Steiner v Strang

Supreme Court of NSW|2016-12-05|Before: Kunc J, Barrett J

Summary

This is an application by the plaintiff, John Steiner ("John"), for interim provision or for a further interim distribution of $500,000 from the estate of his late mother, Dorothy Steiner ("Dorothy"). Without disrespect, I shall refer to the members of the Steiner family by their given names.
Dorothy left John a specific bequest of $2,000,000 in her will. He has already received interim distributions totalling $788,872.50. Notwithstanding the difficult circumstances in which John now finds himself, the Court is not satisfied that an order of either kind should be made.

John's application

John moves on his notice of motion filed 10 March 2016 which includes this prayer for relief: "3. The defendants make further distributions from the Deceased's estate to the Plaintiff of such an amount of the Plaintiff's pecuniary legacy as the Court thinks proper; alternatively an order for interim provision to the Plaintiff pursuant to s 62(1) of the Succession Act."

The facts

Given the interlocutory nature of this application, the parties did not suggest that there was any dispute about the facts relevant to its determination.
On 18 December 2007, John acknowledged in writing a "loan" to him by Dorothy in the sum of $881,000 (the "Alleged Loan").
John received gifts totalling $1,210,000 from Dorothy between 15 September 2008 and 26 July 2011.
Dorothy made a will on 7 June 2011 (the "Will").
Dorothy died on 12 October 2011. She was survived by three adult children - John, Lesley and Robyn - along with grandchildren and other family members.
On 14 December 2011 probate of the Will was granted to the defendant executors, being Mr Strang (a solicitor) and Mr Tang (an accountant) (the "Executors"). Neither of them is a beneficiary.
The Will, after making a number of particular gifts of shares and other assets, included the following provisions relevant to John: "3. I GIVE DEVISE AND BEQUEATH:- (a) to my daughter ROBYN ($2,000,000), and to my son JOHN ($2,000,000); … 9. I GIVE DEVISE AND BEQUEATH the residue of my estate … to my son JOHN and daughter ROBYN in equal shares as tenants in common. 10. I DRAW my Executors' attention to Acknowledgement of Loan between myself and son JOHN dated 18 December 2007 and request that the provisions of that Acknowledgement be implemented and observed."
John has received $788,872.50 in interim distributions of his entitlement under the Will. Robyn has similarly received interim distributions of $1,335,000.
On 24 April 2012, Robyn commenced proceedings for a family provision order ("Robyn's proceedings").
On 13 June 2012, John commenced these proceedings for a family provision order ("John's proceedings").
On 14 August 2012 in Steiner v Strang; Estate of Steiner [2012] NSWSC 919, White J approved an interim distribution to John of $300,000 (which amount is included in the figures referred to in paragraph [13] above). In doing so, his Honour said: "25. Both plaintiffs are entitled to a legacy of $2 million if there are sufficient funds in the estate with which to pay all pecuniary legacies. In Romano v Romano [2004] NSWSC 775 Barrett J (as his Honour then was) held that s 84 of the Probate and Administration Act or Pt 68 r 2(3)(d) or (4)(b) of the Supreme Court Rules (now r 54.3(3)(d) or r 54.3(4)(b) of the Uniform Civil Procedure Rules) provided a foundation for orders requiring the payment of interim distributions in the payment of pecuniary legacies if, acting with the greatest degree of conservation and prudence, the executors could safely part with the sums to be distributed (at [16], [18]). 26. In Indyk v Wiernik [2006] NSWSC 868 Young CJ in Eq (as his Honour then was) said that he had never made an order for interim distribution because he had never had a clear case where, on looking at all the predictions that could be made, it could be seen that in the ultimate, even after paying the costs of litigation, there would still be the sort of surplus that would justify an interim distribution, bearing in mind that the executor is entitled to retain sufficient funds as a buffer against unexpected expenses (at [23]). 27. In the present case I was satisfied that the executors could safely part with the sums of $500,000 and $300,000 by way of interim distribution to Robyn Webster and John Steiner respectively in accordance with these principles. Nor did counsel for the executors submit that the distributions could not safely be made. 28 John Steiner is in a different position from Robyn Webster in that whilst he is entitled to a legacy of $2 million, prima facie he is liable to repay to the estate an amount of $881,000. 29. I did not consider that any order for interim provision should be made under s 62 of the Succession Act. Having regard to the benefits provided to the plaintiffs under the deceased's will and benefits provided to them during the deceased's lifetime, it is far from clear that they will be entitled to any further provision out of the estate. Nor did I consider that an order could be made requiring the executors to make a payment to Mr Steiner pursuant to s 92A of the Probate and Administration Act. …"
On 30 November 2012 the Executors filed a cross-summons seeking orders and declarations as to whether John was indebted to Dorothy's estate for the Alleged Loan.
On 12 September 2014 in Steiner v Strang & Anor [2014] NSWSC 1250, Sackar J, dealing with the cross-summons only, determined that John was indebted to Dorothy's estate for the Alleged Loan in the sum of $881,000 and that the Executors were entitled to offset that amount and interest at the prevailing rate against his entitlement both as a residuary beneficiary and as a specific legatee under the Will.
John made a further application for interim provision under s 84 of the PAA and under s 62(1) of the Act. However, reliance on s 62(1) of the Act was not pressed when the application was heard by Ball J. On 3 February 2015 in Steiner v Strang [2015] NSWSC 14, his Honour dismissed John's application under s 84 of the PAA, concluding: "22. For the reasons I have explained, there may be no residual estate available for distribution to John and Robyn. In fact, there may be a shortfall in the amount available to pay the pecuniary legacies with the result that the remaining amount to be distributed to the plaintiff could be reduced further. In circumstances where the amount of that shortfall is not known, it seems to me that, as things currently stand, it would be prudent for the executors to retain the balance of the pecuniary legacy payable to the plaintiff until the remaining court proceedings are resolved and the precise liabilities of the Estate can be determined."
On 16 July 2015 in Steiner v Strang [2015] NSWCA 203, the Court of Appeal set aside Sackar J's orders, concluding (citations omitted): "63. The orders made by the primary judge should be set aside. The matter should be remitted to the Equity Division for retrial. Whether that trial proceeds in conjunction with the application by Mr Steiner for a family provision order will be a matter of case management by the Equity Division. In that regard, there is no reason why the primary judge should not deal with the matter if that is considered convenient. 64. Mr Steiner has been substantially successful. The general rule is that a court will not differentiate between the issues on which a party succeeded and the issues on which a party failed, and I do not consider that the circumstances of this case, in which Ground 3 did not take up a significant part of the appeal, warrant departure from that rule. The Executors should pay Mr Steiner's costs of the appeal. The costs of the first trial would depend upon the outcome of any new trial."
Insofar as the conduct of the various proceedings is concerned, when I heard John's application which is the subject of these reasons I ordered that all of the proceedings (Robyn's proceedings, John's proceedings and the remitted cross-summons in relation to the Alleged Loan) should be heard together. While this judgment has been reserved, all of those proceedings have now been listed for hearing before me commencing on 22 May 2017 with an estimate of five days.
On 12 April 2016 in Steiner v Strang [2016] NSWSC 395, after a seven day hearing, Slattery J ruled against John in relation to proceedings he had brought about several matters relevant to his mother's affairs. The Executors had been unwilling to pursue the claims on behalf of the estate. John was ordered to pay the defendants' costs of the proceedings. A costs assessment application and itemised bill have been served on John by the defendants claiming approximately $639,000.
John's financial and personal circumstances are parlous. John (who is 65) lives in Townsville in a unit (the "Strand unit"). John suffers from ill health and cannot work. He and his wife (who is 71) own the Strand unit and another investment property in Townsville. Their 49 year-old son lives with them. He is also in ill health and unemployed. John has significant debts to the Bank of Queensland ("BOQ") secured over both of those properties (approximately $950,000 plus other costs) and credit card debts of approximately $385,000. John's liabilities exceed his assets by approximately $687,000. He and his wife live from government pensions, but their monthly expenses exceed the income provided by those pensions. It appears that any shortfall has been made up by relying on credit cards. John's wife is schizophrenic and he is her full-time carer. He is concerned that if they had to move from the Strand unit her condition would be exacerbated.
There was evidence that BOQ's Valuer had valued the Strand unit at $520,000 or $460,000-$500,000 on a forced sale basis. John has been unable to sell or rent the investment unit. He has been unsuccessful in his attempts to sell the Strand unit. There was unchallenged evidence from a Townsville real estate agent that the Townsville property market has been in a "relentless [downward] spiral". There is an oversupply in properties for sale and for rent "with many properties taking more than one to two year [sic] to sell/rent and some even longer".
The present application has been motivated by foreclosure proceedings commenced by BOQ in relation to John's two properties. On 28 November 2016, BOQ accepted a proposal which included John paying the bank $500,000 on or before 10 March 2017, in return for which BOQ would release its mortgage over the Strand unit. John seeks the further interim provision from Dorothy's estate of $500,000 in order to be able to satisfy that part of the settlement that he has reached with BOQ.
There was no dispute between the parties about some of the current financial circumstances of Dorothy's estate: 1. The value of the particular legacies including properties and shares is approximately $7,700,000. 2. The amount currently held by the estate available to pay pecuniary bequests (including those to Robyn and John) is $5,543,658.50. 3. The unpaid balance of the pecuniary legacies, allowing for the distributions paid to John and Robyn, is $5,676,128. 4. As there are insufficient funds in the estate for the payment in full of the pecuniary legacies and no other assets in the estate which are not the subject of specific gifts under the Will, there is currently no residuary estate. Therefore, the funds available for payment of the unpaid balance of the pecuniary legacies must also fund the payment of the liabilities and expenses of the estate. To the extent that they have not already been paid from those funds, those liabilities and expenses comprise: 1. A debt of $280,000 payable to Lesley's husband, Wayne. 2. Commission which the executors intend to claim, which, for the purposes of the debate before me, the parties attributed an amount of $220,000. 3. Ongoing legal costs, which, for the purposes of the debate before me, the parties estimated at $300,000. 4. Ongoing accountancy fees, income tax and other expenses, which the parties did not endeavour to quantify before me.

Section 62 of the Act - legal principles

Section 62 of the Act provides: "62 Interim family provision orders and orders restraining distribution of the estate (1) The Court may make an interim family provision order before it has fully considered an application for a family provision order if it is of the opinion that no less provision than that proposed in the interim order would be made in favour of the eligible person concerned in the final order. (2) After making an interim family provision order, the Court must proceed to finally determine the application for a family provision order by confirming, revoking or varying the interim order. (3) The Court may make an order restraining the final or partial distribution of an estate (other than a distribution under section 94 (1) of this Act or section 92A of the Probate and Administration Act 1898) pending its determination of an application for a family provision order."
In Roberts v Moses [2015] NSWSC 1504, I considered the operation of s 62 of the Act: "10. Young J (as his Honour then was) considered the predecessor provision under the Family Provision Act 1982 (NSW) (the "FPA") in Young v Salkeld (1985) 4 NSWLR 375. The relevant provisions in s 9 of the FPA were: (5) Subject to the foregoing provisions of this section, the Court may make an interim order for provision under section 7 in favour of an eligible person before it has fully considered the application for that provision where it is of the opinion that no less provision than that proposed to be made by the interim order would be made in favour of the eligible person after full consideration of the application. (6) Where, on an application made in relation to a deceased person, the Court has made an interim order as referred to in subsection (5), it shall, in due course, proceed to make a final determination of the application, which determination shall conform, revoke or alter the order so made. 11. In construing s 9(5) of the FPA, his Honour reached four conclusions (at 380-381): (1) "Thus the duty of the Court on an interim application is to examine what evidentiary material is placed before it, and to assess on that material the probable outcome of the proceedings." (2) "The next problem that raises itself is at what date must the Court assess the chances of the plaintiff's success? ... Do I, when considering whether to make an interim order, look at the circumstances as at today's date, or do I look to see what is likely to be position as at the date when the Court makes its final consideration of the matter? In my view, my task is the latter, because the only time when the Court has to be satisfied of the matters set out in s 9(2) is the time of final hearing". (3) "The remaining theoretical problem is whether I am limited to making only such an order as would give the eligible person sufficient moneys to live on pending the hearing of the application, or whether, if I considered it proper, I could go further ... In my view, the Court may make any interim order that it considers it is proper to make." (4) "However, in the normal case, although the Court has jurisdiction to make a wider order, it would seem to me that the proper order would be to give the eligible person only such a sum as would deal with real needs pending the hearing and then usually only on terms that the moneys could be recovered if the applicant were unsuccessful ... I do not say that the Court could not make an order for a penniless eligible person that she receive either a legacy or a weekly sum for living expenses knowing that all these moneys would be dissipated by the time of the hearing. Indeed, I would consider that would be a perfectly proper order. However, generally speaking, if there is the means of protecting the estate by securing the order in some way, then the interim order might be framed accordingly." 12. The slight differences in drafting between the current and former provisions do not detract from the applicability of his Honour's conclusions. The Court will apply them to s 62 of the Act. 13. One matter which his Honour did not expressly discuss was precisely how the Court goes about the task of determining what ought to be ordered by way of interim family provision. In that regard, "family provision order" where it first appears in s 62(1) of the Act is no less a family provision order as defined in s 3 of the Act to be "an order made by the Court under Chapter 3 in relation to the estate or notional estate of a deceased person to provide from that estate for the maintenance, education or advancement in life of an eligible person". It is only qualified by the word "interim". This has the result that at the time of hearing of the application for an interim family provision order, the Court, acting on the evidence then before it, treats the matter as it would any final application for family provision, but recognising its character as "interim". It is that word which supports Young J's conclusion set out in paragraph [11(4)] above. 14. Bearing in mind both Young J's conclusions and my observations in the preceding paragraph, and putting the matter into my own words, s 62 of the Act on its proper construction invites the Court to consider the following questions: (1) Is the applicant an "eligible person"? (2) If "yes" to the preceding question, will a family provision order be made in favour of the applicant at the final hearing of the application for such an order? This requires the Court, by reference to the evidentiary material then before it, to consider what the Court thinks will be the position as at the date of a notional, future final hearing. The use of the modal or auxiliary "would be" does not mean the applicant must demonstrate an arguable case or a serious question to be tried that the applicant will be entitled to a final order. The Court must be satisfied on the balance of probabilities that the applicant will obtain an order at the final hearing. (3) By reference to the evidentiary material before it as at the date of the hearing for an interim family provision order, what interim order does the Court propose to make, applying the principles that would apply to the making of a final family provision order but recognising its character as interim (the "proposed provision")? (4) Is the Court of the opinion that no less provision than the proposed provision will be made in favour of the eligible person at the final hearing? 15. In relation to the last of the four questions, the statute does not require the Court necessarily to come to a view as to the precise size of the provision which it thinks will be ordered at the final hearing. For the Court to embark on that exercise would be generally undesirable and frequently impossible. That is why, following the general approach recommended by Young J in paragraph [11(4)] above, in the normal course a proper order, given its interim character, would only provide for the eligible person's needs pending the final hearing. In the vast majority of cases, if the Court is of the view that a person will receive provision for their maintenance, education and advancement at the final hearing then the Court should be able to form the requisite opinion without too much difficultly as a matter of simple mathematics. If the eligible person is entitled to something for the rest of their life at the final hearing, then it is difficult to see how it could ever be less than an interim provision intended to meet the eligible person's needs for a period of a few months. This analysis does not require the Court, in most cases, to form a view as to the amount of the probable final provision. However, there may be cases where that will be necessary."

Section 62 - the parties' submissions

Mr M Condon of Senior Counsel appeared for John. His submissions may be summarised as: 1. John is impecunious. 2. John's only source of income is social security payments. 3. As at 29 November 2016 John had only $20 in his bank account. 4. John is at risk of losing his home due to foreclosure. 5. John has significant credit card debts of $385,000. 6. John's wife suffers from profound schizophrenia which, on the evidence, would be exacerbated if the mortgagee takes possession of their home. 7. John himself needs psychiatric help. 8. The estate is very substantial - over $13,000,000 when the amounts referred to in paragraphs [26(1)] and [26(2)] above are combined. 9. Given John's dire financial circumstances and the size of the estate, $500,000 is a comparatively modest sum to meet his immediate needs. 10. The purpose of making a family provision order will be subverted if the interim order is not made because, without it, John and his family will be left destitute before the final hearing will occur. 11. Because the settlement with BOQ involves the bank giving up its mortgage over the Strand unit, John will use the Strand unit to secure repayment of the interim distribution of $500,000 in favour of the estate. 12. John's personal circumstances have altered significantly since the time of both White J's judgment in 2012 and Ball J's judgment in 2015 (see paragraphs [16] and [19] above).
The Executors were represented by Mr L Ellison of Senior Counsel. Mr Ellison's submissions may be summarised as: 1. For at least four reasons the Court could not be satisfied that John would receive a final order that is "no less" than that which might be ordered in an interim hearing: 1. The level of provision by way of gifts which he received from Dorothy during her lifetime ($1,200,000). 2. The amount left to John under the Will ($2,000,000). 3. The unresolved question around the Alleged Loan and any costs that might flow from the determination of that question. 4. The evidence to be adduced concerning the nature and quality of the relationship between John and Dorothy. Dorothy had three children, but the evidence discloses that Lesley got on much better with her and for that reason has been favoured. 1. It was clear that John was hopelessly indebted to the point that should there have to be any repayment of an interim provision, it would have to come from the sale of the Strand unit. Even viewed optimistically it was unlikely that the Strand unit could be sold within a reasonable time to yield an amount of $500,000 after the expenses of any such sale were taken into account. 2. Although John's financial circumstances may have worsened since the applications before White J and Ball J, the evidence of impecuniosity and John and his wife's poor health had been before the Court on those earlier occasions. 3. There had been delay in bringing the application.

Section 62 of the Act - resolution

For the four reasons which follow, and not without some hesitation, I have concluded that I am unable to reach a state of actual satisfaction on the balance of probabilities that a family provision order will be made in favour of John at the final hearing of his application for such an order. Alternatively, even if I could be satisfied of that to the requisite standard, I am similarly not satisfied, and hence am unable to form the opinion required by s 62, that provision of no less than $500,000 would be made in John's favour at any final hearing. Finally, even if I were satisfied of the two preceding matters, I would decline to make the order in the exercise of the Court's discretion. The same considerations inform all three conclusions.
Mr Condon SC submitted in his written outline that John had "an arguable case" that a family provision order would be made. I readily accept that submission as correct. However, for the reasons which I gave in Roberts v Moses set out in paragraph [28] above, the jurisdiction to make an order under s 62 of the Act is not enlivened if all that is demonstrated is an arguable case for provision. The Court must be satisfied on the balance of probabilities that an order for provision will be made.
There can be no doubt that John's financial and other circumstances are very serious. However, such adverse circumstances are, in and of themselves, insufficient to warrant the making of a family provision order. John is undoubtedly an eligible person for the purposes of the Act. The fundamental question is whether the Court is satisfied on the balance of probabilities that, at the time of a hypothetical future hearing, the Court will conclude that adequate provision for the proper maintenance, education or advancement in life of John has not been made by the Will in all of the circumstances, including taking into account the matters set out in s 60 of the Act, and then order further provision.
In reaching my conclusions, I have carefully considered the evidence that has been adduced about John's circumstances. Notwithstanding that, the primary reason for the conclusion I have reached is that because of the $1,200,000 received by John from Dorothy during her life by way of gifts and the provision for him in the Will of $2,000,000, I am not satisfied, on the balance of probabilities, that at any final hearing the Court will find that adequate provision has not been made for John under the Will. I hasten to add that the conclusion I have reached is based only on the submissions and material which the parties have chosen to rely on for the purposes of the present application. Any final hearing will involve more detailed evidence and the cross-examination of witnesses, in addition to further detailed submissions about the ultimate issues. All of this may present quite a different picture at final hearing, but the Court must decide the present application on the evidence before it.
The second reason for my conclusions is the uncertainty created by the status of the Alleged Loan. Whether or not it has to be repaid by John is obviously a very important matter in determining both the adequacy of the provision made for John under the Will and the amount of any further provision. If repayment is required, John's financial circumstances mean it can only be done by reducing his pecuniary legacy.
It was not suggested on behalf of John - and nor could it have been - that the decision of the Court of Appeal overturning Sackar J made the outcome of the Executors' cross-summons a foregone conclusion one way or the other. For example, the Court of Appeal did not conclusively determine some question of law which had the effect, in any circumstances, that John did not have to repay the estate. The Court of Appeal's decision turned on findings that Sackar J had incorrectly rejected some of John's evidence and had failed to make other factual findings which the Court considered would have been appropriate for his Honour to make.
The fact that the cross-summons has been remitted for further trial demonstrates that the outcome remains open, turning at least on questions of Mr Steiner's evidence and his credit. So much is apparent from the Court of Appeal's reasons for remitting the cross-summons: "56. There was minimal cross-examination of Mr Steiner and no cross-examination was directed to the conversations with the Deceased to which he deposed, irrespective of whether or not they were admitted or rejected. It would be unfortunate for the cross-summons to be remitted for a further trial. Nevertheless, that course appears to be unavoidable. It would not be appropriate for this Court to make findings of fact that appear to be inconsistent with the implied findings made by the primary judge. A finding by this Court that Mr Steiner should be believed, in the absence of an opportunity for the Executors to cross-examine him on the rejected evidence, could involve a miscarriage of justice. Equally, a finding that Mr Steiner's evidence should be rejected in favour of the Acknowledgement could also involve a miscarriage of justice. In the circumstances, unfortunate though it will be, there will need to be a new trial of the matters raised by the cross-summons."
Neither party addressed me on the question of the likely outcome of the retrial of the cross-summons. That is sufficient for it to be inappropriate for me to express any view on the question. That position is only fortified by the fact that I am now the trial judge. It is sufficient for present purposes to note that the question of whether or not John has to repay the Alleged Loan to the estate is completely open. The uncertainty over the outcome compounds the lack of certainty about whether any order for further provision would be made and the amount of such an order.
The third reason for my conclusions recasts my second reason in an additional, slightly different juridical light. Even if the Court were able to form the requisite opinion for the purposes of s 62, the making of an order remains discretionary. In my opinion, the fact that, for the purposes of any final provision order, John's circumstances are subject to the substantial variable of the fate of the Alleged Loan in and of itself provides an overarching discretionary reason for the Court not to make the interim order. So understood, that uncertainty is an additional reason why I decline to exercise the discretion to make an interim family provision order in favour of John.
Another important discretionary consideration - particularly where the Court might otherwise have reservations about whether or not an interim provision order should be made - is the capacity of the applicant for interim provision to secure repayment if, for example, the interim order is ultimately revoked pursuant to s 62(2) after a final hearing. The evidence starkly demonstrates that John would only be able to repay the provision by securing the Strand unit in favour of the estate and then, if necessary, selling it. The fourth reason for my conclusions is that I am not satisfied that the Strand unit would give adequate security for an interim provision of $500,000. Even on John's own evidence a forced sale could yield less than that sum. The difficulties which John has had in trying to sell the Strand unit and the evidence about the state of the Townsville property market (see paragraph [24] above) demonstrate that even the forced sale valuation may be optimistic. On any view of the evidence, there is a real risk that if the interim provision did have to be repaid, the estate would be faced with a lengthy sale process and a strong likelihood that it would be left out of pocket, even before the expenses of a sale are taken into account.
I should finally record that, in reaching my conclusions, I have not overlooked two other matters urged upon me by Mr Condon SC on behalf of John. The first was that this was a "large estate". Although Mr Condon SC did not specifically articulate the significance of that fact for the present exercise, I understood the implication to be that it made more likely both a finding that adequate provision had not been made for John and a more generous order for further provision.
The second matter was to bring to the Court's attention part of Hallen J's summary concerning family provision claims by adult children in Camernik v Reholc [2012] NSWSC 1537, where his Honour observed at [159]: "… (c) Generally, also, the community does not expect a parent to look after his, or her, child for the rest of the child's life and into retirement, especially when there is someone else, such as a spouse, who has a primary obligation to do so. Plainly, if an adult child remains a dependent of a parent, the community usually expects the parent to make provision to fulfil that ongoing dependency after death if he or she is able to do so. But where a child, even an adult child, falls on hard times, and where there are assets available, then the community may expect a parent to provide a buffer against contingencies; and where a child has been unable to accumulate superannuation or make other provision for their retirement, something to assist in retirement where otherwise they would be left destitute: Taylor v Farrugia [2009] NSWSC 801."
Neither of those considerations, taken singularly or together, has been sufficient to displace the reasons which I have set out in the preceding paragraphs and enable me to be satisfied that John's application under s 62 of the Act should be granted.

Further interim distribution - legal principles

Barrett J (as his Honour then was) said in Romano: "16 Mr Ellison submitted that, in the circumstances at hand, s.84 of the Wills Probate and Administration Act 1898 or Part 68 rule 2(3)(d) or (4)(b) of the Supreme Court Rules represents a foundation on which the orders sought in the notice of motion may be made. In an abstract sense, this is no doubt so, in that each provision is capable of grounding the orders sought. In particular, the jurisdiction created by s.84 may only be exercised in respect of an executor and is therefore not available after the estate has been fully administered and the erstwhile executor is holding the estate as a trustee: In the Will of Clinton [1910] NSWStRp 49; (1910) 10 SR (NSW) 465. Part 68 is available whether or not the transition from executor to trustee has occurred: see Part 68 rule 2(1) and the definition of "administration proceedings" in Part 68 rule 1. The real question is not whether the court has jurisdiction to make the orders now sought by the plaintiff but whether, as the estate currently stands, it should do so as a matter of discretion. … 18 But even allowing for these uncertainties, the moneys in hand may be accepted as more than sufficient to accommodate, at the least, the payment of the pecuniary legacy of $200,000. Acting with the greatest degree of conservation and prudence called for by the circumstances of the case, the executor could safely part with that sum, particularly since, at a pecuniary level, the rents and the share of residue (which will be substantially in cash form) will represent a sufficient buffer or safety valve. According to the tests laid down by Myers AJ in Re Anderson (1953) 53 SR(NSW) 520, this interim distribution is appropriate because there is a clear entitlement to the legacy and funds available to allow for the safe payment of it."
The current equivalent of the Supreme Court Rules referred to by his Honour are r 54.3(3)(d) or r 54.3(4)(b) of the Uniform Civil Procedure Rules.

Further interim distribution - the parties' submissions

John relied again on the size of the estate and the exigency of his financial and personal circumstances as warranting an order for a further interim distribution.
In addition to repeating the reasons he had advanced for the Executors in opposition to an order being made under s 62 of the Act, Mr Ellison SC submitted that it would be unsafe to exercise the Court's undoubted jurisdiction to make an interim distribution because, adopting a conservative approach, the interim distributions to John had reached a level where there could not safely be any more such distributions without the risk of John receiving in excess of his entitlement from the estate. He made good that proposition by positing the following calculation, the integers of which were agreed between the parties (see paragraph [26] above): 1. In round figures, $5,543,000 was available to pay the unpaid balance of the pecuniary legacies. From this had to be deducted $800,000 (comprising the debt payable to Wayne, Executors' commission and the further legal costs of the estate). This leaves a balance available to pay the pecuniary legacies of $4,743,000. (The figures which follow are slightly different from those presented by Mr Ellison SC, because I have corrected for a mathematical error in his calculations. The ultimate difference (see sub-paragraph (4) below) is a remainder of $71,000 as opposed to the $100,000 arrived at by Mr Ellison SC's figures. The force of his point is unaffected by the difference.) 2. That amount of $4,743,000 is required to meet the unpaid balance of the pecuniary legacies of $5,676,000. This means there must be an 83.5% pro-rating. 3. Pro-rating John's legacy of $2,000,000 by 83.5% gives a legacy of $1,670,000. From this must be deducted the interim distributions he has already received of $788,000; the Alleged Loan (which is repayable to the estate on this hypothesis) of $881,000; and a figure of, say, something in the order of $150,000 reflecting an adverse costs order against John in respect of the Alleged Loan. This gives a negative figure of minus $149,000. 4. To the negative figure of minus $149,000, this hypothesis requires John's one quarter share of the Alleged Loan to be added back in his favour ($220,000), suggesting a net final entitlement to John of $71,000.
On the basis of this analysis, the proposed further interim distribution of $500,000 would be considerably in excess of the amount John would be finally entitled to receive from the estate. Adopting the language of Romano, the further interim distribution should not be ordered because there was no clear entitlement to an additional legacy as large as $500,000. Neither were funds available to allow for the safe payment of it without diminishing the pool available for the satisfaction of other legacies.
The only particular issue Mr Condon SC took with this calculation was that he said it did not allow for the Alleged Loan to be added back in, assuming that John was found liable to pay it back to the estate. I do not accept that criticism because, as is apparent from sub-paragraph [47(4)] above, Mr Ellison's calculation did give John the benefit of repayment of the Alleged Loan.

Further interim distribution - resolution

There are two reasons why the Court has concluded that no further interim distribution should be ordered.
First, the Court accepts that, again quoting from Romano, "acting with the greatest degree of conservation and prudence called for by the circumstances of the case", the Court cannot be satisfied that the Executors could safely part with $500,000. The calculation propounded by Mr Ellison SC represents an appropriately conservative analysis. In particular, that analysis requires the "worst case" scenario (provided it is not patently unrealistic, which in this case it is not) to be considered that John has to pay back the Alleged Loan. Mr Ellison SC, correctly, did not present the calculation as being scientific. However, both parties accepted that it involved approximations and estimates that seemed reasonable and appropriate, working from the financial facts as they currently appear. The Court agrees with that characterisation of the elements of the calculation. Accordingly, a further interim distribution of $500,000 is well in excess of what could, on this scenario, be John's remaining entitlement from the estate (ignoring any possibility of an order for further provision under the Act).
The second reason reinforces the first. Even if there was a plausible basis upon which the Court could conclude that the Executors, being conservative and prudent, could safely advance $500,000 to John, his inability to provide what the Court considers would be adequate security militates against the order being made. The analysis set out in paragraph [40] above applies equally here to defeat John's application.

Orders

John's application fails on both of the bases upon which it was argued. It follows that his motion filed on 10 March 2016 should be dismissed. The Court will hear the parties as to costs and any consequential orders that need to be made, including in relation to preparing the various proceedings for hearing in May 2017.

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: 24 February 2017

Family Provision Act 1982(NSW)

Uniform Civil Procedure Rules 2005(NSW)rr 54.3(3)(d), 54.3(4)(b)

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (11 paragraphs)

Parties

Legislation Cited (4)

Cases Cited (11)

Cited By (5)