Smith & ors v Wessling-Smith & ors [2017] QSC 166

First Plaintiff: Rita Carmen Smith / Second Plaintiff: Adam Gerhard Smith & Emma Smith

First Defendant: Benjamin Morrison Smith & Luck James Smith / Second Defendant: Ronald Smith/ Third Defendant: Ian Smith

FACTS

William and Joan Smith married in 1947. They had three sons: Ron, Ian and Gerald. Each of the sons was married with two children. William died in 1991, leaving his estate to Joan. There is no evidence which suggests that any of their sons felt aggrieved by that outcome. Gerald died of cancer in 2001. He left behind a widow (Rita) and their two children, Adam and Gretchen, aged 25 and 21 respectively. Joan died 23 years after Williams’s death, and 13 years after Gerald’s death. Her estate was worth not less than $2,960,000, and was comprised of personal property, cash investments, a life insurance policy, and certain real estate. In her last will in 2013, Joan preferred Ron and Ian and their families over Gerald’s family. She divided her personal property between Ron and his two children and Ian and his two children, gave specific bequests of $90,000 to each of Ron’s two children and Ian’s two children, and divided the remainder of her estate equally between Ron and Ian. Joan’s will have had noted that Ron and his wife owed her no debts, and she specifically forgave any debts owed to her by Ian and his wife and by her “late son Gerald and his wife Rita”.

In 2015, Rita, Adam and Gretchen commenced the proceeding, by which they advanced a claim to one third of Joan’s estate against the first defendants (who were the two executors of Joan’s will) and the second and third defendants (who were Ron and Ian respectively). Rita sued on her own behalf and as the grantee of limited letters of administration of Gerald’s estate. Some might think harsh Joan’s decision not to treat Gerald’s family in the same way as she treated the families of her other two sons. On the other hand, some evidence suggests she may have thought it to be a fair way to even things up between her sons, given the views that she may have had as to the comparative advantage she had conferred on Gerald and his family by way of unpaid loans. But the question whether she had any justification for taking the course she did is not in issue in this proceeding. The critical question is whether the plaintiffs have established their entitlement to the legal and equitable relief which they claim.

The plaintiffs’ case relied on three critical propositions of fact.

First, in 1991 within months after William’s death, a legally binding oral agreement was made between Ron, Ian and Gerald to the effect that they would not make a claim against William’s will whilst Joan was alive, but would distribute her estate equally among themselves when Joan died, irrespective of the contents of any will she made. The plaintiffs’ pleading referred to this agreement as “the promise”. Secondly, on 18 January 2001 (only two days before Gerald’s death), and in the presence of Rita and Gretchen, Gerald requested that his two brothers confirm “the promise”, and they did so. The plaintiffs’ pleading referred to this event as “the home confirmation”. Third, some five years after Gerald died, in about 2006, Rita, Ron and his wife, and Ian and his wife sat around a campfire one night during a weekend trip away and confirmed “the promise” to each other. The plaintiffs’ pleading referred to this event as “the campfire confirmation”. Based on establishing those three propositions of fact and certain ancillary facts concerning Gerald, Gerald’s estate and the plaintiffs having relied on “the promise”, “the home confirmation”, and “the campfire confirmation” at various times, the plaintiffs sought to establish that the defendants were legally bound to give effect to “the promise” as confirmed.

THE PLAINTIFFS SOUGHT THE FOLLOWING RELIEF

(a) a declaration that the promise to transfer one third of Joan’s estate after her death amounted to a valid and enforceable agreement between Ron, Ian and Gerald

(b) a declaration that “the promise”, or alternatively “the home confirmation” or “the campfire confirmation”, amounted to a valid and enforceable agreement under s 55 of the Property Law Act 1974 (Qld) between Ron, Ian and Gerald, for the benefit of the plaintiffs

(c) a declaration that the defendants are estopped from denying the existence of a valid agreement

(d) a declaration that Ron and Ian hold one third of the estate of Joan on trust for the plaintiffs.

(e) an order that the executors of Joan’s will do all things necessary to transfer one third of the estate to the plaintiffs.

(f) alternatively, damages equivalent to the value of one third of Joan’s estate.

There is no material which supports the alleged promise, namely that Ron, Ian and Gerald had agreed that they would not make a claim against William’s will while Joan was alive. And it follows on the admissibility of Rita’s evidence concerning the conversation she had with Gerald that there is simply nothing in the evidence that supports a finding as to the making of the second part of “the promise” resulting for the court that no promise was made.

It was persuaded to find that a few months after William’s death the three brothers reached an agreement that, irrespective of the contents of Joan’s will, her estate would be distributed equally between them. For that reason, the court did not reach that conclusion. The result is that the plaintiffs have not persuaded that “the promise” was made.

On the hypothesis stated in above, the court concluded that the evidence did not support a finding that the brothers intended to enter into legal relations in relation to the agreement. No formulation of the plaintiffs’ case which turns on the existence of a legally binding agreement survives the foregoing conclusions.

LEGAL ISSUE

  1. the plaintiffs allege that three brothers agreed that they would not make a claim against their deceased father’s will while their mother was alive, but would distribute her estate equally among themselves when she died.
  2. whether certain conversations said to give rise to the agreement occurred.
  3. whether there was an intention to create legal relations.
  4. EVIDENCE, ADMISSIBILITY, HEARSAY where the first plaintiff gave evidence of a conversation with her husband in which he told her about an agreement he had reached with his brothers
  5. where the plaintiffs allege that the statement about the executory contract is admissible as a declaration against interest – whether the statement is admissible as a declaration against interest Property Law Act 1974 (Qld), s 55

OUTCOME

The plaintiffs’ claims were dismissed.