Gooley v Gooley (No 2)

These reasons for judgment relate to the notice of motion filed by the defendant on 29 July 2020. That notice of motion and these reasons need to be understood in the following context.

The plaintiffs in this proceeding, Aleta Joy Gooley and Melinda Louise Foley, are two of the daughters of Melville Gooley, who died on 23 December 2017. The plaintiffs were named as the executors of a will made by the deceased dated 18 July 2014.

The defendant, Brett Raymond Gooley, is the son of the deceased.

On 9 July 2018, the plaintiffs commenced this proceeding, applying for a grant of probate in solemn form of the deceased’s will dated 18 July 2014.

The principal issue in dispute between the plaintiffs and the defendant in the proceeding is whether the deceased had testamentary capacity to make that will and, if not, what is the most recent will made by the deceased at a time when he still had testamentary capacity. The proceeding is part-heard before Sackar J. It is convenient to refer to the proceeding as the Probate Proceeding, as I did in my earlier reasons for judgment published on 25 June 2020: Gooley v Gooley [2020] NSWSC 798 (the First Judgment).

By notice of motion dated 16 March 2020 and filed on 25 March 2020, the defendant sought an order under s 73 of the Probate and Administration Act 1898 (NSW) (PA Act) appointing an administrator pendente lite in respect of all of the assets of the deceased estate (the Estate), and certain ancillary relief. It is convenient to refer to this as the First Application.

The First Application was heard before me on 17 April and 6 May 2020. On 25 June 2020, I delivered reasons for judgment in which I concluded that the assets of the Estate were in jeopardy by reason of certain conduct of the plaintiffs and determined that an administrator pendente lite would be appointed (albeit on terms somewhat different to those that were sought in the defendant’s notice of motion) unless the plaintiffs gave certain undertakings to the Court and to the defendant: First Judgment at [127]–[147].

The undertakings to which I referred were set out in the First Judgment at [141], which I reproduce in full below:

These reasons assume familiarity with the First Judgment. Terms used in the First Judgment have the same meaning in these reasons.

On 29 June 2020, the plaintiffs’ solicitor sent an email to my Associate, copied to the defendant’s solicitor, advising that the plaintiffs would give the undertakings referred to in the First Judgment at [141] in the form of affidavits to be filed within 14 days (that is, by 9 July 2020).

On 8 July 2020, the defendant’s solicitor sent to my Associate short minutes of order signed by both parties. The email, which was copied to the plaintiffs’ solicitor, stated that the short minutes of order were “agreed between the parties” and requested that the orders be made in chambers.

The short minutes noted undertakings given by the plaintiffs to the Court and the defendant in terms that reflected the undertakings set out in the First Judgment at [141], save in one respect that has now become important. Paragraph 1(a)(ii) of the short minutes included an undertaking by the plaintiffs to serve an affidavit within 14 days of the First Judgment:

The undertakings set out in [141] of the First Judgment did not include an undertaking in the terms of paragraph 1(a)(ii) of the short minutes.

The short minutes of order prepared by the parties set out the following orders:

By way of explanation, Order 1 made by Ward CJ in Eq on 24 March 2020 was an interim order that was overtaken by paragraph 1(b) of the undertakings in the short minutes of order signed by the parties and dated 8 July 2020.

The orders in the short minutes were made in chambers on 8 July 2020.

On 9 July 2020, the plaintiffs served the following affidavits:

None of those three affidavits include any evidence relating to the transaction pursuant to which the sum of $1,417,552 was transferred by Motasea to Jamell on 3 July 2014, being the subject of the undertaking noted in paragraph 1(a)(ii) of the orders signed by the parties and made by the Court on 8 July 2020.

On 14 July 2020, the defendant’s solicitor wrote the plaintiffs’ solicitor in the following terms:

On 15 July 2020, the plaintiffs’ solicitor replied in the following terms:

The defendant’s solicitors replied by email sent on the evening of 15 July 2020 in the following terms:

On 29 July 2020, the defendant filed the notice of the motion that is the subject of these reasons for judgment. The notice of motion seeks:

The notice of motion was heard on 4 August 2020. Ms Jonker of counsel appeared for the defendant, the moving party. Mr Romaniuk of senior counsel appeared for the plaintiffs.

The defendant read an affidavit of his solicitor, Mr Frawley, sworn on 24 July 2020, which exhibited the short minutes of order dated 8 July 2020, the affidavits served by the plaintiffs on 8 and 9 July 2020 to which I have referred above (together with the exhibits to those affidavits) and the correspondence between the parties solicitors on 14 and 15 July 2020 to which I have also referred above. The defendant also read his affidavit sworn on 4 February 2019 and tendered an affidavit of the plaintiffs sworn on 5 November 2018, which were relevant to identifying the assets of the Estate for the purpose of formulating the terms of any order made under PA Act s 73.

The plaintiffs read the affidavits of Ms Foley, Ms Gooley and Mr Colley referred to in [17] above. In addition, the plaintiffs relied on an affidavit sworn by their solicitor, Mr Prats, on 3 August 2020.

Ms Prats deposed that, on 7 July 2020, she received a letter from the defendant’s solicitors in the following terms:

Ms Prats deposed that she understood from the letter that the short minutes prepared by the defendant accorded with [141] of the First Judgment. Both Ms Prats and junior counsel for the defendant “briefly” reviewed the letter and the proposed short minutes, without reviewing the First Judgment, and thought that the short minutes did indeed reflect the First Judgment. Ms Prats signed the short minutes on behalf of the plaintiffs without realising that the defendant had inserted paragraph 1(a)(ii) into the short minutes of order.

The defendant’s notice of motion is based solely on the plaintiffs’ failure to comply with the undertaking noted in paragraph 1(a)(ii) of the orders made on 8 July 2020. The defendant noted that he does not accept that the plaintiffs’ affidavits referred to in [17] above comply with paragraph 1(a)(i) of those orders, but he does not make any application for relief based on that alleged non-compliance. I infer from the correspondence referred to in [20] above that the plaintiffs dispute the allegation of non-compliance with paragraph 1(a)(i). It was not necessary to hear from the parties on that issue in light of the position taken by the defendant. The defendant has not taken any step to charge the plaintiffs with contempt of Court based on the alleged non-compliance with the undertakings.

Paragraph 1(a)(ii) of the undertakings noted in the orders made on 8 July 2020 went beyond the terms of the undertakings referred to in [141] of the First Judgment.

Contrary to the defendant’s submissions, the First Judgment did not require the plaintiffs to provide the undertaking in paragraph 1(a)(ii) in order to provide transparency about past transactions so as to facilitate the efficient conduct of any costs dispute or accounting process at the conclusion of the Probate Proceeding: see First Judgment at [141]–[142].

The defendant submitted that the evidence required by the undertaking in paragraph 1(a)(ii) of the short minutes is necessary to provide that transparency because, without that evidence, “it remains unclear” whether the funds in Jamell’s hands (that is the sum of $1,437,000 held by Jamell immediately before it was transferred into the Estate Bank Account on 29 January 2018) “were in fact impressed with a trust in favour of Motasea” such that (in the defendant’s submission) they are Estate funds.

As referred to in the First Judgment at [63], it was common ground between the parties that the source of the $1,437,000 paid by Jamell into the Estate Bank Account was an amount of approximately $1,417,552 that Motasea had paid to Jamell in July 2014, together with some interest earned on that amount. As at July 2014, the deceased was the sole director of Motasea.

There was no evidence at the hearing of the First Application that Jamell had any business, other than as trustee of GFT No.4: see First Judgment at [73]. The evidence suggested that the $1,417,552 had been held in Jamell’s bank accounts since the transfer from Motasea in July 2014.

At the hearing of the First Application, the plaintiffs submitted that these matters supported a finding that the payment of $1,417,552 by Motasea to Jamell in July 2014 was a disposition to GFT No. 4. I note that Mr Colley’s affidavit affirmed on 8 July 2020 confirms that:

The only basis on which the defendant submitted at the hearing of the First Application that the payment of $1,417,552 from Motasea to Jamell in July 2014 had any character other than as a disposition from Motasea to Jamell as trustee for GFT No. 4 was that the second plaintiff had allegedly misappropriated the money from Motasea and caused it be transferred to Jamell. That submission was rejected for the reasons set out in the First Judgment at [65]–[68].

The only alternative submission made by the defendant at the hearing of the First Application was based on the premise that the $1,417,552 was paid by Motasea to Jamell in July 2014 in its capacity as trustee of GFT No. 4 to be held on the terms of that trust. That alternative submission was also rejected, but not on grounds that impugned that premise: see First Judgment at [69]–[72].

In now submitting that the First Judgment required the undertaking noted in paragraph 1(a)(ii) of the orders made on 8 July 2020 in order to provide the transparency referred to in [142] of the First Judgment, the defendant ignores or seeks to undermine the rejection of the misappropriation allegation in the First Judgment. The need for transparency identified in the First Judgment arose from the inconsistencies within the plaintiffs’ evidence and submissions concerning the character of the later payment of approximately $1,437,000 made by Jamell as trustee of GFT No. 4 to the Estate Bank Account on 29 January 2018: see First Judgment at [75]–[83] and [139]–[142].

For those reasons, I reject the defendant’s submission that the First Judgment required the plaintiffs to give an undertaking in the terms noted in paragraph 1(a)(ii) of the orders made on 8 July 2020. That undertaking was presented to the Court as having been agreed by the parties. Consistently with the First Judgment, the Court would have made the orders in paragraphs 2 and 3 of the short minutes signed by the parties on 8 July 2020 if the undertakings given by the plaintiffs had been limited to the undertakings in paragraphs 1(a)(i), (iii) and (iv), 1(b) and 1(c) of the short minutes.

It is clear from Ms Prats’ evidence that the undertaking was given as the result of a mistake made by the plaintiffs’ legal representatives. It is regrettable that the mistake occurred. It is equally regrettable that the defendant’s solicitor did not expressly disclose to the plaintiffs’ solicitor that he had inserted an additional undertaking in the short minutes enclosed with his letter dated 7 July 2020 that went beyond the undertakings referred to in the First Judgment at [141]. However, the plaintiffs’ submissions quite properly did not seek to blame the defendant’s solicitor for the mistake.

The plaintiffs’ solicitors must have realised their mistake by no later than 15 July 2020: see paragraph [21] above. Regrettably, the plaintiffs made no application to the Court to be released from the undertaking noted in paragraph 1(a)(ii) or to otherwise vary the orders made on 8 July 2020 in order to ameliorate their mistake. Instead, the plaintiffs merely asserted in correspondence that they had no obligation to comply with the undertaking in paragraph 1(a)(ii). The plaintiffs left it to the defendant to approach the Court.

In the plaintiffs written submissions dated 3 August 2020, the plaintiffs submitted that, because the undertaking in paragraph 1(a)(ii) did not derive from the First Judgment, the Court should not treat the their failure to comply with that undertaking as a breach of the undertakings given to the Court. It was submitted that the Court should direct that the plaintiffs are not required to comply with the undertaking in paragraph 1(a)(ii).

That is a strange submission.

At the hearing of 4 August 2020, senior counsel for the plaintiffs confirmed that, in substance, the plaintiffs sought to be released from the undertaking in paragraph 1(a)(ii) with a consequential variation of the orders made on 8 July 2020 under Uniform Civil Procedure Rules 2005 (NSW) (UCPR) r 36.16(3) by making the orders in paragraph 2 on the basis of the plaintiffs undertakings noted in paragraphs 1(a)(i), (iii), (iv), (b) and (c) only.

An order appointing an administrator pendente lite is an interlocutory order because it does not finally determine the rights of the parties in the principal cause in a pending probate or administration proceedings. As referred to in the First Judgment at [110]–[126] and [138], the legal effect of an order under PA Act s 73 is to empower the appointed administrator to get in and manage the assets of the estate, in accordance with the powers conferred on him or her by the terms of the orders that are moulded specifically to the circumstances of the particular case, pending determination of the parties’ rights in the principal cause. It was not in dispute that, after an application under PA Act s 73 has been dismissed, it is open to the unsuccessful party to make a further application. The ability to bring such a further application, irrespective of its prospects of success having regard to the outcome of the earlier application, is one of the indicia of an interlocutory order: Bienstein v Bienstein (2003) 195 ALR 225; [2003] HCA 7 at [25]; Re Luck (2003) 203 ALR 1; [2003] HCA 70 at [4]; Plaintiff S164/2018 v Minister for Home Affairs (2018) 361 ALR 8; [2018] HCA 51 at [11] (Edelman J).

It follows that the orders made on 8 July 2020 dismissing the defendant’s application for an order appointing an administrator pendente lite on the basis of the plaintiffs’ undertakings set out in paragraph 1 of the short minutes of order document signed by the parties were interlocutory orders, and the plaintiffs’ undertakings were also interlocutory in nature.

The Court has power to release a party from an undertaking that is interlocutory in nature: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177–178 (Gibbs CJ, Aickin, Wilson, Brennan JJ).

The Court also has power under UCPR r 36.16(3) to:

For the reasons explained in [44]–[45] above, the exceptions in sub-paragraphs (a) and (b) of r 36.16(3) do not apply to the orders made on 8 July 2020.

In my opinion, it is appropriate in this instance to exercise the powers referred to above by releasing the plaintiffs from their undertaking noted in paragraph 1(a)(ii) of the orders made on 8 July 2020 and varying those orders pursuant to UCPR r 36.16(3) by substituting the following order for order 2:

The undertaking noted in paragraph 1(a)(ii) of the orders made by the Court had been included in the undertakings offered by the plaintiffs due to an error made by the plaintiffs’ legal representatives. The plaintiffs themselves played no part in the error. Whilst the defendant cannot be held responsible for the error, it is my view that the conduct of his solicitor in writing to the plaintiffs’ solicitors on 7 July 2020 in the terms set out in [26] above and without drawing attention to the additional undertaking that the defendant had included in the short minutes was one of the circumstances that contributed to the error.

In my opinion, it would be unjust for the consequences of the error to be visited on the plaintiffs by requiring them to file the evidence referred to in the mistaken undertaking, in circumstances where no requirement for that evidence was identified in the First Judgment in order to avoid the jeopardy to the Estate that warranted the appointment of an administrator pendente lite unless the plaintiffs gave the undertakings in [141] of the First Judgment.

In circumstances where the plaintiffs are to be released from the undertaking noted in paragraph 1(a)(ii) of the orders made on 8 July 2020, their failure to comply with that undertaking does not warrant the relief sought in the defendant’s notice of motion filed on 29 July 2020. That notice of motion is dismissed.

At the conclusion of oral submissions concerning the defendant’s notice of motion and the plaintiffs’ application to be released from the undertaking in paragraph 1(a)(ii), I heard from both parties as to the costs orders that they submitted should be made if the defendant succeeded in his motion and also in the alternative scenario that the plaintiffs’ application succeeded and the defendant’s motion was therefore dismissed.

Having considered those submissions, I have decided that the appropriate exercise of the Court’s discretion under s 98 of the Civil Procedure Act 2005 (NSW) in this case is to make an order that the plaintiffs and the defendant each pay their own costs of and incidental to the defendant’s notice of motion filed on 29 July 2020 and of the hearing on 4 August 2020. This reflects the fact that the motion and the hearing were necessitated by both:

For the reasons above, I make the following orders: