Decision
22 Debts of an estate have to be paid in priority to legacies. Although s 15 of the Family Provision Act refers to giving effect to an order for provision and s 28 refers to what is necessary to allow for the making of provision, these words must be understood in the light of the circumstance that an order for provision can only properly be given effect to (and the making of provision can only properly occur) to the extent that the estate after payment of debts is sufficient. If it is necessary for provision properly to be made that debts of the estate be paid, then in my opinion the powers under ss 15 and 24 of the Family Provision Act can be exercised so as to ensure that debts are paid.
23 Accordingly, I reject Mr Wilcher's submission that separate administration proceedings are required. There is no need to consider whether the Court would in any event have an inherent power.
24 In my opinion it is plain that UCPR 36.16(3) does not restrict the powers of the Court under UCPR 36.16(1) and (2), which provide independent grounds on which the power to re-open may be exercised.
25 Accordingly, in my opinion the Court clearly has power to make orders of the kind sought in the Notice of Motion, including order 4. The question then is how, if at all, should this power be exercised.
26 There is a real question as to whether any order of the kind now sought by the appellant should be made, or whether the claim for order 4 should be dismissed with costs. I say this for these reasons:
(1) The appellant's remedy is in the first instance against the respondent, and her direct claim against beneficiaries is limited to an amount which cannot be recovered from the respondent: Re Diplock [1948] Ch 465 at 503 (affirmed Ministry of Health v Simpson [1951] AC 251).
(2) The appellant has a claim for $10,000 which the Court could immediately enforce under s 15 of the Family Provision Act, but has no further claim which could immediately be enforced, until costs have been assessed.
(3) The appellant has not even commenced to have costs assessed, and while it is highly likely costs as assessed will be substantially more than $38,000, this has yet to be established.
27 I am greatly concerned at the costs already incurred in these proceedings on both sides, and particularly on the appellant's side. I am further greatly concerned that the appellant is apparently claiming $8,674 for a costs argument below (seemingly inconsistently with the capping order, on my interpretation of it) and $15,000 for what is called recovery, making a total amount claimed for costs of $147,040. Disputes concerning assessment of costs could further add to costs on both sides.
28 The evidence does show that the executor did the wrong thing by paying out legacies before the time for appeal had expired. It is no justification that the primary judge had set a date from which interest was to accrue on the provisions ordered. However, the correspondence in evidence suggests that both sides are more concerned with continuing adversary disputes than finding a practical solution without further accumulation of substantial costs.
29 If I had power to do so, I would be minded to cap the appellant's costs of the appeal at $30,000, and to rule that the $60,000 cap at first instance applies to all proceedings at first instance, so that (apart from the costs of this motion) the appellant's costs would be capped at $90,000 in all; and it may be that the judges who heard the appeal would be minded to take that course, if the matter needs to be referred back to them. I think it would be reasonable for the respondent to recognise that it will have to provide about $90,000 in costs, and either to pay that amount as an agreed amount, or provide some sort of regime that ensures that such an amount can be paid.
30 I propose to stand the matter over to a date before me in about four weeks' time, to give the parties a final chance to arrive at a sensible solution, before the die is cast and the incurring of further disproportionate costs on both sides becomes inevitable. If the parties have not reached an accommodation by then, I will be concerned (to the extent that this is consistent with any claim for privilege that may be made) to see correspondence between the parties setting out the positions they have taken. On the basis of these reasons and that correspondence and any other evidence as to what has happened, I will then decide whether to make orders of the kind sought by the appellant, or to refuse to make those orders, with the appellant to pay the respondent's costs of the Notice of Motion to date.
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