IN THE ESTATE OF JOHN DAVID NASH (DECEASED)

[2023] SASC 31

SUPREME COURT OF SOUTH AUSTRALIA

(Testamentary Causes Jurisdiction)

IN THE ESTATE OF JOHN DAVID NASH (DECEASED)

[2023] SASC 31

Judgment of the Honourable Justice Stanley  

10 March 2023

SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF PROBATE AND LETTERS OF ADMINISTRATION - TO WHOM PROBATE GRANTED - PASSING OVER OF EXECUTOR AND OTHER MATTERS

The applicant seeks an order for the passing over of the respondent as the executor of the estate of the deceased.

The respondent is the sole executor named in the will, and the applicant is the residuary legatee.

Since the deceased’s death in February 2016, the respondent has not applied for a grant of probate. The respondent resided in the principal asset of the estate, a residential property, from the date of the deceased’s death until the property was sold by the Corporation of the City of Marion in September 2022 to recover unpaid rates.

The applicant seeks the order for passing over of the respondent as the executor on the grounds that the respondent has an irreconcilable conflict of interest between his own personal interest and her interests; that he has failed to finally administer the estate within a reasonable period or within such period that an executor, acting competently, would have finally administered and distributed the estate of the deceased to the beneficiaries; and that he has failed to pay estate debts, which has, ultimately, resulted in loss and damage to the applicant.

Held:

1.      The respondent has failed to discharge properly his duties as executor of the estate by failing to pay estate debts which has, ultimately, resulted in loss and damage to the applicant. This conduct occurred because the respondent has not properly addressed his conflict of interest which has seen him prefer his own interest over his duty resulting in loss to the estate and the risk of further loss if he continues as executor. For these reasons, the respondent should be passed over as the executor.

2.      Pursuant to r 33 of the Probate Rules 2015 (SA) a grant in favour of the applicant of letters of administration with the will annexed should be made.

3.      The question of costs is reserved.

Administration and Probate Act 1919 (SA) s 69; Local Government Act 1999 (SA) ss 182, 182A, 184, referred to.
Executor Trustee Australia Ltd v McDougall (2011) 110 SASR 462; In The Estate of Gwendoline Katherine Wilkinson (Deceased) [2018] SASC 200; Re Watts [1934] VLR 174, considered.

IN THE ESTATE OF JOHN DAVID NASH (DECEASED)
[2023] SASC 31

STANLEY J:

Introduction

1. This is an application for the passing over of an executor. 

2. John David Nash (the deceased), late of 8 Tilley Court, Marion (Tilley Court) died on 23 February 2016 leaving a will bearing date 15 February 2013 (the will) now remaining in the Probate Registry of the Court. 

3. Peter Philip Nash (Mr Nash) is the sole executor named in the will. 

4. Jade Cheree Bromilow (the applicant) is the residuary legatee named in the will, although her interest in the estate is expressed to be conditional. 

5. Clause 8 of the will provides:

   If no person shall obtain a vested interest under the following terms, conditions and provisions of this my will, then I GIVE the whole of my estate both real and personal to Peter Nash subject to the following:

   (a)    I GIVE a 100% share unto my nephew Jade Bromilow upon obtaining the age of thirty, but in particular, not in the case, of her becoming either a drug addict, and or alcoholic, and or by gambler, verified by her complete medical records [a copy to be sighted, in affidavit form]. 

   (b)    I GIVE $1000 to Leanne Nash, because of $20,000 previously given to her as her Inheritance in advance and her acknowledgment to me, to pass on my real estate to Jade, her daughter. 

   (c)    I GIVE Peter Nash all my goods and chattels and also a right to life to reside, at no charge whatsoever, at 8 Tilley Court Marion, if he so desires. 

6. The deceased was the applicant’s grandfather.  Mr Nash is her great uncle. 

7. Since 23 February 2016 Mr Nash, as the propounding executor, has not applied for a grant of probate. 

8. The applicant seeks an order that the Court pass over Mr Nash as executor on three grounds.  First, that he has an irreconcilable conflict of interest between his own personal interest and her interests.  Second, that he has failed to finally administer the estate within a reasonable period or within such period that an executor, acting competently, would have finally administered and distributed the estate of the deceased to the beneficiaries.  Third, that he has failed to pay estate debts, which has, ultimately, resulted in loss and damage to her.  The principal asset of the estate, namely, the residential property at Tilley Court, was sold by the Corporation of the City of Marion (the Council) pursuant to an order of this Court in September 2022 to recover unpaid rates.  Mr Nash, in his capacity as executor, did not pay the rates owing on the property after the death of the deceased except for one payment of $41.67 in September 2022. 

   The discretion to pass over an executor

9. In In The Estate of Gwendoline Katherine Wilkinson (Deceased)[1] I discussed the principles relevant to the exercise of the Court’s jurisdiction to make orders passing over a propounding executor.  I said:[2]

   [1] [2018] SASC 200.

   [2] Ibid [6]-[18].

   There is no issue that the Court is conferred with jurisdiction to make the order sought passing over the propounding executors. Further, s 9(1) of the Public Trustee Act 1995 (SA) confers power on the Court to grant administration of the estate of a deceased person to the Public Trustee or to authorise the Public Trustee to administer the estate of a deceased person in prescribed circumstances, which include where no person entitled to obtain administration (with or without a will annexed) does so within three months after the death of the deceased.

   At issue is whether a proper basis exists to invoke the exercise of the Court’s power to pass over Hugh and Sandy as executors and to authorise the Public Trustee to administer the deceased’s estate.

   In In the Estate of Crane Besanko J identified two general principles governing when the jurisdiction to pass over will be exercised.  They are:  first, a Court will not readily pass over a named executor and, in general, a person who is named as executor by a testator is entitled to a grant of probate; and second, when a Court does exercise the jurisdiction it does so having regard to the due and proper administration of the estate and the interests of the parties beneficially entitled to the estate. 

   Besanko J cited with approval the reasons of Young J in Bowler v Bowler that the inherent jurisdiction to pass over an executor should be exercised only in exceptional circumstances.  Besanko J held that, in the ordinary case, a potential conflict of interest will not be sufficient to justify the exercise of the jurisdiction.  He referred to the reasoning of Windeyer J in Uniting Church in Australia Property Trust (NSW) v Millane, that not infrequently an executor will have some conflict, such as being a debtor to the estate.  However, Besanko J distinguished that situation from the facts of the case before him.  In Crane the executor was in a position of conflict because he asserted that assets of the deceased’s estate had been transferred to him inter vivos for negligible consideration.  There was a dispute as to the validity of these transactions.  Besanko J held that there was every reason to think that the executor would continue to maintain the position that the transactions were legally effective and that he owed no money to the estate.  In these circumstances he considered that he could be confident that the executor would not consent to the estate asserting rights in relation to the assets.  In that event, an application to the Court for the estate to bring or defend proceedings would be almost inevitable.  On that basis he granted the application to pass over. 

   In Monty Financial Services Ltd v Delmo Ashley J held that a testator’s selection of executor should not be lightly set aside but proof of actual misconduct is not necessarily required; a conflict of interest and duty may suffice.  However it is not every conflict of duty and interest which results in removal of an executor.  In Monty, Ashley J made an order for the removal of an executor because the conflict of duty and interest on the part of the executor required him to make a decision whether to accept or reject his own truthfulness as to whether money paid was a gift or a loan.  The circumstances of the case were that the testator died in 1992 leaving a will made in 1987 by which she appointed her son and her daughter as executors.  They were the primary beneficiaries of the will.  The daughter had renounced her right to the executorship as she was bankrupt and probate was granted to the son.  Shortly after the grant was issued the son claimed that his mother owed him approximately $280,000 which he intended to repay to himself from the estate funds.  The plaintiff objected to the son’s claim as it was a creditor of the bankrupt daughter.  The plaintiff claimed that, if and when the son proceeded with the administration of the estate, he would be faced with and obliged to resolve a conflict of duty and personal interest concerning the debt which he claimed was due to him by the estate.  The Court held that it could not sensibly be inferred that the testator intended the son to hold office despite the conflict of duty and interest concerning the asserted loan. 

   In Porteous v Rinehart the Supreme Court of Western Australia held that it is rare for a Court to remove an executor or a trustee save in exceptional circumstances.  The power to remove an executor or trustee is a delicate one which must be exercised cautiously.  White J cited with approval the judgment of Teague J in Gowans v Watkins & Anor as authority for the proposition that before a Court will remove a named trustee for conflict of duty, it must be satisfied that such conflict has caused, or is likely to cause, “mischief” at a reasonably high level of seriousness. 

   In Tsaknis, as executor and trustee of the Estate of Lilburne EM Heenan J held that there is no doubt that a Court has power to pass over an executor named in a will in exceptional circumstances and even in other circumstances.  He held that those circumstances included incompatible interests of the executor.  His Honour observed that there are no limits to the grounds upon which an executor may be passed over.  Every case must depend upon its special facts with each case to be decided upon its own merits.  Heenan J said:

   All of the discussions of this principle emphasise that it is a serious matter to pass over an applicant for a grant who is an executor named by the deceased because, presumably, the deceased has made his or her choice of executors with knowledge of the person concerned and such a person is generally entitled to a grant of probate:  Marsh v Patten; and Porteous v Rinehart, so that exclusion of such a person requires special or stringent grounds:  Evans v Tyler. 

   The testator's choice of a designated person to be executor or co-executor implies that the deceased reposed trust in that person and considered him or her to have been suitable and capable of performing the duties required - Monty Financial Services Ltd v Delmo; Estate of Rogers v Rogers; and Uniting Church in Australia Property Trust (NSW) v Millane.  Especially in relation to family affairs where it might be suggested that there is, or might be, a conflict of interest between the executor named and the due administration of the estate, it is necessary to bear in mind that the deceased can be expected to have known of relationships and circumstances existing during his lifetime which might create or lead to any expectation of any such conflict of interest and, to have made the choice of appointee in the light of that knowledge.  However, this approach cannot be taken in relation to conduct or circumstances which have arisen since the death of the testator or about matters which the testator could not have been expected to have had knowledge.

   [Citations omitted].

   In Tsaknis the grounds relied upon for the order sought passing over the executor were alleged conflicts of interest; alleged hostility or animosity between the executors; alleged failure to disclose the full extent of estate assets thought to be in the possession of the executor; and an alleged failure to provide relevant information concerning the indebtedness of the executor and his wife to a trustee company which was itself a debtor of the estate.  The Court considered there were reasons for concern that the future administration of the estate might be handicapped as there was not a satisfactory working relationship between the co-executors.  This was a sufficient basis to justify an investigation as to whether the executor should be passed over. 

   In order to determine whether named executors should be passed over it is not necessary to make any final determination in relation to the claims made against them.  In Executor Trustee Australia Ltd v McDougall Kourakis J (as he then was) held that the existence of a conflict of interest may be a sufficient basis on which to revoke a grant of probate but only “as a very last resort when there is no other appropriate method of dealing with the problem that may have emerged”.  Revocation will only be ordered where it is clear “that the due and proper administration is put in jeopardy or has in fact been prevented or frustrated by the executor”. Kourakis J cited Morgan v MacRae and Upton v Downie as authorities for the proposition that a mere conflict of interest and duty will not result in a restraint or a removal of the personal representative.  It must be shown that the personal representative prefers interest to duty and intends to neglect the duty.  Kourakis J considered that proposition required some qualification.  He said that statement of the test is correct where the conflict arises from the very terms of the will and the testator must, therefore, have appreciated the extent of the conflict.  However, in cases where the conflict does not arise from the terms of the will itself, and is unlikely to have been anticipated by the testator, Kourakis J preferred the approach taken in Gorman v McGuire by Palmer J. 

   In Gorman v McGuire the plaintiff was an executor of the estate of his mother.  The plaintiff and his mother had carried on a business together which the plaintiff continued to operate with the joint assets after her death.  It was, therefore, necessary that there be an accounting of the profits so derived by the plaintiff.  In addition, the plaintiff’s father had brought a claim against the estate pursuant to the Family Provision Act 1982 (NSW). Palmer J described the plaintiff’s circumstance as “a hopeless position of conflict of interest and duty”. He concluded:

   In the present case I am satisfied that the due and proper administration of the deceased's estate will be placed in jeopardy unless the Plaintiff is released from his executorial duties and is removed from his office. This is not because of any delinquency on the part of the Plaintiff but rather it is because, as a matter of practicality, he cannot now discharge his duties as executor in attempting to administer the affairs of the estate without breaching his fiduciary duty not to place himself in a position of conflict and duty.  If the Plaintiff is not removed from that difficulty, the administration of the estate may be stultified and an appropriate and beneficial settlement of all issues affecting the estate may be frustrated.

   In Woodley v Woodley (No. 2) Pritchard J undertook an analysis of the principles pursuant to which the Court exercises its jurisdiction to pass over an executor under a will.  Her Honour held that the test is whether the due and proper administration of the estate has been put in jeopardy or prevented; either by reason of acts or omissions on the part of the executor; or by virtue of matters personal to him or her; or by virtue of the proof of other matters which establish that the executor is not a fit and proper person to carry out the duties of an executor.  Citing with approval the discussion of the circumstances in which named executors may be passed over in Tsaknis, her Honour noted that executors have also been passed over where their relationship with the other executors has deteriorated to the point where there is no realistic expectation that they will be able to work together in the interests of the estate.  If it is shown that a history of past family conflict, or bitter relations between executors and the beneficiaries of the estate, is likely to impact on the decisions made by the executor, and to leave the beneficiaries with the suspicion that the executor’s decisions will be tainted by their emotions or self-interest, that may also warrant the removal of the executor.

   Her Honour went on to observe that the Court’s caution in passing over an executor means that it will not be sufficient for an applicant for that relief simply to allege the existence of a conflict of interest (such as that the executor owes a debt to the estate), without a proper basis being shown for those allegations.  It is not sufficient to advance “mere allegations and suspicions”.  Vague and unparticularised allegations of misconduct will be insufficient to warrant an executor being passed over.  However, if the executor disputes a debt or refuses to acknowledge a debt as an asset of the estate, in circumstances where the executor himself is alleged to owe the debt and acts on the basis of a version of events which does not give rise to the alleged debt, that will be a relevant consideration in determining whether the executor should be passed over in order to ensure the proper administration of the estate, in the interests of those beneficially entitled to it.  However, even the existence of an actual conflict of that kind will not inevitably require that the executor be passed over.  All of the circumstances of the case will be relevant.  These will include whether the conflict can be managed or resolved in some way (for example, by an application for directions from the Court); the relationship between the executor, any other executors and the beneficiaries; the executor’s appreciation of the conflict of interest; and the financial burden on the estate if the executor is removed. 

   Pritchard J said in family situations, where personal conflicts and conflicts of interest frequently arise, the deceased can be expected to have known of such conflicts but chose the executor in light of that knowledge.  On the other hand, the same approach cannot be taken in relation to conduct or circumstances which arise after the death of the deceased or about matters of which he or she could not have been expected to be aware.  Where the executor is in a position of irreconcilable conflict between his or her duties to the estate and his or her personal interests, and especially when that conflict is something about which the deceased could not have been aware, the proper administration of the estate may require passing over of the executor.  Where the appointment of an independent administrator will be necessitated by passing over a named executor, the cost of that course is a relevant consideration in determining whether to make an order passing over an executor.  Her Honour noted, however, that in cases of conflict between executors in the one family, the cost of appointing an independent administrator may be less of an imposition on the estate than prolonged litigation involving the named executors.

   [citations omitted].

   Assessment of witnesses

1. Evidence was given by the applicant, Mr Nash and Mr Ray Barnwell, the Chief Financial Officer of the Council.  Mostly I accept the evidence of the applicant.  I make due allowance for the fact that she gave her evidence by audio-visual link from Western Australia where she now resides.  In my assessment she was nervous and felt stressed by having to be cross-examined by Mr Nash.  Many questions were merely an attempt to argue his case.  Nonetheless I consider she did her best to answer questions put to her in accordance with her recollection.  I am prepared to rely upon the evidence of Mr Barnwell.  I consider he did his best to give frank and honest evidence under the not inconsiderable pressure to which he was subject by the aggressive questioning of Mr Nash.  I formed an unfavourable view of Mr Nash’s evidence.  Given he was a litigant in person I extended considerable latitude to him in the manner he conducted the proceedings.  However, even making due allowance for the fact that he was self-represented, I was left with the impression that his evidence was tailored to his own assessment of what was most advantageous to his case.    His manner was frequently bellicose and belligerent.  Often his evidence was non-responsive or irrelevant.  Some of his evidence was contradictory.  For example, he claimed he was prejudiced because he was unfamiliar with the law, but at other times asserted he knew the law in relation to wills and probate.[3]  He also claimed the applicant was uncontactable, but also said she hung up the phone when he called.[4]  He seemingly ignored the fact she had solicitors acting for her from May 2016.  He gave evidence that the applicant failed to advise him that she had lodged a caveat,[5]  yet her solicitors sent a letter by email to him on 31 May 2016 notifying him, inter alia, that the applicant had entered a caveat against a grant of probate in the Probate Registry.[6]  Mr Nash gave evidence that he did not know whether he received the letter.  He said that he did not use that email address.[7]  Yet the letter was sent to an email address that Mr Nash used to communicate with the applicant’s solicitors on 9 September 2016, contrary to his evidence that he did not use that email address.[8]  I reject his evidence and find that he was aware of the fact of the caveat by reason of his receipt of the letter to him from Adelta Legal dated 31 May 2016.  He sought to explain his failure to distribute the estate on the basis that he had to wait until the applicant had turned 30, but I find he only learned her age when she gave evidence.[9]  He gave evidence that he learned he was the executor of the deceased’s estate only when he read the will, but he had drafted it.[10]  He frequently sought to blame others for his dereliction of his duties as executor.  A striking example of this was him seeking to blame the applicant for her failure to pay the rates on Tilley Court.  Generally, I am prepared to rely on the evidence of Mr Nash only where it is uncontradicted or consistent with contemporaneous documents. 

   [3]     T 105, 124 and 128.

   [4]     T 123-125..

   [5]     T 214.8-10.

   [6]     Exhibit A2. 

   [7]     T 240.16-18.

   [8]     The email address is [email protected]. See Exhibit A2. 

   [9]     T 165-166 but see T 278.

   [10]   T 206-207.

   The evidence

2. Contrary to the terms of the will, the applicant is the granddaughter of the deceased.  She denied she had acted to impede Mr Nash in the administration of the deceased’s estate.  Amongst other complaints Mr Nash asserted that the applicant acted to prevent him from disposing of the deceased’s body.  But she gave evidence, which I accept, that she had no involvement in the disposition of the deceased’s remains.  The deceased was cremated on 5 July 2016.  She deposed to an email from Mr Nash in September 2016 saying that he wished to apply for probate as soon as possible.  She responded through her solicitors asking him to do so.  In cross-examination Mr Nash focussed on the applicant’s conduct rather than his own.  He put to her that she could have paid the outstanding Council rates.  She replied that she did not consider doing so and, in any event, she was not in a position financially to do so.  Neither did she make any approach to the Council for deferment of rates in relation to Tilley Court. 

3. The applicant gave evidence of unwelcome conduct by Mr Nash that made her feel uncomfortable.[11]  She did not believe Mr Nash was acting in good faith.  I find that for those reasons the applicant avoided direct contact with Mr Nash and preferred to deal with him through her solicitors.   

   [11]   T 123.

4. The applicant gave evidence of the steps she has taken  over the period since the deceased’s death in 2016 to protect her interest in the estate.  The applicant said that on legal advice she filed a series of caveats commencing on 27 May 2016.  She gave evidence that the caveat was renewed on 24 November 2016, 23 May 2017, 22 November 2017, 22 May 2018 and expired on 22 November 2018.  A further caveat was lodged on 12 March 2021 and renewed on 27 August 2021.  Mr Nash warned the caveat on 12 November 2021.  On 19 January 2021 Mr Nash lodged a caveat over Tilley Court.  None of this was in dispute. 

5. In May 2021 the applicant learned that Tilley Court was for sale. She subsequently ascertained that the Council proposed to sell the property to recover unpaid rates. The applicant was notified by the Council’s solicitors that the Council was proceeding to sell the property pursuant to s 184 of the Local Government Act 1999 (SA) (LGA) to recover outstanding rates, penalties, interest and costs which amounted to a sum of $15,880 as at 20 May 2021. On 23 August 2021 the applicant’s solicitors were served with a copy of Council’s application seeking removal of Mr Nash’s caveat and vacant possession of Tilley Court to allow Council to sell the property. The applicant was named as an interested party to that action.

6. Mr Nash gave evidence that he did all within his power to administer the deceased’s estate.  He asserts that he was frustrated in his efforts to administer the estate by the deceased’s body being removed from the morgue without his authority and transported to the premises at Fulham Funerals.  He further asserts he was hindered in his efforts by the caveats lodged by the applicant.

7. He said that his conduct was designed to save the estate money by undertaking the administration personally without retaining solicitors.  As a result he had to undertake research into his duties as an executor and await the launch of the electronic court management system, CourtSA, in the Probate jurisdiction.  This did not occur until late in 2018.  He was further hampered in his efforts to administer the estate by the risk that COVID posed to his health. 

8. Finally, he was unable to distribute the estate until the applicant attained the age of 30 years.  This only occurred in 2022. 

9. Mr Nash says his conduct was designed to preserve the assets of the estate.  Part of his conduct in that regard was to apply for waiver or deferral of the rates payable to the Marion City Council.  He complained that the Council failed to inform him that he was eligible for these measures.  The Council also would not provide him with a specific figure for the outstanding rates.  I do not accept his evidence in that regard.  The only payment he made to Council was $41.67 in September 2022.  Council accepted this payment in reduction of outstanding arrears.  He claimed the Council would not accept his attempts to pay those rates.  He described unsuccessful attempts he made to obtain a stay of the order obtained by the Council to sell Tilley Court. 

10. In addition he gave evidence he attended information sessions at the Supreme Court and undertook research in the Court Library.  He sought advice from Mr Reid Smith of the Probate Registry. 

11. Mr Nash gave evidence that he was acting in his capacity as executor in defending the possession application and in applying for a stay of the order for possession.  He said that he did so without consulting the applicant or seeking legal advice.  He sought to explain his failure to consult the applicant on the basis that she was uncontactable.  I reject his evidence in that regard for the reasons set out above.  He sought to explain his failure to obtain legal advice on the basis that he understood that he was within his rights as executor to defend the action without obtaining legal advice and he refrained from doing so to save the estate money. 

12. Mr Barnwell, as the Chief Financial Officer of the Council, met with Mr Nash on 14 October 2020. He said that at this meeting Mr Nash informed him that he intended to apply for probate but was unsure as to how long that process would take. At that time there was no application by Mr Nash to defer payment of the rates owing on Tilley Court. Such application was only made by Mr Nash on 5 August 2022. That application was rejected because the Council was aware that there was another interested party, namely the applicant, in relation to the property. In any event, he said that the Council only had power to defer the payment of rates prospectively. Once rates were owing there was nothing Council could do to defer payment of outstanding rates. At the time of the meeting in 2020, Council was pursuing four years of outstanding rates in relation to Tilley Court. Mr Nash contacted the Council in relation to this matter only after Council had initiated s 184 proceedings to recover those outstanding rates. Mr Barnwell said that Mr Nash did not make any attempt to negotiate a satisfactory payment plan for the rates owing on Tilley Court. During Mr Barnwell’s time employed by the Council, Tilley Court was one of only three properties sold by the Council pursuant to s 184 of the LGA.

13. Mr Barnwell gave evidence that Mr Nash did not proffer a payment in cash or cheque to the Council in respect of arrears which the Council rejected.  The only payment made by Mr Nash was the payment of $41.67 on 9 September 2022 which, as I have found, was applied by Council to defray outstanding rates. 

14. Prior to the sale of Tilley Court Council obtained a valuation of the property.  It was valued in the range of $570,000 to $600,000. 

15. Mr Barnwell said that in 2022 Tilley Court was sold by the Council pursuant to an order of the Court.  It was initially passed in at auction because it did not reach the reserve of $570,000 to $600,000.  It was subsequently sold by private treaty for $575,000 which was within the reserve range. 

    The failure to finally administer the estate within a reasonable period

16. The applicant contends that Mr Nash should be passed over as executor because of his failure to finally administer the estate within a reasonable period, being such period that an executor, acting competently, would have finally administered and distributed the estate of the deceased to the beneficiaries. For the reasons that follow there is considerable force in this contention. Ultimately, however, it does not succeed. Mr Nash had nearly six years in which to administer and distribute the estate in accordance with the terms of the will. He has conspicuously failed to do so. Over those seven years the administration of a relatively simple estate has not progressed. Even on Mr Nash’s evidence he has done little except attend information sessions conducted by the Probate Registrar; sought information from the Registry staff concerning practice and procedure; obtained legal advice and undertaken study of probate law; obtained various probate documents for filing; filed the actual will in the Probate Registry; applied for fee waivers; met with CAA staff, the Supreme Court Registrar and Probate Registrar; had discussions with the Council and “defended the estate from legal attack / disputes”. None of that has brought the estate any closer to being finally administered and distributed. Rather, Mr Nash, in breach of his obligations as executor, has done nothing practical to progress the administration of the estate. Among the matters he could, and should, have attended to include making an application to the Court pursuant to s 69 of the Administration and Probate Act 1919 (SA) (APA) seeking advice and direction whether the conditions set out in clause 8 of the will concerning the residual gift to the applicant were enforceable. If they were, then the estate could not have been distributed until the applicant’s 30^th birthday.  On the other hand, if they were not, then he did not have to wait for that event before finally administering and distributing the estate.  Accordingly, Mr Nash did not have to wait for the applicant’s 30^th birthday to bring an application to the Court pursuant to s 69.

17. Nonetheless, I accept that before he could finally distribute the estate, on the face of the will, Mr Nash as executor either had to await the applicant attaining the age of 30 or seek advice and direction as to whether the provision in the will conditioning the residuary gift to the applicant was enforceable.  As I have said, advice and direction could have been sought before or after the applicant’s 30^th birthday.  That birthday was last year.  However, the enforceability of those conditions is not before me.  In those circumstances, while Mr Nash has been derelict in his duty as executor to administer the estate, I cannot be satisfied that, at this stage, his failure to finally distribute the estate, standing alone, justifies him being passed over as executor, because it is at least possible that those conditions are enforceable in which case Mr Nash could not have finally distributed the estate before last year. 

    Mr Nash’s conflict of interest

18. The applicant contends that Mr Nash, as the propounding executor, has an irreconcilable conflict of interest between his own personal interests and the interests of the beneficiaries named in the will.  He has preferred his own interests in claiming a life interest in Tilley Court pursuant to the will to his duty as executor of the estate.  As a result, the applicant claims that her interest as the residuary beneficiary has been prejudiced. 

19. In the ordinary case, as I observed in Wilkinson, a potential conflict of interest will not be sufficient to justify the exercise of the jurisdiction to pass over an executor.  Not infrequently an executor will have some conflict.  Circumstances may exist which give rise to a conflict of interest between an executor and the due administration of the estate.  It is necessary to keep in mind that the deceased can be assumed to have been aware of relationships and circumstances existing during his or her lifetime which might create or lead to the existence of a conflict but nonetheless has chosen to appoint the executor in the light of that knowledge.  However, this approach cannot be taken in relation to conduct or circumstances which have arisen subsequent to the death of the testator or about matters to which the testator could not have been expected to have knowledge. 

20. In this case it can be assumed the potential for conflict based on Mr Nash’s asserted claim to a life interest in Tilley Court was a matter of which the deceased was aware when he made the will. Nonetheless the terms of the will gave rise to a conflict between the applicant’s beneficial entitlement to Tilley Court and the gift of a life interest to Mr Nash to reside in the property. I find Mr Nash did not appreciate this conflict and failed to take steps to address how the conflict was to be satisfactorily managed. He did not apply for advice and direction pursuant to s 69 of the APA. While the potential for conflict has greatly reduced since the property has been sold, it still has not been addressed by Mr Nash. On the contrary, Mr Nash has broadened the scope for conflict between his interests as a beneficiary and his duties as executor. Notwithstanding the sale of Tilley Court, he claims he is entitled to bring proceedings in his capacity as executor first to claim some of the money in the Suitor’s Fund representing the remaining proceeds of the sale of Tilley Court and second to return Tilley Court to the estate. Again, he has not sought advice and direction from the Court or indicated any intention to do so before incurring further expense to the estate. Such conduct is inconsistent with his executorial obligations and jeopardises the proper administration of the estate. In Executor Trustee Australia Ltd v McDougall[12] Kourakis J considered that such circumstances could justify the revocation of a grant of probate.  In Wilkinson[13] I held that it might also constitute a sufficient basis to pass over an executor.  In this case Mr Nash has not yet taken steps to claim money from the Suitor’s Fund.  However, he has failed to deal with the conflict in a way that does not involve preferring his interests over his duties.  In his capacity as executor he has unsuccessfully contested the possession proceedings and unsuccessfully brought an appeal from the orders of Judge Dart in those proceedings, putting the estate to further cost and expense.  He did so without obtaining advice from the Court that he was justified in doing so.  In my view that is sufficient, when considered in combination with the matters to which I am now coming, to justify an order passing over Mr Nash as executor. 

    [12] (2011) 110 SASR 462.

    [13] [2018] SASC 200.

    The failure to pay estate debts 

21. I find that at the time of the deceased’s death the principal asset of his estate was the residential property at Tilley Court.  Mr Nash resided in the property from shortly after the death of the deceased until it was sold in September 2022.  Mr Nash did not pay the rates owing on the property from the deceased’s death in February 2016 until the property was sold, except for the payment of $41.67 on 9 September 2022.[14] The property was sold by the Council two weeks later pursuant to an order of this Court made under s 184 of the LGA for non-payment of rates, penalties, interest and costs. Proceedings pursuant to s 184 of the Act were brought against Mr Nash after his repeated failure to pay the rates owing on Tilley Court following the death of the deceased. The order for possession was made by Judge Dart on 28 March 2022. The property was passed in at auction on 17 August 2022. It was subsequently sold by private treaty on 23 September 2022 in an amount of $575,000. After the Council had deducted its costs of the sale and its costs incurred in proceeding pursuant to s 184 of the LGA; the sum necessary to discharge liabilities to the Council for unpaid arrears of rates and interest; and the sum necessary to discharge liabilities to the Crown for rates, charges or taxes and any prescribed liability to the Crown, the balance of $511,426.64 was paid into the Suitor’s Fund.

    [14]   Exhibit A10. 

22. I am satisfied that the sale of the property was the result of the dereliction by Mr Nash of his duties as executor to preserve the assets of the deceased’s estate.  The sale of the property has, at the very least, reduced the value of the estate by the amount of the substantial costs and expenses incurred by the Council. 

23. While I am satisfied that the applicant would eventually have sold the property once it had been transferred to her in the course of the distribution of the estate, its forced sale deprived her of any appreciation in value which might have occurred subsequent to its sale by the Council, and deprived her of the opportunity of realising the optimal value of the asset in her hands.  As a result the applicant has suffered loss and damage. 

24. Mr Nash attempted to defend his conduct in relation to the administration of the estate, and in particular his failure to pay the debt owed by the estate for payment of rates in respect of Tilley Court, on a number of grounds.  None of those grounds provide a satisfactory explanation for his contravention of his duties as executor. 

1. First, he claimed he was unable to pay the rates on Tilley Court because the Council would not provide him with the correct amount owing in respect of rates, interest and other costs. He said he could never get a fixed amount from Council. I do not accept this explanation for his failure to pay the rates. The fact that the amount Council was claiming for unpaid rates, interest and costs kept increasing, was the direct result of Mr Nash’s continued failure to pay the rates. As a result, the amount owing to Council continued to grow. Further, I reject Mr Nash’s contention that the Council refused to accept his attempt to pay rates arrears. I do not accept his evidence in that regard. It is apparent that Mr Nash was offering to enter into what he described as a compromise agreement, pursuant to ss 182 and 182A of the LGA, and make annual payments of $500 to the Council, in consideration of the Council discontinuing the possession proceedings. That was the point of his last minute payment of $41.67 representing one month’s payment of an annual amount of $500. While the Council did not accept this offer, it did accept the payment applying it towards the discharge of the outstanding rates. The Council was not under any obligation to accept Mr Nash’s offer nor did it purport to do so. It was within its rights to apply the money proffered by Mr Nash on 9 September 2022 towards reducing the estate’s outstanding debt to it for unpaid rates.

2. Second, he asserted that he was obstructed and frustrated in his efforts to administer the estate by the conduct of the applicant and the Council. He complained that the applicant and the Council caveated the property and the Council commenced unnecessary litigation against him pursuant to s 184 of the LGA. In addition he complained that the Council failed to inform him of his entitlement to apply to the Council for postponement from payment of rates on account of hardship. I do not accept these explanations. It is true that the applicant entered a caveat over the property on 27 May 2016 in order to protect her interest as beneficiary under the will. On 22 July 2016 the applicant’s solicitors wrote to Mr Nash asking him to either renounce his appointment as executor or to apply for probate as soon as possible. On 9 September 2016 Mr Nash wrote to the applicant’s solicitors asserting that he wished to apply for probate in his name as the sole executor as soon as possible but required the caveat be withdrawn forthwith.

3. That caveat was not withdrawn but renewed for subsequent periods. It expired on 22 November 2018.  During that period Mr Nash took no steps to warn the caveat.  I find that Mr Nash was aware of his right to warn the caveat at the latest by this time.[15]  While a further caveat was issued on 12 March 2021 and renewed until Mr Nash warned the caveat, which I find occurred on 12 November 2021,[16] he took no steps in the period between 22 November 2018 and 12 March 2021 to obtain a grant of probate.  The first occasion he warned the caveat was in November 2021.  That application was sealed and served on 12 November 2021.  The application to pass over Mr Nash as executor was filed on 24 November 2021, within the period prescribed by the warning to the caveat.  Thereafter Mr Nash was unable to apply for probate. 

   [15]   T 214.

   [16]   The evidence in relation to the timing of the warning of the caveat by Mr Nash is not entirely clear.  There is some evidence that the warning was filed on 4 or 5 November 2021 but the sealed copy of the warning is dated 12 November 2021.  I consider that is the best evidence of the service of the warning on the applicant.  The warning gave her 14 days to respond.  She did so by instituting this application on 24 November 2021. 

4. On 2 June 2021 the Council lodged a caveat over Tilley Court.  Mr Nash took no steps to warn this caveat. 

5. The caveats, whether lodged by the applicant or the Council, did not prevent Mr Nash from applying for probate. Although the caveat was an effective obstacle to a grant of probate until it was removed by the Court, withdrawn or lapsed,[17]  it did not prevent him making an application for a grant.  At any time from 27 May 2016 it was open to Mr Nash to warn the caveats.  He failed to do so until either 4 or 5 November 2021.[18]  The fact that he eventually warned the caveat reveals the hollowness of his claim that the estate could not afford to do so earlier.  Moreover, between 22 November 2018 and 12 March 2021 no caveat was lodged in respect of Tilley Court.  He did nothing in this period to obtain a grant of probate or to further the administration of the estate.  On the contrary, on 19 January 2021 Mr Nash lodged a caveat over Tilley Court.  In the meantime he failed to pay rates and interest, which increased the estate’s indebtedness to the Council.  During the trial of the application, Mr Nash sought to blame the applicant for failing to pay the outstanding rates and charges.  However, it was not her responsibility as the beneficiary under the will to do so.  It was the responsibility of Mr Nash as executor to pay the rates and charges in respect of Tilley Court.  Blaming the applicant for his failures only emphasises his unfitness for the office of executor. 

   [17]   Re Watts [1934] VLR 174, 181-182.

   [18]   See footnote 16.

6. Third, it was Mr Nash’s failure to pay the rates and taxes on Tilley Court which precipitated the action brought against him by the Council.  I reject his submission that in doing so the Council was acting unreasonably to obstruct and frustrate him in the discharge of his executorial duties.  Council was entitled to pursue him as executor of the estate, which included Tilley Court, for unpaid rates and charges given his failure to make such payments over a period of more than five years. 

7. Fourth, I reject his complaint that his failure to pay the rates and taxes on Tilley Court was the result of Council’s conduct in failing to offer him the opportunity to apply for postponement or remittal of those rates and taxes pursuant to ss 182 and 182A of the LGA. Council was not under an obligation to advise him of an entitlement to bring an application for postponement or remittal of payment. In any event, rates notices issued by the Council refer to the entitlement to apply for rates relief. In addition, the scheme enshrined in ss 182 and 182A provides for the postponement or remittal of payment for rates prospectively. It does not provide for the deferral of recovery by the Council of arrears in payment. Mr Nash did not make an application to the Council for the postponement or remittal of rates in respect of Tilley Court until 5 August 2022. Further, I accept the evidence of Mr Barnwell that the Council was not obliged to grant such application once made by Mr Nash. Contrary to the submission of Mr Nash, none of this amounted to fraud.

8. Fifth, Tilley Court was unencumbered at the date of the deceased’s death.  The mortgage over the property had been discharged by the deceased in February 2015.  The failure of Mr Nash to obtain a grant of probate prevented him making any attempt to refinance the property in order to meet the liability of the estate for rates, charges and taxes. 

9. Sixth, Mr Nash submits that he was looking to save costs in the way in which he was administering the estate.  I reject this submission.  On the contrary, his failure to pay the rates precipitated the Council’s legal action for possession in order to recover the monies outstanding.  That only added to the costs of administration and reduced the value of the estate. 

10. Seventh, I reject Mr Nash’s submission that he was prevented from performing his executorial duties because of the COVID pandemic.  His evidence does not disclose precisely how the pandemic prevented him from paying the rates, applying for a grant of probate or distributing the estate.  No doubt COVID measures occasioned the same inconvenience and restriction to Mr Nash that they did to every other resident of South Australia.  I accept that it may also have caused Mr Nash a heightened sense of anxiety given his receipt of a disability support pension, but his evidence has failed to explain how COVID prevented him from discharging his duties as executor.  In fact, even on his own evidence, there was a period from November 2018 when the CourtsSA Probate Portal was operational, until March 2020 when the COVID pandemic was declared an emergency in South Australia, when he could have applied for probate but failed to do so. 

11. Eighth, I reject Mr Nash’s contention that the performance of his duties as executor was frustrated by the applicant having “disappeared” without notifying him of her whereabouts.  On 31 May 2016 the applicant’s solicitors wrote to Mr Nash advising that they acted for the applicant.  From that date there was no need for Mr Nash to contact the applicant directly.  From May 2016 the applicant was always contactable through her solicitors. 

12. Ninth, Mr Nash complained about a dispute over the disposal of the deceased’s remains in 2016.  The evidence does not establish clearly the precise nature of the dispute or how it was resolved.  Three things are clear, however.  First, it was resolved by about 5 July 2016 when the deceased’s body was cremated.  Second, the dispute had nothing to do with the applicant.  Third, the dispute cannot explain Mr Nash’s subsequent default in administering the estate in a timely fashion.  The dispute did not prevent Mr Nash from commencing to administer the estate.  Even if it had, more than five years elapsed after the cremation of the deceased without Mr Nash taking any practical steps to administer the estate.

13. Tenth, Mr Nash submits that the time for him to apply for a grant of probate should run from November 2018-2019.  Accordingly, he contends the relevant period of administration is only two or three years before the application to pass over him as executor was instituted.  Again, the basis of this submission is not entirely clear.  As best I understand it, Mr Nash appears to suggest that between 2016 and 2018 or 2019 he was studying probate law and waiting for the launch of the CourtsSA probate portal.  I reject this submission.  Whether Mr Nash refrained from applying for probate for these reasons, neither explanation is acceptable for a failure to take steps to administer properly what is a relatively simple estate.  If Mr Nash lacked the knowledge necessary to fulfil his executorial duties he should have obtained solicitors to do so.  An application for a grant of probate did not need to await the launch of the CourtsSA probate portal.  His evidence that he had to await the launch of ECMS in probate evidences his failure to understand what he was doing but, in addition, does not explain his failure to do anything effective to progress the administration of the estate since 2018 when the probate portal became operative.  Mr Nash’s claim that he was not prepared to instruct solicitors for fear that they would “milk” the estate does not justify his inaction in the discharge of his duties.  As it transpired, the costs of this matter have been substantially increased by the way in which Mr Nash has conducted his defence of the application.  His frequent descent into irrelevancies, his disposition to make speeches rather than asking questions, his frequent repetition of points he felt were important, and the need for adjournments to call witnesses he had not arranged, substantially prolonged the trial of the matter. 

14. Eleventh, I reject Mr Nash’s evidence that he could not take any steps to administer the estate until the applicant reached the age of 30 because of the terms of clause 8(a) of the will.  The applicant did not attain the age of 30 until 2022.  However, whatever the difficulties with the terms of clause 8(a) of the will, there was no need for Mr Nash to wait until the applicant was 30 years of age before applying for a grant of probate.  More importantly, even if Mr Nash was justified in waiting until the applicant attained the age of 30 before finally distributing the estate, that did not prevent him from paying the rates on Tilley Court so as to avoid what ultimately occurred with the property being sold contrary to the interests of the applicant.  In any event, I reject Mr Nash’s evidence that he was in fact waiting until the applicant’s 30^th birthday to undertake the proper administration of the estate.  I am satisfied that he only became aware of the applicant’s age during the trial.  His claim that he was waiting for this to occur was purely opportunistic. 

15. Finally, I also reject Mr Nash’s submission that the applicant was frustrating the discharge of his duties by commencing litigation against him.  For the reasons set out above, the applicant is justified in seeking to have him passed over as executor. 

    Conclusion

16. I am satisfied that Mr Nash has failed to discharge properly his duties as executor of the estate by failing to pay estate debts which has, ultimately, resulted in loss and damage to the applicant.  The evidence establishes that the administration of the estate has been frustrated by Mr Nash.  His conduct has caused the estate to be wasted as a result of the substantial costs incurred by the Council which has reduced the value of the estate.  His conduct has occurred because he has not properly addressed his conflict of interest which has seen him prefer his own interest over his duty resulting in loss to the estate and the risk of further loss if he continues as executor.  While the power to remove an executor must be exercised cautiously, there are no limits to the grounds upon which an executor may be passed over.  Every case must depend upon its own facts and circumstances.  In this case I am satisfied that, for the reasons set out above, the circumstances require that Mr Nash should be passed over as executor, having regard to the due and proper administration of the estate and the interests of the parties beneficially entitled to the estate, particularly the applicant. 

17. There is no basis for the Court to find that if Mr Nash is not passed over as executor the delay and lassitude which has so far characterised his failure to discharge his duties as executor will not continue with the result that the applicant will unjustifiably continue to be kept out of the inheritance that is rightfully hers. 

18. The applicant is prepared to apply for a grant of letters of administration.  The applicant is entitled to bring such an application as the residuary legatee.  I would order pursuant to r 33 of the Probate Rules 2015 (SA) that a grant in favour of the applicant of letters of administration with the will annexed should be made. 

19. I would hear the parties as to costs and any further orders sought.