Holdway v Arcuri Lawyers (A Firm) [2009] HCATrans 14 (13 February 2009)

Last Updated: 13 February 2009

[2009] HCATrans 014

IN THE HIGH COURT OF AUSTRALIA

Office of the Registry
Brisbane No B28 of 2008

B e t w e e n -

MARGARET ELIZABETH HOLDWAY

Applicant

and

ARCURI LAWYERS (A FIRM)

Respondent

Application for special leave to appeal

FRENCH CJ
HAYNE J

TRANSCRIPT OF PROCEEDINGS

FROM CANBERRA BY VIDEO LINK TO BRISBANE

ON FRIDAY, 13 FEBRUARY 2009, AT 9.33 AM

Copyright in the High Court of Australia

MR D.O.J. NORTH, SC: May it please the Court, I appear with my learned friends, MR D.J. MORGAN and MR C.K. GEORGE, for the applicant. (instructed by Philip Roberts Lawyers)

MR R.M. DERRINGTON, SC: May it please the Court, I appear with my learned friend, MR A.D. STORIE, for the respondent. (instructed by Sparke Helmore)

FRENCH CJ: Yes, Mr North.

MR NORTH: Your Honours, the error below emerges from the reasons of the judgment of Justice Keane in paragraphs [75] and [76], which are found in the application book at pages 70 and 71, specifically the opening lines of paragraph [75] at about point 30 before the quote from Re Hallet’s Estate, and then in paragraph [76]. His Honour there considered the executor’s obligation to deal with assets held in a representative capacity when administering an estate and mentioned the related, but in our submission, distinct issue of the distribution of assets.

His Honour, however, did not advert to the Land Title Act and consequently failed to address the question of whether real property which had been transferred to and registered in the name of a beneficiary entitled under the will remained part of the estate of the deceased person within the meaning of that term in section 44(1) of the Succession Act (Qld).

FRENCH CJ: Was this point taken before his Honour, before the Court of Appeal?

MR NORTH: The issue of whether there had been a distribution was alive.

FRENCH CJ: Yes.

MR NORTH: There was no mention made or specific engagement with the Land Title Act, so far as I can see.

FRENCH CJ: Well, the first time the indefeasibility argument has been raised is on this application, is it not?

MR NORTH: That is so, your Honour, and we recognise that in a certain category of cases that would pose a difficulty, but here we have several circumstances that make it appropriate for the Court to consider the issue. The first is that all the evidence is in - the real property transfers, the certificates of title and all the documentation relevant to those issues.

The second lien is very significant. As your Honours would have seen from the reasons in the Court of Appeal, one of the major issues the Court of Appeal had to grapple with was the way in which the trial had evolved. Issues in pleadings were rather large - - -

FRENCH CJ: About the admission or non-admission in relation to distribution?

MR NORTH: Yes, it became a trial more by way of inquiry and not by reference to careful pleadings that neatly defined and narrowed the issues. The trial judge in a way conducted or led a lot of the evidence, as is apparent from the bundle that we gave your Honours and the pages of the transcript we gave you of his questioning of the solicitor for the executor. The issue of distribution is always alive. It was referred to by the trial judge and it was referred to in the Court of Appeal, but no one grappled with the significance of the legal point of the effect of the indefeasible title that is derived or results from the registration of the transfer.

HAYNE J: In this case is the conclusion expressed at [75] and [76] a conclusion that can be understood as saying that the person to whom the title was transferred would, in the particular and unusual circumstances of this case, have been amenable to an injunction requiring return into the estate of the land that had been transferred?

MR NORTH: We would submit not and this is apparent when one has regard to the documentary evidence that discloses – and other evidence – that discloses the intention of the executor and of his legal advisor.

HAYNE J: But the transaction which yielded registration of title was a transaction in which the one person was on both sides of the dealing, albeit apparently in differing capacities. Is that right?

MR NORTH: Yes, your Honour.

HAYNE J: The finding of the Court of Appeal is that despite the absence of recording of the capacity in which the land was received, the fact was the land was received subject to its realisation and, indeed, intended for the purpose of realisation in order to satisfy the just debts, et cetera, and if that be so, how does indefeasibility ever arise, even if it had been taken below?

MR NORTH: It arises in this way, your Honour, that if the courts below had considered the resultant indefeasible title and looked at that, as explained by the many judgments in this Court, and then reassessed the evidence in light of that, the significance of, for example, the executor’s solicitor’s letter of 12 October 2003 - can I direct your Honours to the application book at page 88? At lines 50 to 60 – this letter was written shortly after my instructing solicitors, the solicitors who began to act for the applicant, gave notice of the pending claims:

We repeat our observation that there seems to be no point in your client pursing or proceeding with the Application. There are no remaining assets of the Estate (other than the furniture in the house and the motor vehicles) against which she can make a claim. Further no action can be taken against the Personal Representative whatsoever since he distributed the Estate after nine months following the deceased’s death and without any Application having been served on him and without any Notice having been received . . . In other words even if your client were able to establish an entitlement, there are no assets to meet the same, nor can any action be taken against our client.

That was the express - - -

FRENCH CJ: Does that involve an indirect challenge to the finding of fact referred to at paragraph [76] in the judgment of the Court of Appeal?

MR NORTH: It does, your Honour, but we would submit that the finding is a finding that is of mixed fact and law. If it is fact it is a factual finding that depends upon or has at its foundation an insufficient grasp of the legal principles that were in play when this transfer was deliberately chosen by the executor on advice from his solicitor. Your Honour, the evidence of that comes from the evidence of the executor’s solicitor, Mr Bow, at pages 145 and 146 in the transcript which we included in the bundle of documents. It is document No 1.

It is quite apparent from that evidence, when it is read in the context of the Land Title Act, the transfer documents that were chosen and the sections of the Act that we referred to in our outline, that the executor and his solicitor deliberately chose the method of transfer that would create title absolutely in the beneficiary executor upon registration, there being alternatives available to an executor under the Land Title Act being the difference between sections 111 and 112 and different transfer documents that we have referred to in our outline and referred to by way of the extracts from the land title practice.

FRENCH CJ: It is subject, you would accept, at least to the reservation that the assets remained available, in the terms of paragraph [76], “to meet the debts of the estate”.

MR NORTH: We would submit that, whatever the executor’s intention was, his intention merely was to have sufficient assets available to him in whatever capacity to meet whatever just claims might be forthcoming. Your Honours, can I refer you in this context to the deed of settlement that the parties entered into, or the deed of compromise, whereby the claimed for provision was compromised. It is set out in the reasons of the judgment of Justice Keane in the application book at page 45. Specifically we refer to about line 45 in paragraph 1 of the first operative clauses:

the Claimant acknowledges that the estate of the Deceased has been lawfully distributed by the Executor and that the Claimant has no longer any basis to make any claim against the Executor or the assets of the estate.

FRENCH CJ: That might set up a conventional estoppel as between claimant and the executor, but how does it impact on the litigation between the parties?

MR NORTH: That and the solicitor’s letter - and with all the other oral evidence - is the best evidence of what the executor’s intention was. He gave evidence – and this is not controversial – that before his father died, his father asked him to make a provision for the applicant of $100,000. His evidence was that, come what may, he was always going to do that. What he did was to transfer the substantial assets of the estate lawfully, because he did it without notice after the times prescribed by the Act had run, but he transferred the substantial real property assets into his name and took title absolutely, reserving his intention to make good his father’s wish. That is out of his own assets.

So what the executor was really doing was not subjectively reserving the position with respect to the estate, but protecting himself as beneficiary, but keeping available to him sufficient assets to meet any moral or just claims that may emerge against him in his capacity as executor.

Now, the vice that is inherent in the result of this litigation if it stands with the judgment of the Court of Appeal is this, that we will have – in the administration of estates there will be an important and difficult issue that will now affect executors, beneficiaries, potential applicants for provision from estates and potentially for lenders too, and creditors of those classes of persons, and also those who may advise them because of the uncertainty that the judgment under challenge brings to the Torrens system of title by registration.

FRENCH CJ: The judgment really says nothing relevant to the point that you now seek to advance, the point never having been taken. How can it have any implications for future arguments of the kind that you are now foreshadowing?

MR NORTH: The judgments below and in the Court of Appeal indicate that the assets in issue were real property assets, that they were Torrens land and they had been transferred. The lawyers reading them and considering the implications of the judgment as it stands will now be in a quandary as to the status of a transfer that has been registered in circumstances such as this and at other times during the course of the administration of an estate.

HAYNE J: But do you accept, Mr North, that consistent with the Torrens system and indefeasibility there may yet remain personal claims against someone who happens to be on the register?

MR NORTH: There are some categories of personal claims, but this is not one of them.

HAYNE J: The debate that you would have us enter is, is it not, whether this falls within a group of personal claims that can be made against a registered proprietor. Is that right?

MR NORTH: Your Honour, yes, and if the judgment of the Court of Appeal is left and stands then it appears to establish that this sort of claim as an exception to the indefeasible title, that issue has never been addressed by this Court. The Torrens system, as is the proper administration of estates, are important pieces of law nationwide and it is therefore appropriate, in our submission, for this Court to speak about it and - - -

FRENCH CJ: Sorry, does not the Court of Appeal decision, in terms of the availability of the assets in relation to the claim which was being advanced, turn upon a particular set of fact findings that it has made about the circumstances in which the assets were transferred into the name of the executor?

MR NORTH: What we have said about that largely appears in our reply to the respondent’s outline. That all falls away when it is realised that the legal substratum upon which the analysis of the facts proceeded, was flawed. Those are our submissions.

FRENCH CJ: Thank you, Mr North. We will not need to call on you, Mr Derrington.

The Court of Appeal found that an executor’s transfer of land to himself, apparently in his personal capacity, of an asset of the estate was made on terms that entitled the executor to resort to the asset transferred in satisfaction of the testator’s debts. The Court of Appeal’s finding was that the executor could have been compelled to realise the land and apply the proceeds in satisfaction of any order for further provision out of the estate that was made against him. No question of indefeasibility of title in these circumstances arises. In any event, the question was not raised either at trial or in the Court of Appeal.

An appeal to this Court would not enjoy sufficient prospects of success to warrant the grant of special leave to appeal. Special leave will be refused with costs.

AT 9.53 AM THE MATTER WAS CONCLUDED