Wilcox v Chapple

1. [1]

   HER HONOUR: This is an application by John Chapple as executor of the Estate of the late Patricia Anne Wilcox for advice pursuant to section 63 of the Trustee Act 1925 (NSW). Mr Chapple seeks the Court’s advice in relation to the following questions:

2. [2]

   The application was opposed by the plaintiff, Benjamin Wilcox, the son of Ms Wilcox. The second defendant, Trevor Harland, was Ms Wilcox’s de facto husband for many years and became her husband shortly before she passed away. He did not actively participate in the application.

3. [3]

   In support of the application, Mr Chapple read three affidavits by his solicitor, Belinda Nixon. Mr Chapple also tendered a confidential opinion by the Executor’s counsel, consistently with the process described by Lindsay J in Re Estate Late Chow Cho-Poon; Application for judicial advice [2013] NSWSC 844 at [113]:

4. [4]

   The plaintiff tendered various documents. There was no cross-examination.

Facts

1. [5]

   In 2010, Ian Sanderson died, leaving his Estate to his only child, Ms Wilcox, who was also appointed as executor. Her sons, the plaintiff and Robert Wilcox commenced legal proceedings seeking the whole of their grandfather’s Estate by reason of promissory estoppel or equitable damages. The sons are referred to in various judgments and correspondence as Ben and Robbie and, without intending any disrespect, I will do likewise. Ben and Robbie’s claim failed, although they were considered to be entitled to make a claim for family provision on their grandfather’s Estate: Wilcox v Wilcox [2012] NSWSC 1138. Nothing happened for some time and Ms Wilcox sought to strike out the proceedings for want of prosecution, which application was refused.

2. [6]

   In February 2014, Pembroke J began to hear Ben and Robbie’s applications for family provision. On 12 February 2014, Ben settled his claim for family provision. Heads of Agreement were signed, clause 4 of which provided:

3. [7]

   A draft will was provided by Ms Wilcox, apparently later executed in March 2014, which provided:

4. [8]

   Robbie’s claim for family provision against his grandfather’s Estate was determined in the amount of $387,000: Wilcox v Wilcox (No 2) [2014] NSWSC 88. Ms Wilcox appealed.

5. [9]

   On 30 June 2014, Ms Wilcox made a further Will appointing Mr Chapple and another as executors.

6. [10]

   On 10 August 2014, Ms Wilcox and Mr Harland married and, on 19 August 2014, Ms Wilcox passed away.

7. [11]

   On 12 September 2014, a grant of probate was made in respect of Ms Wilcox’s last Will of 30 June 2014. The net value of the Estate was some $11.6 million. In the Inventory of Property attached to the grant of probate, “Barwon Vale” was valued at $59,301.81 and the shares in Sanderson Estates Pty Limited was valued at $3,295.395.31. Whether Ms Wilcox’s last Will reduced Ben’s bequest from that anticipated by the draft will of February 2014 will be an issue in these proceedings.

8. [12]

   On 18 November 2014, the Court of Appeal upheld Ms Wilcox’s appeal and dismissed Robbie’s claim for family provision from his grandfather’s Estate: Chapple v Wilcox [2014] NSWCA 392. In August 2015, Robbie commenced proceedings seeking provision out of his mother’s estate. In November 2015, Robbie’s claim was resolved at mediation, subject to judicial advice approving its terms as Ben did not consent to the settlement amount being paid out of the residue of his mother’s estate. On 18 December 2015, this Court provided judicial advice and made orders approving the terms of settlement and payment out of the Estate, including an amount of fixed costs.

9. [13]

   By May 2018, administration of Ms Wilcox’s Estate was drawing to a close. On 3 May 2018, Mr Chapple withdrew funds from a cash management account pending distribution. On 10 May 2018, a final distribution was paid to Mr Harland, leaving $178,745.31 in Mr Chapple’s trust account. On 11 May 2018, Mr Chapple wrote to Ben advising that he was now in the process of finalising Ms Wilcox’s estate. Mr Chapple noted that Mr Harland remained the sole director of Sanderson Estates Pty Limited, notwithstanding that the shares in the company had been transferred to Ben, who had been asked to lodge the necessary documents to remove Mr Harland as a director. The letter continued:

10. [14]

    It appears that Ben did not attend to the task of removing Mr Harland as a director. More relevantly, it appears that Robbie brought a further claim against the Estate which was determined by Ward CJ in Eq and in respect of which Robbie has lodged a Notice of Intention to Appeal.

11. [15]

    Which brings us to these proceedings. On 29 April 2019, Ben filed a statement of claim seeking the following relief:

12. [16]

    On 7 June 2019, Ben filed a motion seeking summary relief for payment by Mr Chapple of $178,745.31, being the funds held in Mr Chapple’s trust account. On 21 June 2019, Mr Chapple requested further and better particulars of the statement of claim, which were provided on 28 June 2019. On 19 July 2019, Mr Chapple wrote, complaining that the pleadings and particulars were unsatisfactory, and received no reply. On 30 July 2019, Mr Chapple filed a motion seeking to strike out portions of the statement of claim. A further motion was filed by Mr Chapple on 26 August 2019, seeking to set aside a number of subpoenas issued by Ben. On 4 October 2019, Kunc J determined the various motions. Ben’s motion for summary relief was dismissed with costs. Ben was directed to file an amended statement of claim, and the strike out motion was otherwise dismissed. Subpoenas were set aside and Ben was ordered to pay Mr Chapple’s costs of that motion.

13. [17]

    On 21 October 2019, Ben filed an amended statement of claim, which had been extensively amended from the original pleading. In particular:

14. [18]

    On 6 December 2019, Mr Chapple filed a defence to the amended statement of claim. Further interlocutory skirmishes followed, which it is not necessary to describe. Various orders were made for the parties to put on lay and expert evidence. On 16 October 2020, Mr Chapple filed the motion presently before the Court seeking judicial advice. I understand from the plaintiff’s senior counsel that a further cause of action will soon be pursued by the filing of a further amended statement of claim.

Jurisdiction

1. [19]

   The plaintiff opposed judicial advice being given at all, on the basis that it was said that the issues in these proceedings did not concern the interpretation of the trust instrument nor the management or administration of the estate.

2. [20]

   Section 63(1) of the Trustee Act provides:

3. [21]

   The jurisdiction to provide such advice was clearly stated in Macedonian Orthodox Diocese of Australia and New Zealand at [58]:

4. [22]

   In a case not dissimilar to the one at hand, Darke J observed in Re Rosewood Research Pty Limited [2014] NSWSC 449 at [30]:

5. [23]

   In this case, a question for determination will be whether the gifts made under Ms Wilcox’s Will of 30 June 2014 reduced Ben’s bequest from the gifts proposed under the draft Will prepared in February 2014. This involves consideration of the proper interpretation of the earlier draft Will but also the last Will. In addition, the question for Mr Chapple as executor of Ms Wilcox’s estate is whether to defend this litigation or not. In defending the litigation, Mr Chapple will necessarily commit some of the assets of the Estate to legal costs associated with that defence; which necessarily involves a question concerning the management or administration of the Estate. Thus, I am satisfied that the Court has jurisdiction to give the advice sought by the trustee.

6. [24]

   Further, as Kiefel J observed in Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 at [196]:

7. [25]

   Or as Lindsay J expressed it in Re Estate Late Chow Cho-Poon at [182]:

8. [26]

   It is readily apparent that the administration of the Estate of Ms Wilcox – and that of her father – has been beset with a significant amount of litigation. I consider it appropriate to give advice to the trustee so that he can have confidence going forward that he is not personally exposed by defending proceedings when he ought not. Thus, I propose to give the advice sought.

Submissions

1. [27]

   Turning then to whether Mr Chapple is justified in defending these claims and having recourse to the Estate of Ms Wilcox to pay his costs of doing so, Mr Chapple’s counsel submitted that the Court would have regard to the prospects of the Executor’s success in defending the claims made against him, based up counsel’s confidential advice. It was submitted that the Court would be persuaded that Mr Chapple has good prospects of defending the claims made in these proceedings and would answer the first question in the affirmative. As to the second question on which judicial advice was sought, Mr Chapple’s counsel submitted that the Court would consider the nature of the claims against him as executor, including the factual and legal links between the various claims. The executor had a right of indemnity: Carter Holt Harvey Woodproducts Australia v The Commonwealth [2019] HCA 20.

2. [28]

   The plaintiff’s senior counsel submitted that I should not give the judicial advice sought as the Statement of Facts was said not to be sufficiently detailed or accurate to permit the Court to do so; there was said to have been a sufficiently long and unexplained delay in the bringing of this application such that it ought be denied; it was submitted that Mr Chapple had not raised any defence to the plaintiff’s claim which would justify him defending the proceedings; and, finally, this application was said, in truth, to be to enable Mr Chapple to utilise the plaintiff’s share of residue in payment of his costs prior to the determination of the proceedings. Some of these submissions were of a serious nature and lacked the necessary factual substratum.

3. [29]

   Further, it was submitted that the case does not concern the administration of the Estate as the Estate had been entirely distributed except for the amount of $178,745 which is held in a controlled moneys account on trust for the plaintiff. The only matter arising in the administration of the estate was said to be whether Mr Chapple is entitled to retain the $178,745 pending completion of these proceedings. It was submitted that it was not the purpose of section 63 of the Trustee Act to permit a trustee to bring an application that it is entitled to use moneys to which the plaintiff is otherwise entitled in the payment of his fees of proceedings which do not otherwise concern the interpretation of the trust instrument or the management and administration of the estate.

Consideration

1. [30]

   Three main causes of action are presently pleaded against Mr Chapple. Having regard to the confidential advice, the Statement of Facts supplemented by the additional facts set out in plaintiff’s submissions, and a review of the key documents, I am satisfied that it is appropriate for Mr Chapple to defend these proceedings and to have recourse to the property of the Estate in so doing, for the reasons advanced by Mr Chapple’s counsel: see [27].

2. [31]

   The contrary position contended for by the plaintiff’s senior counsel boiled down to the proposition that, although in May 2018, the administration of the Estate was drawing to a close and Mr Chapple stood ready to pay the plaintiff’s share of the residue to him, and notwithstanding that the Estate has since been sued by Robbie and now by Ben, Mr Chapple should part with the remaining funds held in the Estate and defend the proceedings without the ability to indemnify him from Estate assets. That is, with respect, a curious proposition. It is regrettable that this Estate has been beset by litigation, as was the grandfather’s Estate. But the reality is that, in so doing, the administration of Ms Wilcox’s Estate cannot be concluded and the residue of the Estate will be further eroded by the Executor defending proceedings where appropriate and indemnifying himself from the assets of the Estate, as he is entitled to do.

3. [32]

   For those reasons, I make the following orders.

   1. (1)

      Pursuant to section 63 of the Trustee Act 1925 (NSW), the Court advises that:

   2. (2)

      Order that the costs of the first defendant in this proceeding from the commencement thereof to date be paid out of the Estate.

   3. (3)

      Order that the costs of and incidental to the first defendant’s motion dated 16 October 2020 be paid out of the Estate.

   4. (4)

      Direct the plaintiff to serve a proposed Further Amended Statement of Claim on the defendants by 20 January 2021.

   5. (5)

      Direct the defendants to notify the plaintiff whether they consent, or otherwise, to the proposed Further Amended Statement of Claim by 5 February 2021.

   6. (6)

      Discharge Order 1 made by Registrar Walton on 20 August 2020 insofar as it concerns service of the first defendant’s lay and expert evidence.

   7. (7)

      Stand the matter over to the Registrar in Equity at 9.30 am on 10 February 2021 for further directions.