Law firm loses battle to remain adviser in million-dollar estate case
An Australian law firm has been restrained from continuing to act for a defendant involved in a multimillion-dollar estate matter.
Local law firm, Mason Lawyers Newcastle Pty Ltd (Mason Lawyers) has been restrained from continuing to act in the matter concerning the estate of the now-deceased Kevin Henry Fox, after it was alleged that the firm had a conflict of interest with their client, the defendant, known to the court as Leonard John Timmins.
In the matter, Hutchinson v Timmins, heard by the Supreme Court of NSW, Gail Hutchinson (first plaintiff) and Karen Bermingham (second plaintiff) filed a motion to set aside orders releasing rights against the estate of their late mother and against their step-father, Kevin Henry Fox, under Succession Act 2006, section 95.
The plaintiffs alleged on their application for approval of the release that their step-father and the then-solicitors for their mother’s estate misled the court by withholding documents in their possession from the plaintiffs.
The allegations stem from 29 June 2014, when the plaintiff’s mother Joyce Fox passed away. At the time of Mrs Fox’s death, she and Kevin Fox had been married for 38 years.
The court heard that during her lifetime, Mrs Fox executed multiple wills, retaining a now-defunct Hunter Valley law firm known as Thomas, Mitchell & Co. The firm later changed its name to Thomas Mitchell Solicitors, with solicitor William Paul Mitchell advising Mrs Fox and preparing all of her wills.
In-mid 2011, Thomas Mitchell Solicitors dissolved, forcing Mr Mitchell to practise as a sole practitioner before his practice was acquired by Mason Lawyers in October that year. Court records show from then until 7 September 2016, Mason Lawyers employed Mr Mitchell as a solicitor in performance of a term of the contract for acquisition of his practice.
Mr Ross Mason, who is the sole director of Mason Lawyers, told the court that when his company acquired the business of Mr Mitchell that Mr Mitchell was trading as a sole practitioner.
Mr Mitchell retained the business records and documents of the Thomas Mitchell Solicitors practice. Mason Lawyers then acquired all these records on the purchase of Mr Mitchell’s business. The records acquired included all the business records of Thomas Mitchell Solicitors, documents held in safe custody for clients both of Thomas Mitchell Solicitors and Mr Mitchell’s sole practice, together with the closed and archived files of those practices, Mr Mason explained.
Mr Mason then went on to explain that the firm acted for Kevin Fox on a number of occasions after the acquisition of the practice but that the firm never acted for Joyce Fox.
Mrs Fox’s daughters’ (the plaintiffs) claim for final relief was based on an agreement or consensus said to have been made between Joyce and Kevin Fox in February 2011, the court heard.
The idea of the agreement/consensus was to ensure that the financial benefit of Mrs Fox’s estate be passed to the plaintiffs. Mrs Fox held a joint tenancy with Mr Fox and had $1,030,000 invested in her name in their self-managed superannuation fund.
The court heard evidence to back up the conclusion that Mrs Fox and Mr Fox had an agreement that he would see to it that the plaintiffs would be the receivers of the estate, including a recount from Mr Mitchell, who suggested Mrs Fox was adamant that Mr Fox would leave the property to her daughters.
However following Mrs Fox’s death in 29 June 2014, it was found that Mr Fox had named the aforementioned Leonard Timmins, his friend, in his will as the estate’s successor, instead of Mrs Fox’s daughters.
The plaintiffs argued that Mr Fox was able to conceal this update from Mrs Fox, due to the dementia she had been diagnosed with.
In addition, the plaintiffs’ claimed that when Mr Fox changed his will, “not only did he and Mr Mitchell knew that Joyce Fox no longer had the capacity to change her will but Mr Mitchell also knew that Kevin Fox’s instructions were contrary to Mr Mitchell’s understanding of Joyce Fox’s beliefs and expectations” from her prior consultation with him.
The court heard that Mason Lawyers’ file notes between 19 May 2014 and 24 June 2014 are a basis to infer Mr Mitchell was aware of Joyce’s dementia and hospitalisation. They also record Kevin Fox’s instructions to Mr Mitchell that correspondence not be sent to the family home, court records show.
The plaintiffs argued that the natural inference from these facts is that “Mr Mitchell himself knew by early June 2014, just before Kevin Fox changed his will, that Kevin Fox was calculating to change his will without his wife’s knowledge and that in fact Joyce Fox was unlikely to know of the changes to his will”.
Once Mr Fox died on 19 May 2016, the defendant, Mr Timmins, filed an application for probate of Mr Fox’s last will. Mason Lawyers continued to act for Mr Timmins as the executor of Kevin Fox’s estate in the probate proceedings, the court heard.
On 12 October 2016, the plaintiffs filed a caveat in the probate proceedings, claiming a material interest in the outcome of any court proceedings relating to the estate, however, the caveat lapsed by the effluxion of time on 12 April 2017.
Then in 2017 the solicitors acting for the plaintiffs in these proceedings, known to the court as AMC Lawyers, issued a subpoena to Mason Lawyers as they were the solicitors for Mr Timmins. The subpoena sought the “complete will files including matters relating to Power of Attorney and Enduring Guardianship” for both Joyce and Kevin Fox, court records state.
It was later found one of the Mason Lawyers solicitors, Sarah Young, who was instructed to undertake a search for the documents, could not locate the contents of the 2011 will file relating to any instructions Kevin Fox gave for the preparation of his will, and that she could not identify whether those documents were ever in the possession custody or control of Mason Lawyers.
The defendant, Mr Timmins, took a robust position in response to the plaintiffs’ application, swearing an affidavit that acknowledged that “a number of allegations were being made against Mason Lawyers” and that it was open for him to consider whether the firm’s interest in defending the allegations against the firm “might generate a real and sensible possibility of conflict with the firm’s duties to advance his interests”.
He acknowledged his options, which he listed as being able to obtain independent legal advice in relation to the allegations being made by AMC Lawyers (acting for Mrs Fox’s daughters, the plaintiffs), and the matter generally to determine whether he should continue to instruct that firm, or instruct a new firm of solicitors, or alternatively instruct Mason Lawyers to continue to act in the matter.
However, he noted that it was in his view that the underlying allegations in the proceedings were “absurd” and that they “do not give rise to a real and sensible possibility of conflict”.
In handing down his decision, NSW Supreme Court judge Justice Michael Slattery, QC, ruled that Masons Lawyers be restrained from acting as the solicitors for the defendant.
Justice Slattery also made orders to adjourn further calls upon the plaintiffs’ subpoena of 17 February 2017 to the trial of these proceedings.
“The subpoena issue can be dealt with briefly first. In my view, having reviewed Ms Young’s affidavit, she has deposed to having done all the searches that could reasonably be expected on behalf of the subpoena recipient to answer a subpoena of this kind before trial. Her affidavit evidence about her searches can be tested at trial,” Justice Slattery said.
“A simple order now for Mason Lawyers to comply with the subpoena is pointless: Quach v Vu  NSWSC 131 at . And the court’s discretion under Civil Procedure Act 2005, s 68 to test the sufficiency of an answer to a subpoena is best exercised in this case, in my view, by adjourning the matter to the hearing. One reason for this is that Ms Young’s affidavit makes transparent in the search process that has been undertaken, sufficient to arm the plaintiffs to test the bona fides of the search adequately at trial.
“The plaintiffs are now not in any way left in the dark about how Mason Lawyers say the search was undertaken.”
On ordering the restraint, Justice Slattery said: “The plaintiffs submit that Mason Lawyers’ present position must be considered as tainted. They say that several employees of Mason Lawyers will be material witnesses in the matter, including Mr Mitchell, Ms Helen Denton, Mr Ashley Windus and Ms Sarah Young”.
“They submit that Mason Lawyers’ position is therefore in conflict with the position of its client, and that, as their employees’ conduct and integrity will be seriously challenged in the proceedings, they will need to defend their actions.
“… Applying Kallinicos principles, the plaintiffs submit that evidence must almost certainly come from Mr Mitchell who, on their case, is the means by which the defendant knew, or ought to have known, at the time of the release that the plaintiffs were in a position of special disadvantage in relation to Kevin Fox. The plaintiffs argue Mr Mitchell knew that the plaintiffs were unlikely to know at the time of the settlement that Kevin Fox had changed his will. They submit this is to be inferred from the fact that Mr Mitchell knew that he and Mr Timmins had kept the change to the will a secret from the plaintiffs.
“Mr Mitchell is no longer employed by Mason Lawyers. But the plaintiffs say that other persons were directly involved in what they characterise as deceitful conduct by Mr Mitchell.”