Geldart v Hart

[2009] SASC 20

SUPREME COURT OF SOUTH AUSTRALIA

(Civil: Application)

GELDART v HART & ANOR

[2009] SASC 20

Reasons of Judge Lunn a Master of the Supreme Court

2 February 2009

PROCEDURE

Inheritance Act claim - application to have it determined summarily under 6R 312(12) - whether the plaintiff reasonably estimates the net estate of the deceased available for distribution amounts to $250,000 or less - 6R 312(2) - held valuation evidence about the major asset was so inconclusive it was not shown that the plaintiff's estimate was objectively reasonable - held costs of action, other possibly than those of the executors to the date of the application, not usually to be deducted in estimating the net estate available for distribution - application dismissed.

GELDART v HART & ANOR
[2009] SASC 20

Reasons on plaintiff’s application that the action be determined summarily.

1. JUDGE LUNN:     The plaintiff as the domestic partner of the deceased, Douglas Hart, claims additional provision out of his estate under the Inheritance (Family Provision) Act 1973 (“the Act”).  The two defendants are the sons, the executors and the residuary beneficiaries of the deceased.  They have also each cross-claimed in this action for additional provision for themselves under the Act.  Because of these cross-claims the distributable estate of the deceased includes what was left to the plaintiff in the will.

2. The deceased held a quarter interest in some land near Edithburgh which is by far the major asset in his estate.  (This quarter interest is referred to as “the land”).  There is a major dispute about its true value.

3. By an application dated 25 November 2008 the plaintiff has sought a summary determination of the action under R 312(1).  This is opposed by the defendants.  The plaintiff supported her application by an affidavit sworn on 21 November 2008 in which she stated that she estimated the net estate of the deceased available for distribution to be $250,000 or less.  I have struck out paragraph 6 and the exhibit “MH10” to the affidavit of the second defendant sworn on 16 December 2008 as being inadmissible under s 67C of the Evidence Act. 

4. In relation to claims under the Act 6R 312(12) provides:

   (12)  If the plaintiff reasonably estimates that the net estate of the deceased that is available for distribution amounts to $250,000 or less the following provisions apply …..

   This preamble to subr (12) creates a threshold condition which must be satisfied before any jurisdiction can be exercised by a Master under subr (12).  As it is a jurisdictional provision the Court must be duly satisfied that it is fulfilled before it can exercise the jurisdiction: Rothmans Ltd v Saudi Arabian Airlines Corp [1981] 1 QB 368 at 376; NEC v Lockhart (1991) 101 ALR 95 at 97-8. As subr (12) is only an alternative, although probably a cheaper and more expeditious, means to resolve claims under the Act, the plaintiff is not deprived of any substantive right if she cannot satisfy the threshold condition of subr (12). (The exercise of jurisdiction under subr (12) is also subject to the discretion of the Master under subr (12)(b), but it is not necessary to consider that here).

5. The threshold condition under subr (12) requires the Court to consider whether the plaintiff both subjectively and objectively estimates the net estate of the deceased at $250,000 or less.  Here the plaintiff has deposed to the necessary subjective belief.  The argument focussed on whether it was objectively reasonable.

6. The reason for the threshold condition being in terms of the plaintiff’s estimate is that it is unlikely at the time that any application needs to be made under subr (12) the value of the estate available for distribution can be objectively determined.  Indeed, as this case illustrates, there can be a substantial divergence of expert opinion about its true value which will be a major issue at the trial. 

7. By a valuation dated 21 May 2008 obtained by the defendants from Mr Rapper the land was valued at $187,500.  By a valuation dated 1 September 2008 Mr Mercer, on the instructions of the plaintiff, valued the land at $310,000.  By a letter of 9 October 2008 Mr Aschberger, on behalf of the defendant, challenged some of the methodology of Mr Mercer, but did not express his own value for the land.  By a letter of 16 October 2008 Mr Mercer accepted some of the criticism made by Mr Aschberger, but did not express any revised opinion for a lesser the value of the land. 

8. Counsel for the plaintiff argued that it was reasonable for her to estimate that the value of the land would be found at trial to be somewhere between the original valuation of Mr Mercer and that of Mr Rapper.  However, that would still not necessarily diminish the value of the land to an extent which would reduce the net distributable estate to $250,000 or less.  In my view the plaintiff cannot be taken to have been acting reasonably when she has not put forward a revised valuation from Mr Mercer, disclosing the expert evidence of value which he would give at trial in the light of his acceptance of the criticisms made by Mr Aschberger.  In the absence of that evidence I do not see that the plaintiff can be said to have reasonably estimated the value of the estate available for distribution at $250,000 or less.

9. Counsel for the plaintiff also submitted that the costs of the action should be deducted from the value of the assets in arriving at the net amount available for distribution.  I do not agree.  Firstly, it would only be a contingent liability as it is dependent upon the Court at the conclusion of the trial making an order for payment of the costs out of the estate.  While this often occurs, it is ultimately an exercise of the discretion of the Court and is subject to whatever offers may have been made under 6R 187:  Bowyer v Wood [2007] SASC 327. While it may be that the costs of the administration of the estate to date could be properly treated as a present debt of the estate that is not likely to be a substantial amount. Furthermore, subr (12) refers to the amount available for distribution at the time at which the order for summary determination is to be made. This would exclude subsequent debts of the estate. Even if the plaintiff’s reasonable estimate of the value of the assets of the estate exceeds $250,000 by the likely amount of the costs of the action of all parties which could be ordered out of the estate (which is not established on the evidence before me), the amount of those costs could not reasonably be brought into account in reducing the estimate of the net estate to $250,000 or less.

10. Accordingly, I find that the plaintiff has not discharged her onus to show that the threshold condition for the operation of subrule (12) has been satisfied.  Her application is dismissed.  I will hear the parties on the costs of it.

    I have today made the following orders:

    1Application FDN 11 dismissed.

    2Costs reserved.

    3Further directions hearing on 13 February 2009 at 9.30 am.