HIS HONOUR: The application before the Court relates to the estate of the late Orel Lea (the deceased) who died on 19 May 2023, leaving a Will dated 26 October 2020. Probate of that Will was granted to her son, the current first defendant in the proceedings, Quentin Milton Gray Lea, on 3 December 2023. The proceedings were commenced by summons filed on 6 December 2023 by the plaintiff, Xanthe Meryn Lea, the deceased's daughter, seeking a family provision order. The deceased's husband, Graham, pre-deceased her on 3 December 2009.
The proceedings progressed after the filing of the summons, however there was dispute between the parties in relation to various matters regarding the estate.
On 16 September 2024, the plaintiff filed a notice of motion seeking various orders, including orders that Resolute Tenure Pty Ltd, as trustee of the Gumleaf Family Trust (Trustee), be joined as a party to the proceedings and the matter proceed by way of pleadings. Certain other relief was also sought, including that the plaintiff be appointed to represent the estate and for a form of interim distribution or, alternatively, a form of interim provision, to be made to the plaintiff.
On 9 October 2024, a solicitor in the employ of the plaintiff's solicitors, Ms Bouletos, sent an email to the first defendant's solicitors foreshadowing an addition to the relief sought in the notice of motion (reflecting interim relief sought in a proposed statement of claim), namely that the grant of probate be revoked and that an independent administrator be appointed.
On 16 October 2024, a statement of claim was filed pursuant to leave granted by the Registrar in Probate. The Trustee is named as the second defendant in the statement of claim.
The final relief in the statement of claim seeks:
1. judgment for the deceased's estate against the Trustee in respect of certain amounts said to be owing by reason of a purported loan to the Trustee (in its capacity as trustee of the Gumleaf Family Trust) and an unpaid present entitlement of the deceased, plus interest; and
2. declarations that:
1. the deceased entered into a testamentary agreement with Graham that the deceased would leave the whole of her estate to the plaintiff and the first defendant in equal shares; and
2. all of the deceased's assets, as well as a property in Waverley, are held on constructive trust for the plaintiff and the first defendant as tenants in common.
Alternatively, the plaintiff seeks damages or provision under s 59 of the Succession Act 2006 (NSW).
As filed, the statement of claim also lists as interim relief orders that the plaintiff be appointed to represent the estate pursuant to r 7.10 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR) for the purpose of seeking the amounts said to be owed to the estate from the Trustee, and that the first defendant's grant of probate be revoked and an independent administrator be appointed (as foreshadowed).
On 14 November 2024, the motion was listed for hearing before me today.
On 3 December 2024, the plaintiff served a form of amended notice of motion which reflects the interim relief as proposed and foreshadowed.
In support of the application, the plaintiff caused to be served a number of affidavits and exhibits, including an affidavit of the plaintiff affirmed 5 December 2023, together with an exhibit XL-1, and affidavits of the plaintiff's solicitor, Vivian Evans, dated 16 September 2024, 23 October 2024 and 2 December 2024, and exhibits VE-2 and VE-3 to the first two of those affidavits.
Despite orders on 10 October 2024 requiring him to serve any evidence to be relied upon in respect of the application by 13 November 2024, the first defendant did not serve any such evidence by the time directed.
Nonetheless, on 5 December 2024 (i.e. yesterday), the first defendant served an affidavit of his, affirmed on 4 December 2024, which gave an update as to the status of the assets and liabilities of the estate.
The parties have provided submissions in respect of the competing forms of relief sought on the application, including: submissions by the plaintiff's counsel dated 3 December 2024; submissions by the first defendant's counsel dated 5 December 2024; and reply submissions by the plaintiff's counsel dated 5 December 2024.
Over the last day or so, the parties' respective positions as to the precise relief sought on the application has evolved. Specifically, by his counsel's written submissions which were served yesterday, the first defendant consented on a without admissions basis to the appointment of a solicitor, Mr Benjamin Dornan, as independent administrator, on the basis that the first defendant continues to have carriage of the defence of the proceedings pursuant to r 7.10(2)(b) of the UCPR. Apparently the receipt of those submissions was the first occasion on which it was foreshadowed to the plaintiff that the first defendant would consent (albeit in the manner qualified) to the appointment of an independent administrator.
On the hearing before me today, Mr Brown of counsel appeared on behalf of the plaintiff and Mr Yazdani of counsel appeared on behalf of the first defendant. The parties handed up a form of short minutes of order which sets out their competing positions as to the relief now sought.
Three substantive issues were raised, as well as the issue of costs in respect of the application. I will deal with them sequentially.
[3]
Appointment of independent administrator
The first issue related to who ought to be appointed as the independent administrator of the estate.
Whilst the first defendant proposed Mr Dornan, the plaintiff proposed that Ms Monica Ross-Maranik be appointed as the independent administrator.
Both solicitors are known to the Court as solicitors who act from time to time as independent administrators of estates and they are both, in that sense, known to be capable of carrying out the tasks of administration. Both have consented to their appointment.
On the hearing, Mr Brown indicated that he was instructed to seek that Ms Ross-Maranik be appointed because her fees on an hourly-rate basis are a degree cheaper than those of Mr Dornan. Mr Yazdani did not express any reasons why Ms Ross-Maranik should not be appointed.
In the circumstances, I am satisfied that, mindful of costs being incurred to the estate, it is appropriate to appoint Ms Ross-Maranik as the independent administrator.
[4]
Representation of the estate in the proceedings
The second issue related to the representation of the estate in the proceedings. I should note that, at the outset of the hearing, Mr Brown indicated that, after the administrator is appointed, the plaintiff will likely want the administrator to prosecute the claim against the Trustee, rather than her personally (as initially she sought). However, Mr Brown confirmed that this was not an issue to be dealt with today. Rather, the issue of representation pertained to the first defendant's carriage of the defence to the proceedings.
As foreshadowed in his written submissions, I understood Mr Yazdani to initially submit that the first defendant should continue to have carriage of the whole of the defence of the proceedings by way of an order under r 7.10(2)(b) of the UCPR. Mr Yazdani submitted that such an order was appropriate given the nature of the proceedings effectively being inter partes litigation.
There was no formal notice of motion placed before the Court by the first defendant seeking an order pursuant to r 7.10(2)(b) of the UCPR. The "application" was essentially embodied in the first defendant's version of the proposed short minutes of order handed up. To the extent it would be necessary, Mr Yazdani indicated that he would seek leave to file and serve any formal notice of motion. I proceeded on that basis and it was not opposed.
It is evident that one of the issues in the proceedings is whether an unsecured loan to the Trustee (in its capacity as trustee of the Gumleaf Family Trust), recorded as being owed to the deceased in the 2021 and 2022 financial statements for the Trust, is in fact a debt due to the estate. There is also an issue as to whether there is an unpaid present entitlement owed to the estate from the Trustee.
As to the loan, a draft set of accounts for the Trust for the year ended 30 June 2023 no longer records the amount in question, being a sum of $741,750, as being an unsecured loan owing to the deceased's estate, but rather includes a qualification which provides some context for the change.
Earlier this year on 29 May 2024, the first defendant's solicitors wrote to the plaintiff's solicitors regarding certain matters, including the Gumleaf Family Trust, which letter included a statement:
"Our client accepts that the $741,750 referred to in the Gumleaf Family Trust accounts as a liability that trust owed to the deceased, should be included in the inventory of estate property. Our client will file an updating administrator's affidavit to that effect."
Despite that, on reviewing the recently filed defences to the statement of claim, it is evident that there will be contest over that purported loan.
As the first defendant is essentially the controlling mind of the Trustee, Mr Brown submitted that the first defendant has placed himself in a position of conflict. Mr Yazdani did not appear to make any submission to the contrary.
In light of that potential conflict, I do not consider that it would be appropriate for the first defendant to have carriage of the whole of the defence of the proceedings, at least insofar as it relates to the claims against the Trustee for recovery of the purported amounts owed to the estate.
Mr Yazdani made an alternative submission that if a representative order were not made in respect of the whole of the defence, the first defendant should nonetheless be appointed to represent the estate in relation to that part of the statement of claim which seeks the declaration of a constructive trust. Such relief is said to be based upon the testamentary agreement between the deceased and Graham, or alternatively estoppel. To that end, Mr Yazdani submitted that the first defendant is the only person who has personal knowledge relevant to those allegations and is therefore the appropriate contradictor. It was noted that the independent administrator would have no personal knowledge of any issues in dispute, at least in respect of the constructive trust claim.
Under this alternative regime proposed by the first defendant, the independent administrator would still need to be joined as a party in order to claim (potentially by way of a cross-claim) the amounts said to be owing to the estate from the Trustee.
As a general rule, it is undesirable for the Court to clothe different persons with authorisation to conduct estate affairs because the possibility of inconsistent conduct or conflict is obvious, and the imposition of any possible source of confusion on other persons dealing with one or other of the concurrent representatives should be avoided: see Reeves v Reeves (No 2) [2024] NSWSC 386 (Reeves (No 2)) at [191], citing Bar-Mordecai v Rotman - Estate of the late Eveline Hillston (Supreme Court (NSW), Bryson J, 21 July 1998, unrep) at 3. Of course, there will be circumstances in which it will be necessary to have different persons acting on behalf of the estate, in which cases it may be important to clearly define the bounds of any authorisation (whether under a grant or a representative order): Reeves (No 2) at [192]-[194].
In these proceedings, I do not consider that it would be appropriate or desirable to have different parties acting to represent the estate in relation to different aspects of the plaintiff's statement of claim. It is apparent that such a course would not be conducive to the efficient administration of the estate or the orderly conduct of the proceedings.
As to Mr Yazdani's submission that the first defendant has personal knowledge of matters relevant to the constructive trust claim, I do not consider that that fact necessarily means that a representative order should be made in his favour to conduct the defence to that claim. If the independent administrator is joined as a defendant, any such knowledge may be provided by the first defendant to her, and she can then address any defence of the claim on behalf of the estate.
However, in circumstances where the independent administrator would need to be joined as a party in any event, it is not apparent to me that the Court's power under r 7.10 of the UCPR is even enlivened.
Rule 7.10 applies in circumstances where it appears to the Court that:
1. a deceased person's estate has an interest in the proceedings, but is not represented in the proceedings (r 7.10(1)(a)); or
2. the executor or administrator of a deceased person's estate has an interest in the proceedings that is adverse to the interests of the estate (r 7.10(1)(b)).
Upon the independent administrator being given a grant and being joined as a party to the proceedings (which I will be making orders to facilitate), the estate will be represented in the proceedings and r 7.10(1)(a) will not apply. Further, given that Ms Ross-Maranik will be an independent administrator, she has no interest in the proceedings that is adverse to the interests of the estate, and so r 7.10(1)(b) will not apply.
For the above-stated reasons, I will not make any order under r 7.10(2)(b) of the UCPR appointing the first defendant to represent the estate for the purposes of defending the proceedings.
Whilst Mr Yazdani raised the possibility of appointing the first defendant as an administrator ad litem in respect of the constructive trust claim, I decline to do so for essentially the same reasons stated above, namely that the risk of conflict and confusion arising from various grants would not be appropriate having regard to s 56 of the Civil Procedure Act 2005 (NSW) (CPA).
[5]
Interim distribution
The third issue related to the amount which the plaintiff should receive by way of an interim distribution from the estate. The amount sought was essentially a sum of $50,000. Mr Brown confirmed that the plaintiff was not seeking an interim provision order on the motion against an ultimate entitlement.
In light of some developments yesterday, the prospect was raised by the plaintiff that, rather than merely obtain an interim distribution of $50,000, she would seek a distribution of the complete net proceeds of sale of a property in Kensington, which the plaintiff is specifically bequeathed under the Will, in addition to an interim distribution from other estate assets. When I queried this on the hearing, Mr Brown indicated that the only reason the relief sought was changed was when the first defendant indicated yesterday that he consented to the sale of the property. In light of that, a revised form of orders was proposed indicating that the plaintiff would seek the balance of the proceeds (rather than only the $50,000): see T 17.41-18.12; Exhibit JP-2.
On the hearing, the first defendant did not oppose the plaintiff being given an interim distribution of $50,000. However, Mr Yazdani contended that the amount should only be paid out of the sale proceeds of the Kensington property, when it is eventually sold by the independent administrator. The balance of the sale proceeds would then be held by the independent administrator pending the outcome of the plaintiff's constructive trust claim.
On behalf of the plaintiff, Mr Brown contended that there were various other estate assets from which the plaintiff could be paid the interim distribution more promptly, including:
1. accrued rental income from the Kensington property of approximately $5,621;
2. 50% of the deceased's AustralianSuper superannuation fund, being approximately $4,452.44;
3. cash held in the trust account of Beswick Lynch in the amount of $6,000;
4. the proceeds of sale of a 2017 Mercedez Benz motor vehicle; and
5. cash held in the deceased's bank account with the Commonwealth Bank of Australia, in the amount of $32,433.52.
While the plaintiff had as noted above briefly (overnight and this morning) contended that she should also receive the whole balance of the net proceeds of sale of the Kensington property, I did not understand Mr Brown to necessarily press for this on the hearing. Indeed, my initial reaction was that such an order would effectively give her an almost complete distribution.
I was of the view that the cash reserves in the estate, totalling approximately $38,000, should not be exhausted as the incoming administrator will need at least some amount of cash available to her (provisionally, around $25,000) to effect the sale of the Kensington property and otherwise do what is necessary in relation to the estate. Whilst I was also told by Mr Yazdani that there is a dispute between the parties in relation to the deceased's superannuation fund, I understood that there was otherwise no dispute between the parties that the interim distribution could be paid from the sources listed by Mr Brown.
Following some discussion, the matter was briefly adjourned for the parties to have an opportunity to work out an appropriate regime for payment of the plaintiff's interim distribution and draft appropriate orders, which they did.
[6]
Costs
The final issue related to the question of costs of the application.
The plaintiff sought to have the first defendant pay the costs of the application personally for three related reasons. First, while the original notice of motion filed on 16 September 2024 did not seek the appointment of an independent administrator, the plaintiff's solicitors had put the first defendant on notice that she would be seeking such relief at this hearing in the email to his solicitors on 9 October 2024. I was informed by Mr Brown that there was no response to that email by the first defendant's solicitors, despite the plaintiff's solicitors chasing them up for a response to that issue on a number of occasions, including by letter on 26 November 2024. This led to the filing of the amended notice of motion. The first indication as to the first defendant's position on the appointment of an independent administrator was in his counsel's written submissions provided yesterday, in which he consented (although on a without admissions basis) to an appointment being made. Those submissions were also the first occasion on which the first defendant had indicated that he consented to the plaintiff receiving an interim distribution of $50,000, albeit through the proceeds of sale of the Kensington property. That is despite the first defendant being on notice since the original notice of motion was filed that the plaintiff was seeking such relief.
Secondly, without the first defendant serving any evidence or informing the plaintiff of his position on the relief sought until effectively the day before the hearing, the plaintiff's legal representatives have had to incur the costs of preparing for a fully-contested motion, including the preparation of a court book and submissions. If the first defendant had informed the plaintiff of his position even a week earlier, Mr Brown submitted that such costs could have been largely avoided, and both parties could have focused on a short argument over the first defendant's contention for an order in his favour under r 7.10(2)(b) of the UCPR. In that regard, Mr Brown submitted that ss 56 and 57 of the CPA must play a part.
Thirdly, the plaintiff has essentially been successful on the primary aspects of her application, being the revocation of the grant of probate, the appointment of an independent administrator and the interim distribution.
Mr Yazdani submitted that the appropriate costs order was that costs be in the cause. In that regard, he submitted that the first defendant has sought to narrow the issues in dispute on the application and has acted in good faith. Mr Yazdani submitted that the first defendant has been partially successful in his opposition of the plaintiff being paid the whole net proceeds of sale of the Kensington property, funds from the deceased's superannuation and additional cash by way of interim distribution. Relying upon the principles set out by McHugh J in Minister for Immigration and Ethnic Affairs; Ex parte Lai Qin (1997) 186 CLR 622 at 624-625; [1997] HCA 6, Mr Yazdani submitted that in circumstances where a hearing of the substantive motion was not required because the parties had agreed to certain aspects of the motion, there should be no adverse costs order against the first defendant. Finally, Mr Yazdani observed that the costs order sought in both the original and amended notice of motion was that costs be in the cause.
Mr Brown suggested a halfway point might be that the plaintiff is entitled to her costs up until the receipt of the first defendant's submissions yesterday and otherwise there be no order as to costs.
In the circumstances, I consider that the appropriate costs order is that the first defendant should pay the plaintiff's costs of and incidental to the notice of motion, including the revised relief regarding the revocation of the grant of probate and the appointment of the administrator, personally. Despite the costs order sought in the original and amended notice of motion being costs in the cause, the application was substantially contested. Given that the original notice of motion filed on 16 September 2024 also sought to have the Trustee joined and have the matter proceed by way of pleadings, which was effectively dealt with when the statement of claim was filed on 16 October 2024, I consider that the appropriate period that the costs order should cover is from 10 October 2024, the day after the plaintiff's solicitors put the first defendant on notice of the revised relief being sought, to yesterday (5 December 2024), when the plaintiff received the first defendant's written submissions. I note that, as it is an interlocutory costs order, the costs will not become payable until the conclusion of the proceedings by virtue of r 42.7 of the UCPR.
[7]
Orders
The parties provided a form of short minutes of order following the adjournment. I made a number of notations regarding the notice of motion and the evidence, and addressed the issue of costs. The final form of the orders is as follows:
THE COURT ON A WITHOUT ADMISSIONS BASIS:
1. Notes the Notice of Motion filed by the Plaintiff on 16 September 2024 which the Plaintiff has in respect of the relief sought made revised claims for relief (Notice of Motion).
2. Notes the evidence read on the hearing of the Notice of Motion is as follows namely the affidavits of:
a. Xanthe Lea affirmed 5 December 2023 and exhibit XL-1;
b. Vivian Evans affirmed 16 September 2024 and exhibit VE-2;
c. Vivian Evans sworn 23 October 2024 and exhibit VE-3;
d. Vivian Evans sworn 2 December 2024; and
e. Quentin Milton Gray Lea affirmed 4 December 2024.
3. Notes the evidence tendered on the hearing of the Notice of Motion, namely the:
a. emails from Despina Bouletos dated 9 October 2024, 23 October 2024, 13 November 2024 and 26 November 2024 marked as exhibit P1;
b. proposed defences of the First and Second Defendant marked as exhibit D1;
c. Consents to Act as Administrator of Benjamin John Dornan and Monica Ross-Marinik marked as exhibit JP-1; and
d. final version of the competing short minutes of order with including tracked changes marked as exhibit JP-2.
4. Notes the written submissions of counsel for the plaintiff dated 3 December 2024 and 5 December 2024 (reply) and counsel for the defendant dated 5 December 2024.
5. Notes consequent on the hearing of the Notice of Motion the parties proposed on a without admissions basis a form of short minutes of order marked MFI 1.
6. Orders that the grant of probate of the will of the late Orel Lea ("deceased") issued to the first defendant (Quentin Milton Gray Lea) on 3 December 2023 be revoked.
7. Orders that letters of administration of the estate of the deceased with the will of the deceased dated 26 October 2020 annexed be granted to Monica Ross-Maranik ("Administrator").
8. Orders that any requirement for an administration bond or sureties be dispensed with.
9. Orders that the Administrator shall be entitled:
a. to be paid from the estate all usual and proper charges at the usual hourly rates as are charged, currently $575 per hour plus GST, by the legal practice in which she is engaged and on the usual terms as to payment of that practice:
i. for her work as administrator or trustee, or both; and
ii. for the professional and nonprofessional services rendered by her or that legal practice in the administration of the estate; and
b. to engage the services of any other legal practitioner, accountant or other professional adviser in relation to the administration of the estate where she considers it necessary to do so and to pay from the estate the costs incurred in having those services provided.
10. Orders that the proceedings be referred to the Probate Registrar to complete the Grant.
11. Order that within twenty eight (28) days of the making of these orders, the parties will deliver to the Administrator:
a. any information or documents detailing the nature, description and location of any assets and liabilities of the deceased including documents evidencing insurance for the building and/or contents of any real estate owned by the deceased;
b. the following documents, if it is in their possession:
i. the original or certified death certificate for the deceased;
ii. the original or certified copies of the death certificate for Graham Lea;
iii. the original or certified copies of the birth certificates for the Plaintiff and First Defendant.
c. any estate monies held by the parties on trust for the Estate including but not limited to the proceeds of the deceased's Commonwealth Bank of Australia accounts.
12. Orders that leave be granted to the Plaintiff to file and serve an amended Statement of Claim, within 7 days of the date of these orders, joining the Administrator as a Defendant in these proceedings.
13. Orders that, separately from the $30,000 already paid to the plaintiff by way of an interim distribution on 6 May 2024, the plaintiff is to receive by way of a further interim distribution, the sum of $50,000 from:
a. accrued rental income from the property located at [XX]/[X] Gloucester Place, Kensington ("Property") held by Lea Real Estate who is controlled by the the first defendant of approximately $3,474.57, payable within 7 days of the date of these orders;
b. funds held in the trust account of Beswick Lynch in the amount of $6,000, payable within 7 days of the date of these orders;
c. the proceeds of the sale of the Deceased's 2017 Mercedes Benz B200, which is to be transferred into the Administrator's name within 7 days of the date of these orders and sold as soon as possible, payable within 7 days of the date of sale;
d. the proceeds of the Deceased's Commonwealth Bank of Australia Account numbered [XXXXXX] ("CBA Account"), subject to Orders 15, 18 and 19 below, payable within 7 days of the proceeds being received into the Administrator's trust account; and/or
e. the net sale proceeds of the sale of the Property, payable within 7 days of the date of settlement.
14. Order that the first defendant deliver up the Deceased's 2017 Mercedes Benz B200 to the Administrator within 7 days of these orders.
15. Order that the Orders that, subject to further order, Commonwealth Bank of Australia ("CBA") pay to Monica Ross-Maranik, Solicitor, the administrator of the estate all monies held in the CBA Account (in the amount of approximately $32,433.52).
16. Orders that the solicitors for the First Defendant transfer the funds held in the trust account of Beswick Lynch in the amount of $6,000 to the solicitors for the plaintiff within 7 days of the date of these orders.
17. Orders that a copy of these orders are to be served by the Plaintiff on CBA.
18. Grants liberty to CBA to apply to the chambers of Meek J to vary or discharge order 15.
19. Orders that the Administrator is to retain, on trust, the amount of $25,000 from the CBA Account, for the purpose of paying any ongoing estate liabilities.
20. Orders that the net sale proceeds of the Property be retained by the Administrator, being the balance of the gross proceeds of sale remaining after payment therefrom of:
a. agent's commission;
b. legal fees on sale;
c. marketing fees;
d. sales expenses;
e. any capital gains tax; and
f. discharging of the mortgage registered on the Property (RAMS (Westpac) [XXXXXX]).
21. Directs that the Property be sold by way of auction.
22. Directs that the Property be listed for sale by the Administrator by no later than 1 February 2025.
23. Orders that the first defendant pay the plaintiff's costs of and incidental to the Notice of Motion filed on 16 September 2024, including the revised relief regarding the revocation of the grant of probate and the appointment of the administrator, personally from 10 October 2024 to 5 December 2024.
24. Orders that the directions before the Probate Registrar in the Family Provision List on 6 February 2024 be vacated.
25. Orders that the proceedings be listed for further directions before the Probate Registrar in the Family Provision List on 27 February 2024.
[8]
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Decision last updated: 18 December 2024