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[2019] VSC 350
General information, not legal advice.
Supreme Court of Victoria
2019-05-27
MOORE J
Original judgment source is linked above.
ADMINISTRATION AND PROBATE - Succession - Appointment of executors - Passing over - Where relationship between named executors has broken down - Appointment of an independent executor - r 5.02 of the Administration and Probate Rules 2014.
1 Mavis Arklie (the deceased) died on 10 December 2017. She is survived by five daughters, six grandchildren, and one great-grandchild. Under her last will dated 29 August 2017 (the will), the deceased appointed as executors three of her daughters, Pamela Sime and Linda Mann () and Marina White (). The executors have not made an application for probate of her estate.
2 The plaintiffs seek orders that they and the defendant be passed over as executrices of the will and that Letters of Administration with the will annexed be granted to State Trustees Ltd (State Trustees). State Trustees has consented to being appointed in the event that the Court determines that it is appropriate for an independent administrator to be appointed.
3 Under the will, the deceased's estate is to be distributed as follows:
(a) a bequest of $400,000 to the first plaintiff for a deposit she gave the deceased during the deceased's lifetime;
(b) a bequest of $10,000 to the defendant for assistance with building the deceased's house during the deceased's lifetime;
(c) a bequest of $5,000 to each of the deceased's grandchildren and her great-granddaughter and any other great-grandchildren;
(d) a coin album and collection to her granddaughter Kimberley Mann; and
(e) the residue of the estate to be divided between each of her five daughters in equal shares.
4 The principal asset of the estate is a house located in Bentleigh in the State of Victoria (the Bentleigh property), the estimated value of which was between $900,000-$970,000 as at October 2017. It is encumbered by a reverse mortgage to the Commonwealth Bank, the balance of which was $14,562.88 as at 2 January 2018.
5 A dispute between the plaintiffs and the defendant over the deceased's chattels began after family members attended the Bentleigh property and removed various items, allegedly including a number of items of jewellery, furniture, linens, crockery, and other miscellaneous items (the chattel dispute). There is no agreement between the parties identifying all the items which were removed, their value or whether the defendant was present when the Bentleigh property was said to have been cleared out.
6 The plaintiffs have sought the defendant's co-operation in applying for probate. The defendant has, however, refused to co-operate until the plaintiffs account to her for the allegedly missing chattels. The defendant instructed Morley Naughton Pearn & Cook not to apply for a grant of probate of the deceased's will, and, as such, Morley Naughton Pearn & Cook did not produce the will to either party while the dispute remained on foot.
7 By originating motion filed 9 November 2018, the plaintiffs sought orders that Morley Naughton Pearn & Cook show cause why they should not produce the will to the Court (the first proceeding). The plaintiffs also sought an order that letters of administration with the will annexed be granted to State Trustees in lieu of the named executors under the will, pursuant to s 15 of the Act, having obtained the consent of State Trustees to seek such orders.
8 On 23 November 2018, Morley Naughton Pearn & Cook produced the will to the Court, and the first proceeding was dismissed. No orders were made in respect of the application to pass over the named executors and appoint State Trustees as executor, being the subject matter of this proceeding.
First, it is clearly established that a court will not readily pass over a named executor and, in general, a person who is named as executor by a testator is entitled to a grant of probate. Section 67 of the Testamentary Causes Act refers to 'special circumstances' and the jurisdiction to pass over an executor is properly described as a limited jurisdiction. Secondly, when a court does exercise the jurisdiction it does so having regard to the due and proper administration of the estate and the interests of the parties beneficially entitled to the estate.
10 Although it is a serious matter to pass over an executor named by a deceased, the power of the Court to do so is well established. As stated by Pritchard J in Woodley v Woodley [No 2]:[3]
Notwithstanding the respect which must be afforded to the wishes of the deceased, the primary concern of the Court in the exercise of its discretion to pass over an executor will be to ensure that the estate will be duly and properly administered according to the terms of the will, in the interests of the parties beneficially entitled to the estate.[4] The test will be whether the due and proper administration of the estate has been put in jeopardy or prevented, either by reason of acts or omissions on the part of the executor, or by virtue of matters personal to him or her, or by virtue of the proof of other matters which establish that the executor is not a fit and proper person to carry out the duties of an executor.[5]
11 Re Estate of Crane sets out the following examples of circumstances in which the Court of Probate has decided in a variety of English cases to pass over a named executor or named executors:[6]
6. The executor was of unsound mind: In Goods of Atherton [1892] P 104.
8. The executor had disappeared: In Re Sawtell (1862) 2 Sw and Tr 448.
12 These examples are not exhaustive and do not limit the grounds upon which a named executor may be passed over.[7] In a number of cases, named executors have been passed over in favour of an independent person or the Public Trustee because the relationship between the named executors has deteriorated 'to the point where there is no realistic expectation that they will be able to work together in the interests of the estate.'[8] These cases helpfully illustrate the application of passing over principles where there is sustained and irreconcilable conflict between named executors.
13 In Jurkiewicz v Jurkiewicz,[9] an application to pass over named executors and appoint an independent administrator was granted in circumstances where the Supreme Court of the Australian Capital Territory was satisfied that there was no prospect that the two named executors, being the two sons of the deceased, would be able to work together in the interests of the estate. The application had been made by one of the executors following the failure of both to either apply for probate or renounce their appointments, in the context of serious and unsubstantiated allegations about matters not relevant to the obtaining of a grant of probate. There was a history of conflict between the parties principally about what assets comprised the deceased's estate which made it unlikely that they would be able to agree to obtain a grant of probate in the future.
14 In Bourdales v Carroll,[10] Young CJ in Eq directed that a grant of letters of administration should be made to the Public Trustee in circumstances where there was a dispute between family members about who would otherwise be eligible to apply for a grant of probate. His Honour so decided on the basis that there was merit in the cases put by each side, and that, taking into account the value of the estate as a whole, the cost of appointing the Public Trustee was not significant, and would most likely be 'cheaper in the long run.'[11]
15 In Yazbek v Yazbek (No 2),[12] Slattery J revoked a grant of administration and ordered the appointment of an independent solicitor as administrator of the estate of the deceased in place of the named executors, in circumstances where ongoing litigation and potential future litigation between the executors was likely to obstruct the 'real object of administration, that is, the due and proper administration of the estate.'[13]
16 In opposing the plaintiffs' application, the defendant relies on her affidavit sworn 28 February 2019 and the affidavit of her sister Lois Maria Arkle sworn 28 February 2019.
17 The defendant's principal contention is that she has at all times been willing to cooperate with the plaintiffs to obtain a grant of probate, provided that the chattel dispute is first resolved. She contends that 'special circumstances' do not exist to justify the Court making orders to pass over the named executors. She submits that a named executor should only be passed over in the 'clearest of clear cases,'[14] and that this is not such a case.
18 The defendant identifies the chattel dispute as the main dispute between the parties, and states that the missing items that are said to have been removed from the Bentleigh property were some of the deceased's most valuable possessions, which she estimates were valued at around $75,000.
19 The defendant's evidence was that the plaintiffs did not consult with her before arranging to clear out the Bentleigh property, and that the clearing out occurred before the defendant was able to view a copy of the will. She states that, upon realising that many items had been removed from the Bentleigh property, she instructed her solicitors in January 2018 to request from the plaintiffs, among other things, an itemised list of items removed from the Bentleigh property by the plaintiffs. When the plaintiffs' solicitor's reply indicated that such an inventory could not be provided, the defendant's solicitor wrote to the plaintiffs, informing them that the defendant:
will cooperate with an application for Probate, provided her concerns are addressed to her satisfaction. Indeed, jewellery, cash and other personal property will need to be itemised in the Inventory of Assets and Liabilities.[15]
20 On 7 March 2018, the defendant received from the plaintiffs a four page list of items removed from the Bentleigh property by the plaintiffs, which showed that some items were given to a person who is not a beneficiary under the will. The defendant also contends that the list is incomplete and does not include some of the deceased's most valuable possessions.
21 The defendant deposes that her solicitors made four requests for a complete inventory of items removed from the Bentleigh property, and stated twice to the plaintiffs that the defendant was willing to cooperate with an application for probate, provided that the chattel dispute was resolved first. In a letter dated 11 December 2018 containing the fourth and final request, the defendant's solicitors indicated to the plaintiffs that the defendant intended to 'lodge an insurance claim in respect of the items not accounted for by the plaintiffs to date and that a police report would necessarily need to be filed.'[16]
22 The defendant's evidence was that she has at all times been willing to cooperate with the plaintiffs to obtain a grant of probate and that she has acted appropriately as an executor. She deposes that she has sought to carry out her mother's wishes, and that it was not her mother's wish for an entity unknown to her to be appointed to administer her estate. Further, she states that she has been financially maintaining the estate since the death of the deceased and that any delay has been caused by the plaintiffs' failure to reply to correspondence in a timely manner.
23 The defendant states that she wishes to prove the will and administer the deceased's estate without the expense of a professional administrator. She is supported in this by another of the deceased's daughters, Lois Maria Arklie (Lois). The defendant's intention to cooperate with an application for probate was conveyed in her solicitor's letter dated 20 February 2018 referred to above.
24 In her evidence to the Court, Lois details the removal by the plaintiffs of what are said to be valuable items from the Bentleigh property, and the dispersal of $950 from the deceased's bank account by the plaintiffs with Lois' assistance. Lois also deposes that her mother told her that she had appointed the defendant as executor 'in case the other two don't do the right thing,' and that it was not the deceased's wish to have someone outside the family managing her estate. She states further that she has no confidence in the ability of the plaintiffs to properly administer the deceased's estate. Lois disputes the plaintiffs' submission that the deceased gave away valuable items of jewellery during her lifetime.
25 I consider that the evidence before the Court establishes that the relationship between the plaintiffs and the defendant has deteriorated to a point where the degree of dysfunction and acrimony between them is such that there is no realistic expectation that they will be able to work together in the best interests of the deceased's estate. This characterisation, as I have explained in my review of the authorities, constitutes circumstances of a sufficiently special character which warrant the Court taking the serious step of passing over the plaintiffs and the defendant as executrices of the will and granting letters of administration with the will annexed to State Trustees.
26 My conclusion as to the dysfunctional and acrimonious nature of the parties' relationship is based on a number of matters. First, even before the commencement of this proceeding, the conflict between the parties had already resulted in litigation in the form of the first proceeding. The fact that the defendant was unwilling even to instruct the deceased's solicitors to produce the deceased's will on the request of her co-executrices when nearly a year had passed since the deceased's death, resulting in the plaintiffs commencing the first proceeding, speaks to a highly conflictual and mistrustful relationship between the parties.
27 Secondly, the ongoing chattel dispute demonstrates the mistrust between the parties and their inability to work together to administer the deceased's estate efficiently and without further delay. It is unnecessary for the purposes of this proceeding for the Court to enter upon and make findings about the various claims made by the parties, and particularly the defendant, in relation to the various actions and claims surrounding the chattel dispute. It is sufficient to observe that the protracted nature of the chattel dispute indicates that the parties are at irreconcilable odds with each other which prevents them from pursuing the due and proper administration of the deceased's estate. The 'ongoing stalemate' between the parties, as it was aptly characterised by McMillan J in a judgment on costs relating to the first proceeding,[17] stems from their inability to resolve the chattel dispute and obtain a grant of probate, thereby jeopardising the due and proper administration of the deceased's estate.
28 Thirdly, as noted in paragraph [21] above, by December 2018, the defendant felt it appropriate to inform the plaintiffs that it would be necessary to file a police report in respect of inventory said to have been removed from the Bentleigh property.
29 Fourthly, the evidence before the Court establishes that, in about January 2018, the defendant changed the locks on the Bentleigh property without first notifying the plaintiffs. The first plaintiff's uncontradicted evidence is that the keys to the Bentleigh property have never been subsequently delivered or made available for collection, notwithstanding correspondence from her solicitor on 2 February 2018 proposing arrangements for collection of the house keys or delivery of same.
30 The matters referred to above indicate that the relationship between the parties is acrimonious and dysfunctional to a degree such that there can be no realistic expectation that they will be able to work together in the interests of the deceased's estate. In my view, the continued appointment of the plaintiffs and defendant as executrices jeopardises the due and proper administration of the deceased's estate and is not in the best interests of the beneficiaries.
(1) Pamela Ann Sime, Linda Margueritte Mann and Marina Joy White be passed over as the named executrices of the Will of Mavis Kathleen Arklie dated 29 August 2017.
(2) Subject to any requisitions of the Registrar of Probates, Letters of Administration with the will annexed be granted to the State Trustees Ltd with all necessary consequential orders.
32 Within seven days, the parties are to submit any agreed minute of orders in respect of costs or, in the absence of agreement, written submissions on costs of no more than four pages.
[1] [2013] VSC 62, [24]-[29].
[2] [2005] SASC 379; [2005] 93 SASR 198, [24].
[3] Woodley v Woodley [No 2] [2017] WASC 94, [46].
[4] Mullins - Trnovsky v Adams [2014] SASC 116; (2014) 121 SASR 155 [13]-[15] (Gray J) and authorities cited therein; Re Estate of Crane [2005] SASC 379; (2005) 93 SASR 198 [24], [40] (Besanko J); Tsaknis As Executor and Trustee of the Estate of Geoffrey Douglas Roland Lilburne (Dec) v Lilburne [2010] WASC 152 [62] (Heenan J); cf also Miller v Cameron [1936] HCA 13; (1936) 54 CLR 572, 575 (Latham CJ), 580-581 (Dixon J) in relation to the removal of a trustee.
[5] Mavrideros v Mack (1998) 45 NSWLR 80, 108 (Sheller JA, Priestley JA & Beazley JA agreeing); Bates v Messner (1967) 67 SR (NSW) 187, 191-192 (Asprey JA); In the Estate of Stuart (dec'd) [2009] SASC 399; (2009) 106 SASR 39 [22]-[23] and cases cited therein; Colston v McMullen [2010] QSC 292 [39] (White J).
[6] Re Estate of Crane (2005) SASC 379, [25].
[7] Woodley v Woodley (No 2) [2017] WASC 94, [51], citing Tsaknis as Executor and Trustee of the Estate of Geoffrey Douglas Roland Lilburne (Dec) v Lilburne [2010] WASC 152, [58].
[8] Woodley v Woodley (No 2) [2017] WASC 94, [48], citing Jurkiewicz v Jurkiewicz [2013] ACTSC 89 [13], [26]; In the Estate of Stuart (dec'd) [2009] SASC 399; (2009) 106 SASR 39 [25]; Tsaknis as Executor and Trustee of the Estate of Geoffrey Douglas Roland Lilburne (Dec) v Lilburne [2010] WASC 152, [70]-[72].
[14] Drew v Drew (Supreme Court of Victoria, Gillard J, 8 September 1998) 3.
[15] Exhibit PAS-6 to the affidavit of the first plaintiff sworn 5 February 2019.
[16] The affidavit of the defendant sworn 28 February 2019, [37].
[17] Re Arklie [2019] VSC 138, [17].
Second Plaintiff
MARINA JOY WHITE
(2014) 121 SASR 155
(2005) 93 SASR 198
(1936) 54 CLR 572
(1998) 45 NSWLR 80
(2009) 106 SASR 39