Sharon Scally v Odilla Rhatigan

JurisdictionIreland
JudgeMiss Justice Laffoy
Judgment Date28 March 2012
Neutral Citation[2012] IEHC 140
Date28 March 2012
CourtHigh Court
Docket Number[2009 No. 3286 P]

[2012] IEHC 140

THE HIGH COURT

[No. 3286P/2009]
Scally v Rhatigan
IN THE MATTER OF THE ESTATE OF BRIAN RHATIGAN DECEASED, LATE OF "CHANTILLY", BALLYBRIDE ROAD, RATHMICHAEL IN THE COUNTY OF DUBLIN

BETWEEN

SHARON SCALLY
PLAINTIFF

AND

ODILLA RHATIGAN
DEFENDANT

SCALLY v RHATIGAN 2011 1 IR 639

SUCCESSION ACT 1965 S78

SUCCESSION ACT 1965 S26

SUCCESSION ACT 1965 S27

SUCCESSION ACT 1965 S26(1)

SUCCESSION ACT 1965 S27(4)

SUCCESSION ACT 1965 S10(3)

DUNNE v HEFFERNAN 1997 3 IR 431

FLOOD v FLOOD 1999 2 IR 234

SPENCER v KINSELLA 1996 2 ILRM 401

IRISH LAND ACT 1903

DELANEY EQUITY & THE LAW OF TRUSTS IN IRELAND 5ED P436

HILTON v BARKER BOOTH 2005 1 AER 651

MOODY v COX 1917 2 CH 71

O'CARROLL v DIAMOND 2005 4 IR 41

CARROLL v CARROLL 1999 4 IR 241

BRISTOL & WEST BS v MOTHEW 1996 4 AER 698

SUCCESSION ACT 1965 S121

SUCCESSION ACT 1965 S121(1)

SUCCESSION ACT 1965 S10(3)

SUCCESSION ACT 1965 S27(4)

DORAN v THOMPSON 1978 IR 223

CIVIL LIABILITY ACT 1961 S9

PROBATE

Executor

Grant of probate - Conflict of interest - Professional duties of solicitor/executrix - Conflict between interests of estate beneficiaries and non-estate beneficiaries - Test for removal of executor - âÇÿSerious misconduct' test - âÇÿSerious special circumstances' test - Onus of proof - Executrix formerly solicitor to testator and to companies associated with non-estate assets - Defendant principal beneficiary of estate assets - Solicitor's duty of confidentiality - Solicitor's duty of disclosure - Solicitor having irreconcilable duties - Whether grant of probate should issue to executrix - Whether executrix conflicted in professional capacity - Whether conflict between interests of estate and non-estate beneficiaries - Dunne v Heffernan [1997] 3 IR 431 applied; Hilton v Barker Booth & Eastwood [2005] UKHL 8, [2005] 1 WLR 567 approved; Flood v Flood [1999] 2 IR 234, Spencer v Kinsella [1996] 2 ILRM 401, Moody v Cox and Hatt [1917] 2 Ch 71, O'Carroll v Diamond [2005] IESC 21, [2005] 4 IR 41, Carroll v Carroll [1999] 4 IR 241, and Bristol and West Building Society v Mothew [1998] Ch 1 considered - Succession Act 1965 (No 27), ss 10(3), 26 and 27- Defendant's claim allowed (2009/3286P - Laffoy J - 28/3/2012) [2012] IEHC 140

Re Rhatigan: Scally v Rhatigan

1

Judgment of Miss Justice Laffoy delivered on 28th day of March, 2012.

1. The issues/pleading
2

2 1.1 In my judgment in this matter delivered on 21 st December, 2010 [2011] 1 I.R. 639 (the 2010 Judgment), I dealt, by consent of the parties, with the first three issues to be tried in this matter and I found:

3

(a) that the will dated 19 th May, 2005 (the Will) of Brian Rhatigan (the Testator) was executed in accordance with the formalities required by s. 78 of the Succession Act 1965 (the Act of 1965);

4

(b) that the Testator knew and approved of the contents of the Will; and

5

(c) that at the time of executing the Will the Testator was of sound disposing mind and had capacity to make a valid will.

6

3 1.2 While the second module of the proceedings with which judgment is concerned was expected to deal with the remainder of the issues, which, having regard to the manner in which the case was pleaded, were all raised in the defendant's counterclaim and which, as I had stated in the 2010 Judgment (at para. 2), go beyond the issues which would usually be raised in a probate action, in fact, the focus at the hearing of the second module was much narrower. Accordingly, having regard to the position adopted by the parties at the hearing, the principal issue which requires to be determined at this stage is whether the Court should make an order in the terms sought in paragraph 5 of the prayer in the counterclaim, in which the defendant seeks an order declaring that, by her conduct, the plaintiff is not an appropriate person to act as an executor of the Testator's estate. If the Court makes a declaration to that effect, obviously, the Court has to address the question of to whom letters of administration with the Will of the Testator annexed should issue, given that the plaintiff is the sole surviving executrix of the Testator, the other executor nominated by the Testator, Dan O'Donoghue, having died on 6 th April, 2008. In that connection, one of the reliefs which the defendant has sought in the counterclaim is an order giving the defendant liberty to apply for and extract a grant of letters of administration.

7

4 1.3 The basis on which it was asserted that the plaintiff is not an appropriate person to act as executor of the Testator's estate, as pleaded in the counterclaim, was, in part, as follows:

8

(a) that the firm of Amorys, Solicitors, of which the plaintiff is the principal and has at all relevant times been a partner, at all times acted in connection with alt of the property transactions carried on in Ireland for and on behalf of the Testator, in his personal capacity, and for and on behalf of companies, including, inter alia, York Securities Ltd. (York), TAM Enterprises Ltd. (TAM) and Unit 33 Nominees Ltd. (Unit 33), which are controlled by, or used as nominees for transactions by, the Golden Promise Trust; and

9

(b) that the plaintiff, by reason of her personal involvement in the affairs of the Testator prior to his death and, in particular, having acted on behalf of the Testator in his personal capacity and for and on behalf of the companies in which the Testator had an interest and which are connected with the Golden Promise Trust, has a conflict of interest in acting as executor of the estate of the Testator and is not an appropriate person to carry out the necessary inquiries for and on behalf of the Testator's estate.

10

5 1.4 In addition to the allegation of a conflict of interest, which, it is contended, renders her inappropriate to act as executor of the Testator's will, it was also pleaded in the counterclaim that, while the plaintiff had full details of all the property held directly or indirectly by the Golden Promise Trust, the associated companies, the structure behind the Golden Promise Trust and the terms of the trust, she had failed to disclose the full extent of the Testator's assets, failed to carry out all relevant inquiries, and failed to gather in the Testator's assets and that she had demonstrated that she was not willing to conduct the necessary inquiries and to take the necessary steps to recover the Testator's assets for the benefit of the estate.

11

6 1.5 I have emphasised the distinct bases on which it was pleaded that the plaintiff is not an appropriate person to act as executor of the Testator's estate because, while the issues as set out in the Master's order of 5 th May, 2010, which was made with the consent of the parties, raise questions as to whether the plaintiff has failed to carry out proper inquiries into the extent of, or has failed to take reasonable or sufficient steps to recover, the assets of the Testator, or has been guilty of gross, inordinate and inexcusable delay in the administration of the Testator's estate, the focus of the evidence adduced on behalf of the defendant at the hearing of the second module of the proceedings was on the plaintiff being unsuitable to fulfil the role of executor because, it was contended, she is conflicted in her professional capacity. Accordingly, it is that contention which will be primarily addressed in this judgment.

12

7 1.6. In the reply and defence to counterclaim delivered by the plaintiff, issue was joined with all of the assertions made by the defendant in her defence. As regards the elements of the counterclaim which are now being addressed, it was admitted that the plaintiff was instructed in respect of property transactions by the Testator, in his stated capacity as project manager engaged by York and in his personal capacity, and also in respect of property transactions concluded by, inter alia, York, TAM and Unit 33, although it was stated that it was not known whether she acted in respect of all such property transactions carried out in Ireland. Further, it was admitted that the plaintiff acted for the Testator in his personal capacity during his lifetime and that she acted for companies with whom the Testator had an association, although it was not admitted that he had an "interest" in the said companies. However, it was denied that the plaintiff had any conflict of interest by reason of the foregoing or otherwise in acting as executrix of the Testator and it was denied that the circumstances pleaded in the counterclaim disclosed any such conflict of interest. As regards the allegations that the plaintiff failed to carry out the necessary inquiries and failed to take the necessary steps to recover the Testator's assets, it was admitted that the plaintiff had not completed her inquiries into the extent of the Testator's assets, by reason, inter alia, of the fact that they had been interrupted or hampered by the institution of these proceedings. It was denied that she had failed to carry out such inquiries as might reasonably have been expected.

2. The law
13

2 2.1 Before considering the relevant authorities, I think it is pertinent to reiterate that under the terms of the Will, as recorded at para. 14 of the 2010 Judgment, the plaintiff was appointed both executor and trustee of the Will. As regards the Testator's residuary estate, the executors and trustees thereby appointed were given the type of broad discretions and the type of broad powers one would expect to find in a discretionary trust established to distribute the residuary estate among the beneficiaries of the trust, whom I have identified at para. 18 of the 2010 Judgment. Given the ongoing Revenue investigation referred to at para. 11 of the 2010 judgment, it is not possible to form a view at this stage as to the extent of the assets of the residuary...

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