Application of Harnett and Cutts

[2016] NSWSC 427

Supreme Court

New South Wales

Medium Neutral Citation:	Application of Harnett and Cutts [2016] NSWSC 427
Hearing dates:	8 April 2016
Date of orders:	18 April 2016
Decision date:	18 April 2016
Jurisdiction:	Equity
Before:	Pembroke J
Decision:	See paragraph [24]
Catchwords:	NEXT OF KIN INQUIRY – plaintiffs justified in distributing the estate – Benjamin Order
Cases Cited:	Application by NSW Trustee & Guardian (Estate of the late Marko Sijakovic) [2012] NSWSC 1532 NSW Trustee & Guardian; In the Estate of Rex [2015] NSWSC 841 NSW Trustee and Guardian (Estate of Peter Urso) [2013] NSWSC 903 Re Benjamin; Neville v Benjamin [1902] 1 Ch 723
Category:	Principal judgment
Parties:	John Frederick Hartnett – first plaintiff Allan Frederick Cutts – second plaintiff No defendant
Representation:	Counsel: J Donoghue – for the first and second plaintiffs   Solicitors: Avondale Lawyers – for the first and second plaintiffs
File Number(s):	2016/050005

Judgment

1. This is an application by the executors of the estate of the late Frederick Cutts who died on 21 October 1954. It relates to their inability to locate the last known beneficiary of the estate and effectively seeks to excuse them from any further attempt to do so.

Benjamin Order

2. The executors have sought a ‘Benjamin order’, a form of order derived from Re Benjamin; Neville v Benjamin [1902] 1 Ch 723. In Application byNSW Trustee & Guardian (Estate of the late Marko Sijakovic) [2012] NSWSC 1532, Hallen J made the following observations about Benjamin orders, which I gratefully adopt:

[23]    In Williams, Mortimer & Sunnucks, Executors, Administrators and Probate, 17th ed, (1993), at 938, the learned authors state:

It may happen that distribution is held up because the representatives cannot be sure who is entitled. Thus a person's right to share in the estate may turn on the question whether another predeceased the testator, predeceased him without issue, and it may be uncertain on the facts whether this happened. In these circumstances, the representatives may apply to the court for a "Benjamin" order - Re Benjamin [1902] 1 Ch 723, that is, an order permitting them to distribute the estate on the footing that certain events have or have not happened. The effect of such an order is to relieve the representatives of liability in their capacity as representatives should the hypothesis on which they are to be permitted to distribute turn out to be wrong. Thus, where a beneficiary who was thought to have predeceased a testator subsequently appears, he will not be entitled to bring a claim against the representatives for his share of the estate. He may, however, be entitled to claim in equity against the beneficiaries who have been wrongly paid or perhaps bring a tracing action against the recipients of the share - Re Diplock [1951] AC 251.

[25]    In Lempens v Reid [2009] SASC 179, Gray J, at [32], said:

The effect of a Re Benjamin order is to enable the executor to distribute the estate to those members of the class which have been ascertained at the time of distribution, whilst ensuring protection of the executor if a person entitled to a portion of the estate subsequently appears. If such a person does appear, he or she is not entitled to make a claim against the executor for that portion but may claim against beneficiaries who have been paid incorrectly. If a Re Benjamin type order were considered appropriate in the circumstances of these proceedings, it may be necessary for the Court to order that further enquiries be undertaken, to ascertain whether members of the class can be located, prior to any distribution of the gift contained in the subject clause.

3. Hallen J also explained in NSW Trustee and Guardian (Estate of Peter Urso) [2013] NSWSC 903:

[39]    Thus, in a case where a trustee is faced with a practical difficulty in establishing the existence of possible beneficiaries or other claimants, the Court will give a direction to the trustee enabling it to distribute the trust property on an assumption of fact that there is no such beneficiary or claimant. In the case where a beneficiary has disappeared in circumstances where the absence leads to an inference of death, an order may be made that the trust estate be distributed on the basis that the beneficiary is dead: Re Reynolds Trusts (No 2) [1942] QWN 40; Nolan As Administratrix of the Estate Of Barbara Nolan, deceased v Nolan [2011] WASC 224 at [33].

[40]    As Nourse J explained in Re Green's Will Trusts [1985] 3 All ER 445, at 446:

The true view is that a Re Benjamin order does not vary or destroy beneficial interests. It merely enables trust property to be distributed in accordance with the practical probabilities...

At 462, his Lordship added:

I do not think that the question whether such an order should be made depends on whether or not there will be administrative inconveniences caused by the trustees retaining the fund. I think it depends on whether in all the circumstances the trustees ought to be allowed to distribute and the beneficiaries to enjoy their apparent interests now rather than later.

4. See also the decision of Kunc J in NSW Trustee & Guardian; In the Estate of Rex [2015] NSWSC 841 at [8].

Background of Frederick Cutts

5. On 25 January 1896 Frederick Cutts married Amy Sparling Wilde and they had six children: Frederick Cutts, George Cutts, Winifred Amy Harnett nee Cutts, Clarice Emma Leary nee Cutts, Ada Cutts and Frederick (Eric) Cutts.

6. Frederick, the first child of Frederick and Amy, died at birth. George, the second child of Frederick and Amy, died in 1969. The sole child of George was Fay Randell who died in 2013.

7. Winifred, the third child of Frederick and Amy, died in 1990. The sole child of Winifred is John Frederick Harnett. John is a joint executor of this estate and one of the plaintiffs.

8. Clarice, the fourth child of Frederick and Amy, died in 1965. Clarice had two children: Beverly Joan Leary, who died in 1966 and Brian Gilbert Leary, who died in 2014. Beverly had married Joseph Gordon and they had one son, David Edward Gordon. David is the last remaining known beneficiary of the estate of late Frederick Cutts.

9. Ada, the fifth child of Frederick and Amy, died in 1941.

10. Frederick (Eric), the sixth child of Frederick and Amy, died in 1976. The sole child of Eric is Allan Frederick Cutts. Allan is a joint executor of this estate and one of the plaintiffs.

11. After the death of Amy on a date unknown, Frederick married a second time on 15 April 1936, to Adelaide Woodhead. There is no evidence that Frederick and Adelaide had any children of their own.

Probate of the Last Will of Frederick Cutts

12. On 31 October 1951 Frederick executed his last will and testament. He died on 21 October 1954 and on 15 April 1955 this court granted probate of his will to George, Adelaide and Clarice. Winifred renounced probate.

Application by Adelaide Woodhead Cutts

13. On 10 February 1956 Adelaide made an application to this court pursuant to the Testator’s Family Maintenance and Guardianship of Infants Act 1916. This court ordered that the trustees of the will hold in trust for Adelaide, during her widowhood, the real property comprised in Certificate of Title registered volume 4277 Folio 25 (a life estate).

14. Adelaide died on 28 October 1996 and at the time of her death there were no surviving executors of the estate of the late Frederick Cutts. She outlived all of her stepchildren. On 8 July 1997 pursuant to a Deed of Appointment, the plaintiffs were appointed as joint executors of the estate of the late Frederick Cutts.

Administration of the Estate of the Late Frederick Cutts

15. At the time of Adelaide’s death, the remaining descendants of the four children of Frederick, being the children of his children, were: Fay, Brian, John and Allan. Only John and Allan remain alive. They are the plaintiffs.

16. The estate was divided into four equal portions reflecting the entitlements of the original four named beneficiaries in the will of Frederick (namely his deceased children) and distributed in equal shares to their descendants namely one quarter to Fay, one eighth to Brian, one eighth to Beverly, one quarter to John and one quarter to Allan. As Beverly predeceased Adelaide in 1966, her one eighth share became David’s. However, no one can find David, despite commendable and extensive attempts to locate him. The one eighth share of the distribution that would have descended to Beverly remains to be distributed to David, if he can be found.

Attempts to locate the whereabouts of David Edward Gordon

17. In or about July or August 1966, after the death of Beverly, John and his wife Margaret became the carers of David. David was approximately 11 years of age at the time. David’s father, Joseph Gordon, was believed to be living and working in the United States.

18. Shortly after John and Margaret commenced caring for David, they received a letter from Joseph, instructing them to collect an air ticket in David’s name so that he may travel to the United States to live with his father. This was the last time John and Margaret saw David.

19. I was furnished with an impressive amount of evidence demonstrating the thorough searches that have been conducted by the plaintiffs to locate David. The searches included: an application to The Salvation Army Family Tracing Services; probate searches with the NSW Courts Registry and the Probate Register of the Supreme Court of Victoria; applications to the NSW Registry of Births Deaths & Marriages; various correspondence with the Australian Government Department of Immigration and Border Protection, the New Zealand High Commission, the Department of Internal Affairs – Wellington, the US Embassy, Crown Plaza Perth, Carlson Wagonlit Travel and Geelong Hospital.

20. The executors also engaged the services of Blanch McMillian and Associates, an investigation and missing persons search company and Grajohn Genealogical Services through the New South Wales State Library.

21. Attempts have also been made to telephone similar names to that of David Gordon located in the New Zealand White Pages, and a number of advertisements have also been placed in the New Zealand Herald, Perth Now, The West Australian, The Daily Telegraph (NSW) and the Herald Sun (VIC).

22. All of those searches have yielded a negative result. This is not to suggest that David Gordon is no longer living. In fact, there appears to have been considerable movement by him between New Zealand and Australia in the period between 31 March 2011 and 20 October 2013. The diligence of the plaintiffs has even resulted in the discovery of an Incoming Passenger Information Card apparently completed by David Gordon on 16 October 2013 on his arrival in Perth from New Zealand. It nominated someone called ‘Audrey Gordon’ as his emergency contact. But even that led nowhere. Several attempts to telephone Audrey Gordon were made but the telephone number supplied was not connected.

Conclusion & Orders

23. In all the circumstances, I am satisfied that all reasonable searches have been undertaken to locate David Gordon. To impose on the executors the burden of undertaking further searches would be unnecessarily expensive and time consuming, with little reasonable prospect of success. The size of the estate is modest; the search for David Gordon commenced in 1998, some 18 years ago; and the plaintiffs are now very elderly men. They have exhausted all reasonable and responsible attempts to locate their distant relative. The time has come to put an end to this search.

24. Accordingly, I make the following orders:

1. That the administration bond be dispensed with.

2. That the plaintiffs be entitled to cease any further next-of-kin searches for David Edward Gordon.

3. That the plaintiff be at liberty to distribute the share of the estate set aside for David Edward Gordon to the remaining surviving beneficiaries in equal shares, being John Frederick Harnett and Allan Frederick Cutts.

4. That the costs of these proceedings be paid out of the estate on an indemnity basis.

Decision last updated: 18 April 2016