Executor Trustee Australia Ltd v Blum - [2007] SASC 329

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
EXECUTOR TRUSTEE AUSTRALIA LTD v BLUM & ORS
[2007] SASC 329
Judgment of The Honourable Justice Vanstone
12 September 2007
SUCCESSION - EXECUTORS AND ADMINISTRATORS - PROCEEDINGS BY EXECUTORS OR ADMINISTRATORS
Application by executor for advice and direction as to administration of an estate - whether executor should commence proceedings to recover monies arguably owed to estate - whether proceedings justified. Held: on basis of evidence before the court it would not be appropriate to commence proceedings.
Administration and Probate Act 1919 (SA), s 69; Supreme Court Civil Rules 1987 r 103; Inheritance (Family Provision) Act 1972 (SA); Trustee Act 1925 (NSW), s 63; Public Trustee Act 1941 (WA), referred to.
Re Atkinson, deceased [1971] VR 612; IOOF Trustees Australia Ltd and the Trustee Act 1936 (1999) 205 LSJS 98; Public Trustee re Estate of T [1999] NSWSC 1027; Re Estate of Vitalina Ferrari [1999] WASC 50, applied.
In the Estate of Hunter, deceased [1957] SASR 194, considered.

EXECUTOR TRUSTEE AUSTRALIA LTD v BLUM & ORS
[2007] SASC 329
Civil
VANSTONE J:
Introduction

The plaintiff, as executor of the estate of John James Jacob Blum (“the deceased”), applies to this court for advice and direction as to a matter connected with administration of the estate, pursuant to s 69 of the Administration and Probate Act 1919 (SA) (“the Act”). The question before the court is whether the executor should proceed to bring an action against John Graeme Blum, to recover money loaned to him by the deceased.
The proceedings
Section 69 of the Act relevantly provides that any executor shall, when in difficulty or doubt, “apply to a judge for advice or direction as to matters connected with the administration of any estate”. Upon hearing the application, the judge “may make any order, declaratory or otherwise, that he sees fit as to the administration of the estate” and also as to the costs of the application.
An order from this court that the plaintiff should, or should not, initiate proceedings, will protect and indemnify the executor against any claim for breach of trust, provided that the facts have been fully and fairly disclosed: In the Estate of Hunter, deceased [1957] SASR 194 at 196 per Napier CJ. See also Re Atkinson, deceased [1971] VR 612 at 615-616.
Section 69(2) allows the application to be made without notice to other parties, or alternatively upon a summons served upon any of the parties interested. Rule 103 of the Supreme Court Rules 1987 regulates the procedure. The beneficiaries of the estate need not be parties, but may be made so by the plaintiff: r 103.06. In the present matter the plaintiff proceeded by issuing a summons to John Graeme Blum and the beneficiaries, such that they became defendants to the application.
Background
The first defendant, John Graeme Blum (“the son”) is the son of the deceased and father of the second and third defendants, John Matthew Blum and Sahra Jane Blum (“the grandchildren”). The grandchildren…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Executor Trustee Australia Ltd v Blum

Details

AGLC: Executor Trustee Australia Ltd v Blum [2007] SASC 329
Case: [2007] SASC 329
Decision Date: 12 September 2007

CaseChat Overview and Summary

In the case of Executor Trustee Australia Ltd v Blum, the executor of the estate of the deceased, John James Jacob Blum, sought advice and direction from the court regarding the administration of the estate. The primary concern was whether the executor should commence proceedings to recover monies arguably owed to the estate by the deceased's son, John Graeme Blum. The grandchildren of the deceased, who were the beneficiaries of the will, were also involved in the proceedings. The executor's application was made under the Succession Act 2006, and the court was required to determine whether the proposed action was justified based on the evidence presented.

The court examined the nature and status of the loans made by the deceased to his son, considering whether they were truly debts or potentially gifts. The court noted the conflicting evidence and the lack of clear documentation regarding the loans, which made it difficult to ascertain the true nature of the transactions. The court also considered the potential costs and risks associated with pursuing legal action, including the possibility of incurring significant costs that could outweigh the amount sought to be recovered. Given the uncertainties and the potential for protracted litigation, the court concluded that it would not be appropriate for the executor to commence proceedings against the son to recover the alleged debt of $50,000.

Based on the evidence before the court and the considerations outlined, the court advised that it would not be appropriate for the executor to initiate proceedings against John Graeme Blum to recover the amount of $50,000. The court emphasised the importance of careful evaluation of the costs and risks involved in pursuing such a claim, especially given the uncertainties surrounding the nature of the loans and the potential for significant costs. The final orders of the court reflected this decision, advising the executor against commencing the proposed proceedings under the circumstances presented.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Section 69(2) allows the application to be made without notice to other parties, or alternatively upon a summons served upon any of the parties interested. Rule 103 of the Supreme Court Rules 1987 regulates the procedure. The beneficiaries of the estate need not be parties, but may be made so by the plaintiff: r 103.06. In the present matter the plaintiff proceeded by issuing a summons to John Graeme Blum and the beneficiaries, such that they became defendants to the application.Background The first defendant, John Graeme Blum (“the son”) is the son of the deceased and father of the second and third defendants, John Matthew Blum and Sahra Jane Blum (“the grandchildren”). The grandchildren were the only beneficiaries of the deceased’s will, which was executed on 2 May 1985. No provision was made for the son. The deceased died on 17 December 2003 and probate was granted on 15 September 2004. The value of the estate was $1,660,063. A Statement of Assets and Liabilities of the estate made no mention of monies owed to the deceased by the son. I am advised that the delay in obtaining the grant of probate was due to efforts taken to locate a more recent will than the one mentioned. These efforts bore no fruit. On 29 November 2004 the son filed an application under the Inheritance (Family Provision) Act1972 for provision from the deceased’s estate. Settlement of his claim, in April 2005, resulted in his receiving the deceased’s house property, valued at about $550,000. The balance of the estate went to the grandchildren in accordance with the will. Since that settlement, a question has arisen as to whether the son was indebted to the father at the time of his death, and therefore owes money to the estate. At the time of the settlement negotiations it was known that in December 2001 the deceased advanced the sum of $80,000 to the son by way of loan. That was recorded in a loan agreement dated 13 December 2001. It was demonstrated that of that amount, $50,000 was repaid in May 2003. The son claimed, via a letter written by his solicitor, that the balance was forgiven by his father, orally, at that time. There was no confirmation of this, but in any event, in my view the issue of the outstanding $30,000 was clearly encompassed in the settlement. Since the settlement it has come to light that there was another loan agreement dated 20 December 2001 in respect of a sum of $50,000. A balance sheet prepared by the deceased’s accountant for the financial year ending June 2003 records a loan to the son for $80,000 as a non-current asset. The same entry for the previous year shows an amount of $130,000. It is suggested that the figure of $80,000 represents the balance of the outstanding loan amounts after the $50,000 repayment. In response to being shown this balance sheet, the son’s solicitors wrote “there was an earlier payment to [the son] by the deceased of $50,000 … It was an inter vivos gift to [the son].” It is only the advance of $50,000 that the plaintiff could realistically seek to recover in the District Court. Although at one point it was suggested that the balance of the first loan would also be the subject of the proposed proceedings, ultimately it was clear that only the second loan could be pursued.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Whilst estimating the costs of action which might be incurred in pursuing the claim is problematic, I am not inclined to disregard that matter entirely. In my mind there is a real risk that the executor would lose the action and be left with, not only significant costs of its own, but also a costs order payable by the estate, the total amount of which would approach the size of the alleged debt. The estoppel argument would only extend the length of time required to complete the proceedings. If there is to be further investigation and subsequent consideration of pursuit of the claim then the factor of costs is one which the executor would need to carefully evaluate.Conclusion I agree with counsel for the grandchildren that it is unfortunate that more work was not done before this court’s advice was sought. The difficulty in reaching a decisive position is a direct result of the paucity of evidence presented about the loans. It may be that with the passage of time has gone any prospect of now making good the deficits. I do not consider I can add to what I have said. There will be an order that upon the basis of the material presented to the court, the plaintiff is advised that it would not be appropriate to commence proceedings against John Graeme Blum to recover the amount of $50,000 said to be owed to the estate of John James Jacob Blum.

Ratio Decidendi

Legal Principle Established

Full text does not contain this section.