Heyward v Moloney - [2022] SASC 128

Supreme Court of South Australia
(Civil)
In the Estate of EUGENE PATRICK MOLONEY
HEYWARD v MOLONEY
[2022] SASC 128
Judgment of the Honourable Justice Blue
SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION
SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF PROBATE AND LETTERS OF ADMINISTRATION - TO WHOM PROBATE GRANTED - EXPRESSLY APPOINTED EXECUTORS - GENERALLY
The applicants seek orders that:
1 the respondent be passed over as executor of the estate of Eugene Patrick Moloney;
2there be a grant of letters of administration with the Will annexed to Timothy Donlan, a solicitor;
3the administrator be paid remuneration according to the scale of professional fees used by him in his legal practice; and
4the administrator’s remuneration be paid out of the estate pro rata to the value of the assets of the estate to be distributed to each beneficiary.

The application is not opposed by the respondent except in relation to the manner in which the administrator’s remuneration is to be borne.
Held:
1On the basis that the respondent’s co-executors renounce their roles as executors under the will, it is appropriate to make the passing over order sought (at [20]).
2It is appropriate to appoint Mr Donlan an administrator to perform the role that would otherwise have been performed by the executors (at [21]).
3Subject to determining upon which assets the burden of paying that remuneration is to fall, it is appropriate to order that the administrator be paid remuneration in accordance with the Supreme Court scale (at [22]).
4On the proper construction of the will, the will does not alter the incidence of testamentary expenses under the general law, under which they are to be met in the first instance from residuary personal property and then if necessary from all other assets (at [33]).
5This Court has power under section 70 of the Administration and Probate Act 1919 (SA) to make an order not only that remuneration be payable to an executor, administrator or trustee but also out of which assets that remuneration is payable (at [51]).
6In the circumstances, it is appropriate to order that the administrator’s remuneration be borne out of all of the assets of the estate (both real and personal property and whether the subject of specific or residuary gifts) pro rata to the value of each asset (at [56]).

7 The parties to be heard on the wording of the orders to be made (at [58]).
Administration Act 1908 (NZ), s 20(1); Administration and Probate Act 1919 (SA) s 70(1), referred to.
Australian Securities and Investments Commission v Edensor Nominees Pty Ltd [2001] HCA 1, (2001) 204 CLR 559; Batistatos v Roads and Traffic Authority of New South Wales [2006] HCA 27, (2006) 226 CLR 256; Calcino v Fletcher [1969] Qd R 8; Harris v Caladine (1991) 172 CLR 84; NH v The Director of Public Prosecutions (SA) [2016] HCA 33, (2016) 260 CLR 546. ; Ramsay v Lowther (1912) 16 CLR1; Starke v James

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 Heyward v Moloney

Details

AGLC: Heyward v Moloney [2022] SASC 128
Case: [2022] SASC 128
Decision Date: 11 November 2022

CaseChat Overview and Summary

The case of Heyward v Moloney involves a dispute over the administration of the estate of Eugene Patrick Moloney, who passed away leaving a will. The will appointed three executors, including Eugene, one of his sons. However, Eugene was passed over as an executor, and Timothy Donlan was appointed as the administrator of the estate. The dispute concerns the remuneration of the administrator and the manner in which it should be borne.

The legal issues in this case include whether the remuneration of the administrator falls within the category of "testamentary expenses" in the will, and if so, whether it should be borne by all beneficiaries regardless of the class of asset they receive. The applicants argue that the remuneration should be borne by all assets of the estate, while Eugene contends that it should be met from residual personal property according to the general law.

The court held that the remuneration of the administrator falls within the category of testamentary expenses, as per clause 3 of the will. However, the court also noted that the will does not alter the incidence of testamentary expenses under the general law, which means that they are to be met in the first instance from residual personal property. The court further held that it has the power under section 70 of the Administration and Probate Act 1919 to make an order in respect of the incidence of remuneration. Therefore, the court ordered that the remuneration be paid and borne out of all the assets of the estate in proportion to the value of each asset and, where an asset is left to more than one beneficiary, as between those beneficiaries, in proportion to the share of that asset left to each beneficiary.

In conclusion, the court passed over Eugene as an executor and appointed Timothy Donlan as the administrator of the estate. The court also ordered that the remuneration of the administrator be borne out of all the assets of the estate in proportion to the value of each asset. The court's decision was based on the construction of the will and the general law principles of marshalling.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

The application is not opposed by the respondent except in relation to the manner in which the administrator’s remuneration is to be borne.Background Eugene Patrick Moloney (Eugene Senior) had six children: Margaret Lehmann (Margaret), Kathryn Humphries (Kate), Carolyn Toolis (Carolyn), Mary Heyward (Libby), Eugene Moloney (Eugene) and Helen Boylan (Helen). Helen married Paul Boylan (Mr Boylan). Helen died on 12 April 2012, leaving four children: Brigid, Joseph, Esther and Ignatius Boylan (Helen’s children). Eugene Senior made a will on 10 September 2012 (the Will). The Will was prepared by Mr Boylan and witnessed by Mr Boylan and a clerk employed by his firm. At that time, Eugene Senior owned a farming property known as Brewers comprising 258 hectares[1] (Brewers) (valued in 2018 and 2019 at approximately $4 million[2]) and two other farming properties totalling 377 hectares (the Other Farms) valued in 2018 at approximately $6.85 million. [1] Figures in hectares rounded to the nearest whole hectare.[2] Figures in dollars rounded to the nearest $10,000 unless otherwise shown. Eugene Senior (together amongst others with Eugene and his wife Deirdre) was a partner in EP Moloney & Co (the Partnership). The Partnership undertook farming on Brewers and the Other Farms. Eugene Senior also owned the following assets:·a unit at Toorak Gardens (valued in 2018 at approximately $500,000);·a term deposit (approximately $2 million); ·Pivot shares valued in 2018 at approximately $35,000; and·a personal motor vehicle valued in 2018 at approximately $20,000. By the Will, Eugene Senior appointed Kate, Mary and Eugene as executors and trustees. Clause 3 of the Will provided:I direct that my debts, funeral and testamentary expenses be paid from my estate after my death The chapeau to clause 4 provided:I give the rest of my estate (in this will called “my residuary estate”) to my trustee upon the following trusts Subclause 4(a) provided that, if Eugene Senior had commenced farming for the current farming season at the date of his death, the trustees were to carry on the Partnership (with the other partners) until completion of the next harvest. Subclauses 4(b), (d) and (e) provided that, after completion of the harvest for the current farming season under subclause (a) if applicable in respect of the first three assets and immediately in respect of the other two assets:(i)Brewers was to be held on trust as to 20 per cent each for Margaret, Kate, Carolyn, Libby and Helen’s children (clause (b)(I));(ii)Eugene Senior’s remaining farming land (the Other Farms) was to be held on trust for Eugene (clause (b)(II)); (iii)Eugene Senior’s interest in the Partnership (assets and liabilities) was to be held on trust for Eugene (clause (b)(III));(iv)the Pivot shares were to be held on trust for Eugene (clause (d)); and(v)any utility motor vehicle was to be held on trust for Eugene (clause (e)). Clause 4(f) provided that the balance of the residuary estate was to be held on trust as to 20 per cent each for Margaret, Kate, Carolyn, Libby and Helen’s children.

Evidence

Evidence Before The Court

Eugene Senior had purportedly made a later will on 15 February 2018. However, on 29 July 2022 this Court held that it was not a valid will because amongst other things he did not have testamentary capacity at the relevant times.[3] The Court pronounced for the validity of the Will. The Court rectified the Will by inserting a new clause 5 giving to Eugene an option, exercisable within one year of completion of the next harvest after Eugene Senior’s death, to buy Brewers at market value as determined by a licensed valuer nominated by the trustees.[3] Moloney v Hayward [2022] SASC 79.Evidence I received affidavits by Kate sworn on 15 August 2022 and Mary sworn on 12 August 2022 deposing to their willingness to renounce their roles as executors under the Will if an order is made that Eugene be passed over as an executor. I received three affidavits by Peter Jackson, solicitor for the applicants, sworn on 17 August 2022, 6 September 2022 and 30 September 2022, deposing to relevant facts and exhibiting relevant documents. I received an affidavit by Mr Boylan sworn on 15 September 2022. He deposed to his preparation of and witnessing of the Will; his firm’s usual practice of shredding a previous will after a new will has been executed; and the fact that the original of the Will can not now be located despite searches for it. He also gave oral evidence. I am satisfied based on Mr Boylan’s evidence that the original of the Will was destroyed by his firm in accordance with its usual practice after execution of a subsequent will (which may have been before or after the death of Eugene Senior); that the destruction of the original Will does not evidence an intention to revoke the Will independently of execution of the 2018 purported will; and that the copy of the Will produced is a true copy of the original Will. I received an affidavit by Mr Donlan sworn on 23 August 2022 consenting to act as administrator and stating that, if appointed, he would charge the Estate for his professional services under the Supreme Court scale of costs applicable from time to time. Passing over and appointment of administrator Given that Eugene consents to a passing over order and Kate and Mary renounce their roles as executors under the Will conditional on a passing over order being made, it is appropriate to make the passing over order sought. It then becomes necessary to appoint an administrator to perform the role that would otherwise have been performed by the executors. Given that the parties consent to the appointment of Mr Donlan as administrator, it is appropriate to appoint him as administrator. Given that Mr Donlan is only prepared to act as administrator if he receives remuneration and the parties consent to his being paid remuneration, subject to determining upon which assets the burden of paying that remuneration is to fall, it is appropriate to order that he be paid remuneration in accordance with the Supreme Court scale. I turn to the issue of the burden of that remuneration.Burden of remuneration of administrator

Decision

Reasons for decision

In the circumstances, it is appropriate to order that Mr Donlan’s remuneration be borne out of all of the assets of the Estate (both real and personal property and whether the subject of specific or residuary gifts) pro rata to the value of each asset.Conclusion I propose to make the following orders:1Upon noting that Kathryn Mary Humphries and Mary Elizabeth Heyward shall renounce probate of the Will of Eugene Patrick Moloney deceased (the Deceased), order that:(a) Eugene Joseph Moloney be passed over as an executor of the estate of the Deceased; and(b) there be a grant of letters of administration with the Will as contained in a copy in solemn form as rectified pursuant to the order made on 12 August 2022 by the Honourable Auxiliary Justice McMillan to Timothy Robert Donlan, Solicitor, of Level 2, 60 Hindmarsh Square Adelaide 5000 (the Administrator).2Upon Kathryn Mary Humphries and Mary Elizabeth Heyward the other executors as described in the will duly renouncing probate and letters of administration with the will annexed of the estate of the Deceased and the Administrator making an application for the grant in a form acceptable to the Registrar of Probates (inclusive of the provision of an engrossment of the will as rectified), the Registrar is directed to issue the grant to the Administrator as soon as practicable.3Subject to the Court’s power to moderate or disallow the charges, the Administrator be paid remuneration for all work done by him or a member of his firm in the administration of the estate of the Deceased, whether such work be in the ordinary course of his profession or not, such remuneration to be charged in accordance with the Higher Courts scale.4The remuneration be paid and borne out of all of the assets of the estate of the Deceased in proportion to the value of each asset and, where an asset is left to more than one beneficiary, as between those beneficiaries, in proportion to the share of that asset left to each beneficiary.5 There be no order as to the costs of this action.6 Liberty to the parties and to the Administrator to apply. I will hear the parties concerning the precise wording of the orders to be made and any other orders sought.

Ratio Decidendi

Legal Principle Established

Given that Mr Donlan is only prepared to act as administrator if he receives remuneration and the parties consent to his being paid remuneration, subject to determining upon which assets the burden of paying that remuneration is to fall, it is appropriate to order that he be paid remuneration in accordance with the Supreme Court scale. I turn to the issue of the burden of that remuneration.Burden of remuneration of administrator The applicants contend that, on the proper construction of the Will, remuneration of an administrator falls within “testamentary expenses” in clause 3 and testamentary expenses are to be borne by all beneficiaries regardless of the class of asset received by them. Eugene agrees that remuneration of an administrator falls within “testamentary expenses” in clause 3 but contends that the Will does not alter the incidence of testamentary expenses under the general law, such that they are to be met in the first instance from residual personal property. The applicants contend in the alternative that this Court has power under section 70 of the Administration and Probate Act 1919 (SA) (the Act) to make an order in respect of the incidence of remuneration ordered under that section. Eugene takes issue with that contention. The applicants contend in the alternative that this Court has power in its equitable jurisdiction to make an order in respect of the incidence of remuneration. Eugene takes issue with that contention.Construction of the Will It is common ground that, under the general law, assets of an estate are presumptively to be applied in a particular order in payment of debts and testamentary expenses. This presumptive order was originally devised some centuries ago and later underwent modification but has not been modified in recent times to reflect more modern developments. This order was usefully set out by Hoare J in Calcino v Fletcher[4] as follows:[T]he first class of property is personalty not specifically bequeathed, the executor retaining a fund sufficient to meet any pecuniary legacies.Class 2 consists of realty specifically appropriated for or devised in trust for (and not merely charged with) the payment of debts.Class 3 is realty that descended to the heir.Class 4 includes realty devised, whether specifically or by way of residue and charged with the payment of debts and also personalty specifically bequeathed and charged with the payment of debts …Class 5 is the fund, if any, retained to meet general pecuniary legacies.Class 6 comprises legacies and realty devised specifically or by way of residue and not being at the same time charged with the payment of debts …Class 7 includes realty and personalty which did not belong to the deceased but over which he had a general power of appointment which power was actually exercised by the will.[5][4] [1969] Qd R 8.[5] At 22-23. The order of application of assets to pay debts and testamentary expenses is one of the forms of what is known as marshalling. The classes referred to above include a class that is practically obsolete (class 3) and a class that is relatively uncommon (class 7). Eliminating those classes, ignoring cases involving pecuniary legacies (which are not made by the Will) and simplifying the remaining classes leaves the following classes:1residuary personal property;[6]2real property appropriated or left in trust for the payment of debts; 3property (real and personal) charged with the payment of debts;4all other property (real and personal; specific or residuary).[6] This class includes property of the testator not left by the will (“unbequeathed property”). As this is relatively rare and does not apply in the present case, I ignore it.