Gerstenmeier v Gerstenmeier

Supreme Court of NSW|2024-06-04|Before: Meek J, Bryson J

e officer with actual knowledge of the refinancing transaction, rather than to the corporation by its "proper officer" Legislation Cited: Civil Procedure Act 2005 (NSW) Legal Profession Uniform Law (NSW) Probate and Administration Act 1898 (NSW) Succession Act 2006 (NSW) Uniform Civil Procedure Rules 2005 (NSW) Cases Cited: Attorney General for New South Wales v Melco Resorts and Entertainment Ltd (2020) 102 NSWLR 47; [2020] NSWCA 40 Bailey v Bailey [2004] NSWSC 448 Bar-Mordecai v Rotman - The Estate of the Late Eveline Hillston (Supreme Court (NSW), Bryson J, 21 July 1998, unrep) Blatch v Archer (1774) 1 Cowp 63; 98 ER 969 Galea v Camilleri; The Estate of Patricia Camilleri [2023] NSWSC 206 Gillett v Nelson (No 3) [2014] NSWSC 1415 Jones v Dunkel (1959) 101 CLR 298; [1959] HCA 8 Jurak v Latham [2023] NSWSC 1318 Liprini v Liprini [2008] NSWSC 423 Mordecai v Mordecai (1988) 12 NSWLR 58 Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306; [1990] HCA 45 Penn-Texas Corporation v Murat Anstalt (No 2) [1964] 2 QB 647 Princess Ann of Hesse v Field (1963) 80 WN (NSW) 66 Re BPTC Ltd (in liq) (No 2) (1992) 29 NSWLR 713 Re Estate Buxton; Knoll v Buxton [2023] NSWSC 819 Re Franks [2021] QSC 134 Rochfort v Trade Practices Commission (1982) 153 CLR 134; [1982] HCA 66 Russo v Legal Services Commissioner [2016] NSWCA 306 Wentworth v Wentworth (Supreme Court (NSW), Young J, 4 September 1991, unrep) Xiang bht Cao v Tong [2021] NSWSC 44 Texts Cited: Dal Pont, G E, Law of Succession (3rd ed, 2021, LexisNexis) Category: Consequential orders Parties: Michael Ernest Gerstenmeier (Plaintiff / Applicant) Daniel Fritz Gerstenmeier (Defendant / Respondent) Representation: Solicitors: Artisan Legal (Plaintiff / Applicant) RMB Lawyers (Defendant / Respondent) File Number(s): 2023/50344

Introduction

HIS HONOUR: Estate administration may be performed by executors and administrators either consensually or in contest with beneficiaries. Often, more is able to be achieved by executors keeping the beneficiaries up to date on the administration of the estate and, where there are vexing issues in such administration, explaining to the beneficiaries the reasons for such issues. Executors who have inadequate, confused or no clear information pertinent to a matter which materially affects the beneficiaries should consider what steps they may permissibly take in order to obtain clear information, and provide it to the beneficiaries.
On 23 February 2024, approximately three and a half months ago, I made final orders by consent of the parties resolving a family provision claim. The parties are to be commended for the resolution of the claim. Regrettably, events since that time have cast a shadow on the benefits for all parties seemingly achieved by the settlement, including saving the costs of a contested hearing.
The parties are the children of the late Fritz Gerstenmeier who died on 14 February 2022 (the deceased). The deceased left a Will dated 12 April 2017 in which he appointed the defendant as executor and left the whole of his estate to the defendant. There have been two family provision claims on the deceased's estate. The first was brought by the deceased's adopted son, Clayton. The second, being these proceedings, was brought by the deceased's other son, Michael, as plaintiff.
Relevantly, the family provision orders for Michael provided for: 1. one payment to him of a lump sum legacy of $210,000 out of the estate of the deceased; 2. a period of 60 days to elapse prior to the accrual of interest on the lump sum; and 3. liberty to relist the matter for consequential and ancillary orders for the purposes of giving effect to and implementing the family provision orders made in favour of the plaintiff.
The legacy was not paid within the 60 day period, which ended on 23 April 2024.
The plaintiff's solicitors corresponded with the defendant's solicitors regarding the delay in payment. The defendant's solicitors indicated that the defendant was in the process of refinancing in order to raise funds to pay the legacy.
Correspondence between the parties shows that the defendant's solicitors anticipated that settlement would occur within a short period of time. However, frustrated with lack of detail about the matter, the plaintiff's solicitors foreshadowed that they would seek to relist the matter.

Relisting

On the request of the plaintiff's solicitors, I relisted the matter pursuant to the leave previously given. The matter has now been before me on five occasions prior to today, in order to address issues regarding the delay in payment of the legacy and any accrued interest. Those occasions were on 20, 24, 29 and 31 May 2024 and yesterday.
On each of those occasions, the Court accommodated the request of the parties' solicitors to appear via audio-visual link in circumstances where they are not Sydney-based. That has been accommodated anew for today.
Yesterday, I heard an application by the plaintiff to appoint trustees for sale of the estate property in circumstances where there was little clarity about precisely what was happening with the refinancing and there was, from the plaintiff's perspective, unacceptable delay in payment.
Having heard the application yesterday morning, I stood the matter over to this morning to deliver judgment. I came within a hair's breadth of formally determining the application to appoint trustees for sale. However, at the proverbial eleventh hour (3:57 pm yesterday), the defendant's solicitor, Mr Gittoes, sent my Associate an email which indicated that he had just received communication that the refinance had been completed and that the bank was in the process of releasing funds to the defendant's bank account, which he advised should occur by 9:00 am this morning.
To enable time for the funds to be formally received, and the amount of the legacy and any accrued interest to be paid to the plaintiff, at 8:01 am this morning I adjourned the 9:00 am listing to 2:30 pm today.
One might have thought that the completion of the refinance and proposed release of funds by the bank to the defendant would finally quell the dispute between the parties. Sadly, that was not the case.
At 8:52 am this morning, the plaintiff's solicitor, Mr Kristofferson, sent an email to my Associate indicating that his law firm provided to the defendant's solicitors two payment directions for the funds that they "hold on trust", one for their office account on account of costs and one for the plaintiff personally.
At 10:36 am this morning, without addressing Mr Kristofferson's email, Mr Gittoes sent an email to my Associate which stated "[o]ur client has paid the full amount owing to the Applicant, including any outstanding interest", and attached what was said to be the receipt for the transfer of funds "for the courts records". The email then stated: Noting that the payment had been made in full, we kindly request confirmation as to the whether the listing for 2:30pm today is still required.
Perhaps unsurprisingly, at 10:39 am Mr Kristofferson replied to the email as follows: Dear Associate, We do not agree to the listing being vacated. Firstly, our costs in connection with the Notice of Motion and recent appearances are still sought. Secondly, the payment has disappointingly been made in express contradiction of our directions for payment despite multiple emails making clear to which accounts funds should have been paid.
In light of the persisting dispute, I retained the listing.
Finally, at 2:11 pm (about 20 minutes ago) my Associate received an email from Mr Salinas (the other solicitor director within Artisan Legal acting for the plaintiff), which advised the Court that the parties have reached an agreement regarding the outstanding issue of costs, and sought that the following orders be made: 1. Noting that the Defendant has paid the amount owed to the Plaintiff including interest today, that by consent the Defendant shall pay to the Plaintiff costs in respect to the present Notice of Motion in the sum of $3,458.00 (inc GST) as follows: 1. $584.71 which it is noted has already been paid direct to the Plaintiff 2. $2,873.29 to the Plaintiff's solicitors by 5:00pm 6 June 2024 2. That the Plaintiff's motion is otherwise dismissed.

Issues

In the above context, the Court would ordinarily make orders finalising the matter and perhaps deliver either no reasons or minimal reasons for disposing of the application.
However, there are a number of aspects of the application which have a wider practical significance. The issue of enforcement of family provision orders is one that arises not infrequently and, given the range of issues that have occurred in the lead up to this application, I ought to address some reasons which explain certain aspects of enforcement applications in the hope that such issues can be avoided by parties in the future. The matters I propose to address are: 1. the power of the Court to make orders dealing with specific property to enable the enforcement of a legacy; 2. the nature of evidence which ought to be available to enable the Court to deal with the matter in a just way; 3. the obligations of practitioners in making submissions; 4. the options open to parties in funding an estate; and 5. the obligations of practitioners and parties in complying with orders of the Court and directions to pay.

Some background

To give some context to the matter, it suffices to note that, apart from a small amount of funds in an account with the National Australia Bank , the only other asset of the estate comprises real estate at Long Street, Goulburn (estate property). According to the inventory of property, that is valued at $700,000.
The defendant had a property at Hovell Street, Goulburn (Hovell Street property), which was sold in December last year. The Hovell Street property was encumbered by mortgages seemingly in favour of St George Bank. The mortgages totalled $354,000 and were seemingly discharged, with the defendant receiving a net amount of approximately $192,000.
However, the Court was informed that there was still a mortgage over the estate property in favour of Westpac, the existence of which had apparently been causing issues with the defendant's intended refinance.
On Monday 20 May 2024, the Court was informed by Mr Gittoes that loan approval for the defendant's refinance had been in place for four weeks. Two banks, apparently St George and Westpac, had some involvement in the matter. The Court was informed that one of those banks (apparently Westpac) had not signed off on the settlement on the prior Friday, and that settlement had been brought forward to noon on the day of the listing.
In that context, Mr Gittoes anticipated that settlement would happen at noon that day. I made orders to stand the matter over to Friday 24 May 2024 and directed that, in the event that payment of the legacy and accrued interest was not made by 4 pm on 21 May 2024, the plaintiff be at liberty to file and serve a notice of motion seeking relief in relation to payment of the legacy and interest. I made directions regarding the service of affidavits and reserved the question of costs.

Subsequent listings

On Friday 24 May 2024, the matter was relisted. The refinance had not occurred. Mr Gittoes indicated that the latest update from the bank (seemingly Westpac) was that they needed a further 24 hours to process the settlement of the refinancing. When I asked what the delay was, Mr Gittoes indicated that the estate property was previously a "guarantor property" for the mortgage taken out on the Hovell Street property.
I asked whether there was a mortgage registered on the title of the estate property. Mr Gittoes indicated that there was. He described it as a "guarantee property". I assume by that he meant it was essentially a form of collateral property. I could not readily understand why the mortgage over the estate property was not also discharged when the St George mortgages were discharged on the Hovell Street property. Mr Gittoes indicated that he was under the belief that it had been discharged and that Westpac only notified him on 14 May 2024 that it had not been discharged. The position appeared unduly confused and, accordingly, I indicated that I would be assisted by having someone from St George or Westpac explain precisely what was the issue.
I made the following orders: 1. Grants leave to the plaintiff to file in Court the notice of motion of the plaintiff dated 22 May 2024 in the form initialled by me dated and placed with the papers, upon the undertaking of the plaintiff's solicitor Mr Salinas to pay the applicable filing fee. 2. Notes the affidavit of Kellin Kristofferson affirmed 22 May 2024 and the affidavit of Lochie Andrew Lang Gittoes affirmed 23 May 2024. 3. Directs the defendant's solicitor to notify the applicable financing officer at St George and Westpac that Meek J requests that they each provide a report outlining what if any obstacles there are to completing the financing application made by the defendant and an indication of when it is they expect the application will be settled via the PEXA workspace. The request is to be made by Mr Gittoes by 2pm this afternoon and the Court invites St George and Westpac to provide a response by 12pm on Monday 27 May 2024. The request should indicate that in the event that the request is not complied with, the Court will give consideration to the issue of a subpoena to the relevant officers of St George and Westpac to attend Court to explain in person what the position is. 4. Directs that pending the responses to the requests made in earlier orders, that the defendant pay to the plaintiff by 4pm on Monday 27 May 2024 the sum of $5,000 as an interim payment in respect of the order for the lump sum of $210,000 made under order 12 of the orders dated 23 February 2024. 5. Adjourns the matter to 9:30am Wednesday 29 May 2024 before Meek J for further hearing of the plaintiff's notice of motion or directions as the nature of the case may require. 6. Reserves costs of the notice of motion and the appearance today.
On 29 May 2024, the matter was listed again. Mr Gittoes indicated that the refinancing had not occurred. He informed the Court that he had sent letters to both Westpac and St George requesting the provision of a report but had no response from either bank. Seemingly contrary to earlier indications, he further indicated that St George had said that they needed time to finalise the refinance and were awaiting Westpac to sign off. I made the following orders: 1. Stands the matter over to 9am on Tuesday, 4 June 2024. 2. If settlement has not happened by 5pm tomorrow, 30 May 2024, grants leave to issue a subpoena to the relevant Westpac officer nominated under Order 3. 3. Directs that Mr Gittoes identify an appropriate officer at Westpac dealing with the matter and provide the name and contact details including email of such officer to Mr Salinas by 12pm tomorrow, 30 May 2024. 4. Abridges the time of service of any such subpoena to any such officer to 12pm on Friday, 31 May 2024, such service in the first instance may be made by electronic service including via email, subject to any further order. 5. Directs that Mr Gittoes provide to Westpac a copy of these orders by 5pm today. 6. Orders costs be reserved.
On 31 May 2024, my Associate received an email from Mr Salinas at 12:12 pm seeking the issue of a subpoena to Westpac. The subpoena was in a form directed to "the proper officer" of Westpac.
Subpoenas may be issued to corporations. Subpoenas for the production of documents (duces tecum) may permissibly be addressed to the corporation "by its proper officer": Penn-Texas Corporation v Murat Anstalt (No 2) [1964] 2 QB 647 (Penn-Texas) at 663 per Lord Denning MR, approved in Rochfort v Trade Practices Commission (1982) 153 CLR 134 at 146 per Mason J (as his Honour then was); [1982] HCA 66; Re BPTC Ltd (in liq) (No 2) (1992) 29 NSWLR 713 at 719C per McLelland J (as his Honour then was). There may be instances in which a corporation can be required to give testimony by its proper officer (ad testificandum): Penn-Texas at 662; Attorney General for New South Wales v Melco Resorts and Entertainment Ltd (2020) 102 NSWLR 47; [2020] NSWCA 40 at [73]-[74]. However, it is not necessary for me to essay the law regarding such cases.
The point to be made is that the intent of Order 3 made on 29 May 2024 was to require active steps by the defendant's solicitor to identify a specific person at Westpac to give evidence about the impediments to the refinancing. The framing of the order was to avoid the matter being left at large within the discretion of Westpac as to who might fit the description of being a "proper officer", with the risk that the person who actually attended to "give evidence" might not have the necessary knowledge to assist the Court.
I requested my Associate to list the matter at 2 pm to discuss the issue with the solicitors and obtain the name of a Westpac officer to whom a subpoena could be issued. The matter was listed at 2 pm and while Mr Salinas appeared, Mr Gittoes did not. There was still no appearance by Mr Gittoes at 2:20 pm and, accordingly, I stood the matter down to 3 pm. At 3 pm, Mr Gittoes appeared as did Mr Salinas. Mr Gittoes indicated that he still did not have a contact person from Westpac to whom a subpoena could be issued. In a context in which the defendant, his legal representatives and other persons assisting him had been presumably liaising with both banks, I found it difficult to understand that not a single person at Westpac could be identified as an appropriate person to whom to issue a subpoena. I stood the matter down to 4:30 pm to enable Mr Gittoes the opportunity to obtain the name of an appropriate contact person at Westpac.
The matter was recommenced at 4:30 pm. At that time, Mr Gittoes indicated that an officer from Westpac had been identified, namely Hannah Burbidge.
However, Mr Gittoes indicated that there had been a development within the last 90 minutes; he had been informed by Westpac that, contrary to earlier indications, it could not discharge the mortgage and apparently only St George could discharge it. Mr Gittoes indicated that he, or those assisting him, had just been on the phone to the St George settlements team to discharge the mortgage, and that they were in the process of discharging the mortgage that afternoon and would soon be issuing the booking notice for the settlement of the refinance. He expressed the hope that the mortgage would be discharged either then or on the following Monday (3 June 2024).
Following my enquiry of Mr Salinas to ascertain his position, I made the following orders: 1. Notes the matter is listed on Tuesday, 4 June 2024 before Meek J. 2. Notes the Court has requested Mr Gittoes to provide an update regarding discharge of mortgage and settlement of the refinance to Mr Salinas by 12pm on Monday, 3 June 2024.
I had hoped that by yesterday morning the matter would have been completely resolved. Regrettably, it was not.
At 7:45 pm on Monday evening, Mr Salinas sent an email to my Associate, copying Mr Gittoes, in which he stated that the moneys owed to the plaintiff remained unpaid. He then outlined the proposed orders that he would seek in relation to the motion. It will be seen that there is a slight variation in the orders proposed. The orders were as follows: 1. That if full payment of the amount owed by the Defendant to the Plaintiff pursuant to Orders dated 23 February 2024 (including interest) is not made by 5:00pm Friday 7 July 2024 the Court shall forthwith appoint a trustee for sale of the property known as [XX] Long Street Goulburn NSW 2580. 2. That the Trustee be appointed from one of the following legal practitioners: … 3. That the trustee for sale have discretion as the method and conditions of sale. 4. That from the net proceeds of sale after payment of sale costs (including Trustees costs), the Plaintiff be paid the amount owed (including interest accrued) and the balance be paid to the Defendant or as the Defendant directs. 5. That the Defendant pay the costs of the Plaintiff in connection with this Notice of Motion in the sum of $5,500.
On the commencement of the listing yesterday morning, Mr Gittoes provided an oral update regarding his understanding of the position as to the refinancing: GITTOES: … We requested an update from the bank this morning or yesterday and noting that the matter was listed before the court again today at 9am I sent through another request this morning for another update and I am just waiting for that email. The last update I received from the bank on Friday, the bank noted that the discharge conditions be removed so that is a requirement of the bank which has been holding up settlement. They are going to try and have it done, I am supposed to get this on Friday but an email came through at 4.58 saying that they were not able to get that done on Friday so they had a pushover until Monday. On Monday St George sent an update around lunchtime saying that all departments of St George were on the same page in regards to the discharge and were aware of the urgency and said we had settlement pre-booked for soon. Our broker - a further update was received at lunch time on Monday from St George. That update provides that all departments through St George were on the same page regarding the discharge of the mortgage and understand that it was their error in believing that Westpac had to discharge the mortgage and they were trying to dispense with the requirement for any discharge that would be required at all for settlement to go ahead. Our client went to a St George branch himself so that he could try and progress it within the branch himself. He did sign documents with St George. The deed registered the mortgage was paid out to remove any interest they had over any properties which included the Long Street property. There are copies of these. The bank has also sent those through to the discharge team to try and expedite the matter as quickly as they can. At 4.58 yesterday afternoon St George were sent a letter from our office confirming that the requirements for … the urgency for the discharge be declared as soon as possible, noting that there were currently court proceedings underway in which they were the subject. We requested with that an update at the same time be provided by 9am today, noting that it was to be before the court at 9am, and a confirmation email came through at 6.54 last night from St George saying that they had received our letter and were following through as a matter of urgency and were unable to give us a date and time as that - that was at 9.07 this morning. I believe our broker is still on the phone to the bank at the moment to see if they have been able to progress that any further since that time.
I enquired of Mr Salinas what he wished to do regarding the matter. Mr Salinas indicated that he wished to proceed on the notice of motion, albeit seeking the orders set out in the email I have noted above. I clarified that the date by which he was seeking payment of the legacy sum and interest was in fact Friday 7 June 2024 (not 7 July 2024).
I asked each of the solicitors about the evidence that they relied upon. Mr Salinas indicated that he relied upon the affidavit of Mr Kristofferson dated 22 May 2024 that had been served with the notice of motion. Mr Gittoes indicated that he relied upon his affidavit of 23 May 2024.
Each of Mr Salinas and Mr Gittoes made oral submissions.
Having regard to what has now transpired, it is not necessary for me to outline in detail the content of those submissions.
In respect of Mr Salinas' submissions, it suffices to note the following. 1. Mr Kristofferson followed up with Mr Gittoes on 27 March 2024 seeking an update regarding the refinance and continued to follow up by correspondence until 21 May 2024. Mr Salinas emphasised there was a lack of adequate information provided by the defendant and his solicitor for the cause of the delay. 2. Mr Salinas noted that it was not until last Friday (31 May 2024) that the cause of the delay was actually determined to be a misunderstanding within St George. He submitted that the matter could have been resolved considerably earlier by simply looking at the dealings in the register on the title. 3. Mr Salinas indicated that his client was in a position of financial hardship which was being exacerbated by the continued delay.
Mr Gittoes made a number of submissions, which primarily consisted of outlining the steps that he contended his client had taken in order to have the payment of the legacy made prior to the specified timeframe (being 23 April 2024) and subsequently.
In making submissions yesterday, Mr Gittoes referred to matters that were not, strictly speaking, the subject of evidence. His affidavit does not address the period prior to 11 April 2024. Nonetheless, he submitted that his client had first approached St George to obtain pre-approval for a loan prior to the making of any offers of settlement. However, it was submitted that his client, or rather the bank, required a court order to be made as part of the approval process.
Mr Gittoes submitted that, since 11 April 2024, his client had followed up with St George and Westpac to have the security removed over the estate property. He contended that errors had been made within St George and that it was not until Friday that St George realised that such errors had been made. He asserted that, since then, St George had taken every step it could to have the discharge approved.
Mr Gittoes further submitted that the delay was not egregious. He recited details about his client, indicating that: the estate property is his principal place of residence; he is the father of two children with a partner from whom he is now separated; and to require him to vacate the premises and find alternate accommodation would result in significant prejudice. In addition, he submitted that the appointment of trustees for sale would not enable the plaintiff to receive the funds any quicker than his client's current method of refinance.
Mr Gittoes also disputed that the plaintiff was in financial hardship, claiming that the evidence as to the plaintiff's circumstances in the affidavit of Mr Kristofferson was anecdotal.
Finally, Mr Gittoes submitted that a period of 14 to 21 days ought to be permitted to allow the refinancing to occur. In the alternative, he submitted that the time be extended until next Friday, 14 June 2024.
Mr Gittoes did not oppose a costs order being made against his client, but did dispute the quantum.
Mr Salinas had no submissions in reply.

Power to make orders

The precise character of a family provision order depends upon the effect provided for the order by the relevant legislation within each jurisdiction.
In New South Wales, s 72(1) of the Succession Act 2006 (NSW) (Succession Act) relevantly provides: 72 Effect of family provision order (1) A family provision order takes effect, unless the Court otherwise orders, as if the provision was made - (a) in a codicil to the will of the deceased person, if the deceased person made a will, or (b) in a will of the deceased person, if the deceased person died intestate.
Notwithstanding that the order takes effect as a codicil to the Will, a family provision order creates a new right in a person in whose favour the order is made, which corresponds to the new obligation imposed on the executor or administrator. The right arising from a family provision order is independent of rights conferred by the Will. It may displace the benefit of rights conferred by the Will, and hence confer an entitlement of a special kind beyond that of an ordinary beneficiary. The two kinds of right spring from different sources and remain distinct, despite their similarities: see Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306 at 316-317; [1990] HCA 45 (Schultz). Although the High Court in Schultz considered the relevant provisions of the Queensland legislation, the Court observed that the same result has been reached in relation to other legislation providing that an order should take effect as if it had been made by codicil: Schultz at 316-317.
Conventionally, enforcement of an order for family provision is by means of an administration suit or, in clear cases, taking advantage of the summary procedure provided by s 84 of the Probate and Administration Act 1898 (NSW): see Liprini v Liprini [2008] NSWSC 423 at [9] per Brereton J (as the Commissioner then was), quoting Wentworth v Wentworth (Supreme Court (NSW), Young J, 4 September 1991, unrep).
The precise basis of the Court's power to appoint trustees for sale was not the subject of any submissions before me. However, Mr Gittoes did not seem to dispute the power of the Court to appoint trustees for sale of the estate property. Rather, he submitted that, as a matter of discretion, the Court should not exercise its power to do so.
In circumstances in which it is no longer necessary for me to address the making of the requested orders for the appointment of trustees for sale, it is not necessary for me to express any concluded view and I would hesitate in doing so without the benefit of assistance from the legal practitioners involved. It suffices for me simply to note the following.
Upon making a family provision order, the Court would, in the ordinary course, leave the matter to the executor or administrator to administer the estate and pay the legacy, or transfer any property which the Court has ordered be transferred under the family provision order.
If the executor or administrator delays in carrying out such an order, the Court has power to intervene. In some (although usually rare) cases, intervention may require the removal of an executor or administrator.
In other cases, there are less favourable courses open to the Court, including directing an executor or administrator to carry out a particular action by a particular time: see, for example, r 54.3 Uniform Civil Procedure Rules 2005 (NSW) (UCPR).
Further, the Court has extensive statutory powers, in addition to or as part of a family provision order, to make orders for the purpose of giving effect to the family provision order: s 66 Succession Act.
Family provision orders are required to identify the manner in which the provision is to be provided and the part(s) of the deceased's estate out of which it is to be provided: s 65(1)(c) Succession Act.
Conceptually, in some (hopefully rare) cases where the carrying out of the family provision order has become unacceptably delayed or stymied, the Court may, pursuant to its statutory powers, make orders vesting the estate property in a trustee, being a person other than the executor or administrator, and clothing such person with the necessary authority to deal with a specific asset of the deceased's estate.
The Court has express powers, for the purpose of giving effect to a family provision order, to order: the appointment of trustees of property of the estate; the vesting in any person of property of the estate; the sale of property of the estate; and the disposal of the proceeds of any sale of property of the estate: see ss 66(1)(c), (e), (g) and (h) Succession Act; r 54.3 UCPR.
If such orders are contemplated, they would need to be made with a degree of care so as to avoid the possibility of inconsistent conduct or conflict between persons authorised by the Court to deal with the estate property, being the trustee so appointed and, of course, the executor or administrator. Such care is necessary to avoid any possible source of confusion on other persons dealing with one or other of the concurrent representatives: see, for example, Bar-Mordecai v Rotman - The Estate of the Late Eveline Hillston (Supreme Court (NSW), Bryson J, 21 July 1998, unrep) (Bar-Mordecai v Rotman) at 3.
However, the risk of conflict and confusion can be managed by defining the powers of trustees for sale of estate property and directing that the executor or administrator is not to take any steps of the kind which the trustees are permitted to take, except on further direction of the Court: e.g. Bar-Mordecai v Rotman.
As matters currently stand, the defendant in this case is the executor of the deceased's estate. The defendant's grant of probate has not been revoked. The payment has now been attended to and there is no subsisting need to make any bespoke orders to give effect to the order for provision.

Evidence

As I have outlined above, one of the particular issues in this case is that no direct information is before the Court from the banks in question, being St George and Westpac, which explains the obstacles to refinancing and reasons for delay.
Mr Gittoes' 23 May 2024 affidavit did not include any documentation, whether by email or otherwise, regarding direct contact with St George and Westpac. Rather, the correspondence annexed was between Mr Gittoes and the defendant's broker.
From the time of the first listing and progressively on each subsequent occasion that the matter was listed before the Court, it was obvious that, in the absence of any affidavit evidence recording actual communications with St George and Westpac, the Court would be unable to ascertain what the refinancing issues were. The Court would have been assisted by having some clear communication from St George or Westpac regarding those issues, as distinct from having information filtered through the medium of Mr Gittoes' communications with the broker.
One of the complaints of the plaintiff's solicitors that led to the relisting in the first place was that the information provided by Mr Gittoes was, although no doubt well-intentioned, at a high level of generality. This included assertions that Westpac was not able to sign off on the matter and that the settlement had been rescheduled. At that stage, and even up until the hearing, there was a failure to set out precisely why settlement had not occurred and what steps remained outstanding before the refinance could be finalised.
The lack of clarity became even more striking when, as I have recited above, Mr Gittoes was not (until very late in the piece) able to identify even the name of a Westpac or St George officer who was dealing with the refinance in order to enable a subpoena to be issued for such an officer to give evidence.
The result was that, at the mentions on and after 24 May 2024, the Court had no evidence from the defendant or Mr Gittoes other than the latter's communications with the broker (only) as at 23 May 2024. The Court and the plaintiff were effectively being asked to act on Mr Gittoes' assertions as to what the ongoing complications were regarding the matter.
On the listings on 24, 29 and 31 May 2024, Mr Gittoes merely provided verbal updates regarding what he understood the position to be in respect of the refinancing.
On the hearing of the balance of the relief on the plaintiff's notice of motion for the appointment of trustees to sell the estate property, there was no formal evidence from the defendant or Mr Gittoes setting out any written communication with any identifiable St George or Westpac officer or, at the very least, evidence of a discussion with such an officer which addressed, for example: (a) the reasons for the delay in refinancing; (b) the reasons for St George's alleged misapprehension of the position; (c) what remaining issues were stymieing the refinance; (d) what further steps or requirements were necessary from the perspective of St George or Westpac to effect settlement of the refinance; and (e) when that was all likely to occur.
I hasten to add that I do not suggest Mr Gittoes was at any stage in making his oral assertions doing anything other than relaying what he understood the position to be, or being anything other than what he regarded to be frank with the Court.
Nonetheless, it gave rise to a scenario where neither the plaintiff nor the Court had any direct information from the financiers. That was particularly unsatisfactory from the plaintiff's point of view.
It is a fundamental principle that in legal proceedings "all evidence is to be weighed according to the proof which it was in the power of one side to have produced, and in the power of the other to have contradicted": Blatch v Archer (1774) 1 Cowp 63 at 65; 98 ER 969 at 970 per Lord Mansfield.
Without disclosure of communications with St George or Westpac, or the provision of a name of an officer of St George or Westpac dealing with the matter, the plaintiff's solicitors were left in an invidious position of not being able to test Mr Gittoes' assertions about what was happening with the refinancing.
On some occasions, such as urgent interlocutory applications, the Court will act upon statements of legal practitioners asserting a particular factual position. That is generally, or at least often, done upon the legal practitioner warranting (expressly or otherwise) to the Court that what the legal practitioner is stating orally is to the best of the legal practitioner's honest belief, and in due course capable of being made good by admissible evidence.
Further, on a hearing, sometimes there may be a degree of leeway given for legal practitioners to inform the Court of factual matters relied upon "from the Bar table", without any formal evidence in support of them. Such leeway may be warranted where the matter recited to the Court is given with the consent of the opposing side, or is in respect of matters of which there is no genuine dispute.
However, where the Court is dealing with an application in which it is asked to make significant relief, which is not simply procedural but has a substantive element to it (such as in this case the appointment of trustees for sale of the estate property), the Court expects that probative evidence would be provided in support for and in defence against the relief sought.
Otherwise, the party for whom the legal practitioner acts faces the risk that the Court will not be satisfied of important matters which are put simply on the basis of pure assertion, and may in some circumstances draw an inference unfavourable to the party where it appears that the party fails to testify or give evidence without adequate explanation: Jones v Dunkel (1959) 101 CLR 298 at 321 per Windeyer J; [1959] HCA 8.

Obligations in making submissions

A number of Mr Gittoes' submissions yesterday were unsupported by evidence. These included referring to what had occurred prior to 11 April 2024 regarding the steps his client had taken in attempting to negotiate a settlement, the apparent errors made by St George and the details regarding his client's personal circumstances.
I have little doubt that, in the particular circumstances of the case, Mr Gittoes was attempting to advance all that he could in his client's interests in order to avoid the prospect of a trustee for sale being appointed for the estate property.
However, the proper administration of the law requires legal practitioners to refrain from making submissions that are unsupported by any evidence unless the facts are agreed or the matter is genuinely not in dispute.
If legal practitioners wish to make submissions in relation to facts that are or are likely to be disputed or contentious, but do not have available evidence to hand to support such submissions, they should either (a) not make the submissions, or (b) take some other appropriate course, such as seeking to adjourn the matter briefly to enable them to place before the Court some evidence in proper form that is capable of being tested, if need be, by the opposing party.
The above comments are intended by me to be instructive rather than critical of Mr Gittoes.

Options for funding, compliance with orders and directions to pay

In estate law, beneficiaries are generally paid or transferred property from the assets of the deceased estate in the process of the executor or administrator finalising the administration and distribution of the estate.

Permissible departures from administration according to a Will and funding estates

Estates are to be administered according to law, including, importantly, the terms of any applicable Will. Nevertheless, departures from administration according to a Will are in some instances permissible.
Sometimes, such departures are formalised. Thus, generally speaking, where the parties are all sui juris, it is open for all of the beneficiaries of the estate and the executors to agree that the estate will be administered and distributed in a way different from that which is set out in the provisions of the deceased's Will. The familiar situation of a deed of family arrangement is an example of such a contract: see Bailey v Bailey [2004] NSWSC 448 at [12] per Campbell J (as his Honour then was).
However, other departures may be less formal. Often, particularly in the period immediately following the deceased's death, some informal or ad hoc arrangements are undertaken by those interested in the estate (including family members) not "according to Hoyle". Examples include the payment of bills, maintenance of family members and funding of an estate to cover expenses whilst bank accounts are frozen: e.g. Galea v Camilleri; The Estate of Patricia Camilleri [2023] NSWSC 206 at [488]. On many occasions, such arrangements are initially welcomed or tolerated, and then later ratified, by the authorised executor or administrator. Sometimes, what starts as well-intentioned pragmatism meets its limits and arrangements do not work out well, leading to court intervention and the removal of executors: e.g. Re Franks [2021] QSC 134 at [14]-[50] per Jackson J.
On occasion, if an executor beneficiary or some other beneficiary wishes to retain certain estate property in specie, consensual arrangements may be made in order to enable that to occur so that the other beneficiaries still receive payment of the amounts of their legacies, even if there are otherwise insufficient estate assets to meet the payment of such legacies. Such arrangements may, for example, involve beneficiary A funding the estate in order to make a payment of a legacy to beneficiary B or, alternatively, making a payment directly to beneficiary B, enabling the estate to retain the desired property in specie so that it can then be distributed to beneficiary A.
In such cases, there is usually little or no quibble made by the other beneficiaries about the fact that the funds have come from an alternative source rather than out of the estate property, since as a matter of substance the beneficiary that is due to receive a legacy is still being paid an amount referable to the value of the legacy.

Executors or executor beneficiaries seeking to retain estate assets

Funding an estate to pay expenses is one thing. Funding an estate in order for an executor who is also a beneficiary to retain an estate asset is another.
In making Wills, testators may modify obligations so as to permit action that would otherwise be prohibited by reason of being a breach of a fiduciary duty: e.g. Mordecai v Mordecai (1988) 12 NSWLR 58 at 66G-67D per Hope JA. If a testator wishes to impose on a trustee a duty which is inconsistent with the pre-existing interest or duty, the trustee is not thereby debarred from accepting the trust or from performing the duties which are imposed under it: Princess Ann of Hesse v Field (1963) 80 WN (NSW) 66 at 73 per Jacobs J; G E Dal Pont, Law of Succession (3rd ed, 2021, LexisNexis) at [12.23]. An executor may, if permitted in accordance with the terms of the Will, purchase or retain estate property. Absent any such permission, such conduct would give rise to a conflict for the executor.
However, absent an empowering provision in the Will, statutory provision, consent or court order, generally there is no entitlement for an executor to appropriate property in specie and pay out claims on the property from other funds. There is no warrant, absent consent, for an executor to retain property in specie by opting to pay a legacy from alternate funds, in circumstances where the Court has ordered for the payments to be made out of the deceased's estate. This was such a case.
Ordinarily, the fact that an executor who is also a beneficiary seeks for him or herself to retain estate property which is subject to an order from the Court directing payment may constitute a prohibited self-dealing with trust property. In any event, it is a type of indulgence to that executor which should not be presumed.
Unless there is consent or an available power of appropriation, if an executor or beneficiary wishes to retain in specie the estate property which is burdened by a family provision order, there is facility under the Succession Act for the executor (or other relevant person) to apply to the Court to vary the family provision order by substituting replacement property for the property affected by the order: s 92 Succession Act; see, for example, Gillett v Nelson (No 3) [2014] NSWSC 1415 per Darke J. Such an order may only be made if the Court is satisfied that the replacement property can properly be substituted: see Xiang bht Cao v Tong [2021] NSWSC 44 at [395] per Hallen J. The power under s 92 of the Succession Act may also be used in conjunction with the Court's power under s 66 of the Succession Act: see, for example, Re Estate Buxton; Knoll v Buxton [2023] NSWSC 819 at [55], [60] and [98] per Lindsay J.
In this case, the defendant made no such substitution application. Technically, the Court's order for payment of the legacy out of the estate property has not been complied with.

Directions to pay

Separately, a solicitor who receives a direction to pay from another solicitor generally ought to comply with the direction unless there is a proper reason not to do so. Indeed, there is a specific statutory obligation to do so where the property the subject of the direction is trust moneys (other than cash): see s 142 Legal Profession Uniform Law (NSW).
The effect of a direction for payment from the plaintiff to the defendant may impact upon the plaintiff's solicitors' contractual right to hold a fund for payment of costs.
Conceivably, there may be situations in which the failure of a solicitor to comply with a direction to pay constitutes unsatisfactory professional conduct: see, for example, Russo v Legal Services Commissioner [2016] NSWCA 306.
Estate law is quintessentially an area of the law in which legal practitioners will have to deal with one another on a number of different occasions. The practice of family provision law will generally be more cordial, efficient and better serve the administration of justice when practitioners deal with one another fairly and consistently for the purposes of paying family provision, as highlighted by me in Jurak v Latham [2023] NSWSC 1318.
In the circumstances of this case, the matter has ultimately been able to be resolved. Having regard to the final email received by my Associate this afternoon, it appears that all payment issues have been resolved, including issues regarding the payment of costs.

Costs

Costs are in the discretion of the Court: s 98 Civil Procedure Act 2005 (NSW). Generally, if the Court makes any order as to costs, the Court is to order that the costs follow the event unless it appears to the Court that some other order should be made as to the whole or any part of the costs: r 42.1 UCPR.

Orders

Impressionistically, the orders proposed by the parties this afternoon are appropriate and, in all the circumstances of this case, I am prepared to make the orders sought.
The orders that I make are as follows. The Court: 1. Notes that the defendant has paid the amount owed to the plaintiff including interest today, and that by consent the defendant shall pay to the plaintiff costs in respect to the present notice of motion in the sum of $3,458.00 (including GST) as follows: 1. $584.71 which it is noted has already been paid direct to the plaintiff; and 2. $2,873.29 to the plaintiff's solicitors by 5:00 pm 6 June 2024. 1. Orders that the plaintiff's motion filed in Court on 24 May 2024 is otherwise dismissed.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 13 June 2024

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (16 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (19)