Harris Estate - Gray v Hart & Anor - [2010] NSWSC 55 - NSWSC 2010 case summary

1 Mrs Betty Harris died in September 2009 aged 93 years, leaving a very large estate. There are two wills now in contest. The first was made in July 1996 and gives the estate to the First Defendant, who is Mrs Harris' niece, and other relatives. The second will was made in April 2005 and gives the estate to Mrs Harris' neighbours, Mr and Mrs Gray. Mr Gray predeceased Mrs Harris so that Mrs Gray, now the Plaintiff, is the sole beneficiary under the second will. 2 The Plaintiff seeks probate of the second will, saying that the first will was validly revoked by the second will. The Defendants seek probate of the first will saying that Mrs Harris lacked testamentary capacity at the time of the second will. Each side has filed a Notice of Motion for the appointment under s 73(1)(a) of the Probate and Administration Act 1898 (NSW) of an administrator of the estate pending determination of the contest as to which of the two wills is valid. The only difference between the parties is as to the identity of the administrator to be appointed. 3 The Defendants seek the appointment of Mr D Swindells. Mr Swindells is a chartered accountant. On 3 February 2005 he was appointed by the Guardianship Tribunal as the financial manager for Mrs Harris under the Guardianship Act 1987 (NSW). The application for a financial management order was made by Mrs Coralie Hart, who is a beneficiary under the first will. Mr Swindells is Mrs Hart's son-in-law. Mr Swindells continued to manage Mrs Harris' financial affairs until her death. He has a good knowledge of her financial affairs. 4 The Plaintiff opposes the Defendants' application and seeks the appointment as administrator of some other person, suitably qualified and independent. The Plaintiff says that Mr Swindells has not been, and will not be, independent in the administration of the estate and that before and after Mrs Harris' death he, as financial manager, engaged in transactions on behalf of the estate which are, at the least, questionable as to their propriety. 5 This is not the occasion to investigate and make a finding as to whether Mr Swindells has exercised his power as financial manager properly. All that I need say is that there are some matters which on their face give rise to understandable concern on the part of the Plaintiff. 6 First, there is no question but that Mr Swindells is allied in sympathy with the interests of the Defendants in these proceedings. He has conceded that, based on his own observations of Mrs Harris before her death, he regards the will in favour of the Plaintiff as invalid and he supports the will in favour of his mother-in-law. 7 Second, during his financial management of Mrs Harris' affairs, Mr Swindells permitted his wife and daughter to have a credit card which operated on Mrs Harris' bank account. Mr Swindells says that this was purely a matter of convenience as his wife and daughter assisted him by making purchases of goods and services for the benefit of Mrs Harris. I do not need to say more at this stage than that many of the purchases made by Mr Swindells' wife and daughter on their face raise understandable suspicion as to whether the goods and services purchased were really for the benefit of Mrs Harris. This is not the kind of question which Mr Swindells ought to have permitted to arise in the financial management of Mrs Harris' estate. 8 Third, Mr Swindells has permitted his daughter to live in Mrs Harris' property rent-free since Mrs Harris' death. He says that the property is untenantable by reason of a lack of repair and that his daughter and her partner are merely keeping the property safe from vandalism. That may well be so but the proximity of the relationship between Mr Swindells and the tenant of the property may have coloured his attitude to letting it out at a commercial rent. Again, this is not the sort of question which Mr Swindells ought to have permitted to arise. 9 Fourth, it is obvious that there is a considerable degree of hostility between the Plaintiff on the one hand and the Defendants on the other. As I have noted, Mr Swindells is aligned in interest with the Defendants, both by marriage and in sympathy. There will inevitably be hostility and dispute between him and the Plaintiff if he is given administration of the estate pending determination of the proceedings. 10 In an application for the appointment of an administrator pending determination of a contest as to the validity of wills, the Court will not, as a general practice, appoint a party to the proceedings unless all parties consent: see, for example, De Chatelain v De Pontigny (1859) 164 ER 616. Mr Swindells is not a party, but he is close enough in interest to the First Defendant for the same consideration to apply. The reason for the practice is obvious. If the estate is in contest between beneficiaries under competing wills, there will often be mutual distrust and hostility in the administration of the estate if one of the contestants, or a person apparently biased towards one of them, is appointed administrator. That circumstance will often generate needless litigation to the detriment of the estate. That is why the Court generally prefers an administrator independent of both sides in the dispute: see, for example, Stratham v Ford (1754) 161 ER 260; Young v Brown (1827) 162 ER 504 and Shorter v Shorter [1911] P 184. 11 This case demonstrates the soundness of the general practice: some independent person should be appointed as administrator of the estate. 12 In arriving at that conclusion I have not overlooked the fact that Mr Swindells is acquainted with the financial affairs of Mrs Harris' estate, having managed it for some years, and that there will inevitably be some costs incurred in another person acquainting himself or herself with the affairs of the estate. However, the affairs of the estate are not complicated and those costs will not be great. Certainly, they will be vastly less than the costs of litigation which may very well arise between the Plaintiff and Mr Swindells should he be appointed administrator. 13 In those circumstances I decline to appoint Mr Swindells as administrator of the estate. 14 The Plaintiff has in the first instance put forward a trustee company to act as administrator but the information to hand suggests that the fees to be charged by a trustee company, which are a percentage of the value of the estate, will be inordinately large, having regard to the actual work which must be done. 15 The Plaintiff now suggests an accountant who previously acted for Mrs Harris but ceased to do so some years before her death. I do not think that it is appropriate to appoint that accountant, because a nominee of the Plaintiff is likely to encounter the same degree of hostility from the Defendants as a nominee of the Defendants will attract from the Plaintiff. I think that the person to be appointed should be truly independent of both sides. The parties should have an opportunity of conferring to see if a suitably qualified person is acceptable to both sides. 16 I will stand over the applications in that regard until the formal appointment of a person agreed by both sides to be the administrator of the estate. If there is no agreement, each side will put forward a list of nominees and the Court will then select the nominee to be appointed. Costs

17 It was obviously necessary to have an administrator appointed pending determination of this suit. I have declined to appoint Mr Swindells because of questions raised about his partiality and his conduct. I have said that it is not appropriate at a hearing such as this to investigate the substance of those questions. It has been sufficient to note them for the purposes of arriving at a decision based upon the practice to which I have referred. 18 It may be said that the Defendants ought to have appreciated that the usual practice of the Court is not to appoint as administrator either a party to the suit or one who is clearly aligned with the interests of a party, as is Mr Swindells in this case. However, as I have also said, it is not an invariable rule and there were legitimate concerns on the part of the Defendants that the appointment of somebody unfamiliar with Mrs Harris' affairs might add an additional financial burden to the estate. There was much to be said on both sides and I have given a decision in the interests of the management of the estate as a whole. 19 The necessity for the appointment of an administrator arises, of course, from the fact that there are in contest two wills. It seems to me that the costs of these applications are, in terms of the merits at least, bound up in the merits of the ultimate issues for trial. It would be unfair to visit upon the Defendants the costs of an application to appoint an administrator if it turns out in the end that the second will is invalid and ought never to have been propounded. Similarly, it would be unfair to burden the Plaintiff with the costs if it turns out that the second will was valid. 20 For those reasons I do not think it is appropriate to make a separate costs order in relation to these two applications. I think that their costs should abide the result of the proceedings. 21 Costs of both applications are therefore reserved.

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Harris Estate - Gray v Hart & Anor

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