Blunden v Blunden - [2008] SASC 286

SUPREME COURT OF SOUTH AUSTRALIA
(Applications Under Various Acts or Rules: Civil)
BLUNDEN v BLUNDEN & ANOR
[2008] SASC 286
Judgment of The Honourable Justice Bleby
27 October 2008
SUCCESSION - FAMILY PROVISION AND MAINTENANCE - PRACTICE - TIME FOR MAKING APPLICATION - EXTENSION OF TIME
SUCCESSION - FAMILY PROVISION AND MAINTENANCE - PRACTICE - PARTIES AND SERVICE
Application for extension of time in which to commence proceedings under the Inheritance (Family Provision) Act 1972 – plaintiff is adopted daughter of deceased but only lived with deceased for a short time as a young child – deceased bequeathed entire estate to his two sons in equal shares – no provision made for plaintiff in will – final distribution of estate made less than six months after grant of probate – plaintiff attempted to serve summons on defendants’ solicitors within time but was informed solicitors did not have instructions to accept service – summons then served personally on defendants, out of time – court has no discretion to extend time once final distribution made – application for extension of time has no merit – plaintiff’s moral claim weak – no explanation for delay in bringing application – application dismissed.
Application for permission to amend prayer for relief in Statement of Claim by including an order setting aside distribution of estate – whether distribution lawful when made before the expiry of the period within which claim under Inheritance (Family Provision) Act 1972 may be brought – executor or administrator should ordinarily refrain from distributing any part of estate during that period – no absolute prohibition on distribution – no statutory power for court to set aside distribution – application dismissed.
Inheritance (Family Provision) Act 1972 (SA) s7 s8 s9 s14; Supreme Court Civil Rules 2006 (SA) r66 r67; Trusts Act 1973 (Qld) s8; Family Provision Act 1982 (NSW) s15, referred to.
Guardian Trust and Executors Co of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115; Ernst v Mowbray [2004] NSWSC 1140, distinguished.
In the Estate of Gough, Deceased; Gough v Fletcher (1973) 5 SASR 559; In re Simson Deceased; Simson v National Provincial Bank Ltd [1950] Ch 38, discussed.
Burns v Elder's Trustees & Executory Co Ltd [1968] SASR 297; In Re Winwood (Deceased), Winwood v Winwood [1959] NZLR 246; In re Gimblett; Gimblett v Gimblett [1960] NZLR 664; Easterbrook v Young (1997) 136 CLR 308, considered.

BLUNDEN v BLUNDEN & ANOR
[2008] SASC 286
Civil
BLEBY J.
Introduction

Quentin Lloyd Blunden died on 22 April 2006. Probate of his Will was granted to the first defendant, Michael John Blunden, on 8 January 2008. The first defendant was the sole executor named in the deceased’s Will.
The deceased was survived by three children. The first defendant and the second defendant, David Lloyd Blunden, were both natural children of the deceased and his first wife. The plaintiff is the daughter of the deceased’s second wife. She was adopted by the deceased when she was three years old. Approximately 12 months after that the second marriage broke down and was dissolved some three years after that. The deceased married his third wife in 1982. She had two children of an earlier relationship. It is not necessary for the purpose of this application to analyse the various allegations concerning the closeness of the relationship between the deceased and the parties to this action, although I will refer briefly, in due course, to the allegations of the plaintiff in that regard.
The effect of the deceased’s Will was that he bequeathed his entire estate to his two sons in equal shares. The plaintiff was not named as a beneficiary, neither was her estate or any of her issue. In fact she was named by the deceased in his Will as not being entitled to any part of his estate. She has now made application pursuant to s 7 of the Inheritance (Family Provision) Act 1972 (SA) (“the Act”) for provision out of the estate for her maintenance, education and advancement.
Probate having been granted on 8 January 2008, the estate was finally distributed on 20 June 2008.
The plaintiff’s inter partes summons was filed on 7 July 2008. It was delivered to the defendants’ solicitors on the same day but returned to the plaintiff’s solicitors on 8 July with a note that the solicitors did not have instructions to accept service of the proceedings. The summons was eventually served on the first defendant on 17 July 2008 and on the second defendant on 16 July 2008.
The applications presently before me are an application pursuant to s 8(2) of the Act for an extension of time for making the application, and an application for permission to amend the prayer for relief in the Statement of Claim by including an order setting aside the distribution of the estate and for consequential relief. If the application for an extension of time fails, the proceeding is not properly instituted and the application to amend must also fail. However, I will return to that later in these reasons. Section 8 of the Act provides:
8—Time within which application to be made
(1)Subject to this section, an application shall not be heard by the Court at the instance of a person claiming the benefit of this Act unless the application is made within six months from the date of the grant in this State of probate of the will, or letters of administration of the estate, of the deceased person.
(2)The Court may, after hearing such of the persons affected as the Court thinks necessary, extend the time for making an application for the benefit of this Act.
(3)An extension of time granted pursuant to this section may be granted—
(a)upon such conditions as the Court thinks fit; and
(b)whether or not the time for making an application pursuant to subsection (1) of this section has expired.
(4)An application for extension of time pursuant to this section shall be made before the final distribution of the estate.
(5)Any distribution of any part of the estate made before the application for extension of time shall not be disturbed by reason of that application or any order made thereon.
(6)An application for the benefit of this Act shall be deemed to be made on the day when the summons by which it is instituted is served on the administrator of the estate.
(7)Where an application has been made for the benefit of this Act, the Court may, if satisfied that it is just and expedient to do so, permit at any time prior to the final determination of the proceedings, the joinder of further claimants as parties to the application.
Other relevant facts
The plaintiff and the first defendant have had solicitors acting for them in connection with the plaintiff’s intended claim since July 2006. By letter dated 15 August 2006 the plaintiff, through her solicitors, advised the first defendant’s solicitors that she would be instituting proceedings pursuant to the Act. However, at that stage there had been no grant of probate. Proceedings under the Act could not be commenced until that occurred.[1] Nevertheless, the letter was accepted by the first defendant as a notice under s 14(2) of the Act.[2]
[1] Burns v Elder’s Trustee & Executor Co Ltd [1968] SASR 297, 301 Mitchell J.
[2] See para 32 below.
The plaintiff lodged and subsequently renewed a caveat in the Supreme Court Probate Registry in respect of the estate of the deceased. There was discussion over the payment to beneficiaries of the proceeds of a small superannuation fund which did not form part of the estate and some proposals for possible mediation of the plaintiff’s claim. The plaintiff withdrew her caveat upon the solicitors for the first defendant undertaking to provide the plaintiff’s solicitors with a copy of the grant of probate as soon as it was obtained. That in fact occurred, and a copy of the grant of probate was forwarded by letter to the plaintiff’s solicitors on 4 February 2008.
The assets of the estate comprised a bank account of $2,103.00 and interest in another superannuation fund valued, at the time of the grant of probate, at $97,364.31. The trustee of that superannuation fund determined that the proceeds should be paid to the executor of the deceased’s estate as forming part of his estate.
On 25 January 2008 the sum of $99,507.83 was paid to the trust account of the first defendant’s solicitors, and after payment of fees the sum of $96,000 was invested. In the letter of 4 February 2008 the first defendant’s solicitors informed the plaintiff’s solicitors of that fact.
On 15 February 2008 the first defendant’s solicitors requested the plaintiff’s solicitors to respond urgently to a proposal made on 2 November 2007 regarding mediation. A further request was made on 2 April 2008.
The plaintiff had evidently sought counsel’s opinion which was received on 23 April 2008. Having heard nothing, the first defendant distributed the whole of the estate on 20 June 2008 by paying the sum of $21,783 to himself, in payment of debts owed by the deceased to him, and $32,661.96 to each of the defendants in payment of the gift of one half of the residuary estate. It is not disputed that that was the final distribution of the estate.
The date of service of the application
If the plaintiff’s summons was served on 7 July 2008 it was brought within the time specified by s 8(1) of the Act.
The Act does not prescribe any method of service for the purposes of sub-s (6) of s 8 of the Act. Rule 66(1)(a) of the Supreme Court Civil Rules 2006 (SA) requires personal service of a primary originating process. Rule 67(1) of the Rules relevantly provides that personal service is effected if the document is given to and accepted by the person to be served or if a solicitor accepts service of the document on behalf of the person to be served.
Although the parties were represented by the same solicitors for a substantial period before the summons was delivered to the defendants’ solicitors and correspondence about the plaintiff’s possible claim had been exchanged between them, at no stage did the defendants’ solicitors indicate to the plaintiff’s solicitors that they had instructions to accept service. The plaintiff argues that if, in those circumstances, the plaintiff had served the summons directly on the defendants personally on 7 July without consultation with their solicitors, there would have been a breach of r 25 of the Rules of Professional Conduct & Practice. That may be so. However, it was open to the plaintiff’s solicitors at any time to enquire of the defendants’ solicitors as to whether they had instructions to accept service and to inform them, unless they gave an immediate response, that the plaintiff would arrange for personal service on the defendants. That was not done. The plaintiff’s solicitors erroneously assumed that the defendants’ solicitors would accept service.
Service on the solicitors on 7 July 2008 was therefore not personal service on the defendants. The summons was not served on the first defendant until 17 July 2008.
Under r 67(2) of the Rules personal service of a document will be presumed if it is established that the document and its contents have come to the attention of the person to be served. There is no evidence that, prior to 17 July 2008, the summons had come to the attention of the first defendant. The date of service, and therefore the date upon which the application by the plaintiff is deemed to have been made, was 17 July 2008.
Extension of time
Section 8(1) of the Act requires that an application “shall not be heard by the Court” unless the application is made within six months from the date of the grant of probate in this State. The application was made outside that time. While the Court has power to extend time under s 8(2) of the Act, s 8(4) requires that an application for extension of time “shall be made” before the final distribution of the estate. The estate was finally distributed on 20 June 2008. It is therefore not possible for the Court to extend the time within which to bring the plaintiff’s application. The Court has no discretion to exercise in that regard.
It does not matter that the final distribution took place before the expiry of the six-month period within which the application could have been brought without an extension of time. Whatever may be the consequences of distribution within that time in respect of an application brought after final distribution but within the six-month period, the Act is clear with respect to the bringing of an application for extension of time. It can only be made before final distribution of the estate,[3] and if so made, cannot disturb any distribution made before the application is made.[4]
[3] Section 8(4).
[4] Section 8(5).
The lawfulness of the distribution
As I understood the argument of counsel for the plaintiff, he sought to avoid the consequences of s 8(4) of the Act by suggesting that the distribution of the estate before the expiry of the period of six months from the grant of probate was unlawful and should be disregarded. There is no doubt that an executor or administrator should ordinarily refrain from distributing any part of an estate during the period in which an application under the Act may be brought as of right or during the period of any extension of time granted by the Court under s 8.
In In theEstate of Gough, Deceased; Gough v Fletcher[5] Zelling J cited with approval the following passage from the judgment of Vaisey J in In re Simson Deceased; Simson v National Provincial Bank Ltd[6] where his Lordship said:
"I wish it to be made clear that in these cases it is the paramount duty of the executor to avoid embarrassing the court and to think once, twice and several times before allowing any part at all of the estate to be paid out to any beneficiary — whether a specific legatee or a residuary legatee or whoever it may be matters not — while any application under this Act is either pending or impending … I wish it to be distinctly understood ….. that where an application under the Inheritance (Family Provision) Act, 1938 is either pending or impending, that is to say, during the first six months after grant of representation, if it is a case in which there is any risk of such a thing happening, the executor distributes the estate at his risk. If beneficiaries come and pester him and say that they want their legacies and pressure is put on other beneficiaries to allow these anticipatory payments to be made, in my judgment it is the duty of the executor to resist any such pressure. I think it must be said that where the court has to deal with a matter under this Act the estate should be there intact. Of course, duties and debts, and that sort of thing, can be paid — there is no question about that — but no distribution to beneficiaries should be made while there is any possibility or expectation that an application under this Act will be made."
[5] (1973) 5 SASR 559.
[6] [1950] Ch 38, 42-43.
That was sufficient for Zelling J to grant an interlocutory injunction restraining the respondent executor of the estate in question from selling or otherwise disposing of any part of the real estate forming part of the estate of the deceased, and from distributing any part of the estate pending the determination of the application brought under the Act. The justification for the injunction was that, if further provision for the deceased’s widow was to be made, it was likely to require a division in specie of some real estate, and that because of inflationary conditions at the time, the value of the estate was better preserved in real estate than by realisation and investing in fixed interest securities.
However, the prohibition on distribution is not absolute. There is authority for an executor to distribute a legacy if it is trifling in comparison with the size of the residue of the estate, if a beneficiary has a strong moral claim to provision and his or her need is urgent, if all persons who are eligible to apply for provision have effectively disclaimed their right to do so or if it is clear that there is no person who is eligible to apply for provision from the deceased’s estate.[7]
[7] See Anthony Dickey, Family Provision after Death, The Law Book Co Ltd (1992), pages 178-179 and the cases cited therein.
It would seem that the consequence in equity of an executor distributing an estate before the relevant period has expired is that the executor may be personally liable to a successful applicant who suffers loss as a result. In other words, the executor is at risk if he or she makes the distribution.[8] However the executor is not prevented from doing so.
[8] In re Simson Deceased; Simson v National Provincial Bank Ltd [1950] Ch 38; In the Estate of Gough, Deceased; Gough v Fletcher (1973) 5 SASR 559; In re Winwood (Deceased), Winwood v Winwood [1959] NZLR 246; In re Gimblett; Gimblett v Gimblett [1960] NZLR 664.
The plaintiff relied on Guardian Trust and Executors Co of New Zealand Ltd v Public Trustee of New Zealand[9] where the Privy Council stated the relevant principle of equity to be:
… that if a trustee or other person in a fiduciary capacity has received notice that a fund in his possession is, or may be, claimed by A, he will be liable to A if he deals with the fund in disregard of that notice should the claim subsequently prove to be well founded.[10]
[9] [1942] AC 115.
[10] Ibid 127.
In that case there was a challenge to the very right of the administrator to administer the estate. The executors named in the Will had obtained a grant of probate with notice of the fact that the next of kin intended or contemplated applying for revocation of the grant of probate on the ground of want of testamentary capacity on the part of the deceased. When probate was recalled, the executors were liable to the estate for sums which they had paid out by way of pecuniary legacies purportedly granted under the Will. That is different from a situation where the estate is properly vested in the executor and the claim is that the Court should exercise a discretionary judgment in respect of the estate lawfully held or disposed of by the executor.
A similar power to that referred to in the Guardian Trust Case has been exercised in a jurisdiction where the Court has power to set aside a distribution made by an administrator of an estate.[11] The plaintiff also relied on Ernst v Mowbray[12] for the proposition that the Court has power to set aside distributions. That case involved a claim under the Family Provision Act 1982 (NSW). Application was made within the required time, and the defendants had notice of it being made. As executors, they distributed the estate to themselves. Young CJ in Eq dismissed the plaintiff’s claim but said:
It would seem to me that where the executors have distributed to themselves prematurely, they would ordinarily be ordered to restore the monies to the estate with interest and that for the purpose of working out the value of the estate left by the testator as at the date of the hearing that interest should be taken into account. This is because had the executors done their duty the estate monies would have been invested at interest so that the fund available for the Court to consider would have been increased by the relevant amount of interest.
In the present case, because the plaintiff has failed to show that inadequate provision was made for her, what I have just said is academic except as to costs. However, I wish to make it quite clear that in my view that where there has been a premature distribution of the estate the Court is not obliged to consider questions of notional estate, but would make an order that the executors personally restore the money which they have taken into the estate with interest and then make an order out of the augmented actual estate.[13]
[11] See, for example, Trusts Act 1973 (Qld), s 8 and Re Faulkner [1999] 2 Qd R 49.
[12] [2004] NSWSC 1140.
[13] Ibid [64]-[65].

Young CJ in Eq did not refer to the power under which such an order could be made, but s 15 of the Family Provision Act confers extremely wide powers on the Court to make orders of that nature. There are no provisions equivalent to s 15 of the Family Provision Act 1982 (NSW) or to s 8 of the Trusts Act 1973 (Qld) in any South Australian legislation. Accordingly, the Court has no power to set aside the distribution made by the first defendant in this case.
On the contrary, a certain degree of protection is afforded to an administrator under s 14 of the Act where distributions are made during the six-month period before provision is made under the Act. Section 14 provides:
14—Liability of administrators after distribution of estate
(1)An administrator of the estate of a deceased person who has lawfully distributed the estate or any part thereof shall not be liable to account for that estate or that part thereof, as the case may be, to any person claiming the benefit of this Act, unless the administrator had notice of the claim at the time of the distribution.
(2)For the purposes of this section, notice of the claim—
(a)shall be in writing signed by the claimant or his solicitor; and
(b)shall lapse and be incapable of being renewed unless, before the expiration of three months after the administrator receives notice of the claim a copy of an application by the claimant for the benefit of this Act has been served on him.
(3)Subsection (1) of this section shall not prevent the Court from ordering that any provision under this Act be made out of the estate, or any part thereof, after it has been distributed.
That section relieves the administrator of any personal liability unless notice has been given, and has not lapsed, in accordance with the provisions of subsection (2). Subsection (3) contemplates that the Court can still order provision to be made out of the estate after it has been distributed.[14] The Court does not have power to set aside the distributions. It only has power to make an order for provision out of the estate, including that part which has been distributed. If an order is made, the portion of the estate affected by the order is to be held subject to the provisions of the order.[15] In that case, the beneficiary will hold the asset for the party benefiting from the order.
The application to amend the statement of claim to include an order setting aside the distribution of the estate
[14] See also Easterbrook v Young (1997) 136 CLR 308, 318.
[15] Section 9(7).
It follows from what has been said that an order cannot be made setting aside the distribution. Therefore, even if the plaintiff’s application were properly on foot, the requested amendments to the Statement of Claim could not be granted.
In any event, no basis for making the order has been established. There is no personal liability in this case on the part of the first defendant arising from the distribution of the assets of the estate. He is protected by the provisions of s 14. He acknowledges that the letter dated 15 August 2006 from the plaintiff’s solicitors to his solicitors was a notice of the plaintiff’s claim under s 14(2) of the Act. However, at that time the first defendant was not the administrator of the estate. Probate had not been granted. I am prepared to assume that the notice became effective upon the grant of probate to him on 8 January 2008. However, it lapsed after three months from that date. No application was served by the plaintiff during that time. It was therefore incapable of being renewed after that time.[16] No distribution of the estate was made during that three-month period.
[16] Section 14(2)(b).
Upon the lapse of the notice the first defendant was free to proceed with distribution of the estate whilst retaining the protection afforded to him by s 14. However, that would not have prevented an order for provision being made out of the distributed estate or any part thereof if an application under the Act had been brought within the six months period. On the other hand, if an application for extension of time had been brought before final distribution of the estate, the claim would have been limited to the undistributed portion of the estate, the earlier distribution not being able to be disturbed.[17]
[17] Section 8(5).
The merits of an extension of time
Even if there were power to extend the time within which to bring the application, I consider that it would be inappropriate to grant the extension of time. The balance of the estate after payment of debts was less than $70,000. The cost of further litigation would rapidly diminish an already small estate.
Even taking the plaintiff’s assertions as to the relationship with her adopted father at their highest, she has a very weak moral claim for the provision of benefits under the Act. Although there was some apparently frequent contact with her father until her 21^st birthday and payment of maintenance to her mother until the plaintiff turned 18, the plaintiff was extremely vague about any contact since then for the past 10 years. The most she deposes to is occasional telephone contact and exchange of birthday and Christmas cards “until it dwindled away as he became more deeply involved with his wife and the contact between us diminished somewhat”.
Furthermore, the plaintiff has not attempted to explain any basis for the delay in bringing her application. Apart from obtaining counsel’s advice, remarkably little seems to have happened within the time available to commence proceedings. In all the circumstances I consider that it would be inappropriate to grant an extension of time even if the Court had power to do so.
Conclusion
Accordingly, both the application for extension of time and the plaintiff’s application for provision out of the estate must be dismissed.