Brooks v Young
[2017] SASC 162
•14 November 2017
SUPREME COURT OF SOUTH AUSTRALIA
(Civil: Application)
BROOKS & ANOR v YOUNG & ORS
[2017] SASC 162
Judgment of The Honourable Justice Stanley
14 November 2017
PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - ENDING PROCEEDINGS EARLY - SUMMARY DISPOSAL - SUMMARY JUDGMENT FOR DEFENDANT OR RESPONDENT: STAY OR DISMISSAL OF PROCEEDINGS
SUCCESSION - FAMILY PROVISION - PROCEDURE - TIME FOR MAKING APPLICATION - EXTENSION OF TIME - APPLICATION TO BE BEFORE FINAL DISTRIBUTION
Application by the defendants for summary judgment or dismissal of proceedings.
On 23 February 2015, probate of the deceased’s will was granted to the first defendant and her son, the second defendant. Pursuant to the will they were appointed as his executors and trustees.
On 17 August 2015, the plaintiffs issued proceedings pursuant to s 7 of the Inheritance (Family Provision) Act 1972 (SA). The proceedings were served on the executors’ solicitors on 31 August 2015, eight days after the expiration of the limitation period prescribed by s 8(1) of the Act. On 11 July 2016, the plaintiffs filed an interlocutory application seeking an extension of time to bring their application and on 28 November 2016, the plaintiffs filed a statement of claim alleging that the first defendant is liable to the plaintiffs for provision under the Act or that the defendants, as executors, are liable to account, either to the estate or the plaintiffs, for breach of fiduciary duty for distributing the estate before the expiry of the limitation period under the Act.
Held: The plaintiffs’ claim is not reasonably arguable and the defendants are entitled to summary judgment. Action dismissed.
1. It is not unlawful for an executor to administer an estate prior to the prescribed limitation period unless they are on notice of a claim. In this case the majority assets were distributed within the limitation period when the executors were not on notice of a claim.
2. As a result the plaintiffs require an extension of time to issue the proceedings. The Court can only grant an extension of time prior to the final distribution of the estate and, if the estate has been completely distributed, there is no power to grant such extension.
3. Australian law does not recognise any duty not to distribute estate assets within the limitation period prescribed by s 8. Nor were the executors obliged to inform the plaintiffs of their right to make a claim for provision under the Act.
4. “Disturbed” in s 8(5) of the Act means not to be interfered with at all. Accordingly, the plaintiffs cannot obtain an order for provision greater than the undistributed assets of the estate which the defendants are, and at all relevant times have been, prepared to distribute to them.
Inheritance (Family Provision) Act 1972 (SA) s 7, s 8, s 14; Supreme Court Civil Rules 2006 (SA) r 232, referred to.
Spencer v Commonwealth of Australia (2010) 241 CLR 181; Davies v Minister for Urban Development and Planning (2011) 109 SASR 518; Blunden v Blunden [2008] SASC 286; Broadhead v Prescott [2015] SASC 34; Easterbrook v Young (1977) 136 CLR 308; Yancic v Yancic & Anor [2010] SASC 335, applied.
Brine v Carter [2015] SASC 205; Maguire v Makaronis (1997) 188 CLR 449; Chan v Zacharia (1984) 154 CLR 178; Robbins v Hume [2015] VSC 128; Young v IOOF Australia Trustees Ltd and Peterson and Young (1995) 180 LSJS 302; Dawson & Ors v Fitch & Ors (2002) 84 SASR 20, considered.
BROOKS & ANOR v YOUNG & ORS
[2017] SASC 162Stanley J.
Introduction
This is an application for summary judgment or the dismissal of the proceedings.
Leslie Melville Brooks late of 5 Huckstepp Court, Berri, South Australia died on 27 September 2014 (the deceased). The deceased was survived by four adult children; namely, Raymond Brooks and Trevor Brooks (the plaintiffs), the first defendant, Rosemary Young, and Margaret Boyle. Ms Boyle is not a party to these proceedings. For convenience, I shall refer to each of Raymond, Robert and Rosemary by their first names. No disrespect is intended.
Probate of the deceased’s will was granted to Rosemary and her son, the deceased’s grandson, Robert Young, on 23 February 2015. Pursuant to the terms of the deceased’s will he appointed Rosemary Young and Robert Young (the defendants) as his executors and trustees. He gave a legacy of $30,000 to each of Raymond, Trevor and Ms Boyle and the residuary estate to Rosemary.
The net estate disclosed in the statement of assets and liabilities is $434,542.02. The major asset of the deceased’s estate is his property located at Berri valued at $275,000 and the remainder assets comprise money held in various bank accounts.
On 17 August 2015, the plaintiffs issued proceedings (the proceedings) in this Court pursuant to s 7 of the Inheritance (Family Provision) Act 1972 (SA) (the Act). The proceedings were served on the executors’ solicitors on 31 August 2015, eight days after the expiration of the limitation period prescribed by s 8(1) of the Act.
On 11 July 2016, the plaintiffs filed an interlocutory application seeking an extension of time to bring their application pursuant to the Act. That application has not been pursued and has been referred to the trial judge. I am not required to consider that application.
On 28 November 2016, the plaintiffs filed a statement of claim alleging Rosemary, as beneficiary, is liable to the plaintiffs for provision under the Act or the defendants, as executors, are liable to account, either to the estate or the plaintiffs, for breach of fiduciary duty for distributing the estate before the expiry of the limitation period under the Act.
On 12 December 2016, Rosemary, in her capacity as a beneficiary of the deceased’s estate, filed an application seeking summary judgment or in the alternative, an order for the dismissal of the proceedings on the ground that the pleadings disclose no reasonable cause of action or reasonable basis for the claim. It is that application that I must decide.
Summary judgment
Rosemary, in her capacity as a beneficiary of the deceased’s estate, seeks summary judgment on the basis that the originating proceedings were not served on the executors within the prescribed limitation period and the majority estate has been distributed. She submits that, in these circumstances, the proceedings are futile as it is not open to the plaintiffs to obtain relief under the Act or in equity greater than the specific bequests made in their favour under the will which the defendants are ready to distribute. Consequently, any loss suffered by the plaintiffs is the result solely of their failure to bring the proceedings within time.
Rule 232 of the Supreme Court Civil Rules 2006 (SA) (SCR) empowers the Court to grant summary judgment. In order to succeed, Rosemary must satisfy the Court that the plaintiffs’ claims have no reasonable basis.[1] As the plurality of the High Court emphasised in Spencer v Commonwealth of Australia,[2] which considered a provision not materially different from SCR 232, analysis of such provisions should concentrate on the express words of the provision. Those words emphasise a test of reasonableness in determining the prospects of success of a plaintiff’s claim. For the Court to dismiss the plaintiffs’ claims before trial, it must be satisfied that there is no reasonable basis to find that the claim will succeed on the assumption that the facts alleged by the plaintiffs are proved. The power must be exercised with great care and the interests of justice are not to be sacrificed to efficiency and expedition.[3]
[1] SCR 232. Rosemary has brought this application pursuant to SCR 232 or, in the alternative, pursuant to SCR 193. As I am prepared to make an order pursuant to SCR 232, it is unnecessary to consider the differences in operation, if any, between the rules.
[2] [2010] HCA 28, (2010) 241 CLR 181.
[3] Davies v Minister for Urban Development and Planning [2011] SASC 87, (2011) 109 SASR 518 at 528-532; Bradman v Allens Arthur Robinson [2009] SASC 80, (2009) 103 SASR 438 at 444-446 subsequently approved on appeal at (2010) 107 SASR 1 at 9-11; Spencer v Commonwealth [2010] HCA 28, (2010) 241 CLR 118.
Background
There is no issue as to the relevant facts which are set out in the affidavits filed in this matter.
On Sunday 5 October 2014, all of the deceased’s children attended at Raymond’s house. On that occasion, Rosemary informed her siblings that a solicitor, Mr Kudra, had prepared and was holding a will for the deceased and that he would attend to the administration of the deceased’s estate. Rosemary said that she gave each of her siblings Mr Kudra’s business card and said that they could contact him if they wanted any information. Equally, she sought and obtained their contact details to provide to Mr Kudra, which she did in due course.
Through Mr Kudra, Rosemary and Robert applied for a grant of probate which was issued to them by the Registrar of Probates of this Court on 23 February 2015.
On 8 April 2015, Mr Kudra wrote to Raymond at his PO Box address providing him with a copy of the grant of probate with the deceased’s last will. The letter advised that the executors were in a position to distribute the estate and for that purpose he requested Raymond’s bank account details to deposit his legacy of $30,000.00. From that date, Raymond was on notice of the terms of the will and the date probate was granted. Trevor does not suggest he was in a different position.
After the letter was sent to Raymond, pursuant to the terms of the deceased’s will, the executors made the following distributions from the deceased’s estate:
10 April 2015
The executors paid $6,595.00 for payment of their solicitors’ fees
14 April 2015
The executors distributed $81,677.89 to Rosemary
15 April 2015
The executors distributed $30,000.00 to Ms Boyle pursuant to clause 2(b) of the deceased’s will
18 April 2015
The executors distributed the house property located at Berri to Rosemary by way of registered transfer
The effect of the above distributions was that, after allowing for funeral expenses of $11,627.16, the only asset being held by the deceased’s estate was the sum of $60,000.00 to be distributed equally between the plaintiffs pursuant to clause 2(a) and 2(c) of the deceased’s will.
On 20 April 2015, Raymond instructed a solicitor, Mr Westley, and on 22 April 2015 Mr Westley wrote to Mr Kudra by email attaching a letter advising him that he had been instructed to act on behalf of Raymond. Mr Westley’s letter states, inter alia:
I ask for your urgent response and undertaking to:
1.Withdraw the transfer of land to Rosemary Young from the Lands Titles Office.
2.Provide each of the beneficiaries of the deceased with a copy of the statement of assets and liabilities in the estate.
3.Give your undertaking to make no further distribution of funds in the estate until each beneficiary shall have had opportunity to review their respective positions.
The letter then proceeds to request information in regard to the preparation and execution of the deceased’s last will but the letter does not indicate that a potential claim for provision may be issued.
On 24 April 2015, Mr Kudra responded to Mr Westley’s letter and advised that he was in the process of obtaining instructions from the executors and he gave an undertaking not to make any further distributions from the deceased’s estate until such time as instructions had been obtained.
On 8 May 2015, Mr Kudra sent a further letter to Mr Westley providing him with a copy of the grant of probate and the statement of assets and liabilities. The letter also stated, “We are further instructed by Rosemary Young not to withdraw the transfer of the property at 5 Huckstepp Court, Berri.” At that stage the plaintiffs could not have been under any misapprehension that the executors were not going to set aside or withdraw the transfer of the Berri property. Mr Kudra also stated in his letter, “We also advise that our office prepared the Will, and at the time our Victor Kudra was satisfied that the deceased had capacity to provide instructions and to execute the Will”.
On 27 May 2015, Mr Westley wrote to Mr Kudra requesting a copy of the deceased’s previous wills and a copy of his notes in relation to the preparation of the deceased’s last will. On 22 June 2015, Mr Westley again wrote to Mr Kudra referring to his letter dated 27 May 2015 stating that he had not received a response.
On 2 July 2015, Mr Westley wrote to Mr Kudra to inquire whether he had instructions on behalf of the executors to accept service of a claim being commenced pursuant to the Act. Mr Kudra replied to Mr Westley on 16 July 2016 confirming that he had instructions to accept service on behalf of the executors.
On 31 July 2015, Mr Westley’s firm forwarded by express post to the Supreme Court Civil Registry Raymond’s originating Court documents to commence proceedings pursuant to the Act (the originating proceedings). On or about 12 August 2015, the originating proceedings were returned to Mr Westley’s office unfiled and subject to a requisition. On 14 August 2015, Mr Westley’s firm again forwarded by express post Raymond’s amended originating proceedings for filing. On 17 August 2015, the Supreme Court Civil Registry telephoned Mr Westley’s office to confirm that the originating proceedings had been successfully filed. At this point there was six days until the limitation period was to expire.[4]
[4] Six months from the date of the grant of probate was 23 August 2015, which fell on a Sunday. Pursuant to subs. 27(2) of the Acts Interpretation Act 1915 (SA), the time was extended to the Monday being 24 August 2015.
On 18 August 2015, Mr Westley wrote to Mr Kudra stating:
Please note I have filed Inheritance Act proceedings in the Supreme Court. I note you have instructions to accept service on behalf of the executors. I will serve these documents on you shortly.
On the same day Mr Westley also wrote to the solicitors acting on behalf of Rosemary in her capacity as a beneficiary of the deceased’s estate, Lindbloms Lawyers, stating:
Please note I have filed Inheritance Act proceedings in the Supreme Court. Do you have instructions to accept service? Please advise whether you are also instructed to accept service of documents on behalf of Margaret Boyle.
On 25 August 2015, one day after the prescribed limitation period had expired, the executors’ solicitors again confirmed that they had instructions to accept service.
On 28 August 2015, the sealed originating proceedings were sent by express post to the executors’ solicitors. The letter enclosing the originating proceedings were received by the executors’ solicitors on 31 August 2015, eight days after the prescribed limitation period.
The claim for provision under the Act
I address first the application to dismiss the claim for provision under the Act. In order to understand the basis of the application, it is necessary to refer to certain provisions of the Act.
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.
Section 14 of the Act 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.
The scheme of the Act is clear.
If an application for provision is made within the time prescribed in s 8(1) of the Act, the Court has the power to make an order for provision out of any part of the estate, irrespective of whether estate assets have been distributed.[5] Distributed assets can be subject to an order for provision under the Act. The limitation period is six months from the grant of probate or letters of administration. Pursuant to s 8(6), an application is deemed to be made on the day when the summons is served on the administrator of the estate.
[5] Blunden v Blunden [2008] SASC 286 at [30] and Broadhead v Prescott [2015] SASC 34 at [21].
Therefore, if an executor chooses to distribute assets of the estate within the prescribed limitation period or while being on notice of a claim, the executor may be personally liable to satisfy an order for provision. I will come back to this issue later in these reasons. In Blunden v Blunden, Bleby J said:[6]
In In the Estate of Gough, Deceased; Gough v Fletcher 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 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.”
[Footnotes omitted.]
[6] [2008] SASC 286 at [21].
There is no doubt that an executor should consider very carefully before distributing the assets of an estate. However, it is not unlawful for an executor to administer an estate prior to the prescribed limitation period unless they are on notice of a claim being made.[7]
[7] Inheritance (Family Provision) Act 1972 (SA) s 14(1) and Blunden v Blunden [2008] SASC 286 at [24].
In this case the executors distributed the majority assets of the estate within the limitation period, but they were not, at that time, on notice of a claim. If the plaintiffs had filed and served their proceedings within the prescribed limitation period, the Court would have been entitled to include those distributed assets in an order for provision.
However, the plaintiffs’ proceedings were not served on the executors until after the prescribed limitation period.
As a result, the plaintiffs require an extension of time to issue their proceedings.[8] The court is only able to grant an extension of time prior to the final distribution of the estate[9] and, if the estate has been completely distributed, whether prior to the expiry of the limitation period or after its expiry, the court does not have power to grant an extension of time.[10] As I have noted, that application for an extension of time has been reserved to the trial judge.
[8] Inheritance (Family Provision) Act 1972 (SA) s 8(2) & (3).
[9] Inheritance (Family Provision) Act 1972 (SA) s 8(4).
[10] Easterbrook v Young [1977] HCA 16, (1977) 136 CLR 308; Blunden v Blunden [2008] SASC 286; Yancic v Yancic & Anor [2010] SASC 335.
Fundamental to the determination of this application for summary judgment is the operation of s 8(5). Even if an extension of time is granted to the plaintiffs, s 8(5) of the Act provides that any distributions that have been made before the application for the extension of time cannot be disturbed. This is regardless of whether the distributions were made before or after the six month limitation period.
Accordingly, the defendants submit that even if an extension of time is granted to the plaintiffs, the only assets available to satisfy any order for provision in their favour, is the $60,000.00 that is currently held by the estate for their benefit. However, the plaintiffs submit that s 8(5) does not have this draconian result. They contend that the prohibition on disturbing distributions made before the application for an extension of time does not prevent a court ordering either the executors to account to the estate or the beneficiaries to pay equitable compensation in an amount equivalent to the provision that would have been payable under the Act if distribution had not occurred. The plaintiffs submit that “disturbed” in the context of s 8(5) does not mean “not affected at all” but rather means “undone”. They contend that is consistent with the terms of s 14(3).
This requires consideration of the plaintiffs’ claims in equity.
Executors’ fiduciary duties and equitable remedies
The plaintiffs submit that the defendants, as executors, owe fiduciary or some other equitable duties to them. It is not entirely clear what is the precise nature of the equitable duties the plaintiffs allege the defendants owe. The plaintiffs submit the defendants are under an obligation as executors to act impartially and to act in the interests of the beneficiaries. They contend that, as executors, the defendants are under a duty not to use the opportunity their fiduciary position provides to advance their personal interests or to pursue a personal benefit in circumstances of conflict between their duties and interests. In addition, the plaintiffs submit the executors had an additional duty not to distribute estate assets within the limitation period. The plaintiffs submit that the executors breached this duty by distributing the majority of the estate before the expiry of the limitation period prescribed in s 8 of the Act. They submit that by breaching this duty, the executors are liable to account to the estate. In the alternative, the first defendant is liable to pay equitable compensation.
It can be accepted that the defendants, as executors, owe fiduciary duties.[11] Where a fiduciary has profited from a breach of duty, the fiduciary is liable to account in equity where there is a sufficient connection between the breach of duty and the profit derived from the breach.[12] But a fiduciary is not liable to account for a personal benefit where the fiduciary has been authorised to act in the manner in which he or she acted expressly by the instrument creating the fiduciary duty or by implication arising from the circumstances of his or her appointment.[13]
[11] Brine v Carter [2015] SASC 205 at [124].
[12] Maguire v Makaronis (1997) 188 CLR 449 at 468.
[13] Chan v Zacharia (1984) 154 CLR 178 at 204.
In my view, there are a number of answers to the plaintiffs’ claims in equity, which lead me to conclude the claims have no reasonable basis.
First, Australian law does not recognise any duty to potential claimants under the Act not to distribute the assets of the estate within the limitation period prescribed by s 8. Further, the plaintiffs seem to suggest that the executors were obliged to inform the plaintiffs of their intention to distribute the estate or of their right to make a claim for provision under the Act. I reject that submission. Potential claimants are not persons to whom executors owe a fiduciary duty of that nature. In Robbins v Hume, McMillan J said:[14]
In Victoria, there is no duty on an executor to notify claimants in the category of the plaintiff. An executor is not under an obligation to bring the fact of the availability of a right to make a claim to the attention of a potential claimant. If there were, one would think that the Victorian Parliament would have provided for that, just as the New Zealand Parliament did when they included the special provisions for a person not of full age or mental capacity. Executors are entitled to distribute an estate if there is no notice of a claim within the statutory timeframe. Executors and beneficiaries are entitled to certainty of administration against a reasonable time limit for claimants to take proceedings against an estate.
...
In respect of the defendant’s capacity as the executor of the estate of the deceased, as discussed, the defendant as executor does not have any duty to safeguard the plaintiff’s interests or a duty of even-handedness towards the plaintiff of the type submitted by the plaintiff. In any event, the defendant’s executorial duties have finished with the estate finally distributed in accordance with the deceased’s will. The plaintiff is not entitled to any injunctive relief by her against the defendant.
[14] [2015] VSC 128 at [61] and [65].
The position in South Australia is the same. There is no relevant difference between the legislation in each jurisdiction. There is nothing in the Act to suggest any duty being owed by executors to potential claimants. On the contrary, the existence of such obligations would contradict the duty owed by executors to administer the deceased’s estate in accordance with the terms of the will.
While in Blunden Bleby J considered that an executor who distributed an estate before the expiry of the limitation period might be personally liable in equity to a successful applicant who suffers loss as a result, that did not prevent the executor from distributing the estate before the expiry of the limitation period.[15] The reference to a successful applicant suffering loss as a result of the distribution of the estate before the expiry of the limitation period, must be understood in its proper context. The judge is referring to the loss the successful applicant for provision under the Act might suffer because the distribution has been dissipated and is unavailable to satisfy the order for provision. In this case, there is no basis for the plaintiffs to claim they have suffered any loss as a result of the distribution of the majority assets, because that distribution cannot be disturbed by an order for provision given the operation of s 8(5). I will come back to that proposition in a moment but, in consequence, there is no loss suffered by the plaintiffs in this case of the kind contemplated in Blunden.
[15] Blunden v Blunden [2008] SASC 286 at [24].
Second, in relation to the claim against the defendants as executors, they are protected by the provisions of s 14(1). In Blunden, Bleby J said:[16]
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.
...
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. 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. In that case, the beneficiary will hold the asset for the party benefiting from the order.
[Footnotes omitted.]
[16] Blunden v Blunden [2008] SASC 286 at [29]-[30].
In this case, notice pursuant to s 14(2) was not given. The plaintiffs do not contend otherwise.
Third, the defendants are not liable to account for a personal benefit where they have been authorised to act in the manner in which they acted expressly by the instrument creating the fiduciary duty.[17] Any fiduciary duty the defendants owed as executors arose from their appointment as executors under the will. The will authorises the executors to distribute the estate in accordance with its terms. The plaintiffs’ submission that Rosemary preferred her own interests, where they were in conflict with her duty is an argument without any reasonable prospect of success because she did no more than she was bound to do in distributing the estate in accordance with the terms of the will. Further, the plaintiffs’ interest in the estate has been preserved by the executors for the plaintiffs’ benefit. As Robert’s alleged liability arises on an accessorial basis, the claim against him cannot succeed because the claim against Rosemary must fail.
[17] Chan v Zacharia (1984) 154 CLR 178 at 204.
Fourth, in any event, any breach of fiduciary or other equitable duty requires proof of causation in the form of a sufficient connection between the breach and the profit. The plaintiffs cannot make out that causal nexus. As I have explained, the fundamental obstacle to the plaintiffs obtaining an order for provision that would disturb the distribution of the estate that has already occurred is the failure to bring the claim under the Act within the limitation period prescribed by s 8. If the claim under the Act had been instituted within time, the Court could have made an order for provision which could have disturbed the distribution already made. But the claim was not made within time. That is the cause of any loss the plaintiffs have suffered. The plaintiffs’ difficulty is demonstrated by considering their position if the executors had made the distribution on 24 August 2015, i.e. one day after the expiry of that limitation period. In those circumstances, the plaintiffs could not assert the breach of fiduciary or other equitable duty for which they contend, yet they would be in precisely the same position in which they now find themselves. Section 8(5) would prevent the Court, if it granted an extension of time, from disturbing the distribution of the estate that occurred the day after the expiry of the limitation period.
In these circumstances, even if I considered the plaintiffs’ claims in equity were arguable, I would not accept the plaintiffs’ submission that s 8(5) does not prohibit an order for equitable relief that would amount to provision for three reasons.
First, the submission is contrary to the construction of the Act. Pursuant to s 7, the Court is empowered to make an order for provision out of the estate where a claimant has been left by a testator without adequate provision for his or her proper maintenance, education or advancement in life. That provision operates as a codicil to the will or, if the deceased died intestate, as a will.[18] It is the estate, not a beneficiary or an executor, who makes the provision. There is no power under the Act to make orders against beneficiaries or executors. Accordingly, the use of the term “disturbed” in s 8(5) clearly indicates that distribution should not be disturbed in any way. If an extension of time is granted, whatever provision might subsequently be made out of the estate cannot interfere with any distribution that was made before the application for an extension of time was instituted. The suggestion that there should also be scope for an order against executors to give an account, or beneficiaries to pay equitable compensation, is contrary to the concept embodied in the prohibition against disturbance of the distribution of the estate made before the application for an extension of time.
[18] Inheritance (Family Provision) Act 1972 (SA) s 10.
Second, the submission is contrary to one of the underlying purposes of the Act which is to ensure certainty for executors and beneficiaries in the distribution of the estate once the limitation period has expired, if notice of a claim has not been given. Section 14 of the Act is intended to protect an executor if a claim is made after the limitation period and the assets of the estate have been distributed. There is an obvious purpose in the Act extending such protection to executors and administrators. Absent such protection they would be disinclined to take up the appointment and would be reluctant to distribute the assets of an estate in a timely fashion due to a looming fear of personal liability. Section 14 is also intended to protect beneficiaries by conferring certainty in relation to their receipt of the testator’s bounty once the limitation period has expired without notice of a claim under the Act. It would be contrary to these purposes to permit a claim for equitable compensation payable by a beneficiary or beneficiaries years after the expiry of the limitation period.
Third, the submission is contrary to authority. In Blunden, Bleby J said:[19]
... 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, and if so made, cannot disturb any distribution made before the application is made.
[Footnotes omitted.]
[19] Blunden v Blunden [2008] SASC 286 at [19].
In Yancic v Yancic & Anor, Judge Burley found:[20]
The combined effect of sub-s 8(5) and sub-s 14(3) of the Act is that if the proceedings are served on the administrators prior to the expiry of the six month period, recourse may be had to assets which have previously been distributed (without notice of the plaintiff’s claim), whereas, if an extension of time is required because the proceedings were not commenced in time, only those assets which have not been distributed may be the subject of an order for provision out of the estate.
[Footnotes omitted.]
[20] [2010] SASC 335 at [11].
In Young v IOOF Australia Trustees Ltd and Peterson and Young, Lander J said:[21]
Section 14(3) expressly allows the court to make a provision out of the estate after it has been distributed. However, that power is available only if the applicant seeking provision has brought proceedings within six months. Section 14(3) would have to be read subject to s 8(5).
[21] (1995) 180 LSJS 302 at 314.
In Dawson & Ors v Fitch & Ors,[22] the Full Court considered s 8 in the following terms:[23]
Section 8, however, provides that the Court may extend the time for making an application for benefits under the Act. In this case ... an order was made, pursuant to s 8(3) of the Act, extending the time for the bringing of the application ...
A Court is not entitled to extend time for the bringing of an application unless the application for the extension of time is made before the final distribution of an estate. If the order extending time was within power, and nobody has suggested otherwise, the estate could not have been finally distributed at that time.
Where an application is brought outside the time provided for in s 8 of the Act but where an extension of time has been granted, the Court cannot order provision in favour of the applicant from that part of the estate which was distributed before the extension of time was granted.
In the latter case the Court’s power to make provision out of the estate is limited by s 8(5) which provides:
“(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.”
[22] [2002] SASC 12, (2002) 84 SASR 20.
[23] [2002] SASC 12 at [28]-[31], (2002) 84 SASR 20 at 24.
While it is arguable that each of these observations are obiter, there is no basis upon which I would consider them wrong or decline to follow them.
For these reasons, I am satisfied that “disturbed” in s 8(5) means not to be interfered with at all. Accordingly, the plaintiffs cannot obtain an order for provision under the Act greater than the undistributed assets of the estate which the defendants are, and at all relevant times have been, prepared to distribute to them. As a result, there is no reasonable basis for the plaintiffs’ claim for provision under the Act.
Further, for the reasons set out earlier I am satisfied that there is no reasonable basis to the plaintiffs’ claims in equity.
Conclusion
It follows that there is no reasonable basis to the plaintiffs’ claim. The defendants are entitled to summary judgment. I would dismiss the action.
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