Parsons v Davison

This is an application by the plaintiffs for the revocation of a grant of probate made by the court to the defendant, and an order that the court grant letters of administration with the will annexed to the plaintiffs, together with consequential relief.

The late Hugh Charles Davison died on 20 November 2010, leaving a last will and testament dated 2 July 1990.

By the will, the deceased appointed the defendant, Murray George Davison, his brother, as his executor.

The deceased gave the whole of his estate to the plaintiffs, Kimberley Roy Parsons and Julie Percy, and the defendant’s three children, in equal shares.

This court made a grant of probate of the deceased’s will to the defendant on 29 March 2011. A resealing of the grant was obtained on 18 October 2011 in the Supreme Court of Western Australia.

The plaintiffs’ statement of claim was filed on 5 June 2015. As at the hearing on 29 July 2016, the administration of the estate of the deceased remains incomplete.

In substance, the plaintiffs claim that the administration of the estate by the defendant has been entirely dilatory; the defendant has failed to realise estate assets in a timely way; the defendant paid himself a substantial commission without authorisation (albeit that the sum has been repaid); and the defendant has failed in his attempt to pass accounts because of the manner in which he has conducted the administration.

The principles that the court is required to apply on an application such as the present have been authoritatively confirmed by the Court of Appeal in Mavrideros v Mack (1998) 45 NSWLR 80; [1998] NSWCA 286 by Sheller JA (Priestley and Beazley JJA agreeing) at 101 and 102:

As Lindsay J has more recently said in Riccardi v Riccardi [2013] NSWSC 1655; (2013) 11 ASTLR 198 at [7]:

The plaintiffs were represented by Mr Sneddon of counsel. The defendant was originally represented by solicitors, who acted for him in the preparation of his defence. The defendant then represented himself at the hearing. For the convenience of the defendant, and the first plaintiff, who was the primary witness for the plaintiffs, the hearing was conducted in a manner whereby Mr Sneddon was present in the courtroom, and the court communicated with both the defendant and the first plaintiff, who were in Western Australia, by telephone.

The issues between the parties are substantially disclosed by the response to the statement of claim made in the defendant’s defence, filed on 5 August 2015. A number of significant matters are admitted. In summary, they are as follows:

Apart from the general dilatoriness displayed by the defendant in executing the will of the deceased, there remains a significant problem concerning the shares in Moore Securities held by the defendant as executor of the deceased’s estate.

The evidence shows that there are 2004 ordinary shares in Moore Securities. The defendant holds two of the shares in his own right. His sister, Ms Maxine Parsons, holds 1001 shares. At the time of his death, the deceased held the remaining 1001 shares. Those shares have been transferred to the defendant in his capacity as executor of the deceased’s estate.

The deceased’s will requires that the 1001 shares be transferred to the five beneficiaries in equal shares.

Plainly, 1001 shares cannot be distributed equally between five persons. Ms Parsons gave evidence that she and the deceased’s wife, Patricia, are the directors of Moore Securities. The defendant is the secretary of the company. On 21 July 2014, the directors signed a resolution that the shares in the company be split on a 5 to 1 basis, in order to facilitate the transfer of the estate’s shareholding to the beneficiaries.

Some two years have now passed, without the shares being transferred.

Ms Parsons explained that Moore Securities was set up by the defendant, who persuaded his mother to transfer assets into the company. There is a question as to what has happened to those assets over time, but that is not a matter that can be explored on the evidence in the present case.

Ms Parsons gave evidence that, after the deceased’s death, the defendant resided rent-free in a property owned by Moore Securities, being unit 7, 158 Broadway, Crawley in Western Australia, between 2010 and 2013 or 2014. The defendant admitted in cross-examination that he had lived rent-free in this property for a period.

More significantly, the defendant has on a number of occasions made claims that he is entitled to a third interest in the shares in Moore Securities. In February 2015, the defendant sent texts to Ms Parsons in which he claimed a third interest in Moore Securities.

In the statement of assets and liabilities prepared by the defendant in association with the grant of probate by this court, he did not list shares in Moore Securities as an asset of the estate, even though at that time he was the company secretary and should have known that the deceased held shares in the company when he died.

The defendant was cross-examined in relation to his claim for an interest in Moore Securities. In my view, the defendant’s responses to the questions were not satisfactory, as they were flippant, and not in accordance with the seriousness of the defendant’s obligation as executor of the deceased’s estate to conscientiously execute the terms of the will. The defendant conceded that he had made claims to an entitlement to ownership of more shares in Moore Securities than the two shares already registered in his name, but was dismissive and evasive about whether or not he would pursue his claim.

The evidence is sufficient to establish that the defendant has a conflict of interest in relation to his holding of the 1001 shares in Moore Securities as an asset of the estate, both in respect of his expressed claim to be entitled to an interest in those shares, and also the possibility that he may have dealt with the assets of Moore Securities in an unauthorised manner.

Furthermore, the performance by the defendant of his duty as executor to maintain proper accounts for the estate has been entirely unsatisfactory. It appears that the primary supervision of the execution of the deceased’s will has fallen to the Supreme Court of Western Australia.

Registrar Boyle, of that court, wrote to the defendant on 20 August 2014. She referred to the fact that there had been four appointments in relation to the requirements to pass the accounts. At each appointment, while there had been some explanation of various estate accounting matters, the defendant had never been able to deal with all of the matters necessary to properly pass the accounts of the estate. The Registrar referred to this as being a “serious concern”. The letter included the following statements:

By letter dated 6 November 2014, Registrar Boyle advised the solicitors for the plaintiffs that she had declined to pass the accounts of the defendant. She said that the next steps in dealing with the problem resided with the beneficiaries. Further, she said that the beneficiaries that objected to the defendant’s accounts were entitled to recover their legal fees from the defendant.

In saying that the next steps in dealing with the problem resided with the beneficiaries, Registrar Boyle was effectively suggesting that the only avenue open for the resolution of the problems caused by the defendant’s conduct was for the plaintiffs to commence the present proceedings.

In my view, the evidence establishes that this is a clear case requiring the court to make the orders sought by the plaintiffs in their statement of claim.

I accept the plaintiffs’ submission that this is a case where the court should order the defendant to pay the costs of the proceedings on terms that he has no right of indemnity from the assets of the estate: see Mead v Watson as Liquidator for Hypec Electronics Pty Ltd [2005] NSWCA 133; (2005) 23 ACLC 718 at [11] and following.

Accordingly, I make the following orders: