Supreme Court New South Wales Medium Neutral Citation: Smith v Smith [2015] NSWSC 484 Hearing dates: 24 April 2015 Decision date: 24 April 2015 Jurisdiction: Equity Division Before: McDougall J Decision: Set aside Notice to Produce. Strike out Statement of Claim. Liberty to replead on conditions. Plaintiff to pay costs on indemnity basis, assessable forthwith. Catchwords: PRACTICE AND PROCEDURE – application to set originating process aside – application to strike out pleadings – where pleadings frivolous, vexatious and embarrassing – statement of claim struck out – whether leave to replead should be. PRACTICE AND PROCEUDRE – application to set aside notice to produce – where no evidence served – whether exceptional circumstances – notice to produce set aside. Legislation Cited: Inheritance (Family Provision) Act 1972 (SA) Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW) Probate Rules 2004 (SA) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Saunders v Vautier (1841) Cr & Ph 240 Barnes v Addy (1874) LR 9 Ch App 244 Category: Principal judgment Parties: Bronwyn Amanda Smith (Plaintiff) Jamie Lachlan Smith (First Defendant) Adam Brook Smith (Second Defendant) Andrew Thiele (Third Defendant) Estate of Denby Garfield Smith (Fourth Defendant) Representation: Counsel: M Griffin (Solicitor) (Plaintiff) G Stevens (Defendants) Solicitors: Morgan Ardino & Co (Plaintiff) Wadlow Solicitors (Defendants) File Number(s): 2014/336450 Judgment 1. Three of the four named defendants seek orders in relation to proceedings commenced against them by the plaintiff. The matters in dispute 1. The orders sought are that the originating process be set aside or that the Court decline to exercise jurisdiction (see UCPR r 12.11(1)(a), (h) respectively); or that the proceedings be cross-vested to the Supreme Court of South Australia (Jurisdiction of Courts (Cross-Vesting) Act 1987 (NSW), s 5(1)); or that the amended statement of claim be struck out in whole or in part (r 14.6, calling in aid also r 13.4, and the inherent jurisdiction of the Court). 2. Further relief is sought, of which the only relevant aspect for today's purposes is an order that a notice to produce be set aside. Background 1. It is necessary to state some of the background. The plaintiff and the first and third defendants are the children of the late Marlene Marie Smith and the late Denby Garfield Smith. For convenience, and without either wishing or being taken to be condescending or patronising, I shall refer to those people as, respectively, Bronwyn, Jamie, Adam, Marlene and Denby. 2. The third defendant (Mr Thiele) is a solicitor of the Supreme Court of South Australia. 3. The fourth defendant is named as "Estate of Denby Garfield Smith". The statement of claim identifies that defendant further by the words "as per the third defendant". 4. I note at this point that there has been no grant of representation in the estate of Denby. Specifically, although Mr Thiele was named as one of executors in Denby's will, Mr Thiele has renounced probate (and the same applies in respect of Marlene's will). 5. Marlene and Denby made what might be called mutual or reciprocal wills on 6 July 2012. By clause 3 of Marlene's will, she left her shares in the company known as Lachmarden Pty Limited and her interest (if any) in "the DG and MM Smith Family Trust" on the following trusts: 3.2 The bequest to JAMIE is subject to and conditional upon him agreeing in writing with my trustees as follows: - 3.2.1 To pay the sum of FOUR HUNDRED AND FIFTY THOUSAND DOLLARS ($450,000.00) to ADAM; 3.2.2 JAMIE shall pay ADAM a minimum of THIRTY THOUSAND DOLLARS ($30,000.00) per year the first payment due on or before the first anniversary of my death; 3.2.3 The total due to ADAM shall be paid in full to him by JAMIE within fifteen (15) years of the date of my death. … 3.2.6 If JAMIE fails to enter into a written agreement with my trustees agreeing to these terms within ninety (90) days of the date of my death then my shares in LACHMARDEN PTY LTD and my interest in the "DG & MM SMITH FAMILY TRUST" shall fall into and form part of my residuary estate. 1. By clause 5 of her will, Marlene gave her shares in another company known as Dema Vista Pty Limited together with her interests (if any) in the "Denby Smith Family Trust" on the like trusts, so far as they are relevant. 2. By clause 7 of her will, Marlene directed her trustees to set up a trust fund with a capital of $20,000, to be held at the discretion of the trustees as to both income and capital for Bronwyn. 3. By clause 9 of her will, and in the events that have happened, Marlene gave her estate otherwise to Denby. 4. Denby's will follows the same pattern, except that the residue of the estate, after the gift of the shares and the settings up of another trust fund of $20,000, is given to Adam (as to certain assets) and to Jamie and Adam (as to other assets). 5. Marlene died on 25 October 2012. Denby died on 26 November 2013. As I have said, Mr Thiele renounced probate of each of their wills. 6. At the time Marlene died, it was thought that her estate was very small, and indeed insolvent. Accordingly, Jamie administered her estate without proceeding to obtain a grant of probate as apparently is permitted under the relevant legislation of South Australia. (I should have mentioned that Marlene and Denby were domiciled in South Australia, that the bulk of their assets were located in South Australia, and that administration of their estates, to the extent that it is required, would be under the law of South Australia and by the Supreme Court of that State). 7. Mr Thiele has sworn however that, at some time after Marlene died, an additional asset was discovered. That had the effect of rendering her estate solvent, to the point where it could pay not only its debts but also the capital of the trust fund of $20,000 to be set up for Bronwyn. On Mr Thiele's evidence, which was relevantly uncontroverted, the gross value of the estate was about $44,800, and its net value was about $28,000. 8. I should note that Mr Griffin, solicitor, who appeared for Bronwyn on this application, submitted that the limit for informal administration of estates either is or at the relevant time was $30,000. There was no authority or legislation cited to justify that proposition. Nor was Mr Griffin able to say where or not it referred to a gross or a net value. 9. In circumstances where Mr Thiele, an experienced and apparently competent solicitor, has effectively acquiesced in the informal administration of Marlene's estate, I think I should proceed upon the basis that whatever (if anything), the monetary limit may have been, the mode of administration was, on the figures that he gives, appropriate. 10. Jamie has applied for a grant of probate of Denby's will. Because Bronwyn filed a caveat against grant, that application will proceed as a suit for probate in solemn form. As yet, no order of representation for Denby's estate has been made. Dispute as to value of Marlene's estate 1. I referred a little while ago to what was said to be the value of Marlene's estate. Mr Griffin submitted, and it is Bronwyn's case, that in fact the estate was of substantially greater value. That is because, Mr Griffin submitted, the share that Marlene held in each of Lachmarden and Dema Vista was worth far more than the one dollar notional value ascribed to it. 2. Mr Thiele has sworn, without controversion, that each of Lachmarden and Dema Vista was a trustee company. Lachmarden held certain grazing or family lands on trust, I assume for one or other of the trusts mentioned in the wills. Dema Vista appears to have conducted the primary production business that was carried on upon those (and perhaps other) lands. However, Mr Thiele swore, it did so as trustee for another trust. 3. In those circumstances, the obvious inference from Mr Thiele's evidence is that neither Lachmarden nor Dema Vista had any beneficial interest in the assets in its name. On that basis, it is inappropriate to do, as Mr Griffin said should be done: namely, value the shares by reference to their supposed net asset backing. 4. There is simply no evidence to suggest that the shares in question had any value other than nominal value. Thus, there is no evidence to support the submission that the value of Marlene's estate was anything other than the figure ascribed to it by Mr Thiele. The notice to produce 1. I pass over the orders sought pursuant to r 12.11(1), and the orders pursuant to the Cross-Vesting Act. It is convenient to start with the application to set aside a notice to produce. 2. The notice to produce was dated 28 November 2014, and presumably was served at some time shortly thereafter. It required Mr Thiele, upon whom it was served, to produce various records of Lachmarden and Dema Vista, of the two trusts, and of each of Marlene and Denby. 3. The pleadings have not closed. Indeed, if the order for striking out the amended statement of claim is made, there will be no pleadings to close. There has been no evidence served. Thus, as it seems to me, the notice to produce is in substance if not in form an attempt to get around the command of Practice Note SC Eq 11. By that Practice Note, the Court should not make an order for disclosure of documents until the parties have served their evidence, unless there are exceptional circumstances that necessitate disclosure (see para 4). 4. It is clear that the provisions of the Practice Note should be applied by analogy where documents are sought not pursuant to an order for disclosure but pursuant to some process for production such as that employed in the present case. 5. There was nothing to suggest that there are exceptional circumstances necessitating disclosure. Indeed, when questioned about the Practice Note, Mr Griffin said that he was not aware of it. The Court expects its practitioners to be aware of relevant matters, including not only the content of relevant legislation but also the content and application of relevant Practice Notes. The Practice Note was promulgated on 22 March 2012. One would have hoped that, more than three years later, a practitioner would be aware of its terms. 6. There being no suggestion of any exceptional circumstances, it is plain that the notice to produce must be set aside. The application to strike out 1. I turn to the application to strike out the amended statement of claim. I start by observing that the statement of claim is a lengthy, prolix and repetitive document. It includes, over some four pages, 24 different prayers for relief. To enable some flavour to be given, I set out those prayers for relief: 1 Declaration that the First Defendant in breach of trust and unlawfully and/or dishonestly and/or fraudulently obtained assets of the estate of the late Marlene Marie Smith ('the estate of the deceased mother') consisting of dividends and shares in two corporations and for which estate he was trustee and executor for himself and to the detriment of the estate, its creditors, beneficiaries and claimants; 2 Declaration that the Fourth Defendant assisted and participated in the First Defendant's conversion of the assets of the estate of the deceased mother to his own use and benefit with knowledge that the First Defendant's conversion of those assets was a breach of trust by the First Defendant, unauthorised by law or by the Will and/or fraudulent; 3 Declaration that the Fourth Defendant unlawfully and/or dishonestly and/or fraudulently obtained assets of the estate for which he was trustee and executor for the benefit of himself and/or the First Defendant and to the detriment of the estate, its creditors, beneficiaries and claimants; 4 Declaration that the First Defendant assisted and participated in the unlawful, unauthorised, dishonest and/or fraudulent taking of assets from the estate of the deceased mother by the Fourth Defendant; 5 Declaration that the First and/or Fourth Defendants hold assets of the estate of the deceased mother to the value of $770,000, consisting of shares and dividends therefrom, for the benefit of the estate and its creditors, beneficiaries and claimants as constructive trustees; or, alternatively, 6 Declaration that the Defendants jointly hold assets of the estate of the deceased mother to the value of $770,000 consisting of shares and dividends therefrom for the benefit of the estate and its creditors, beneficiaries and claimants as constructive trustees; 7 Declaration that the Second and Third Defendants while acting as trustees and executors of the estate, wilfully turned a blind eye, sat on their hands and/or assisted and participated in the First and Fourth Defendant taking the assets of the estate of the deceased mother for their own use and benefit; 8 Declaration that the Second and Third Defendants, while acting as trustees and executors of the estate and in wilfully turning a blind eye, sitting on their hands and/or in assisting and participating in the First and Fourth Defendant taking the assets of the estate of the deceased mother, breached their duties as trustees to the estate of the deceased mother and to the Plaintiff; 9 Declaration that the First and Fourth Defendants intermeddled in the assets of the estate of the deceased mother and devastated its assets for their own use and benefit to the detriment of the estate and its creditors, beneficiaries and claimants including the Plaintiff; 10 Declaration that the transfers of shares and the Entitlement to Dividends those shares entail from the estate of the deceased mother to the Fourth Defendant by the First Defendant while acting in his capacity as Trustee of the estate of the deceased mother, and/or the subsequent transfer of those shares and of the Entitlement to Dividends those shares entail from the Fourth Defendant to the First Defendant for his own personal use and benefit, and the agreement or contract for such transfer between those two defendants while both were purportedly acting as trustees for that estate, are void for unlawfulness and/or for want of consideration; 11 That the defendants give account of the assets of the estate of the deceased mother to the Plaintiff including the accounts of the two unlisted corporations in which the estate had shares and from which the estate was entitled to dividends or a share of profits; 12 That the dividends from the shares unlawfully and/or dishonestly and/or fraudulently obtained by the First and/or Fourth Defendant be traced through the accounts of the First and Fourth Defendants and of the two corporations for which they have been issued; 13 That the dividends from the shares retained by the First and/or Fourth Defendants from the financial year 2011/2012 to the date of judgement be returned or remitted back to the estate of the deceased mother for the benefit of the estate and its creditors, beneficiaries and claimants; 14 Declaration that the shares obtained from the estate of the deceased mother by the Fourth Defendant and, subsequently, by the First Defendant from the Fourth Defendant are held by the First Defendant as constructive trustee for the benefit of the estate and its creditors, beneficiaries and claimants; 15 That the dividends from the shares retained by the First and/or Fourth Defendants from the financial year 2011/2012 to the date of judgement be returned or remitted back to the estate of the deceased mother for the benefit of the estate and its creditors, beneficiaries and claimants; 16 That all assets taken from the estate of the deceased mother by the Defendants be remitted back or brought back into the estate; 17 Declaration that the First Defendant as trustee intermeddled in the assets of the estate of the deceased mother, devastated its assets and converted those assets for his own use and benefit to the detriment of the estate and its creditors, beneficiaries and claimants; 18 Declaration that the Fourth Defendant as trustee intermeddled in the assets of the estate of the deceased mother and devastated its assets and converted those assets for his own use and benefit and/or for the benefit of the First Defendant and to the detriment of the estate and its creditors, beneficiaries and claimants; 19 Declaration that the Third Defendant intermeddled in the estate of the deceased mother by realising and/or taking the life insurance policy in the name of the Plaintiff from the estate of the deceased mother and ion doing so acted as executor/administrator of the estate contrary to his renunciation; 20 Declaration that the renunciation of probate by the Third Defendant is invalid and void; 21 Should it be necessary, a Declaration that the Third Defendant acted as executor de son tort and is not entitled to any indemnity from the estate of the deceased mother; 22 That the defendants be passed over as executors and administrators of the estate of the deceased mother; 23 That the Plaintiff, or a suitable person nominated or appointed by her, be installed as executor and administrator of the estate of the deceased mother; 24 In relation to the Plaintiff: a. Declaration that the 'fund' set up for the Plaintiff by the deceased mother is a Trust' in which all of the defendants are trustees and the Plaintiff is the beneficiary; b. an order for specific performance that the defendant's pay the Plaintiff her entitlements in the estate or equitable damages in lieu of those entitlements; c. an order that the Plaintiff be granted extension of time to make application for probate of the Will of the deceased mother; or, d. should the assets obtained by the First and Fourth Defendant be remitted or brought back into the estate of the deceased mother, an order that the Plaintiff is granted an extension of time to make family provision claim against that estate; e. Declaration that the defendants breached the duties they owed the Plaintiff as her trustees and fiduciaries in the Trust Fund set up for the Plaintiff by the deceased mother; f. Declaration that the Third and Fourth Defendants, are executors de son tort or trustees de son tort in relation to the entitlements they held on trust for the Plaintiff in the estate of the deceased mother pursuant to the Trust Fund; g. In addition to the orders and declarations set out above and to the amounts the Plaintiff may obtain by way of a family provision claim, any other orders the Court sees fit including orders and declarations that the defendants are to pay the damages, costs and interest to the Plaintiff and/or hold assets and amounts derived from the estate of the deceased mother as constructive trustee for the benefit of the Plaintiff in the amounts set out below: Amount of claim $ 23,773.09 Damages (loss of opportunity) $ 420.000.00 Interest $ 2,164. 01(s 100) Filing fees $ 1,028.00 Service fees $ 800.00 (est) Solicitors fees $ 12.000.00 (est) TOTAL $ 39.685.10 $459.685.10 1. I should note, in relation to prayer 24(g), two things. The first is that, in the course of submissions, Mr Griffin said that his client's claim was one for equitable compensation. Although there are some 24 separate claims asserted, one of which has seven subclaims, equitable compensation finds no mention among them. 2. The other matter is that, in disregard of r 14.13, the statement of claim claims an amount for unliquidated damages. If that were the only disregard of the rules relating to the pleading, it could perhaps be overlooked. But as I shall show, it is not. 3. The "pleading" (for want of a better word) commences by identifying the parties. It then turns its attention to what are called "material facts". It sets out, although not entirely clearly, facts relating to the death of Marlene and (as Bronwyn sees them) the assets of Marlene's estate and certain of the provisions of Marlene's will. 4. The first matter of which complaint is made is the way in which Marlene's shares in Lachmarden and Dema Vista were dealt with. The pleading alleges, from paras 13 onward, that the shares in those two companies were wrongly transferred by Jamie to Denby. It alleges further, that thereafter those shares were wrongly transferred by Denby back to Jamie. 5. The basis of the allegation that the shares were wrongly transferred must be the (unstated) proposition that they had real rather than notional value, so that they could not be transferred as part of the informal administration of Marlene's estate. For the reasons I have given, that unspoken basis is incorrect. It must follow, on the assumption that it was open to Jamie to administer the estate in the way that he did, that: 1. there was no impropriety in his transferring the estate's shares to his father Denby; and 2. nor was there any impropriety in Denby's act thereafter, as owner of the shares, transferring them back to Jamie. 1. Thus, the complaint that is made is entirely unsustainable, on the assumption as to value of the estate. Nonetheless, to give some indication of the repetitive, prolix, embarrassing, and vexatious way in which the whole of the statement of claim is pleaded, I shall set out, in extenso, paras 13 to 49 of the amended statement of claim: 13. By her Will, the deceased mother made the following bequests: a. each of her single shares in Lachmarden Pty Ltd and in Demar Vista Pty Ltd ('the Two Corporations') to the First Defendant subject to the following express conditions: that the First Defendant enter written agreement with the nominated trustees and executors of the estate of the deceased mother to pay the Second Defendant $900,000.00 in lump sum or by instalments of $60,000.00/year for 15 years within 90 days after her death ('the Condition Precedent'); should the First Defendant not enter the agreement with the nominated executors and trustees referred to at subpar 'a' above and, thereby, not satisfy the Condition Precedent, then the gifts of the shares in the Two Corporations to the First Defendant would fail and the shares and the dividends or share of profits therefrom ('the Entitlement to Dividends') would fall into the residual estate of the deceased mother for use in the discharge of the debts of her estate; after discharge of debts of the estate from the residual estate, and only after the discharge of debts, the remainder of the residual estate was to be distributed to the Fourth Defendant, i.e. Denby Garfield Smith; b. her share in the real property particularised at par '9 d' above to the Fourth Defendant and then solely to the Second Defendant. 14. The First Defendant did not satisfy the Condition Precedent for the gift to him of the shares in the Two Corporations under the Will of the deceased mother in that he failed to enter the written agreement with the nominated executors and trustees of the estate of the deceased mother within the 90 days specified and has not entered such an agreement at all. 15. The shares in the Two Corporations did not fall into the residual estate of the deceased mother when the First Defendant failed to satisfy the Condition Precedent as expressly required by the Will but, contrary to the provisions in the Will, the shares, and the entitlements to dividends and share of profits therefrom ('the Entitlement to Dividends'), were, on 23 August 2013, transferred to the Fourth Defendant while the donor was alive for no value by the First Defendant while purporting to act in the capacity of executor of the deceased mother's estate, and before debts of the estate were discharged. 16. The transfer of shares in the Two Corporations and the Entitlement to Dividends were transferred to the Fourth Defendant before payment of the debts of the estate without the knowledge and consent of the Plaintiff but with the assent of all other defendants acting in their purported capacity as nominated executors and trustee of the estate of the deceased mother and while they were trustees of the Trust Fund for the Plaintiff. Transfer of Shares from the First Defendant to the Fourth Defendant 17. On 23 August 2013, the First Defendant, with the knowledge and assent of all the defendants, but without the consent or knowledge of the Plaintiff, proceeded to administer the estate of the deceased mother without grant of probate. 18. On or about the 23 August 2013, the First Defendant, acting in the capacity as executor administering the estate of the deceased mother, and without the consent or knowledge of the Plaintiff, entered agreement with the Fourth Defendant to transfer the shares in the Two Corporations and the Entitlement to Dividends therefrom that were in the estate of the deceased mother, to the Fourth Defendant, Denby Garfield Smith, while he was alive, for no or inadequate consideration and for the personal use and benefit of the Fourth Defendant: a. on 23 August 2013, the First Defendant did transfer the shares and the Entitlement to Dividends therefrom to the Fourth Defendant; b. the shares and the Entitlement to Dividends did not fall into the residual estate for the payment of debts of the estate; c. the estate of the deceased mother received no consideration for the shares or the Entitlement to Dividends from the Fourth Defendant. 19. While transferring the shares in the Two Corporations in the estate of the deceased mother to the Fourth Defendant, the First Defendant was a nominated trustee and executor of the estate of the deceased mother and trustee in the Trust Fund set up for the Plaintiffs benefit by the deceased mother. 20. When receiving the shares in the Two Corporations in the deceased mother's estate from the First Defendant, the Fourth Defendant was a nominated trustee and executor of the estate of the deceased mother and trustee in the Trust Fund set up for the Plaintiffs benefit by the deceased mother. 21. At the material time of the transfer of shares in the Two Corporations in the estate of the deceased mother to the Fourth Defendant by the First Defendant, the First and Fourth Defendants knew that the estate of the deceased mother had debts including funeral and administration expenses, outstanding loans, legal fees and unpaid tax. 22. At the material time of the transfers of shares in the Two Corporations in the estate of the deceased mother to the Fourth Defendant by the First Defendant for the personal use and benefit of the Fourth Defendant, the First Defendant and the Fourth Defendant knew they owed the duties of trustees to the Plaintiff under the Trust Fund set up for the Plaintiffs benefit by the deceased mother: a. the knowledge of the First Defendant and the Fourth Defendant was derived from their positions as nominated trustees and executors of the estate familiar with the Will of the deceased mother and its terms; b. representations by the Fourth Defendant and the terms in his unexecuted Will of 2013. 23. At the material time of the transfers of shares in the Two Corporations from the estate of the deceased mother and the Entitlement to Dividends to the Fourth Defendant by the First Defendant for the personal use and benefit of the Fourth Defendant, the Fourth and First Defendants knew that the Plaintiff had a benefit and entitlement in the estate of the deceased mother: a. knowledge derived from their positions as nominated trustees and executors of the estate and familiar with the Will of the deceased mother and familiarity with the terms of the Will of the deceased mother; b. representations by the Fourth Defendant and the terms in his unexecuted Will of 2013. 24. At the material times of the transfers of shares in the Two Corporations from the estate of the deceased mother to the Fourth Defendant by the First Defendant for the personal use and benefit of the Fourth Defendant and, subsequently, from the Fourth Defendant to the First Defendant, the Fourth and First Defendants knew that the dealings in the shares were not authorised by the Will and were contrary to the requirements of the Will: a. knowledge derived from their positions as nominated trustees and executors of the estate and familiar with the Will of the deceased mother and familiarity with the terms of the Will of the deceased mother; b. the Will of the deceased mother was in similar terms to the Will of the Fourth Defendant by agreement and design. 25. At the material times of the transfers of shares in the Two Corporations from the estate of the deceased mother to the Fourth Defendant by the First Defendant for the personal use and benefit of the Fourth Defendant and, subsequently, from the Fourth Defendant to the First Defendant, the Fourth and First Defendants knew that the Will provided the Condition precedent and that then First Defendant had not satisfied the Condition Precedent a. knowledge derived from their positions as nominated trustees and executors of the estate and familiar with the Will of the deceased mother and familiarity with the terms of the Will of the deceased mother; b. The Fourth Defendant was a trustee of the estate with whom the First Defendant was required to, but failed to, enter an agreement pursuant to the Condition Precedent; c. the Will of the deceased mother was in similar terms to the Will of the Fourth Defendant by agreement and design. 26. The transfer of shares in the Two Corporations from the estate of the deceased mother to the Fourth Defendant by the First Defendant was done with the knowledge of the Second and Third Defendants who had knowledge and notice of their obligations to the Plaintiff as her trustee under the Trust Fund set up for the Plaintiff by the deceased mother: a. knowledge derived from their positions as nominated trustees and executors of the estate who were familiar with the Will of the deceased mother and with the terms of that Will. 27. At the material times of the transfer of shares in the Two Corporations and the Entitlement to Dividends to the Fourth Defendant for the First Defendant and subsequently to the First Defendant from the Fourth Defendant, the Second and Third Defendants knew that the Will provided the Condition Precedent, that the First Defendant had not satisfied that Condition Precedent and that, in that event, the shares were to fall into the residual estate for the discharge of debts of the estate: a. knowledge derived from their positions as nominated trustees and executors of the estate who were familiar with the Will of the deceased mother and with the terms of that Will; b. the Second and Third Defendants were trustees of the estate with whom the First Defendant was required to, but failed to, enter an agreement pursuant to the Condition Precedent. 28. At the material times of the transfer of shares in the Two Corporations and the Entitlement to Dividends to the First Defendant by the Fourth Defendant for the First Defendant's personal use and benefit, the Second and Third Defendants knew that the estate of the deceased mother had debts by way of funeral and administration expenses, outstanding loans, legal fees and a tax debt. 29. On the basis that the Second and Third Defendants knew that the estate of the deceased mother had debts and that the transfer of shares and the Entitlement to Dividends out of the estate of the deceased mother for inadequate or no consideration would diminish the value of assets in the estate of the deceased mother for discharge of those debts, then the Second and Third Defendants also knew that there was a risk that the transfer of shares and Entitlement to Dividends out of the estate of the deceased mother without consideration or for less than adequate consideration would pose a risk to the value of Trust Fund set up for the Plaintiffs benefit by the deceased mother. Transfer of Shares Back to the First Defendant by the Fourth Defendant 30. Approximately one week after transferring the shares from the deceased mother's estate to the Fourth Defendant, on or about the 5 September 2013, the Fourth Defendant, Denby Garfield Smith while alive, entered an agreement with the First Defendant to assign the shares in the Two Corporations and/or the Entitlement to Dividends that were formerly in the estate of the deceased mother and which he had received from the First Defendant while the First Defendant had been administering the estate of the deceased mother, back to the First Defendant for the First Defendant's personal use and benefit and for the inadequate consideration of $1.00 for each share and without the knowledge or consent of the Plaintiff: a. the shares were transferred to the First Defendant by the Fourth Defendant for the personal use and benefit of the First Defendant on 5 September 2013 for $1.00 each. 31. At the material times of the agreement to transfer or assign the shares in the Two Corporations and/or the Entitlement to Dividends that were formerly in the estate of the deceased mother by the Fourth Defendant back to the First Defendant for the personal use and benefit of the First Defendant, and at the material time of the transfer of those assets, the First and Fourth Defendants knew that the estate of the deceased mother had debts by way of funeral and administration expenses, outstanding personal loans, legal fees and a tax debt. 32. At the material times of the agreement to transfer or assign the shares in the Two Corporations and the Entitlement to Dividends from the Fourth Defendant to the First Defendant for his personal use and benefit, and of the transfer of those assets, the Fourth and First Defendants knew they owed the duties of trustees to the Plaintiff under the Trust Fund set up for the Plaintiffs benefit by the deceased mother: a. the terms of the Will of the deceased mother; b. the unexecuted Will of 2013 of Denby Garfield Smith - the now deceased donor of the Fourth Defendant Estate. 33. At the material time of the agreement to transfer, and of the transfer and assignment of, the shares in the Two Corporations and/or the Entitlement to Dividends from the Fourth Defendant to the First Defendant for his personal use and benefit, the Fourth and First Defendants knew that the Plaintiff had a benefit and entitlement in the estate of the deceased mother: a. knowledge as trustees and executors of the estate of the deceased mother of the express provisions of the Will of the deceased mother; b. knowledge as expressed in unexecuted Will of 2013 of Denby Garfield Smith - the now deceased donor of the Fourth Defendant Estate. 34. The assignment of shares in the Two Corporations and/or the Entitlement to Dividends formerly in the estate of the deceased mother by the Fourth Defendant to the First Defendant was done with the knowledge and assent of the Second and Third Defendants as trustees of the estate of the deceased mother and when the Second and Third Defendant had knowledge and notice of their obligations as trustees to the Plaintiff: a. the Second and Third Defendant's knowledge as trustees and executors of the estate of the deceased mother and of the express provisions setting up the Trust Fund for the Plaintiff in the Will of the deceased mother; b. the Will was drafted by the Third Defendant. 35. At the material time of the assignment of shares in the Two Corporations and/or of the Entitlement to Dividends formerly in the estate of the deceased mother to the First Defendant by the Fourth Defendant for the First Defendant's personal use and enjoyment, the Second and Third Defendants, as trustees of the estate of the deceased mother, knew that the estate of the deceased mother had debts by way of funeral and administration expenses, outstanding loans, legal fees and a tax debt. 36. At the material time of the assignment of the shares in the Two Corporations and/or of the Entitlement to Dividends formerly in the estate of the deceased mother to the Fourth Defendant by the First Defendant, the Second and Third Defendants, who, as trustees of the estate of the deceased mother familiar with the contents of the Will of the deceased mother: a. knew that the transfer was not authorised by the Will; b. knew that the Fourth Defendant only had an entitlement to the value of those assets remaining after the debts of the estate had been discharged; c. knew that the Will contained the Condition Precedent; d. knew that the First Defendant had not satisfied the Condition Precedent. 37. On the basis that the Second and Third Defendants knew that the estate of the deceased mother had debts and that the assignment of the shares or the Entitlement to Dividends or assets out of the estate of the deceased mother for inadequate or no consideration would diminish the value of assets in the estate of the deceased mother available for discharge of the debts of that estate, the Second and Third Defendants also knew that there was a risk that the assignment of shares and/or the Entitlement to Dividends to the First Defendant by the Fourth Defendant Estate without any or adequate consideration would pose a risk to the value of Trust Fund set up for the Plaintiff by the deceased mother and in which they were trustees for the Plaintiff. Retention of Dividends or Share of Profit by the First &/or Fourth Defendants 38. For the period between the death of the deceased mother in October 2012 and 23 August 2013 - the date at which the shares in the Two Corporations were transferred or assigned to the Fourth Defendant by the First Defendant - the First Defendant retained and converted for his own use and benefit the dividends or share of profits from the Two Corporations (i.e. the Entitlement to Dividends) owed to the deceased mother and/or to her estate as holder of the shares in the Two Corporations for the financial year 2011/2012 and for part of the 2012/2013 financial year to the approximate net value of $180,000.00. 39. In the alternative to or in addition to the facts pleaded at par 38 above, when receiving the shares of the deceased mother in the Two Corporations from the First Defendant, the Fourth Defendant also retained and converted for his own use and benefit the Entitlement to Dividends for the financial year 2011/2012 and for part of the 2012/2013 financial year to the approximate net value of $180,000. 40. Neither the First Defendant nor the Fourth Defendant nor any of the defendants, in their capacities as executors and trustees of the estate of the deceased mother, applied any dividends owed to the deceased mother or to her estate by way of the shareholding in the Two Corporations to the payment of debts or legacies of the estate between the time of the death of the deceased mother in October 2012 and the transfer of shares and the Entitlement to Dividends to the Fourth Defendant in August 2013 or after. 41. At the material time they retained for themselves the Entitlement to Dividends the First Defendant and/or the Fourth Defendant knew that the estate of the deceased mother had undischarged debts by way of funeral and administration expenses, outstanding loans, legal fees and a tax debt. 42. At the material time they retained for themselves the Entitlement to Dividends the First and/or Fourth Defendant: knew: a. knew they owed the duties of trustee to the Plaintiff under the Trust Fund set up for the Plaintiff by the deceased mother; b. knew they were not entitled to the dividends by the arrangements of the Will' c. knew the First Defendant had not satisfied the Condition Precedent: Particulars. knowledge derived from their positions as nominated trustees and executors of the estate and familiar with the Will of the deceased mother and familiarity with the terms of the Will of the deceased mother; representations by the Fourth Defendant in his unexecuted Will of 2013. 43. The retention of the Entitlement to Dividends by the First Defendant and/or by the Fourth Defendant was done with the knowledge and assent of the Second and Third Defendants. 44. At the material time that the First Defendant and/or the Fourth Defendant retained for themselves the Entitlement to Dividends, the Second and Third Defendants knew that the estate of the deceased mother had undischarged debts by way of funeral and administration expenses, outstanding loans, legal fees and a tax debt. 45. At the material time that the First Defendant and/or the Fourth Defendant retained for themselves the Entitlement to Dividends, the Second and Third Defendants knew that that retention was unauthorised by, and contrary to, the provisions of the Will on the basis that they knew that the share transfers were unauthorised by the Will by way of the Condition Precedent and of the consequences in the event that the Condition precedent was not satisfied. 46. At all material times when they assented to the retention of the Entitlement to Dividends by the First Defendant and/or the Fourth Defendant, the Second and Third Defendants knew that: a. the estate of the deceased mother had debts, b. they had obligations as trustees to the Plaintiff under the Trust Fund; c. That any transfer of assets from the estate without adequate consideration would place the estate at risk of insolvency. 47. On the basis that the Second and Third Defendants knew that the estate of the deceased mother had debts and that any loss of assets from the estate would diminish the value of assets available in the estate from which those debts could be discharged, the Second and Third Defendants also knew that the unauthorised transfers of shares and retention of the Entitlement to Dividends by the First and/or Fourth Defendants posed a risk to the value of the Trust Fund set up for the Plaintiff by the deceased mother. 48. At the material time they transferred and received the shares in the Two Corporations and the Entitlement to Dividends therefrom, the First and/or Fourth Defendants appropriated those assets of the estate and converted them for their own use and, thereby, intermeddled in the assets of the estate. 49. At the material time of the intermeddling in the assets of the estate and of the appropriation of the shares and the Entitlement to Dividends by the First Defendant and/or by the Fourth Defendant, the Second and Third Defendants: a. assented to that intermeddling and to the conversion and appropriation of the estates assets; b. acquiesced in that appropriation and conversion; c. assisted in that appropriation and conversion; or, d. wilfully turned a blind eye to that conversion and appropriation of the assets of the estate of the deceased mother. 1. It will be observed immediately that the drafter of the pleading either did not know, or did not propose to pay attention to, the requirements of Div 3 of UCPR Part 14. I set out rules 14.6, 14.7 and 14.8: 14.6 Pleadings to be divided into paragraphs If a pleading alleges or otherwise deals with several matters: (a) the pleading must be divided into paragraphs, and (b) each matter must, so far as convenient, be put in a separate paragraph, and (c) the paragraphs must be numbered consecutively. 14.7 Pleadings to contain facts, not evidence Subject to this Part, Part 6 and Part 15, a party's pleading must contain only a summary of the material facts on which the party relies, and not the evidence by which those facts are to be proved. 14.8 Pleadings to be brief A pleading must be as brief as the nature of the case allows. 1. It simply cannot be said that each of the "several matters" with which the pleading deals are alleged in separate paragraphs. It cannot be said that the pleading contains only a summary of material facts rather than evidence. Nor can it be said that this aspect of the pleading is as brief as the nature of the case allows. 2. On the contrary: 1. the paragraphs that I have set out on many occasions contain multiple allegations of fact (and multiple allegations of evidence); 2. the paragraphs do not confine themselves to material facts, but on the other hand do not allege with adequate particularity some of those facts; 3. many of the paragraphs allege matters that are evidentiary; 4. the constant repetition, with slight variations, of the same allegations offends the rule against repetition that follows from r 14.8; and 5. overall, the pleading is structured in such a way that it is almost impossible to see how a sensible defence could be pleaded to it. 1. As to the last point: anyone seeking to plead a defence would have to take each of the paragraphs, disentangle the multiple allegations made, admit them, deny them, traverse them in some way, or otherwise deal with them individually and serially. It is simply not possible for a pleading by way of defence to do no more than admit or deny a particular paragraph. That is why in my view the way in which those paragraphs are pleaded is not only vexatious but also embarrassing 2. The next section of the pleading refers to "The rule in Saunders v Vautier". The essence of that pleading is that that Bronwyn, as she is entitled to do (it now being clear that Marlene's estate is solvent), has called for payment to her of the trust fund set up for her benefit. It is common ground by now that the amount of $20,000 has been paid and received. 3. Mr Griffin submitted that there was also a claim for interest because of the delay in payment. Quite why interest should be payable in circumstances where, until the other asset to which I have referred was discovered, the estate was insolvent, I do not know. However, regardless, Jamie has offered what is in effect an ex gratia payment on account of interest in the sum of $1,000. Bronwyn has accepted that offer. She was wise to do so. It is clear that interest (even if allowed) at the usual rate would be far less. 4. The sum of $1,000 has not been paid, but I have no reason to think it will not be paid. 5. The pleading then turns its attention to a life insurance policy which Marlene effected on Bronwyn's life. It seems that Bronwyn wishes to have the benefit of that policy transferred to her. Jamie is prepared to do so. Indeed, Jamie has helped Bronwyn out by paying, out of his own pocket, premiums on that policy for a period of time. All that needs to be done is that Bronwyn needs to arrange for the necessary formalities with the insurer. The policy will then be transferred. 6. I should however note in this context that the amended statement of claim makes a scandalous and irresponsible allegation that Mr Thiele cashed out the policy and paid the cash value of it to himself. That allegation was made, so Mr Griffin said, because Mr Thiele gave Mr Griffin an incorrect policy number; and when Mr Griffin made inquiries of the insurer, he was told that those things had happened. 7. I think that what happened is that the policy that was cashed out and paid (to Mr Thiele's trust account, not to himself personally) was another small policy that Marlene held on the life of Denby. 8. In the course of submissions, Mr Griffin accepted facts which show quite clearly that Mr Thiele has not acted in the wrongful way attributed to him. Nonetheless, Mr Griffin did not submit that he should have leave to replead so as to delete those entirely inappropriate allegations. 9. The amended statement of claim then alleges matters said to show breach of trust by the trustees of Marlene's estate, and matters said to show breach of duties owed by the defendants to the estate and indeed by the defendants to Bronwyn. It then turns to allege various aspects of what are said to be maladministration and intermeddling. 10. The starting point is that Bronwyn is not an executor or trustee named in either of the wills. She is a beneficiary. Her interest has been paid or will be paid. It is difficult to understand how she has any standing to seek the relief that she does seek in relation to the matters alleged. And if she does wish to interfere in the administration of Marlene's estate, there are statutory mechanisms available under The Probate Rules 2004 (SA) of the Supreme Court of South Australia. 11. Mr Griffin sought to justify the orders sought, and the problem of standing, by referring to the claim for "loss of opportunity to make a family provision claim". I shall return to that topic. 12. Passing over numerous other matters that are "pleaded" but go nowhere, it is convenient to point out another aspect of the deficiency of the "pleading". Paragraph 80 alleges breaches of duty against one or other or more of the defendants. For present purposes, it is necessary to refer only to subparas (d) and (e): d. with respect to the Third Defendant, in knowledge and with notice of his duties to the Plaintiff has her trustee under the Trust Fund, had conflict of interest and duties in that he acted for, encouraged and advised the other trustee defendants in his capacity as lawyer and notary for the estate and of those defendants in regard to the appropriation and conversion of the shares and of the Entitlement to Dividends therefrom against the interests of the Plaintiff his beneficiary in the Trust Fund; e. also with respect to the Third Defendant, in knowledge and with notice of his duties to the Plaintiff as her trustee under the Trust Fund, took the benefit of the cash value of the insurance policy on the Plaintiff's life taken out by the deceased mother for himself. 1. There is simply no pleading of any material fact by which those allegations are said to be demonstrated. The pleading is conclusionary in the extreme. It gives Mr Thiele no knowledge whatsoever of the case that he might have to meet. 2. The next section of the pleading deals with "Damage caused to the plaintiff by the defendants". The first two items relate to the $20,000 trust fund and the policy on Bronwyn's life. I have dealt with those. The next section refers to a (supposed) lost opportunity to bring family provision claims. I set out paragraph 81 (c), (d): c. lost the Plaintiff the opportunity to bring a family provision claim against the estate of the deceased mother which, if not for the taking of the assets by the First and Fourth Defendants would have had significant assets from which the Plaintiff could obtain a contribution towards her maintenance and advancement; d. lost the Plaintiff an opportunity to bring a family provision claim against the Fourth Defendant that would have had significant assets had the shares and Entitlement to Dividends they entail ben dealt with in accordance with the Will and if, after payment of debts of the estate of the deceased mother, adequate consideration been obtained for those assets when transferred out of the estate of the deceased mother. 1. At this point, I note that "family provision claims" are governed, in South Australia, by the Inheritance (Family Provision) Act 1972 (SA) (the IFP Act). Under s 8 of the IFP Act, an application is not to be heard unless it is made within six months after the date of grant of probate: 8. Time within which application to be made (1) Subject to this section, an application shall not be heard by the Court at the instance of a person claiming the benefit of this Act unless the application is made within six months from the date of the grant in this State of probate of the will, or letters of administration of the estate, of the deceased person. (2) The Court may, after hearing such of the persons affected as the Court thinks necessary, extend the time for making an application for the benefit of this Act. 1. There has been no grant of probate in either estate. Accordingly, the time to make an application under the IFP Act has not commenced to run. It cannot be said, in any temporal sense at least, that Bronwyn has lost the opportunity to bring a claim. The only thing holding up her claim, at least in respect of Denby's estate, is the necessity for probate to be granted in solemn form, because of the caveat that she herself lodged. 2. Mr Griffin sought to support this aspect of the case by saying that the claim was not based on loss of any temporal opportunity but, rather, on the way that the defendants had administered the two estates. That, he submitted, had the effect of making it impossible, in a practical sense, for his client to bring a claim. 3. The starting point is that, on the evidence, Marlene's estate, after allowing for payment of the trust amount of $20,000 to Bronwyn, has only a few thousand dollars left in it. It is simply inconceivable that any order for provision, or further provision, would be sought or made out of so small an estate. 4. To the extent that this aspect of the claim depends on the proposition that Marlene's estate is more valuable than Mr Thiele has said, it is unsustainable, for the reasons I have given. 5. It may very well be that Denby's estate is more substantial. However, until probate is granted, there can be no family provision claim made in respect of it. 6. In my view, the claim for lost opportunity is utterly misconceived. 7. The next section of the pleading deals with what is said to be a Barnes v Addy case. I pass over that, although it should not be thought that, in doing so, I am expressing a view that it is properly pleaded or has any appearance of merit. 8. The next section of the case alleges a conspiracy between Jamie and Denby (presumably, during Denby's lifetime). I set out the relevant part of the pleading (paras 93 to 98): 93. On or about the 23 August 2013 the First and Fourth Defendants, as co-trustees in the estate of the deceased mother and as trustee for the Plaintiff in the Trust Fund, formed a plan and entered an agreement that they would combine to take the shares and Entitlement to Dividends in the estate of the deceased mother contrary to the provisions of the Will for their own benefit and to prevent those assets falling into the residual estate for use to pay the debts of the estate and the gift to the Plaintiff in the Trust Fund, to make any family provision claim from the Plaintiff useless and then use the remaining amounts in the estate, including those intended for the Plaintiff in the Trust Fund, to pay the debts of the estate so that there would be nothing in the Trust Fund for the Plaintiff. 94. On or about 23 August 2013 the defendants, as the trustees of the estate of the deceased mother and of the Plaintiff, also formed a plan and entered an agreement that they would combine and assent to allow the First and Fourth Defendants to take the assets of the estate contrary to the provisions of the Will and assent to the use of the entitlement of the Plaintiff to satisfy the debts of the estate rather than allow the assets to fall into the residual estate for payment of the estates debts and to provide amounts for the Trust Fund of the Plaintiff 95. The plan and agreement for which the defendants combined to deprive the estate of its assets in or around the 23 August 2013 was also intended to prevent the estate from holding sufficient assets from which the Plaintiff could obtain a contribution toward her maintenance and advancement in a family provision claim. 96. In combining and assenting to the plans to deprive the estate of the assets, the defendants also caused loss and damage to the Plaintiff as there are now insufficient funds to provide the amounts for the Trust Fund, pay the debts of the estate and devastated the assets of the estate available to the Plaintiff to obtain a contribution in a family provision claim. 97. The taking of the assets by the First and Fourth Defendants and the assent to the taking of the assets by all other trustees was: a. unlawful; b. contrary to and unauthorised by the provisions of the Will, c. a breach of the trustee and fiduciary duties that the defendants owed to the estate of the deceased mother at law, by the terms of the Will and in equity; d. a breach of the trustee and fiduciary duties that the defendants owed to the Plaintiff as her trustees in the Trust Fund at law, by the terms of the Will and in equity. 98. The plan to deprive the estate and the Plaintiff of assets to which they were entitled, and for which the defendants combined and which they implemented, caused damage to the Plaintiff in the form of: a. loss of the amounts in the Trust Fund set up for the deceased mother; b. loss of the cash out value of the insurance policy the trustees had agreed to provide to her; c. loss of opportunity to obtain a contribution toward her maintenance and advancement in a family provision claim against the estate of the deceased mother; d. legal costs. 1. It is to be noted that the allegations of the conspiracy in paras 93 and 94 (and, perhaps, 95 and 96 also) are utterly devoid of any material facts from which the conspiracy is said to be proved. More specifically, there is no pleading of any overt act from which the existence of the conspiracy could be inferred. 2. The allegation made is a very serious one. The persons against whom it is made (now, after Denby's death, only Jamie) are entitled to have it fully and properly pleaded and, to the extent necessary, particularised. This the pleading conspicuously fails to do. 3. The next section of the pleading alleges a case in fraud. The fraud is said on occasions to involve one or other of Jamie, Denby and Mr Thiele. As an example of the confusion of the pleading, it is alleged on two occasions that Mr Thiele acted under instructions given by, among others, Denby at a date well after Denby's date of death. 4. More significantly, although the pleading of fraud is a serious matter and one that requires full pleading of material facts and provision of particulars, the pleading that is given is utterly inadequate. 5. There are then pleaded claims in conversion and detinue, unjust enrichment, and unconscionability. Again, I pass over those claims. Again, it should not be thought that in doing so I am to be taken as suggesting that they have any merit whatsoever or that they are properly pleaded. 6. The case is clearly one where it would be unjust to put the defendants to the difficulty and expense of pleading to the allegations made against them. In terms of r 13.4, the pleading is frivolous and vexatious. More generally, the pleading is embarrassing. It is frivolous and vexatious because it does not give any proper notice of the case to be met, and because (as I have said) it is cast in such a way that it is impossible to plead in a considered way in defence. It is embarrassing for the same reasons. As a consequence of all those matters, it is in my view an abuse of the Court's processes. 7. Accordingly, in my view, the applicants have made good their claim to have the amended statement of claim struck out. 8. That would leave the question of whether Bronwyn should be given an opportunity to replead. It may be - I do not know - that it might be possible for a case to be constructed that complies with the rules as to pleading, is put in an intelligible way, and makes out a cause of action that, arguably, could be sustained. In those circumstances, subject to hearing further argument, I would be inclined to allow a time for repleading, but to order in addition that if a further amended statement of claim not be filed within whatever time might be allowed, then the proceedings should stand dismissed. 9. There is also the question of costs. Plainly, the applicants should have their costs. In the circumstances of this case, and having regard to the manifest and obvious deficiencies in the pleading, I think those costs should be payable on the indemnity basis and that there should be an order for assessment forthwith. 10. However, before making orders, I will hear from the parties. 11. (For costs argument see transcript.) 12. The only controversy in relation to the orders is one as to repleading. Mr Griffin has sought that the defendants should be required to produce documents before his client repleads. That is because he wishes to show that the shares in Lachmarden and Dema Vista were worth more than the value assigned to them by Mr Thiele. 13. As I have said, the only evidence is that the assets held by those two companies were held by them as trustees not beneficially. 14. Mr Griffin's response was to say that that was not his argument; his argument was that Marlene held the shares beneficially. That may be so. There is nothing to controvert it. But it does not follow, simply because Marlene owned beneficially shares in two trustee companies, that those shares could have any value greater than the value of the underlying company. 15. This aspect of the case seems to me to be utterly misconceived. However, the only thing that I can do is to say that in my view the defendant should not be required to produce the documents referred to. Orders 1. I make the following orders: 2. 1. Set aside the notice to produce served by the plaintiff and dated 28 November 2014; 3. 2. Order that the amended statement of claim be struck out; 4. 3. Direct that any further amended statement of claim be filed and served no later than 31 July 2015; 5. 4. Order that if a further amended statement of claim be not so filed and served then these proceedings are to stand dismissed with no further order of the Court necessary; 6. 5. Order the respondent/plaintiff to pay the costs of the applicants/first, second and third defendants of the notice of motion filed on 9 December 2014; 7. 6. Order that those costs be assessed on the indemnity basis; 8. 7. Grant leave for those costs to be assessed forthwith; 9. 8. Reserve liberty to apply on five days' notice. ********** 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: 04 May 2015