MATTER : Estate of Shaun James Robbins late of Unit 4, Lot 455 Prinsep Road, Jandakot, Western Australia, Irrigation Technician, Deceased Intestate

Probate and administration - Intestacy - Application for letters of administration by surviving widow - Common form proceedings - Uncertainty as to the liabilities of the estate and the entitlement to distribution - Infant children - Alleged debt to applicant widow - Uncertainty of proof - Registrar's referral to judge - Unavailability of certain assets of the deceased for the payment of estate debts - Apparent insolvency of the balance of the estate available to creditors - Inability of applicant's alleged debt to be satisfied from distributable assets - Application for appointment of the Public Trustee to represent infant children - Administration Act s 17A - Appointment of trustee for separate part of intestate property - The effect of partial insolvency of the estate upon the application for administration and the conduct of administration - Priority of claims

Administration Act 1903 (WA)

Bankruptcy Act 1966 (Cth)

Life Insurance Act 1995 (Cth)

Trustees Act 1962 (WA)

Order for grant of letters of administration to be made to the applicant on conditions and subject to any further requirements of the probate registrar

1 EM HEENAN J: Shaun James Robbins, late of Unit 4, Lot 455 Prinsep Road, Jandakot, Western Australia (the deceased) died on 8 October 2005, apparently intestate. At the date of his death, he was aged 32 years. Surviving him are his widow, Natalie Louise Robbins (the applicant), and four infant children. Three of the children were born of earlier relationships with two other women. One of these was a de facto relationship and the other an earlier marriage which was later dissolved. His fourth and youngest child was born of the applicant. The names of the mothers of these children and, where known, the dates of marriages and the births of the children, are as follows:

• Kristine Marie Hutt-Wright, mother of:
  • Shayden Hein James Hutt-Robbins born 4 February 1996; and

• Lara Jane Ward (married to the deceased on 21 October 2000), mother of Paige Jane Robbins born 28 May 2001;
• Natalie Louise Fitzgerald (the applicant) (married to the deceased on 13 May 2005) and mother of Shonnay Bree Robbins born 10 August 2005.

2 By motion dated 23 February 2006, the applicant widow applied for a grant of letters of administration of the estate of the deceased. The application was made in the non-contentious jurisdiction for a grant in common form and was supported by the applicant's affidavit and was accompanied by a statement of assets and liabilities of the estate which is required by Non-Contentious Probate Rules 1967 (WA) r 9B.

3 This evidence disclosed, among other things, that the applicant was over the age of 18 years, that the deceased had died on 8 October 2005 and that it was expected that a coronial inquest would be held into the cause of his death. The affidavit also disclosed that, to the best of the knowledge, information and belief of the applicant, having made enquiries, the deceased had left no will but, in addition to the applicant, was survived by the four infant children whose names and dates of birth have already been set out and that he had not adopted any children. The affidavit also disclosed that the deceased had left property situated within the State of Western Australia, and that there had been no prior application for probate or administration of the estate. The applicant swore that if granted letters of administration of the estate of the deceased, she would administer the estate according to law. The affidavit annexed a consent from Kristine Marie Hutt-Wright to a grant of letters of administration of the estate of the deceased being granted to the applicant and this consent disclosed that Ms Hutt-Wright did not intend to apply for administration of the estate.

4 Also, because of an asserted lack of means, the applicant sought an order or direction that the court should dispense with any requirement for her to obtain a guarantee in relation to the value of the estate as a condition of the grant of the letters of administration. The evidence revealed that the applicant was then in receipt of a supporting parent's benefit from Centrelink. In addition to her child by the deceased, Mrs Robbins is responsible for and is supporting two other young children and does not have the financial capacity to obtain any banker's guarantee in relation to any portion of the estate distributable to the children of the deceased.

5 The applicant also deposed that she had attempted to obtain a consent from Lara Jane Ward, the first wife of the deceased, to a grant of administration being made to the applicant and renunciation of any intention to seek any grant of representation by Ms Ward, but that Ms Ward was uncooperative and had declined to provide any consent or renunciation.

6 The rule 9B statement of assets and liabilities of the estate of the deceased was submitted by the applicant in support of the application. It showed that the deceased had no immovable property either within or outside the State of Western Australia. It listed moveable property to an aggregate value of $100,372.91, more or less, and debts due by the deceased at the time of death totalling $53,400.73, more or less. Among the debts of the estate listed in that statement was an amount of $34,250 due as loans by the deceased to the applicant.

7 On the footing that this represented a correct statement of the assets and liabilities of the deceased at the date of his death, the applicant contended that the net value of the estate represented the difference between those two figures, namely $46,972.18, more or less. However, realising that the apparent distributable surplus of the estate would be significantly more if the alleged debt due to the applicant was less than that claimed or was not legally due or payable, the probate registrar caused requisitions to be issued calling for evidence to support the existence of the alleged debt of $34,250 to the applicant. If no such debt were due and payable by the estate to the applicant, then the apparent distributable net value of the estate would be $81,222.18, more or less, and that would alter the entitlements to distribution of the estate as under s 14 of the Administration Act 1903 (WA).

8 By virtue of the provisions of the table set out under s 14 of that Act, the distribution on this intestacy is that the first $50,000 of the net value of the estate would be payable exclusively to the applicant as the surviving wife. If the net value of the estate were to be more than $50,000, then the applicant, as the surviving wife, would be entitled to distribution of the first $50,000 and one-third of the balance. All the issue of the deceased, namely the four children, would be entitled to share equally between them the remaining two-thirds of the balance: s 14(2b). Such entitlements also carry an entitlement to interest by the surviving wife under s 14(4) of the Act. Accordingly, if there was no debt due by the estate to the applicant in the amount of $34,250 as alleged, then, on the distribution in intestacy, there would be two-thirds of the net value of the estate in excess of $50,000 distributable among the four infant children.

9 As the widow of the deceased and a person entitled in distribution, at least in part, to the net proceeds of the estate, the applicant is eligible to be granted administration of the estate - Administration Act s 25(1). Also, under s 26 of the Act, the court has the power to require the administrator to produce sureties to guarantee that she would make good, within any limit imposed by the court on the total liability of the surety or sureties, any loss which any person interested in the administration of the estate of the deceased may suffer in consequence of a breach by the administrator of her duties in that respect. Obviously, therefore, if the net value of the estate were such as to create an entitlement in distribution to the infant children of the deceased, there would be cause for the probate registrar to require that suitable sureties be given by the applicant, at least in respect of so much of the estate as would be distributable to those infant children.

10 One possible alternative to this course would be for the applicant to appoint a trustee corporation, including the Public Trustee, or other persons, to be the trustee or trustees of the share or shares of the respective infants pursuant to s 17A(1). However, at least until very recently, the applicant was not disposed to make any such appointment of a trustee, maintaining her assertion of the debt of $34,250 due by the deceased to herself with the consequence that, in that case, there would be no entitlement in intestate distribution for any of the infant children.

11 Unfortunately, a lengthy period passed during the time when the applicant was attempting to satisfy these requisitions and which resulted in a series of further affidavits being filed in an attempt to establish the existence and enforceability of the alleged debt. The results of this were regarded by the registrar, not without cause, as being inconclusive or at least less than sufficiently persuasive. Without going into the details of the affidavits, it is enough to say that the evidence put forward by the applicant revealed that over the time that they had been living together, the applicant had, so she said, lent various sums of money to the deceased on a number of occasions and had discharged liabilities of the deceased, arising from previous divorce proceedings, on the strength of a promise that he would repay the amounts concerned in due course.

12 No detailed loan agreement or acknowledgment of debt could be produced, but a series of bank statements and credit card statements was produced indicating that there had been payments made by the applicant to the deceased or to his credit on a series of occasions and that these aggregated the $34,250, more or less, claimed. A presumption of advancement, to suggest the payments were gifts, could not arise here where the payments were by a wife to the advantage of her husband, and not vice versa - see Calverley v Green [1984] HCA 81; (1984) 155 CLR 242, 268 (Deane J), and Trustees of the Property of Cummins v Cummins [2006] HCA 6; (2006) 227 CLR 278, 298 [55] (Gleeson CJ, Hummow, Hayne, Heydon and Creman JJ). Nevertheless, the registrar took the view that some or all of these payments could have been gifts rather than loans, and was not satisfied that the debt as asserted was payable or that the need for provision of a guarantee or sureties by the applicant should be dispensed with.

13 The applicant made further attempts to bolster the proofs which she had proffered about the existence and quantum of the asserted debt, but because of the doubts which arose and the need for scrutiny to be exercised to protect the interests of the children, the registrar took the course of referring the application to a judge of the court under r 4(4) of the Non-contentious Probate Rules.

14 Upon the matter being referred to me, I directed that notice of the application should be given to Ms Kristine Marie Hutt-Wright and to Ms Lara Jane Ward and that the matter be listed to be heard in chambers. I also directed that at least seven days before the hearing of the matter in chambers, the applicant should file written submissions showing a calculation of the amounts alleged to be owed by the deceased to the applicant in a manner which would reconcile such advances with the evidence and annexures contained in the supplementary affidavit of the applicant sworn 1 September 2006. I also gave liberty to file any further affidavit or affidavits on behalf of the applicant in support of her allegation that the deceased was indebted to the applicant.

15 Such submissions were duly filed by counsel for the applicant and notice for the application was given by post to Ms Kristine Marie Hutt-Wright and Ms Lara Jane Ward at the latter's last known contact address. The letter sent by the court to Ms Hutt-Wright was returned through the postal service unclaimed. No response of any kind was received in relation to the letter sent to Ms Lara Jane Ward. At the hearing of this matter before me in chambers on 24 September 2008, there was no appearance by, or on behalf of, either of those two ladies.

16 For reasons which emerged for the first time at the hearing before me, the potential significance of the doubts about the existence or quantum of the alleged debt of $34,250 to the applicant became significantly diminished. This is because by far the greater portion of the assets of the deceased comprise entitlements to the proceeds of a series of life insurance policies upon his life which were part of the property of the deceased. These are:

17 It may be necessary to establish that these life insurance policies listed are correctly described as policies of life assurance, rather than endowment or accident insurance policies - see Re Farnley; Holden v Johnson [1933] VicLawRp 44; [1933] VLR 271, Re Carter [1963] Qd R 45, and Re Ackland (1939) 11 ABC 60.

18 By virtue of s 205 of the Life Insurance Act 1995 (Cth), if the proceeds of the policies become payable to the estate of the deceased, then those moneys are not liable to be applied or made available under any judgment, order or process of a court or in any other manner whatsoever in payment of the deceased's debts unless permitted by circumstances designated in s 205(1)(b) of the Act. There is nothing in the evidence before the court to suggest that any of the circumstances contemplated by s 205(1)(b) of the Act arose and, therefore, subject to the provisions of the Bankruptcy Act 1966 (Cth), the proceeds of the assets of the estate of the deceased are not available for the payment of the estate debts, including any debt due to the applicant as asserted.

19 Again, generally speaking, the proceeds of such policies of life insurance are similarly exempted from the category of property available to a trustee in bankruptcy under s 116(1) of the Bankruptcy Act. The submission of counsel for the applicant, therefore, is that upon the evidence before the court, there are assets of the estate of the deceased available for distribution totalling at least $92,757.55 with, perhaps, some further accrued interest, because they are not available for the satisfaction of any of the debts of the estate. In other words, this means that there is a sum of at least $28,504.00 (($92,757.55 - $50,000.00) x 2/3 = $28,505.00) available for distribution to the infant children.

20 It also follows that the balance of the assets of the estate, namely approximately $7,600, ($100,372.91 - $92,757.55) are the only assets available for the satisfaction of the claims of creditors. Consequently, if the applicant's debt of $34,250 is in fact due and payable, there will be liabilities of $53,400.73 or thereabouts. If, however, the asserted debt to the applicant does not exist or is not enforceable there will be debts of $19,190. So, in either case, there will be a partial insolvency with no prospect of any part of the assets, other than the proceeds of the insurance policies, being distributable to the beneficiaries entitled under the intestacy.

21 It follows, therefore, that upon a true appreciation of the position, the existence or otherwise of the alleged debt claimed by the estate to the applicant will not in any way affect the entitlements to distribution of the estate of the beneficiaries because the only assets distributable will be the proceeds of the life insurance policies. That being the case, there will be entitlements in distribution for the widow applicant, and for each of the infant children.

22 That being the case, a real question arises about whether or not the applicant should be required to provide a guarantee or sureties, at least in respect of so much of the share of the insurance policies as will be distributable to the children. Associated with that issue is a further issue of whether or not, as the applicant now seeks, the Public Trustee should be appointed to receive, invest and manage, on behalf of each of the four infant children, the shares in the distribution of the estate of their late father. If the Public Trustee were to be appointed to fulfil such a role, then, so long as satisfactory arrangements were made for the distribution of the moneys to be made to the Public Trustee, the need for the provision of a guarantee or sureties by the applicant would reduce significantly.

23 As already indicated, counsel for the applicant is now seeking an order that the court appoint the Public Trustee to represent the interests of each of the four children pursuant to s 17A of the Administration Act. However, also as noted previously, the provisions of s 17A contemplate that the power of appointment of a trustee under s 17A(1) rests in the personal representative of the deceased. Counsel submitted that it is implicit in the section that such a power of appointment may be exercised by the court or that, in any event, the court has a similar or analogous power within its general equitable jurisdiction or under the provisions of the Trustees Act 1962 (WA).

24 Leave was granted for further written submissions to be filed in relation to this point, and I have since had the benefit of such additional submissions from counsel for the applicant. It is evident that under s 7(2)(b) of the Trustees Act that on the appointment of a trustee or trustees to hold the whole or any part of the property on trust, a separate set of trustees may be appointed for any part of the property to be held on trusts distinct from those relating to any other part, and whether or not new trustees are or are to be appointed for any other part of the trust property.

25 It is accepted that there may be the appointment of a new or additional trustee of a will in respect of a distinct part of the trust property - In re Paine's Trusts (1885) 28 Ch D 725; In re Hetherington's Trusts (1886) 34 Ch D 211 . It is also accepted that such a trustee may be appointed under provisions equivalent to s 7 of the Trustees Act - In re Moss's Trusts (1888) 37 Ch D 513.

26 If analogies are to be sought, there are examples of applications for probate being granted of an estate where there is property situated both within and outside the jurisdiction and where, should the circumstances so require and the applicant so propose, there are good reasons to appoint separate trustees for property located in different jurisdictions - In the estate of Baron von Brentano [1911] P 172. Examples of this being done can also be found in the books, see Yeldham RF, Gowers JS and Downs MJ, Tristram and Cootes Probate Practice (22nd ed, 1989) and Barlow F, Sherrin C, Wallington R, Meadway S, Watermoth M, Williams on Wills (9th ed, 2008).

27 Another expedient could be to make a grant of letters of administration to the applicant on the condition that, before she attempted to obtain or receive the proceeds of any of the insurance policies, she should appoint the Public Trustee as a separate trustee for the interests of the four children pursuant to s 17A of the Administration Act and submit proof of such appointment to the court whereupon the court would make a further order that certain portions of the insurance policies should be paid direct to the Public Trustee to be held on trust for the infant children and authorise the Public Trustee to give a good and sufficient receipt to the insurers for the discharge of their obligations under the policies. As to the power to make a grant of representation on conditions - see Re Arbib [1891] 1 Ch 601 and In the estate of Kavanagh (dec'd) (1977) 16 SASR 342. There may be some delays and practical problems in giving effect to this alternative expedient and, for that reason, I am satisfied it is less suitable than the proposal to appoint the Public Trustee to represent the interests of the four infant children and to receive the proceeds of the policies and to hold them on their behalf with the usual directions that recourse may be had to capital for the use, advancement, education and welfare of the children from time to time and that the proceeds be invested by the Public Trustee and that the investment be not restricted to the common fund.

28 Orders and directions as already outlined, including the authorisation of a limited grant to the applicant to deal with the insurance policies and their proceeds, will not, however, deal with all aspects of the administration of the estate. There remains the requirement to deal with other assets and the claims of creditors. For reasons already described, there will be a partial insolvency of the estate in that the estimated available assets for distribution to creditors will only be about $7,600 and that the claims of creditors will either be about $19,190 or $53,400.73.

29 Section 10A of the Administration Act provides that where the estate of a person dying on or after the day on which the Acts Amendment (Insolvent Estates) Act 1984 (WA) comes into operation is insolvent, his real and personal estate should be administered in accordance with the rules set out in the Fifth Schedule to the Act. The provisions of the Fifth Schedule give priority to funeral, testamentary and administration expenses, but otherwise direct that the same rule should be applied and observed in relation to the respective rights of secured and unsecured creditors, debts and liabilities provable, and the priorities of debts and liabilities as are, at the time of the death of the deceased person, in force under the Commonwealth law of bankruptcy with respect to the assets of persons adjudged bankrupt.

30 In addition, there are provisions in pt XI of the Bankruptcy Act 1966 (Cth) enabling an insolvent estate of a deceased to be administered in bankruptcy. Were an order for administration of the insolvent estate under pt XI of the Bankruptcy Act to be made, that would divest the administrator of all powers and duties and transfer to the bankruptcy jurisdiction all control in respect of the divisible assets and their eventual distribution. Despite suggestions that there are advantages in having an insolvent estate administered in bankruptcy rather than under the State laws for the administration of insolvent estates (see Rose D, Lewis' Australian Bankruptcy Law (11th ed, 1999) 257), these are unlikely to be of significance in the present case because, again, the proceeds of the life insurance policies would not be property available to creditors - see s 248 of the Bankruptcy Act and Re Brown (1950) 15 ABC 74.

31 An order for administration in bankruptcy under pt XI of the Commonwealth legislation may be sought by a creditor, but now only by leave of the bankruptcy court because of the commencement of these proceedings for a grant of administration in this court or by the person administering the estate of the deceased under s 247, which would be the present applicant in the event that a grant of administration as sought or upon conditions as outlined were to be made.

32 Obviously, therefore, there exists the possibility that the insolvent portion of this estate can be administered by any personal representative to whom this court makes a grant and in accordance with s 10A and the fifth schedule to the Administration Act. Equally, there is the possibility that an order for administration of that part of the estate might be made by the bankruptcy court under pt XI of the Bankruptcy Act, whether as a result of an application on that behalf by the personal representative appointed by this court or, if leave were to be granted by the bankruptcy court, by a creditor.

33 I have received no submissions either on behalf of the applicant, or from any other quarter as to which of these alternatives might better be pursued and it seems to me that I should not, on this present application, attempt in any way to usurp decisions which might be made by an administrator appointed by this court or by any of the creditors should administration under the Bankruptcy Act in respect of the insolvent portion of the estate be desired. The amount available in distribution for the creditors' claims is so small that there is a considerable risk that excessive emphasis on this aspect of the administration will result in the dissipation of the scant resources available to general creditors. Therefore, apart from noticing these potentialities, I do not consider that the possibility that there may, in future, be a partial administration of the insolvent portion of this estate in bankruptcy should affect any decision or the exercise of any discretion on the present application about the grant of an order of representation or the details of such a grant.

34 On a reference such as this under the Non-Contentious Probate Rules r 4(4), a judge has the power either to dispose of the matter or to refer it back to the registrar with such directions as he may think fit. In so disposing of the matter, a judge may exercise all such powers and authorities in respect of voluntary or non-contentious probate jurisdiction as repose in the court under the Administration Act 1903 (WA), the Supreme Act 1935 (WA) or the Public Trustee Act 1941 (WA), which I take to include the power to make any such grants or conditional grants as may be required or to give such directions or limitations in respect of a grant as may seem proper.

35 Presumably seeking to act to invoke the amplitude of this power, counsel for the present applicant has also sought a declaration that this court should determine that the estate of the deceased is lawfully indebted to the applicant in the sum of $34,244.95, being the debt asserted. I accept that the jurisdiction of a judge includes the power to determine disputes and to give directions in relation to the existence and priorities of debts due by or to the estate of a deceased person. However, I am satisfied that this power should not be exercised on this occasion. The proofs offered in support of the existence of the debt claimed by the applicant remain inconclusive but, more to the point, there is no person or interest represented which would serve as a contradictor to the asserted claim of the applicant and, in the circumstances, a declaration, one way or the other, would not bind anyone but the applicant and, therefore, would be of little utility.

36 Having regard to the apparent insolvency of that portion of the estate available for creditors, including the applicant, the controversy over whether or not the applicant is a creditor of the estate is now of relatively only minor significance. As previously explained, any resolution of that controversy will have no impact upon the interests of the children of the deceased which had been potentiality largely responsible for this present reference. That feature has now disappeared. The issue of whether or not the applicant is a creditor of the estate as claimed may, however, have some significance for other creditors because the resolution of that issue would affect the amount of the dividend, if any, payable in pro rata distribution to those creditors although, again, the magnitude of that effect is likely to be small.

37 It seems to me that it is better to leave those uncertainties unresolved and for them to be addressed in the administration of the insolvent portion of the estate either by the applicant, if she completes the administration, or by any trustee in bankruptcy if an administration in bankruptcy is sought by any other creditor. In that event, there is the prospect that if there is a real controversy over this, there will be scope for it to be determined in proceedings where there can be expected to be an available contradictor.

38 For these reasons, therefore, I consider that, subject to proof that the policies are indeed policies of life insurance, the applicant has established a claim entitling her to the following relief to be granted by the court, namely:

(a) a grant of letters of administration of the estate of the deceased to be made to the applicant in respect of all the assets of the deceased but without the need for the applicant to provide any guarantee or sureties for her administration of the estate subject, however, to the Public Trustee of Western Australia being appointed as a separate trustee to accept, receive and administer so much of the assets of the estate as are distributable to the infant children:

and in each case to hold the proceeds of distribution for each child upon trust until such child attains the age of 18 years, with full power to make such advancements out of capital or income for the maintenance, advancement or welfare of each child as the Public Trustee may consider proper, for the investment of such moneys not to be restricted to the common fund and for there to be liberty to apply by or on behalf of the Public Trustee or any of the children in connection with the administration of those trusts.

39 This will leave the questions of whether the partial insolvency of the estate is to be administered under the provisions of s 10A of the Administration Act or whether any interested party wishes to make an application for an order for administration under pt XI of the Bankruptcy Act and the associated question of whether or not the applicant's claim to be owed $34,250 by the estate should be admitted to proof in any such insolvent administration, for future determination if necessary.

40 As it is possible that any formal grant of representation by the court in these terms may give rise to further requirements by the probate registry, I consider that I should direct that the matter be returned to the probate registrar to determine the final form of the grant or the completion of any formalities which these determinations may require, but subject to liberty to re-list this matter before me if so desired.