EDMUNDS v TRASS [2001] NSWSC 395

New South Wales Supreme Court

CITATION : EDMUNDS v TRASS [2001] NSWSC 395 CURRENT JURISDICTION: Equity Division FILE NUMBER(S) : SC 5160/1999 HEARING DATE(S) : 9, 10 May 2001 JUDGMENT DATE : 22 June 2001

PARTIES : NICOLE ANNE EDMUNDS & CORRINE ANNE WEBB v CORAL ANN TRASS JUDGMENT OF : Master Macready at 1

COUNSEL : Ms K. Ottesen for plaintiffs G.P.F. Rundle for defendant SOLICITORS : Baldock Stacy & Niven. Orange, for plaintiffs R.J. Nolan & Co, Dubbo, for defendant CATCHWORDS : Family Provision. Application by daughters of first marriage. Estate passed to second wife. Not a large estate. In the circumstances no order should be made. Discussion of whether special circumstances existed under s28(5)(d) of the Act. Re Guskett (deceased) (1947) VLR 211 Massie v Laundry (unreported 7 February 1986) CASES CITED : De Winter v Johnston Court of Appeal 23 August 1995 Sheller JA Singer v Berghouse (1994) 181 CLR 201 Goloski v Goloski (unreported 5 October 1993 DECISION : Paragraph 57

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1 MASTER: This is an application under the Family Provision Act in respect of the estate of the late Ronald Norman Trass who died on 7 February 1998. He was survived by his two daughters from his first marriage, who are the plaintiffs in the proceedings, the defendant who was his second wife and his first wife. His first wife has been given notice of the proceedings and makes no claim. 2 By his will made 7 March 1997 the deceased appointed the defendant his Executrix. The will gave his jewellery and clothing to the plaintiffs, his guns to his son-in-law and the rest of his estate to the defendant. At the date of death the assets in the estate comprised the following:- Units 1 and 5/282 Macquarie Street, Dubbo $110,000.00 Money in banks $ 6,910.80 Holiday and long service leave $ 2,807.00 $ 11,266.68 One share in Trass Holdings Pty Limited $ 1.00 Debt due from the Trass Family Trust $ 5,008.21 3 Although the precise form in which it appeared in the Probate application is not before me it is apparent that there was also reference to a debt due by the deceased of $250,000. This was in fact an obligation which he had secured by way of guarantee to a bank in respect of a business loan to the business in which he and two other persons were involved. 4 After some dispute between the parties the items of jewellery were distributed to the plaintiffs and the assets in the estate have been transferred to the defendant. Effectively, this was the two units to which I have already referred. After the date of death the defendant received $117,593.19 which was the whole of the deceased's superannuation pursuant to a Trust Deed for the Australian Meat Industry Superannuation Trust. The deceased had carried on two businesses prior to his death. One was through a company, Imak (Western) Pty Ltd which was a meat wholesaler. Mr Macpherson, his partner in that business, had died in 1996. At the time of the deceased's death that company was being liquidated to enable distribution of Mr Macpherson's shareholding in that company. After liquidation its business was carried on by the other company, Dubbo Meat Centre Pty Limited which was a retailer and distributor of meat in the Dubbo and Orana area. The deceased's interests in those companies were held by his family trust known as the "Trass Family Trust" the corporate trustee of which was Trass Holdings Pty Ltd. Following the liquidation of Imak (Western) Pty Limited it was proposed by the liquidator to make distributions to the deceased's estate and Mr Macpherson. In respect of the deceased's estate $83,704.51 was paid to the solicitor for the estate, Mr R.J. Nolan while a dispute as to its ownership through the trust was resolved. This was resolved by the settlement of District Court proceedings in 1999 as result of which the defendant received $20,000 and the two plaintiffs each received one half of the balance of that sum. 5 There have been costs incurred in the estate. The plaintiffs' costs are likely to be in the order of $31,125 and those of the defendant $12,400. However, those estimates were based upon a one-day hearing. The hearing occupied two days. 6 The present proceedings were commenced on 22 December 1999 and, accordingly, were out of time. An application was made for an extension of time pursuant to s 16 of the Act. 7 There are a number of cases which refer to the principles to be applied in an application for an extension of time. In Re Guskett (deceased) (1947) VLR 211 the following was said: "It is necessary for the applicant to make out a case that will justify the grant of the indulgence sought. He is to show reasons why his failure to apply within the time allowed should be excused. Every case will have to be dealt with on its own facts but it would seem necessary for the applicant to satisfy the court that the circumstances are such as to make it unjust for him to be penalised for being out of time. As moreover he is seeking an indulgence he should apply promptly for an extension of time." 8 His Honour Young J has in several cases dealt with the principles governing application to extend time under this Act. In Massie v Laundry (unreported 7 February 1986) he indicated that the factors which one looks at include the following:- (a) is the reason for making a late claim sufficient? (b) will the beneficiaries under the will be unacceptably prejudiced if the time were extended? (c) has there been any unconscionable conduct on either side which would enter into the equation? 9 He also accepts a view, which was expressed by his Honour Needham J in Fancett v Ware (3 June 1986), that there is no purpose in extending the time with respect to a claim which must fail. In Phillips v Quinton (unreported 31 March 1988) Powell J when considering the matter at the substantive hearing leant to the view that a plaintiff seeking an extension of time under the Testators Family Maintenance Act must now demonstrate not merely a reasonable prospect but at least a strong probability of obtaining substantive relief. That view was not accepted by his Honour Hodgson J in Basto v Basto (unreported 8 September 1989). 10 In De Winter v Johnston, a decision of the Court of Appeal on 23 August 1995 his Honour Powell J referred to this matter and in particular the fact that nowadays the application for extension of time is invariably dealt with at the time of the application for substantive relief. He said at page 23: "In such a case, so it seems to me no extension of time ought to be granted unless it be established (inter alia) that the application for an extension of time would, in the event of that extension being granted, be entitled to an order for substantive relief." 11 In order to consider the first question of whether the explanation for the delay is sufficient it is useful to note generally the chronology in relation to the family of the deceased and steps taken up to the commencement of proceedings. 12 The defendant was born on 24 July 1950. The plaintiff, Corinne, was born on 18 February 1976 and her sister, Nicole, born on 15 February 1971. In 1985 the deceased and his former wife separated. Shortly thereafter in 1985 or early in 1986 the deceased commenced to live in a de facto relationship with the defendant. By 1990 Nicole had left school and was working full time with her father at the Dubbo Meat Centre. On 7 March 1998 the deceased made a will. In that will the defendant who was described as the wife of the deceased and the evidence does not reveal when they married. 13 On 6 February 1998 there was a meeting at which the deceased, Nicole, the defendant and a number of the deceased's advisers were present. There was some discussion about his estate. At that time he indicated that he owed nothing and that his share in the Dubbo Meat Centre he thought, according to the plaintiff, Nicole, was worth half a million dollars. The defendant recalls that he said it was worth $300,000. The deceased also referred to the fact that his superannuation was worth $150,000. On 7 February 1998 the deceased died. A week or so later, according to the plaintiffs, they briefly saw a will but they were not given a copy and they were uncertain as to their entitlements. In March 1998 Nicole saw solicitors, Booth Brown Samuels & Olney in order to obtain a copy of the will. That request was refused on 16 April 1998 There does not seem to be any explanation for the extraordinary refusal of such a reasonable request. 14 On 1 May 1998 the superannuation payment was made to the defendant in the sum of $117,593.19. Nicole had been working at the Dubbo Meat Centre after the date of death and on 27 July 1998, according to her, she was dismissed. The defendant's recollection is that she resigned. That led to some unfair dismissal proceedings brought by Nicole but what happened in relation to those proceedings is not before me in the evidence in this case. A day later on 28 July 1998 there was a resolution for the issue of 150,000 shares in Dubbo Meat Centre. This included 50,000 shares to the defendant and two parcels of 50,000 each to Mr John Tratt and Mr Mark Knaggs who were involved in the running of that business. This had the effect of reducing the interest of the Trass Family Trust in the company from 67% to 0.044% of the capital. Once the evidence in the case had been heard it transpired that this resulted from the fact that the bank which had advanced monies to the business required that further provision be made to secure the bank on the deceased's death. The defendant, Mr Tratt and Mr Knaggs made the equity contribution of $150,000. Initially it was only $100,000 as the defendant's contribution was not made until 1 July 1998. In August 1998 Nicole saw Mr Bucherine of Nelson Keane & Hemmingway in connection with the unfair dismissal proceedings. She says that she then started to discover her interest as a shareholder and director of Trass Holdings Pty Limited, the trustee of the Trass Family Trust. She also discovered the payment in respect of the $83,000 and in due course the District Court proceedings, to which I have referred, were commenced by Trass Holdings Pty Ltd against the defendant. 15 On 31 October 1998 the defendant was injured while on holidays. I will return to the details of this injury later. 16 In November 1998 the plaintiffs' solicitors sought information about the application for probate and this request was repeated in January 1999. Probate was granted on 12 February 1999 to the defendant. Eventually after a number of requests on 18 March 1999 the defendant's solicitors provided a copy of the will and probate to the plaintiffs' solicitors. According to their evidence the plaintiffs were advised (a) that they had twelve months from the date of grant of probate to bring an application under the Family Provision Act, (b) that on the basis of inventory of property the estate was not large enough to warrant a claim for provision and (c) that it would cost more than it was worth. 17 The plaintiffs then instructed their solicitors to focus on obtaining the jewellery and personal items to which they were entitled. On 16 March 1999 and 17 March 1999 there was correspondence, to which I will refer in more detail, asking about personalty and an explanation for the $250,00 liability. A clear explanation that it related to a guarantee in existence at the date of death was given. On 14 April 1999 advice was given by the defendant's solicitors that the debts had been paid and it was proposed to transfer the estate to the defendant. 18 On 16 April 1999 the solicitors for the plaintiffs wrote to the defendant's and said, "We have now been instructed by our clients that they do not intend to contest the will. We have been instructed to request the jewellery and items of clothing be immediately delivered to our clients or be made available for immediate collection and we would be grateful if you could arrange for this to be done." 19 There was correspondence about the exact nature of that jewellery and in a letter of 1 July 1999 the solicitors for the plaintiffs wrote and said that their clients were prepared to accept the various items in full settlement of their entitlement pursuant to the will. 20 On 2 July 1999 after a rollover of an investment the defendant paid the $50,000 for the shares which she had agreed to subscribe to earlier in order to satisfy the bank's requirements. 21 On 7 August 1999 the period in which the application should have been made expired. On 27 October 1999 there was a Deed of Compromise and Release between Trass Holdings Pty Ltd and the defendant in which $20,000 was paid to the defendant and the balance of the monies to the company which were then distributed between the two plaintiffs. In the course of that litigation the details of the allotment of shares became known to the plaintiffs and they sought advice on the diluting effect that that had on the shareholding in Dubbo Meat Centre. A new solicitor was consulted because the solicitor then acting had a conflict of interest. On 3 December 1999 the plaintiff Nicole was referred to her current solicitors and saw them on 15 December 1999. The summons was filed on 22 December 1999. 22 A number of matters were suggested by way of explanation. The first of these was the failure to provide a copy of will or the probate application. This difficulty disappeared by March 1999 well within the time limit for making the application. It seems fairly clear that as a result of the advice given in March 1999 the plaintiffs decided at that stage not to proceed with the application under the Family Provision Act. Their information was, and I am prepared to accept their evidence, that they were told they had 12 months from the date of grant of probate to commence proceedings. Such a time would expire in February 2000. The fact of the matter is that they decided not commence proceedings in 1999 and, according to Nicole, she effectively put the proceedings out of her mind until after she had dealt with the other proceedings against the estate and her unfair dismissal matter. The plaintiffs' knowledge as to how long they had to commence the proceedings I would have thought would be one of the reasons for the proceedings being commenced out of time. They changed their mind and decided to commence proceedings. The circumstances in which that happened are probably best considered under whether there has been any unconscionable conduct. 23 The nub of the unconscionable conduct is said to be the conduct by the plaintiffs and their solicitors in making statements that they did not intend to "contest the will" in a context where they were settling a dispute as to jewellery. That is an ambiguous statement in the context of there having been a grant. It could either mean seeking to set aside the grant or bringing proceedings under the Family Provision Act. It seems that the plaintiff, Nicole, understood it as not preventing a claim under the Act. In her affidavit of 31 October 2000 in paragraph 6 she said the following:- "Subsequently, there followed lengthy correspondence between my solicitor and the defendant in relation to the jewellery and personal items in clause 3 of the will. The defendant's solicitors refused to provide any of the items while my sister and I reserved our rights to contest the will. I sought the advice of my solicitor, saying words to the effect. 'If we say that we will not contest the will, does that mean we could never do anything about it?' My solicitor said: 'No. It just means that you accept that these items are the personal jewellery and clothing that was left to you in the will.' In the belief that all this meant that we would not be able to raise again what constituted the jewellery and personal items in the will, I instructed my solicitor to advise the defendant's solicitors that we would not contest the will." 24 There is no doubt that the defendant and her advisors understood the communications from the plaintiffs on the basis that there would be no challenge under the Family Provision Act. After the letter of 16 April the defendant in fact arranged for the transfer of the real estate into her name and took other steps consistent with this belief. 25 In De Winter v Johnston a decision of the Court of Appeal on 23 August 1995 Sheller JA said at page 11 of the judgment the following:- "In the present case the Master found that there was no prejudice to the other beneficiaries on account of delay and that finding is not seriously challenged. The Master referred to unconscionable conduct and said: 'Unconscionable conduct in this context, of course, relates to such matters as where the plaintiff has made an informed decision not to make a claim against the estate, and has then decided after the limitation period has expired to make such a claim on account of some change in her financial and material circumstances which has occurred after the expiry of the limitation period. With all respect, I would not have thought this to have been unconscionable conduct. No doubt it depends on the circumstances. However, the concept of unconscionable conduct is there directed towards a deliberate holding off designed to lull he beneficiaries into a false sense of security. There is nothing to suggest anything of that sort in the present case." 26 Although the plaintiffs' conduct may not have been deceptive the action of their solicitors I would have considered quite deceptive. They should have well known that the defendant's solicitors would have understood the matter as they in fact did. 27 However, there is no evidence of any detrimental effect on the defendant as a result of that deception and, accordingly, I would not refuse the application on this ground.