Estate Late Helen Margaret Johnson Riddell v Casey and Johnson [2013] NSWSC 224

Supreme Court New South Wales

Medium Neutral Citation: Estate Late Helen Margaret Johnson Riddell v Casey and Johnson [2013] NSWSC 224 Hearing dates: 20.03.2013 Decision date: 20 March 2013 Jurisdiction: Equity Division Before: Lindsay J Decision: Summons dismissed with costs Catchwords: SUCCESSION - wills, probate and administration - construction and effect of will Legislation Cited: Civil Procedure Act 2005 NSW s 140 Uniform Civil Procedure Rules 2005 rule 28.2 Evidence Act 1995 NSW Cases Cited: - Texts Cited: - Category: Separate question Parties: Louise Margaret Riddell (Plaintiff) Christopher Hart Johnson as Executor of the Estate of the Late Helen Margaret Johnson (First Defendant) Anne Theresa Casey as Executor of the Estate of the Late Helen Margaret Johnson (Second Defendant) Representation: J Jobson (Plaintiff) T Maltz (Defendant) Andresakis & Associates (Plaintiff) Coleman & Greig (Defendant) File Number(s): 2010/00238817

Judgment - EX TEMPORE 1These proceedings, commenced by summons, invite the Court to construe a will, the construction of which may have a bearing on the conduct of proceedings between the same parties pending in the District Court of New South Wales (bearing the case number 2012/197963), and, in the alternative, to transfer the District Court proceedings to this Court pursuant to s 140 of the Civil Procedure Act 2005 NSW. 2No challenge is made to the jurisdiction of the District Court to determine the proceedings pending before it. 3An order has been made, today, under rule 28.2 of the Uniform Civil Procedure Rules 2005 for the separate determination of the question of construction of the will identified in paragraphs 1 and 2 of the summons. 4That order was made in a procedural context that will be outlined later in these reasons for judgment. It is necessary for that context to be explained because the subject matter of the District Court proceedings lies at the heart of the parties' dispute about the proper construction of the will presently under consideration. 5Helen Margaret Johnson ("the testatrix") died on 9 June 2010, leaving as her last will an instrument dated 22 March 2007, probate of which was granted by this Court to the defendants in the present proceedings (two of the three children of the testatrix) on 27 August 2010. 6As disclosed in the "inventory of property" attached to the grant of probate, the testatrix left a small estate, the total (gross) value of which was estimated by the present defendants to be $389,275.98. Her assets comprised the home unit at Marayong in which she lived at the time of her death ($380,000), a bank account with a credit balance ($2,275.98), a motor vehicle ($5,000) and jewellery ($2,000). 7At the time of the testatrix's death the Marayong home unit was subject to a registered mortgage in favour of the ING Bank. That mortgage was granted by the testatrix as security for a guarantee given by her to the ING Bank, on or about 18 September 2006, in support of a loan made by the bank to Scrapbook Cottage Pty Limited (the third plaintiff in the present proceedings). 8The parties have raised a question as to the proper characterisation of that loan and its relationship with a similar loan made by the bank in 2002. For present purposes, it is sufficient to record that there was a loan guaranteed by the testatrix and that her guarantee was secured by a mortgage over her home unit. 9That loan was co-guaranteed by the first plaintiff (a daughter of the testatrix, the remaining child of the testatrix's three children) and her husband, the second plaintiff. 10The third plaintiff is a company formed as a vehicle through which the testatrix, her then husband Kevin Johnson, and the first and second plaintiffs once conducted business. 11It is common ground that, by the time the deceased made her last will, she had left the business, and the company, in the control of the first and second plaintiffs. 12After the testatrix's death, following demands made by the ING Bank, the defendants (the legal personal representatives of the testatrix and the siblings of the first plaintiff) paid out the company's debt to the ING Bank, which granted a discharge of its mortgage over the testatrix's home unit. The amount paid to the bank for that purpose was approximately $250,000. 13On 25 June 2012 the executors (the defendants in the present proceedings) commenced the District Court proceedings against Scrapbook Cottage Pty Limited (the principal debtor to the ING Bank and the third plaintiff in the present proceedings); their sibling, the first plaintiff in the present proceedings (a co-guarantor, with the testatrix, of the company's debt) and the second plaintiff in the present proceedings (the third co-guarantor). 14In those proceedings the executors seek to enforce what they claim to be a right to an indemnity from the company as the principal debtor, and a right of contribution from their sibling and her husband as co-guarantors of the company, which the testatrix's estate, prima facie, has by reason of its payment out of the debt owed to the ING Bank. 15The defendants in the District Court proceedings (the plaintiffs in the present proceedings) have denied liability to the testatrix's estate and filed cross-claims which, in their turn, have been denied. 16A determination of the District Court proceedings on their merits will, or may, require an exploration of business dealings between the testatrix, the company (the present third plaintiff) and the first and second plaintiffs in these proceedings, possibly over the period between 1998 and the date of the testatrix's death in 2010. 17The ambit of the District Court proceedings might also be affected by the presence in those proceedings of a cross-claim by the executors' sibling (the present first plaintiff) which makes a claim for Family Provision relief under Part 3 of the Succession Act 2006. 18On both sides of the record in the proceedings before this Court, and hence in the proceedings in the District Court, there is agreement that the subject matter of the District Court proceedings can be dealt with within the jurisdictional limits of the District Court, whether by reference to s 134 of the District Court Act 1973 NSW or otherwise. 19By their commencement of proceedings in this Court, the plaintiffs seek to obtain an early determination of the proper construction of clause 6 of the deceased's will. 20The question of construction, in substance, is whether, upon the proper construction of the will, clause 6 effected a release of any (present or prospective) indebtedness that the first plaintiff in the present proceedings might have to the testatrix's estate referable to the ING loan. 21Clause 6 is in the following terms: "I have not made any provision for my daughter [the first plaintiff] in the previous clause 5 of this Will [whereby the deceased's home and its contents were, in substance, given to the defendants in the present proceedings] because I have already given substantial financial support to [the first and second plaintiffs in the present proceedings] in their business ventures during my lifetime". 22This clause has to be read in the context of the deceased's will as a whole and any extrinsic, contextual facts admissible for the purpose of construction of the will. 23It is not necessary to set out each of the various provisions of the will. It is sufficient to note that the testatrix's occupation is expressed in the will to be that of a "bank officer". By clause 2, she appointed the defendants to these proceedings as her "executors". By clause 3, she gifted her jewellery to her grandchildren who, it is common ground, are all of her grandchildren, representing the children of the first and second plaintiffs, the first defendant and the second defendant respectively; no branch of the family has been discriminated against in clause 3. 24Clause 4 gifted to the deceased's grandchildren the proceeds of sale of her motor vehicle. Clause 5 directed that the deceased's home unit be sold, that the net proceeds of sale be divided between the present defendants, and that the furniture and contents of the home unit be divided equally between the defendants. Clause 6 is the clause at issue. Clause 7 gave the residue of the deceased's estate to the present defendants. 25Other clauses of the will which follow deal with directions for the deceased's funeral (clause 8) and powers conferred upon the defendants as executors (clause 9). 26There is nothing in the powers conferred upon the executors that has been drawn to attention as bearing upon, or possibly bearing upon, the proper construction of clause 6. 27Admitted into evidence in these proceedings, as possibly bearing upon the proper construction of clause 6, is a written statement made by the deceased and dated 13 May 2007. It is broadly contemporaneous with her will, but it bears a date after the will. 28It was admitted into evidence subject to an order under s 136 of the Evidence Act 1995 NSW limiting the use that can be made of it. It is not to be taken as evidence of the truth of statements recorded in it. Its use is limited to evidence of the state of mind of the deceased at or about the time she made her will. 29It is not necessary, on the view that I take, to refer at length to any of the statements made in the written statement. 30On the whole, the written statement is indicative of a perception on the part of the deceased that there had developed a deep rift between herself and the first plaintiff in their personal relationship, arising from dealings between the two women in connection with the business of the third plaintiff. 31Clause 6 of the will does not, in terms, effect any disposition of property. It does not, in terms, cancel any indebtedness or "forgive" any debt. 32Nor does it, in terms, give any direction to the executors as to what they should do in administration of the deceased's estate vis-a-vis the mortgage over the deceased's home unit or adjustments that might be made, or might be thought should be made, arising out of any repayment of the third plaintiff's indebtedness to the ING Bank. 33Clause 6 does not identify any debts owed or any prospective indebtedness that might be owed to the deceased by the first plaintiff - or any debts once owed by the first plaintiff and now forgiven. 34Clause 6 offers an explanation for the absence of any provision for the first plaintiff in the deceased's will. That explanation is offered in terms that might have been thought to provide an answer to any prospective application by the first plaintiff for family provision relief. 35The expression "substantial financial support" found in clause 6 is consistent with the testatrix's grant of a guarantee, secured by a mortgage, in support of the indebtedness of the third plaintiff as a company under the control of the first and second plaintiffs. 36On my reading of clause 6, in the context of the will as a whole, the clause cannot be taken as a disposition of property in favour of the first plaintiff or as a direction to her executors as to their administration of her estate vis-a-vis any claim her estate might have against the plaintiffs arising from discharge of the indebtedness of the third plaintiff to the ING Bank. 37In those these circumstances, I determine the separate question presently before the court by ordering that the claims for relief made in paragraphs 1 and 2 of the summons be dismissed, and by making a declaration that, upon the proper construction of the will of the deceased dated 22 March 2007, clause 6 of the will is not dispositive of any property to the first plaintiff. 38In making these orders I record that my determination, although binding on all parties to the District Court proceedings, will not prevent the balance of the proceedings in the District Court from being determined on their merits. 39[His Honour heard further submissions]. 40The parties are agreed that, in light of my determination of the separate question, the balance of the summons should be dismissed. It stands dismissed. That dismissal carries with it dismissal of the plaintiffs' notice of motion filed on 21 November 2012 and dismissal of the defendants' notice of motion filed on 30 November 2012. It is not necessary for there to be any separate orders dealing with those notices of motion expressly. 41The effect of the orders that I have made is that the proceedings in the Supreme Court are, in their entirety, dismissed. The parties' continuing dispute remains within the control of the District Court. 42In light of the fact that the proceedings in this Court have been determined in favour of the defendants, the correct costs order, not disputed by the plaintiffs, is an order that the plaintiffs should pay the costs of the defendants. I order that those costs be assessed on the ordinary basis. 43The plaintiffs have applied for an order that the costs order I have made be stayed pending the determination of the District Court proceedings. I decline to grant such a stay. The question of construction determined by this judgment could have been determined, one way or another, in the District Court proceedings as an incident of the determination of questions in dispute in that court. It is inappropriate, in my assessment, to make an order that the costs of these, Supreme Court proceedings be stayed. 44The only other order I make is the usual order for the return of exhibits. That is, I order that exhibits and subpoenaed material may be returned forthwith; any exhibits returned must be retained intact by the party or person that produced the material until the expiry of the time to file an appeal or until any appeal has been determined.