Blackman v Permanent Trustee Co Ltd

1406/03 - BLACKMAN v PERMANENT TRUSTEE CO LTD JUDGMENT 1 HIS HONOUR: Although, at first sight, this appears to be a very simple application, it does in fact raise very awkward questions. However, thanks to the good sense of the barristers and solicitors involved I am able to make orders without having to investigate thoroughly the legal minefield through which I would otherwise have to warily tread. 2 Essentially, the plaintiff is the widow of the late William Allan Blackman who left a very substantial estate. There were contested probate proceedings which eventually were settled on the basis that the defendant (Permanent Trustee Company Limited) would obtain a grant of administration of the will made by the testator in 1998; that is, a grant of administration cta. 3 There were contesting parties in the probate suit and there are still contesting parties because there are three applications under the Family Provision Act 1982 pending in this Division; namely, suit 4706/01 brought by Margaret Napier Blackman, the testator's first wife, and suits 4150/01 and 4151/01 brought by children of the testator. 4 Under the will the plaintiff receives the proceeds of an insurance policy, the income of the testator's shares in publicly listed companies and the rest and residue of the estate. 5 The deceased died on 27 March 2000. Had distributions been made in accordance with the will, the plaintiff would have received over $200,000 by way of income. However, she has not received much by way of income at all in the last twelve months and says that the lifestyle that she was accustomed to adopt when the testator had been alive has been drastically affected, she is in want of immediate cash and sees no way of getting it other than approaching the court. 6 The summons initially only sought relief by way of compelling an interim distribution. However the plaintiff's amended summons also makes a claim under the Family Provision Act. Essentially this is a defensive move against the other applications and it would, at least prima facie, appear that if the other applications are dismissed so too will the plaintiff's application. The application is out of time but the plaintiff seeks an extension of time. Thus the plaintiff seeks access to income primarily under two heads: (a) because of an order under Pt 68 of the Supreme Court Rules; and (b) under s 9(5) of the Family Provision Act. 7 I am told that because of the delay occasioned by the contested probate proceedings the state of the evidence in the Family Provision Act applications made by the first wife and children is still at a very preliminary stage, though orders have been made that all the affidavits on which those claimants rely are to be filed and served no later than 15 April 2003. 8 Mr Meek, who appears for two of those claimants, informs me that it is unlikely that that date can now be met but it would seem that all the evidence can be filed by 24 April. If that occurs then, from what I have been told, the proceedings (by which I mean all four Family Provision Act applications and related matters) can be heard on 10 to 12 June. 9 That then leaves the question of what provision should be made for the plaintiff in the meantime and various procedural questions such as the extension of time and making directions as to getting the proceedings ready for trial. 10 As to the power of this Court to order an interim distribution, as I have said the plaintiff seeks the order on two bases. I do not consider that she can succeed under s 9(5) of the Family Provision Act because the court can only make an order under that section when the court is able to form the opinion that no less provision than that proposed to be made by the interim order would be made in favour of the eligible person after full consideration of the application. 11 Without any prejudgment and just applying rules of thumb as to what happens to the applications of widows, there must be a very good chance that the plaintiff's application will be dismissed because other applications are either dismissed or receive orders of such a degree that will not greatly affect the plaintiff's benefaction under the will. Accordingly, I cannot reach the statutory opinion under s 9(5). 12 Part 68 of the Supreme Court Rules is adopted to replace similar provisions in the Equity Act 1901 which, in turn, provided a summary procedure to deal with matters which in Charles Dickens' days were dealt with by way of administration suit. The general view is that unless there was jurisdiction under the administration suit to deal with the sort of question the plaintiff wants to raise, it cannot be dealt with under Pt 68. 13 The present problem could not, of course, arise under an administration suit because no one contemplated Family Provision Act proceedings before the 20th century. Furthermore, creditors could still be paid by the trustee of an estate even though an administration suit was pending because the mere pending of the suit did not affect the trustees' discretion, though there was some practical problem because a trustee could be attacked for making such a payment if he or she did not make it after due consideration; see eg Re Hankey [1899] 1 Ch 514 and Ingpen on Executors and Administrators (Stevens & Sons, London, 1908) p 356. 14 However, as the English White Book says (see the 1999 edition, being the last before the Wolff reforms) 85/2/8 and 85/2/10, where a next of kin enquiry was ordered the court could order partial distribution to any lines of kin which were not disputed. Indeed, it would seem that on a next of kin enquiry the court had a very wide discretion as to making orders and directions (see for instance Frey v Demarset 16 New Jersey Equity 236 and Pomeroy's Equity Jurisprudence vol 1, par 350 at 351). 15 Accordingly, I tend to think that the present order is one which can be made under Pt 68 of the Supreme Court Rules. However, there was a useful discussion between counsel and myself this morning as to these problems. Both counsel referred me to the decision of Cross J in Re Ralphs [1968] 1 WLR 1522 where his Lordship, at 1525, said about trustees in a difficult position: "They should form their own view, with the assistance, of course, of their legal advisers, as to the payments which could properly be made, and if they are not prepared to make such payments on their own responsibility, they should ask the parties who might conceivably be affected...for their consent. If such consent is not forthcoming the executors can apply for the court for leave to make the payment in question, and the court, if it thinks that any withholding of consent was unreasonable could throw the costs of the application on the party to blame." 16 That passage throws up the principle that trustees cannot merely take the view that if there are contested proceedings they cannot do anything in and about the estate, particularly making any interim distributions, until all those problems are resolved. It is the duty of the trustees to direct their minds to the proper administration of the estate. Everyone knows it is difficult where there are warring members of a family who will not budge from their positions, but it needs to be done. If the trustee is to seek consent he or she has to make a decision as to what should happen and, if necessary, seek the imprimatur of the court. 17 It was also suggested that I make an order under s 84 of the Wills Probate & Administration Act 1898. It seems to me there are two answers to this. First, that section is only to be used where a legacy is clearly payable and, secondly, as I decided in Thurtell v Aubusson, 19 May 1994, unreported, the present gift is not a legacy within the meaning of that section. 18 At 2 pm Mr Blackburn-Hart, for the trustee, asked the court to make an order under s 63 that the trustee would be justified in loaning to the plaintiff $33,000 on terms that, first, that loan be repaid after the final orders were made in the Family Provision Act proceedings, with no interest if it were paid within one month, otherwise at the rate provided for judgments under the Supreme Court Rules. 19 Mr O'Loughlin, for the plaintiff, was prepared to accept that in lieu of the $60,000 that he had been pressing for earlier. 20 I thank counsel for coming to that view. However, there is one matter which does still cause me some concern in the short term and that is that there is a tax debt of $13,602. I am informed that it needs to be paid in the next week but there is no evidence of this. It seems to me that when one has a large estate with a large amount held back in accumulated income and there is a tax debt which will carry penal interest, that the trustee may well take the view that it would be appropriate to advance that money to avoid the penal interest running. It would also be of benefit to all the other claimants because if the widow has to pay penal interest on the tax, it will make her Family Provision Act claim even stronger. 21 As there is no firm evidence at this stage that the debt is presently owing, I will not do anything about it but I will give liberty to apply should the trustee consider that it is not at liberty to make a loan of that further amount. 22 There is no doubt at all about the power of the court to make an order under s 63 of the Trustee Act 1925 on the trustee's application, which has now been made orally. However, care must be taken in framing the order. Under s 63(8) of the Trustee Act it seems to me that this is not an order that has to be served on the beneficiaries but, to make things abundantly plain, the court should "otherwise direct" that no notice need be given. 23 That now means that I should in each of the suits; that is, this suit and the other three which I have mentioned earlier, make directions that all the plaintiff's evidence be filed and served no later than 4pm on 24 April 2003, that the evidence in one proceeding be evidence in all the proceedings, that the defendants file and serve any affidavits by 12 May 2003 and fix the proceedings for hearing before Windeyer J on 10, 11 and 12 June. 10 June will follow the Probate List. I will appoint 22 May at nine o'clock before a Deputy Registrar for return of subpoenas and I give liberty to apply on three days' notice. 24 In the case of proceedings 4706/01 where there is no representative of the plaintiff before the court today, I will give liberty to apply to vary those orders on three days' notice. 25 Then I must order that I advise the defendant by order that it would be justified on loaning to the plaintiff unsecured the sum of $33,000 on terms that it be repaid after final orders are made in these and associated proceedings, not to carry interest if repaid within one month of such final orders, otherwise at the rate for judgments in this Court. Costs of the motion to be costs in the cause. 26 So far as the extension of time is concerned, I cannot see the plaintiff making any claim against notional estate. Thus the special provisions in the Act do not apply. The application for extension of time is not consented to, but, it seems to me, in all the circumstances, that it is appropriate to extend the time up until 14 April 2003. I make that order because, by some mischance, the amended summons was not actually filed in court until today. 27 The costs of Mr Meek's attendance, whilst strictly speaking referable to suits 4150/01 and 4151/01, will also be costs in the proceedings. 28 The exhibits may be returned. 29 In each of proceedings 4706/01, 4150/01 and 4151/01, I vary the order made by Registrar Berecry on 27 February, so that the plaintiffs file and serve affidavits by 24 April, the defendants by 12 May. The subpoena date is 22 May. In lieu of re-listing on 11 July, they are to be listed for pre-trial before Windeyer J on 26 May 2003.

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