Carmel Mary Spillane v Denis John Hall

Ex tempore Judgment 1Pursuant to an amended summons filed by Carmel Mary Spillane (the Plaintiff) on 24 April 2012, the Plaintiff seeks an order under s 59 of the Succession Act 2006 for provision out of the estate or notional estate of John Hilary Spillane (the Deceased) who had died on 2 July 2009. The Plaintiff also seeks an order that the time for the making of the application for family provision be extended to the date of the filing of the summons. The executors of the Deceased's estate, Denis John Hall (the Deceased's solicitor) and Bruce Burge (the Deceased's accountant), are the defendants (the Defendants). 2The Defendants filed a notice of motion on 18 February 2013, seeking: (1)a declaration that the Defendants are entitled to be indemnified by the Plaintiff in respect of their costs in the further administration of the estate; and (2)a stay of the proceedings until such time as the Plaintiff pays to the Defendants' solicitors' trust account an interim payment in the sum of $20,000 towards the costs of the further administration of the estate. 3The Plaintiff also seeks such further or other orders as the circumstances of the case may require. In the present proceedings, I am only concerned with the notice of motion filed by the Defendants.

Background 4In summary, the Deceased's will, which is dated 8 February 2001, appoints the Defendants as executors and trustees of his will, gives to each of his children Joan Therese Johnson, Anne Catherine Graham, Carmel Mary Pengelly (i.e. the Plaintiff) the sum of $100,000, gives to his son Michael Anthony Spillane his shares in Tyre World Australia Pty Limited, and finally provides: 8. I FORGIVE release and discharge the mortgage between myself as mortgagee and my son the said MICHAEL ANTHONY SPILLANE as mortgagor which is secured over the property...known as 62 Railway Parade Fairfield. 9. I GIVE the rest residue and remainder of my estate to my son the said MICHAEL ANTHONY SPILLANE... 5Probate of the Deceased's will was granted to the Defendants on 22 June 2011. Annexed to the probate of the Deceased's will is an inventory of the Deceased's assets, which discloses assets to a total value of $5,167.27. This consists primarily of money deposited with financial institutions totalling $4,609.60, but it does include a number of interests in shares and trusts or relatively negligible value. This appears to be confirmed by copies of the financial statements of the relevant trusts prepared by the Deceased's accountant (i.e. the second defendant, who is a chartered accountant). 6However, one of the items of property is listed in the inventory as follows: 5. LOANS (a) Loan to Michael Anthony Spillane, secured by mortgage (registered 5924021) over 62 Railway Parade, Fairfield - Loan advance of $665,000.00. Mortgage provides that mortgage is discharged and released upon the death of the deceased 7The inventory of assets also specifies that the "Estimated or Known Value" of this asset is "$0.00". This may be an expression of the Deceased's wishes as expressed in clause 8 of his will, quoted above. During the course of the hearing, the Plaintiff tendered a copy of the relevant mortgage documentation. The mortgage document is dated June 1999 (the precise day is indecipherable), provides for nil interest, and includes a clause which provides: The Mortgagor has agreed to repay the principal sum to the Mortgagee on written demand by the Mortgagee provided however this mortgage is discharged and released upon the death of the last survivor or the mortgagees. 8The Plaintiff's position is that this loan remains an asset of the estate. The filed evidence includes various correspondence dated from about January 2012 to January 2013 exchanged between the solicitors acting for the Plaintiff (Baker Deane & Nutt, Plaintiff's solicitors), the solicitors acting for the Defendants (HWL Ebsworth, Defendant's solicitors) and the solicitors acting for Michael Anthony Spillane (Maclarens Lawyers). It is not necessary to set out in full the content of these communications. I will only summarise them briefly. 9From about January 2012 to August 2012, the correspondence was only between the Plaintiff's solicitors and the Defendants' solicitors. Essentially, on 27 January 2012 the Defendants' solicitors wrote to the Plaintiff's solicitors indicating that the value of the estate assets were insufficient to enable the Defendants to continue to administer the estate, and they asked to the Plaintiff's solicitors to identify the property or persons holding the property against which the Plaintiff makes her claim for provision. 10The Plaintiff's solicitors replied by letter dated 10 April 2012 saying they would "make all the investigations necessary to present evidence before the court to enable the court to designate property as notional estate". The Defendants' solicitors responded on 6 August 2012 saying that the Plaintiff's failure to identify the relevant property was unsatisfactory, and advised that the Plaintiff should discontinue the proceedings as the Plaintiff had no prospects of success. The Plaintiff's solicitors wrote back on 15 August 2012 saying their client did not agree to discontinue the proceedings, and that the Defendants' solicitors fail to recognise the alleged debt owing to the Deceased. 11On 31 October 2012 Maclarens Lawyers wrote to the Defendants' solicitors complaining about the costs the Defendants' solicitors had incurred, and denying acceptance of any further legal costs. On 28 November 2012 the Plaintiff's solicitors wrote to the Defendants' solicitors reaffirming their view that loan of $665,000 to Michael Anthony Spillane forms part of the Deceased's estate, and that the Defendants should seek to obtain payment of that debt in accordance with their duties as executors. On 10 December 2012 the Defendants' solicitors wrote back complaining about the lack of funds, and they also wrote to Maclarens Lawyers on the same day asking whether the $665,000 formed part of the estate. Maclarens Lawyers responded on 11 January 2013 saying "[w]e offer no comment on the question". 12On 22 February 2013 the Defendants' solicitors sent a further letter to Maclarens Lawyers seeking to re-agitate this issue, asking: Please let us have your client's instructions by 27 February 2013 as to whether he accepts or disputes the Plaintiff's solicitors' view that the alleged mortgage debt of $665,000.00 forms part of the estate. 13On 26 February 2013, Maclarens Lawyers responded: We note that one of the executors is a qualified lawyer, and that the Executors retain your firm for the purposes of obtaining legal advice. The Executors are in a position to form their own view as to the matters contained in the letter of Baker Deane & Nutt dated 28 November 2012. We therefore offer no further comment. 14Given the uncooperative manner in which Mr Michael Anthony Spillane has instructed his lawyers to respond, the question of whether or not there is in existence a mortgage is likely to be a matter of dispute. 15The financial position of the estate is set out in the affidavit of Denis John Hall sworn 27 August 2012. The assets of the estate of $5,167.24 have been exhausted, and, as at 27 August 2012, there were debts associated with the administration of the estate totalling $22,626.22. In his affidavit dated 27 August 2012, Mr Hall also estimated further costs of $15,000 and $3,900 in relation to the preparation of affidavits of the administrators and counsel fees respectively. In his affidavit dated 18 February 2013, the first defendant confirms that the estate is insolvent and that no funds have been offered. Apart from some documents tendered during the hearing, the Plaintiff has not filed any evidence in relation to this motion. 16The estate is now insolvent, but the first and second defendants still have further duties as executors in the administration of the estate. The issues which arise are whether the executors are entitled to be indemnified by the beneficiaries against the costs of the further administration of the estate, and whether I should exercise my discretion under s 67 of the Civil Procedure Act 2005 to stay the proceedings pending payment by the Plaintiff or any other interested beneficiary of $20,000 to meet costs of administration of the estate.