Plaintiff v Defendant

2 Applications for further provision from the estate of a deceased must be made within six months of the date of a grant of probate or letters of administration unless the Court exercises its discretion to extend the time under section 99 of the Act.

3 The time within which the plaintiff could make a claim for further provision expired on 27 March 2011. The plaintiff made her application for an extension of time on 27 February 2012.

4 The deceased died on 1 July 2010 leaving a will dated 8 April 2004. Probate of the will of the deceased was granted on 27 September 2010 to the defendant, the son of the deceased.

5 Under her will, the deceased left her estate as follows:

(a) Her crystal cabinet and crystal, all her jewellery and the sum of $5,000 to her granddaughter, Andrea Lea Walpole (the plaintiff's daughter).

(b) The sum of $4,000 to each of her grandsons, Steven Thomas Pettitt, Michael Andrew Pettitt and Christopher Andrew Pettitt, and to her granddaughter, Grace Elizabeth Pettitt (the defendant's children).

(c) The sum of $1,000 to her daughter, the plaintiff.

(d) After payment of debts and expenses, the residue of her estate to the defendant.

6 The inventory of assets of the estate disclosed that the estate comprised cash of $26,884.82 and real estate, being a house and land at 11 Wesley Street, Yarram ("the Property").

7 By letter dated 19 August 2010 from the defendant's solicitors to the plaintiff, the plaintiff received a copy of the deceased's will.

8 By letter dated 10 September 2010, amongst other things, the plaintiff's solicitors requested a copy of the inventory of assets of the deceased's estate.

9 By letter dated 17 September 2010, the defendant's solicitors wrote to the plaintiff's solicitors enclosing a copy of the inventory of assets and advised, amongst other things, that they would inform the plaintiff's solicitors once probate of the will had been granted.

10 By letter dated 5 October 2010 to the defendant's solicitors, the plaintiff's solicitors thanked them for a copy of the inventory and requested further information in relation to the payment of moneys due to the deceased for a property, which was determined not to be a part of the estate.

11 On 7 October 2010, in response, the defendant's solicitors wrote a letter to the plaintiff's solicitors advising that probate of the will of the deceased had been granted and enclosed a copy of the grant of probate.

12 There was no further correspondence between the solicitors after this date.

13 On 28 February 2011, the plaintiff's solicitors sought to file electronically an originating motion on behalf of the plaintiff seeking further provision from the estate of the deceased. The electronically filed document was not accepted by the Court (for reasons not explained in the evidence). The plaintiff's solicitors did not serve a copy of the originating motion on the defendant's solicitors at the time they attempted to file the document.

14 On 2 March 2011, the plaintiff met with her solicitors and swore an affidavit in support of the originating motion. Again, the plaintiff's solicitors did not file or serve the affidavit on the defendant's solicitors. There was no explanation as to the reasons for this failure.

15 By letter dated 8 April 2011 to the plaintiff, the defendant's solicitors advised that they had instructions from the defendant, as the executor of the estate, to finalise the estate and to make distributions to the various beneficiaries under the will. The letter enclosed a cheque for $1,000, being the legacy due to the plaintiff under the will of the deceased. In her affidavit, the plaintiff deposed that she did not cash the cheque for $1,000 because she was aware that she was making a claim and thought that if she cashed the cheque, it would mean that she had accepted that amount from the estate.

16 By originating motion dated 27 February 2012, the plaintiff sought further provision from the estate of the deceased. A summons seeking an extension of time within which to issue proceedings was not filed by the plaintiff, however, the application before me was heard on the basis that such an application had been made.

17 The plaintiff's evidence, by way of affidavit, of her past and present circumstances is as follows:

(a) She is presently aged 67 years. She married when she was aged 29 years and had a daughter in 1974. She now has three grandchildren aged from seven years to two years.

(b) She divorced her husband in approximately 1984. With the proceeds of the Property settlement, she purchased a unit behind the deceased's house. She sold that unit in approximately 2002.

(c) Her relationship with the deceased was good until 15 years ago when they had a disagreement after which they barely spoke to each other. At around that time, she moved in with a friend and she pays half of the household expenses.

(d) Her work history includes a number of years in the air force as a telephonist and, subsequently, employment in hotels until her retirement in 2011.

(e) She has approximately $90,000 in savings from the sale of her unit and expects to receive a further distribution of $30,000 from SESI Ltd. She owns a motor vehicle and receives a pension of $620 per fortnight.

(f) Her health is poor. She has high blood pressure and says that a sore knee led to her retirement from work.

(g) She believes, as best known to her, that the defendant is financially secure and that he works as an optometrist.

18 The plaintiff also gave evidence that "[she] do[es] not seek to take away any of the specific bequests in the will, [she] simply seek a share of the residuary estate of which the defendant is the sole beneficiary."[1]

19 The defendant's solicitor gave evidence, by way of affidavit, that:

(a) The payments made to Andrea Lea Walpole and the plaintiff, being their entitlements under the will of the deceased, were made on 8 April 2011.

(b) The Property was registered in the name of the defendant, as the beneficiary of the will of the deceased, on 13 April 2011.

(c) After payment of the amounts referred to in (a) above and the costs and disbursements of the estate, there was a cash balance in the estate of $8,566.10.

(d) By letter dated 11 April 2011, the defendant's solicitors informed the defendant that the amounts referred to in (a) above had been paid, confirmed that the defendant would arrange for the payment of $4,000 to each of Steven Thomas Pettitt, Michael Andrew Pettitt, Christopher Andrew Pettitt and Grace Elizabeth Pettitt in accordance with the deceased's will and that the defendant had provided an undertaking that he would attend to making the payments directly to the legatees. The solicitors also advised that the transfer of land for the Property into the defendant's name as beneficiary had been lodged at the Land Titles Office and, as the administration of the estate was complete, enclosed a trust account cheque for $8,566.10, being the balance of the funds held on behalf of the estate.

20 During the hearing of the application, counsel for the defendant, without objection by the plaintiff, provided details of the payments by the defendant to the four legatees. A total of $4,500 was paid by the defendant before the plaintiff issued her originating motion on 27 February 2012 and the balance of $11,500 was paid after that date. The details of the payments were as follows:

* payments before the issue of the plaintiff's originating motion

Applications for an Extension of Time under section 99 of the Act

21 Section 99 of the Act provides:

No application shall be heard by the Court at the instance of a party claiming the benefit of this Part unless the application is made within six months after the date of the grant of probate of the will or of letters of administration (as the case may be):

Provided that the time for making an application may be extended for a further period by the Court after hearing such of the parties affected as the Court thinks necessary, and this power shall extend to cases where the time for applying has already expired but in all such cases the application for extension shall be made before the final distribution of the estate and no distribution of any part of the estate made prior to the application shall be disturbed by reason of the application or of any order made thereon.

Provided further that the time for making an application under this Part shall be extended by a period equal to the period between the commencement of proceedings in an application under Part V and the making of an order by the Court granting or dismissing the application.

22 The power to extend time is discretionary and is a power which must be exercised judicially. The authorities have "repeatedly stated that the six month time limit in the Act is there for good reason. The time limit is a substantive provision, not merely procedural and the burden on the applicant is no triviality."[2]

23 There are two qualifications within section 99 with respect to the granting of an extension of time. The first is that an extension shall only be granted before the final distribution of the estate and the second is that no distribution of any part of the estate made prior to the application shall be disturbed by reason of the granting of the extension of time.

24 Other considerations relevant to the discretion to grant an extension of time, and relevant for present purposes, are the reasons for the plaintiff's delay[3] and the merits of the claim for further provision of the estate. [4]

25 The onus of proof in applications for extensions of time is born by the plaintiff.[5]

26 The plaintiff submitted that the failure by the plaintiff to issue her application seeking further provision from the estate of the deceased was the fault of her solicitors. A plaintiff will not ordinarily be shut out from making a claim when the reason for the failure to comply with a time limit is due to the error, omission or negligence of a solicitor. [6]

27 An explanation for the failure to issue the proceeding was provided by the plaintiff's solicitors, but, as stated above, no explanation was provided by them for the failure to serve the originating motion and affidavit in support on the defendant or his solicitors.

28 When the plaintiff became aware of the right to apply for an extension of time, she acted promptly. The failures of the plaintiff's solicitors are not the fault of the plaintiff. In my view, the plaintiff should not be penalised for the failures of her solicitors.

Consideration of the Merits of the Plaintiff's Claim for Provision

29 In considering the merits of the claim, the Court must have regard to the criteria set out in section 91(4)(e)-(p) of the Act. Whether the deceased failed to make adequate provision for the proper maintenance and support of an applicant is determined by a consideration of the facts and matters known to the deceased at the time of his or her death.[7] A wise and just testator is deemed to be aware of the relevant circumstances prevailing at the time of death but the testator will only be deemed to be aware of subsequent events to the extent that they were reasonably foreseeable at the time of death.[8]

30 For the purposes of this application, I am not required to determine the claim for further provision and my view has no binding force on the ultimate issue at any trial. The relevant determination for me to make is whether there is evidence of an arguable case.[9] However, whilst evidence of an arguable case is a relevant consideration it will not of itself be reason enough to grant an extension of time.[10]

31 In my view, the plaintiff has an arguable case, and not a hopeless case. As a daughter of the deceased, the deceased, prima facie, had a responsibility to make provision for the plaintiff's proper maintenance and support. Although a small provision of $1,000 was made by the deceased for the plaintiff, having regard to the evidence of the plaintiff[11] as it relates to section 91(4)(e)-(p) of the Act, the plaintiff has established that the provision is not proper maintenance and support based on her circumstances, her financial position and need as at the date of death of the deceased.

Whether There Has Been Final Distribution of the Estate

32 The law as to when an estate is finally distributed for the purposes of section 99 of the Act was outlined by the High Court in Easterbrook v Young.[12] The High Court gave great weight to the policy and purpose of testator's family maintenance legislation and said that it:[13]

is the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the ... beneficiary [that renders the estate finally distributed].

33 The defendant opposed the plaintiff's application for an extension on the grounds that the application was made after final distribution of the estate and, since final distribution has taken place, it cannot now be disturbed.

34 The defendant relied on the fact that approximately ten months before the application for extension was made, namely, by 13 April 2011, the estate of the deceased had been finalised.

35 In contrast, the plaintiff submitted that, for various reasons as set out below, final distribution of the estate had not occurred, that the administration was continuing and the Property still formed part of the estate of the deceased.

36 The plaintiff contended that there had not been final distribution of the estate of the deceased and the administration of the estate must be continuing because there is no proof that the defendant has not paid the legacies due to the four legatees under the will of the deceased. This submission has been answered by the defendant's counsel providing the details of the payments made by the defendant to the four legatees.[14]

37 The plaintiff further submitted that the estate was not distributed because the defendant, by paying the sum of $8,566.10 to himself when he was not entitled to do so (as the legacies remained unpaid), breached his fiduciary obligations. The plaintiff argued that the defendant remained in breach of those obligations until such time as the four legacies were paid and, accordingly, the sum of $8,566.10 was held on a constructive trust by the defendant for the benefit of the estate.

38 In my view, the defendant has not breached any fiduciary obligations in making the payment of $8,566.10 to himself. At the time the payment was made to him, the defendant had undertaken to pay the legacies directly to his children in accordance with the deceased's will. There is no evidence that the defendant's children were dissatisfied with or objected to this course. The legacies were paid to them by the defendant. In my view, by reason of these facts, the sum of $8,566.10 cannot be said to be held on a constructive trust for the benefit of the estate.

39 The plaintiff then contended that the defendant was not entitled to the transfer of the Property until the four legatees were paid. The plaintiff submitted that the evidence demonstrated that the defendant transferred the Property for the purpose of paying out the four legatees and therefore the defendant had breached his fiduciary duty in transferring the Property to himself. Accordingly, it was submitted that the Property has not been finally distributed but rather is being held on trust by the defendant for the benefit of the estate.

40 In support of this contention, the plaintiff relied on the Administration Account which was exhibited to the defendant's solicitors' affidavit.[15] The plaintiff submitted that the Administration Account stated that the Property is "transferred to the Defendant pending sale and that the proceeds to be paid to nominated beneficiaries after sale."[16]

41 Further, senior counsel for the plaintiff relied on the decision of Holdway v Arcuri Lawyers (A firm)[17]. In that case, the executor of the estate was also the sole beneficiary under the will. The executor transferred the two properties that comprised the estate to himself. An issue in the case was whether the transfer amounted to a final distribution of the estate. At trial, it was found that the Property was transferred on the basis that it was available to meet the debts of the estate and that "there was not the assent to a distribution which is essential to a distribution of the beneficial interest in the asset to the devisee under the will."[18]

The view taken by the learned trial judge in this regard accords with that taken in de Groot and Nickel, Family Provision in Australia, where the following is said:

"In Re Lago it was held that, once the transmission documents have been lodged in the Titles Office and if the beneficiary and personal representative are one and the same person, the estate has been effectively distributed and an extension of time will, at that point, be refused.

It would seem that, if a transmission application but no memorandum of transfer has been lodged, and the personal representative and ultimate transferee are one and the same person, then the estate is no longer in existence and an application for extension will be refused. The position is likely to be different if the transmission was lodged to enable the personal representative and sole beneficiary to sell the property to pay debts of the estate. In these circumstances, the administration of the estate is clearly continuing." (emphasis added)

In the present case, the terms of the deed of compromise and the facts as to the executor's recourse to the sale of the house property to meet the debts of the estate amply support the conclusion of the learned trial judge that the transfer of the real estate to the executor was not a final distribution but a transfer provisional on, and subject to, the completion of the administration of the estate. As at 25 July 2003, that administration was far from complete.

43 In my view, the circumstances of this case can be distinguished from those in Holdway. In that case, the executor needed recourse to the sale of the Property to meet the debts of the estate. It was held that the transfer was provisional upon the completion of the administration of the estate. In this case, when the Property was transferred to the defendant, all of the debts of the estate[20] had been paid. The only outstanding matter in relation to the administration of the estate was the payment to the four legatees, which was the subject of the defendant's undertaking. The undertaking by the defendant completed the administration of the estate. In the event that the defendant failed to comply with the undertaking, the legatees' cause of action against the defendant would have been for breach of the undertaking.

44 In any event, in my opinion, the Administration Account does not demonstrate that the Property was transferred in order to pay the four legatees. The document does not state that the Property is "transferred to the Defendant pending sale and that the proceeds to be paid to nominated beneficiaries after sale."[21]

45 Part B of the Administration Account is headed "Assets Transmitted to Executor Pending Sale" and then describes the Property as being transferred to the defendant as residuary beneficiary. Part C of the Administration Account is headed "Proceeds to be Paid to Beneficiary Upon Finalisation" and then lists the residuary estate to be paid to the defendant and the payment of the legacies to the various legatees under the will.

46 In making this submission, it appears that the plaintiff has amalgamated some of the words in Part B and Part C of the Administration Account to form the quoted words.[22] On reading the document as a whole, in my view, the document does not support the contention that the Property was transferred to the defendant in order to pay the legacies. There was no evidence to suggest that the Property was sold, let alone sold to pay the legacies. In my view, the evidence is that the defendant undertook to pay the legacies to his children in accordance with the terms of the deceased's will and that he complied with that undertaking.

47 Finally, I reject the plaintiff's submission with respect to breach of fiduciary duty. In my opinion, there is no evidence that the four legatees objected to the defendant transferring the Property to himself as residuary beneficiary prior to paying the legacies to them and there is no claim from the four legatees for breach of fiduciary duty.

48 In the alternative, the plaintiff contended that the transfer of the Property to the defendant was simply a purchase by the defendant of the Property. As the defendant was not entitled to the Property (because the legacies were unpaid), he simply purchased it or otherwise acquired it and it was clear that the Property needed to be sold to pay the legacies.

49 In my view, the evidence does not support this submission. The evidence is that the Property was transferred to the defendant as the residuary beneficiary of the estate. There is no evidence to suggest that the Property was purchased by the defendant. It cannot be said that because the Property was transferred to the defendant prior to the payment of the legacies that the defendant purchased the Property.

50 Further, the plaintiff submitted that the defendant's purchase or acquisition of trust Property placed him in a position of conflict and therefore the defendant has breached his fiduciary obligations. In support of this submission, senior counsel relied on the decision of Clay v Clay,[23] and submitted that it is analogous to the present case. In that case, the Court held that the sale by the trustee of trust Property to him or herself is voidable by the beneficiary, however honest and fair the transaction may have been.[24] Counsel submitted that as there is no evidence that the beneficiaries consented to the defendant's acquisition of the Property, in such circumstances, the defendant was in breach of his fiduciary obligations and holds the Property on trust for the benefit of the estate.

51 In my view, this submission should be rejected. As stated above, there was no objection by the four legatees to the undertaking by the defendant for the payment of the legacies.[25] To the contrary, the details of the payment and acceptance of the payment of the legacies confirmed that the four legatees were content with the arrangements.

52 Finally, the plaintiff submitted that the defendant could not undertake to make payments that he was obliged as executor to make. In my opinion, as the legatees were content to accept the undertaking given by the defendant this is not an issue which could disturb the distribution of the estate.

53 I reject all of the plaintiff's submissions in relation to the final distribution of the estate of the deceased. In my view, the final distribution of the estate has occurred and it occurred approximately ten months before the plaintiff's application for extension was filed. In particular, the Property, which the plaintiff seeks to claim should form part of the estate of the deceased, was registered in the name of the defendant some ten months before the application for extension of time was made.

54 While I have determined that the estate has been finally distributed, for completeness I will deal with the defendant's submissions in relation to the Property as it is the Property which would ultimately be the subject of the plaintiff's claim for further provision. As stated above, section 99 of the Act provides that no distribution of any of the estate made prior to the application can be disturbed.

55 Accordingly, the defendant submitted that because registration of the Property in the name of the residuary beneficiary was completed, the distribution of the Property itself cannot be disturbed and there is no discretion available to be exercised under the proviso to section 99 of the Act, that is, no distribution of any part of the estate made "prior to the application shall be disturbed".

56 In making this submission the defendant relied on the decision of Brown v Holt.[26] In that case, the will left the entire estate to the testator's widow, who was appointed executor. The estate included land. After the six month period expired without any application for family provision being made, the solicitor for the executrix prepared and lodged a transmission application and a transfer of the land to her as beneficial owner at the Titles Office. By the time the application for an extension was issued, the widow was registered as proprietor of the land. In that case, Pape J held:

It must follow that if on 8 June 1960 (when the summons for an extension of time was taken out) the testator's estate had been finally distributed, I have no power to make an order extending time.

57 In my opinion, it is clear that the Property was registered in the name of the defendant as residuary beneficiary on 13 April 2011, ten months before the application for extension of time was made. It is clear that the Property itself has been finally distributed and should not be disturbed. Therefore, in the circumstances, there is no discretion to be exercised under the proviso of section 99 of the Act.

58 Accordingly, I dismiss the plaintiff's application for an extension of time. I will hear the parties as to the form of orders and costs of the application.

[1] Amended affidavit of plaintiff in support of application to extend time dated 17 May 2012, [9].

[2] Lexis Nexis Butterworths, Wills Probate and Administration Service (Vic), vol 1 (at Service 46) [39,050].

[3] West v West [1996] TASSC 17; (1996) 5 Tas R 392, 397; Re Nassim (dec'd) [1984] VicRp 5; [1984] VR 51 at 55.

[4] See, for example, Valbe v Irlicht [2001] VSC 53; Groser v Equity Trustees Ltd [2007] VSC 27; (2007) 16 VR 101, 107 [36]-[39]; Ashhurst v Moss [2006] VSC 287; (2006) 14 VR 291.

[5] See, for example, Re Lauer (dec'd) [1984] VicRp 14; [1984] VR 180.

[6] Brown v Holt [1961] VicRp 69; [1961] VR 435, 437-8.

[7] Coates v National Trustees Executors and Agency Co. Ltd [1956] HCA 23; (1956) 95 CLR 494, 507; Blore v Lang [1960] HCA 73; (1960) 104 CLR 124, 130; Prosser v Twiss [1970] VicRp 29; [1970] VR 225, 232.

[8] See Coates v National Trustees Executors and Agency Co. Ltd [1956] HCA 23; (1956) 95 CLR 494, 507-8.

[9] See, for example, Valbe v Irlicht [2001] VSC 53; Groser v Equity Trustees Ltd [2007] VSC 27; (2007) 16 VR 101.

[10] Re Lauer, deceased [1984] VicRp 14; [1984] VR 180, 186 (Young CJ); See also, Ashhurst v Moss [2006] VSC 287; (2006) 14 VR 291, [110 -111] (Hansen J).

[12] [1977] HCA 16; (1977) 136 CLR 308.

[13] Ibid, 316-317, (Barwick CJ, Mason and Murphy JJ).

[15] Affidavit of Trevor Hon Seong Yong sworn 29 May 2012, exhibit THY-1.

[16] See paragraph 41 of the plaintiff's submissions.

[17] [2008] QCA 218, [68]-[78].

[19] Ibid, [77]-[78] (emphasis in original) (citations omitted).

[20] Being "a monetary sum or other charge amounting to value which is owed by the deceased to another at the time of death." Lexis Nexis Butterworths, Wills Probate and Administration Service Victoria, vol 2 (at Service 11) [75,015.20].

[21] See paragraph 41 of the plaintiff's submissions.

[23] [2001] HCA 9; (2001) 202 CLR 410.

[26] [1961] VicRp 69; [1961] VR 435, 443.