[2000] HCA 40
Bates v Messner (1967) SR (NSW) 187
Damberg v Damberg (2001) 52 NSWLR 492
[2001] NSWCA 87
Estate Kouvakas
[1979] HCA 38
The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358
UBS AG v Tyne (as trustee of the Argot Trust) (2018) 265 CLR 77
[2018] HCA 45
Walker v Walker
Source
Original judgment source is linked above.
Catchwords
[2000] HCA 40
Bates v Messner (1967) SR (NSW) 187
Damberg v Damberg (2001) 52 NSWLR 492[2001] NSWCA 87
Estate Kouvakas[1979] HCA 38
The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358
UBS AG v Tyne (as trustee of the Argot Trust) (2018) 265 CLR 77[2018] HCA 45
Walker v Walker
Judgment (14 paragraphs)
Background Facts
The deceased died on 2 April 2017, leaving property in New South Wales.
She left a duly executed Will dated 1 April 2015 by which, in Clause 2, she appointed the Plaintiff and the Defendants, as the executors and trustees of the Will. In Clause 3, she left the whole of the estate, upon trust, to pay thereout, all debts, funeral, and testamentary, expenses, and all or any State and federal, death, probate, estate, and succession duties, payable in consequence of her death, with the residue left to the Plaintiff and the Defendants, and if more than one, in equal shares.
In the Inventory of Property placed inside, and attached to, the Probate document, the property owned solely by the deceased comprised, principally, real estate, situated at Phillip Bay, a suburb in south-eastern Sydney ("the Phillip Bay property") ($1.9 million), furniture watches and jewellery ($300), cash in banks or financial institutions on deposit ($19,271), a reimbursement amount ($1,000) and other monies from the Department of Human Services ($1.00). The total gross value of the estate, at the date of death, was estimated to be $1,920,572.
On 2 March 2018, the Plaintiff's husband, Clark Lester ("Clark Senior") and their three adult children, Denise Ruth Lester, Megan Michelle Lester and Clark Edward Lester ("Clark Junior") commenced proceedings in which they sought a family provision order out of the estate and notional estate of the deceased. I shall refer to these proceedings as "the Lester proceedings".
Although the Plaintiff and the Defendants were all named as defendants in the Lester proceedings, the Plaintiff's co-executors conducted those proceedings on behalf of the estate. On 13 July 2018, this Court made orders appointing the Defendants (in these proceedings) to have the conduct of the proceedings and gave leave to the Plaintiff (as the named first Defendant), to make submissions, if necessary, on how the provision, if any, made in favour of any of the Plaintiffs, should be provided.
On 27 March 2018, Jessie Mudge, another grandchild of the deceased, also made a claim for a family provision order. I shall refer to these proceedings as "the Mudge proceedings". The proceedings were resolved, and on 20 June 2019, this Court, relevantly, made the following orders:
"Orders, pursuant to s 59 of the Succession Act 2006 (NSW), that the Plaintiff receive, by way of provision, out of the estate of Dulcie Brown ("the deceased") a lump sum of $65,000.
Orders that no interest is to be paid on the lump sum if it is paid within 28 days of the date of settlement of the sale of the deceased's property at Phillip Bay ("the Phillip Bay property"); and if not so paid, interest is to be paid on any unpaid part thereof, calculated at the rate prescribed by s 84A(3) of the Probate and Administration Act 1898 (NSW), from the 29th day from the date of the settlement of the sale of the Phillip Bay property until the date of payment in full.
Makes no order as to the Plaintiff's costs, to the intent that he will bear his own costs of the proceedings.
Makes no order as to the first Defendant's costs, to the intent that she will bear her own costs of the proceedings.
Orders that the burden of the provision made for the Plaintiff be borne by the residuary estate, the beneficiaries of which are the three named Defendants.
Notes that each of the Defendants, as a residuary beneficiary, consents to these orders and notations.
Orders that the second and third Defendants' costs, calculated on the indemnity basis, of the proceedings, be paid out of the estate of the deceased."
Kunc J heard the Lester proceedings on 19 and 20 February 2020. On 27 July 2020, his Honour delivered reasons for judgment bearing the medium neutral citation Lester & Ors v Lester & Ors; In the Estate of Dulcie Brown [2020] NSWSC 958. His Honour summarised his conclusions at [9]:
"(1) Each of Megan, Denise and Clark Junior are eligible persons within s 57(1)(e) of the Act, as Dulcie's grandchildren and having been, during their lives, at least partly dependent on Dulcie.
(2) Clark Senior is not an eligible person, having failed to persuade the Court, on the balance of probabilities, that he was a member of the same household as Dulcie under s 57(1)(e)(ii) of the Act.
(3) Having regard to all the circumstances of the case (whether past or present), the Court is satisfied pursuant to s 59(1)(b) of the Act that there are factors warranting the making of the application for a family provision order in respect of Megan and Denise only.
(4) Turning to s 59(1)(c) of the Act, the Court is satisfied that adequate provision for the proper maintenance, education or advancement in life of Megan and Denise has not been made by the will of Dulcie.
(5) Having regard to the facts known to the Court at the time of the hearing, the Court finds that an order for provision out of the Estate of $65,000 for Denise and $55,000 for Megan should be made.
(6) The provision out of the Estate for each of Megan and Denise is to be borne by the legacies payable to Paul (80 percent) and Terry (20 percent)."
On 4 August 2020, his Honour made the following orders.
"The Court:
1. The Summons brought by the first plaintiff, Clark Lester Senior is dismissed.
[2]
The Summons brought by the fourth plaintiff, Clark Lester Junior is dismissed.
[3]
In respect of the claim by the second plaintiff, Denise Lester, she have provision out of the estate by way of a lump sum of $65,000.
[4]
In respect of the Summons brought by the third plaintiff, Megan Lester, she have provision out of the estate of the deceased by way of a lump sum of $55,000.
[5]
Interest as for a legacy under the Probate and Administration Act, 1898 to run on so much of the provision as ordered in Orders 3 and 4 herein as remains unpaid more than 6 weeks after the making of these orders.
[6]
The burden of the provision made for the second and third plaintiff is to be borne by that share of the estate passing to the second defendant Terrence Brown as to 20% and to the third defendant, Paul Brown as to 80%.
[7]
The second and third plaintiffs' costs of the proceedings be paid from the estate on the ordinary basis up to and including 5 February 2020 and thereafter on the indemnity basis.
8. Note that there is no order as to costs of the first and fourth plaintiffs.
The costs of the first defendant pursuant to the grant of leave to make submissions as to burden will be paid, on the ordinary basis, by the second and third defendants personally and not out of the estate.
The costs of the second and third defendants on the indemnity basis be paid out of the estate of the deceased (but not including their obligation to pay the first defendant's costs pursuant to order 9).
11. For the purposes of satisfying the obligation of the estate to make the payments to the second and third plaintiffs and any costs order in favour of the second and third defendants and the second and third plaintiffs as ordered herein, the Court authorises the second and third defendants to deal with the assets of the estate of the deceased and to discharge all necessary obligations consequent thereon."
There was no appeal lodged in those proceedings.
The administration of the Estate
In November 2019, the Phillip Bay property was sold. The net proceeds of sale, totalling $1,581,712.53, were deposited to the trust account of the Plaintiff's current solicitors and held in the name of the estate.
There appears to be no dispute that all the assets of the deceased have been collected, except for a debt ($40,105), which the Defendants allege is owed by the Plaintiff to the deceased's estate. This amount is said to have been made up of $26,000 "misappropriated" by her "prior to the deceased's passing" and $14,105 "misappropriated" "following the deceased passing": Affidavit, Sandra Elizabeth Lester, 19 April 2022, Annexure D (p 22). The Plaintiff disputes the debt.
There is no evidence of proceedings having been commenced against the Plaintiff to recover the alleged debt
There have been distributions out of the estate that are not the subject of dispute. Firstly, on 20 December 2019, each of the two Defendants received an interim distribution of $100,000. It appears that on 20 December 2019, the Plaintiff, received an interim distribution of $32,589.12, described in the Trust account ledger as "Balance of Interim Distribution". The balance of the amount (about $67,411) was paid, on her behalf, to her legal representatives, as costs and disbursements payable by the Plaintiff to them: Affidavit, Sandra Elizabeth Lester, 19 April 2022, Annexure B (p 15).
The first Defendant then received a further interim distribution of $100,195 on 1 June 2020 (paid to a firm of solicitors on his account). The second Defendant, on the same date, received a further distribution of $100,600. The Plaintiff also received an amount, by way of a further interim distribution, of $80,105.84. The balance of $20,020, was paid to the Plaintiff's solicitors, again, on account of costs payable by the Plaintiff: Affidavit, Sandra Elizabeth Lester, 19 April 2022, Annexure B (pp 15-16).
There were other small withdrawals to which reference does not need to be made as they do not appear to be the subject of the Plaintiff's complaint.
As at 1 June 2020, the balance in the estate trust account was $963,711.77. On 14 September 2020, the amount was transferred to a trust account held by Macedone Legal, which was the firm of solicitors acting for the estate in the Lester proceedings. There is no dispute that the transfer of the estate funds in this way was pursuant to instructions given to Glass Goodwin, by the parties, as executors to whom Probate had been granted.
On 10 June 2021, Macedone Legal informed the solicitors for the Plaintiff that they had ceased to act for the Defendants, and that Messrs Owen Hodge were acting for the Defendants Affidavit, Sandra Elizabeth Lester, 19 April 2022 at par 19, Annexure D (p 21).
On 28 July 2021, the balance of the estate funds was released to Owen Hodge, who was instructed to deposit the money into an ANZ account which had been opened earlier that month, by the Defendants, for this purpose: Affidavit, Sandra Elizabeth Lester, 19 April 2022 at pars 19-23.
There is no trust account ledger of Macedone Legal in evidence. One might have thought that, upon request by one of the executors to whom Probate had been granted, it would have produced a copy of a complete trust account ledger. Be that as it may, other evidence reveals that:
1. the legal costs of Macedone Legal ($160,000) were paid out of the estate funds sometime in July 2021;
2. a trust account cheque for $684,766.24 was drawn in favour of the estate and paid to Owen Hodge, solicitors, on about 28 July 2021.
It appears that there is no dispute that each of these transactions were authorised by the parties, as executors. Each of them signed an authority, addressed to Macedone Legal, to take those steps. The authorities signed by the Defendants were dated 26 July 2021 and the authority signed by the Plaintiff was dated 22 July 2021: Affidavit, Sandra Elizabeth Lester, 19 April 2022, Annexure Y (p 64-66).
The Plaintiff does not dispute that the lump sum provision made for each of the successful plaintiffs in the Lester proceedings and in the Mudge proceedings have been paid out of the deceased's estate.
However, the Plaintiffs' costs in the Lester proceedings have not been paid as the bill of costs and disbursements is currently undergoing a formal costs assessment: Affidavit, Sandra Elizabeth Lester, 19 April 2022 at par 18. (The Plaintiff has not been involved in the assessment and otherwise does not know its current status.)
There is copy correspondence addressed to Owen Hodge (Mr Southwell-Keely) requesting information about the estate accounts and otherwise. One letter, dated 18 November 2021, from the Plaintiff's solicitors, is in the following terms:
"We refer to our emails of 14 October, 28 October, 8 November and 16 November 2021, to which we have not received a meaningful reply.
Our client is alarmed at the lack of transparency regarding the estate funds. She is also concerned that the estate funds, which we understand from Macedone Legal exceed $600,000, are within the sole control of your clients.
We remind you that our client is an executor of the Will. As things presently stand, our client does not know the precise amount currently held in the estate and she does not know what transactions have occurred in respect to the estate funds.
The estate funds have previously been held in a law firm trust account (initially our trust account and then the trust account of Macedone Legal) and any transactions regarding the estate funds have always been authorised by the three executors irrespective of which firm held the funds.
Order 11 of Kunc J's decision dated 27 July 2020 authorised your clients to deal with the estate funds to satisfy the payments due to the second and third plaintiffs (including costs). That order did not give your clients carte blanche to do whatever they like.
By email dated 12 July 2021, Erin Henry, a former solicitor of our firm, confirmed that our client would authorise "the transfer of the balance of the estate funds from Macedone Legal to Owen Hodge". An authority, prepared by your firm, was signed by our client and returned to you on 22 July 2021 and the estate funds were released to your firm shortly thereafter.
At no time were we advised that it was the intention of your clients to open an operate a separate bank account to the exclusion of our client. At no time was our client's consent sought for the opening of a separate bank account or the release of the estate funds (which we presumed were held in your firm's trust account) to the account.
Our client requires the immediate transfer of the whole of the estate funds to your firm's trust account. Our client authorises the opening of an interest bearing estate account held by your firm so that interest is earned on the funds.
If we do not receive confirmation of the transfer of the estate funds to your trust account within 14 days of the date of this letter, we will obtain our client's instructions to seek appropriate orders from the Supreme Court and we will rely on this letter in respect to costs."
On 3 December 2021, Pooja Kapur, a solicitor at Owen Hodge, responded by email, relevantly, in the following terms:
"Dear Ms Goodwin,
I refer to our telephone discussion just now. As discussed, I have recently taken over carriage of the abovementioned matter of Brown.
I am in the process of acquainting myself with this matter and obtaining instructions from our clients. We would appreciate your patience and understanding while we undertake this process.
We endeavour to be in a position to respond to you by mid next week.
Please do not hesitate to contact me if you wish to discuss this matter."
The Plaintiff's solicitors responded by email dated 8 December 2021, in, relevantly, the following terms:
"I refer to our telephone call earlier today.
I note that your clients have instructed you that an estate account was opened recently with the ANZ Bank. They have also instructed you that my client signed the necessary account opening forms and has access to the ANZ account.
I am instructed that this is not the case at all.
My client is not aware of any ANZ account and has not signed any forms for the opening of an estate account with ANZ or any other bank.
My client continues to be alarmed at the lack of transparency regarding the estate funds and these new assertions by your clients have only exacerbated those concerns.
As I have explained, the estate funds have always been held in a law firm trust account and any transactions regarding the estate funds have always been authorised by the three executors.
We again request that the estate funds be transferred to your firm's trust account as a matter of urgency. If we do not receive confirmation that this has occurred by 5 pm on 13 December 2021, I am instructed to proceed with an application to the Duty Judge for appropriate orders."
Another email was sent by the Plaintiff's solicitors on 13 December 2021, in, relevantly, the following terms:
"I refer to my email below and to our telephone call today.
I understand that the estate funds have not been transferred by your clients to your trust account.
Please confirm by 5 pm tomorrow that you have instructions to accept service of our summons. If we do not receive a reply by that time, we will serve your clients personally."
Owen Hodge, almost immediately, responded by email in the following terms:
"Thank you for your email. I confirm that I have just forwarded both of your emails from the chain below to our clients and am awaiting further instructions."
On 15 December 2021, Owen Hodge sent an email to the Plaintiff's solicitors, relevantly, in the following terms:
"We confirm that no estate funds have ever passed through our Trust Account. We attach a Trust Account statement for your reference.
We are instructed that the funds were transferred from Macedone Legal directly to our clients by way of cheque. The funds were deposited into an ANZ account around August/September 2021. We are again instructed that your client was required to sign as an executor upon the opening of the account, which allows her to view any transactions made and the balance of funds. Out client is in the process of obtaining a statement from ANZ which confirms same.
We are further instructed that this was around the same time as when each executor received their interim distribution of $20,000 each.
We have counselled our clients in relation to the estate funds and are awaiting further instructions with respect to holding them in our Trust Account."
On 15 December 2021, the Plaintiff attended a branch of the ANZ Bank and made enquiries about any account relating to the deceased's estate. She was provided with a copy of a bank statement for the estate account. The copy of one page of the Bank Statement from the ANZ Bank reveals that, as at 19 November 2021, the amount of $511,506.52 was held in an account entitled "Estate of Dulcie Brown". The statement also reveals that on 8 December 2021, the amount of $29,590 was withdrawn from that account, leaving a balance of $481,904: Affidavit, Sandra Elizabeth Lester, 19 April 2022 at pars 48-49, Annexure AD.
It is some of the withdrawals from the ANZ account, made between August and December 2021, not made pursuant to instructions from all three executors, which provides the basis of the Plaintiff's claim.
On the same day, the solicitor for the Plaintiff telephoned the ANZ Bank and was advised that the account only required two signatories to operate it. The solicitor then sent a letter, by email, to ANZ Bank to request that it place a stop on the estate account so that no further withdrawals could be made: Affidavit, Sandra Elizabeth Lester, 19 April 2022 at pars 50-53, Annexure AE.
On 17 December 2021, the solicitor for the Plaintiff sent another email to the ANZ bank to request that the signing authority on the estate account be changed to that all three executors needed to sign to operate the estate account. A representative of the Bank responded to the Plaintiff's solicitor, confirming that the signing authority had been changed to require all three executors to authorise any transaction: Affidavit, Sandra Elizabeth Lester, 19 April 2022 at pars 53-54, Annexures AG-AI.
On that same day, the Plaintiff's solicitor sent an email to Owen Hodge in, relevantly, the following terms:
"I refer to previous correspondence in this matter, particularly my email of 13 December 2021.
I have made enquiries with ANZ Bank and understand that an estate account was indeed opened by the executors in late July 2021 at the instigation of your clients. My client's present instructions are that she has no recollection of the opening of the account, and has not transacted on the account at all, or received any updates from your clients as to their transactions on the account.
I am informed by ANZ Bank that the estate account only requires two signatories and as such it has been operated exclusively by your clients.
ANZ Bank has provided me with a current statement for the estate account which indicates a balance of $481,904.64. I attach a copy of same.
I note you have confirmed that the cheque issued by Macedone Legal for $684,766.24 was released by your firm to your clients and, we assume, deposited to the estate account. Accordingly it appears $202,861.60 has been withdrawn by your clients over a short period of time.
This is very concerning.
It is particularly concerning that these figures suggest that your clients have transacted beyond any authority purportedly given to them to act on behalf of the estate for the purposes of effecting the Family Provision and costs orders made by Kunc J (see 11 of the orders made on 4 August 2020).
We note and share the concerns of Macedone Legal in respect of transactions that expressly breach an irrevocable undertaking.
We are obtaining bank statements for the estate account from ANZ Bank and have requested the bank freeze the account until further notice.
We note our respective clients have completed their executorial duties and as such, in the final administration of the estate, are now trustees for this estate. As trustees they are required at law to act jointly. We have requested ANZ Bank to change the signatory arrangements for the estate account so that all three trustees must now sign. Any transactions on the estate account made without our client's consent may be regarded as a breach of trust by your clients.
We put your clients on notice that they should not attempt to make any further withdrawals from the estate account until the bank statements are received and considered by us.
If your clients would like to expedite the matter, then they are welcome to provide us with copies of the bank statements which we understand have been sent to your client's Mystery Bay address."
On 21 December 2021, Owen Hodge replied in, relevantly, the following terms:
"I confirm receipt of your email and have forwarded same to our clients for their further instructions."
On 18 January 2022, the Plaintiff's solicitor sent an email to Owen Hodge in, relevantly, the following terms:
"I refer to my email of 17 December 2021 and confirm I have now received bank statements for the ANZ Account.
I attach a copy for your reference.
There appears to be a number of significant withdrawals from the estate account.
Please obtain your clients' urgent instructions as to the purpose of the following withdrawals:
Date Description Amount
17 September 2021 Withdrawal $4,367
17 September 2021 Withdrawal $8,885
17 September 2021 Withdrawal $20,000
17 September 2021 Withdrawal $20,000
12 November 2021 Withdrawal $60,000
8 December 2021 Withdrawal $29,590
There appears to us to be no legitimate reasons for such significant withdrawals to be made from the estate account when the only outstanding matter, pending a final distribution, is ascertaining the quantum of the plaintiffs' legal costs. Although I had raised with your firm the prospect of further interim distributions, no response to those requests was ever received.
It is a very serious matter if your clients have been making distributions of estate funds to or for the benefit of themselves to the exclusion of our client and without her authority as executor.
I understand that your clients wanted to open an estate account so that interest could be earned on the estate funds. However, I note that the monthly bank fee of $15.00 now exceeds the credit interest paid on the account.
In light of your clients' conduct to date, and given there is no apparent benefit to the estate account remaining open, we propose that the estate account be closed immediately and the estate funds transferred to your firm's trust account on the basis that it is held subject to the joint instructions of our clients. Please obtain your client's instructions.
Please respond to this email within 7 days. If a response is not forthcoming, I will obtain instructions to commence proceedings for appropriate orders including an order for costs against your clients personally."
The withdrawals referred to total $142,842. The Defendants have not given the Plaintiff any reasons for those withdrawals or stated the purpose for which each withdrawal was made: Affidavit, Sandra Elizabeth Lester, 19 April 2022 at pars 55-57, Annexure AJ (pp 85-95).
On 25 January 2022, Owen Hodge replied in, relevantly, the following terms:
"We refer to your email below. We confirm we no longer hold instructions to act for Mr. Paul Brown or Mr. Terrence Brown.
Kindly direct all communication to them directly."
One might think that a response from the Defendants to the requests for information would not have been an onerous task. A cardinal duty of an executor is to keep accounts and records relating to the administration of the estate and to be ready with an inventory and account when called it is for. Here what was being sought was only information and documentation.
The Legal Principles
I must next consider the jurisdiction of the Court to revoke the grant of Probate as sought by the Plaintiff.
As is well-known, Probate litigation is "interest litigation": Nobarani v Mariconte (2018) 265 CLR 236; [2018] HCA 36 at [49] (Kiefel CJ, Gageler, Nettle, Gordon and Edelman JJ); Gertsch v Roberts; The Estate of Gertsch (1993) 35 NSWLR 631 at 634 B-C (Powell J). To commence or to be a party to proceedings relating to a particular estate, a person must be able to show that her or his rights will, or may, be affected by the outcome of the proceedings. The Plaintiff must establish her standing to seek revocation of the probate. Generally speaking, an interest sufficient to entitle a person to oppose a grant is sufficient to entitle the same person to apply for revocation of a grant: In re Gillard [1949] VLR 378 at 381 (Barry J); Estate Kouvakas; Lucas v Konakas [2014] NSWSC 786 at [213] (Lindsay J).
In this case, the Plaintiff relies upon her standing as one of the three executors and also as one of the three residuary beneficiaries. In the circumstances, she has standing to seek an order revoking the grant of probate.
A grant of probate, or administration, is a judicial act, and becomes an order of the Court. A grant in common form, or a non-contentious grant, is usually made by a Registrar of the Court. It provides an authority to the administrators who are named in the document to deal with the assets of the deceased's estate as directed in the deceased's Will, or on intestacy, and to exercise the powers of the office of administrators.
That the Court possesses an inherent power, by reason of the conferral of the power to make a grant of probate or administration, to revoke its own grant for just cause cannot be disputed: Bates v Messner (1967) SR (NSW) 187.
The principles upon which the Court acts in determining whether to remove an executor or administrator of an estate are well known and do not require detailed elaboration. The guiding principle was stated by Jeune P, in In the Goods of Loveday [1900] P 154 at 156, which was followed in In the Goods of Galbraith [1951] P 422.
Whilst In the Goods of Loveday concerned an application in circumstances where the administrator of an estate could not be found, it was said, at 156, that in exercising the jurisdiction to revoke a grant of administration, a court must have regard to the due and proper administration of the estate and the interests of the parties beneficially entitled to the estate:
"…After all, the real object which the Court must always keep in view is the due and proper administration of the estate and the interests of the parties beneficially entitled thereto; and I can see no good reason why the Court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient."
In Neilson v Public Trustee - The Estate of Ellen Letitia Neilson (Supreme Court (NSW), 8 May 1992, unrep) at 14-15, Powell J wrote:
"That the Court possesses, and, when necessary and appropriate, will exercise, the power to revoke a grant which it has made - even after the death of the original grantee (see, Ayling, deceased January (1949) (UK) unreported, but noted Tristram and Coote's Probate Practice 24 Ed (1973) at 470; In re Gillard (1949) VLR 378) is undoubted, the classes of case in which the power has, in the past, been exercised being usually described as being: 1. where the grant is, in effect, a nullity; 2. where the surname or first Christian name, of the deceased in the grant is seriously incorrect; 3. where the grant has been obtained on a false, or incorrect, basis; 4. where, by reason of supervening events, the grant has become defective. (See, for example Tristram and Coote op cit at 426-433; Williams Mortimer and Sunnucks: Executors Administrators and Probate 16 Ed. (1982) at 335-339).
It should, however, be noted that, although the power to revoke a grant undoubtedly exists, it is not exercised as of course, or even as a matter of right; rather, the question whether, in a particular case, the power ought to be exercised is one which lies in the discretion of the Court, having regard to all the circumstances of the case (In the Will of Lamont (1881) 7 VLR (IP and M ) 86; In re Goode (1890) 11 NSWLR (Eq) 281; In re Gillard (supra)). Since that discretion is to be exercised after having regard to all the circumstances of the particular case, it is undesirable - and, in any event, probably impossible - to attempt to lay down, in advance, any general principles as to the way particular circumstances ought to affect the exercise of that discretion."
More recently, in The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358 at [23], EM Heenan J wrote:
"There is a wide variety of circumstances under which revocation of a grant of probate or letters of administration, which have not been the subject of proof in solemn form, may be made. Broadly, these may be divided into two categories. The first being where it is discovered that there is some error which has been made in the grant of representation or where the particular grant should not have been made (for example, the discovery of a later will, or of a subsequent marriage which revoked the will in question). The second category includes revocations made necessary or desirable to ensure the due administration of the estate such as, for example, where the grantee becomes sick or disabled, or has disappeared. The ultimate purpose of the court is to ensure the due and proper administration of the estate and of the interests of the parties beneficially entitled to it."
In this case, the Plaintiff relies upon the second category of case referred to in the judgment.
In Walker v Walker; the Estate of Ngaere Joy Walker, late of Mortdale [2016] NSWSC 92 at [22], Slattery J noted that the "[t]he Court's discretion to remove an executor includes removal on the basis of gross misconduct or unjustified delay and ineffective co-operation among joint executors and includes also a persistent failure to pass accounts".
The guiding principle is whether the administration of the estate is being carried out properly: Lucas v Konakas at [211] (Lindsay J). Put another way in the circumstances of this case, when looking at the welfare of the beneficiaries named in the Will of the deceased, is it in their best interests to replace two of the executors?
The primary concern of the Court is to ensure that the estate is efficiently and properly administered according to the terms of the will. In support of this proposition, I need only refer to Mavrideros v Mack (1998) 45 NSWLR 80, at 108 (Sheller JA, with Priestley and Beazley JJA agreeing):
"The question was, to adapt the language of Asprey JA (at 192), whether the due and proper administration of an estate had either been put in jeopardy or had been prevented either by reasons of acts or omissions on the part of the executor or by virtue of matters personal to him, for example, mental infirmity, ill health, or by virtue of the proof of other matters which established that the executor was not a fit and proper person to carry out the duties he had sworn to perform. His Honour applied a far too rigid test by saying that one had to get close to the position of the grant being useless. In this, in my opinion, his Honour erred."
Where Probate has been granted to more than one person, and where one, or more, of the other executors to whom Probate has been granted is to be removed involuntarily for proper reasons, the usual practice of the Court is to recall, and revoke, the original grant, and make a fresh grant of administration, with the deceased's Will annexed to the remaining executor or executors. The revocation of the grant is a revocation in toto, not a partial revocation, and the fresh grant to the remaining executor entirely supplants the former grant.
In Lucas v Konakas, at [234]-[235], Lindsay J dealt with the nature of a revocation order:
"Although it is customary to speak of a grant being "revoked" (consistently with the instrument of grant being recalled to the Registry of the Court) that is essentially a matter of language. A revocation order is, in substance, an order that a grant be "set aside"…
Under the general law, a revocation order renders a grant ineffective from the date the order takes effect, not void ab initio … In any event, legislation now governs the effect of a revocation order, and provides qualified statutory protection for those who have acted in good faith on the grant revoked: Probate and Administration Act 1898 NSW, ss 40D, 81, 90 and 91." (Omitting citations)"
Determination
It was broadly submitted that the grant has become ineffective, and that, in all the circumstances, the proper administration of the estate is being prevented, or frustrated, by the Defendants' conduct.
It seems tolerably plain that the Plaintiff is no longer capable of meaningfully communicating with the Defendants. The predicament faced by the Plaintiff, who it is to be remembered is a co-executor with the Defendants, to whom Probate has been granted, has come about as a result of the complete failure of the Defendants to engage, by their solicitors, Owen Hodge, before the retainer was terminated, and by them personally, thereafter, with the Plaintiff's legal representatives.
Furthermore, their conduct, in withdrawing funds from the estate bank account, without the knowledge, or consent, of the Plaintiff, and the subsequent failure to provide any explanation for so doing, when an explanation was sought, taken with the complete failure to deal with these proceedings in any way, suggests that the Defendants are unable to discharge their duties, as co-executors, with the Plaintiff. The apparent breakdown in the relationship between the parties has placed the administration of the deceased's estate in jeopardy.
What appeared, for a time, to be the orderly administration of the deceased's estate has been disrupted, with the consequence that the completion of the administration, and the distribution, of the estate, has completely stalled. If the present situation were allowed to continue, the winding up of the estate would not proceed. The revocation of the grant of Probate and the issue of a fresh grant would go a long way to resolving these difficulties and promoting the finalisation of the administration of the estate. The due administration of the deceased's estate, and the interests of justice, favour a prompt determination of these proceedings.
The question which then arises is what order should be made to ensure the timely future administration of the estate. Here, the Plaintiff seeks an order that Ms A S Jelliffe, a solicitor, be appointed as an independent administrator. On 31 March 2022, the Plaintiff filed an affidavit of Ms Jelliffe, indicating that she consented to the appointment.
Whilst Ms Jelliffe may be an appropriate independent administrator, in the circumstances of this case, I do not think that I should make that order for the following reasons:
1. One asks rhetorically why the Defendants would be more likely to co-operate with Ms Jelliffe, if she were appointed? I have dealt with the opportunities that have been given to them to resolve the concerns of the Plaintiff by providing information and producing documents. Each of the Defendants has not taken such opportunities. Even after the adjournment of the hearing, with judgment reserved, each has not involved himself in the proceedings.
2. There are likely to be costs and expenses of Ms Jelliffe incurred if an order were made appointing her. Because she would need to act independently, she may, no doubt, consider it prudent to investigate the way in which the estate has been administered to date. She may not simply accept what the Plaintiff asserts without her own independent investigations being conducted. Much of the work, in this regard, appears to have already been done by the Plaintiff and her legal representatives.
3. The completion of the administration of the deceased's estate is unlikely to be complex. Indeed, subject to the claims made for the assessment of the costs of the Lester proceedings, which as earlier mentioned, appears to be in the course of assessment, and, perhaps, the preparation of tax returns for the estate, there should not be very much left to do, other than to distribute the balance of the estate.
4. The nature of the orders that the Court proposes to make should make the Plaintiff's task of completing the administration of the estate even easier. She will, if necessary, be able to approach the Court for its assistance if further problems of administration arise.
In all the circumstances, I consider that it is in the interests of the due administration of the estate to make an order revoking the grant of Probate and making a fresh grant to the Plaintiff alone.
I respectfully agree with the view expressed by Lindsay J in Riccardi v Riccardi [2013] NSWSC 1655 at [9] and [12], that an order for grant of administration (whether by way of a grant of probate or a grant of letters of administration) is in the nature of an instrument of title; an order for the revocation of a grant, coupled with orders for delivery up of the revoked grant and for the issue of a fresh grant, is likely, in most cases, to facilitate the due administration of an estate by removing a spent grant from circulation or, at least, making express, clear provision for its removal from circulation; and the traditional approach is correct beyond argument.
Part 78 rule 49 of the Supreme Court Rules 1970 (NSW) empowers the Court to order the persons in whose possession, custody or control is the original grant of Probate to deposit the grant in the Probate registry if, relevantly, proceedings for the revocation of the grant have already commenced, on the application of the plaintiff, or of its own motion. In this case, it would be appropriate to make such an order requiring the Defendants to do so.
To ensure that the Defendants, who, by their former solicitors, Owen Hodge, may have retained the original grant of Probate, can no longer deal with the property in the estate, it is necessary to make such an order.
In order to ensure that the funds of the estate are properly protected, an order should also be made that the moneys in the ANZ Bank should be withdrawn and, thereafter, held in a controlled monies account, by the Plaintiff's solicitors, in the name of the estate. In this way, the funds will be protected.
Since there has been the unexplained failure to account for the expenditure of $142,842 from the estate, despite a number of requests for information and documents, it seems to me that it would also be in the best interests of the estate, to order the Defendants to repay that amount to the estate within a period of time. If they are unable to do so, or if they wish to seek to have the order varied, they can make an application in the appropriate way.
Costs are in the discretion of the Court. The only fetter on the exercise of that discretion is that it must be exercised judicially and by reference to considerations relevant to the proceedings. The proceedings were necessary as a consequence of the Defendants' silence. They should personally bear her costs of the proceedings. To the extent that there is a difference between her costs calculated on the ordinary basis, and her costs, calculated on the indemnity basis, the difference should be paid out of the estate of the deceased.
In the submissions of counsel for the Plaintiff, it was put that the Plaintiff's costs, calculated on the indemnity basis, should be paid out of the estate. That would mean that she was bearing one third of those costs. In my view, that would not be a just result. Yet, the order that I propose to make, will still result in her bearing one-third of the difference between the costs calculated on the ordinary basis and her costs calculated on the indemnity basis.
The Court:
1. Orders that the grant of Probate issued by the Court on 17 January 2018 in respect of the estate of Dulcie Brown to the Plaintiff and the Defendants be revoked.
2. Orders that Probate of the Will dated 1 April 2015 of Dulcie Brown be granted to the Plaintiff, one of the three executors named in the Will.
3. Orders that the matter be remitted to the Senior Deputy Registrar in Probate to complete the grant.
4. Orders that the first Defendant, the second Defendant, or both Defendants, in whose possession, custody or control, is the original grant of Probate, deliver up, or cause to be delivered up, that grant to the Probate Registry, marked to the attention of the Senior Deputy Registrar in Probate, within 7 days of the service of a copy of these orders and notations upon each of him.
5. Orders that, in the event that the original revoked grant is not produced to the Court, by the Defendants, or either of them, in accordance with these orders and notations, the Senior Deputy Registrar in Probate proceed to completion of the grant of Probate to the Plaintiff, notwithstanding non-compliance with the order in (4) above.
6. Orders that the order in (4) be confirmed for the purpose of recording that each, or both, of the Defendants is, or are, under a continuing obligation to deliver up the revoked grant to the Court.
7. Orders, subject to further order, that the first and second Defendant, by himself, his servants and agents, be restrained:
1. from using, or dealing with, the grant of Probate made on 17 January 2018, other than by delivery up of the grant to the Court.
2. acting, or purporting to act, as a legal personal representative of the deceased; and
3. holding himself out as entitled to act as a legal personal representative of the deceased.
1. Orders that, within 7 business days of the date of the making of these orders and notations, and upon a sealed copy of the orders being provided to the Manager of the branch of the ANZ Bank in which the funds held to the account of The Estate of Dulcie Brown, the Plaintiff withdraw those funds and forthwith pay all of the funds to her solicitors, Glass Goodwin, to be held by those solicitors in a controlled monies account in the name of the estate of Dulcie Brown, pending further order of the Court.
2. Orders that it shall be sufficient compliance with the order in (8), if the funds held in the name of "The Estate of Dulcie Brown" are paid by the ANZ Bank into Court, referable to proceedings 2022/58101.
3. Orders that the Defendants pay, or cause to be paid, the lump sum of $142,842 into Court, designated as referable to "The Estate of Dulcie Brown - proceedings 2022/58101" and, thereafter, be paid to the Plaintiff's solicitors upon proof satisfying the Prothonotary that those solicitors have created a controlled monies account in the name of "The Estate of Dulcie Brown".
4. Orders that the Plaintiff serve a copy of these orders on each of the Defendants, personally, no later than 10 days after these orders and notations have been taken out and entered.
5. Orders that the Plaintiff's solicitors, no later than 3 business days after the date of the making of these orders and notations send a copy of the orders:
1. By prepaid Express Post, addressed to the last residential address of each of the Defendants that is known to the Plaintiff.
2. By email, addressed to the second Defendant.
3. If ascertained, by email addressed to the first Defendant.
1. Orders that the Defendants personally pay the Plaintiff's costs, calculated on the ordinary basis, of these proceedings and that if there is any difference between those costs, and her costs calculated on the indemnity basis, that the difference be paid out of the estate of the deceased.
2. Grants liberty to the Plaintiff to apply for consequential and ancillary orders for the purpose of, or with respect to, giving effect to, and implementing, these orders.
DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.
Decision last updated: 02 June 2022
When the matter was called on 5 May 2022, Dr H P Bennett of counsel appeared for the Plaintiff, instructed by Ms T Goodwin.
At approximately noon, then again at 12:45 p.m., and finally, at about 2:15 p.m., the matter was called outside the Court. There was no appearance by, or on behalf of, either Defendant, on each occasion that the matter was called.
Although each of the Defendants was personally served with the Statement of Claim, they have not entered an appearance (UCPR r 6.9 and r 6.10) or filed a defence to the Statement of Claim (UCPR r 14.3). Pursuant to UCPR r 6.1, each is unable to take any step in the proceedings (including any appearance in court) without the leave of the court. Each is not an "active party" in the proceedings (UCPR r 1.2). (None of the exceptions in UCPR r 6.1(2) apply.)
Whilst a distinction may be drawn between "active" and "non-active" parties, I am of the view that the position of a non-active party should be considered, since r 6.1 of the UCPR permits the Court to grant leave to take a step in the proceedings (including any appearance in court) and because each Defendant is a person who may be adversely affected by the orders sought in the proceedings.
UCPR rule 29.7 applies when a trial is called on. If any party is absent, the Court may proceed with the trial generally or so far as concerning any claim for relief in the proceedings, or may adjourn the trial.
A party is relevantly absent only if he, she, or it, had knowledge, or notice, of the hearing date, and is neither present, nor represented, when the matter is due to be heard.
In NSW Trustee and Guardian as executor of the Will of Michael Robert Walsh (Dec'd) v Gregory (2012) 18 BPR 35,153; [2012] NSWSC 681, I wrote, at [18]-[22]:
"The clear purpose of UCPR r 29.7 is the efficient dispatch of court business. However, in dispatching court business, I cannot ignore the right of a defendant to be informed, or, at least, to be made aware, of a trial date. It is a fundamental principle that a party who may be adversely affected by the making of court orders has a right to be heard: Cameron v Cole [1944] HCA 5; (1944) 68 CLR 571, in which Rich J said (at 589):
'It is a fundamental principle of natural justice, applicable to all courts whether superior or inferior, that a person against whom a claim or charge is made must be given a reasonable opportunity of appearing and presenting his case. If this principle be not observed, the person affected is entitled, ex debito justitiae, to have any determination which affects him set aside, and a court which finds that it has been led to purport to determine a matter in which there has been a failure to observe the principle has inherent jurisdiction to set its determination aside … In such a case there has been no valid trial at all.'
In the circumstances, the first issue to address is whether I am satisfied that it is appropriate to proceed in the absence of the Defendants or of anyone representing him.
A party is 'absent' within the meaning of the rule, when the trial is called on, only if it can be shown that he, or she, has knowledge, or notice, of the date of the trial, and is not physically present, or not represented. In other words, before the rule can be relied upon, there should be proof that the absent party has been given reasonable notice of, or has knowledge of, the date of the trial.
On this question, I have not forgotten what I said in Smirski v Macander [2010] NSWSC 929 at [34]:
'It is to be remembered that the primary considerations on whether to proceed ex parte concern whether there is urgency; whether irreparable damage would flow from making an ex parte order; whether hardship would flow to a party against whom an order is made and whether such an order can be set aside: Ndjamba v Toyota Finance Australia Ltd [2010] NTSC 23, per Blokland J at [8].'"
I repeated the views that I had expressed, more recently, in Pye v Pye [2021] NSWSC 686.
The uncontroverted evidence reveals that each of the Defendants has been given more than enough notice of the hearing of the proceedings and sufficient opportunity to be heard. Each has chosen not to take advantage of the opportunities given to him. Neither has filed an Appearance, a Defence to the Statement of Claim, or sought the leave of the Court to take any step in the proceedings. Nor has either Defendant provided to the Court, or, it appears, to the legal representatives of the Plaintiff, any explanation, adequate or otherwise, for his non-appearance on each of the occasions the matter has been in Court.
Naturally, I considered whether the Court should adjourn the proceedings to give the Defendants one further opportunity to appear. However, I concluded that there was no utility in doing so, in the absence of any reasons for each not having filed an Appearance, or a Defence, or for not having appeared at the hearing. There was no reason to believe that each would be more likely to appear on any subsequent occasion to which the hearing was adjourned, than on that occasion.
On this issue, the Court must also have regard to the obligations imposed by s 56 to s 60 of the Civil Procedure Act 2005 (NSW). Section 56 emphasises that the overriding purpose of the Act and the rules of court, in their application to civil proceedings, is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. The Court is required to give effect to the overriding purpose when it exercises any power given to it by the Act or by the rules of court. Section 57, in turn, requires the Court to have regard to specified matters. Section 58 requires the Court, in deciding whether to make any order or direction for the management of the proceedings, to act in accordance with the dictates of justice, and to have regard to the provisions of ss 56 and 57. Section 59 requires the Court to, as far as possible, eliminate delay between the commencement of proceedings and their final determination. Section 60 requires the Court to endeavour to resolve issues in such a way that the cost to parties is proportionate to the importance and complexity of the subject-matter in dispute.
All of these sections recognise the fact that delay and case backlog are matters that affect not only the public cost in delivery of justice, but the court's ability to provide individual justice, and that the reforms introduced by the Civil Procedure Act promote the provision of individual justice notwithstanding that they may have adverse effects on the claims of individual parties in particular circumstances: Hans Pet Constructions Pty Limited v Cassar [2009] NSWCA 230 at [37] (Allsop ACJ). Also see UBS AG v Tyne (as trustee of the Argot Trust) (2018) 265 CLR 77; [2018] HCA 45 at [38] (Kiefel CJ, Bell and Keane JJ).
Yet, the Court is not required to indefinitely delay the completion of the hearing in these proceedings in the hope that each of the Defendants might change his mind and appear: Allesch v Maunz (2000) 203 CLR 172, 186, 189-191; [2000] HCA 40 (Kirby J); Taylor v Taylor (1979) 143 CLR 1, 4; [1979] HCA 38 (Gibbs J). The right to have the opportunity to be heard is not a right to frustrate the hearing of proceedings by not attending thereat. Justice requires consideration to be given to all the parties.
These are proceedings concerning the administration of the estate of a will-maker who died over 4 years ago. The Plaintiff is one of the three executors who has appeared, with legal representation, on each directions hearing and at the hearing. Undoubtedly, she has incurred legal costs in doing so. Any delay in having the proceedings heard and determined, and in completing the administration of the deceased's estate, has gone on long enough.
The Defendants, both of whom are on notice of these proceedings, as well as on notice of the date for the hearing of the proceedings, had been afforded the opportunity to appear and to be heard. Each has chosen not to do so. Whether through stubbornness, confusion, misunderstanding, fear of costs, or other emotions, each has not taken advantage of the opportunity to be heard. They must abide the consequences.
As it is the Defendants who have failed to appear, the Plaintiff is entitled to prove her claims so far as the burden of proof lies upon her, and, if it is established that she is entitled to the relief claimed, and such other relief as is consistent with what is sought, the court may proceed to make final orders: Ritchie's Uniform Civil Procedure (NSW) [29.7.5], referring to Stone v Smith (1887) 35 Ch D 188 and Kingdon v Kirk (1887) 37 Ch D 141; see also Satz v ACN 069 808 957 Pty Ltd [2010] NSWSC 365 at [64] (Barrett J).
Having established service, the hearing continued with the other affidavits being read. Following this, the matter proceeded with submissions and discussion between counsel for the Plaintiff and the Bench concerning the nature of the Plaintiff's case and the amounts in issue.
During the discussion between the Bench and counsel, it became clear, as will be read, that the balance of the Plaintiff's share of the deceased's estate, which is the subject of her concerns, may be less than $50,000 and that, on the current information, the Plaintiff is concerned about 6 transactions that have not been explained by the Defendants: Tcpt, 5 May 2022, p 8-10.
Following this discussion, it also became clear that, perhaps, the just, cheap, and quick resolution of the real issues in the proceedings might involve no more than the Defendants, if they were prepared to do so, providing documents, with supporting evidence, concerning the transactions in issue.
Counsel for the Plaintiff, after obtaining instructions, stated that Ms Goodwin would attempt, yet, again, to contact the second Defendant, by telephone, to ascertain whether he, and the first Defendant, might be prepared to provide the necessary documentation without additional costs being incurred: Tcpt, 5 May 2022, p 15(5-16).
However, as I considered that there was no certainty that the Defendants, or either of them, would co-operate with this approach, as detailed written submissions had been provided on behalf of the Plaintiff, and as the discussion referred to had dealt with a number of matters the subject of the submissions, the Court made the following orders:
"1. Reserves its decision.
2. Notes that reasons for judgment will not be delivered until after 26 May 2022.
3. Stands the matter over before Hallen J at 2:00 p.m. on Thursday, 26 May 2022.
4. Reserves the costs of today."
In this way, the Defendants were given a further opportunity to provide the necessary documentation relating to what are said to be unexplained transactions (withdrawals from the estate bank account) and if they choose not to, the matter can simply proceed to the Court dealing with the matter.
On 26 May 2022, once again, there was only an appearance by the legal representatives of the Plaintiff. There was no evidence that the course suggested, which might have avoided making orders, had prompted the Defendants to engage with the Plaintiff's solicitors.
In the circumstances, the Court raised with counsel whether it would be necessary to make the order sought, or whether if the grant were revoked, a fresh grant to the Plaintiff, alone, would enable the administration to be completed more quickly.
Following counsel taking instructions, the Court was informed that the Plaintiff consented to a fresh grant being made in her favour.
The failure to file a Defence
The service of the documents, as set out above, should be considered effective in drawing the proceedings to the attention of each of the Defendant.
Of course, because each Defendant did not file a Defence, within 28 days after service of the Statement of Claim or such other time as the Court directed for the filing of a defence, he is regarded as being "in default": UCPR r 16.2(1)(a).
Rule 16.1 of the UCPR provides that Part 16 applies to proceedings commenced by statement of claim. Pursuant to UCPR r 16.3(1)(a), which deals with the case where a defendant is in default, a plaintiff may apply for judgment under UCPR Part 16 "according to the nature of his, or her, claim for relief" against the defendant in default. Unless the Court otherwise orders, such an application for judgment must be accompanied by an affidavit of service of the statement of claim and an affidavit in support of the application: UCPR r 16.3(2). UCPR r 16.10 provides that whatever the plaintiff's claims for relief against a defendant in default, the court may, on application by the plaintiff, give such judgment against the defendant as the plaintiff appears to be entitled to on his, or her, statement of claim.
In addition, by his failure to file a defence traversing the allegations of fact in the Statement of Claim, each of those allegations of fact is taken to be admitted as against the relevant Defendant: UCPR r 14.26(1).
Part 17 of the UCPR deals with admissions. Rule 17.7 is in these terms:
"(1) If admissions are made by a party, whether by his or her pleadings or otherwise, the court may, on the application of any other party, give any judgment or make any order to which the other party is entitled on the admissions.
(2) The court may exercise its powers under this rule even if the other questions in the proceedings have not been determined."
In Damberg v Damberg (2001) 52 NSWLR 492; [2001] NSWCA 87 at [154], Heydon JA (with whom Spigelman CJ and Sheller JA agreed) wrote:
"A party may admit allegations made in pleadings by the opposing party, and may do so either expressly or by non-traverse. The effect of such admissions is to narrow the issues in dispute: they can thus have the effect of restricting the evidence to be tendered and can prevent evidence being called to the contrary".
In the present case, the admissions have been made by non-traverse. Despite this, I will not determine the matter solely on the basis of the non-traversed admissions made in the pleadings. I am satisfied otherwise, that the allegations of fact pleaded are supported by evidence.
The Court has no reason to doubt, or even question, the correctness of the evidence given in the affidavits that have been read in these proceedings.