I am of the view that the fact that the records of the administration (on which the procedure for the taking of an account would have to be based) are in large part no longer available to the defendant and the very real possibility that the exercise itself would be futile, taken together with the circumstances that this is a small estate (of a kind in which, since shortly after the grant of letters of administration in 1981, there would not have been such an obligation as a matter of general course, presumably reflecting a recognition as to the need or utility for such a process in the ordinary turn of events) and that the administration of the estate (involving, as it did, the payment out by the administrator personally of liabilities both of the estate and of the deceased's widow as to which it does not appear that any objection was made at the time by the plaintiffs and who, insofar as Michael is any indication, were concerned to protect their mother's position and her ability to remain in the family home) was dealt with by the administrator on the basis of an incorrect understanding as to his obligations in relation to the filing of accounts; that the failure to file accounts was not the subject of formal complaint until some 22 years after the administration commenced; and that I have real doubt as to the utility of such a process given the limitations on the accounting records available for that purpose, are such that in the exercise of my discretion I think it appropriate to decline to grant the relief sought and to dismiss the plaintiffs' application with costs.
I gave some thought to whether, in balancing the interests of all the parties, it would be appropriate to order the filing of accounts simply by the filing of the draft forensic accountants' report, without requiring the usual process of verification of accounts to take place, in order to permit an assessment to be made as to whether the draft report was (as the plaintiffs contend) sufficient to enable the appropriate court officer to 'get to the bottom of the estate affairs'. However, on its face the report was no more than a draft 'for discussion purposes' and was based on a number of stated assumptions, themselves not verified or agreed between the parties. The forensic accountants raised various issues in respect of which instructions would have been necessary to take matters further. I have difficulty in seeing how, even 'armed with such a report', a meaningful determination of the accounts could ensue. Insofar as the forensic accountants' draft apparently represented just such an attempt (by consent between the parties) to verify the accounts of the administration, it would seem that the attempt was singularly unsuccessful. There is no reason to think that a court officer armed with such information would now be placed in any better position to complete such a task.
I do not see it as consistent with the mandate imposed on me under s 56 of the Civil Procedure Act 2005 (NSW) to permit the use of court time and resources simply to provide the plaintiffs with the 'satisfaction' that the 'protocols' have been observed (particularly when they have waited an inordinate time to seek that satisfaction). (Had I been of the view that it was appropriate for relief of the kind sought in these proceedings to be granted, in the more limited fashion indicated above, I would have ordered that the process of taking the accounts be at the plaintiffs' expense.)
Facts
16 Vaclav Hons died on 8 April 1980 and was survived by his wife, Mrs Hana Hons, and their six children. (Hana has resided overseas since around 1999/2000 and is not a party to these proceedings.) Under the deceased's will, his estate was left to his widow and their six children in equal shares. At the time Vaclav died, three of the six children were still dependents. Hana renounced probate. Alexander sought and obtained a grant of letters of administration with the will annexed on 6 August 1981.
17 It does not appear to be in dispute that the main assets in the estate were properties in Earlwood, Bardwell Park and a half share in a property at Mt Druitt. The Earlwood property was the family home.
18 From about 1980, Alexander was advised in estate matters by a solicitor (Mr John Wheeler). In his affidavit sworn 22 October 2008, he sets out a brief (and, at least in one respect to which I refer later, inaccurate) chronology of events, deposing to the history of this matter. Alexander says that on 9 December 1982 he swore an affidavit, which was prepared by Mr Wheeler, verifying the accounts of the estate, and therein noting the balance in the estate account at $1,872.41 and listing each of the Earlwood, Bardwell Park and Mount Druitt properties as being unrealised real estate.
19 Alexander deposes, and was not challenged on this in cross-examination, to the fact that in 1983 Mr Wheeler informed him that, due to a change in the law, the filing of estate accounts was no longer required. Such advice was clearly incorrect. The provisions of the Act and Pt 78 r 71 of the Supreme Court Rules 1970, in force as at 31 December 1981, required a legal personal representative to file an inventory of the estate and to file, or file and pass, estate accounts. It was only for estates of persons dying after 31 December 1981 that the Act and Rules were amended to confine such an obligation to certain categories of estate (of which it is accepted that this estate would not have been one). Nevertheless, the pertinent fact for present purposes is that Alexander was advised otherwise. Hence, his failure in the late 1980's to prepare and file accounts in relation to the administration cannot be said to have been in wilful default of compliance with his statutory obligations.
20 Alexander, in his affidavit sworn 3 December 2008, deposes that the estate matters were complex and that there were delays and complications in the administration of the estate (relating to the assessment of his father's taxation position and a charity foundation involving both of his parents) (paragraph 13). (Michael, without asserting any basis for this opinion, apparently was under the impression that "probate shouldn't take as long" (T 3.1) and seems sceptical as to the genuineness of Alexander's claim that the administration of the estate involved complex issues.) Alexander also says that in the weeks just after his father's death he asked all his siblings if they would be prepared to help him financially with the estate and they said they would not put any money into the estate. Alexander says (and Michael, by accepting that he signed a memorandum of understanding in which this was recited, appears to have acknowledged) that he put a considerable sum of his own money towards meeting estate liabilities and the personal debts of Hana. Alexander did not make any claim for commission in relation to his administration of the estate.
21 It does not seem to be disputed that the Hons children wished to put in place an arrangement whereby their mother would be able to remain in the family home for her life. Michael's evidence was that his mother was worried at the prospect that she might lose her home. Indeed, Michael seems to have been critical of the fact that his mother's concerns in this regard were not allayed for some years by reason of the fact that the administration took so long, yet there seems no doubt that part of the reason that Hana was able to retain her home was the fact that Alexander (unlike those of his siblings who may have been financially able to do so, and leaving aside those who were still dependents at that time) was prepared to advance his own funds to assist his mother.
22 On 11 December 1987, Hana and all of the children signed a Deed of Family Arrangement regarding the Earlwood property. A copy of the Deed was in evidence. It was prepared by the late Mr Wheeler's firm. Under the Deed, Hana was given a life estate in the Earlwood property with the remainder to be transferred to the children as tenants in common in equal shares. A transfer of that property from Alexander, as administrator, to Hana pursuant to the Deed was executed on 1 July 1988.
23 According to Michael's account of what he describes as a number of "informal discussions" with Alexander in the months prior to 11 December 1987 as to the progress of the administration (which I admitted subject to relevance), Michael seems to have understood the effect of the proposed deed of family arrangement as giving to the children one-sixth of the property each at the expense of their mother (something contrary to the arrangement in fact put in place which gave Hana a life estate in place of the one-seventh interest she had been left under the will). I mention this only because it indicates an early (and apparently unfounded) suspicion by Michael of his brother's actions as administrator. Michael says he was of the opinion that in the "natural course of events" his mother should have inherited the Earlwood property from the estate (T 3.34). Whether or not one might have expected that to be the case, any complaint by Michael as to the exercise of his father's testamentary bounty was one surely not appropriately directed to Alexander but more properly a criticism of his late father.
24 Michael accepts that he consented to the Deed of Family Arrangement, which he signed. He says that he did so (notwithstanding that he had disagreed with it) because his mother was happy with the arrangement based on the advice given by Alexander and his solicitor that that was the "best way to go". Michael said in the witness box:
Even though I disagree with it, I am not in charge to make the decisions. The family, based on the authority and information, made a decision to agree to let Mum have life tenancy; because Mum says it's okay… (T 4.9).
25 According to Michael, the outcome achieved by that arrangement (ie that his mother did not lose her home) was a great relief to Hana and led to her seeing Alexander as the "hero" (T 4.18) and considering that any criticism of Alexander's conduct of the administration of the estate was an "affront" to him (T 8.25; T 8.32).
26 Alexander (with, he says, the consent of the other beneficiaries) purchased the shares of the other beneficiaries in the Bardwell Park property. Alexander says that Mr Wheeler also advised in relation to that transaction. It seems that this transaction is at least partly (if not largely) the source of Michael's grievance.
27 Michael says that, at the family meeting on 11 December 1987 at which the Deed of Family Arrangement was signed, all the family also "gathered to sign" a "memorandum of agreement" for the sale of the Bardwell Park property to Alexander. Exhibit A is a copy of an unsigned Memorandum of Agreement which Michael says he received and which I understand him to say he had signed at that meeting. (Michael says that Alexander did not provide him with a copy of the signed document.)
28 The unsigned Memorandum of Understanding (which at first blush appears similar in typeface and format to the Deed of Family Arrangement, from which one might infer it was a document also prepared by the late Mr Wheeler's firm), which seems to have been prepared in 1987, insofar as it leaves room for a 1987 execution date to be completed on execution, is drafted as an agreement between Michael (as vendor) and Alexander (as purchaser) of Michael's one-seventh interest in the Bardwell Park property. The document recites that Hana and each of the children are beneficiaries of the estate; that the Bardwell Park property forms part of the estate; that the sale value of that property has been agreed at $130,000; and, relevantly, recites that Alexander (the purchaser) has paid debts, funeral and testamentary expenses of the estate amounting to $77,500 out of his own moneys and is entitled to recoup that amount from the estate. It further recites that each of the beneficiaries (excluding Alexander) has agreed to pay to Alexander the sum of $11,071.43, being a one-seventh part of the said expenses. The draft memorandum of understanding then provided that the vendor (Michael) agreed to sell to the purchaser (Alexander) his one-seventh share as tenant in common of the Bardwell Park property for the sum of $18,571.43 (ie one-seventh of $130,000) but that there was to be deducted from the purchase price for Michael's share (and credited to Michael in satisfaction of Michael's liability for a one-seventh share of the estate debts agreed to have been borne by Alexander) the sum of $11,071.43. In other words, contrary to Michael's understanding of the effect of that document, it seems that Michael's agreed share of the expenses which had been borne personally by Alexander was to be offset against the amount Alexander was to pay for Michael's share in the property, leaving a lesser sum payable to Michael than he had thought.
29 Michael says that he signed a memorandum of understanding in this form on the same night as he signed the Deed of Family Arrangement (T 5.30-44). Alexander does not dispute it. There is also no dispute that Alexander in fact acquired title to the Bardwell Park property. It may be that he did so pursuant to a similar arrangement with each of the other beneficiaries (that certainly seeming to be contemplated by the format of the document which referred in the schedule to each of the beneficiaries), though whether any such document was signed by the other beneficiaries I do not know. There was no evidence by any of the other beneficiaries in these proceedings.
30 The relevance of this evidence, in my view, is threefold.
31 First, although Michael was clearly aggrieved in the witness box that he had not received what was due to him for his relevant share in the Bardwell Park property, in saying this he seems to have understood that he was to receive some eleven and a half thousand dollars for his share (T 5.35). However, if what Michael and Alexander signed was an agreement in the terms of that comprised by Exhibit A, as Michael seems to say, then on the terms of that document Michael would have been entitled to no more than $6,500 for his share of the property. (The corollary of that is that, if such agreement was signed then absent any amendment thereto or further agreement between the brothers, there would have been no basis for Alexander to deduct, from the $6,500 payable for Michael's share, any further amount towards reimbursement of estate or other debts - whether or not he had paid other debts of his mother or the estate to which his brother might have been obliged to contribute. The agreed contract price at least under the memorandum of understanding seems to have been a fixed sum, not one for subsequent adjustment.)
32 Secondly, any dispute about the receipt of the moneys payable for Michael's share of the Bardwell Park property is properly a claim in contract (arguably long since statute barred) and not one which is before me in these proceedings. On the disposition by the beneficiaries of their interest in the Bardwell Park property, that property ceased to be subject to the trusts of the will and is no longer available to meet any debts of the estate.
33 Thirdly, if an agreement was made in this form then on its face it amounts to an acknowledgement (and apparent acceptance) by Michael that Alexander had paid some of his own moneys towards debts and expenses of the estate and was entitled to recover that amount (quantified in the document at $77,500). (I note this because there seems to have been a suggestion that when the question of the estate accounts came to be considered by forensic accountants in 2006/07 they were unable to verify, on the records then available, all the payments claimed to have been made by Alexander on behalf of the estate, as well as a suggestion that various of the payments which had been made may have been to meet Hana's personal liabilities - not estate debts. I do not understand the plaintiffs to be advocating any adjustment of the accounts so as to recover back from Hana any amounts paid by Alexander or the estate on her behalf; however, this does raise the question whether an adjustment of the accounts could be effected without reference to Hana's position, particularly if the beneficiaries had acquiesced in or consented to, the payment of moneys out of the estate on her behalf.)
34 In his affidavit of 3 December 2008, Alexander says that, at the November 1987 meeting, Michael had said that he had considered Alexander's "personal moneys used to help the estate as now belonging to the estate and not belonging to [Alexander]". Alexander says that Michael was quite upset when Alexander replied that the moneys were owed to him as they had been lent by him to the estate to help see the estate finalised (paragraph 10, affidavit 3 December 2008). This suggests that Michael may not have understood the extent or basis of Alexander's personal contribution to finalisation of the estate.
35 As to the remaining property assets in the estate, the half share held by the estate in the Mount Druitt property was apparently sold during 1988 to a third party (Elphinstone Pty Limited). There is little information as to this sale but it does not seem to be suggested that Alexander had any personal interest in relation to the sale (other than as a beneficiary of the estate who might share in the proceeds thereof on distribution of the net estate in due course).
36 Michael says that in early 1988 he spoke to Alexander at the Earlwood property, in the presence of the other plaintiffs, and asked him when they could expect to be paid for the sale of their interest in the Bardwell Park, to which Alexander responded that there were no proceeds as they had been absorbed by the remaining debts in the estate (a response which I note would seem to be inconsistent with the manner in which the unsigned memorandum of agreement provided for a payment of $6,500). However, Michael seems to have accepted or understood that the payment he was to receive for his share in Bardwell Park was to be determined by reference to the overall estate proceeds insofar as his response was, he says, to ask for evidence that there were no such proceeds. He says that about a month later he received a handwritten account (Annexure A to his affidavit) from Alexander.
37 Alexander says that he does not recall such a conversation in 1988 but says that he had a conversation with all of the beneficiaries in November 1987 to explain the breakdown of estate costs, expenditure and income. He says that his copy of Annexure A to Michael's affidavit bears the date November 1987 and that he gave this document to his siblings at that meeting.
38 Of interest in the handwritten notes (Annexure A to Michael's affidavit) is that the sum of $77,500 said in the unsigned Memorandum of Agreement to have been paid by Alexander is clearly noted. There is also reference to an amount described as "owing" by Alexander for rent of $17,000. (This document therefore seems to disclose an acceptance by Alexander of an obligation to pay rent for his occupation of the Bardwell Park property, although the arrangements in that regard were not clear to me. There was evidence by Alexander that one or more of his siblings at one stage had suggested that he should be paying more rent for that property.)