Dunne v Heffernan

• Jurisdiction: Ireland
• Judge: Lynch J.,
• Judgment Date: 26 November 1997
• Neutral Citation: 1998 WJSC-SC 1440
• Court: Supreme Court
• Docket Number: [S.C. Nos. 134 and 135 of 1997]
• Date: 26 November 1997

DUNNE v. HEFFERNAN & MCMAHON

In the matter of Section 27 of the Succession Act 1965

and in the matter of the Estate of Therese Dunne (Deceased)

Between:

Bernard Dunne

Plaintiff/Respondent

and

Margaret Heffernan

Defendant/Appellant

and

Sharon McMahon, Brian McMahon, Paul McMahon and John McMahon

Notice Parties/Appellants

1998 WJSC-SC 1440

Record No:1996/357SP

Appeal No:134/97

Appeal No: 135/97

THE SUPREME COURT

Synopsis

SUCCESSION

Will; grant of probate; removal of executrix; administration of estate; whether appellant should be removed as executrix of estate; grounds for removal; conduct of executrix; conflict of interest; ss. 26(2) and 27(4) Succession Act, 1965 Held: No grounds to justify removal of appellant as executrix (Supreme Court: Hamilton C.J., O'Flaherty J., Denham J., Barrington J., Lynch J. 26/11/1997)

Dunne v. Heffernan

[1997] 3 IR 431

Citations:

SUCCESSION ACT 1965 PART VI

SUCCESSION ACT 1965 S55

SUCCESSION ACT 1965 S26(2)

SUCCESSION ACT 1965 S27(4)

CHAINE-NICKSON V BANK OF IRELAND 1976 IR 393

COPE, IN RE 1954 1 AER 698

MOORE V MCGLYNN 1894 1 IR 74

LOVEDAY, IN RE 1900 PD 154

ARNOTT V ARNOTT 58 ILTR 145

SPENCER V MINSELLA 1996 2 ILRM 401

AG V KELLY 1992 1 IR 361

RSC O.79 r5

SUCCESSION ACT 1965 S55(3)

1 Judgment of Lynch J., delivered 26th day of November, 1997. [NEM DISS]

2 This is an appeal by the Defendant/Appellant Mrs. Margaret Heffernan and the Notice Parties from an order of the High Court (Smyth J.) made on the 7th April 1997 revoking and cancelling a grant of probate of the will of the above named Therese Dunne which issued to the Appellant on the 8th November 1995 and appointing Mr. Garrett Wren a Chartered Accountant as administrator of the estate of the testatrix with the said will annexed in place of the Appellant and making also certain consequential orders.

The Facts

3 By her will dated the 21st May 1984 the testatrix Therese Dunne provided as follows:

"I, Therese Dunne of Merrion Village, Ballsbridge, Dublin hereby bequeath to my sisters Margaret and Elizabeth all my preference shares in Dunnes Holding Company in equal shares absolutely or if only one shall survive me the entire to such survivor and in default then to my brothers Frank and Bernard in equal shares absolutely or if only one shall survive the entire to such survivor.

I appoint my said sisters to be the executrices hereof.

In witness whereof I have to this my will set my hand this 21st day of May 1984."

4 Therese Dunne died on the 16th September 1995 unmarried and without issue and without having revoked or altered her said will. Her sister Elizabeth was Mrs. Elizabeth McMahon and she predeceased the testatrix dying on the 26th July 1993. Mrs. McMahon had four children being the above named Notice Parties and they were represented in the High Court and the Supreme Court and they supported the case of the Appellant Mrs. Heffernan.

5 The Respondent is a brother of the testatrix and of the Appellant and is referred to as "Bernard" in the said will. The other brother referred to in the said will namely Mr. Frank Dunne took no part in the proceedings either in the High Court or in the Supreme Court. Likewise another sister of the testatrix who is not mentioned in the said will namely Ms. Anne Dunne took no part in the proceedings.

6 Because the will dealt only with the "preference shares in Dunnes Holding Company" and did not deal at all with any other property of the testatrix such other property (which was substantial) passed under the rules of distribution on intestacy set out in Part VI of the Succession Act 1965. Accordingly the residuary property of the testatrix is divisible into five equal shares and is distributable as to 1/5th each to the Appellant, the Respondent, Mr. Frank Dunne, Ms. Anne Dunne and the remaining 1/5th equally between the Notice Parties that is to say 1/20th share each.

7 Probate of the said will was on the 8th November 1995 granted to the Appellant as the sole surviving executrix named in the said will. The grant of probate certifies "that an affidavit for Inland Revenue has been delivered wherein it is shown that the gross value of all the estate of the said deceased within this jurisdiction (exclusive of what the deceased may have been possessed of or entitled to as a trustee and not beneficially) amounts to £21,156,841.23 and that the nett value thereof amounts to £21,010,897.09". The testatrix also left property in other jurisdictions and on the 14th December 1995 the Appellant obtained a grant of probate of the said will in England and on the 17th January 1996 a like grant in Jersey. Applications for further grants in the Isle of Man and in Spain had been made and were pending.

8 The "preference shares in Dunnes Holding Company" by virtue of the articles of association of that company on the death of a shareholder become available for purchase at par (£1 each) by the other holders of preference shares in the Company. The testatrix had 265 preference shares in Dunnes Holding Company and these shares were purchased by other holders of preference shares in the company (not including the Appellant) for £265. The inland revenue affidavit sworn by the Appellant includes the said preference shares as assets of the testatrix and plainly and openly puts a valuation thereon of £265. This was done by the Appellant on competent and responsible legal and taxation advice having regard to the requirements and the effect of the said articles of association. The Respondent does not suggest that this was done mala fide and indeed accepts that it was done bona fide. Nevertheless it is the valuation of these preference shares in the inland revenue affidavit at £265 which has ultimately given rise to these proceedings.

9 There is a history of antipathy between the Appellant and the Respondent which predates these proceedings. In earlier proceedings between them and other persons the Respondent had sold his preference shares in the said company for some millions of pounds. He was concerned that the inland revenue affidavit valuation of the testatrix's preference shares of £1 each might result in a liability for capital gains tax on him much in excess of what he had anticipated if the said valuation of £1 per share remained. He contended that the said shares had a value at the date of death of the testatrix of the order of £75,000 per share.

10 On the 16th February 1996 the Respondents" solicitors wrote to the Appellants" solicitors inter alia stating as follows:

"You will appreciate that given the attitude of the trustees in relation to the valuation which they submitted already to the Revenue Commissioners in this matter, for a different capital tax i.e. capital gains tax on disposal on their shareholding from the trust and capital acquisitions tax in the hands of the beneficiary (our client) it would seriously undermine our clients" argument vis-a-vis the value of the company and serve to unjustly increase his liability for tax on the disposal/acquistiion of shares. We must vigorously pursue that this valuation is corrected immediately by means of a corrective affidavit which will require to be re-sworn by your client. This will of necessity require a valuation of Dunnes Stores as of the death of Therese Dunne deceased (OB 16th September 1995). The preference shares which amount to at least 15% of the value of the company must then be allocated to Therese's share therein."

11 We are, at the suggestion of your partner Mr. David Prentice going to make our own submission vis-a-vis the valuation of the company as of the 5th April 1974. It is imperative therefore that this corrective affidavit is available to us without delay.

12 Further, we would submit at this time that your client, Mrs. Heffernan should consider her own position as administratix of the will given:-

13 (a) she is administratix of the will:

14 (b) she is the beneficiary under the will of the deceased:

15 (c) she is a Director of Dunnes Holding Company:

16 (d) she is an object of the trust, which holds the balance of the ordinary shares in the company.

17 (e) she has an interest therefore in the value being assigned to different shares.

18 Further we would submit that she has a direct conflict in the valuation of the preference shares qua the estate of the deceased due to the multiplicity of roles which she fulfils in this transaction.

19 Equally, the higher the value and greater percentage value that the Revenue attribute to such preference shares, the less tax will be payable by our client.

20 We endeavoured to advance these arguments to the trustees representatives but they declined to consider same: hence we must now make our submission in the first instance to the Superintendent, Inspector of Taxes and where appropriate thereafter, to the Appeal Commissioners.

21 We look forward to receiving the information by return as our submission on these matters to the Revenue on our client's capital gains tax liability is imminent.

22 Please acknowledge separately our objections on the estate of Therese Dunne deceased and confirm that you will be making arrangements to file the necessary corrective affidavit.

23 Please also confirm in the light of the above circumstances, if your client, Mrs. Margaret Heffernan, intends to continue to act in this matter.

24 We look forward to hearing from you."

25 On the 22nd February 1996 the Appellants" solicitors replied as follows:

"Thank you for your letter dated 16th February 1996.

1. As is quite normal, a corrective affidavit may be considered in due course.

2. We note what you say in relation to Dunnes Stores Andalucia S.A.

3. Our client is satisfied that the affidavit reflects the true value to the estate of the deceased's preference shares in Dunnes Holding Company. As executrix, our client is concerned only...