Cann v John Walter Saleeba as Executor of the Will of Ruth Harriet Grenville Payne (Deceased)
[2014] WASC 299
•21 AUGUST 2014
CANN -v- JOHN WALTER SALEEBA as Executor of the Will of RUTH HARRIET GRENVILLE PAYNE (Deceased) [2014] WASC 299
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 299 | |
| 21/08/2014 | |||
| Case No: | CIV:2101/2013 | 5 AUGUST 2014 | |
| Coram: | MASTER SANDERSON | 6/08/14 | |
| 10 | Judgment Part: | 1 of 1 | |
| Result: | Order for interim distribution to plaintiff | ||
| A | |||
| PDF Version |
| Parties: | GAVIN MICHAEL CANN JOHN WALTER SALEEBA as Executor of the Will of RUTH HARRIET GRENVILLE PAYNE (Deceased) AMELIA MARGARET CANN DAVID ROBERT BUCKINGHAM CANN MURRAY GRENVILLE CANN IAN CHARLES FRANCIS as Trustee in Bankruptcy of the Estate of GAVIN MICHAEL CANN SARA GRENVILLE CANN |
Catchwords: | Family Provision Act 1972 (WA) Interim distribution from estate to beneficiary not dependent upon deceased 'immediately' prior to death of deceased Basis upon which such distribution can be made |
Legislation: | Nil |
Case References: | Grove v Fisher [2002] WASC 247 In re Simson (decd) v National Provincial Bank Ltd [1950] Ch D 38 In the Estate of Gough (decd); Gough v Fletcher (1973) 5 SASR 559 Re Jones; Noonan v Jones [1978] VR 272 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
- Plaintiff
AND
JOHN WALTER SALEEBA as Executor of the Will of RUTH HARRIET GRENVILLE PAYNE (Deceased)
First Defendant
AMELIA MARGARET CANN
Second Defendant
DAVID ROBERT BUCKINGHAM CANN
Third Defendant
MURRAY GRENVILLE CANN
Fourth Defendant
IAN CHARLES FRANCIS as Trustee in Bankruptcy of the Estate of GAVIN MICHAEL CANN
Fifth Defendant
SARA GRENVILLE CANN
Sixth Defendant
Catchwords:
Family Provision Act 1972 (WA) - Interim distribution from estate to beneficiary not dependent upon deceased 'immediately' prior to death of deceased - Basis upon which such distribution can be made
Legislation:
Nil
Result:
Order for interim distribution to plaintiff
Category: A
Representation:
Counsel:
Plaintiff : Mr M Blundell
First Defendant : Ms M A Kershaw
Second Defendant : Ms M R Bloch
Third Defendant : Ms M R Bloch
Fourth Defendant : Mr E A Rennie
Fifth Defendant : No appearance
Sixth Defendant : Ms L M McFarlane
Solicitors:
Plaintiff : Solomon Brothers
First Defendant : Kershaw Legal
Second Defendant : Merle Bloch
Third Defendant : Merle Bloch
Fourth Defendant : Tolson & Co
Fifth Defendant : No appearance
Sixth Defendant : McFarlane Lawyers
Case(s) referred to in judgment(s):
Grove v Fisher [2002] WASC 247
In re Simson (decd) v National Provincial Bank Ltd [1950] Ch D 38
In the Estate of Gough (decd); Gough v Fletcher (1973) 5 SASR 559
Re Jones; Noonan v Jones [1978] VR 272
1 MASTER SANDERSON: By chamber summons issued 24 July 2014, the plaintiff sought the following orders:
1. The first defendant shall pay to the fifth defendant (as trustee in bankruptcy of the plaintiff) the sum of $1,400,000, alternatively the sum of $120,000, pursuant to s 7A(1) of the Family Provision Act 1972.
2. The costs of and incidental to this application be reserved.
2 After hearing argument on 5 August 2014, I made the following orders on 6 August 2014:
1. The first defendant shall pay forthwith to the fifth defendant (as trustee in bankruptcy of the plaintiff) the sum of $120,000.
2. The costs of and incidental to this application be reserved.
3 I indicated to the parties I would publish reasons for my decision. These are those reasons.
4 These proceedings were commenced by the plaintiff in July 2013. In support of his application, he filed an affidavit sworn 12 July 2013. In support of the present application, he relied on a further affidavit sworn 24 July 2014. The summary of facts which follows is taken from these two affidavits.
5 The plaintiff is the son of Ruth Harriet Grenville Payne (the deceased) and he is seeking further provision from her estate. The first defendant was granted probate of the deceased's will on 14 January 2013. The first defendant is an independent trustee - he is not a beneficiary under the will. The second, third and sixth defendants are the children of Robert John Buckingham Cann, who died in May 2012. Robert was the plaintiff's brother. The fourth defendant is also the plaintiff's brother. On 21 December 2010, a sequestration order was made against the plaintiff. He remains a bankrupt. His trustee is the fifth defendant and is appropriately joined having in mind the trustee's interest in the outcome of this action.
6 The deceased's will makes certain small bequests to 11 named beneficiaries. A property owned by the deceased in Victoria Avenue, Dalkeith was left to the fourth defendant. The deceased's residuary estate was then to be divided between the plaintiff and the fourth defendant. The statement of assets and liabilities filed with the probate application appears as attachment GMC 4 to the plaintiff's first affidavit. It values the residuary estate at just over $3 million. In his affidavit, the plaintiff points to what he says are errors in the statement. Even assuming he is correct and the assets and liabilities statement is slightly inaccurate, the figure of $3 million can be regarded as accurate for present purposes.
7 Most of the residuary estate comprises shares in blue chip corporations. These shares have not been realised. As a consequence, the estate has cash of around $200,000. In other words, if the plaintiff's claim for an interim distribution of $1,400,000 was to be met, a significant proportion of the estate's shareholding would have to be liquidated.
8 The circumstances which led to this application are detailed in the plaintiff's second affidavit. He is the registered proprietor of a property in Nedlands. In August 2013, the National Australia Bank obtained judgment against him. He had failed to make mortgage payments on the property. In late October 2013, the bank took possession of the property. Recently, they have advertised it for sale with an auction to be held 9 August 2014.
9 The plaintiff says as at 31 March 2014, he owed the bank just over $1,200,000. He was desperate to retain ownership of the Nedlands property. That was the reason why he sought an interim distribution of $1,400,000 - it would have allowed him to pay out the National Australia Bank and would also have allowed him to have his bankruptcy annulled. The reason for seeking the $120,000 in the alternative was to have his bankruptcy annulled and attempt to negotiate with the bank in the hope sale of the property might be deferred.
10 As the chamber summons makes plain, the plaintiff sought an order for an interim distribution under s 7A of the Family Provision Act 1972 (WA) (the Act). That section is in the following terms:
7A. Interim order, Court may make
(1) Before making an order under section 6(1), the Court may make an interim order if it is of the opinion that such an order is necessary for the purpose of providing those things immediately necessary for the maintenance, support or education (including past maintenance, support or education provided after the death of the deceased) of any person who was totally or partially dependent on the deceased immediately before the deceased’s death.
(2) If the Court makes an interim order, the Court must proceed to determine an application under section 6(1) by confirming, revoking or altering the interim order.
11 If any interim distribution is to be made under this section, it is necessary for an applicant to show that he or she 'was totally or partially dependent on the deceased immediately before the deceased's death'. The first defendant in these proceedings swore an affidavit dated 1 August 2014. In that affidavit he says he, along with Michele Ann Kershaw, was jointly appointed as attorney for the deceased pursuant to an enduring power of attorney. The deceased moved into an aged care facility in early 2009. From that date onwards the first defendant had complete control of her estate. He says that at no time was any distribution from the estate made to the plaintiff. The first defendant says, in effect, the plaintiff could not have been dependent upon the deceased at least since early 2009.
12 In his oral submissions, counsel for the plaintiff accepted the plaintiff had not received anything from the deceased subsequent to her move to the aged care facility in early 2009. Nonetheless, he argued the plaintiff was dependent upon the deceased 'immediately' prior to her death. These arguments do not bear repeating. No matter how far the definition of the word 'immediately' is stretched, it cannot cover this case. Accordingly, in my view, it was not open to make a distribution under s 7A of the Act.
13 There is power under the Act for an executor to make an interim distribution from the estate in certain circumstances. This is covered by s 11, which is in the following terms:
11. Distributions made for urgent purposes, administrator etc. protected in case of
Where for the purpose of providing those things immediately necessary for the maintenance, support or education (including past maintenance, support or education provided after the death of the deceased) of any person who was totally or partially dependent on the deceased immediately before his death, an administrator distributes the whole or any part of the estate to any such person, being a person entitled thereto, an action shall not lie against him in respect of such distribution and no order made under this Act or under section 65 of the Trustees Act 1962, shall disturb such distribution, whether or not the administrator had notice immediately before the distribution of any application, or intention to make an application, that would affect the estate.
15 It has long been the accepted practice that an executor, once notified of a claim under the Act, should not distribute any part of the estate. There is nothing in the Act itself which requires an executor to refrain from distributing the estate prior to the conclusion of proceedings. Section 11, which was introduced in 2011, recognises by implication this rule of practice. Section 20 of the Act carries the same implication. But the fact remains the practice of not distributing the estate once a claim is notified is a rule of practice in the administration of estates. It is not a rule mandated by statute.
16 It would appear the rule was first articulated by Vaisey J in In re Simson (decd) v National Provincial Bank Ltd [1950] Ch D 38. Sir Harry Vaisey was, at that time, the senior Chancery Division judge. Clearly, his views carried great weight. In the course of his judgment he 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 of 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.
If these legacies have been paid, as I understand they have, the matter comes before me in a form which adds further embarrassment to an already embarrassing jurisdiction. I wish it to be distinctly understood - I have said it before and I say it again, and I hope some notice will be taken of it - 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 (42 - 43).
17 These strong words, laced as they are with common sense, appear to have given rise to the practice in Australia generally, and this State in particular, of executors not distributing an estate when a claim under the Act is pending or impending. That said, there are very few reported cases where the rule has been considered. These are worthy of mention. The first is Re Jones; Noonan v Jones [1978] VR 272. In the course of a judgment mainly directed at other matters, McInerney J said:
In my view the executor is not at liberty to make a final distribution before the expiration of six months after probate. If he does purport to make such a distribution, it cannot defeat the power of the court to make an order that provision be made for the applicant out of the estate which the executor has purported to distribute. In so far as Dunn J held to the contrary [in] Re McClelland (9 April 1976 unreported) that decision is in my view inconsistent with the general policy of the legislation that an applicant has six months from the date or probate within which to make a grant (273):
18 (It may be the report is in error when it uses the word 'grant'. It would make more sense if the reference was to an 'application'. Nonetheless, it seems to me the thrust of his Honour's decision is clear.)
19 The second decision is In theEstate of Gough (decd); Gough v Fletcher (1973) 5 SASR 559. The facts of this case taken from the headnote are as follows:
By his will a testator gave his widow the right until death or remarriage to occupy his residence, free of rates, taxes, insurance premiums and repairs, and provided for payment to her of an annuity during life or widowhood. The widow applied under the Inheritance (Family Provision) Act 1972 for further provision out of the estate. A considerable portion of the testator's estate consisted of real property and mortgages. The executor proposed to sell portion of the real property to enable payment out of the proceeds of sale of estate duty and other charges. The widow applied for an injunction restraining the executor from selling the real property pending the hearing of her application for further provision (559).
20 Zelling J granted the injunction. His Honour referred to what was said by Vaisey J in Simson, and he did so without comment. He said nothing about the basis upon which the injunction was granted. Clearly, his Honour felt the balance of convenience favoured the granting of the injunction. What is not discussed is the legal or equitable basis upon which an interim injunction might be available. But for present purposes, it is enough to note his Honour approved the rule of practice and was prepared to enforce it by way of injunctive relief against an executor.
21 There is one further case in this jurisdiction which should be mentioned, if only in passing. It is the decision of Hasluck J in Grove v Fisher [2002] WASC 247. In that case, the plaintiff was a beneficiary under the will of her late father. The plaintiff sought to enforce a claim for interest against the executors of her late father's estate when the executors declined to distribute to her because an Inheritance Act (Family and Dependants Provision) Act 1972 (WA) claim was pending. His Honour concluded the executors acted properly in not making a distribution. At least by implication, his Honour approved the rule of practice which had been followed by the executors. His Honour did reject the submission that once a claim is made there is, effectively, an injunction restraining the executors from distributing the estate. After all, Zelling J concluded in Gough that an injunction would be granted - an unnecessary step if, in fact, the making of a claim acted as a de facto injunction. So that leaves the practice of not distributing the estate as a rule of practice and nothing more.
22 Against that background, I determined this was an appropriate case to order a distribution to the plaintiff of an amount of $120,000. In doing so, I was mindful, given the size of the estate, it was unlikely the plaintiff would receive less than this amount from the estate and as a consequence, the other claimant and the potential beneficiaries would not suffer. That was the important fact - and, in my view, the only relevant fact - in making the determination. The question of the power to make the order posed rather more difficult. There were two reasons for my making the order I did. First, the general rule of practice that an executor does not distribute an estate where a claim under the Act is pending must give way in certain circumstances. It is to be remembered the Act itself is beneficial in nature. It is designed to remedy a situation where a testator has not made adequate provision for a claimant. It is not designed to prevent a beneficiary receiving provision from the estate where there is a real need and where no one stands to lose. The general supervisory capacity of the Supreme Court in relation to estates is, in my view, sufficiently wide to allow an order to be made in proper circumstances.
23 Secondly, there is power under the Trustees Act 1962 (WA) to order a distribution to be made from an estate. Section 89 of the Act is in the following terms:
89. Additional powers, Court may confer on trustee etc.
(1) Where in the opinion of the Court any sale, lease, mortgage, surrender, release or other disposition, or any purchase, investment, acquisition, retention, expenditure or other transaction is expedient in the management or administration of any property vested in a trustee, or would be in the best interests of the persons, or the majority of the persons, beneficially interested under the trust, but it is inexpedient or difficult or impracticable to effect the disposition or transaction without the assistance of the Court, or it or they cannot be effected by reason of the absence of any power for that purpose vested in the trustee by the trust instrument (if any) or by law, the Court may by order confer upon the trustee, either generally or in any particular instance, the necessary power for the purpose, on such terms, and subject to such provisions and conditions (if any) as the Court may think fit, and may direct in what manner any money authorised to be expended, and the costs of any transaction, are to be paid or borne, and as to the incidence thereof between capital and income.
(2) The Court may from time to time rescind or vary any order made under this section, or may make any new or further order; but such a rescission or variation of any order shall not affect any act or thing done in reliance on the order before the person doing the act or thing became aware of the application to the Court to rescind or vary the order.
(3) An order may be made under this section, notwithstanding anything to the contrary contained or expressed in the instrument creating the trust.
(4) An application to the Court under this section may be made by the trustees, or by any of them, or by any person beneficially interested under the trust.
24 The plaintiff is a person entitled to make an application under s 89(4). In my view, the discretion embodied in s 89(1) is sufficiently wide to cover the present case. It may be said it was 'inexpedient' to effect a distribution to the plaintiff because of the established rule of practice. Accordingly, jurisdiction is enlivened and an order could be made.
25 There is one further factor which is relevant and should be mentioned. The sixth defendant is a person under a disability. In due course, it will be necessary for a guardian to be appointed to represent her interests. However, solicitors have been appointed and appeared on her behalf at the hearing. They have foreshadowed the sixth defendant will make a claim under the Act. Sometime prior to the making of this application for interim provision, the plaintiff had resolved to discontinue his action and simply accept what he would receive under the terms of the deceased's will. However, once he was advised the sixth defendant would make a claim, he was effectively prevented by s 12(2) of the Act from discontinuing his action. The fact that he was trapped in this procedural impasse was an additional reason for my making the interim order.
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