Gibson v Buchanan

Gibson v Buchanan - [2004] NSWSC 957 - NSWSC 2004 case summary — Zoe

1 The Plaintiff, Ms Gibson, seeks an order under s.66 of the Wills Probate and Administration Act 1898 (NSW) revoking the grant to the Defendant, Ms Buchanan, of substituted Letters of Administration of the estate of the late William Joseph Alexander Veney ("WJV") made on 10 September 1999. 2 Ms Gibson claims that Ms Buchanan should be removed as administrator because she has neglected or omitted to carry out the administration of the estate with due expedition and because she has, in the administration of the estate, preferred her own interest or the interest of her father, Roy William Veney, to her duties as an administrator. 3 The circumstances in which Ms Buchanan came to be appointed an administrator of the estate of WJV and the activities required in the administration of that estate are extraordinarily complex. Ms Buchanan has described them as an absolute nightmare. I do not think that that is too strong a description, as the merest glance at the family tree, which has been prepared for the purpose of administering the estate, shows. 4 As at the date of grant of the Letters of Administration to Ms Buchanan, there were five unadministered estates to be investigated, one of them going back to 1945. Those estates involved some seventeen different properties, all of which required investigation. For the purposes of this application, I need give no more than a brief summary of the difficulties involved in the administration. 5 The family tree commences with William "The Saddler" Veney ("William") and Emily Letitia Veney ("Emily"), the parents of WJV and George Christopher Veney ("George"). For the sake of comprehensibility, and without disrespect, I will refer to members of the family by abbreviations or their forenames. 6 Emily died on 12 October 1945 and Probate of her will was granted to WJV and George, her sons. Emily had an interest in two properties at Alexandria and Randwick. William died on 5 August 1955. He had an interest in another property at Alexandria. WJV and George took interests in these three properties under the wills of their parents. 7 WJV died intestate on 18 July 1968 not having completed the administration of Emily's estate. He had property in his own name and interests in the unadministered estates of Emily and William. Letters of administration of WJV's estate were granted to George. 8 George died intestate on 1 August 1986 not having completed administration either of Emily's estate or WJV's estate. George had property in his own name and interest in the unadministered estates of Emily, William and WJV. Probate of George's will was granted to his widow, Bessie May Veney ("Bessie"). 9 WJV's widow, Gladys Estelle Veney ("Gladys"), died on 2 March 1970. Ms Gibson, Gladys' niece and sole beneficiary, was granted Probate of Gladys' will. Gladys, of course, was a beneficiary of WJV's estate on intestacy. 10 George's widow, Bessie, died on 12 July 1992 not having completed the administration of George's estate. Bessie owned property in her own name and had interests in the unadministered estate of George, who had in turn interests in the unadministered estates of Emily, William and WJV. 11 The beneficiaries of Bessie's estate were Roy William Veney ("Roy") - Ms Buchanan's father - and Ken George Veney ("Ken"), each of whom therefore had interests in the unadministered estates of Emily, William, WJV, George and Bessie. 12 Ken died on 20 September 1997 and Probate of his will was granted to his sole beneficiary, his widow, Nola. 13 As executor of Bessie's estate, Ms Buchanan had to investigate the assets and interests in these estates. In the course of her investigations, she discovered that WJV had died possessed of real estate assets which were unknown to Ms Gibson as executor of the estate of WJV's widow, Gladys. Because the administration of Bessie's estate was inextricably intertwined with the administration of WJV's estate, Ms Buchanan sought and was granted Letters of Administration of WJV's estate on 10 September 1999. 14 Ms Gibson's complaint of inexcusable delay on the part of Ms Buchanan in administering WJV's estate now focuses on four matters, although, properly speaking, they may be compressed under two headings. 15 First, Ms Gibson says that distribution from WJV's estate has been inexcusably delayed by the dilatory fashion in which Ms Buchanan and her solicitors have dealt with a foreshadowed claim against the estate by Ms Buchanan's father, Roy. 16 Second, Ms Gibson says that in dealing with her father's claim, or foreshadowed claim against the estate, Ms Buchanan has endeavoured to advance that claim at the expense of the estate, and this in itself has lead to unjustifiable delay in administration. 17 Third, Ms Gibson says that Ms Buchanan has failed to ascertain with due expedition the capital gains tax liability which attaches to real property which she has sold in the course of administering WJV's estate. 18 Fourth, Ms Gibson says that Ms Buchanan has manifested an intention to neglect her duties as administrator by selling a property at Sussex Inlet which was an asset of WJV's estate before she had actually obtained administration of that estate. 19 The principles upon which the Court acts in determining whether to remove an executor or administrator of an estate are well known and require no further elaboration. They are discussed in cases such as Mavrideros v Mack (1998) 45 NSWLR 80 and Bates v Messner (1967) 67 SR NSW 187. 20 For the purposes of this case, I need only refer to the principles set out in Mavrideros v Mack as follows: "In exercising the discretion to revoke a grant of probate, the question is whether the due and proper administration of an estate has been put in jeopardy or has been prevented by acts or omissions of the executor, or by matters personal to the executor, or by other matters establishing that the executor is not a fit and proper person to carry out the duties that the executor has sworn to perform." 21 At the heart of the exercise of the discretion, of course, is the protection of the interests of the estate and those entitled to benefit from it. I turn now to examine the circumstances relevant to the various complaints made by Ms Gibson. 22 The circumstances relevant to the claim against the estate foreshadowed by Roy may be summarised thus. On 14 March 2001 Ms Buchanan's solicitors wrote to Ms Gibson's solicitors advising that Roy intended to make a claim against the estate. This had been foreshadowed in earlier correspondence between the parties and their solicitors. Roy had had separate solicitors acting for him and they had also been in communication with Ms Buchanan's solicitors. 23 In the letter of 14 March 2001, Ms Buchanan's solicitors said that in the light of the claims that had been made by Roy and the fact that there was evidence to corroborate the alleged agreement between George and Gladys: "… the prudent thing to do is to hold back any possible entitlement Shirley Gladys Gibson may have in the estates until the issues have been resolved by Court or by agreement. As the estate funds are invested your client will not be prejudiced by any brief delay." 24 I should add that the claim foreshadowed by Roy was a claim that Gladys had agreed to give up her interest in the estate of WJV. If that claim had succeeded then of course Ms Gibson, as beneficiary of Gladys's estate, could have no claim against the estate of WJV. 25 On 19 March 2001, the solicitors for Roy wrote to Ms Gibson's solicitors confirming that they had requested Ms Buchanan's solicitors to refrain from distributing funds in the estate to Ms Gibson pending resolution of proceedings in the Supreme Court which Roy intended to commence. The solicitors suggested the advisability of some family compromise. 26 The solicitors for the parties corresponded backwards and forwards enquiring as to whether Roy intended to commence proceedings. For example, on 8 May 2001 Roy's solicitors wrote to Ms Buchanan's solicitors advising that counsel had been instructed to draw documents to be filed in Court seeking the relief which Roy claimed. By letter dated 27 July 2001, Ms Buchanan's solicitors advised Ms Gibson's solicitors that, according to the advice of Senior Counsel, the estate should not be distributed until Roy's claims against it had been litigated. 27 On 10 September 2001 Ms Buchanan's solicitors wrote to Roy's solicitors noting that Roy had not yet commenced proceedings to vindicate the claim which he was making against the estate. They noted that the distribution of the estate was impeded and prevented pending resolution of Roy's claims and concluded: "In the circumstances we must put you on notice that unless proceedings have been commenced within 14 days from the date of this letter, we will seek instructions to once and for all distribute the remainder of the estate." 28 On 29 November 2001, Ms Buchanan's solicitors wrote to Ms Gibson's solicitors noting that Roy was contesting the entitlement of Ms Gibson to benefit from the estate of WJV and suggested that Roy's claim might be resolved if he were to be compensated for: "His significant efforts over many years in maintaining the various properties that comprise the estate."

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Some examples of the work said to have been done by Roy justifying such compensation were given and a response to the suggestion was invited. 29 By letter dated 19 December 2001, Ms Gibson's solicitors responded, rejecting any proposal for the payment of any money out of the estate to Roy. Nothing seems to have been done thereafter until the commencement of these proceedings by Ms Gibson by Statement of Claim filed on 14 March 2002. There was correspondence after the commencement of the proceedings in which the solicitors for Ms Buchanan advised Ms Gibson's solicitors that the final properties remaining to be sold in the estates had now been sold, the claim by Roy had been resolved, and that the solicitors were instructing an accountant to carry out an accounting of the various estate properties and expenses. It was said that some two years of accounting must now be done so that the final amounts owing to the beneficiaries could be ascertained. 30 The only other matter which was referred to in the letter from Ms Buchanan's solicitors to Ms Gibson's solicitors on 21 March 2002 was a claim by Ms Buchanan for executor's commission. An inquiry was made as to whether Ms Gibson would be willing to reach an agreement on executor's commission in order to avoid an application to the Court. By letter dated 9 April 2002 Ms Gibson's solicitors responded saying that Ms Gibson was "not agreeable to reaching an agreement in respect of executor's commission" . 31 For some time after the proceedings were commenced, the solicitors for Ms Buchanan expressly indicated that they did not require a Defence to be filed in the hope that there could be a distribution from the estate shortly or that outstanding issues would be capable of resolution. However, distribution from the estate was not as expeditious as Ms Gibson hoped. 32 There were, according to Ms Buchanan, considerable difficulties in preparing accounts for the estates bearing in mind the number of unadministered estates involved, the time over which those estates had been dealt with by other persons, and the complexity of the issues relating to the properties. The accounting had been placed in the hands of an accountant who had promised accounts by 7 March 2003. In those circumstances, the proceedings were re-enlivened and Ms Gibson has pressed for the removal of Ms Buchanan. 33 It does not seem to me that it has been demonstrated that administration of the estate of WJV has been unreasonably delayed because of delays in resolving the claim foreshadowed against the estate by Ms Buchanan's father. 34 It is quite obvious that Roy conceived there to be a substantial claim against the estate, that he engaged separate solicitors who advanced that claim to Ms Buchanan's solicitors, that that claim was made known to Ms Gibson's solicitors, and that the effect of the claim, if successful, would be to bar any right of recovery out of the estate by Ms Gibson. It is clear also that in dealing with that claim as she did, Ms Buchanan was guided not only by the advice of her solicitors but by the advice of Senior Counsel. 35 Bearing in mind that the administration of these various estates has occupied a considerable period of time, many years in fact, I do not think that the time taken to resolve the claim against the estate foreshadowed by Roy was an inordinately long time. The circumstances requiring investigation were obviously somewhat distant in time and obscure and it would have taken some time on the part both of Roy's solicitors and of Ms Buchanan's solicitors to gain a clear picture of the facts of the claim and its prospects of success. There is no history of failure on the part of Ms Buchanan's solicitors to answer correspondence when Ms Gibson's solicitors made enquiry as to the progress of resolution of Roy's claim. 36 It seems to me that there is nothing demonstrated in the period of time taken between the formal notification by Roy's solicitors to the solicitors for Ms Buchanan in March 2001 of a request to refrain from distribution of the estate and the commencement of proceedings by Ms Gibson in March 2002 such as to lead to the conclusion that Ms Buchanan has been delaying inexcusably in dealing with this claim, particularly in light of the fact that there are clearly very many other matters with which she has had to deal as administrator of the estates with which she is concerned. 37 I come now to whether Ms Buchanan has evidenced some partiality in the way in which she has dealt with the claim by her father against the estate. 38 I do not think that partiality emerges from the correspondence or may be inferred from the length of time taken to deal with her father's claim. As have I said, her solicitors wrote on a number of occasions to Roy's solicitors enquiring as to Roy's intentions and I do not think it can be said that she let the matter go to sleep. While it is true that Ms Buchanan's solicitors suggested that Roy's claims against the estate might be compromised by an agreement to pay him something out of the estate in respect of work he had done for the benefit of the subject properties, I do not think that this was anything more than an attempt to resolve the disputes quickly by a compromise rather than by any litigation or further delay until the whole position could be clarified. Certainly there does not seem to have been any resolute insistence on the part of Ms Buchanan that the estate should pay Roy some amount for compensation for his effort in the estate's interest. The proposal having been rejected by Ms Gibson, it does not seem thereafter to have figured in any way in causing any delay in distribution. 39 I deal now with the complaint relating to capital gains tax. It is said that Ms Buchanan has neglected over an inordinately lengthy period of time to obtain or ascertain information as to the tax liability of the estate in respect of the properties which she has realised. I bear in mind again that the administration of the estate, the identification of interests in properties, indeed the very identification of properties themselves, has been clearly a complex, difficult and time consuming exercise. 40 It is now some five years since Ms Buchanan was appointed as administrator of WJV's estate but, having regard to her affidavit evidence and having regard to the number of properties with which she has had to be concerned, I do not find it at all surprising that it has taken her and her accountant a considerable time to prepare sufficient information to submit tax returns and thus identify capital gains tax liability. I am informed that it was only last week that the relevant tax returns were lodged on behalf of the estate. They numbered thirty-eight, and I think that indicates the difficulty and the complexity of the task which confronted the accountant preparing those returns. 41 There is no suggestion that the accountant who undertook the work on the instructions of Ms Buchanan was not competent to do so. There is no evidence of any particular instance of default or any particular instance of neglect or delay in relation to any one of the properties in respect of which liability had to be ascertained. There is, in short, nothing more than a complaint that the administration of the estate in relation to ascertainment of tax liability has taken too long, but of course "too long" is an expression that obtains its content from the particular circumstances of each case. What might be far too long in a very simple estate may be very expeditious in a far more complex and difficult estate. I think that administration of this estate falls into the category of complex and difficult. 42 I am not satisfied that any inordinate delay has been occasioned in the administration of the estate by anything done or omitted to be done by Ms Buchanan in respect of ascertainment of tax liability. 43 Finally, I come to the complaint that Ms Buchanan has in some way manifested an intention to be negligent in her duty by selling a property at Sussex Inlet without her having formally been appointed administrator of WJV's estate. I must say, I am really not able to understand how this accusation is an accusation of neglect. If anything, it shows that Ms Buchanan has been a little more anxious than she perhaps should have been in attempting to finalise the affairs of the estate. 44 There is no suggestion generally that Ms Buchanan has failed to account properly for the proceeds of sale or realisation of any of the assets which she has been administering. She has, at all times, had the benefit of the assistance of solicitors, counsel and accountants and nothing in the evidence suggests that there has been any untoward dealing with any of the assets of the estate. 45 Finally, bearing in mind that the tax liabilities have now been ascertained and that the disputes between the estate and Roy seem to have been concluded, there is nothing further to be done in the estate than that the estates' accounts be passed and the claim for executor's commission by Ms Buchanan be resolved. Those are matters really within the control of the Court. Once they are attended to, then the estate may finally be distributed. 46 Even if there had been some matter of concern in Ms Buchanan's administration of the estate, I would have hesitated considerably in replacing her at this late stage of the administration, bearing in mind that the appointment of a replacement would inevitably have cost the estate further expense. 47 In summary, it seems to me that no ground has been shown for the removal of Ms Buchanan. There will be judgment therefore for the Defendant on the Plaintiff's Amended Statement of Claim. (Counsel addressed on the issue of costs.) 48 Mr Gorrick, who appears for the Plaintiff, submits that the usual costs order should not be made because, at least on the information available to the Plaintiff at the time of commencement of these proceedings, there seemed to be good ground for these proceedings to be brought and the Defendant has had the benefit of time and, perhaps, the prodding of these proceedings in order to bring the administration of the estate near to completion. 49 It seems to me that the bringing of these proceedings by the Plaintiff has been understandable, in a sense. The administration of these estates has taken what must seem an extraordinary long time to a bystander unacquainted with the complexity of administration. However, when one knows a great deal more about the difficulties which confronted the Defendant, one can understand that, as I have said in the judgment, there has been no culpable or inordinate delay on the part of the Defendant. Indeed, if I may say so, it seems to me that the Defendant has demonstrated commendable industry and thoroughness in undertaking the very difficult exercise of sorting out the problems of this family in terms of administering estates which have gone unadministered for generations. I do not think that anything has been shown which should deprive the Defendant of the benefit of the usual costs orders. 50 The orders will therefore be: judgment for the Defendant on the Plaintiff's Amended Statement of Claim. 51 The Plaintiff is to pay the Defendant's costs of the proceedings. 52 Exhibits may be returned. - oOo -

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