Davis v Davis
[2014] WASC 395
•18 NOVEMBER 2014
DAVIS -v- DAVIS [2014] WASC 395
| SUPREME COURT OF WESTERN AUSTRALIA | Citation No: | [2014] WASC 395 | |
| 18/11/2014 | |||
| Case No: | PRO:1139/2001 | 20 AUGUST 2014 | |
| Coram: | JENKINS J | 26/08/14 | |
| 19 | Judgment Part: | 1 of 1 | |
| Result: | Appeal allowed, in part | ||
| B | |||
| PDF Version |
| Parties: | MARGARET JOAN DAVIS RONALD CLIFTON DAVIS |
Catchwords: | Executors and administrators Appeal against order of a registrar that an executor pass accounts Duties of executor Delay Cost |
Legislation: | Administration Act 1903 (WA), s 43, s 44, s 144 Interpretation Act 1918 (WA), s 63 Limitation Act 1935 (WA), s 38(1) Non-contentious Probate Rules 1967 (WA), r 4, r 5, r 37 Public Trustee Act 1941 (WA) Rules of the Supreme Court 1971 (WA), O 25, O 58, O 60A Supreme Court Act 1935 (WA) |
Case References: | Davis v Davis [No 2] [2012] WASC 374 Hons v Hons [2010] NSWSC 247 Re Estate of John William Henry Nicholls (Dec) [2003] WASC 85 The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358 Wheatley v Bower [2001] WASCA 293 |
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
- IN CHAMBERS
Regulation 37 of the Noncontentious Probate Rules and s 43 and s 44 of the Administration Act and the direction of Registrar Dixon made 16 April 2014 to lodge accounts of the estate for passing
- Appellant
AND
RONALD CLIFTON DAVIS
Respondent
Catchwords:
Executors and administrators - Appeal against order of a registrar that an executor pass accounts - Duties of executor - Delay - Cost
Legislation:
Administration Act 1903 (WA), s 43, s 44, s 144
Interpretation Act 1918 (WA), s 63
Limitation Act 1935 (WA), s 38(1)
Non-contentious Probate Rules 1967 (WA), r 4, r 5, r 37
Public Trustee Act 1941 (WA)
Rules of the Supreme Court 1971 (WA), O 25, O 58, O 60A
Supreme Court Act 1935 (WA)
Result:
Appeal allowed, in part
Category: B
Representation:
Counsel:
Appellant : Mr M S Macdonald
Respondent : Mr C Biris
Solicitors:
Appellant : Macdonald Rudder
Respondent : Chris Biris
Case(s) referred to in judgment(s):
Davis v Davis [No 2] [2012] WASC 374
Hons v Hons [2010] NSWSC 247
Re Estate of John William Henry Nicholls (Dec) [2003] WASC 85
The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358
Wheatley v Bower [2001] WASCA 293
- JENKINS J: (These reasons were delivered extemporaneously on 26 August 2014 and have been edited from the transcript.)
1 The appellant appeals from a decision of a registrar made on 16 April 2014 that she, as executor of the estate of Frederick John Davis, lodge accounts for passing within 28 days. The appeal is brought under the Non-contentious Probate Rules 1967 (WA) (the Rules), r 5, made pursuant to the Administration Act 1903 (WA) (the Act).
2 The Rules, r 5, gives a right to a person aggrieved by 'an order, decision or requirement' of a registrar of this court to appeal therefrom to a judge in chambers. Such an appeal must be filed within five days after the decision is made. The decision in question was made on 16 April 2014. The appeal notice was filed on 24 April 2014. If I am right about those dates it is necessary for the appellant to obtain an extension of time within which to appeal. Given the short period of the delay, and despite the fact that appeals against registrars should be brought promptly, I will extend the time to permit the appeal to be instituted.
3 Under the Rules, r 5(3), the appeal was to be served on every person other than the appellant who appeared, or who was represented, before the registrar. There were no appearances before the registrar because, with the consent of the appellant, and Ronald Clifton Davis, the person who applied for the order, the application was decided on the papers.
4 Ronald, as I will call him to distinguish him from his father, the deceased, has been served with the appeal and he has appeared by his counsel at the hearing of the appeal.
5 The Rules do not prescribe the permitted grounds of appeal or the nature of the appeal. It is not apparent that the Rules of the Supreme Court 1971 (WA) (the Supreme Court Rules) O 60A applies, even to a limited extent, to an appeal instituted under the Rules, r 5. The nature of an appeal under r 5 was considered by Barker J in Re Estate of John William Henry Nicholls (Dec) [2003] WASC 85. His Honour held:
Consequently, and as recognised by the learned authors of Wills Probate and Administration Service Western Australia (Butterworths 1999, loose leaf service), the Registrars of probate exercise specific, that is, limited statutory and regulatory power under r 4. In a real sense, a Registrar of the Court exercises the voluntary or non-contentious probate jurisdiction under the Non-Contentious Probate Rules as a delegate of a Judge of the Court and each decision is subject to review by a Judge, whether on a reference to the Judge by the Registrar or in an appeal against a decision of the Registrar to a Judge.
It follows, in my view, that an 'appeal' to a Judge under r 5(1) should be treated as an appeal de novo, so that it is open to the Judge on the hearing of such an 'appeal' to hear the matter afresh. On such a reference or 'appeal' under these rules, the Judge is effectively exercising the jurisdiction created by s 6 of the Administration Act that was delegated by the rules to the Registrar. Such an 'appeal' is not one in the strict sense; nor is it appropriate to view the 'appeal' as one by way of rehearing where the Court will only act to correct an identified error on the part of the Registrar. In effect, the Court exercises an original jurisdiction on such an 'appeal' [13] - [14].
6 Although I am not bound by Barker J's decision, in order to ensure a consistent approach by single judges to appeals of this nature I have treated the appeal as a hearing de novo. Thus, I have considered afresh all of the matters relevant to make a decision in this matter.
Facts
7 Frederick John Davis, who was the husband of the appellant and the father of Ronald, died on 31 May 2000. Probate of his will was granted to the appellant on 18 April 2001. At the date of his death, Mr Davis lived with the appellant, Ronald and Mr Davis' and the appellant's daughter, in a home in a Perth suburb. Ronald was 16 years of age. Mr Davis and the appellant ran a business called John Davis Advertising Pty Ltd (JDA).
8 By his will Mr Davis left Ronald and his sister a legacy of $500,000 each. Smaller legacies were left to Scripture Union, and the deceased's two sisters and one brother. The residue of the estate was left to the appellant on trust for the appellant and the deceased's children, amongst other beneficiaries. The appellant paid out the legacies to the deceased's sisters and brothers, but not those to the children, including Ronald.
9 The appellant did not tell Ronald or his sister about their legacies. Ronald says that at the time of his father's death he thought he must have been left something in the will. He asked his mother to show him the will. She refused. He says that she later told him that he was not mentioned in the will.
10 In about December 2007 when Ronald was about 23, Ronald received information, he says, from a third party, that he was left a legacy by his father. He approached the appellant. She showed him a copy of the will. She told him that there was no money to pay the legacy. Ronald has never accepted that position.
11 In a letter to Ronald in 2008 the appellant acknowledged that she did not tell her children of their legacies. I understand her position to be that they did not ask if they had been left any money. She said that after the deceased's death she was 'struggling to keep body and soul together'. She referred to having travelled in an attempt to 'heal' herself. She said, 'financially I am no worse off so your inheritance from me has improved'. Ronald relies on this letter as an admission that the appellant used estate funds for her own purposes.
12 The appellant has deposed that she did not tell Ronald about the legacy because he was young, irresponsible, and going through a difficult time after the death of his father. She also says she struggled to manage JDA and there was no money to pay the legacies.
13 This history led Ronald to commence proceedings in this court against the appellant. They came to an end on 12 September 2012. Those proceedings, in broad terms, related to complaints against the appellant about her administration of the estate. The action sought an order replacing her as executor and for an account. The proceedings ended when Master Sanderson allowed an appeal by the appellant against a registrar's decision to allow Ronald further time to file a minute of his statement of claim.
14 Master Sanderson said in Davis v Davis [No 2] [2012] WASC 374:
There is no allegation in the proposed substituted statement of claim of fraud. It is not pleaded that the defendant was guilty of actual moral turpitude. The way the proposed statement of claim is framed it looks very much as though the plaintiff is seeking to have the defendant account in relation to the estate. It should be remembered this proposed substituted statement of claim was not the subject of detailed submissions by either counsel, but despite putting the question directly to counsel for the plaintiff I am none the wiser as to why the proper course in this case is not to require the defendant in her capacity as executor to pass accounts.
If she refused to do so she could be removed as executor of the estate. See The Estate of Erminia Agnes Rogers v Brian David Rogers [2009] WASC 358 [21]. (emphasis added)
15 In respect to the appellant's position, Master Sanderson said:
The [appellant] says after her husband's death she tried to keep JDA afloat. However, she was unable to do so and eventually she had to sell the [family] property to pay off the company's debts and settle an overdraft. Essentially it is the [appellant's] position there was little or nothing in the deceased's estate. In her affidavit sworn 10 August 2012 and filed in opposition to this application, she sets out her present assets and liabilities and her present circumstances. It is clear she has very limited means [3].
16 As the appellant's means are disputed by Ronald, it is fairer to say that the appellant says that her means are limited.
17 In 2012 the appellant deposed that she owned her own home, valued at approximately $550,000, and she had approximately $20,000 in shares. The appellant is now 63 years of age and in 2012 when she swore her affidavit she was working part-time in two jobs.
18 The appellant has never filed estate accounts in the court. She has provided to Ronald the last set of financial statements prepared for JDA in the financial year ending 30 June 2004. She has provided three different statements of assets and liabilities for the estate, the first of which valued the deceased's estate at approximately $7 million, the second of which valued it at $420,000, and the last of which valued it at $20,000. The significant difference in the three statements is the value of the deceased's share in JDA. In addition, the appellant has provided an account which is attached to the affidavit of Matthew John Wilson sworn the 19 July 2012. That account and its supporting documents are more detailed.
19 On the other hand, the appellant does not say that she has, in all respects, kept proper accounts. She asserts that she does not have all the records required to provide a full accounting.
20 This issue has led to conflict between the parties, with Ronald alleging that the appellant has failed in her duties as executor to him as a beneficiary under the estate, that she has an obligation to account and that she should do so in the proper manner.
21 The appellant does not dispute that she did not comply with all her duties as an executor, but says that that was for good reasons. She says that, given her lack of funds and the lapsing of time, it is now futile to make her account.
Grounds of appeal
22 The appellant says that:
(1) the registrar had no power to make the order he did;
(2) if the registrar had power the exercise of the power is now time barred; and
(3) in the alternative to (1) and (2), the registrar should not have exercised his discretion to make the order.
23 The matters raised in points (1) and (2) raise similar issues so I will deal with those matters together.
Did the registrar have the power to make the order?
24 The Act, s 43 and s 44, state:
43. Inventory and accounts
(1) Every person to whom probate or administration is granted shall be under a duty to -
(a) collect and get in the real and personal estate of the deceased and administer it according to law;
(b) file an inventory of the estate of the deceased, and pass his accounts relating thereto within such time, and from time to time, and in such manner as may be prescribed by the rules or as the Court may order;
(c) when required to do so by the Court, deliver up the grant of probate or administration to the Court.
(2) The order of the Court allowing any account shall be prima facie evidence of the correctness of the same, and shall, after the expiration of 3 years from the date of such order, operate as a release to the person filing the same, except so far as it is shown by some person interested therein that a wilful or fraudulent error, omission, or entry has been made in such account.
44. If accounts not filed Principal Registrar to give notice, etc.
(1) If an executor or administrator neglects to file an inventory or to pass accounts within one month after the expiration of the period fixed by the rules, the Principal Registrar shall cause such executor or administrator to be notified of such neglect.
(2) In case of further neglect of the period of one month, the Principal Registrar shall apply for an order upon such executor or administrator to file such inventory or exhibit such account forthwith.
(3) No proceedings under this section shall affect the liability of the executor or administrator to be proceeded against for an account and administration, or prevent an action from being brought on any guarantee given as required by section 26(1) or section 62(1).
(1) The Registrar may exercise the powers of a Judge in Chambers in and about the granting of probate and administration, and in and about the granting to the Public Trustee of orders to administer the estates of deceased persons, and may transact all such business and exercise all such powers and authorities in respect of voluntary or non-contentious probate jurisdiction as under the Act, the Supreme Court Act 1935, the Public Trustee Act 1941, the Rules of the Supreme Court 1971, or these rules, may be transacted or exercised by a Judge in Chambers, except in respect of the following proceedings and matters, that is to say -
(a) applications and orders under section 26(2) and (6) of the Act;
(b) subject to the provisions of rule 35(1) and (2), applications and orders under section 29 of the Act; and
(c) applications under section 64 of the Act to remove caveats.
(2) Nothing contained in these rules derogates from or limits the jurisdiction or powers conferred by the Act on a Registrar.
(3) The Registrar may require an application made to him to be brought by summons, and may require an application made to him, whether by summons or otherwise, to be brought before a Judge by summons or before the Court on motion.
(4) Without prejudice to the provisions of subrule (3), where a matter appears to the Registrar proper for the determination of a Judge, the Registrar may refer it to a Judge, and the Judge may either dispose of the matter or refer it back to the Registrar with such directions as he may think fit.
26 The appellant challenges the validity of r 4 insofar as it authorises a registrar to exercise the powers of a judge in chambers when the Act has specifically empowered a judge only to exercise that power. The Rules are made under the Act s 144, which state in part that:
(3) The judges of the Supreme Court may make and prescribe all such rules, forms and fees as may be necessary or convenient to carry out the objects and purposes of this Act and, in particular, but without prejudice to the foregoing power, may by rules -
…
(b) prescribe what part of the business which may be transacted, and of the jurisdiction which may be exercised by a judge in chambers, may be transacted or exercised by a registrar or other office of the court.
28 Next, the appellant says that a registrar could not exercise the particular power in s 44(2). It is true that s 44(2) is unusually worded. It does not say to whom the registrar is to apply, or what order may be made upon such an application. However, I do not agree with the appellant's submission that s 44(2) could only make sense if the registrar was required to apply to a judge for an order under that section. The appellant says that it would make no sense that a registrar could apply to himself or herself for such an order and so the appellant argues that the application under s 44(2) must be made to a judge.
29 In my view, as long as the power to make an order in the Act, s 44(2) rests with a judge in chambers, as opposed to a judge in court, the Act, read with r 4, means that a registrar in his or her capacity as a registrar may apply to himself or herself as a delegate of a judge for an order under that subsection.
30 I am satisfied that the power to make an order for an account rests with a judge in chambers. I have come to this conclusion based on a consideration of the Supreme Court Rules O 58, which permits a judge in chambers to determine, amongst other things:
(a) any question affecting the rights or interests of the person claiming to be creditor, devisee, legatee, next of kin or cestui que trust;
(b) the ascertainment of any class of creditors, legatees, devisees, next of kin, or others;
(c) the furnishing of any particular accounts by the executors or administrators or trustees, and the vouching (when necessary) of such accounts;
31 I acknowledge that O 58 says that these matters are to be determined on an originating summons by a judge in chambers, but if that is how they are to be determined between parties before a judge in chambers it follows that, pursuant to the Rules, r 4, such a matter may be heard by a registrar without the need for an originating summons.
32 Lastly, in this respect, the appellant says that r 4 only permits a registrar to exercise the powers of a judge in chambers 'in and about the granting of probate and administration', and to 'transact all such business and exercise all such powers and authorities in respect of voluntary or non-contentious probate jurisdiction as under the Act, the Supreme Court Act 1935, the Public Trustee Act 1941, the Rules of the Supreme Court 1971, or these rules, may be transacted or exercised by a judge in chambers' except in respect of specified matters.
33 The appellant says that the delegation in r 4 does not include the power of a judge in chambers to order the filing of accounts. In my opinion, there is no reason to so restrict the meaning of the words in r 4. They are words of limitation, but they are broad enough to include the powers of a judge in chambers under the Act s 44(2) to make an order for accounts to be filed and passed. As EM Heenan J said in The Estate of Erminia Agnes Rogers v Rogers [2009] WASC 358:
Accordingly, the Registrar does have power to entertain applications for the revocation of a grant of administration pursuant to s 29 of the Administration Act, subject to the provisions of r 35, as well as possessing the general jurisdiction of a judge to transact all such business, and exercise all such powers and authorities, in respect of voluntary or non-contentious probate jurisdiction, as is set out in r 4(2), subject to the exceptions mentioned [19].
34 It is also necessary, for the purpose of this decision, to have regard to the Rules, r 37, which states:
37. Executors and administrators to pass accounts
(1) Every executor and administrator (other than the Public Trustee) shall file in the Registry his accounts relating to the estate of the deceased in accordance with Form 4, and shall attend before the Registrar at such time as the Registrar may appoint to have the accounts passed and allowed.
(2) Where there is any balance available for distribution, the executor or administrator shall file a plan of distribution with his accounts.
(3) The accounts and plan of distribution mentioned in this rule shall be filed within 12 months after the grant, or within such further time as a Judge or the Registrar may allow, and shall be verified by the affidavit of the executor or administrator.
(4) Notice in accordance with Form 5 of filing of the accounts of an executor or administrator shall be advertised once, 14 days at least before the day fixed for passing the accounts, in a daily newspaper published in Perth.
(5) In the case of an administrator, notice of the filing and of the appointment to pass his accounts shall also be served on the sureties of the administration bond.
(6) A person wishing to object to the passing of the accounts of an executor or administrator, shall file in the Registry, before the day fixed for the passing of the accounts, a notice of his intention to object, and also an affidavit stating his interest and the nature and grounds of his objection.
(7) Upon the taking of the accounts, the Registrar may make such order as to service upon any of the parties or persons interested as he may think fit.
(8) Any person interested may attend before the Registrar upon the taking of the accounts.
(9) The costs of the accounting party and of any person who has filed a notice of objection under this rule shall be in the discretion of the Registrar.
(10) The Registrar's allowance of an account shall be recorded by a certificate.
35 The Act and the Rules, read together, required the appellant to pass the estate accounts 'within such time and from time to time, and in such manner, as may be prescribed by the rules or as the court may order'. It is not in dispute that the appellant has not complied with her obligation in this regard. However, as the registrar acknowledged in his decision of 16 April 2014, the court does not usually take any action for non-compliance unless an interested party requests it to do so, as Ronald has asked in this case.
36 If the appellant failed, as she did, to pass accounts within one month after the expiration of 12 months after the grant of probate, a registrar shall cause the appellant to be notified of her neglect. This is a mandatory requirement. No special procedure or form is set out or required for this notification. The appellant says that this provision was not complied with.
37 In light of the fact that no special procedure or form is set out or required, at the very least the appellant was advised of her neglect by the registrar's letter to her solicitors of 28 October 2013.
38 If, as she did, the appellant still did not file accounts, the Act, s 44(2) required the registrar to apply for an order upon the executor to exhibit the accounts forthwith. As I have said, the language of s 44(2) is odd in that it does not say to whom the application for an order is to be made, and for the first time it speaks of exhibiting accounts. Previously the Act has referred to passing accounts. The reference to exhibiting accounts may be because the Rules, r 37 refers to the requirement that the accounts be verified by affidavit.
39 I have already held that a registrar in his or her capacity as a registrar may apply to himself or herself as a delegate of a judge in chambers for an order upon the executor to exhibit the accounts forthwith. Again, no special form is required for such an application. In my view, no want of form should invalidate the registrar's order of 16 April 2014 to the appellant to file accounts within 28 days.
40 The appellant says that as no time is specified in the Act s 44 for either the registrar to notify her of her neglect to file accounts, or for the application of the registrar, it is implied that notice must be given within a reasonable time and the application must be made within a reasonable time.
41 The Interpretation Act 1918 (WA) s 63 applies. It states that where no time is fixed or allowed within which an act or thing shall be done, such act or thing shall be done with all convenient speed and as often as occasion arises. Section 63 is of very wide import. What is convenient speed depends upon the facts of each case. What is convenient speed in one case will not be in another.
42 The court's power to require an executor to file and pass accounts is an important part of the court's armoury of powers in the administration of estates. As EM Heenan J noted also in the case of The Estate of Erminia Agnes Rogers, albeit in respect of the power to revoke a grant of probate or letters of administration, the ultimate purpose of the court is to ensure the due and proper administration of the estate and of the interests of the parties beneficially entitled to it. His Honour also noted [33] that when complaints are made to the court about delays, or failures by a personal representative to proceed with due administration, it has been common to give notice to the executor or administrator to pass accounts under the Act s 44. It would be counterproductive to place on the exercise of this power a time limitation that was not determined having regard to the facts of the particular case.
43 In this case Ronald did not know about his legacy until 2007. He commenced proceedings against the appellant in respect of her administration of the estate. Those proceedings were struck out in 2012 and Ronald must take responsibility for that. However, when the proceedings were struck out Master Sanderson specifically referred to an order to the appellant to pass accounts as being an alternative available remedy to Ronald. In a timely manner Ronald then asked a registrar to require the appellant to pass accounts. In these circumstances I do not agree with the appellant that the effluxion of time meant that the registrar did not notify her of her neglect to file accounts within an appropriate time, or that a registrar, or a judge in chambers, did not have power to invoke the statutory regime to enforce the appellant's obligation to pass accounts.
Should the appellant be ordered to pass accounts?
44 I accept the appellant's submission that on appeal I have the same discretion as a judge in chambers would have on application made under the Act s 44(2) for an order that the appellant file accounts forthwith.
45 I am of the opinion that the registrar erred in finding that he had no discretion but to make an order at the point where he was exercising the powers of a judge in chambers to make the order that the appellant exhibit the accounts forthwith under the Act s 44(2).
46 The Act s 44(2) does not state whether or not an order is discretionary or mandatory if the executor has failed to file accounts. The respondent, that is Ronald, points to the Rules, r 37(3), and says that if there is a good reason why an executor has not filed accounts the executor may apply for an extension of time within which to do so. He submits that absent such an order on an application made to the court a judge or registrar must make an order under the Act s 44(2) for the executor to file the accounts.
47 I disagree. Given that the power in the Act s 44(2) is not stated to be mandatory, I see no reason to so limit the power. There are foreseeable circumstances where it would be inappropriate for the court to make such an order for the filing of accounts, such as if an executor had become disabled. I do not think that it is necessary in such a case to require an executor to apply for an extension of time under the Rules, r 37(3). Instead, the executor could simply ask the court not to make an order under the Act s 44(2).
48 I have been assisted in respect of this issue, and others that have arisen in this case, by the detailed judgment of Ward J in Hons v Hons [2010] NSWSC 247. In that case her Honour found that in New South Wales:
It does not seem to me that there is any doubt that Alexander, as an administrator, remains under an obligation under s 85(1) of the Act to file an inventory of the estate of the deceased and to file, or file and pass, accounts in relation to the administration of the estate of the deceased but it is open to me to determine the time and manner within which such an obligation is to be performed. While there is not, in the Rules or in the Act, an express provision allowing for the dispensation of relief from such an obligation, the effect of an order (of the kind which is clearly contemplated under the rules) extending the time for filing of the accounts until further order would in practical terms be to dispense with any immediate obligation to do so. There is also clearly a discretion as to the manner in which any order for accounts should be made, which would have to take into account the evidence as to what is likely now to be possible after the lapse of time since completion of the administration.
Whether or not there is a power formally, if not as a matter of practicality, in terms of the timing of such an order, to dispense with the filing of the statutory accounts does not affect the court's discretion whether to grant any relief at all on the present application. Here what is sought is an order compelling performance of a statutory obligation. There is no doubt that there is such an obligation. However, the question is whether that obligation should be the subject of an order by the court of the kind sought, or the administrator should simply be left in the position that, without accounts having been passed and filed, there is no release in respect of the estate accounts and no basis on which commission can be claimed [88] - [89].
49 Her Honour determined that there was a discretion as to whether the court should make an order requiring the administrator in that case to file the accounts. Her Honour went on to consider whether that discretion ought to be exercised in that case. In New South Wales the relevant statutory provision required that in respect of the estate of a person who had died before 31 December 1981, as the deceased had in that case, the administrator was required to file and pass the deceased person's accounts relating to the estate within such time, and from time to time, and in such manner as may be fixed by the Rules or as the court may order. In Hons v Hons the deceased had died some 20 years prior to the application for an order that the administrator file and pass the deceased's accounts.
50 Taking into account all these matters, I consider that it is a matter for my discretion as to whether the appellant's obligation to account should be the subject of an order of the court.
51 Turning then to the exercise of the discretion, the appellant says that I should not exercise my discretion to make an order requiring her to file and pass accounts for the following reasons:
(1) the age of the matter, that is, probate was granted over 12 years ago;
(2) in the course of Ronald's proceedings in CIV 2822 of 2008 seeking, amongst other things, an account, a final account was given to Ronald to which no objection has yet been taken;
(3) that account demonstrates that the estate is hopelessly insolvent;
(4) pursuant to an order of the Acting Master, that action was dismissed with an order that Ronald pay the appellant's costs;
(5) those costs of over $20,000, plus other costs which have yet to be taxed, have not been paid;
(6) the investigations made by the sheriff are to the effect that Ronald has no assets to satisfy those costs;
(7) the passing of accounts under the Rules does not provide a remedy to anyone other than the executor who is passing the account. If an item in the account is not allowed the only remedy a beneficiary has is to commence a civil action for an account. In this case any civil claim for an account by Ronald is statute barred having regard to the Limitation Act 1935 (WA) s 38(1)(c)(iii), and see also Wheatley v Bower [2001] WASCA 293, 123 - 124;
(8) nothing useful can come from the passing of accounts more than 12 years after they should have been passed; and
(9) she has had to undergo the strain of Ronald's civil litigation brought against her and ultimately dismissed.
52 In the appellant's affidavit material she has deposed to not only the financial strain of that litigation on her, but also the emotional strain of the litigation. Of course, such strain is a matter that is well known to the courts. Thus, the appellant says that the delay in this matter, the futility of any order for an account, and the undoubted costs to the appellant of the taking of such account, are powerful matters which warrant the court exercising its discretion not to make an order that she comply with her obligation to pass accounts.
53 On the other hand, Ronald says that I should make such an order. He asks me to take into account that the appellant has failed in her obligations to pass correct accounts despite repeated requests from him, a beneficiary under the will. He says that the appellant has been unable to provide accurate and proper accounts as shown by the fact that she has provided different accounts and financial statements over time. He says that she has filed inconsistent and conflicting statements of assets and liabilities. Ronald also points to the fact that the appellant deliberately, he says, failed to inform him that he had an interest in the estate until eight years after the estate was distributed, and, the appellant says that she has destroyed some relevant documents. Ronald says that a substantial part of the delay in making this application has been caused by the appellant herself because of her failure to inform him that he was a beneficiary under the estate.
54 He says that, upon finding out the situation, he has acted promptly to try and protect and preserve his rights. He refers to the fact that the master in deciding to allow the appellant's appeal so that his action against her was struck out said that the prospect of calling the appellant to account for her administration of the estate remained. He says that this appears to have been a factor which the master took into account in deciding to allow that appeal which had the effect of his claim being struck out.
55 He says in those circumstances it would be unfair to now deny him the opportunity of obtaining an account from the appellant. In respect of the futility of obtaining an account, Ronald says that the passing of accounts would give clarity to the situation in regards to the financial position of the estate and the conflicting accounts which have been provided by the appellant.
56 In considering and balancing these matters, I acknowledge the strength of the appellant's arguments that the effluxion of time has prejudiced her ability to prepare accounts.
57 I also take into account that it would seem that any further civil action against her, as executor, is time barred and that fact reduces the utility of her passing accounts.
58 In respect of the first issue, the registrar said in his decision which is under appeal, and I agree with him, that the prejudice caused by the effluxion of time may affect the quality of the accounts and the amount of proof required in relation to them. That is a matter that can be quite easily taken into account by the registrar in the passing of the accounts.
59 I also take into account, as I have said, that the affidavit of Mr Wilson attaches what he says are final accounts dated 17 February 2011, as amended, as at 28 February 2011. Thus there are accounts already prepared which can form the basis of accounts to be filed and that weakens the strength of the argument that the effluxion of time causes a difficulty for the appellant.
60 There is also an inconsistency in the appellant's argument in that on the one hand she says she has provided an account already in the civil proceedings, but on the other hand she says it will be difficult for her to now prepare the accounts. Both should not be true.
61 As to the fact that any further proceedings are now time barred so there is no utility in requiring the appellant to pass accounts, I say that justifying further proceedings, or protecting an executor from further proceedings, is the primary, but not necessarily the only, reason why accounts are required to be passed. All trustees, including executors, are required to keep accounts and to render proper accounts to the beneficiaries when required.
62 The passing of accounts may quell disputes between the executor and beneficiaries under a will. They may also satisfy the court that the executor has performed his or her duty. The consequence of passing accounts, and the benefits of doing so, were referred to by Ward J in Hons v Hons [116] - [118]. She concluded that, where to order an account to be taken would be likely to be an exercise in futility at a disproportionate cost to any potential benefit resulting therefrom, the fact of delay in seeking an account seemed to her to be an added factor tending against the exercise of the discretion to order such relief.
63 I conclude that in this case the competing considerations are finely balanced. On the one hand the appellant has a continuing obligation to file accounts. She has not done so. Further, she has not complied at all times with her duties as executor to the beneficiaries. There are also some apparent anomalies in the accounts that she has provided to Ronald, such as the fact that they say that she has paid out three legacies in full, but none of the legacies to Ronald and his sister were paid out at all.
64 There is also the fact that she has given differing statements of the assets and liabilities of the estate over time. There is an ongoing controversy between the appellant and Ronald over the administration of the estate which the taking of accounts may help to quell. Lastly, there is the fact that the master appeared to take into account the availability of the taking of an account when he allowed the appellant's appeal and dismissed Ronald's claim against the appellant.
65 On the other hand, over 12 years have now elapsed since the accounts should have been filed. The taking of the accounts has limited utility due to any action against the appellant being time barred, and the taking of accounts may be costly. Ronald still has not paid a costs order of approximately $20,000 against him in the civil proceedings and there may be other costs which he has to pay in those proceedings.
66 Lastly, a final account was given to Ronald in the course of the civil proceedings he took against the appellant, even though he does not accept it because it is different from other accounts that have been provided by the appellant.
67 I agree that at some point this dispute between the appellant and Ronald about the administration of the estate has to be brought to an end, but, as I have said, the passing of accounts is one means of assisting that to occur in a manner which hopefully can be fair to both the appellant and Ronald.
68 Taking all the matters raised by the parties into account, I am of the opinion that I should exercise my discretion on appeal to order an account, only if Ronald gives security for costs in respect of that taking of the account. Pursuant to the Rules, r 37(9), a registrar on the taking of the accounts has a discretion as to costs. It would seem to me that if upon the taking of the account the registrar is of the view that the appellant should have her costs paid, it would be unfair in the extreme to the appellant if there were not funds available to meet such an order. I also refer to Ward J's decision in Hons v Hons where her Honour said, after reviewing the equitable principles relating to accounting, that an order for an account should be given on whatever conditions are necessary to ensure justice between the parties.
69 I have discussed with the parties today whether I have power to order that Ronald give security for costs. Mr Macdonald for the appellant, although he says that I should not make an order for an account, says that if I am minded to do so then I have an inherent power to order it on terms that Ronald give security for costs. In addition to any inherent power, in my view, the power in the Supreme Court Rules O 25 would also enable me to order security for costs.
70 In deciding that Ronald should give security for costs before the appellant is required to file her account, I have taken into account the matters in the Supreme Court Rules O 25. That is, I have taken into account the merits of requiring security for costs, including the strength of the appellant's arguments that she should not to have to pass accounts at this late stage. I have also taken into account that the evidence in the appellant's affidavit is to the effect that Ronald does not have property within the jurisdiction to satisfy an order for costs against him. I have also taken into account that, whilst the normal processes of the court are available to enforce any order for costs, the costs order against Ronald in the civil proceedings remains unpaid. So those processes have been unsuccessful to date.
71 I take into account that the costs order against Ronald is in favour of the appellant and it relates to a civil proceeding which raised very similar issues to those raised in this matter. I have also taken into account the argument that the appellant is the cause of Ronald's impecuniosity. This is an argument against ordering security for costs, but, in my view, it is as yet untested and it should not hold sway against those arguments in favour of ordering security for costs.
72 I have also considered whether the order for security for costs would be oppressive against Ronald, who is allegedly impecunious. Against that, however, is the appellant's claim that she too is impecunious, in part, because Ronald has not paid his earlier costs order.
73 I will now hear the parties as to the terms of the security for costs order. In this respect I should note that if it gets to the point that the registrar passes the accounts, the registrar will not only have the discretion under the Rules, r 37(9), as to costs, he will also have a discretion to order payment out of court of those costs and to order to whom they should be paid out to.
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