Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis

Ian Davis as Executor of the Estate 6In its principal judgment the Court made a number of findings about the quality of the administration of the estate of the late John Joseph Davis. As a result of those findings the Court said, "the Court's findings raise questions as to whether Ian Davis should continue as the executor of the Estate. The Court calls for further submissions from both sides about that question": Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [109]. The Court received further submissions about that subject from Ian in the course of the hearing. But it was potentially procedurally unfair to Ian, to make any determination about his continuation as executor of the Estate, without him having a further opportunity to put submissions to the Court as to why he should continue, in light of the Court's findings. 7The position taken by each of the parties on this issue may be shortly stated. Ian, the executor, was clear that he, as he put it, "should remain as the executor of my dad's estate". In summary Ian said: (1) the deceased wished him to be the executor because he trusted and believed in Ian; (2) he says he was not given a fair chance to defend himself in the Court process and has sought to advance further evidence that he did apply for housing for Robyn and himself through the Department of Housing in July 2009; (3) that things have changed because he has had a girlfriend assisting him since the end of last year, to help him administer the will as the Court ordered so that there would be no more costs to the estate; and, (4) personally the last year has been very difficult for him because Robyn, with whom he was very close, has now been taken away from him. Ian's submission is supported by a short statement by Ms Jeanette Fraser, who was assisting Mr Ian Davis in Court; she speaks clearly about how difficult this process has been for him. 8Graham Davis submits that the grant of probate to Ian should be revoked. He submits that the executor has occupied rent-free the Cordeaux Road property, the only substantial asset of the estate; has taken no apparent steps to sell it to satisfy the terms of the will; has recorded the powers of the executor as powers to be exercised in his own personal interests rather than in the interests of the estate; and that this is likely to continue to the prejudice of the beneficiaries unless the grant of probate to Graham is revoked.

The Legal Test to be Applied 9The relevant legal principles may be concisely stated. The Court has inherent jurisdiction to revoke the grant of probate: Bates v Messner (1966) 67 SR (NSW) 187 and In the Goods of Loveday [1900] P 154 at 156. In exercising this jurisdiction the question is "whether the due and proper administration of an estate had either been put in jeopardy or had been prevented either by reason of acts or omissions on the part of the executor or by virtue by matters personal to him, for example, mental infirmity, ill health or by virtue of the proof of other matters which established that the executor was not a fit and proper person to carry out the duties he had sworn to perform: Mavrideros v Mack (1998) 45 NSWLR 80 at 108 per Sheller JA. It is always appropriate and necessary for a Court, when asked to exercise this jurisdiction, to have regard to the testator's wishes as to the identity of an executor or a trustee and the overriding assumption must be that the testator thought the person chosen was worthy of trust "even when well aware when making a choice of existing hostility [from family members] towards the chosen executor or trustee, or of other grounds for doubt about the wisdom of the choice": Baldwin v Greenland (2007) 1 Qd R 117 at 129-130. A mere conflict of interest in duty will not result in restraint or removal of a personal representative; it must be shown that the personal representative prefers interest to duty, and intends to neglect duty: Morgan v MacRae [2001] NSWSC 1017 at [25] and Upton v Downie [2007] NSWSC 1095. 10The application of those principles to the Court's findings in this case justify the revocation of the grant of probate and the appointment of a new executor, for several reasons. 11Ian has failed to discharge the ordinary functions expected of an executor who has taken probate which have prevented the due and proper administration of the estate which established that the executor is not a fit and proper person to carry out his executorial duties. In reaching this conclusion the Court does not rely upon its findings about Ian Davis' physical care of Robyn being less than ideal: Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [28]. Ian's personal care of Robyn was not required under the will and is not an executorial duty. But nevertheless in caring for Robyn Ian has placed himself in the fiduciary position of looking after her financial affairs. His adminstration of her financial affairs is something which the Court can take into account. The principal problems are the following. 12The executor has failed to sell the Cordeaux Road property for many years. He did not have a satisfactory explanation for his delay: cf Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [89] to [92]. In my view this delay will continue whilst Ian remains executor of the estate. This delay in sale has indirectly led to the dispute about Ian paying an occupation fee which now has had to be resolved by litigation: cf Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [93] to [95]. The evidence that Ian now advances about applying to be placed on the Housing Register of the New South Wales Department of Housing (Exhibit A) does not explain why he made no effort to sell the Cordeaux Road property. His attitude seems to be that the other residuary beneficiaries of the estate should be expected to wait for their distributions until at some uncertain future time Ian Davis received an answer to his housing application in July 2009. It would be to his financial disadvantage not to have to rent accommodation after selling Cordeuax Road, but before this housing application came through. But he would have had to at least offer to pay such rent to avoid preferring his own interests over that of the other beneficiaries on this issue. 13The executor has not kept any estate accounts. He has not separated the estate's money from his own money. There is no evidence that he has even done any kind of quarantining of the estate's financial affairs from those of his own, however informally. Despite many years now passing after the death of the deceased, a period affording many opportunities to Ian to create some estate accounts, nothing has been produced. Production of estate accounts would have had the indirect effect of perhaps prompting Ian Davis to think about his own financial obligations to the estate arising from the occupation of the Cordeaux Road property and avoiding the expense of litigation for the estate: cf Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [93] to [95]. But in my view accounts will not be produced for this estate whilst Ian remains its executor. 14Ian Davis has long administered his sister Robyn's financial affairs. But he has done so without ever separating her financial interests from his: cf Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at 97] to [104]. The result is that she has no accumulated capital at this stage in her life, when her capital needs a high. This problem has now being cured by the making of the guardianship and financial management orders for Robyn. But in my view Ian will mix his own financial affairs with those of the estate if he remains as executor. 15Finally, Ian's attitude is one of doing as he pleases with respect to the estate. He interprets clause 5 of the will as permitting him to do whatever he likes for as long as he likes in respect to the administration of the estate: cf Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [11]. It is true that the will clause 5(c) contains a classic clause that the executor has the power "to invest and change investments freely as if he was beneficially entitled and this power includes the right to invest in property for occupation or use by a beneficiary". But clauses such as this do not mean that the interests of beneficiaries can be ignored, which is the way that Ian seems to interpret it: Trustee Act 1925(NSW), ss 14 and 14B; Riddle v Riddle (1952) 85 CLR 202 at 214 per Dixon J; Byrnes v Kendle (2011) 279 ALR 212 at [119] per Kydon and Crennan JJ; X v A (2001) 1 All ER 490 at 494 and 495 per Aiden J. But in my view, Ian will not take appropriate legal or other advice about the administration of the estate, whilst he remains as its executor. 16For all these reasons the Court concludes that Mr Ian Davis is not a fit and proper person to carry out the duties as an executor of the estate of his late father that he was sworn to perform. I will revoke the grant of probate to him. The question now arises as to who should be appointed to replace him.

A New Personal Representative 17There is now an issue about who should replace Ian Davis as the deceased's personal representative. Graham says that he should be appointed. Ian has put submissions against that. Graham's submission does not have the advantage of being supported by the deceased's own preference. But it does have the advantage that his appointment would minimise future costs to the estate. 18But there is another disadvantage with Graham's appointment. There was obviously hostility within the family arising out of the estate's administration to date together with a degree of mutual suspicion about how Robyn's personal and financial and personal affairs had been managed. In my view, the appointment of Graham would simply perpetuate these hostilities, which would have the effect of further slowing down the administration of the estate, the administration which has already been much delayed. 19Who then should be appointed? Neither side advanced any suggestion other than Graham being appointed. In my view, the best course is for the Court to appoint the NSW Trustee, who is empowered to act in this role: NSW Trustee and Guardianship Act 2009 (NSW), s 22. 20The appointment of the NSW Trustee will ensure that the estate is independently administered, free of the personal hostilities which have characterised dealings between the estate and the beneficiaries so far. 21The charges of the NSW Trustee are set by the NSW Parliament. On an estate of this size, in excess of $300,000, the NSW Trustee charges 4.4 per cent on the first $100,000, 3.3 per cent on the next $100,000, 2.2 per cent on the next $100,000 and 1.1 per cent on all amounts above $300,000 comprising the gross value of the assets in the name of the deceased. These fees will average a little over 3.1 per cent of the estate's value, or about $10,175. In addition to that there are other smaller account keeping fees and hourly charges and disbursement charges. Many of these fees would be incurred by lawyers charging professional fees to assist the executor in any event. The imposition of these fees may be the price of producing efficiency and certainty to the administration of this estate. 22Robyn's situation as a beneficiary of the estate is another factor which inclines the Court to appointment of the NSW Trustee. She cannot afford to have any more instability. Decisions may need to be made in a co-operative environment for the rapid acceleration of some of the capital to which she is entitled as a result of the orders in the Family Provision Act proceedings. Such co-operation is less likely to be forthcoming if Graham is appointed in contrast to the NSW Trustee. For all these reasons the NSW Trustee and Guardian should be appointed to administer the estate. A copy of these reasons will be forwarded to the NSW Trustee. 23Probate will be revoked. The estate is in effect unadministered only one set of preliminary accounts was filed when Ian applied for probate. The proper form of order in such cases has been considered in a number of cases: cf In the Goods of Galbraith [1951] P422; In the Estate of George Hardy (deceased) [1957] 1 NSWR 638 and Morgan v MacRae [2001] NSWSC 1017, and see also McKerracher v McKerracher [2011] NSWSC 1288. The appropriate form of grant if of one of administration of the estate cum testamento annexo and de bonis non. The usual ancillary orders in such circumstance are for the filing of estate accounts and for the vesting of estate property in the name of the administrator. Here as there is a new personal representative coming in, and in whom the Court has confidence the Registrar will be in the best position to make orders for the timing of the filing of estate accounts. 24I will therefore grant liberty to apply in the event that there are any other ancillary orders that the NSW Trustee seeks in these proceedings. Supplementary vesting orders may need to be made if it emerges there is any estate property other than the Cordeaux Road property. 25The Court has indicated a willingness to make an order in respect of the sale of the Cordeaux Road property. But the Court will not make that order at this stage. Now that probate has been revoked and a grant of administration will be made to the NSW Trustee, it can be expected there should be no issue about the timely and efficient sale of the Cordeaux Road property. In those circumstances it may be better to not make such an order but to grant liberty to apply to the NSW Trustee. That is the course that I propose to take.

Costs and Other Issues 26In the principal judgment the Court indicated that it would order that the estate pay Graham's costs of the administration proceedings. But the Court deferred a decision as to whether those costs or some portion of them should be borne by Ian until the quantum of Graham's costs was made clear: cf Graham Davis v Ian Andrew Davis; Robyn Davis by Her Tutor Sandra Arnold v Ian Andrew Davis as the executor of the estate of the late John Joseph Davis [2012] NSWSC 201 at [107]. The Court is not prepared to make an unlimited order for Graham's costs to be borne by Ian alone, until those costs are quantified. Accordingly, the Court will make directions for Graham to notify the NSW Trustee on behalf of the estate of the quantum of those costs and for what is payable to be agreed or assessed. The Court will then make a determination of what proportion of Graham's costs, if any, will borne by Ian, upon further application. Making an order of this kind before knowing what is the quantum of the costs, may work considerable unfairness among the parties.

Orders 27Accordingly, the Court makes the following orders and directions:- 1.revoke the 24 March 2009 grant to Ian Davis of probate of the estate of the late John Joseph Davis ("the estate"); 2.order that the NSW Trustee be granted letters of administration of the estate cum testamento annexo and de bonis non; 3.refer the proceedings to the Registrar to complete the grant of letters of administration to the NSW Trustee and to make directions for the filing of estate accounts; 4.order that the Cordeaux Road property (as defined in this and the Court's principal judgment) vest in the NSW Trustee; 5.order that the estate pay Graham's costs of the administration proceedings, as agreed or assessed; 6.direct that on or before Friday, 8 June 2012 Graham provide to the estate an estimate of his reasonable legal costs and disbursements of the administration proceedings; 7.grant liberty to apply, in respect of making any further orders as to what part of the estate shall bear the liability to pay Graham's costs of the administration proceedings, in respect of any issue about the sale of the Cordeaux Road property, in respect of any further vesting orders that may be required; and, in respect of other matters necessary to implement these orders; 8.order Ian Davis to bear his own costs of the administration proceedings; 9.grant general liberty to apply to the NSW Trustee; 10.order that the administration proceedings be 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: 18 May 2012