New South Wales Supreme Court CITATION : McCool v McCool [2008] NSWSC 748 HEARING DATE(S) : 14 July 2008 JUDGMENT DATE : 24 July 2008 JUDGMENT OF : Gzell J DECISION : Statement of claim dismissed. Plaintiff ordered to pay defendant's costs. Order charged on plaintiff's remaining entitlement in estate. CATCHWORDS : PROCEDURE - Costs - Action to revoke probate - Matters resolved - No decision on the merits of matters in dispute - No orders as sought in statement of claim - Whether plaintiff nonetheless substantially successful - Whether irregularities justified the commencement of proceedings - Proper approach to decisions on fact - Basis for inherent jurisdiction to revoke probate. CATEGORY : Principal judgment Foord v Brock & ors [2005] NSWCA 156 Teubner v Humble (1962-1963) 108 CLR 491 CASES CITED : Bus v Sydney City Council (1989) 167 CLR 78 Bates v Messner (1966) 67 SR (NSW) 187 Mavrideros v Mack (1998) 45 NSWLR 80 Upton v Downie [2007] NSWSC 1095 PARTIES : Ross Colin McCool (Plaintiff) Russel Joh McCool (Defendant) FILE NUMBER(S) : SC 113711/06 COUNSEL : Mr S Benson (Plaintiff) Mr S Walsh (Defendant) SOLICITORS : Kenneally & Co Lawyers (Plaintiff) BDA Legal (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION GZELL J THURSDAY 24 JULY 2008 113711/06 ROSS COLIN McCOOL v RUSSEL JOHN McCOOL JUDGMENT 1 The plaintiff, Ross Colin McCool, and the defendant, Russel John McCool, are two of the sons of the late Dorothy Evelyn McCool. She left her estate to her three sons in equal shares and appointed Russel McCool her executor. Probate of her will was granted to him in December 2005. By his statement of claim, Ross McCool sought orders that Russel McCool, his servants and agents be restrained from taking any action in administration of the estate, that he deposit the grant of probate in the Registry, that the grant of probate be revoked and that letters of administration with the will annexed be granted to Ross McCool. 2 Issues between the brothers were largely resolved and I was informed that the only issue was as to costs. Ross McCool seeks an order that Russel McCool pay his costs on an indemnity basis and bear his own costs without recourse to estate assets. Russel McCool seeks orders that Ross McCool pay his costs and Ross McCool's entitlement to any remaining assets of the estate be charged with those costs. 3 In Foord v Brock & ors [2005] NSWCA 156, Bryson JA, with whom Giles JA and Brownie AJA agreed except as to who should pay the costs of the administrator, said at [10] that where a court has to decide questions of costs of proceedings that have not carried to adjudication it is not appropriate to hold a trial of the facts and issues and come to conclusions on the merits in the way in which it would be appropriate if final orders were required. 4 Nevertheless, a context needs to be established within which the competing submissions as to costs may be assessed. 5 Ross McCool filed his statement of claim in August 2006. He claimed that Russel McCool had incorrectly deposed to the assets of the estate in that valuable cricket memorabilia collected by the deceased's late husband as a member of the 1948 Australian cricket team, "The Invincibles", were not included as an asset and nor were other assets acquired from the estate of the deceased's late husband. It was claimed that there were irregularities and improprieties in the application for probate and in the sale of the deceased's property at Umina, New South Wales. It was alleged that Russel McCool had falsely deposed to a residential address in Cherrybrook that was the residence of Ronald Lester Cardwell. It was alleged that Russel McCool's affidavit purported to have been sworn on a date when he was out of Australia. It was alleged that the date of publication of Russel McCool's notice of intention to apply for probate in the affidavit was different from the date of publication of the notice in the Sydney Morning Herald. It was alleged that the certificate of registration of death contained information given by Mr Cardwell in the purported capacity of son-in-law of the deceased. It was alleged that the legal work in relation to the application for the grant of probate and of the sale of the Umina property was carried out by a person unqualified to perform that work. The false attribution of son-in-law to Mr Cardwell was also claimed to constitute an irregularity in the registration of the death of the deceased. It was alleged that Russel McCool was using the services of Mr Cardwell to the disadvantage of the beneficiaries and putting the interests of the beneficiaries at risk as he was not a legal practitioner. It was alleged that the sales inspection report and agency agreement for the sale of the property at Umina were signed by Mr Cardwell as power of attorney and this constituted an improper delegation of duties by Russel McCool. It was alleged that the balance of deposit from the sale of the Umina property was banked to a Cardwell & Associates trust account rather than being paid to an estate account under the control of Russel McCool. It was alleged that Russel McCool had allowed Mr Cardwell to become an intermeddler in the administration of the estate. 6 Russel McCool was a resident of the Philippines when his mother died. He was a schoolteacher in Manila. Mr Cardwell was his friend. When he returned to Australia, Russel McCool stayed at the Cherrybrook home of Mr Cardwell. This explanation of the alleged irregularity was given in the defence filed in October 2006. 7 In his defence, Russel McCool explained that the date on the affidavit was in error. The defence also asserted that the placing of the incorrect date of publication of the defendant's notice of intention to apply for probate was a typographical error. 8 In the defence it was asserted that Russel McCool had not presented Mr Cardwell as the son-in-law of the deceased. The funeral home prepared the death notice with the notation of Mr Cardwell as the son-in-law. The defence claimed this as an error made by the funeral home and not by Russel McCool. 9 Ross McCool lived in Perth, Western Australia. The other sibling, Ray McCool, lived on the Gold Coast in Queensland. Since Russel McCool was working in the Philippines he needed assistance in applying for probate and in the sale of the Umina property. Mr Cardwell performed those functions under a power of attorney. Mr Cardwell was not a legal practitioner but the functions he was asked to perform were not the exclusive province of a lawyer. 10 There was a conflict in the evidence as to whether or not Mr Cardwell held himself out to be a lawyer. Proceedings by the Council of the Law Society of New South Wales against Mr Cardwell were settled. By consent and without admission, the court ordered that Mr Cardwell be restrained by himself or through his servants or agents from engaging in legal practice within New South Wales or representing or advertising that he was entitled to engage in legal practice, together with an order for the payment of costs in an agreed amount. 11 Reference was made to the criticism of Mr Cardwell by the Court of Appeal in Foord. At [66] Bryson JA said that judging by results, Mr Cardwell was operating well beyond his ability in seeking to obtain probate. The criticism was not that as a non-lawyer he was not able to obtain probate. Rather, he was criticised for a lack of the skills to do so. That was not the situation in this case. He was successful in obtaining probate and in selling the property at Umina. It is not suggested that the sale was at an undervalue. It is not suggested that Ross McCool suffered any loss as a result of the activities conducted by Mr Cardwell. 12 Russel McCool was in the Philippines when probate was granted and when settlement of the sale of the Umina property occurred in May 2006. He returned to Sydney in June 2006. He then took over the day to day administration of the estate. He opened a bank account and transferred the proceeds of sale of the Umina property into it. He made an interim distribution from it in June 2006. Mr Cardwell's involvement in the day to day administration of the estate had ceased well before the statement of claim was filed. 13 Russel McCool said that Ross McCool had agreed to the involvement of Mr Cardwell at a meeting at Umina in October 2005. As a friend of their late parents Mr Cardwell said he was happy to help finalise the affairs of their late mother and his costs would be minimal, only disbursements. 14 In October 2005 the three siblings signed an agreement in respect of the cricket memorabilia. It was agreed that the items should be held in trust by Mr Cardwell until the siblings agreed upon their safe keeping, transfer, loan, disposal or sale. Any dealing with the memorabilia had to be with the written consent of the three of them. 15 During these proceedings it was agreed that the memorabilia would be valued by an independent valuer. The initially proposed expert had written a book with Mr Cardwell. He was replaced by Tony Burgess. He valued the memorabilia in its current condition at $55,000 and at $65,000 if better presented. For insurance purposes he suggested a figure of $100,000. 16 Pressed upon me were affidavits relating to a recent dispute as to whether a photograph of The Invincibles signed by each member of the team formed part of the estate. Ross McCool asserted that there had been such a photograph. He was supported by his wife, Margaret Joy McCool, and by a neighbour of the deceased, Adele Kathleen Stephenson. On the other hand, Justin Patrick Dunne, a friend of the deceased and her late husband, produced a photograph showing a photograph of the team without signatures. Russel McCool says that is the only photograph of the team. 17 There is a conflict between the parties on this issue. It is not appropriate for me, in the exercise of my discretion as to costs, to resolve that conflict. 18 The assertion in the statement of claim that there were other assets acquired from the estate of the deceased's late husband, has not been made good. 19 Upon perusing the inventory of the property of the estate that accompanied the application for probate, Ross McCool was concerned that there were other bank accounts beyond the Westpac bank accounts totalling $56.82 which he apparently read as a reference to a single bank account. On 13 April 2006 Ross McCool sent an e-mail to Russel McCool raising his concern that only one bank account had been declared. He received a response from Russel McCool on 18 April 2006 explaining that one account contained $1.04, a second account contained $0.79 and a third account contained $54.82, making a total of $56.65. When probate was sought, a further $0.17 had been received by way of interest. 20 No complaint was made about any inaccuracy in the amount of the bank accounts in the statement of claim. It was submitted on behalf of Russel McCool that the same approach should have been taken to the matters of complaint contained in the statement of claim or, at the least, they should not have been further pursued after the defence containing the explanations referred to above had been served. 21 It was submitted on behalf of Ross McCool that the usual rule that costs follow the event should apply. It was submitted that Ross McCool, in effect, had largely got what he wanted from the litigation. It was submitted that while he did not obtain orders for the removal of Russel McCool as executor, Ross McCool achieved the important objective of the exposure of the conduct and effective removal of Russel McCool's "alter ego", Mr Cardwell. It was submitted further that without the fiat of the court's coercive powers there would not have been orders made to put in place a regime for the identification, location, production and valuation of the memorabilia. 22 I do not see this matter in that light. Ross McCool failed to obtain an order restraining Russel McCool from taking any action or doing any act or thing in the administration of the estate. He failed to obtain an order that Russel McCool deposit the grant of probate in the Registry. He failed to obtain an order that the grant of probate be revoked and that there be dispensation of the administration of bond. He failed to obtain an order that letters of administration with the will annexed be granted to him. That was the relief sought by the statement of claim and none of it was obtained. 23 Nor is it correct, in my view, to describe Mr Cardwell as the "alter ego" of Russel McCool. He was appointed under a power of attorney to assist in the administration of the estate while Russel McCool was carrying out his teaching functions in Manila. Mr Cardwell ceased to play any active part in the administration of the estate when Russel McCool returned to Australia. Far from exposing the conduct and effectively removing Mr Cardwell, his function had ceased a considerable time before Ross McCool filed his statement of claim. 24 Ross McCool's reliance upon irregularities to ground his application for costs is based upon Foord. That reliance runs the risk of treating a decision on the facts as precedent. It is only a statement of legal principle that can constitute a precedent and it is inappropriate to rely upon statements in a judgment germane to a decision on fact. As Windeyer J, with whom McTiernan J agreed, said in Teubner v Humble (1962-1963) 108 CLR 491 at 503 in a passage cited with approval in Bus v Sydney City Council (1989) 167 CLR 78 at 89: "I should add that we were referred by counsel to a number of decisions in other cases of road accidents. But decisions on the facts of one case do not really aid the determination of another case. Observations made by judges in the course of deciding issues of fact ought not to be treated as laying down rules of law. Reports should not be ransacked and sentences apt to the facts of one case extracted from their context and treated as propositions of universal application that a pedestrian is always entitled, or that a motorist is always obliged, to act in some particular way. That would lead to the substitution of a number of rigid and particular criteria for the essentially flexible and general concept of negligence. Perhaps the tendency to this has come about because so many common law actions are now tried by judges instead of by juries. Judges give reasons for their decisions and their reasons get into law reports; and lawyers, accustomed to arguing from precedents, are inclined, as this case shows, to quote the reasons that one judge has given for his finding of fact in one case to other judges in other cases. Lord Somervell and Lord Denning each referred to the unfortunate consequences of this in Qualcast (Wolverhampton) Ltd v Haynes ([1959] AC 743, at pp 757-759). And I would respectfully echo what their Lordships said, especially the passage quoted from the judgment of du Parcq LJ in Easson v London & North Eastern Railway Co ([1944] 1 KB 421) that, "There is a danger, particularly in these days when few cases are tried by juries, of exalting to the status of propositions of law what really are particular applications to special facts of propositions of ordinary good sense ([1944] 1 KB, at p 426)." 25 In Foord at [15] Bryson JA said that notwithstanding that there was no loss, the shortcomings that he had identified were an important part of the circumstances in which to decide whether it was reasonable that the appellant should have been dissatisfied with one of the executor's dealings and his explanations and should have brought a cross-claim for accounts to be taken, and should have obtained a result in which, in effect, accounts were taken. 26 In Foord the deceased placed a sum of money on short-term deposit with Deloitte. One of the executors, a partner in Deloitte Touche Tohmatsu, transferred this deposit to a family trust account during the deceased's lifetime. Funds under his control belonging to members of his family and not the deceased passed in and out of the account and there were occasions when total funds in the account were less than the deceased's entitlement for varying periods. In the absence of evidence that the deceased did not authorise her money to be dealt with in that fashion, Bryson JA took the view that there was no reason to treat the conduct of the account as unsatisfactory. 27 After the death of the deceased, the account continued as a vehicle for dealing with funds other than those of the deceased and her estate. Again, there were from time to time, deficits in the account so that there was insufficient money to meet all estate claims. The estate was not fully protected in the sense that if there had been competition with other claims the estate might have been entitled only to a rateable part of the fund or to a balance after satisfaction of other claims. The deficit ended when a relatively large amount to which one of the other executors was entitled was deposited to the account. In retrospect, Bryson JA said he was unable to attribute much importance to the deficits. They were not large in relation to the size of the estate and were overcome in about two months in the flow of transactions including the large credit. While there should never have been any deficit there was no reason to think that there was any intended misapplication of funds. From the time the deficit was eliminated there was no loss for which the Deloitte partner could be called on to account or to pay compensation. 28 His Honour pointed out that the estate asset was not dealt with in correct manner. A deposit of money at interest with a firm of which one of the executors was a partner was an unsuitable investment. Probate was not obtained with reasonable promptness so no one had lawful authority to deal with the trust account or to see to the protection of the interests of the estate. The account was not brought under the control of all the executors but remained under the control of one alone. Funds were not invested in a way that was clearly identified or earmarked as an estate asset. The estate asset was mixed with funds held with other interests with the result that, in theory, although there was no adverse outcome, it was not clearly identifiable and free from risks of shared losses. 29 It was in this context that his Honour made the observation that these shortcomings were important parts of the circumstances in which to decide whether it was reasonable that the appellant should have been dissatisfied and brought her cross-claim. 30 At [82] Bryson JA observed that important aspects of the appellant's conduct, allegations and behaviour were excessive and unjustified, but the basic position was that her suspicions and resistance were brought into being by the manner in which one of the executors conducted estate affairs. There were good grounds for her to wish estate affairs to be placed in other hands than the partner in Deloitte. Although she maintained her position in ways that were excessive and antagonistic, when exercising its discretion as to costs, the court should not be distracted from the good grounds she had by excess in her response. 31 At [83] his Honour observed that the ordinary consequence of the appellant's having succeeded, which in substance he found her to have done, was that she should recover a general order for costs unless for some sound discretionary reason the court decided to depart from that ordinary course. 32 The irregularities in this case are not of that order. It was submitted on behalf of Ross McCool that the irregularities related to matters of some importance to a beneficiary in the plaintiff's position, that prima facie that conduct of itself was notable for its brazen disregard for the requirement of legal formality and propriety. I disagree. Apart from the absence of cricket memorabilia as an asset of the estate, the irregularities relied upon are minor and the reliance is carping. 33 It is regrettable that the cricket memorabilia were not listed as estate assets but since it had been agreed that they should be held in trust for the brothers, their omission can be understood, although not condoned. The memorabilia having been dealt with by the agreement of the brothers there was no risk to the estate and no possible loss could be sustained by Ross McCool from the absence of the memorabilia from the inventory of property. As I have said, the allegation that other assets were not disclosed was not made out. Nor was any basis for such a suspicion established. 34 In Bates v Messner (1966) 67 SR (NSW) 187 at 191 Asprey JA had said that the essential basis for the exercise of the court's inherent jurisdiction to revoke a grant of probate is that the real object is the due and proper administration of the estate in the interests of the parties beneficially entitled thereto on the part of the person to whom and by whose oath as to the faithful performance of duty the court has been induced to entrust the office of executor. 35 In Mavrideros v Mack (1998) 45 NSWLR 80 the Court of Appeal differed from the view of the judge at first instance that the inherent jurisdiction should not be exercised unless one was getting close to the position of the grant being useless. At 108, Sheller JA with whom the other members of the Court of Appeal agreed said this was too narrow an interpretation of Bates. The question was whether the due and proper administration of an estate had either been put in jeopardy or had been prevented either by reasons of acts or omissions on the part of the executor or by virtue of matters personal to him, for example, mental infirmity, ill health, or by virtue of the proof of other matters that establish that the executor was not a fit and proper person to carry out the duties he had sworn to perform. 36 Similar judicial expressions are analysed in Upton v Downie [2007] NSWSC 1095 at [44] – [52]. 37 In my view, it should have been obvious to Ross McCool, at least when the defence was served upon him with its explanation of the irregularities, that none of the matters raised in his statement of claim was likely to cause the court to regard the proper administration of the estate of the deceased to have been put in jeopardy or prevented. 38 The event in this case has been the failure of Ross McCool to obtain any of the orders sought in the statement of claim. In my view Russel McCool is entitled to an order for costs that should be charged against Ross McCool's remaining entitlement in the estate. 39 I dismiss the statement of claim. I order the plaintiff to pay the defendant's costs of the proceedings. I order that the plaintiff's remaining entitlement to part of the estate be charged with the order as to costs. ********** 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.