, if proved, are not enough to prove that the first defendant was aware of the terms of the Heads of Agreement, although they probably would prove that he knew of its existence. First, there is no presumption that each partner in a law firm has the knowledge of every other partner. Secondly, it does not follow from the fact that the same person is named as executor in two wills that the person knows the contents of both wills. Finally, knowing that a settlement has occurred is not the same as knowing the terms of the settlement.
15. Although Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 15.4(2) has the effect that particulars of knowledge need not be included in a statement of claim when filed, UCPR r 15.10(2)(b) specifically contemplates that an order may be made requiring a party who pleads knowledge to give particulars of the facts on which that party relies. As the plaintiff is now applying for leave to amend his statement of claim for the second time, the particulars that are given should be complete.
16. The plaintiff alleges in par 28 that, if the values for the estate's assets stated by the first defendant in his executor's affidavit are assumed to be correct, then, subject to the need to take into account testamentary expenses incurred after the deceased's death, the plaintiff would have received $587,660.69 more under the March will than under the June will.
17. The plaintiff then alleges: 29. As at the date of the Executor's Affidavit, the First Defendant knew, or should have known, that: (a) the Plaintiff was entitled to receive more under the March 2014 Will compared to the June 2014 Will; (b) the deceased was in breach of the Heads of Agreement; and (c) he should not distribute the deceased's estate in accordance with the June 2014 Will.
18. This is an allegation that, when the first defendant had available the information as to the value of the assets in the estate for the purpose of making his executor's affidavit, he had a duty to do the arithmetic necessary to calculate the plaintiff's entitlement under the two wills and, having knowledge of the terms of the Heads of Agreement, he should have appreciated that the deceased had breached that agreement, so that he should not distribute the estate in accordance with the June will.
19. The allegation is that the duty not to distribute was imposed upon the first defendant if he knew of the matters listed in par 29(a) and (b), or he should have known those matters. In making the allegation, which is the foundation for the claim that a fiduciary duty was imposed on the first defendant, it is problematic to allege that it is sufficient for the duty to arise if the first defendant should have known those matters.
20. In any event, the law of succession does not impose upon executors a positive duty to ascertain, whether by way of the making of calculations or otherwise, that the deceased may have been liable at the time of death for breach of contract to some other person. The executor simply has an obligation to pay all debts of the deceased, to the extent that the assets in the estate are sufficient to enable the executor to do so, when the debts are ascertained. In this way, an executor may become personally liable to creditors, if the executor distributes the assets in the estate to the beneficiaries before all the debts of the deceased are known.
21. Paragraph 31 contains an allegation that the plaintiff did not consent to the deceased reducing the bequest in his favour. There is no allegation that the first defendant was aware that the plaintiff had not consented to the terms of the June will. If the first defendant's personal liability depended on his own knowledge that the making of the June will was a breach of contract by the deceased, the allegations as to the first defendant's knowledge in the draft further amended statement of claim would be insufficient, in the absence of an allegation that the first defendant knew that the plaintiff had not consented to the terms of the June will.
22. The claim pleaded in the draft further amended statement of claim proceeds on the basis, as alleged in par 33, that: Upon the death of the deceased, the First Defendant, in his capacity as the executor of the deceased's estate, with knowledge of the Heads of Agreement, acted in breach of trust by distributing the estate contrary to the terms of the Heads of Agreement and the March 2014 Will.
23. It is not clear why the plaintiff has applied for leave to amend his amended statement of claim to engraft a breach of trust claim onto his claim for damages for breach of contract. I am not aware of any principle of succession law whereby an executor has a fiduciary obligation to creditors that prevents the executor from distributing the assets of the estate to beneficiaries, if the executor has notice of a claim by a creditor. The executor may remain liable to pay the creditor personally, if the remaining assets in the estate are insufficient to make the payment, and it will be a matter for the executor whether the circumstances are such as to entitle the executor to recover the amount of the payment from the beneficiaries to whom the estate has been distributed.

Basis of first defendant's opposition to leave being granted

1. The first defendant addressed the new prayers for relief in the draft further amended statement of claim in par 46 of his written submissions. He referred to certain parts of the prayers for relief and claimed that they involved vague language. The first defendant referred to the use of the words "and in the events which have occurred" in prayer 2, and complained that the events referred to have not been pleaded as facts in the draft further amended statement of claim.
2. The use of the expression "and in the events which have occurred" (or "have happened") in the formulation of declarations is time-honoured, although probably not particularly meaningful, and now usually omitted from the terms of declarations. As the words complained of are found in the prayers for relief, any deficiency in drafting can be cured, if the plaintiff establishes a right to the relief.
3. I consider that the same is true for the other complaints made by the first defendant about the way in which the plaintiff has formulated his prayers for relief. That aspect of the draft further amended statement of claim is not embarrassing.
4. My concern has been more about the juridical foundation of the new claims, in so far as they seek to impose a constructive trust on the estate and a fiduciary duty on the first defendant. The formulation of the prayers for relief is sufficiently clear to avoid the prayers being struck out on pleading grounds.
5. The first defendant's complaints about the adequacy of the plaintiff's proposed pleading and particulars are set out in par 48 of his written submissions.
6. In par 48.1, the first defendant complains about the use of the expression "in-principle agreement" in par 9, and the fact that the plaintiff has only extracted paragraphs from the Heads of Agreement and not pleaded the terms of the agreement alleged in the conventional manner.
7. I consider that this is a legitimate complaint, even if only a technical one. The existence of a contract between the plaintiff and the deceased is the foundation of his claim against the estate, and if the plaintiff wishes to allege the existence of a contract he should plead that fact unequivocally. I can see no reason why the plaintiff should not be required to plead the terms of the agreement in the proper way. This defect is curable by a relatively simple set of amendments to the draft further amended statement of claim.
8. The first defendant submits in par 48.2 that par 14 of the draft further amended statement of claim is wholly inadequate, and that its inclusion compounds the confusion that arises from the failure to plead the terms of the contract properly. Paragraph 14 is an allegation that the plaintiff verbally communicated his approval of the gifts made to him by the deceased in her March will to the deceased's solicitor. I do not accept the first defendant's complaint. Paragraph 14 contains a clear allegation of a fact that was a condition to the alleged agreement.
9. In par 48.3, the first defendant complains that par 21 of the draft further amended statement of claim contains a vague assertion that the deceased "departed from the terms of the Heads of Agreement", without explaining what the departure was. The first defendant submits that there was no express allegation of breach of contract.
10. I reject this complaint. Paragraph 21 clearly states that the departure was the execution of the June will without the plaintiff's knowledge or consent. It would be quibbling for the Court not to accept that "departed from the terms of" is intended to mean the same as "breached" the Heads of Agreement.
11. The first defendant complains, in par 48.4, of the use of the words "in the events which occurred" in par 23 of the draft further amended statement of claim, together with the fact that those events are said to be "inclusive" of certain matters. The first defendant also complains that there is no pleading of the existence of knowledge, and that the particulars to par 23 are wholly inadequate. The first defendant submits that "it is unclear what awareness means".
12. I accept that the use of the expression "in the events which occurred, including" in par 23 are embarrassing, given that they are found in that part of the draft further amended statement of claim that sets out the pleadings and particulars. If the plaintiff only needs to rely on the balance of the allegation in par 23, then the words complained of should be deleted as being superfluous. If the plaintiff intends that other events are also relied upon, then those events should be pleaded specifically. It would, however, be quibbling not to equate "was also aware of" with "had knowledge of". I have already explained above why I consider that the particulars given in par 23 are not sufficient to establish knowledge, even if the facts alleged are proved.
13. In par 48.5, the first defendant submits that pars 27 and 28 of the draft further amended statement of claim are not pleadings at all, and appear to be a series of submissions based upon estimated values and various assumptions. The first defendant submits that he is unable to plead to the allegations.
14. Paragraph 27 of the draft further amended statement of claim contains a table and an explanation of the table. Column one of the table sets out what the plaintiff alleges were the assets in the deceased's estate at the date of her death. As such, that part of the table alleges matters of fact, and the use of the table is a convenient way to make the allegations. As explained in the paragraph, the second column sets out the value given to the asset by the first defendant in his executor's affidavit in those cases where the particular asset was acknowledged in that affidavit. The third and fourth columns set out the value of the assets as estimated by the plaintiff, and particulars of the source of the plaintiff's values respectively. Although the use of the table may be unusual, it is a convenient way to set out concisely facts that would otherwise need to be pleaded in separate paragraphs at some length. I see no reason why the first defendant cannot plead to par 27 of the draft further amended statement of claim.
15. In par 28, the plaintiff sets out his case as to why the bequests made to him by the deceased in the June will are less valuable than the bequests made under the revoked March will. The plaintiff explains that, under the March will, he would have received gifts with a value of $3,976,589.71, while the value of the gifts that he received under the June will was $3,388,929.03; the difference being $587,660.69. Paragraph 28 contains two tables that set out the way the plaintiff has calculated these figures. Arguably, the format of the calculations could have been clearer, but I do not consider them to be inadequate. The tables are given as particulars of par 28, and assume knowledge of the gifts made to the first and second defendants in the two wills. The explanation for each of the tables begins: "Adopting the values of the estate assets contained in the Executor's Affidavit". These words do not involve an impermissible assumption or submission. It is a reasonably clear statement that the difference in the value of the bequests to the plaintiff under the two wills is calculated on the basis that the values for the individual assets adopted by the first defendant in his executor's affidavit are correct. That is a reasonable and efficient way for the plaintiff to explain his case. It is also a relevant step in the pleading of the balance of the plaintiff's case, because the plaintiff can only complain that the first defendant failed to realise that the deceased had breached her agreement with the plaintiff by undertaking a calculation using his own values for the assets in the estate.
16. Paragraph 48.6 criticises par 29 of the draft further amended statement of claim on the ground that "it is based on no pleaded facts and stands as a bare assertion". I have set out par 29 above. I consider that the first defendant's criticism of the way this paragraph has been pleaded is in substance valid. The plaintiff seeks a declaration in prayer 2 that, upon the death of the deceased, her estate was impressed with a constructive trust, which imposed upon the first defendant an obligation not to distribute the property of the estate in accordance with the terms of the June will, and contrary to the terms of the March will. In prayer 3, the plaintiff seeks a declaration that the first defendant has breached his fiduciary duty by distributing the estate contrary to the terms of the Heads of Agreement and the March will. However, in the part of the draft further amended statement of claim that sets out the plaintiff's pleading and particulars, there is no specific allegation as to the creation of the constructive trust, or the imposition of fiduciary duties on the first defendant. The reader of the draft pleading is required to glean the allegations as to the existence of the trust, and the imposition of the fiduciary duty, from the bare facts that are alleged elsewhere in the draft further amended statement of claim. These allegations lead up to the assertion in par 29(c) that the first defendant "knew, or should have known, that he should not distribute the deceased's estate in accordance with the June 2014 Will". There is no allegation to support the claim that a prohibition against distribution in the circumstances arose. Furthermore, the source of the alleged liability that the plaintiff claims arose because the first defendant "should have known" is not pleaded.
17. The first defendant submits in par 48.7 that, although an allegation of breach is made in par 32 of the draft further amended statement of claim, there is no pleading of causation. The allegation in par 32 that "the deceased breached the Heads of Agreement" is preceded by the word "Accordingly". In my view, it is reasonably clear that the plaintiff relies upon the preceding allegations to establish the causal consequences of the breach. The plaintiff's case is that the value of the bequest that he received under the June will was less than he was entitled to receive under the contract created by the Heads of Agreement.
18. In par 48.8, the first defendant complains that, in pars 33 to 36 of the draft further amended statement of claim, the plaintiff alleges a trust but the facts and matters that gave rise to the alleged trust are not pleaded.
19. Paragraphs 34 to 36 are allegations against the second defendant, to the effect that the second defendant holds part of the deceased's estate that was distributed to him on trust for the plaintiff, on the basis that the second defendant "was both a knowing recipient and a volunteer". It is not necessary for the Court to deal with these allegations, as the second defendant does not oppose the application for leave to amend.
20. Paragraph 33, which is set out above, is an allegation that the first defendant acted in breach of trust by distributing the estate contrary to the terms of the Heads of Agreement and the March will, and par 37 seeks damages or alternatively equitable compensation, presumably against both defendants (as the new prayer 7 seeks equitable compensation against the first defendant for breach of alleged fiduciary duties owed to the plaintiff). I think that it is technically correct that the plaintiff has not pleaded the facts that are alleged to have given rise to the trust, at least in the sense of specifically identifying how the trust arose.
21. The conclusion that the draft further amended statement of claim does not specifically state how the constructive trust arose, and how the fiduciary duty was imposed on the first defendant, by reference to identified facts is arguably a technical deficiency, given that all of the facts upon which the plaintiff seeks to rely are the subject of allegations in the pleadings and particulars. The real problem with the draft further amended statement of claim is not that insufficient material facts are alleged, but that, having regard to the relevant principles of the law of succession canvassed above, it is problematic to claim that the trust and the fiduciary duty arose out of those facts.
22. In par 48.9, the first defendant submits that the plaintiff's measure of damages and equitable compensation is alleged in par 37 of the draft further amended statement of claim by reference only to the difference between "Ben's Bequest" and the gifts he in fact received, "but no attempt has been made to identify the facts and matters that show those differences". The quantum of the plaintiff's claim, whether in damages or equitable compensation, is sufficiently clearly stated as being the difference between what he would have received if the March will had not been revoked and the amount that he has in fact received from the deceased's estate. Arguably, it is a minor technical deficiency for the plaintiff to have used the expression "has in fact received to date", rather than "has in fact received to date or will receive". The detailed tables in pars 28 and 30 provide an adequate explanation of the manner in which the plaintiff seeks to quantify his claims for monetary relief. The plaintiff's actual entitlement will depend upon the evidence at the hearing, including the evidence as to the ultimate amount that the first defendant is required to pay towards the liabilities and testamentary expenses of the deceased.
23. Paragraph 48.10 asserts that pars 38 to 43 of the draft further amended statement of claim are framed as a devastavit claim but are in essence another breach of duty claim. The first defendant observes that the "version of the claims in the [amended statement of claim], whilst still problematic, was clearer". The relative clarity of the two sets of allegations may lie in the eye of the beholder. In my view, pars 38 to 43 of the draft further amended statement of claim are clearer than the equivalent allegations in the amended statement of claim, and, in addition, appear to have reduced the ambit of the plaintiff's claim to the circumstances in which the first defendant sold two properties that were included in the deceased's estate.
24. In par 48.11, the first defendant submits that pars 44 and 45 of the draft amended statement of claim contain a claim for breach of duty "unconnected with any claim of loss or, indeed, any claim for relief". These paragraphs assert that, on 11 May 2018, the first defendant advised the plaintiff's solicitor that he held the sum of $178,747.81 on trust for the plaintiff, and the sum of $56,929.89 on trust for the second defendant, by way of their final entitlements from the deceased's estate. The first defendant is alleged to have distributed to the second defendant the amount due to him, but to have failed to pay to the plaintiff the amount to which he is entitled. The plaintiff's complaint, as specified in par 45, is that the first defendant has failed to treat the two beneficiaries equally, in breach of his duty as executor, as pleaded in par 44, to do so. I reject this aspect of the first defendant's criticism of the draft further amended statement of claim. It may be that the first defendant has retained the amount held on behalf of the plaintiff as a fund to pay his legal costs of defending these proceedings, as the judgment of Rees J mentioned above authorises him to do. The paragraphs are not defective on pleading principles.
25. Paragraph 48.12 contains a related criticism, that par 46 alleges that the first defendant breached his fiduciary duties, without those duties having been pleaded, by reason of the first defendant not having given the plaintiff the title deeds to Barwon Vale. The first defendant adds that the plaintiff does not plead any loss as the basis for the compensation sought in par 48. This appears to be a separate part of the plaintiff's claim. As I understand the effect of the table in par (ii) to the particulars to par 28 of the draft further amended statement of claim, the plaintiff became entitled to the property known as Barwon Vale under the June will, which bequeathed to him both the deceased's interest in that property and the deceased's shares in the company that owned the balance of the property. That being the case, if the first defendant, as executor, holds the title deeds for the property, he would have a duty to give them to the plaintiff. I do not accept that this part of the draft further amended statement of claim has been inadequately pleaded. If the first defendant fails to deliver the title deeds to the plaintiff, that may cause the plaintiff some loss that the plaintiff would have to establish by evidence at the hearing.

Determination

1. I propose to publish these reasons for judgment and to give both the plaintiff and the first defendant some time to consider the consequences. If the first defendant's complaint continues to be limited to the concern that the draft further amended statement of claim contains pleading deficiencies, then the plaintiff should revise the draft to accommodate the conclusions reached in these reasons.
2. I recommend that the plaintiff revisit his application for leave to file a further amended statement of claim that would introduce breach of trust and fiduciary duty claims against the first defendant personally, having regard to the applicable principles of the law of succession to which I have referred briefly above.
3. It is a notable omission from the draft further amended statement of claim that it contains no allegations as to when the first defendant made distributions of the assets in the deceased's estate to the plaintiff and the second defendant. The draft pleading is also silent on the issue of whether the distributions were made by the first defendant with actual knowledge of the claim that was made in the statement of claim filed on 29 April 2019.
4. It is therefore not clear how the relevant principles of the law of succession may apply to the plaintiff's claim for breach of contract against the estate of the deceased, or to the question of whether the plaintiff is entitled to recover from either the first defendant or the second defendant any shortfall in capacity of the first defendant to pay any damages that may be awarded to the plaintiff out of the assets that remain in the estate. It is also not clear whether the first defendant would be entitled to recover any shortfall from the second defendant. There may be a question as to whether there must be a rateable apportionment of any shortfall as between the shares in the estate distributed to the plaintiff and the second defendant.
5. The parties' legal representatives should confer for the purpose of exploring the possibility that the plaintiff's real claim may be conducted in a cost effective way.
6. There is an outstanding question concerning the costs of the application for leave to amend and the costs order that should be made if leave to amend is given. I will defer dealing with the issue of costs until I know the response of the parties to these reasons for judgment.
7. My Associate will arrange a telephone directions hearing with the parties at a convenient time to consider the way forward.

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. Decision last updated: 20 July 2021