Watkins v Combes

Supreme Court of NSW|2013-07-17|Before: Young AJ

Judgment (ex tempore - revised 17 july 2013) 1HIS HONOUR: This is an application by a group of people who wish to sue a person who has died, but in respect of whom no grant of administration has been made. The matter is of some urgency as the putative plaintiffs say that the appropriate limitation period expires about 13 August 2013. 2The deceased died on 21 January 2013. The plaintiffs in these proceedings seek an order that a person be appointed as administrator ad litem to represent the deceased's estate for the purpose of proceedings intended to be commenced in the Federal Court of Australia. 3Exhibit PX01, which I think was meant to be a confidential exhibit, is the proposed statement of claim in the Federal Court of Australia. In essence, it claims compensation for loss allegedly suffered by the plaintiffs who sue in a class action because of the alleged breach by Allco Finance Group Limited, now in liquidation, under the Fair Trading Act 1987 (NSW), s 12GF of the Australian Securities and Investments Commission Act 2001 (Cth) or s 1041I of the Corporations Act 2001 (Cth). It is claimed that the deceased was a director and a high executive of that corporation and that he is personally liable for, at least some, if not all, of the contraventions. 4The first plaintiff appears to be a New Zealand corporation and the other named plaintiffs New Zealand residents. The solicitors for the plaintiffs give a Melbourne address. That may be significant for what I am about to say. 5An action against a deceased person is usually a nullity. For instance, in e.g. Watkins v Combes [1921] HCA 24; (1921) 29 CLR 317 and Deveigne v Askar (2007) 69 NSWLR 327, the only way that an action can proceed is either for a representative order to be made under the rules or for a person to be appointed administrator of the estate. The former course appears by authority not to be available, save for instance, Nagel v Hough (1927) 27 SR (NSW) 418; 44 WN (NSW) 121. The evidence before me shows that on 14 February 2013 notice of an intended application for probate was given by one Gary James Jones in respect of what is claimed to be the deceased's will of 15 November 2007. A firm of solicitors, Esplins, were noted as the persons to whom claims should be addressed. The plaintiffs' solicitors have written four letters to Esplins. The only reply received was as at 11 June 2013. Esplins was not aware of this application for probate being lodged, but was aware that Mr Jones was currently making preparations for such an application. 6The plaintiffs believe that the deceased and his estate are fully insured against the liability to pay compensation as a result of the proposed proceedings. 7There is clearly power in this Court to make an order appointing an administrator ad litem: s 40 of the Probate and Administration Act 1898 (NSW) and see cases such as Davis v Chanter (1848) 2 Ph 545; 41 ER 1054, Maclean v Dawson (1859) 1 Sw & Tr 425; 164 ER 796, Greenway v McKay [1911] HCA 25; (1911) 12 CLR 310, and Re Simpson [1936] P 40. The case was argued ex parte by Mr W A D Edwards of counsel. Last Monday I was uncomfortable in giving a decision ex tempore because I could see some red lights and I was dealing with a very busy probate list. I reserved my decision until today and I am glad that I have. There seem to be a number of difficulties in making the order sought at this time; however, those difficulties should be able to be overcome if the plaintiffs are given a couple of weeks. I will now discuss the problems and then either dismiss the proceedings or entertain an application to reopen or for a short adjournment. 8Broadly speaking, the principal problems are, listing them in no particular order: (1)The executor has not been cited to prove the will of 15 November 2007; (2)The scope of the administration has not been addressed; (3)There is a question of an administration bond being required; (4)There is no affidavit deposing that the proposed administrator is an independent person who will carry out his fiduciary obligations to the beneficiaries; (5)The proceedings appear only to have minor connections with New South Wales; and (6)The form of the order needs to be more seriously considered. 9I will deal with these problems in that order.

(1) The failure to cite the executor 10I need to give some background as to the remedy sought. The authorities clearly say that an administrator ad litem is not merely a token representative of the deceased in the proposed action. He or she is virtually for all purposes the representative of the estate within the limits of the grant. In Faulkner v Daniel (1843) 3 Hare 199 at 207-8; 67 ER 355 at 359, Wigram VC said: "In principle, I think it is clear that, where a limited administration is granted...and the limited administrator is made a party to a cause, the estate of the deceased is perfectly represented for all purposes, to the extent of the authority conferred by the letters of administration." 11Lord Cottenham LC took up those words in Davis v Chanter and the head note of that case reflects what his Lordship said, namely: "The grant of letters of administration ad litem makes the grantee complete representative of the estate to the extent of the authority which the letters purport to confer, and a decree obtained against such grantee is therefore binding upon anyone who may afterwards take out general administration to the estate." 12Thus to appoint an administrator ad litem without the involvement of the persons named as the deceased's executor or the beneficiaries under the will, is an extreme step. The administrator ad litem not only has to be the defendant in the suit, he or she also needs to raise moneys to retain lawyers and to investigate the allegations made by the plaintiffs, and, if a verdict is suffered, then he or she needs to raise moneys by selling the deceased's assets or otherwise so as to provide for the verdict. That probably means, though this has never been decided in any case that I have found to date, that that person also has fiduciary duties, so that he or she cannot do what might be called a 'sweetheart deal' with the plaintiffs and must be fair in and about raising the funds to meet costs and verdict. So that it is an extreme step to appoint an administrator ad litem. However, on the other hand, as Mr Edwards has said more than once, unless someone is appointed to represent the deceased he cannot be sued. 13It is put that it is unlikely in the present case that the administrator ad litem will need to raise funds, as the deceased appears to have his liability covered by insurance and the proposed action appears to be one which is going to be funded, and presumably there will be moneys available for essential expenses of the administrator outside the assets of the estate, but one should not assume that. And although I have been presented with facts as to the insurances, it would not be proper to rule on the question of insurance without, at the very least, hearing the insurer. 14What should I do? The possibility of having a representative appointed under the Uniform Civil Procedure Rules is excluded, but there are other possibilities. The Probate and Administration Act 1898 (NSW) contains various provisions which could have been availed of by the applicants, namely ss 69, 74 and 75. Section 75 is the one that is usually used, and, under that section, where an executor named in a will neglects or refuses to approve the same or to announce probate within 3 months from the death of the testator, the Court may, on the application of any person interested in the estate, order that administration of the will annexed be granted to the applicant or make such other order for administration of the estate as appears just. The traditional way was to cite the executor to either take the grant or to renounce, and that is dealt with under s 69 of the Probate and Administration Act 1898 (NSW), but as Geddes and Studdert say in their book on probate law, s 75 is now the preferred method of proceeding. 15However, for the purposes of discussing the old cases, I will use the word "citation" or "cite". In Maclean v Dawson, to which I have already referred, at 432 of Swabey & Tristram and 800 of the English Reports, Sir Cresswell Cresswell in the pre-Judicature Court of Probate said: "It is said by Mr Cotton, in his ingenious argument, that if this application were granted, the party would, in truth, be made a party to administer the estates of the deceased. If such is its effect, and the defendants are therein prejudiced, it is their own fault, and they may still protect themselves from any such consequences by now doing their duty and taking probate." 16It is to be noted that in that case the matter did not proceed ex parte, but with people who were entitled to the estate, being representative defendants. That seems to be the usual way of proceeding, and Victorian cases such as Re O'Connor [1950] VLR 343 and Re McGown [1947] VLR 113 proceeded on the same basis. In McGown, the counsel appeared for the applicant who was about to sue for damages relating to a motor vehicle accident. The widow of the deceased was represented, as was the third party insurer. In Re Byrne [1910] ILTR 98 at 99, Justice Ross was faced with this sort of problem, but the order that he made at 99 seems to meet the situation. It is in summary: "...it is ordered by the Court that [X] be at liberty to apply for a grant of administration of the goods of the said deceased limited, to the purpose only to become and to be made a party to proceedings to be commenced before His Honour the Recorder of Belfast by the said Henry Clarke as such administrator... and to carry the decree (if any) of the said Recorder into effect, but no further or otherwise." 17Yet the order was made conditional on the people entitled to the estate not applying for probate before a certain date. In other words, they had one more chance for making the application for probate and being in control of the estate. If they didn't do it by that day, then the administrator ad litem would take charge of the estate. 18It seems to me at the moment that, whilst it is quite clear that Esplins and presumably Mr Jones have been made well aware of the present application, and it may be (though there is not enough evidence one way or the other to deal with this contention) that they are waiting until after August to make their application for probate, it may well be the case that they do not sufficiently appreciate the deleterious effect it may have on the estate to appoint an administrator ad litem. 19Accordingly, in my view, either an order in the Re Byrne form should be made - that is, an order appointing the administrator as from a date in the future, say 21 days, or whatever number is required to meet the limitation period, but giving the estate some chance to react - or alternatively, the matter should stand over for, say, 2 weeks, with an amendment of the present summons either to claim under s 75 of the Probate and Administration Act 1898 or otherwise to cite the executor to take out probate. Thus, I decline to make an order for the appointment of administrator ad litem at this time in the absence of either making the executor a party, citing the executor to take out probate, or having an order made in the Re Byrne form.

(2) The scope of the administration 20I have already dealt with this point in what I have said above to a great degree. The form of the order of the summons is inadequate. In consequence of the order not only does the administrator ad litem take his place as a party to the proceedings, but he may also realise estate assets to pay all necessary expenses in the verdict, and anything he does do within the limits of his authority binds the estate forever. I have repeated this concern to make it quite clear to Mr Jones and his advisors the risk they take by not taking out probate themselves.

(3) The need for an administration bond 21The authorities tend to suggest that an administrator ad litem needs to take out an administration bond and, ordinarily, the Court should not dispense with it. This matter has not been addressed, so I mention it and if any submissions are to be made as to whether the Court should dispense with an administration bond, they can be dealt with later.

(4) Should there be evidence that the proposed administrator is independent? 22The original application was to appoint the Public Trustee and Guardian. That authority was consulted and the message was that the institution would not consent, but recognised that it may be the will of the Court that it be appointed and if so, it would, of course, accept the appointment. 23Later on, a solicitor of this Court was nominated as the proposed administrator ad litem. I put to Mr Edwards that, colloquially, this person might be a sympathiser with the plaintiffs and I was met with a firm rejection of that proposition. However, it is usual (see e.g. Re O'Connor) to require evidence that the person to be appointed administrator ad litem has no close connections with the putative plaintiffs and will act independently. Accordingly, it would seem to me that an affidavit to that effect must be filed, and I think it would also be useful for the solicitor involved to acknowledge that he realises that he may also have fiduciary duties by taking up the appointment, because one would not wish an innocent third party to be foisted with some liability completely unanticipated, whereas if it is anticipated, the appropriate indemnities can be obtained.

(5) The proceedings appear to have only minor connections with New South Wales 24The proceedings appear to have only minor connections with New South Wales. I am not too sure whether this is a difficulty, but it is something that has gone through my mind. As is noted in Hull and Cullity (eds) MacDonnell, Sheard and Hull: Probate Practice (3rd ed, 1981) Carswell, Toronto at p 285, the source of this jurisdiction comes from the old Court of Probate before the Judicature Act and that Court had been accustomed to making grants of administration ad litem for the purpose of enabling actions in Chancery to be properly constituted. 25The process did not apply to Courts at Common Law mainly because, at that stage, personal actions died when the defendant died. Although the Courts now have, in the 20th and 21st century, given orders in a wider set of circumstances, at least up until recently they insisted that the action be properly brought in New South Wales, or if the application were made in Victoria, Victoria. The reason for that is that the order can only be made if the estate has property in New South Wales and accordingly, the action must be brought in New South Wales where the property is because it cannot be brought for instance, in the Supreme Court of Victoria. If it is to be brought in the Supreme Court of Victoria then the application for administration ad litem has to be made in Victoria. Cases like McGown bear this out. 26However, here, the proposed action is a class action. The people who are promoting it are New Zealanders, the solicitor involved is a Victorian solicitor, and the action may or may not be filed in the Victorian registry of the Federal Court. Is that a disqualifying factor for making the order? I tend to think, because verdicts of the Federal Court of Australia, even if made in relation to a suit heard in Melbourne, are enforceable in New South Wales, that this is not a problem. I also consider that the law under s 107 of the Probate and Administration Act 1898 is probably diminished since cases like Nagel v Hough as Australia has become more unified, but this is a matter that I would need to be assured about.

(6) The form of the order 27I have already set out the form of the order in Re Byrne. The Australian form seems to be that in McGown at 118. That is, in summary: "[A grant of administration ad litem to X] limited for the purpose only of him representing the said estate in any action or proceeding which may be instituted by [Y] against [the estate]... and for the purpose of [X] obeying and carrying into execution all judgments or orders of the Court relating to such actions or proceedings until final judgments shall be had or made therein and such judgments shall be carried into execution and the execution thereof fully completed, and with power for the purpose of satisfying any such judgments or orders or carrying into effect any compromise or to exercise and enforce against any person whatsoever all rights of indemnity or contribution which the said deceased or his estate may have in respect of or arising out of or in connection with the said actions or proceedings and to receive from and to give receipts to such persons for any moneys payable in respect of damages and costs or otherwise adjudged to be recoverable in such proceedings or agreed to be paid as a compromise thereof and to pay the same to the persons entitled thereto, and with power further for the same purpose to do all things necessary or expedient for carrying into effect the provisions of [the relevant legislation] in respect of any such actions or proceedings as aforesaid, but such administration shall proceed no further or otherwise than as aforesaid or in any other matter whatsoever." 28Those words were taken from the 1947 case. It may well be that they can be modernised, but they do cover what needs to be done. 29As to costs, the order in McGown was that neither the widow nor the insurance company received any costs, because there was no justification for their opposing the grant, and the applicant's costs were part of the necessary costs of the administration of the estate. 30Accordingly, as I said earlier, I am not prepared to make a grant at this stage. If there is an application to reopen or adjourn or otherwise amend, I will deal with that either today or in the next few days. Alternatively, I will dismiss the summons and someone can appeal. 31I should add that despite the head note in Re Aylmore [1971] VR 375, it is clear that an order of this nature can only be made if there are assets within the jurisdiction. There is sufficient material, both inferred from Mr Jones' statement that he intends to apply for probate and otherwise, that that requirement is satisfied in this case.

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Probate and Administration Act 1898(NSW)ss 40, 69, 74, 75, 107

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