Revised from transcript and annotated; issued 14 April 2022
Two sets of proceedings are before the Court, each of which concerns the estate of the late Margaret Therese Tait who died in April 2020. The deceased was born in May 1930 and so was 89 years old when she died. Her husband, William Thomas Tait, predeceased her, dying in January 2005. Together they had three children: Peter Lloyd Tait, born in June 1961; Catherine Mary Weaver (née Tait and formerly Sedgwick), born in December 1963; and Anne Elizabeth White (née Tait), born in March 1967. Without disrespect and for convenience, I will refer to the members of the deceased's family by their given names.
The deceased made what proved to be her last Will in August 2010 at the age of 80. She appointed her son Peter and her daughter Catherine as her executors and left the whole of her estate to them in equal shares. She left nothing to her youngest child, Anne. The deceased and Anne had been estranged for a long period. The last time Anne spoke to her mother (or to her siblings) was in 2007. There is no challenge to the deceased's testamentary capacity at the time she made her Will.
The deceased's estate following her death was estimated by Peter and Catherine, in their application for probate, as being worth $700,000. Of that, Peter and Catherine have paid out $300,000 each to themselves, towards their entitlements under the Will.
Anne is the plaintiff in both of the proceedings before the Court. The first was commenced by her in March 2021. In those proceedings, Anne seeks an order for family provision in her favour under Chapter 3 of the Succession Act 2006. As the executors of the deceased's estate, Peter and Catherine are named as the defendants. I will refer to these proceedings as the "family provision proceedings."
The second set of proceedings was commenced by Anne in October 2021. Peter and Catherine are the first and second defendants. In the proceedings, Anne complains that, over the last four or so years of the deceased's life, Peter and Catherine received moneys from the deceased (or diverted to themselves moneys which would have been the deceased's) totalling at least $2.1 million. Anne seeks to have Catherine and Peter repay these amounts to the estate so as to make them available to meet her family provision claim. I will refer to these proceedings as the "estate proceedings."
White v Tait [2022] NSWSC 460 | Case summary | Zoe
The statement of claim in the estate proceedings pleads various claims on behalf of the estate against Peter and Catherine as recipients of the deceased's money. In order to regularise the proceedings, the statement of claim also seeks (by way of "interlocutory relief") an order under r 7.10(2) of the Uniform Civil Procedure Rules 2005 (NSW) appointing Anne, nunc pro tunc, as the representative of the estate for the purpose of bringing the claims on the estate's behalf.
The proceedings have come before the Court as a result of two notices of motion filed on behalf of Peter and Catherine as the defendants. The first notice of motion was filed in the family provision proceedings. It seeks orders setting aside subpoenas which were issued at the request of Anne's solicitors in those proceedings. The purpose of the subpoenas is to gather evidence of the deceased's medical condition, and in particular her mental faculties, over the last ten years or so of her life. Anne's solicitors have indicated that they will not press for compliance with certain of subpoenas, though others are pressed.
The second notice of motion was also filed in the family provision proceedings but should have been filed in the estate proceedings. It seeks an order that the statement of claim in the estate proceedings be struck out. The contention is that the claims as pleaded, or at least some of them, do not disclose proper causes of action.
Anne's legal representatives reacted to this motion by propounding a proposed amended statement of claim that aimed to meet at least some of the complaints about the form of the statement of claim. But the defendants' lawyers maintain that the proposed pleading is still inadequate. In effect, the motion has turned into a contest about whether I should allow the amendments in the proposed form.
The proceedings were fixed before me today for the hearing of the two motions. But I considered that, before going into the issued posed by the motions, it was necessary to determine whether the representative order sought on behalf of Anne in the estate proceedings should be made. Argument has proceeded today accordingly.
Anne is not a beneficiary under her mother's Will. She would only be entitled to monies out of the estate if she obtains an order for provision in her favour as a result of the family provision proceedings. Anne, therefore, only has a contingent interest in the estate. Furthermore, the claims in the estate proceedings will only need to be pursued if Anne obtains an order for provision which exceeds the value of what she can recover, including by way of notional estate, in the family provision proceedings.
The usual rule is that only an estate's legal personal representative may pursue claims for its benefit. But the court has power in exceptional circumstances to authorise someone else to sue on the estate's behalf. In Butcher v Balog [2017] NSWSC 1409 I decided (at [21]-[22]) that, in a proper case, such authority may be granted to a person with no current interest in the estate but who has an arguable contingent interest based on a family provision claim. That decision was not disputed by either party for the purposes of today's argument.
Counsel for Anne contended that the present case is indeed an appropriate one for the making of a representative order. Counsel submitted that the claims pleaded in the statement of claim are arguable. It is plain that the claims will not be pursued by Peter and Catherine against themselves. Thus, counsel submitted, the only way in which the estate's rights could be vindicated would be through the representative order sought.
In Butcher, I imposed two conditions on the making of the representative order. The first was that the applicant needed to provide security for the defendant's costs of the proceedings so authorised. The second was that the applicant was not permitted to file a statement of claim unless a certification could be obtained from her solicitor to the effect that the claim was a proper one with reasonable prospects of success (as would be required in a claim for damages by cl 4(2) of sch 2 of the Legal Profession Uniform Law Application Act 2014 (NSW)).
Counsel for Anne submitted that neither condition should be imposed in this case. In particular, he suggested that Anne might have difficulty providing the requisite security given her impecunious circumstances. I interpolate that Anne places her family provision claim squarely on the basis that she is in need because of financial misfortunes that she and her husband suffered after she became estranged from the rest of her family.
Counsel identified six separate claims in the proposed amended statement of claim. These claims derive from information provided by the defendants as executors since the deceased's death. In summary, the claims are as follows:
1. A claim for $335,000 which was paid out of a family superannuation fund, the trustee of which is the third defendant in the estate proceedings, Tait Super Fund Pty Limited. This payment was made by the trustee after the deceased's death to Peter and Catherine in 50/50 shares. The payment was made pursuant to a binding death nomination executed by the deceased in May 2017.
2. A claim to a dividend of $337,000 paid on the winding up of a family company, Admiral Plastics Pty Limited (a members' voluntary winding up initiated before the deceased's death). The payment itself was made in June 2019, about 10 months before the deceased died. It was paid into the deceased's bank account and then paid out to Peter.
3. A claim for a further $456,000 which was split between Peter and Catherine. Payment was made in December 2016 and represented part of the proceeds of the sale of the former family home at Castle Hill (the deceased by this stage was living in a nursing home).
4. A claim for a further $1 million which was split between Peter and Catherine in May 2016. This payment represented substantially the whole of the proceeds of the former family holiday home at Avoca on Sydney's Northern Beaches.
5. A claim for an account of all income received by the deceased into a particular bank account between October 2016 and the deceased's death. Evidence available to Anne suggests that the income received exceeded expenditure on costs of the deceased by about $35,000. The suggestion is that the difference may have been applied for the benefit of Catherine or, perhaps, Catherine and Peter.
6. A claim for an account of any monies due to the deceased from Admiral Plastics over the period from 1 January 2017 until its liquidation. The suggestion is that Peter and Catherine, who were also the directors of Admiral Plastics, may have appropriated monies of that company to themselves which otherwise should have come to the deceased as shareholder.
Based on medical records (as Anne has no direct knowledge of her mother's mental state and medical condition), it is alleged on Anne's behalf that the deceased's mental capacity declined in the last few years of her life. Apparently, Catherine had a power of attorney from 2014 onwards. The suggestion is that Catherine and Peter controlled the deceased's affairs and used that control to confer upon themselves the benefits which are the subject of the claims.
According to counsel, the power of attorney is limited, in that it did not authorise the provision of benefits to the attorney herself. But the position is complicated because it seems that some of the payments in question were based on withdrawal forms which the deceased herself signed and others were based on a bank authority which the deceased had previously executed in favour of Catherine.
Despite the allegations about the deceased's declining level of mental capacity, there is no claim of non est factum so far as the payments made by the deceased are concerned. Nor is there any claim that the bank authority in favour of Catherine ceased to be effective because the deceased lost capacity after having executed it.
Instead, claims 1-5 are put on the basis of breach of fiduciary duty. As I understood counsel, he appeared to be contending that, even in the case of payments made by the deceased herself, there was some sort of fiduciary duty on Peter and Catherine, the breach of which allows those payments to be recovered from them. I am not sure about this, but in the view that I take it is not necessary to go into it any further for present purposes. Claim 6 is also based on breach of fiduciary duty by Peter and Catherine, but, in this case, the alleged duty was owed to their mother as a shareholder: Brunninghausen v Glavanics (1999) 46 NSWLR 538.
The defendants' evidence is that the payments which are the subject of claims 1-4 were made in accordance with their mother's wishes. In particular, the dividend paid by Admiral Plastics, which went to Peter alone, is said to have been made in recognition of his role in the business (and to have been consistent with the wishes of the deceased's husband who originally acquired the business for the family).
The defendants make no admissions concerning claims 5 and 6. They do not accept that any benefits of the type suggested were in fact received by them.
The summons in the family provision proceedings seeks relief in the broadest terms. It simply asks for the Court to make "provision", in an unspecified amount and manner, out of the "estate and/or notional estate" of the deceased. In the course of today's hearing, I asked counsel for Anne how much is claimed by way of provision. Counsel did not give a final answer, but I understood that the claim could be as high as $2 million or more. Counsel certainly suggested that the claim could exceed the $700,000 in the deceased's estate at the time of her death and the claimable notional estate.
It is obvious, and was not disputed, that the prosecution of the claims in the estate proceedings will probably be expensive and time-consuming. The claims will be vigorously defended. If the accounts which are sought under claims 5 and 6 are granted, then that is likely to lead to further litigation and expense. None of this will be necessary unless the plaintiff not only succeeds in her family provision claim, but also succeeds in obtaining provision in an amount which cannot be satisfied out of the deceased's estate and the notional estate.
Counsel for the defendants invited me to conclude that Anne's claim for family provision is not particularly strong. I do not think that it is necessary in this application to make any finding as to the strength of that claim. It is enough to say that there is a real doubt about whether the claim will succeed at all, let alone that the extent of the plaintiff's success will exceed the value of the estate and the notional estate. Naturally this raises the question whether it would be possible, rather than instituting expensive and potentially unnecessary separate proceedings, for Anne to pursue her claims (or, at least, her valid claims) in her family provision application.
Counsel for Anne accepted immediately that claims 1 and 2 may be pursued as claims for notional estate. Not only does this mean that those claims could be directly prosecuted through the family provision proceedings, but it also makes those claims simpler. It will not be necessary for Anne to prove that the deceased's estate has any cause of action against Peter or Catherine for the recovery of those amounts. Instead, because the transactions forming each claim occurred within a year of the deceased's death, it is enough for Anne to demonstrate only that recourse to those moneys is necessary in order to give effect to the provision that the Court considers that she should have. [1]
Claims 3 and 4 are in a different category. The relevant date for each of them is more than three years before the deceased's death. Therefore, they cannot be claimed by way of notional estate. [2] The only way in which Anne can pursue those claims is by establishing an entitlement to provision out of the estate which is sufficiently large to require the moneys in question to be recovered by the estate's legal personal representative in order to meet provision ordered.
But the mere fact that Anne is not entitled to relief by way of designation of notional estate does not mean that claims 3 and 4 cannot under any circumstances be the subject of scrutiny in the family provision proceedings. In such proceedings, the value of the deceased's estate is usually a relevant factor in quantifying the provision, if any, to be made in favour of the plaintiff. It must always be open to the plaintiff, for this purpose, to show that the deceased's actual estate consists of assets additional to those that have been disclosed by the deceased's executors or administrators.
In particular, I can see no reason why a plaintiff could not, if it were clearly established that the estate had an entitlement to recoup funds from a third party, obtain an order for provision on that basis. The Court might then make an order that the plaintiff, or some other suitable person, be appointed as the estate's legal personal representative for the purpose of prosecuting the recoupment of the funds following judgment on the family provision claim.
It may be possible to go further. In a case such as this, where the recipients who are allegedly liable to refund monies to the estate are already parties to the family provision proceedings, it may be possible to seek a declaration that they are indeed so liable. The decision would, as a matter of issue estoppel, bind all the parties for the purposes of all later proceedings.
Based on the debate that I have heard so far, it is not clear to me that claims 3 and 4 have been well enough articulated for the Court to be satisfied that they are truly viable. As I understood him, counsel for Anne appeared to accept that the claims would need some reconsideration. But, in principle, if these claims are to be pursued, then I think that it is clearly preferable that they should be pursued through the family provision proceedings.
Claim 5 is in a weaker position. The $35,000 is only an estimate of the maximum amount that could be recovered; there is little to show that monies were actually misappropriated. And in the context of litigation in this Court, a claim which will, at most, yield $35,000 is a very small one.
Claim 6 is even more problematic. The plaintiff, simply put, does not know whether there is such a claim. There is no pleading on Anne's behalf of any particular action by Peter or Catherine, as directors, which could be said to be a breach of their duties to anyone, whether to Admiral Plastics or to the deceased as its shareholder.
There was a faint suggestion made by counsel that this was a problem which should be addressed at a later stage of the proceedings, apparently by evidence. I cannot agree. There is simply an absence of pleaded material facts. On the information available to me, this claim should not be permitted to continue at all.
In these circumstances, I do not think that it is in the estate's interest for the claims articulated in the proposed amended statement of claim to be prosecuted by Anne on the estate's behalf. Accordingly, I decline to make the representative order sought.
It seems to me that, although I shall hear further argument on this if necessary, the estate proceedings should be dismissed. Because the dismissal will not be a dismissal on the merits, this will not affect the plaintiff's capacity to bring claims in the future through the family provision proceedings, nor later by the estate (if that point is ever reached).
Had I taken the view that a representative order was appropriate, I would have imposed the same conditions which I imposed in Butcher. In particular, I would have required Anne to provide security for Peter and Catherine's costs of defending the proceedings before permitting the claims to continue (although the security itself might have been provided in tranches, so long as reasonable coverage was provided for the defendants' costs in advance at each stage). The very fact that Anne might experience difficulty in providing security, as suggested by her counsel, underlined why such a condition would have been necessary. It would have been intolerable for the defendants not to have been adequately protected against the costs of proceedings which might have proved entirely unnecessary.
In the course of my debate with counsel about the nature of Anne's claims in the family provision proceedings, counsel appeared reluctant to be pinned down to a precise statement of how much provision was claimed, and out of which assets. In some cases where an applicant for family provision does not know, or does not have information, about the estate, that may initially be an understandable position to take. But the Court's procedures require the estate's legal personal representative to provide, at an early stage, information to allow the applicant to identify the estate's assets and potential notional estate claims. If there is a question about whether sufficient information has been provided, then this can be remedied in a proper case by discovery (or possibly subpoenas), as well as specific directions to the executors, who are amenable to the control of the Court. Once the necessary information has been provided, the applicant should be able to identify specifically any property claimed for designation as notional estate, and to specify precisely the nature of the relief ultimately sought (see Succession Act 2006, s 65).
I think that the next step in the family provision proceedings is for Anne's solicitors to amend the summons so as to do this. That will require a considered reflection on whether her claim is strong enough to justify pursuing any of the claims, apart from claims 1 and 2. If claims 3-6 are pursued, then they will need to be articulated in a precise and satisfactory way.
[Counsel addressed on the orders to be made.]
The orders of the Court in the estate proceedings (2021/280005) are:
1. Order that the proceedings be dismissed.
2. Order that the plaintiff pay the defendants' costs of the proceedings, including the defendants' costs of the notice of motion dated 15 November 2021 and filed incorrectly in proceedings 2021/82589.
[2]
Endnotes
See Succession Act 2006 (NSW) s 80(2)(b).
Succession Act 2006 (NSW) s 80(2)(a).
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Decision last updated: 14 April 2022