Solicitors:
Brown Wright Stein Lawyers (Plaintiffs)
File Number(s): 2017/27320
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Judgment - EX TEMPORE (REVISED)
HIS HONOUR: In this application, which is made under the Trustee Act 1925 (NSW) s 63, the Plaintiffs, who are the executors of the estate of Clement Joseph Maloof ("the deceased"), seek advice on questions which concern the deceased's Will.
There has been read on this application, a Summons filed on 27 January 2017, what is described as a "Confidential Statement of Facts" dated 4 July 2017, a "Confidential affidavit of Rachel Vijayaraj sworn 4 July 2017" and a copy of the confidential opinion of senior counsel going to some aspects of the application.
The Plaintiffs sought leave to file an amended Summons, which, relevantly, seeks the following relief (with appropriate editorial amendments):
"That the Court indicate, by way of advice pursuant to s 63 of the Trustee Act 1925 (NSW) whether the plaintiffs would be justified in:
(a) treating the "mausoleum space" referred to in clause 7(1) of the Will of the late Clement Joseph Maloof dated 17 July 2006 on the basis that it is subject to the Family Court orders made in proceedings XXXXX of 1994 on around 14 November 1994;
…
(e) selling or realising the value of the "mausoleum space";
(f) applying any abatement to the proceeds of sale which is required to be applied to specific gifts to pay administration and other estate expenses; and
(g) dividing the balance equally between the five children of the deceased namely Frances Maloof, Anthony Maloof, Clement George Maloof, Alberta Jane Rashid and Michael Maloof?"
(There is also a second Paragraph of the Summons that identifies another matter upon which judicial advice is sought, but as it cannot be dealt with today, I shall not refer to it. As I am on long leave from the end of August 2017, and as a number of steps are required to be taken by the Plaintiffs going to that aspect of the judicial advice, it has been necessary to adjourn that part of the relief sought in the amended Summons to the Registrar's List on 23 August 2017. There will be no difficulty in another Judge dealing with this aspect as no part of the hearing today has concerned it.)
I granted the leave sought by the Plaintiffs and ordered the amended Summons to be filed by 4:00 p.m. on 6 July 2017. I have proceeded today to deal with the relief sought as set out above in the amended Summons.
As is well known, s 63 enables trustees to apply to the Court for an opinion, advice or direction on any question respecting the management, or administration, of the trust property, or respecting the interpretation of the trust instrument. In this case, it can be seen from the relief sought, that the advice concerns the administration of the trust property and/or the interpretation of the trust instrument.
"Management or administration of property" includes taking steps to preserve the property, and taking steps to make the property financially productive. The words refer to both the manner in which trust property is managed, administered, handled, directed or controlled, and the actual carrying out of those functions. In addition, the words include transferring part, or all, of it, as required, to those who have become entitled to it. The words are not confined to the continued holding of the property in question: Stein v Sybmore Holdings [2006] NSWSC 1004 at [59].
An order under s 63 produces the statutory consequence stated in s 63(2), namely that if the trustees, having received judicial advice, act in accordance with it, the trustees are "deemed to have discharged the trustee's duty as trustee in the subject matter of the application".
Uniform Civil Procedure Rules 2005 (NSW) ("the UCPR"), rule 55.1, provides:
(1) A statement under section 63 of the Trustee Act 1925:
(a) must be divided into consecutively numbered paragraphs, and
(b) must state the facts concisely, and
(c) must state the question for opinion, advice or direction.
(2) Despite rule 6.12 (2), the originating process in proceedings under section 63 of the Trustee Act 1925 need not state the question for opinion, advice or direction."
UCPR rule 55.2 provides that an opinion, advice or direction given under s 63 "must be given by order". However, such an order is permissive in nature, its usual form being that the trustee "would be justified" in taking certain action. As such, the order does not carry with it the usual consequences of an order made by the Court in adversarial proceedings, regardless of whether parties have been given notice of the application under s 63(4). Thus, it does not create a res judicata. It does not finally determine the rights of parties. Indeed, it does not, of itself, determine any rights, although, it has the potential to affect the rights of the parties given notice under s 63(4). It does not carry with it the consequences of breach, including, e.g. the exposure to contempt proceedings should an order be disobeyed: Macedonian Orthodox Community Church St Petka Inc v Petar (2006) 66 NSWLR 112; [2006] NSWCA 160.
Whilst neither of those rules has been strictly complied with, the evidence to which I shall refer is the subject of evidence read in the proceedings, upon which the Plaintiffs rely.
Furthermore, this sort of application provides a summary procedure, intended to enable questions arising in the administration of an estate, or a trust, to be resolved cheaply and simply: Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42, at [61]. For this reason, to the extent necessary, I have proceeded with the evidence as read on the Plaintiffs' application.
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Background Facts
It is next necessary to state the context in which the application for judicial advice has been made. This necessitates the statement of background facts that are clear and undisputed.
The Plaintiffs are the two remaining executors of the Will dated 17 July 2006, and a codicil, dated 4 November 2009, of the deceased, who died, as long ago, as 9 November 2009, and who was survived by eight children, all of whom are now adults.
The administration of the deceased's estate, to date, has been protracted and difficult. There was a challenge to the deceased's testamentary capacity, which delayed the grant of Probate for three years. It was only after contested Probate proceedings, that this Court, on 28 May 2012, granted Probate in solemn form, of the Will, and of the codicil, to the Plaintiffs.
There has been other litigation between the deceased's children relating to trusts that the deceased had established during his lifetime, and other trusts which were to be established under his Will, as well as a claim made against the estate by four of the deceased's children, being Helen Pernice, Tiba Maloof, Sarah Maloof and Frances Maloof, each of whom sought an order for additional provision out of the estate pursuant to s 59 of the Succession Act 2006 (NSW). The last of these claims was resolved, by compromise, only in about November 2015.
Each of the daughters who brought a claim entered into a different Deed with one of the Plaintiffs, John William Kellert, as the representative of the deceased's estate. As a condition of the settlement of the claim, Helen disclaimed all of her interest in, and released, all of her rights to the assets of the estate, apart from her entitlement to the shares in Einasleigh Nominees Pty Ltd in the Codicil; Tiba disclaimed all of her interest in, and released, all of her rights to the assets of the estate, apart from her entitlement to the shares in Einasleigh Nominees Pty Ltd in the Codicil and the pecuniary gift provided in the Will; Sarah disclaimed all of her interest in, and released, all of her rights to the assets of the estate, apart from her entitlement to the shares in Einasleigh Nominees Pty Ltd provided in the Codicil and the pecuniary gift provided in the Will; and Frances disclaimed all of her interest in and released all of her rights to the legacy in the Will.
It has become clear that the specific gifts in the estate will have to abate by some proportion, to enable all administration and other estate expenses to be paid.
The case now before the Court arises because one of the assets listed in the Inventory of Property attached to the Probate document is a "Mausoleum at the Randwick Cemetery, being [two identified graves] in the general vault section". The value of the asset was estimated in the Inventory of Property to be $100,000.
Clause 7(1) of the deceased's Will, provided:
"I note that our family company Albert & May Pty Limited also owns and is responsible for mausoleum space for 14 adult family members in Randwick Cemetery."
The deceased appears to have forgotten that he owned the rights to the mausoleum space and made no provision for the disposition of those rights in his Will, although he did erroneously state that it was owned by the company, Albert & May Pty Limited.
Enquiries made by the Plaintiffs of Randwick City Council, which owns the land on which the Randwick Cemetery is located, and which is the relevant authority, indicate that what the deceased has described in his Will as "mausoleum space" is, in fact, rights of internment in the vaults which are situated in the "General Section" of the Cemetery, rather than the vaults themselves.
There having been no specific gift made of the mausoleum space in the deceased's Will, it, therefore, would fall into residue. Under Clause 5(2) of the deceased's Will, the residue was given to the Clement & Peter Trust. Under Clause 3 of the Will, the executors were appointed the trustees of that Trust. The discretionary objects of the Trust are referred to as "my grandchildren and direct lineal descendants of my grandchildren".
The evidence does not disclose the identity of any of the deceased's grandchildren, or other lineal descendants of the grandchildren, and it is accepted that no notice of the application has been given to any of them. However, because of what follows, and because it seems to me that the Plaintiffs must comply with a court order made many years ago, against the deceased, or if they did not, further litigation might ensue, to adjourn the proceedings to enable notice to be given to all of the grandchildren and other lineal descendants would be productive of unnecessary costs, expense, and further delay, in the administration of the deceased's estate. In the circumstances, I consider that the matter should proceed.
On 10 May 1995, the Family Court of Australia heard the application brought by the then wife of the deceased, Rabiha Maloof, who is also the mother of each of the eight children of the deceased, for a divorce order in relation to her marriage to the deceased. On 11 June 1995, the Court made a divorce order. The Court also ordered (Order 3) the deceased "to do all acts and things and sign all documents necessary to transfer to Rabiha Maloof, all his right title and interest in the vault at Randwick Cemetery".
Subsequently, however, on 14 November 1995, the Family Court, by agreement of the deceased and his then former wife, ordered that Order 3 be set aside, and in lieu of that order, made the following orders in respect of the mausoleum space:
"17. The Court notes in relation to the vault at the Randwick Cemetery owned by the Husband ('the Vault') the Husband and the Wife have agreed that:
(a) each party is to retain a key to the Vault and that if for any reason a lock is changed the party who changes the lock is forthwith to provide the other party and the Sexton of the cemetery with a key to the new lock at his/her expense;
(b) both parties shall do all things necessary to ensure that each of them, the Husband's brother Peter Maloof, and any of the children of the marriage or any spouse or descendant of a child of the marriage may be buried in the Vault;
(c) that if either party wishes to change the superscription over the door of the Vault in the future they may provided that:
(i) that party pays for the cost of the change; and
(ii) the superscription is changed to 'Pray for Clement and Rabiha Maloof and all herein'."
18. Order that the Husband make provision in his will that he leave to the children of the marriage of the parties or to an entity owned and controlled by all of the children of the marriage all his right title and interest in the Vault and further order that the Husband not revoke or vary such provision."
There is no suggestion that either of these orders has been set aside, or varied, at any time since it was made.
Randwick City Council has indicated to the Plaintiffs that it would only accept a transfer of the internment rights to all of the deceased's children, if they were able to provide unanimous instructions as to how those rights could be exercised in the future.
As there have been significant disputes between the children concerning different aspects of the deceased's estate over the last 8 years, naturally, the Plaintiffs are not confident that a unanimous position on this issue would be able to be reached.
Thus, the Plaintiffs wrote to each of the children proposing that the rights to the mausoleum space be sold and, after allowing for any abatement that might be necessary, that the balance of the proceeds of sale be divided equally between the children who had not disclaimed her interests, and seeking her, and his, consent, respectively, to this course. A response was received from Helen Pernice (although she had released her rights to any entitlement), Anthony Maloof, and Michael Maloof, each of whom consented to the proposal.
Those children who have not responded are Frances Maloof, Tiba Maloof, Clement George Maloof, Alberta Jane Rashid, and Sarah Maloof. However, so far as is known, none of the children has expressed any interest in being interred in the mausoleum space, or in having any of their loved ones interred there.
In these circumstances, the Plaintiffs seek the advice of the Court that they would be justified in acting consistently with the terms of the relevant Family Court Orders, and that they ought to proceed as though the deceased's Will contained a Clause which gave the "mausoleum space" to the eight children (some of whom have disclaimed that interest). They also seek advice that they would be justified in selling it and applying any necessary abatement to the proceeds of sale as though it had been the subject of a specific gift in the deceased's Will; and thereafter to distribute the balance proceeds of sale equally between the five children who have not surrendered their interests in the deceased's estate.
Bearing in mind all of the circumstances, and noting that there is no evidence that suggests that the orders of the Family Court should not be complied with, I am of the view that the Court should provide the advice sought, and that it should be along the lines sought by the Plaintiffs in the amended Summons.
Accordingly, the Court orders, by way of advice pursuant to s 63 of the Trustee Act 1925 (NSW), that the Plaintiffs would be justified in:
1. treating the "mausoleum space" referred to in Clause 7(1) of the Will dated 17 July 2006 of the late Clement Joseph Maloof on the basis that it is subject to the Family Court orders made 14 November 1994, in proceedings [XXXXXX];
2. selling or realising the value of the "mausoleum space";
3. applying any abatement to the proceeds of sale which is required to be applied to specific gifts under the Will of the deceased so as to pay administration, and other, expenses of the deceased's estate; and
4. dividing the balance of the proceeds of sale or realisation equally between the five children of the deceased who have not surrendered their interests in the estate, namely, Frances Maloof, Anthony Maloof, Clement George Maloof, Alberta Jane Rashid, and Michael Maloof.
I also order that the Plaintiffs' costs, calculated on the indemnity basis, of the proceedings, so far as they relate to the present application, be paid, or retained, as the case may be, out of the assets of the estate of the deceased.
Finally, I order that the balance of the amended Summons be adjourned to the Registrar's List at 9:30 a.m. on 23 August 2017.
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Decision last updated: 06 July 2017