Bates v Messner [2022] NSWSC 1083 | Case summary

THE DEFENDANT'S APPLICATION FOR AN INTERIM ADMINISTRATOR

The parties have been engaged in hotly and bitterly contested proceedings concerning the estate (and, before her death, the person) of the deceased for many years. Their litigation has been conducted in Australia and Croatia. My own engagement with the Ritossa family, upon an exercise of protective jurisdiction, is reported as IR v AR [2015] NSWSC 1187. The relationship between the brothers is toxic.
On 8 April 2021 the defendant filed a notice of motion seeking the appointment of an interim administrator of the deceased's estate. Although mentioned from time to time during the course of case management hearings, the motion was not pressed by the defendant until recently. On 30 June 2022 I ordered that it be listed for hearing before me on 3 August 2022.
At the end of a short hearing on that day, I formally recorded the following notations: "1. NOTE that, as presently advised, the Court is minded to appoint an interim administrator on terms that she be authorised to lease the principal asset of the estate, but not to sell it without the prior agreement of the parties or the leave of the Court, and on the basis that her entitlement to remuneration be deferred (subject to further orders of the Court) pending the determination of the proceedings, with an express charge over estate property as security for her remuneration. 2. NOTE that, before the defendant's notice of motion filed 8 April 2022 is determined, the parties are to take an opportunity to consider whether they can come to some form of arrangement that would forestall the necessity for the appointment of an interim administrator."
Those notations having been made, the proceedings were adjourned to 10 August 2022 in anticipation of orders being made disposing of the defendant's notice of motion.
On their return to Court on 10 August 2022, the defendant tendered draft orders designed to give effect to the provisional ruling made on 3 August 2022. The plaintiff maintained his resistance to any appointment of an interim administrator, contending that there is no necessity for, or convenience in, the appointment of an administrator because, he submitted, the estate of the deceased, under his informal management, is "not in jeopardy".
The plaintiff expressly disclaimed any challenge to the jurisdiction of the Court to appoint an interim administrator, whether by reference to section 73 of the Probate and Administration Act 1898 NSW (which speaks in terms of an administrator of personal estate and a receiver of real estate) or the Court's inherent probate jurisdiction. He contended, rather, that, because the estate is "not in jeopardy" under his management, it would be a wrong exercise of discretion on the part of the Court to appoint an administrator.
In my opinion the plaintiff's opposition to the appointment of an interim administrator is misconceived. Despite his failure to acknowledge the fact, the deceased's estate is, in his terms, "in jeopardy" because of his unilateral, unauthorised "management" of the estate, leaving its most significant asset unproductive and, he says, in such a state of disrepair as to be untenantable. This, despite his claim to have personally spent a substantial amount on maintenance of the property.
The appointment of an interim administrator pending the determination of a contested probate suit (upon an exercise of the Court's inherent probate jurisdiction, traditionally effected by a grant of administration pendente lite or by reference to section 73 of the Probate and Administration Act 1898) is not made merely as a matter of routine or simply because a contested probate suit is pending. The Court must be satisfied that an order for the appointment of an interim administrator advances the due and proper administration of the estate and the interests of persons beneficially entitled to the estate.
In Gooley v Gooley [2020] NSWSC 798 at [125]-[126] Williams J made the following observations (with editorial adaption): "[125] In my opinion, … [a search for a] "necessity" or "sufficient reason" for the appointment of an administrator pendente lite is directed to a need for the Court to be satisfied that, in all the circumstances of the case, the assets of the deceased estate are in some jeopardy, and the appointment of an administrator pendente lite will remove, or at least reduce, that jeopardy. As the plaintiffs' submissions acknowledged, it is not necessary that the jeopardy arise from some misconduct on the part of a person dealing with or claiming to preserve the assets of the deceased estate. … [126] The object of an appointment of administrator pendente lite is to ensure that the deceased estate is managed and preserved for the benefit of those persons who may ultimately be found in the suit to be entitled to it. The administrator is required to act impartially as between the potential beneficiaries. Section 73 of the PA Act allows the Court to mould the powers of the administrator in a manner best designed to achieve that object in the specific circumstances of the case: Henderson v Executor Trustee Australia Ltd (2005) 93 SASR 337; [2005] SASC 477 at [44]-[45], [53] (Debelle J, Anderson J agreeing); Hempseed v Ward [2013] QSC 348 at [14] (McMeekin J)."
A court giving effect to the purposive nature of probate proceedings, and the particular object of the appointment of an interim administrator pending the determination of a probate suit, is not required, as a condition precedent to the appointment of an administrator, to make a formal finding that an estate is or would be "in jeopardy" absent the appointment of an administrator. Reference to an estate being "in some jeopardy" is a convenient way of giving practical expression to a perceived "necessity" or "sufficient reason" for engagement with the object of the appointment of an administrator. This requires an exercise of judgement in each case, not a formalistic search for "jeopardy", as the plaintiff in the present proceedings urged upon the Court. I do not understand Williams J to have suggested otherwise.
With that explanation, I agree with her Honour's observations. They are consistent with, and reflect, the purposive nature of an exercise of probate jurisdiction, which is to carry out a deceased person's duly expressed testamentary intentions, and to see that beneficiaries entitled to a deceased estate get what is due to them, without delay: In the Goods of William Loveday [1900] P154 at 157; Bates v Messner (1967) 67 SR (NSW) 187 at 189 and 191-192.
By taking possession and control of estate property without any authority to do so, the plaintiff has intermeddled in the affairs of the deceased; more particularly, as he has done so without consultation with the defendant, knowing that there is a contest about which of the deceased's wills should be admitted to probate.
The fact that the parties have been unable to agree upon an orderly interlocutory arrangement for administration of the estate is, in itself, indicative of an estate in jeopardy and in need of an independent administrator: somebody clothed with legal authority to administer the estate and able to do so with skill and impartiality, preserving the estate for those in due course found to be beneficially entitled to it.
The plaintiff has left the property vacant since the death of the deceased, incurring expenses and eschewing opportunities for rental income. Although he claims to have expended a substantial amount on maintenance of the property, he contends that it is not in a fit state to be let out to a tenant without repairs likely to cost more than liquid funds presently available to the estate. He opposes any steps being taken towards the property being leased or sold.
The plaintiff's management of the property has been informed, not altogether consistently, by self-interest. On the one hand, he expresses a desire to retain the property for himself and his children because of a sentimental attachment to it as a former family home. On the other hand, he contends that the property might best be valued, for the purpose of a prospective sale, as a "knock down and rebuild" opportunity. He would have the property remain unoccupied, under his exclusive management, without supervision, pending the final determination of the principal proceedings, the trial for which is eight months away. The prospect of a reserved judgment and an appeal cannot be excluded. Despite the possibility that, upon determination of the principal proceedings, the defendant may be found to have a beneficial interest in the estate, he seeks to pursue his own agenda without accountability.
The plaintiff's intermeddling in the affairs of the estate, and his lack of insight in a failure to appreciate the need for an accountable interim administration regime pending the determination of the principal proceedings, ground a finding that administration of the estate cannot be left in his hands pending the determination of the proceedings, but should be placed in the hands of an independent administrator to whom the parties can make representations about how the property should best be dealt with.
In deciding that an independent interim administrator should be appointed, I preserved for the plaintiff an opportunity to be heard in the event that the administrator forms the view that the property should be sold. The administrator's powers are constrained by an order that the property not be sold without the prior written consent of the parties or the leave of the Court. I have reserved to the administrator and the parties liberty to apply for directions in the conduct of the administration, a means by which any dispute about repairs to the property or the granting of a lease can be determined in an orderly way.
There has been no dispute between the parties as to the identity of the interim administrator or the terms of her entitlement to remuneration. She is a person suitably qualified for appointment as administrator.
In deference to submissions made by counsel for the plaintiff, I determined the plaintiff's notice of motion by reference to section 73 of the Probate and Administration Act as well as the Court's general probate jurisdiction. For that reason, a special grant of administration was made in terms that acknowledged that the office of interim administrator incorporated the roles of administrator of personal estate and receiver of the real estate.
The juristic character of a special grant of administration upon an exercise of probate jurisdiction, limited to accommodate the pendency of a contested probate suit, and an appointment expressed in the terms of section 73, is essentially the same and governed by similar considerations. To the same effect could be the appointment of a receiver and manager upon an exercise of equitable jurisdiction. Each form of order is just that: an order of the Court, for a defined purpose, authorising the management of property, with a duration and powers limited in a manner designed to serve the purpose of the order.
For these reasons, on 10 August 2022 I made orders and notations as follows: 1 ORDER that (pursuant to section 73 of the Probate and Administration Act 1898 NSW or the inherent jurisdiction of the Court) a special grant of administration of the estate of late Marie Ritossa ('the deceased') who died on 30 April 2019 be granted to Tamara Jayne Goodwin (to the intent that she be the receiver of real estate and the administrator of personal estate of the deceased) limited to: a. identifying and taking possession of the Deceased's real and personal property; b. selling any real property forming part of the estate of the deceased, including the real property located at 44 Mons Avenue Maroubra ('the Maroubra property'), subject to Order 2 of these orders; c. leasing the Maroubra Property; d. at the administrator's discretion applying any assets of the deceased's estate (other than the Maroubra property) for the purposes of; i. Rendering the Maroubra property into a condition where it is capable of being leased; ii. Effecting any insurance in respect of the Maroubra Property, including landlord insurance; and iii. Paying the costs of storage and insurance of the deceased's personal effects and furniture. e. collecting any monies due to the estate of the deceased, and, in the ordinary course, paying the liabilities of the deceased out of the estate; f. Establishing, and operating in the ordinary course, a bank account or accounts in the name of the estate of the deceased; g. Keeping an account of all receipts and disbursements relating to the administration of the estate; h. Holding and managing the assets of the Deceased on trust for it pending an Order of the Court to distribute the assets or their proceeds or until the Interim Grant of Administration is revoked; i. Make arrangements for the creation and provision to the parties of a digital photographic record of all personal effects of the Deceased held at the Deceased Property at the Maroubra Property; j. Make arrangements for the storage and security of all personal effects of the Deceased. 2 ORDER that the administrator not sell the Maroubra Property without the prior written consent of the Plaintiff and the Defendant or the leave of the Court. 3 ORDER that Ms Goodwin as Administrator of the deceased's estate shall be entitled to: a. Make and be paid from the estate of the deceased all usual and proper charges at the hourly rates applicable of $550.00 plus GST on her usual terms as to payment i. For work as administrator of the estate or trustee of the estate or both; ii. For the professional and non-professional services rendered in the administration of the estate of the deceased; and b. Engage the services of any other legal practitioner, accountant, expert, real estate agent or professional advisor or other third party in relation to the administration of the estate where necessary to do so and to pay from the estate the costs incurred in having those services provided. 4 ORDER that payment of the Administrator renumeration be deferred (subject to further orders of the Court) pending the determination of these proceedings, and that the Maroubra property be subject to a charge to secure payment of her renumeration and any sums that she may be entitled to pursuant to these orders. 5 ORDER that the grant of the administration end upon determination of these proceedings which for the avoidance of doubt includes any appeal/s. 6 ORDER that any administration bond be dispensed with. 7 ORDER that publication of Notice of Intention to make application for the appointment of the special administrator be dispensed with. 8 GRANT liberty to any party in these proceedings, including the special interim administrator, to apply for consequential and ancillary orders for the purposes of, or with respect to, and implementing, the Order that a special grant of administration in the estate of the deceased be made to Ms Tamara Goodwin. 9 ORDER that the defendant be granted leave to amend the statement of cross claim filed on 7 April 2020 for the limited purpose of including in the statement of cross claim a claim for a grant of probate in respect of the will of the deceased dated 27 March 2007, any such amended statement of cross claim to be filed and served no later than 31 August 2022. 10 ORDER that the parties' costs referable to the plaintiff's notice of motion filed 8 April 2021 be their respective costs in the proceedings. 11 ORDER that these orders be entered forthwith.
The powers conferred on the administrator by these orders are those which were proposed by the defendant, without objection by the plaintiff as to their form. If the parties, or the administrator, perceive a need for those powers to be supplemented (for example, to enable the administrator to borrow funds on the security of the property in order to effect repairs to it) an appropriate application can be made to the Court, preferably with the agreement of the parties, but, in any event, after consultation of all affected interests and with the benefit of a specific proposal.

Bates v Messner

At a glance

Court

Decision date

Before

Source

Judgment (8 paragraphs)

Parties

Cases Cited (5)

Cited By (3)