Re Keating [2015] VSC 371 (31 July 2015)

1 The plaintiff ('STL') is the executor of the estate of Desmond Keating deceased. He was survived by his adult children, Mr Oisin Keating ('Mr Keating') and Ms Naomi Calligaro ('Ms Calligaro').

2 The deceased died on 1 September 2009, leaving a will dated 23 November 2005. His will appoints Mr Keating as the executor of his estate. The deceased's will bequeaths four fifths of the net estate to Mr Keating with the remaining one fifth to Ms Calligaro. In the event that Ms Calligaro fails to obtain a vested interest, the one fifth share of the net estate is to be paid to the Starlight Children's Foundation Australia ('Starlight').

3 STL commenced acting as the executor of the estate on 2 September 2009 and then withdrew following the later discovery of an undated handwritten will. The handwritten will appointed Mr Keating as the executor of the estate and provided that Mr Keating receive 70 per cent of the net estate, with Ms Calligaro receiving the remaining 30 per cent. Mr Keating did not seek to obtain a grant of the handwritten will.

4 Pursuant to the request of Mr Keating, STL made application for a grant of probate of the deceased's will dated 23 November 2005. On 29 July 2011, probate of that will was granted to STL.

5 The principal asset of the estate was a property in Seaford ('the property'), which has now been sold. During the preparation of the property for sale, STL determined that certain personal items at the property belonged to Ms Calligaro. It removed the items from the property and placed them in storage. The items comprise ten bags of clothing and shoes, a bicycle and helmet, a printer, two sewing machines, an alarm clock, a compact disc player and a photo album. STL deposed that none of the items has any commercial value and estimate the total value between $130-$160.

6 Mr Keating's share of the estate was distributed to him on 29 January 2013. As at 20 March 2015, Ms Calligaro's share of the estate was $81,012.70 with interest accruing on that amount.

7 Extensive correspondence has taken place between STL and Ms Calligaro,[1] as well as with her husband, Dr Calligaro, although no signed authority has been provided authorising Dr Calligaro to act on his wife's behalf. Both Ms Calligaro and her husband reside in the United Kingdom. STL has been provided with two postal addresses (although STL has not sent any correspondence to Ms Calligaro at the second postal address) and an email address for Ms Calligaro. STL has also received emails from Dr Calligaro's email address.

8 Despite the extensive correspondence, however, information required of Ms Calligaro by STL for the purposes of winding up the estate has not been provided by her. STL has sent requests for declaration of identity documents and also asked for bank account details from Ms Calligaro. She has not provided any of this information to STL. This is despite email correspondence being received by STL from either Ms Calligaro or Dr Calligaro that contained numerous serious, though vague, allegations of misconduct on STL's part. No plausible explanation has been provided to STL as to why the requested information has not been forthcoming.

9 STL submits that it can be inferred that whoever is responding to the correspondence sent to Ms Calligaro - whether it be her or her husband - he or she is actively preventing the winding up of the estate by repeatedly failing to respond to STL's requests for the necessary documentation and information.

10 In the circumstances as outlined, STL issued an originating motion[2] seeking the guidance and approval of the Court and ancillary orders relating to the administration of the estate of the deceased, pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2005.

(a) the Court's approval to refuse to recognise Ms Calligaro's claim and to serve a notice under s 30A of the Administration and Probate Act 1958 ('the Act'); and

(b) the Court's approval to give notice to Ms Calligaro and dispose of her personal items in accordance with s 60 of the Australian Consumer Law and Fair Trading Act 2012.

12 On the first return date for directions, the Court directed STL to provide written submissions addressing the applications made by STL as well as whether Ms Calligaro should be joined as defendant to this application.

Administration and Probate Act 1958 s 30A

30A State Trustees' power to make distribution after notice of refusal

(1) If State Trustees refuses to recognise in whole or in part the claim of any person against the estate of any deceased person, State Trustees must serve a notice of the refusal specifying that proceedings to enforce the claim must be instituted within 3 months of the notice being served on the person by registered post to the person's last known address.

(2) If the person does not institute proceedings to enforce the claim within 3 months of being served with the notice of refusal State Trustees may distribute the assets of the deceased person without regard to the claim specified in the notice of refusal.

(3) After the distribution is made the right of the person to recover the claim specified in the notice of refusal is absolutely barred.

14 In determining whether STL can make use of this provision in these circumstances, the Court needs to be satisfied that the application comes within the scope of s 30A of the Act, namely: whether a claim of a legatee falls within the section; whether Ms Calligaro has a 'claim' in accordance with the section; and whether STL can legitimately refuse to recognise that claim.

Does the claim of a legatee fall within s 30A of the Act?

15 Although no case law exists in Victoria that assists in the determination of this question as it relates to s 30A specifically, STL submits that there is little uncertainty as to the common law position in this jurisdiction. In support of its submission, STL relies upon the case of In the Will of Walker, in which two people both claimed to be entitled to an annuity under a will.[3] Rather than choose between them, the executor trustee company published notices under a provision then similar to s 30A of the Act regarding claims brought 'against' the estate, and brought proceedings. In his decision, Nicholas CJ in Eq made the following remarks:

By s. 92 an executor is relieved from liability for claims of which he does not receive notice within the prescribed time after having published the requisite notices. By s. 93 he is relieved from liability for claims of which he has had notice, if he takes the necessary steps and, not being the Public Trustee, he obtains the order of the Court. By s. 95 the rights of persons interested are preserved as against beneficiaries or next of kin, although the executor is freed from liability: cf. Perpetual Trustee Co. (Ltd.) v. Permanent Trustee Co. of N.S. W. Ltd. In Newton v. Sherry, which was referred to with approval by the Privy Council in Guardian Trust and Executors Company of New Zealand, Ltd. v. Public Trustee of New Zealand, it was held by a Court of Appeal that the English section corresponding to s. 92 of the New South Wales Act referred to next-of-kin as well as to creditors. In In re Griffin (Deceased) Myers C.J., when considering s. 3 of the Administration (Amendment) Act, 1911, of New Zealand, a section corresponding in its object to s. 93 of the Wills, Probate and Administration Act, 1898-1940, held that the Court had no power to bar a claim of an institution claiming to be a legatee, and that the word "against" in the section was not an apt word to describe such a claim. His Honour held that there was a distinction between next-of-kin and legatees, so that Newton v. Sherry was not an authority opposed to his decision.

It appears to me that in the context in which they are found in the Wills, Probate and Administration Act, 1898-1940, ss. 92 and 93 should be treated as applicable to persons claiming to be legatees as well as to those who claim to be creditors or next-of-kin. There is no case in which the distinction drawn by Myers C.J. has been found to be applicable to the English Act or to the New South Wales Act, and in In re Dalton (Deceased) Blair J., without discussing the authorities, held that s. 74 of the New Zealand Trustee Act, 1908, which corresponds with s. 60 of the New South Wales Trustee Act, 1925-1942, might be applied to a person who claimed to be a legatee, and did not draw a distinction between legatees and next-of-kin. A person who claims to be a legatee would be affected by an application under s. 93 only if his claim were disputed by the executor. If there were no ambiguity or difficulty in the will, but the executor was doubtful where the legatee could be found, or whether he was alive or dead, payment might be made to the Public Trustee under s. 47 of the Public Trustee Act, 1913-1942, or the money might be paid into Court, or an order might be obtained similar to that made by Joyce J in In re Benjamin. See also In re Gess. If there is no ambiguity in the will or difficulty of administration, the legacy must be paid by the executor if the assets enable him to do so. If there are disputable claims, then it appears to me that the executor has the right under s. 93 to call upon a claimant to prosecute his claim and, if he fails to do so, the executor is entitled to apply to the Court for an order barring the claim.

The corresponding section of the New Zealand Act is in a different setting from that of ss. 92 and 93 of the Wills, Probate and Administration Act, 1898-1940, but, with the greatest respect, I find myself unable to appreciate the distinction drawn by Myers C.J. in In re Griffin (Deceased) between persons who claim as next-of-kin and persons who claim to be identical with the legatee mentioned in the will.[4]

16 The distinction in In re Griffin (Deceased)[5] to which his Honour referred was drawn by Myers CJ and had its basis in the contention that a claim by a person entitled to a legacy given by the will of the deceased was not a claim against the estate, but rather a claim to a portion of that estate.[6] Nicholas CJ in Eq's rejection of this interpretation was preferred by the New Zealand Court of Appeal in Re Long,[7] which remarked in obiter[8] that:

The section has been considered in only one case in New Zealand - namely_, In re Griffin_ - where Sir Michael Myers, C.J., held that it did not apply to a claim by a person to be entitled to a legacy given by the will of the deceased, on the ground that such a claim was not a claim against the estate, but was a claim to a portion of the estate. He further said that a claim under s. 3 must be such a claim as is contemplated by s. 74 of the Trustee Act, 1908, and he appears to have considered that the claim of the alleged legatee could not have been disposed of under the last-mentioned section, and, accordingly, could not be a "claim against the estate" under s. 3 of the Administration Amendment Act, 1911. With great respect, we think that that case was wrongly decided, and should not be followed, and in this respect we prefer the decision of Nicholas, C.J. in Equity, who, in In the Will of Walker, declined to follow Griffin's case. We think a person who claims to be entitled to a portion of the assets of an estate, whether in money or in property, is making a claim against the estate, irrespective of whether the basis of the claim is a legacy under the will, a claim as next-of-kin, or some other basis.[9]

17 The issue was put beyond doubt in New South Wales when the New South Wales Parliament, in 2009, amended s 93 of its Probate and Administration Act 1898 to expressly include legatees, thereby confirming the decision in In the Will of Walker.[10] That section now relevantly reads:

93 Claims barred against executor or administrator in certain cases

...

(3) Where:

(a) in its capacity as executor or administrator, the NSW Trustee or a trustee company:

(i) disputes any claim upon an estate (whether the claimant claims to be a creditor or to have a beneficial interest in the estate), and

(ii) has served on the claimant a notice in accordance with subsection (1), and

(b) the claimant has not, within the period of 3 months referred to in the notice served in accordance with subsection (1), commenced proceedings to enforce the claim,

...the NSW Trustee or the trustee company may serve a further notice on the claimant that unless, within the period of 2 months from the date of service of that further notice, the NSW Trustee or the trustee company is duly served with process of court issued in proceedings to enforce the claim, the NSW Trustee or the trustee company will distribute the estate without regard to the claim.

(4) If, within the period of 2 months referred to in a notice served on a claimant in accordance with subsection (3), the NSW Trustee or a trustee company has not been duly served with process as referred to in that subsection, the claimant's claim shall thereupon be barred and become irrecoverable as against the NSW Trustee or the trustee company and the NSW Trustee or the trustee company may proceed to distribute the estate without regard to the claim.[11]

18 Although the question of whether a 'claim of any person against the estate' extends to claims by legatees has not been determined in Victoria, in my view, this Court should follow the reasoning in Re Walker which was approved by the New Zealand Court of Appeal in Re Long. This is so, in particular, as the Court in Re Long held that Re Griffin was wrongly decided. In following Re Walker, this means that the terms of s 30A do encompass legatees.

Does Ms Calligaro have a claim against the estate?

19 Ms Calligaro is a beneficiary under the deceased's will, and therefore has, prima facie, a claim against the estate. Further, she maintains that she has such a claim, and has at no time renounced it. All of the correspondence that has passed between Ms Calligaro, and/or her husband, and STL occurred in the context of a clear understanding that Ms Calligaro was actively concerned about STL's conduct in the administration of the estate. It seems likely that Ms Calligaro claims her inheritance from the deceased's estate under the handwritten will, as evidenced by the following email extract received by STL on 20 May 2014 from Dr Calligaro's email address:

I am referring here to my father-in-law's valid [handwritten] Will, not the Will which State Trustees of Victoria had drawn up previously (lucratively appointing State Trustees of Victoria as the Executors), and which State Trustees of Victoria fraudulently filed for Probate.

...

Please be aware that the valid [handwritten] Will of my father-in-law did not appoint State Trustees of Victoria as his Executors, as by that stage he had been living in the State of Victoria long enough to have learnt that State Trustees of Victoria is an organization which does not deserve respect or trust. Please also be aware that this valid handwritten Will of my late father-in-law also gave my wife - who has been a thorn in the side of State Trustees of Victoria for years, because we will not give up on writing highly uncomfortable home truths and calling it to account - a higher percentage of my father-in-law's Estate than the one which State Trustees of Victoria fraudulently filed for Probate.

20 The handwritten will has not admitted to probate, however, and despite the allegation that the probate application in relation to the will was fraudulently filed, no attempt has been made on Ms Calligaro's part to revoke it. Nor has any such attempt been foreshadowed. Later correspondence directed to STL from Ms Calligaro also supports the view that, although she is not actively prosecuting her claim against her father's estate, she has not abandoned it. Rather, it seems that she is choosing not to co-operate with STL in its administration of the estate. In those circumstances, I find that Ms Calligaro does have a claim against the estate as required by s 30A.

Can STL refuse to recognise Ms Calligaro's claim?

21 The key question needing to be resolved is whether the terms of s 30A would allow STL to refuse to recognise the legitimate claim that Ms Calligaro has against the estate, in light of her conduct. The section provides that if STL were able to do so, it would be required to serve a notice of refusal, and would then - should Ms Calligaro fail to institute proceedings within the three month period stipulated - be at liberty to distribute Ms Calligaro's share of the estate without regard to her claim.

22 In support of its contention that it ought be allowed to refuse to recognise the claim in question, STL refers to the NSW case of Application of the NSW Trustee and Guardian; Estate of SGB,[12] in which the NSW Trustee sought the advice of the court regarding the distribution of the balance of an intestate estate, with both parents entitled to take. The NSW Trustee distributed to the mother but had difficulty locating the father, and discovered that he lacked capacity. The mother said she had outstanding claims against the father. The father's attorney reportedly renounced his entitlement by telephone, but not in writing. White J stated as follows:

Provided the disclaimer of the person who described herself as Mrs [W] is genuine, the NSW Trustee is entitled to act on it. On the other hand if the disclaimer is not genuine and Mr [W], through his attorney, makes a claim on the estate, then prima facie the outstanding share of the estate (after the deduction of the NSW Trustee's costs and expenses) should be remitted to him or to Mrs [W] as his attorney. However, that is subject to any claim to which the deceased's mother might be entitled.

... I consider that the NSW Trustee is entitled to the protection of judicial advice before making a distribution of the balance of the estate. The estate is small. The NSW Trustee will be entitled to be indemnified out of the estate for its costs and expenses and there is a risk that the balance of the estate might be wholly dissipated if any substantial further costs are incurred arising from litigated claims. Nonetheless, if Mrs [W] does not confirm her advice that on behalf of her husband she disclaims his share of the estate, but instead claims that share, and if the deceased's mother maintains her claim against that share of the estate, it is inevitable that the claims will have to be dealt with by the Court.

It appears to me that the NSW Trustee is entitled to proceed on the basis that the telephone advice received that Mrs [W] on behalf of her husband disclaims his share of the estate is genuine, that the disclaimer is effective, and that the NSW Trustee would be justified in distributing the balance of the estate to the deceased's mother. That, however, is subject to formal notice being given to Mrs [W] of the intended distribution of the estate and to her either confirming in writing that she has no opposition to the distribution, or her not making any application to the Court on behalf of her husband for an order or direction of the Court for payment of the balance of the estate.[13]

23 STL submits that the present situation is similar to that described in Estate of SGB, in that STL reasonably requires Ms Calligaro to take clear action in regard to her entitlement or let it flow to Starlight according to the terms of the deceased's will.

24 There are, however, several differences between the present situation and the situation in Estate of SGB. The Trustee in that case had made many attempts to contact the deceased's father in the nursing home in which he resided, with the latter's failure to respond attributable to the fact that he suffered from advanced dementia. The mother, who was a co-beneficiary under the deceased's will, claimed back payments of unpaid child maintenance stemming from her raising the deceased, who was a 'special needs child', as a single parent. Further, White J noted that the father had 'no moral claim' to the deceased's estate, and would therefore not wish to make a claim against the estate if he were capable.[14] Finally, the claim on the estate in that case had been orally renounced.

25 In the present situation, Ms Calligaro does not lack capacity and has been expressly provided for under the terms of the will, as opposed to a share of the estate on an intestacy. However, Ms Calligaro does not seek to revoke the grant of probate, has failed to prove her identity or appoint an attorney and has evidenced no intention of renouncing her claim against the estate.

26 In the absence of any co-operation by Ms Calligaro, STL cannot distribute her share of the estate to her without the approval of the Court. Although the deceased died in September 2009, the administration of this estate with STL as the executor proceeded after a grant of probate was made on 29 July 2011. Such a lengthy administration for a modest estate is not to be condoned and the estate should be finalised as soon as practicable. By giving approval to the proposed course of action under s 30A of the Act, STL is able to refuse to recognise her claim as a valid and proper course of action but Ms Calligaro will have sufficient time within which to initiate an outcome, whether it be by way of constructive communication, litigation or abandonment of her rights. This will resolve the issues facing STL whilst at the same time preserving Ms Calligaro's rights within the time limits specified by s 30A of the Act.

Australian Consumer Law and Fair Trading Act 2012 s 60

27 As stated, STL has in its possession various personal items valued at $130 - $160 belonging to Ms Calligaro. STL's requests of Ms Calligaro for instructions as to the disposal of these items have not been answered. No plausible explanation has been provided to STL as to why the requested information from Ms Calligaro has not been forthcoming.

28 STL has requested instructions and/or co-operation in delivering those personal items to Ms Calligaro, or in their disposal, on nine separate occasions. Although three separate items of correspondence have been received in which Ms Calligaro has directed STL to preserve the personal items, she has not provided any direction as to their delivery or disposal. STL notes that it is not economic to ship the personal items to the United Kingdom, as Ms Calligaro has not agreed to the offers to ship them at her expense. STL has been quoted shipping costs at $2,300. The shipping of the personal items is not properly an estate expense.

29 Section 60 of the Australian Consumer Law and Fair Trading Act 2012 provides a procedure allowing for the disposal of low value goods after notice to the appropriate person, as follows:

Section 60 Low value uncollected goods

(1) A receiver may dispose of low value uncollected goods if -

(a) the receiver has given the provider written notice of the receiver's intention to dispose of the goods; and

(b) 28 days have elapsed since the giving of the notice and the provider has not taken delivery of the goods or given directions as to their delivery.

(2) A receiver may dispose of low value uncollected goods if -

(a) the receiver cannot locate or communicate with the provider in order to provide written notice under subsection (1) after making reasonable attempts to do so; and

(b) 60 days have elapsed since the goods became uncollected goods.

(3) Goods may be disposed of under this section by sale, destruction, appropriation or any other means.

30 The definitions section of the Australian Consumer Law and Fair Trading Act provides that low value goods are those worth less than $200. STL submits that, as it has lawful possession of the goods as the executor of the estate and through its administration of that estate, Ms Calligaro is a 'provider' for the purposes of s 3, and STL is a 'receiver', as it took possession of the goods under a bailment.

31 In the circumstances, it is reasonable to infer that the personal items have no significant value to Ms Calligaro and it is reasonable to conclude that her failure to direct how the items should be dealt with flows from the same motivation as her failure to verify her identity and provide her banking details to STL. Although the personal items are not estate assets, they are in the possession of STL. In my view, it is reasonable for STL to seek the Court's indemnity and advice in regard to resolving what should be done with the personal items. This is particularly so because Ms Calligaro's responses thus far do not assist STL at all. I accept STL's submission that Ms Calligaro will express discontent with whichever course of action STL takes in respect of the disposal of the personal items.

32 Accordingly, it is in the interests of Ms Calligaro and STL for the Court to approve that STL should follow the process outlined in s 60 Australian Consumer Law and Fair Trading Act 2012 in regard to the personal items.

Should Ms Calligaro be joined as a defendant to this proceeding?

33 STL could have joined Ms Calligaro as a defendant to this proceeding pursuant to r 54.03(c) of the Rules as she has a 'beneficial interest in or claim against the estate' although STL submits that she need not be a party and STL need only have joined her if it saw fit.

34 The Court could also make orders on its own motion if it determines that she is a necessary party under r 9.03, or in its inherent jurisdiction and case management powers.

35 STL submits that, in accordance with its duties to the estate of the deceased, it has considered and proposed the procedures under s 30A of the Act and s 60 of the Australian Consumer Law and Fair Trading Act having regard to procedural fairness for Ms Calligaro.

36 I am satisfied in the circumstances that Ms Calligaro is not a necessary party and should not be joined as a defendant to this application pursuant to r 54.03(c) of the Supreme Court (General Civil Procedure) Rules for a number of reasons.

37 The application is not determinative of any of Ms Calligaro's substantive rights, but is intended to provide guidance and protection to STL in choosing procedural matters in the administration of the estate.

38 Both provisions provide for notice to be given to Ms Calligaro of STL's proposed actions, giving her the opportunity to choose her own outcome once and for all and it will resolve the issues whilst preserving her rights for a limited time. The procedures ensure that she has notice of STL's proposed actions before any of her rights are permanently lost.

39 On 24 November 2014, Ms Calligaro was put on notice, that STL intended to approach the Supreme Court for directions as to how it ought to proceed in finalising the administration of the estate, with no response having been received from her.

40 The correspondence between Ms Calligaro and/or her husband and STL indicates that they are unlikely to be co-operative in the Court's procedures and Ms Calligaro's residence in the United Kingdom would mean that expense and delay would be incurred in joining her to the proceeding, contrary to the overarching purpose enshrined in s 7 of the Civil Procedure Act 2010.

41 In seeking the approval of the Court for its actions as outlined, STL has stated that it will ensure that all notices to Ms Calligaro will be sent to her four known addresses. This exceeds the notice requirements under the relevant Acts but it is a prudent and sensible course in the circumstances.

42 In making the orders under s 30A of the Act, Ms Calligaro will receive written notice of at least three months that her entitlement under the deceased's will would be paid to Starlight if she did not initiate a claim or, if she provided the required information verifying her identity and her bank account, the estate could be wound up promptly.

43 In making the orders under s 60 of the Australian Consumer Law and Fair Trading Act 2012, Ms Calligaro will receive written notice of at least 28 days that her personal items would be disposed of unless she provides directions to STL.

44 Both procedures ensure procedural fairness to Ms Calligaro and ensures that she remains in control of her rights and interests within the specified time frame under the relevant sections.

45 Lastly, and importantly from STL's position as the executor of the estate, it will have the security of the Court's approval for taking the actions under s 30A of the Act and s 60 of the Australian Consumer Law and Fair Trading Act 2012 enabling it to finalise the administration of the estate of the deceased.

(a) The plaintiff have leave to serve a notice on Ms Calligaro that it will refuse her claim pursuant to s 30A of the Administration and Probate Act 1958;

(b) The plaintiff have leave to serve a notice on Ms Calligaro that it will dispose of her goods held by them pursuant to s 60 of the Australian Consumer Law and Fair Trading Act 2012;

(c) The plaintiff serve the above notices on Ms Calligaro by registered international post to the two postal addresses and to the two email addresses listed in Exhibit KB-1 to Ms Karen Bradshaw's affidavit sworn 15 April 2015.

(d) The costs of this application be had and retained out of the estate of the deceased.

[1] STL sought to contact Ms Calligaro via her postal address on file, an email address, and another postal address subsequently provided to STL. Both addresses are in the UK. Replies were received from an email address apparently belonging to Dr Calligaro.

[2] In Form D where there is no defendant.

[3] [1943] NSWStRp 26; (1943) 43 SR (NSW) 305.

[4] Ibid 306-7 (citations omitted, emphasis added).

[5] [1940] NZLR 174.

[7] In re Long (Deceased) [1951] NZLR 661.

[8] The claimant in this matter was not a legatee, but had a contractual claim against the Public Trustee administrator.

[9] Ibid 670 (citations omitted, emphasis added).

[10] [1943] NSWStRp 26; (1943) 43 SR (NSW) 305.

[12] [2015] NSWSC 398 (9 April 2015).