In the Estate of Gray
[2023] ACTSC 241
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | In the Estate of Gray |
Citation: | [2023] ACTSC 241 |
Hearing Date: | 4 August 2023 |
Decision Date: | 1 September 2023 |
Before: | Curtin AJ |
Decision: | (1) In the opinion of the Court the executor has complied with the requirements of s 64(1)(a)-(d) of the Administration and Probate Act 1929 (ACT) in relation to the proposed distribution of part of the assets of the estate as referred to in Order 2. (2) The executor is justified in distributing $1,800,000 from the term deposit account referred to in prayer 2 of the application in proceeding filed 25 May 2023 pro rata under the terms of the Will to the beneficiaries named therein after the expiration of 6 months from the date of the grant of probate. (3) The applicant’s costs of the application are to be paid out of the estate on the solicitor and client basis. |
Catchwords: | SUCCESSION – EXECUTORS AND ADMINISTRATORS – JUDICIAL ADVICE – whether judicial advice should be given – whether executor has complied with s 64 of the Administration and Probate Act 1929 (ACT) – whether executor should make interim distribution – whether executor would be protected from personal liability – judicial advice given – executor complied with s 64 – executor justified and protected in making interim distribution |
Legislation Cited: | Administration and Probate Act 1929 (ACT), s 64 Family Provision Act 1969 (ACT), ss 7, 8, 9, 21 Legislation Act 2001 (ACT) Succession Act 2006 (NSW), s 93 Trustee Act 1925 (ACT), s 63 Trustee Act 1925 (NSW) |
Cases Cited: | Brooks v Young [2018] SASCFC 81 D’Albora v D’Albora [1999] NSWSC 468 Estate of Chow Cho-Poon [2013] NSWSC 844 Estate of Love [2017] ACTSC 5 Macedonian Orthodox Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand [2008] HCA 42; 237 CLR 66 Nediva Pty Ltd as Trustee for the 31 Torrens Street Unit Trust [2023] ACTSC 130 |
Texts Cited: | Handler, L.G and Neal, R, Mason and Handler Succession Law and Practice New South Wales (LexisNexis, 2011) |
Parties: | Gavin Matthew ( Applicant) |
Representation: | Counsel C Erskine SC ( Applicant) |
| Solicitors Badgery & Rafferty ( Applicant) | |
File Number: | PRO 74 of 2023 |
CURTIN AJ:
Introduction
1․This is an application by the executor of the estate of the late John Payne Gray seeking judicial advice under s 63 of the Trustee Act1925 (ACT).
2․The executor seeks advice on the following questions:
(1)Has the executor complied with the requirements of s 64(1) of the Administration and Probate Act 1929 (ACT) (Probate Act)?
(2)Is the executor justified in distributing proceeds contained in a Westpac bank account in the sum of $1,800,00.00, those distributions to be made pro rata under the terms of the Will to the beneficiaries named therein at the expiration of 6 months from the grant of probate?
3․For the reasons set out below, both of these questions should be answered ‘Yes’.
Background
4․The testator, the late Mr John Payne Gray, was an American citizen employed by the government of the United States of America
5․On 6 May 1967, he married his wife, Nan Lydia Sorenson Gray (Mrs Gray).
6․At some point, through his employment, he was posted to Canberra. Upon his retirement, Mr Gray and Mrs Gray elected to stay in Canberra. They never had any children together.
7․On 16 April 2008, Mr Gray executed a valid will (the Will), which relevantly divided his estate amongst several beneficiaries who were friends or godchildren, with a portion also going to the Immanuel Lutheran Church in Woden, ACT.
8․The Will appointed his wife as executor of the estate. In the event his wife predeceased him, the Will appointed Mr Gavin Matthew, Mr Gray’s long time friend, as executor.
9․In 2013, Mr Gray, suffered a severe stroke. His speech and cognition were severely affected. He suffered a further stroke in 2018, after which he moved into a shared aged care facility.
10․On 9 April 2019, Mrs Gray died.
11․On 4 August 2019, Mr Gray was contacted by letter by a person who asserted that her name was Christine Gagnon and who said she resided in the United States. In her letter, Ms Gagnon claimed to be Mr Gray’s biological daughter, born to another woman who was not Mr Gray’s wife, Nan. She said she had been put up for adoption in Massachusetts and had only recently been able to find out information about her biological father.
12․From 2019 onwards, Ms Gagnon continued to send emails and letters to Mr Gray.
13․Ms Gagnon asserted that she had found out that Mr Gray was her biological father through ancestry tracing and DNA testing which linked her to Samuel French, a relative of Mr Gray.
14․She did not provide to the executor a birth certificate, the results of the DNA testing or any other independent corroborative material supportive of her assertion to be the daughter of Mr Gray.
15․The executor, Mr Matthew, who had some interaction with Mr Gray, says that during his interactions Mr Gray did not acknowledge one way or the other that Ms Gagnon was his child, and this was probably due to Mr Gray’s grossly affected cognition and speech.
16․Mr Gray died on 27 September 2022.
17․On 27 September 2022, Mr Matthew sent an email to Ms Gagnon informing her of the death of the deceased.
18․On 4 October 2022, Ms Gagnon replied to Mr Matthew’s email with the following:
Hi Gavin,
I am so sorry to hear the news about Jack. This is a big loss for both of us. I want to thank you for always being there for Jack. You were a great friend. I am glad I was able to connect with him, writing him letters and calling. His loss is deeply felt.
Thank you,
Christine
19․On 30 November 2022, Ms Gagnon sent a further email to Mr Matthew, stating that she had attended the funeral service (remotely) and requesting the executor send Ms Gagnon the images of the deceased displayed at the funeral.
20․On 10 February 2023, this Court granted probate of the Will to Mr Matthew as executor.
21․Ms Gagnon is not mentioned in the Will.
22․On 17 February 2023, the applicant published a notice in the Canberra Times Newspaper (the Canberra Times notice). The notice says:
Form 1 Notice of intended distribution Administration and probate Act 1929 (see s 64(1)
In the Supreme Court of the Australian Capital Territory Probate jurisdiction
In the estate of JOHN PAYNE GRAY late of David Harper House, 15 Cockcroft Avenue, Monash, Australian Capital Territory, deceased.
Any person with a claim against the estate of the deceased person, who died on 27 September 2022, must send particulars of the claim to the legal personal representative within 30 days after the day this notice is published. After that time and after 6 months after the date of death of the deceased the legal personal representative intends to distribute the property in the estate having regard only to the claims of which he has had notice at the time of the distribution.
Particulars of claims must be sent to the following address for service:
BADGERY & RAFFERTY, SUITE 8.01, LEVEL 8, 15 LONDON CIRCUIT, CANBERRA ACT 2601
(Emphasis original)
23․On 23 February 2023, the executor sent an email to Ms Gagnon forwarding a copy of the Canberra Times notice to Ms Gagnon and attaching a letter.
24․The letter said:
Hi Christine,
I hope that you are well.
Please note that probate was granted by the Supreme Court of the Australian Capital Territory in Canberra on the 10 February 2023 to me to act as executor of the will of the late Mr John Payne Gray.
As you may know the executor role is responsible for administering the deceased estate, including broadly and publicly notifying the granting of probate. Executors do not provide advice about any parties’ potential actions.
The attached formal notice of probate was published on 17 February 2023 as per the relevant legislation of the Australian Capital Territory.
Kind Regards
Gavin Matthew
(Emphasis original)
25․On 24 February 2023, Ms Gagnon responded, sending an email to the executor in which she said “Yes I expected that. I’m glad he found you”.
26․On 28 June 2023, the solicitor for the applicant made an application under the Births, Deaths and Marriages Registration Act 1997 (ACT) for a search of the ACT Register for information about the parents or any children of Mr Gray.
27․On 5 July 2023, a parentage search of Mr Gray from the ACT Births, Deaths and Marriages Registration Office was returned with no children found.
28․There is no information suggesting that Ms Gagnon continues to live other than in the United States.
29․As at the date of the application, Mr Gray’s estate is broadly in two parts. The majority of the estate is held in cash in Australian bank accounts. A substantial minority of the estate comprises savings and investments that are held in a United States bank account. The Australian portion of the estate has crystallised into cash following the sale of Mr Gray’s property. The portion of the estate in the United States is not yet finalised, being potentially subject to taxation and health care costs under United States law.
30․The executor seeks to make an interim distribution of most of the Australian portion of the estate.
31․Under the Family Provision Act 1969 (ACT), the Supreme Court may, upon application, make orders for provision to be made out of an estate for the benefit of an eligible person, including a child of the deceased (see ss 7-8). The application must be brought within six months after the grant of probate (see s 9). Ms Gagnon has not made an application nor indicated she will make an application, for a distribution from the estate pursuant to the Family Provision Act.
32․It is in these circumstances that the executor brings an application for judicial advice pursuant to s 63 of the Trustee Act.
Issues
33․There are two issues that I am required to address. The first is whether the discretion to provide judicial advice should be exercised and the second is the content of that advice. The content of the advice is to address questions (1) and (2) outlined at [2] above.
Legislation
34․Judicial advice can be given pursuant to s 63 of the Trustee Act.
35․That section says:
63Advice
(1)A trustee may apply to the Supreme Court for an opinion, advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument.
(2)If the trustee acts in accordance with the opinion, advice or direction, he or she shall be deemed, so far as regards his or her own responsibility, to have discharged his or her duty as trustee in the subject matter of the application, provided that he or she has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion, advice or direction.
(3)Unless otherwise prescribed by rules of court, the application may be made by summons or appointment upon a written statement signed by the trustee or his or her lawyer.
(4)Unless the Supreme Court otherwise directs, it shall not be necessary to serve notice of the application on any person, or to adduce evidence by affidavit or otherwise in support of the application.
(5)Where the question is who are the beneficiaries or what are their rights as between themselves, the trustee before conveying or distributing any property in accordance with the opinion, advice or direction shall, unless the Supreme Court otherwise directs, give notice to any person whose rights as beneficiary may be prejudiced by the conveyance or distribution.
(6)The notice shall state shortly the opinion, advice or direction, and the intention of the trustee to convey or distribute in accordance with it.
(7)Any person who claims that his or her rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Supreme Court, apply to the court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution.
(8)Subject to subsection (7), anyone on whom notice of any application under this section is served or to whom notice is given in accordance with subsection (5) shall be bound by the opinion, advice or direction of the Supreme Court, or by the order and directions of the court, as the case may be, as if the opinion, advice or direction, or the order and directions, had been given or made upon the hearing of an application to which such person was a party.
36․Question (1) of the two questions on which my advice is sought concerns the executor’s compliance with s 64 of the Probate Act.
37․That section says:
64Distribution of assets
(1)The executor or administrator of the estate of a testator or intestate may distribute the assets of the estate, or part of the assets, among the people entitled only if the executor or administrator—
(a)gave public notice for creditors or anyone else to give the executor or administrator their claims against the estate within the time stated in the notice; and
(b)had regard to each claim the executor or administrator received within the time stated in the notice; and
(c)applied under the Births, Deaths and Marriages Registration Act 1997 for a search of the register for information about the parents or any children—
(i) of the deceased person; or
(ii) of any other person known by the executor or administrator to be relevant to the distribution of the assets; and
(d)had taken into account any relevant information or documents obtained from the registrar-general as a result of the search.
(2)A notice under subsection (1) (a) must state that—
(a)after the later of the time set out in the notice and 6 months after the date of death of the deceased person, the executor or administrator intends to distribute the deceased person’s estate; and
(b)in the distribution of the deceased person’s estate, the executor or administrator will only have regard to claims which are notified to the executor or administrator at the time of the distribution.
Note Public notice given under subsection (1) (a) is also required before making a distribution under the following provisions:
(a) the Family Provision Act 1969, s 21 (Protection of administrator);
(b) the Trustee Act 1925, s 60 (Distribution after notice).
(3)The executor or administrator is not liable to any person for any distributed assets if the executor or administrator—
(a)complied with subsection (1) (c) and (d); and
(b)did not have notice of the person’s claim when the distribution was made.
38․Question (2) concerns whether the executor is justified in making an interim distribution in the context of a potentially viable application under the Family Provision Act (see [31] above). The relevant sections of the Family Provisions Act are as follows:
7Eligibility
(1)Subject to this section, each of the following persons is entitled to make application to the Supreme Court for provision out of the estate of a deceased person:
…
(c)a child of the deceased person;
…
8Family provision orders
(1)On application by a person entitled, under section 7, to apply for provision out of the estate of a deceased person, the Supreme Court may order that the provision as that court thinks fit be made for the applicant out of the estate.
…
(3)The criteria for the Supreme Court’s decision under subsection (2) in relation to the deceased and the applicant are as follows:
(a)the character and conduct of the applicant;
(b)the nature and duration of the relationship between the applicant and the deceased;
(c)any financial and non-financial contributions made directly or indirectly by or on behalf of either or both the applicant and the deceased to the acquisition, conservation or improvement of any of the property or financial resources of either or both persons;
(d)any contributions (including any in the capacity of homemaker or parent) by either the applicant or the deceased to the welfare of the other, or of any child of either person;
(e)the income, property and financial resources of the applicant and the deceased;
(f)the physical and mental capacity of the applicant, and the deceased (during his or her life), for appropriate gainful employment;
(g)the financial needs and obligations of the applicant and the deceased (during the life of the deceased);
(h) the responsibilities of either the applicant or the deceased (during his or her life) to support any other person;
(i) the terms of any order made under the Domestic Relationships Act 1994, section 15 with respect to the property of the applicant or the deceased;
(j) any payments made to either the applicant or the deceased by the other, under an order of the court or otherwise, in respect of the maintenance of the other person or any child of the other person;
(k)any other matter the court considers relevant.
…
9Time for making application under s 8 (1)
(1)Subject to subsection (2), an application for an order under section 8 shall be made within a period of 6 months after the date when administration in respect of the estate of the deceased person has been granted.
(2)The Supreme Court may, after hearing such of the persons affected as the court thinks necessary, extend the time within which an application may be made under section 8.
(3)An extension of time under this section may be granted—
(a) on any conditions that the Supreme Court thinks fit; and
(b) whether or not the time for making an application has ended.
(4)An application for the extension, under this section, of the time within which an application for provision out of the estate of the deceased person may be made under section 8 shall not be made after the estate of a deceased person has been lawfully and fully distributed.
(5)An application for provision out of the estate of a deceased person shall, for this section, be deemed to have been made on the day when the notice of motion or other document instituting the application is filed.
…
21 Protection of administrator
An action does not lie against the administrator of the estate of a deceased person because of his or her having distributed the whole or any part of the estate of the deceased person if the distribution was a distribution referred to in section 20 (2) or if—
(a) the distribution was made before the administrator had notice of an application for an order under this Act or notice of an application to extend the time within which an application for an order under this Act may be made under this Act; and
(b) before making the distribution, the administrator had given notice in accordance with theAdministration and Probate Act 1929, section 64 and the time specified in the notice for sending in claims had expired.
Submissions and Relevant Law
Jurisdiction for the Court to give advice
39․The applicant made reference to Macedonian Orthodox Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand [2008] HCA 42; 237 CLR 66 a decision of the High Court which the applicant submitted confirmed the legitimacy of the jurisdiction of the Court to give judicial advice.
40․The applicant drew my attention to Lindsay J’s judgment in Estate of Chow Cho-Poon [2013] NSWSC 844, in which the nature of judicial advice under the Trustee Act 1925 (NSW) is discussed. Lindsay J relevantly said:
31Where a more summary procedure may have been followed and all affected interests have not been represented in the proceedings, a 63 order may follow the usual form granted upon provision of judicial advice: "order that the trustee would be justified in [doing or omitting to do something] on the basis [assumption] that et cetera". This form of order is, or may be, a permissive form of management decision. I say "may be" because a trustee who acts in disregard of judicial advice might, by disregard of that advice, expose itself to liability for a breach of trust.
…
37 Advice given under the Trustee Act, s 63 is often said to be in the nature of "private advice", serving the function of providing personal protection to a trustee, subject to the qualifications in favour of other interests for which the section provides: Macedonian Church Case (2008) 237 CLR 66 at 91-92 [64]-[65]. However, what, precisely, is meant by "private advice" may depend on the nature of the particular case in which section 63 is called in aid; and the ambit of s 63 is not confined to the provision of "private, personal advice".
…
40As noted by Lindgren AJ in Crnjanin v Ioos [2010] NSWSC 750 at [28], under s 63 a trustee generally places all relevant circumstances before the Court and seeks an opinion, advice or direction (colloquially, but not necessarily in concept, subsumed by the generic expression "judicial advice") that in those circumstances the trustee would be justified in taking a certain course; it is a mistake to think that, on an application for judicial advice, a trustee must necessarily "prove" facts according to a certain standard of proof to enable findings of fact to be made as in the case of adversarial litigation.
41 On a review of a judgment relating to the provision of judicial advice, a reader needs to be mindful of the possibility that a recitation of "facts" may be based upon a "statement of facts" by a trustee that is, in essence, an administrative form of statement upon which the Court is invited to act rather than a record of facts determined by the Court after a hearing on the merits. In these proceedings, at this stage, that possibility is a reality.
42 As the High Court confirmed in the Macedonian Church Case, judicial advice proceedings require the Court to adapt its procedures to serve, in the particular case, the purposes served by the Court's jurisdiction over trusts.
43The Court is not bound to give judicial advice merely because a trustee has a right to apply for it: Application of Perpetual Trustee Company Ltd [2003] NSWSC 1185 at [8]-[9].
…
45The Court must be guided by what it perceives to be in the best interests of the trust estate: Application by Marilyn Joy Cottee [2003] NSWSC 47 at [35].
46In any case falling within the broad jurisdictional limits of s 63, a discretionary judgement must be made about whether the "summary" procedure for which the section provides is a suitable vehicle for the determination of questions stated by a trustee for consideration: Macedonian Church Case [2008] 237 CLR 66 at 90 [60]. These proceedings call for an exploration of this topic.
47The proceedings also call for a consideration of the important role played by the legal profession in facilitating the due exercise by the Court of its jurisdiction to provide judicial advice to trustees.
48The practice of the Court over many years (as a matter of practice, not compelled by legislative edict) has been to look for, and in an appropriate case rely upon, a memorandum of opinion of counsel, proferred by an applicant for s 63 relief, directed to the substance of questions arising for consideration on the application: see, for example, Application of Gnitekram Marketing Pty Limited [2010] NSWSC 1328 at [17].
49The absence of a well-considered memorandum of opinion may compel the Court to explore possibilities, of fact and law, that might not otherwise need exploration. A well-considered memorandum should anticipate lines of inquiry that a judge might be bound to identify and, one way or another, address them so as to focus attention on real problems in need of a solution.
41․The applicant submitted that the NSW judicial advice provisions referred to in Macedonian and Estate of Chow Cho-Poon are materially the same as s 63 in the ACT and therefore the principles in those judgments should be applied in this case.
42․The applicant further referred to Mossop J’s decision in The Estate of Love [2017] ACTSC 5 where Mossop J cited Chow Cho-Poon with approval. His Honour said at [7]:
The nature of judicial advice proceedings is explained in detail by Lindsay J in Re Estate Late Chow Cho-Poon [2013] NSWSC 844 at [29]-[49] (Chow Cho-Poon). The distinction between such proceedings and a construction suit has consequences for the manner in which matters are required to be proved and the appropriateness of the provision to the Court of an advice from counsel. While a construction suit will involve the joinder of parties who have an interest in opposing the relief sought, in judicial advice proceedings the manner in which other parties are given an opportunity to be heard is set out in ss 63(4)-(8). I adopt what was said by Lindsay J in Chow Cho-Poon at [48]-[49] as to the utility of the provision of counsel’s opinion when advice is sought. No such opinion was provided in the present case.
43․The applicant accepted that Chow Cho-Poon and Love note the desirability of having counsel’s opinion when advice is sought. The applicant conceded that no such advice had been prepared but submitted that the written submissions drafted by senior counsel sufficiently set out his opinion. The applicant also submitted that judicial advice can be given in the absence of counsel’s opinion being provided to the Court, per Mossop J in Love.
44․The applicant submitted that the above cases further indicate that an applicant may (but not necessarily “will”) be required to notify an interested party of the application for judicial advice (see Love at [17]-[19]; s 63(4)-(6) of the Trustee Act).
45․The applicant has not given notice of this application to Ms Gagnon.
46․The applicant submitted that a trustee does not need to give notice to any party of an application for advice, unless the Court otherwise orders. This is qualified in the case of judicial advice regarding the identification of beneficiaries under the trust or beneficiaries’ rights, which requires notice to be given. The defendant submitted that on the face of this application, no such issues arise considering advice is not sought as to who the named beneficiaries are under the Will, or the rights between them. I am inclined to agree that in this case, the applicant was not required to give notice of the application for judicial advice to Ms Gagnon.
Compliance with s 64 of the Probate Act
47․The applicant submitted that it has complied with s 64 of the Probate Act.
48․Public notice under s 64(1)(a) is not defined in the Act, but it is defined in the Legislation Act 2001 (ACT) as:
(a) a dated notice on an ACT government website; or
(b) notice in a daily newspaper circulating generally in the ACT.
49․The applicant submitted that the Canberra Times notice was in accordance with s 64(1), the Canberra Times being a daily newspaper circulating generally in the ACT. In addition, Ms Gagnon was emailed a copy of the notice with an accompanying email from the executor explaining the notice. She responded confirming that she had received it.
50․The applicant further submitted that the executor had complied with s 64(1)(c), as the executor had made an application to the ACT Registrar of Births, Deaths and Marriages for information about children or parents of the deceased.
51․The applicant accepted that a significant proportion of the ACT population came from outside the ACT, and the Will notes an address in Queanbeyan in NSW and therefore “it might be thought less significant to have searched only the ACT register”. Despite this, the applicant submitted that the legislation only makes reference to searching the ACT register, and as such the application has complied with the requirement of the section.
52․Accordingly, the applicant submitted that it had satisfied s 64(1) and therefore, the preconditions were met for the executor to be able to rely on the protections from personal liability when making an interim distribution per s 64(3) of the Probate Act (see also s 21(b) of the Family Provision Act (discussed below)).
Interim distribution and Family Provision Act
53․The applicant seeks the protection provided for by s 21 of the Family Provision Act. Section 21 protects an administrator from personal liability if an estate has been distributed in accordance with s 64 of the Probate Act and the distribution was made before any notice of an application under the Family Provision Act.
54․Pursuant to s 9, an “eligible person” has six months from the grant of probate in which to make a Family Provision Act application. On application, that time can be extended by the Court under s 9(2) and (3) but cannot be extended once the estate has been “lawfully and fully distributed” per s 9(4).
55․Six months from the date of the grant of probate in this case would be 10 August 2023.
56․To date, the executor has not been notified of any application by Ms Gagnon under the Family Provision Act.
57․In terms of notice, the applicant submitted that there are no notice requirements in either the Probate Act or the Family Provisions Act that requires the executor to specifically draw attention to the operation of the Family Provisions Act. The applicant submitted that the scheme of the two Acts read together is that a potential claimant under the Family Provisions Act is assumed to be aware of their rights and the possible consequences if they see a notice under the Probate Act. I agree with this submission.
58․The applicant submitted that if it is the Court’s advice that the executor has complied with s 64, then the consequence under the Family Provisions Act is that the executor is entitled to begin distributing the estate six months after probate was granted in the absence of any notification of an application under the Family Provision Act.
59․The proposed distribution would leave approximately $275,000 remaining in Australia and approximately $1 million would still be held in the United States. The applicant submitted that therefore, the proposed interim distribution would still leave substantial sums in the estate to meet any calls on the estate (including presumably any Family Provisions Act application) in the short to medium term.
60․Further, if any Family Provision Act application were to be made by Ms Gagnon, the applicant submitted that pursuant to s 8, any provision, if granted, would not be for a substantial amount.
Decision
Discretion to give judicial advice
61․In Nediva Pty Ltd as Trustee for the 31 Torrens Street Unit Trust [2023] ACTSC 130, I set out the applicable principles regarding exercising the discretion to give judicial advice pursuant to s 63 of the Trustee Act. To avoid the need for extensive cross-referencing I set out what I there said at [46]-[56]:
46.In relation to the provision of advice under s 63 it is sufficient to refer to the High Court’s decision in Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar The Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand [2008] HCA 42; 237 CLR 66.
47.That case concerned s 63 of the Trustee Act 1925 (NSW), a provision the parties agreed was in relevantly similar terms to s 63 of the ACT Act.
48.The majority (Gummow ACJ, Kirby, Hayne and Heydon JJ) said at 83; [36] that it was desirable that trustees in doubt as to a course of action should not proceed with that course of action and then seek relief under s 85 afterwards (s 85 may excuse a trustee’s breach of trust after the fact), but rather seek s 63 advice first. That is because, their Honours said, one of the things which a trustee invoking s 85 requires to be excused from is failure to seek s 63 advice.
49.The majority cited with approval (at 86–87; [47]) a passage from the judgment of Lindley LJ in In re Beddoe; Downes v Cottam [1893] 1 Ch 547 in which it was said:
[A] trustee who, without the sanction of the Court … defends an action unsuccessfully, does so at his own risk as regards the costs, even if he acts on counsel’s opinion …
50.Their Honours said, at 89; [58], that there was only one jurisdictional bar to s 63, namely that the applicant must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument.
51. That jurisdictional bar is met in this case, a matter properly conceded by Mr Nelson.
52.In exercising the discretion whether to give advice their Honours said that there are no discretionary factors which are of any greater importance than others. Their Honours said at 90; [59]:
Thirdly, there are no express words in s 63, and no implications from the express words which are used in s 63, making some discretionary factors always more significant or controlling than others. In particular, s 63 does not provide that the adversarial nature of the proceedings about which the advice is sought, the tendency of the advice to foreclose an issue in those proceedings, or the fact that the trustees seeking the advice are being sued for breach of trust are of special significance.
53.Their Honours said, at 93; [70] that circumstances where a trustee is sued for breach of trust:
… should be seen as a standard instance to which s 63 can in appropriate circumstances apply.
54. Their Honours went on to say at 93–94; [71]:
In short, provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that a trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee’s duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee’s fear of personal liability for costs.
(emphasis in original)
55.It is important to make clear what advice is given. If the discretion is exercised to give advice, then the advice given is not by way of deciding the issues agitated in the Magistrates Court Proceedings on a final basis. Rather, the only advice given is whether, on the material made available, it would be proper for Nediva to defend the Proceedings: Macedonian at 94; [74].
56.Sometimes that advice is expressed in terms that a trustee “would be justified” in defending certain proceedings. Perhaps other expressions such as “having a reasonable basis to defend” or having a “reasonable prospect of successfully defending” might be used to give flavour to the High Court’s expression that “it would be proper” for the trustee to defend the Proceedings. The sense is the same.
62․In Nediva, the advice sought related to whether a trustee would be justified in defending proceedings against it in the Magistrates Court of the ACT. Regardless, the principles set out therein, in the general sense, are still applicable to the determination of whether judicial advice should be given in this case.
63․In this case, I consider that advice should be given.
Compliance with s 64
64․In my view the applicant has complied with s 64 of the Probate Act.
65․The Canberra Times notice referred to above met the criteria of a public notice as referred to in s 64, and the executor otherwise complied with that section’s requirements as described earlier in this judgment.
Interim distribution and family provision
66․Having established that the statutory notice of interim distribution was properly given under s 64(1) of the Probate Act, I next consider whether the executor is justified in making the proposed interim distribution.
67․The executor is protected from liability when acting in accordance with judicial advice. In this context, I consider that whether the executor is justified in making an interim distribution will depend upon the availability of the statutory protection afforded to administrators under s 21 of the Family Provision Act.
68․The two conditions for protection under s 21 are that the administrator has published a notice in compliance with s 64 (see s 21(b)), and that the administrator does not have notice of any application or application for extension of time under the Family Provision Act (see s 21(a)). I have already determined that the executor published a notice in accordance with s 64. I now consider whether there was any notice of a family provision claim (see s 21(a)).
69․Section 93 of the Succession Act 2006 (NSW) provides for a similar regime of protection for executors to the one in the ACT under the Probate and Family Provision Act. Section 93 says:
93 Protection of legal representative who distributes after giving notice (cf FPA 35 (1))
(1)The legal representative of the estate of a deceased person may distribute the property in the estate if—
(a)the property is distributed at least 6 months after the deceased person’s death, and
(b)the legal representative has given notice in the form approved under section 17 of the Civil Procedure Act 2005 that the legal representative intends to distribute the property in the estate after the expiration of a specified time, and
(c)the time specified in the notice is not less than 30 days after the notice is given, and
(d)the time specified in the notice has expired, and
(e)at the time of distribution, the legal representative does not have notice of any application or intended application for a family provision order affecting the estate of the deceased person.
(2)A legal representative who distributes property of the estate of a deceased person is not liable in respect of that distribution to any person who was an applicant for a family provision order affecting the estate if the legal representative did not have notice at the time of the distribution of the application and if—
(a)the distribution was made in accordance with this section, and
(b)the distribution was properly made by the legal representative.
(3)For the purposes of this section, notice to the legal representative of an application or intention to make any application under this Chapter must be in writing signed in accordance with rules for the signing of documents by a party in proceedings under the Uniform Civil Procedure Rules 2005.
Note—
On the enactment of this subsection, rules for the signing of documents by a party in proceedings were contained in Rule 4.4 of the Uniform Civil Procedure Rules 2005.
70․Handler and Neal in Mason and Handler Succession Law and Practice New South Wales provide commentary on s 93:
[s 93.4] General Principles The legal representative cannot defeat a timely claim by premature distribution of the estate. If he or she has notice from any source of a likely or intended claim and if the period within which applications may be made under the [Succession Act] as of right (see [s 58]) has not expired, the representative distributes at his or her peril (see generally [1469.5] and Guardian Trust & Executors Co of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115). However, s 35 of the [Family Provision Act 1982] provided a means in relation to claims under the FPA whereby an administrator (including an executor) may obtain personal protection by distributing the estate upon publishing a formal notice: see generally [1469]. An administrator would be justified in distributing the estate upon complying with the requirements of the statutory notice of intended distribution even though having received a letter which makes certain claims about the administration of the estate but which does not constitute a claim or a notice of intention to make a claim for family provision: see Estate of Hertslet [2016] NSWSC 1240; BC201607611. It should be abundantly clear that no family provision claim may be made or in some fashion is foreshadowed.
Subject to what is said in D’Albora v D’Albora [1999] NSWSC 468; BC9902597, if this regime is followed and if the administrator after waiting the requisite period in the s 35 [9221] notice has no notice of a claim prior to distribution then he or she may distribute without incurring personal liability.
71․In summary, Handler and Neal confirm that under the NSW regime, an executor would be protected from liability if they made a distribution having published a statutory notice, and they had no notice of an actual or intended family provision claim.
72․As the learned authors indicate, this position is subject to D’Albora, a decision given under earlier legislation but the general principles of which continue to apply. This decision discussed the possible liability of executors making an interim distribution where the executor was not on notice of any actual application, but there is notice of a potential family provision application. Macready M relevantly said at [67]-[71]:
[67] In Re Simpson (1950) CH 38 at 42.43 Vaisey J who was concerned with an application under the Inheritance (Family Provisions) Act 1938 made the following observations:-
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 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.
[68] The six months His Honour is referring to is the period allowed for an application under the act. Noticeable again is the reference to "possible" claims. The English Act did not have a provision in the nature of s 35. These comments have been referred to with approval by McGregor J in Re Winwood (1959) NZLR 246 and in Re Gimblett (1960) NZLR 664. In the second case he considered that an executor who distributed with undue haste before the expiration of the period allowed for claims under the Act would incur a personal liability to an applicant even if he had no notice of a potential claim. At p 666 he said:-
Under the provisions of the Family Protection Act s 9 a party claiming the benefit of the Act is entitled to make application within a period of twelve months from the date of the grant in New Zealand of administration in the estate. By s 10(2) of the Act no action shall lie against the administrator by reason of his having distributed any part of the estate, if the distribution was properly made by the administrator after the expiration of six months from the date of the grant of administration in the estate of the deceased, and without notice of any application or intended application under this Act in respect of the estate. In the present case, although the administrators had no notice of any application or intended application under the Act, the estate was distributed before the expiration of six months from the date of the grant of administration. The provision is a negative provision, but in view of the fact that an applicant has a period of twelve months from the grant of administration to make application it seems to me that it was improper in the circumstances that here exist for the administrators to distribute the estate before the expiration of the period of six months from the date of grant of administration without prior notice to the widow and without full particulars being given to her of the assets. Reference can also be made to subs (6) of this section, although it is not fully applicable, whereby the Court is empowered, where the administrator has made a distribution which cannot be disturbed under the provisions of this Act, to make an order in respect of the assets or to make an order that any person to whom the assets were distributed pay to any applicant a sum not exceeding the value of the assets.
[69] This personal liability was referred to by Master Windeyer, as he then was, in Heuston v Barker (1990) 19 NSWLR 354 at 362 but the question was not decided by him in that suit. The Master does not seem to have been referred to the authorities I have referred to above. Dickey on Family Provision After Death at p 178 et seq refers to the problem and a number of other authorities in support of the personal liability.
[70] After the English and New Zealand decisions I have referred to there were changes to acts in a number of jurisdictions. See s 99A of the Victorian Administration and Probate Act 1958 and s 93 of the Queensland Succession Acts Amendment Act of 1968 which merely adopted the New Zealand provisions referred to in Re Gimblett. Those provisions allow early distribution in respect of dependants, distributions with consent and a distribution provided there is no notice of an intended claim after six months, the time for applications being 12 months. S35 has been enacted in a state of the law which recognised that there was a personal liability on an executor if he distributed an estate before the time for making claims under the Act had expired. That this is so is demonstrated by the terms of s17 which is as follows:-
(1) On an application made to the Court by the administrator of the estate of a deceased person or by any other person who, in the opinion of the Court, has sufficient interest in proceedings in respect of the estate or notional estate of a deceased person, the Court may, if it is satisfied that, having regard to all the circumstances of the case, it is reasonable to make an order under this section, order that, in respect of an application in relation to the deceased person by a specified person, the period within which the application shall be made shall be such period (being a period expiring before the expiration of the period of 18 months after the death of the deceased person) as the Court specifies.
(2) An application by a person under this section all not be deemed to be an admission by the person of any matter for any purpose.
(3) An administrator shall not be regarded as being under any duty to make an application under this section.
[71] In this respect the Law Reform Commission saw this procedure as avoiding a not uncommon problem of vague threats of action by aggrieved next of kin which remain unpursued with the result that the Executors cannot prudently distribute until after the expiration of the time for applications under the Act, sometimes to the detriment of needy beneficiaries.
73․It appears from D’Albora that Macready M considered that an executor could be personally liable where the executor had made an interim distribution while on notice of a “possible” family provision claim. However, such notice still needed to be given within the relevant period in which a family provision claim could be brought (six months). There is a suggestion at [68] from the passage quoted from Re Gimblett that even in the absence of any notice of potential claims, any distribution within the period allowed for by family provision legislation, would be in “haste” and could incur personal liability.
74․Justice Doyle’s decision of Brooks v Young [2018] SASCFC 81 differs from the approach in D’Albora.
75․In Brooks, Doyle J discusses the operation of s 14(1) the Inheritance (Family Provision) Act 1972 (SA), which is in much the same terms as s 21(a) of the ACT Act. Section 14(1) of the South Australian legislation relevantly says:
14 Liability of administrators after distribution of estate
(1)An administrator of the estate of a deceased person who has lawfully distributed the estate or any part therefor shall not be liable to account for that estate or that part thereof, as the case may be, to any person claiming the benefit of this Act, unless the administrator had notice of the claim at the time of distribution.
76․The time limit for making a claim under the Act is within six months of the grant of probate (see s 8(1)).
77․In considering whether a distribution was “lawfully” made, Doyle J said at [71]-[72] and [76]:
[71] While this protection from liability on the part of the executor is confided to distributions “lawfully” made, it is my view that this requires merely that the distributions were made in accordance with the terms of the will as they then stood. I do not think the mere fact that a distribution is later established to have been made in breach of trust (by reason of a successful claim for provision resulting in an order that takes (retrospective) effect as a codicil predating the deceased’s death) is sufficient to render a distribution one made unlawfully.
[72] … While a premature distribution might be unwise, imprudent or even inappropriate, and expose the executor to a risk of liability in the event that a provision claim ultimately succeeds, I do not consider that it can be said that such a distribution is unlawful.
[76]… Certainly there is no statutory obligation to await the expiration of the six month period for the making of claims… And in the absence of notice of a claim there is no potential liability for the executor that might act as a disincentive to premature distributions, or incentive to delay distribution until after the expiration of that period.
(Emphasis added)
78․In Doyle J’s view, regardless of any potential claim, in the absence of notice of a family provision claim, distributions made by the executor before the expiration of the six month period, while “unwise”, would not expose an executor to personal liability. Even if a family provision claim was subsequently made and a distribution ordered by the Court, the executor would not be liable for the original distribution as it would have been lawful, particularly if the claim was made after the six month period expired.
79․In this case, there is no evidence that the person who claimed to be Ms Gagnon had notified the executor of a proposed or potential family provision claim. Indeed, in her correspondence with the executor, she had not made any enquiries about the legacies under the Will and had made no suggestion of any purported entitlement to assets of the estate. Hence, I do not need to determine the question of whether or not an executor would be protected from personal liability if they made an interim distribution while on notice of a potential claim under the ACT Family Provision Act because no such notice has been given.
80․Both Brooks and D’Albora accept that upon expiry of the relevant period in which family provision claims can be made, in the absence of notice of any applications, an executor will be protected from personal liability if making lawful interim distributions. The executor proposes to make the distribution only after six months from the grant of probate, which is when the period for making a family provision claim (without an extension) lapses. Where no notification of a potential, intended or actual family provision claim is received, I see no reason why the condition under s 21(a) of the Family Provision Act is not satisfied.
81․In all of those circumstances it is my opinion, and I advise accordingly, that the interim distribution proposed is justified.
Costs
82․The applicant seeks costs on a solicitor and client basis to be paid from the estate.
Orders
83․I make the following orders:
(1)In the opinion of the Court the executor has complied with the requirements of s 64(1)(a)-(d) of the Administration and Probate Act 1929 (ACT) in relation to the proposed distribution of part of the assets of the estate as referred to in Order 2.
(2)The executor is justified in distributing $1,800,000 from the term deposit account referred to in prayer 2 of the application in proceeding filed 25 May 2023 pro rata under the terms of the Will to the beneficiaries named therein after the expiration of 6 months from the date of the grant of probate.
(3)The applicant’s costs of the application are to be paid out of the estate on the solicitor and client basis.
| I certify that the preceding eighty-three [83] numbered paragraphs are a true copy of the Reasons for Judgment of his Honour Acting Justice Curtin. Associate: Date: |
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