IN THE ESTATE OF NEMER - [2021] SASC 14

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
IN THE ESTATE OF NEMER (DECEASED)
[2021] SASC 14
Decision of the Honourable Justice Bampton
24 February 2021

EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO COURT FOR ADVICE AND AUTHORITY
SUCCESSION - ADMINISTRATION OF ESTATE - OTHER MATTERS
The executors of a will bring an application for judicial advice or direction pursuant to s 69 of the Administration and Probate Act 1919 (SA) — whether the executors would be justified in continuing probate proceedings commenced by them seeking to propound an alleged codicil — the defence of proceedings where they are named as respondents — the institution and prosecution of proposed proceedings.
HELD: It is appropriate to provide the executors with the necessary advice or direction in favour of continuing to prosecute the probate proceedings, to institute and prosecute the proposed proceedings, and to defend the proceedings where they are named as respondents — a Beddoe order by way of indemnity is justified.
Supreme Court Civil Rules 2006 (SA) r 83(4); Uniform Civil Rules 2020 (SA) rr 1.4(4), 1.3, 24.6; Administration and Probate Act 1919 (SA) s 69, referred to.
Re Beddoe; Downes v Cottam [1893] 1 Ch 547; Re Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247, applied.
Aoukar & Anor v Nemer & Ors [2019] SASC 218; Tschirn v Australian Executor Trustees Ltd [2016] SASC 149; Re Atkinson [1971] VR 612; Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Community Church of Australia and New Zealand & Anor (2008) 237 CLR 66; Macedonian Orthodox Community Church St Petka Inc (No 2) (2005) 63 NSWLR 441; Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand (2006) 66 NSWLR 112 ; In the Estate of Martin [1958] SASR 365; Barnes v Addy (1874) 144 ER 643; Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89 and Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373, discussed.

IN THE ESTATE OF NEMER (DECEASED)
[2021] SASC 14

Testamentary Causes Jurisdiction

BAMPTON J: The executors of the will of Linda Carmel Nemer (“Linda”) seek advice or direction pursuant to s 69 of the Administration and Probate Act 1919 (SA) (“the Act”) in the nature of a Beddoe[1] application regarding the continuance of proceedings commenced by them, the defence of proceedings where they are named as respondents and the commencement of proposed proceedings.
[1] Re Beddoe; Downes v Cottam [1893] 1 Ch 547.
Linda died on 10 October 2017, aged 91, leaving a will dated 23 July 2015 (“Linda’s will”) and a codicil dated 24 May 2017 (“the codicil”). Linda was married to Antoine Nemer (“Antoine”), the founder of the Tip Top Dry Cleaning business in South Australia which is part of the Nemer Group of Companies (“the Nemer Group”). Antoine died on 27 January 2016, leaving a will dated 23 July 2015 (“Antoine’s will”).
Antoine and Linda had eight children, namely, Sonia Marie Aoukar (“Sonia”), George Anthony Nemer (“George”), Donia Marie Yammine (“Donia”), Joseph Nemer (“Joseph”), Paul Richard Nemer (“Paul”), Ronia Marie Khoury also known as Pauline Khoury (“Pauline”), Marie Antoinette Andonopoulos (“Marie”), and Leslie Andrew Nemer (“Leslie”).
Antoine’s will
Antoine’s will appoints Sonia and her husband Brian Aoukar (“Brian”) executors of his estate. However, they renounced probate and Sonia renounced her priority to a grant of letters of administration. On 4 November 2016, Leslie and Antoine’s accountant, Andrew Woods (“Mr Woods”), (“the administrators of Antoine’s estate”) were granted letters of administration in Antoine’s estate with the will annexed. Linda is the residuary beneficiary of the estate pursuant to Antoine’s will.
Linda’s will
Linda’s will, executed the same day as Antoine’s will, appoints Sonia and Brian the executors of her estate.
Pursuant to Linda’s will, the residue of her estate is distributed 25 per cent to George, 37.5 per cent to Paul, and 37.5 per cent to Leslie. A special bequest in clause 3.6 is made in favour of Sonia, Donia, Pauline, and Marie in equal shares of any money standing to Linda’s credit at the date of her death in any bank account or investment account situated in Australia held in her name.
The codicil, executed after Antoine’s death, fundamentally alters the distribution of Linda’s estate. In changing clauses 3.4, 3.6, 3.8, and 6 of Linda’s will the codicil redirects away from her residuary estate, assets including monies held in foreign bank accounts and assets to which Linda was entitled under Antoine’s will, to Sonia, Donia, Pauline, and Marie.
The probate action
On 7 November 2018, Sonia and Brian commenced probate action SCCIV‑18-1323 (“the probate action”) seeking a grant in solemn form of Linda’s will and the codicil. George, Donia, Joseph, Paul, Pauline, Marie, and Leslie are named as respondents.
On 4 June 2019, Paul, George, and Leslie filed a defence in the probate action admitting the validity of Linda’s will and disputing the validity of the codicil. Joseph who is, except in respect of a statue, not a beneficiary of Linda’s estate was disjoined from the proceedings on 13 June 2019.
Donna, Pauline, and Marie were served with the proceedings but have not filed a notice of address for service or a defence. They have each sworn an affidavit consenting to Linda’s will being admitted to probate “without there being a grant of probate of any potential codicil”.[2]
[2] FDN 15, FDN 16 and FDN 17 in the probate action.
The administration action
On 14 July 2019, Leslie and Mr Woods issued an application seeking advice or direction pursuant to s 69 of the Act in respect of the administration of Antoine’s estate in action number SCCIV-19-724 (“the administration action”). Mr Woods deposes in an affidavit sworn 14 June 2019 and filed in the administration action[3] that he was Antoine’s accountant and the accountant for “various family members and Companies and trusts associated with him”. Mr Woods details the disclosed assets and liabilities of Antoine’s estate and the complications that have arisen that require judicial advice or direction in administering Antoine’s estate.
[3] MFI E2.
Relevant to Sonia and Brian’s application for advice or direction is Mr Woods description of the following assets:[4]
39.4an option to direct Allied Investment Group SARL (Allied), a company incorporated in Lebanon, to transfer to [Antoine] and/or his estate the issued capital of Hilltop (the Hilltop Option) with a value of $4,936,664;
39.5.property held in trust for [Antoine] being an unregistered estate in fee simple in a property at 43 Delamere Avenue Springfield (the Springfield residence)[5] with a value of $1,700,000;
39.6.a further option to direct Allied to assign the benefit of what was described as being “the Allied Debt” being debt due by Hilltop to Allied (the Allied Debt Option) with a value of $1,884, 377;
(Emphasis in original, footnote added)
[4] At [39].
[5] The Springfield residence is hereafter referred to as “the Delamere property”.
Allied and Hilltop, like Tip Top Dry Cleaning Pty Ltd (“Tip Top”) are entities forming part of the Nemer Group.
The administration action names Sonia and Brian in their capacity as executors of Linda’s estate,[6] George, Paul, and Leslie as respondents to the administration action.
[6] At the time the administration proceedings were commenced Sonia and Brian had not been granted probate in Linda’s estate.
The decree proving Linda’s will in the probate action
Upon Paul, George, and Leslie filing a defence in the probate action admitting the validity of Linda’s will and disputing the validity of the codicil, Sonia and Brian made application for judgment by admissions to admit the will to probate in circumstances where the validity of the codicil was disputed.
Sonia and Brian’s application was heard by Stanley J, who commented in his judgment in Aoukar & Anor v Nemer & Ors[7] that there was evidence which might permit the drawing of an inference that Sonia and Brian (Sonia being a beneficiary under Linda’s will) were seeking a grant of probate of Linda’s will because they wished to use the standing the grant would give them to pursue other claims against the administrators of Antoine’s estate.[8] Justice Stanley noted that this was a factor which led to the administrators of Antoine’s estate seeking advice or direction in the administration action.
[7] [2019] SASC 218 at [17].
[8] Affidavit of Andrew Donald Lovelock Woods at [171]-[214] filed in the administration action.
His Honour noted that Paul, George, and Leslie did not oppose a grant of probate of the will to Sonia and Brian, but opposed a grant of probate prior to the Court pronouncing on the validity of the codicil. It was noted that Paul, George, and Leslie proposed either the appointment of Sonia and Brian pursuant to r 83(4)[9] of the Supreme Court Civil Rules 2006 (SA) to represent Linda’s estate or the appointment of an administrator pendente lite. Paul, George, and Leslie submitted to Stanley J that if the Court was to order that Sonia and Brian were entitled to a grant of probate, it should be conditional upon them proffering inter alia an undertaking in respect of Linda’s estate affected by the codicil.[10] They also sought an undertaking that if Sonia and Brian chose to continue the probate action, the further costs of the probate action were to be funded out of the share of Linda’s estate which goes only to Sonia, Donia, Pauline, and Marie.
[9] Rule 83(4) was repealed by UCR 1.3 and replaced by UCR 24.6.
[10] [2019] SASC 218 at [27].
Justice Stanley determined that, in the circumstances, there was potential for Paul, George, and Leslie’s interests in the residue of Linda’s estate to be used to fund proceedings contrary to their interests and it was appropriate that Sonia and Brian provide undertakings that they would not commence any further proceedings or take any steps in the administration action without having obtained advice or direction from the Court that they would be justified in instituting proceedings or taking steps on behalf of Linda’s estate in the administration action.
Accordingly, on 24 January 2020, Stanley J recorded the following undertakings and decree proving Linda’s will in solemn form:
The plaintiffs, by their counsel, undertake that:
1.They will not dispose of or distribute that part of the estate of Linda Nemer,[11] late of 186 Cross Road, Malvern, South Australia, who died on 10 October 2017 (the deceased) that is affected by a codicil dated 24 May 2017.
2.In their capacity as executors of the estate they will not commence any further proceedings or take any steps in action SCCIV-19-724 without having obtained advice and direction from the Court that they would be justified in commencing these proceedings, or taking such steps.
The Court:
1.Pronounces for the force and validity of the last will and testament of Linda Nemer late of 186 Cross Road, Malvern, South Australia (the deceased) being the script bearing dated the 23rd day of July 2015 referred to in the affidavit of Sarah Kathleen Annicchiarico affirmed on the 21st day of June 2019 filed in this action and propounded on behalf of the plaintiffs.
2.An order that the first, third and fourth defendants pay one half of the plaintiffs' costs of the interlocutory application filed 21 June 2019, such costs to be adjudicated or agreed on a party-party basis.
3.An order that the plaintiff's costs of the interlocutory application otherwise be a testamentary expense of the estate of the deceased and paid out of the estate on the basis of a full indemnity.
[11] Pursuant to UCR 1.4(4), the plaintiffs are now referred to as the applicants and defendants as the respondents.
On 1 July 2020, probate in solemn form in Linda’s estate “with an undertaking pursuant to orders of the Honourable Justice Stanley made on 24 January 2020 (copies annexed)” was granted to Sonia and Brian.
The application for advice or direction
Sonia and Brian now bring this application for judicial advice or direction pursuant to s 69 of the Act in accordance with the undertaking given to Stanley J in the probate action. Affidavits of Sonia and Brian’s solicitor, Sarah Kathleen Hooper, affirmed 7 August 2020 (“Ms Hooper’s first affidavit”),[12] 1 October 2020 (“Ms Hooper’s second affidavit”),[13] and 15 December 2020 (“Ms Hooper’s third affidavit”)[14] are relied on in support of the application.
[12] MFI E3. Ms Hooper explains in her third affidavit that at the time of her first affidavit she practised under the name Sarah Kathleen Annicchiarico.
[13] MFI E4.
[14] MFI E5.
It is noted that Sonia and Brian each swore an affidavit in the probate action undertaking that should a grant of probate be issued, they would not distribute that part of Linda’s estate affected by the codicil.[15] No undertaking was given in respect of taking further steps in the probate action. However, Sonia and Brian also make application as a matter of caution for advice or direction in respect of the probate action.
[15] FDN 13 and FDN 14 in the probate action.
Ms Hooper deposes in her third affidavit that Donia, Pauline, Marie, and Sonia in her personal capacity have each consented to the orders sought by Sonia and Brian.[16]
[16] MFI E5.
Sonia and Brian seek advice or direction as to whether they would be justified:
·in continuing to bring the probate action;
·to appear, make submissions and lead evidence on behalf of Linda’s estate as respondents in the administration action; and
·to bring proceedings relating to proposed claims to be brought by them against George in respect of the Hilltop legacy for breaches of trust and equitable compensation,
(“the three actions”).
As the authors of Lewin on Trusts detail, the general character of a Beddoe application is that:[17]
… the function of an order made in a Beddoe application is to predetermine the question of recoverability of costs of the main action from the trust fund by way of indemnity to the trustees as between the trustee and the beneficiaries. What is predetermined is a potential issue between the trustee and the beneficiaries as to whether costs of any action should be recoverable by the trustee as expenses of the trust. What is not predetermined is the issue of costs between the trust and any other party to the main action.
[17] Lynton Tucker et al, Lewin on trusts (20^th ed, Sweet & Maxwell, 2020) at [28-132].
The principles to be applied were considered in Tschirn v Australian Executor Trustees Ltd,[18] where Doyle J stated:[19]
[Beddoe applications] are usually supported by advice from counsel as to the prospects of success, an estimate of the costs likely to be incurred and evidence as to the value and composition of the estate. …
The role of the court, in determining what judicial advice should be given in the best interest of the estate on a Beddoe application, is not to undertake an investigation of the evidence with a view to determining whether the proceedings will succeed, or otherwise to make any fine or detailed assessment of the merits. However, as Gillard J observed in Re Atkinson,[20] in determining whether it is appropriate that the proceedings be taken, “the matter should be sufficiently investigated to determine whether or not the proceedings would be fruitless”.
…
… there are a number of relevant considerations in determining whether to give the judicial advice sought by the plaintiff. They include matters which, broadly speaking, fall under the headings of the merits of the proceedings, the nature of the proceedings, the likely cost of the proceedings, the likely benefit and burden of the proceedings, and the alternative options open to the plaintiff and the residuary beneficiaries standing to benefit from the proceedings.
(Footnote in original)
[18] [2016] SASC 149 at [54]-[73].
[19] Tschirn v Australian Executor Trustees Ltd [2016] SASC 149 at [61]-[62]; [73].
[20] Re Atkinson [1971] VR 612 at 616.
The funding of the three actions
It is convenient to first discuss how Sonia and Brian propose funding the three actions. As the court record in the probate action reveals, Sonia and Brian proffered an undertaking that they would not dispose of or distribute that part of Linda’s estate affected by the codicil until the question of the validity of the codicil had been determined, either inter partes or by order of the Court.
Ms Hooper deposes in her first affidavit that apart from shares in private companies and an interest in Antoine’s estate the main assets in Linda’s estate are monies held in two NAB accounts totalling approximately $1,047,000 (“the NAB monies”) at the date of Linda’s death.
As set out above, clause 3.6 of Linda’s will provides that any money standing to Linda’s credit at the date of her death in any bank account or investment account whatsoever situated in Australia held in her personal name is gifted to Sonia, Donia, Pauline, and Marie. The codicil deletes this clause and inserts new clause 3.6 which provides that any money standing to Linda’s credit at the date of her death in any bank account or investment account whatsoever situated in Australia and/or overseas and any money still owing to her or due to be paid to her from Antoine’s estate is gifted to Sonia, Donia, Pauline, and Marie.
As the NAB monies gifted to Sonia, Donia, Pauline, and Marie are not affected by the validity or otherwise of the codicil, Sonia and Brian seek court approval to use the NAB monies (which have now been received into their solicitors’ trust account) to pay legal fees (both solicitor and counsel) and disbursements incurred in the three actions. An estimate of legal costs likely to be incurred in respect of each of the three actions is set out in Mr Hooper’s second affidavit.
Should the application be served on the beneficiaries of Linda’s will?
As Donia, Pauline, Marie, and Sonia (in her personal capacity as beneficiary) have all consented to the orders sought in the application for advice or direction, Sonia and Brian contend that the application should not be served on Donia, Pauline, Marie, and Sonia as beneficiaries of Linda’s estate.
Further, they submit that the application for advice or direction should not be served on George, Paul, and Leslie (the residuary beneficiaries of Linda’s estate) because no order is presently sought that the funds in Linda’s residuary estate be used for their indemnity and reimbursement. Ms Hooper deposes in her third affidavit that at the time she affirmed her third affidavit Sonia and Brian were not in possession of any assets that would fall into the residue of Linda’s estate.
Sonia and Brian refer to the situation in England where such an application for advice or direction is served on the beneficiaries, even where the litigation involves the beneficiaries on the basis “that a Beddoe application is concerned with a question that directly affects the beneficiaries, namely, whether trust money should be spent or placed at risk in the main action. Accordingly, beneficiaries are necessary parties to the Beddoe application since they are entitled to be heard on the issue”.[21]
[21] Lynton Tucker et al, Lewin on trusts (20^th ed, Sweet & Maxwell, 2020) at [48-133], [48-145].
In New South Wales, such applications are made under s 63 of the Trustee Act 1925 (NSW). Section 63(4) provides that unless the Court otherwise directs the application does not have to be served on any other person. Sonia and Brian cite the High Court’s statement in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Community Church of Australia and New Zealand & Anor:[22]
… s 63 operates as “an exception to the Court's ordinary function of deciding disputes between competing litigants”; it affords a facility for giving “private advice”[23]. It is private advice because its function is to give personal protection to the trustee.
Section 63(2) precludes any trustee, who acts in accordance with the private advice, from being held liable for breach of trust in the event that in conventional proceedings it is later held that the legal position does not correspond with the advice given, so long as the proviso to s 63(2) is satisfied. The possibility that the rights of beneficiaries under private trusts could be affected by judicial advice led the New South Wales Parliament in 1925 to introduce the protections given by s 63(8)-(11) and in that sense to strike a compromise. However, those protections did not alter the primary function of s 63 as creating a procedure for private advice to trustees. Even if notice of the application for private advice is given to other persons (by reason of rules of court, or a court direction under s 63(4), or by reason of s 63(8)), those persons are not strictly speaking “parties” to “proceedings” by reason of the closing words of s 63(11), although they are able to participate in the proceedings to some extent. Section 63 reflects a compromise between a procedure for affording private advice to trustees and the need for affected persons to be given a hearing in some cases.
(Footnote in original)
[22] (2008) 237 CLR 66 at [64]-[65].
[23] Application of Macedonian Orthodox Community Church St Petka Inc (No 2) (2005) 63 NSWLR 441 at 445 [23] per Palmer J, approved in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar, the Diocesan Bishop of the Macedonian Orthodox Church of Australia and New Zealand (2006) 66 NSWLR 112 at 122 [40] per Beazley and Giles JJA.

As noted by Sonia and Brian, there is no express equivalent of s 63(2) in South Australia prescribing protection to a trustee for breach of trust. However, this is the effect of an order under s 69 of the Act. Section 69(2) and (5) provide:
(2)Such application may be made either without notice to or upon summons served upon any of the parties interested.
…
(5)Any such order made in the absence of an interested party shall have the same effect, or be of the same force or validity, so far as regards protection to the Public Trustee, or other trustee, or the executor, or administrator, as if the same had been a decree or order made in an action where all parties concerned were represented.
Accordingly, it is argued that an application under s 69 of the Act may be heard and determined ex parte, as it is the responsibility of the personal representative (and not the Court) to determine who should be served. In In the Estate of Martin,[24] where a personal representative endorsed a summons with a request for directions as to service, Piper AJ stated:[25]
It is the responsibility of those who initiate the proceedings to decide whether the case is a proper one for an approach to the Court to be made without notice to the beneficiaries and also, if it is a case for notice, to decide to whom notice shall be given in the first place. The practice [of seeking directions from a Master as to service] which is apparently growing up shirks that responsibility, and it seems to me constitutes an attempt, I feel tempted to say an impudent attempt, to shift that responsibility on to the shoulders of the Masters.
[24] [1958] SASR 365 at 379.
[25] [1958] SASR 365 at 379.
In the circumstances of this matter, which include the following:
·Senior Counsel appeared for George, Paul, and Leslie before Stanley J at the hearing when the undertakings were recorded and the decree proving Linda’s will was made in the probate action such that it can be inferred they are aware that Sonia and Brian would be seeking advice or direction;
·Donia, Pauline, Marie, and Sonia in her capacity as beneficiary consent to this application for advice or direction and the orders sought;
·Sonia and Brian will only be indemnified and reimbursed for their costs, charges and expenses incurred in prosecuting the probate action, in responding to the administration action, and in issuing and prosecuting the proposed proceedings against George from the monies Sonia, Donia, Pauline, and Marie are entitled to under clause 3.6 of Linda’s will and unaffected by the validity or otherwise of the codicil;
·the orders sought do not place at risk that part of Linda’s estate affected by the codicil as no order is presently sought that the funds in Linda’s residuary estate be used for Sonia and Brian’s indemnity and reimbursement;
·the orders sought provide that should Sonia and Brian seek that the funds in Linda’s residuary estate be used for their indemnity and reimbursement they must make application to the Court to be served on the residuary beneficiaries, George, Paul, and Leslie,
I am prepared to proceed to hear the application ex parte.
Before considering the application further, it should be noted that Sonia in her capacity as a beneficiary of Linda’s estate has a pecuniary interest in each of the three actions. I also note Sonia and Brian’s concerns that Leslie and Mr Woods are in a position of conflict such that they are unable to discharge their duties impartially.[26] These are issues to be resolved in the substantive proceedings.
[26] MFI E3 at [35].
Counsel’s opinion
Sonia and Brian obtained counsel’s advice regarding the three actions. They have obtained written opinions with respect to the prospects of success of pursuing the probate action and the proposed action against George. Counsel also made oral submissions on the hearing of the application in respect of the merits of the three actions. I need to determine whether the opinion of counsel establishes that there are sufficient prospects of success to justify the prosecution of the probate action and the proposed action and establishes the need to defend the administration action.
Counsel have addressed the facts necessary to support the legal conclusions they have reached and have demonstrated that the propositions of law relied upon for those conclusions are properly arguable.[27] Counsel’s opinion in respect of the probate action is that the action is not fruitless and there is merit in pursuing it. Likewise, it is counsel’s opinion that the proposed action is not fruitless and there is merit in instituting and prosecuting it. Furthermore, counsel have advised Sonia and Brian that the circumstances of the administration action make it appropriate and indeed necessary for that action to be defended by them.
The merits of the probate action
[27] Re Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 at [80].
The defence filed in the probate action puts in issue Linda’s testamentary capacity at the time she executed the codicil. It alleges Linda held a number of delusional beliefs at the time she gave instructions for the codicil and that she did know and approve the codicil’s contents. It also alleges that she was subject to undue influence.
If the Court finds that a suspicion or lack of capacity is made out, the onus is on Sonia and Brian to disprove it. It is submitted that the solicitor who drafted the codicil has deposed in an affidavit that she considered Linda had capacity at the time she executed it. Sonia and Brian assert that Linda’s medical records disclose that she had not been diagnosed with dementia or Alzheimer related issues or that she was suffering from delusions.
In respect of the allegation in the defence that Linda’s had a limited grasp of English, it is submitted that Marie Theresa Nemer (“Marie Nemer”) attended on Linda at the time she executed her will and again when she executed the codicil for the purposes of translating. Marie Nemer has sworn two affidavits of due execution of translator dated 26 April 2018 and filed in PROGR-18-1604. One affidavit concerns Linda’s will[28] and the other concerns the codicil.[29] Marie Nemer deposes in the latter affidavit that she is a sister-in-law of Antoine and Linda. She states that she is experienced in translating and interpreting wills and like documents from English to Lebanese and that she assisted Antoine and Linda in reviewing their wills from time to time by translating for Linda. She deposes that at the time Linda executed the codicil she “appeared thoroughly to understand the explanation and to have a full understanding of the effect of her instructions”.[30]
[28] MFI E1.
[29] MFI E6.
[30] MFI E6 at [15]-[16].
Sonia and Brian recognise the potential for Marie Nemer’s lack of formal qualifications as a translator and her lack of independence to be challenged. However, it is submitted that there has been no challenge to Linda’s capacity at the time she executed her will, translated by Marie Nemer, two years before the codicil.
Accordingly, Sonia and Brian, having obtained counsel’s advice, submit that there are reasonable prospects of the codicil being admitted to probate.
The merits of taking steps as respondents in the administration action
Ms Hooper details in her first affidavit that the matters in issue in the administration action fall into the four following categories:
The classification of the Delamere property
Ms Hooper states that the statement of assets and liabilities in Antoine’s estate discloses at paragraph A(3) Antoine’s beneficial interest in the Delamere property which is said to arise pursuant to a Deed of Family Settlement dated (“the 2014 Deed”). Ms Hooper says that the issue in relation to the Delamere property is whether or not it is an asset of Antoine’s estate. Ms Hooper explains:[31]
25.1.The registered proprietors of the Delamere Property are Joseph Nemer (a son of [Linda] and Antoine Nemer) and his wife, Mirna Nemer.
25.2.Pursuant to the 2014 Deed, Joseph and Mirna agreed to transfer ownership of the Delamere Property to Antoine Nemer.
25.3.Subsequent to signing the Affidavit of Assets and Liabilities of Antoine Nemer’s estate, the Administrators have taken the position that the Delamere Propery is not, in fact, an asset of the estate of Antoine Nemer but rather that it is an asset of one of the Administrators, Leslie Nemer.
25.4.Exhibited hereto and marked “SKA8” is a copy of a letter from Mellor Olsson, the solicitors for the Administrators, to Nemer Essey Lawyers (the former solicitors for the Executors) dated 8 September 2017. With reference to this letter, I say that the Administrators informed the Executors that it had come to light that the registered proprietors of the Delamere Property (being Joseph and Mirna Nemer) had signed a contract for the sale of the Delamere Property to Leslie Nemer and his wife, Mirian Nemer, in October 2005 (being prior to the 2014 Deed) but that the transfer remained unregistered.
25.5.Exhibited hereto and marked “SKA9” is a copy of a letter from Mellor Olsson to Nemer Essey Lawyers dated 7 June 2018. With reference to this letter, I say that the Administrators informed the Executors that it was Mr Woods’ preliminary view that the parties to the 2014 Deed mutually agreed not to be bound by the terms of the Deed and in consequence did not carry it into effect.
25.6.By letter dated 20 May 2019 (a copy of which is exhibited hereto and marked “SKA10”), the Administrators have confirmed the position that the parties to the 2014 Deed effectively abandoned it or otherwise accepted that it was not enforceable.
25.7.Consequently, the Administrators consider that the Delamere Property ought not to have been included as an asset of Antoine Nemer in the Statement of Assets and Liabilities of his estate.
[31] MFI E3 at [25].
Sonia and Brian contend that if the Delamere property is not an asset of Antoine’s estate there may be insufficient funds in Antoine’s estate to pay all of the legacies and testamentary expenses. They submit that this will have the effect that there is not a surplus of assets in Antoine’s estate to form the residue due to pass to Linda’s estate, and could result in an abatement of the Hilltop Legacy and/or testamentary expenses being paid from the Hilltop Legacy.
The value and administration of the Hilltop Legacy
Antoine’s will at clause 3.5 provides that Antoine’s assets relating to the Hilltop Shopping Centre Pty Ltd (“Hilltop”) be applied towards the satisfaction of certain bequests made to Sonia, Donia, Pauline, and Marie with the balance to be distributed to Linda.
At the time of Linda’s death, the Hilltop legacy had not been paid to her and remains unpaid to her estate. The effect of the codicil is to direct that any money still owing to Linda from Antoine’s estate is to be distributed to Sonia, Donia, Pauline, and Marie. In her first affidavit, Ms Hooper details the background to the Hilltop Legacy as follows:[32]
[32] MFI E3 at [30].
30.1.Hilltop was a company which owned land in South Australia upon which a shopping centre was operated by Hilltop. Exhibited hereto and marked “SKA11” is a copy of a Current & Historical extract for Hilltop dated 3 April 2018. With reference to this document, I say that:
30.1.1.George Nemer was the sole director and secretary of Hilltop.
30.1.2.There were 1,025,002 ordinary $1.00 shares issued in Hilltop.
30.1.3.As from 1 September 2017, the shares in Hilltop were registered to Antoine Nemer.
30.1.4.Prior to 1 September 2017, the shares were registered to Allied Investments Group S.A.R.L (Allied), being a Lebanese company.
30.2.I am instructed by my clients and believe that the sole director of Allied is Joseph Nemer, and that the shares in Allied are registered to Joseph and his wife Mirna and their son Elias.
30.3.One of the terms of the 2014 Deed was that Joseph Nemer would transfer the shares and interests of Allied in Hilltop to Antoine Nemer.
30.4.Subsequent to the 2014 Deed, various parties entered into an Option Deed dated 17 March 2015 (the 2015 Option Deed), a copy of which is exhibited hereto and marked “SKA12”. The 2015 Option Deed provides, inter alia, that at any time within 2 years after the death of Antoine Nemer, the legal personal representatives of his estate may direct the following to occur:
30.4.1.Allied to assign and transfer the Allied Debt (being an amount of $5,387,419.00 owed by Hilltop to Allied) to Antoine Nemer or his estate for $1.00;
30.4.2.the sale of the land owned by Hilltop with the proceeds of the sale to be applied in repayment of a debt owed to NAB and, after the assignment of the Allied Debt, repayment of the Allied Debt to Antoine Nemer or his estate; and
30.4.3.the transfer of all of the shares in Hilltop by Allied to the estate of Antoine Nemer for $1.00.
30.5.The 2015 Option Deed also includes a covenant from Allied to Antoine Nember or his estate that as from the date of the Deed until the option expired, Allied would not receive, compound, release or compromise the Allied Debt.
30.6.The Administrators exercised the options set out set out in the 2015 Option Deed in or about August 2017.
30.7.By letter from Mellor Olsson to Nemer Essey Lawyers dated 7 June 2018 (a copy of which is exhibited hereto and marked “SKA13”) the Administrators informed the Executors that an amount of $1,586,627.00 had been transferred from Hilltop to the bank account maintained for Antoine Nemer’s estate representing payment of the Allied Debt.
30.8.By further letter from Mellor Olsson to Treloar & Treloar and Nemer Essey Lawyers dated 7 June 2018 (a copy of which is exhibited at SKA9) the Administrators informed the Executors that the value of the Allied Debt which was due to Linda Nember’s estate was $918,324.00.
Sonia and Brian are concerned that there has been a reduction in the value of the Allied Debt in the period from the date of the 2015 Option Deed until June 2018 which has, in turn, reduced the amount due to Linda’s estate from Antoine’s estate pursuant to the Hilltop Legacy.
The identification of assets in Lebanon
Sonia and Brian believe that Antoine and Linda owned property and other assets in Lebanon at the time of their deaths as set out in paragraph [33] of Ms Hooper’s first affidavit.
Sonia and Brain are concerned that the administrators of Antoine’s estate are not taking any steps to identify and call in the Lebanese assets. They are also concerned that land in Lebanon is owned by George, Paul, Leslie, and Joseph. They consider that steps should be taken to investigate what assets were owned by Antoine at the date of his death and what has become of those assets. In the event any of the assets have been taken out of Antoine’s name or otherwise dealt with inappropriately, Sonia and Brian would seek to recover those assets for the benefit of Linda’s estate.
The collection and preservation of evidence
No submissions were made under this heading.
Accordingly, Sonia and Brian, having obtained counsel’s advice, submit that it is necessary for them as named respondents to appear, make submissions, and lead evidence on behalf of Linda’s estate in respect of the foregoing issues in the administration action.
The merits of the proposed action against George
Sonia and Brian propose commencing an action against George for breach of trust, tracing and equitable compensation. A draft statement of claim exhibited to Ms Hooper’s first affidavit sets out the claim against George. It alleges that George was the sole director and secretary of Hilltop, and in that capacity he caused Hilltop to take certain actions which had the effect of reducing the Hilltop Legacy. The draft pleading alleges that Hilltop’s actions were unconscionable and a breach of trust which denied the recipients of the Hilltop Legacy the benefit of their full entitlement and George knowingly received the benefit of Hilltop’s breach of trust.[33]
[33] Ms Hooper’s first affidavit at [39]-[40].
Counsel have provided opinion to the effect that George caused Hilltop to act in the way it did, in circumstances where he was aware of the Hilltop Legacy and that others stood to benefit from it, and that he acted in a manner contrary to the interests of those beneficiaries. Counsel have advised that it is at least arguable that George’s conduct falls into the first limb of Barnes v Addy,[34] which exposes him to personal liability. As such, Sonia and Brian have been advised that the prospects of successfully prosecuting the proposed action are reasonable.
[34] (1874) 144 ER 643; Farah Constructions v Say-Dee Pty Ltd (2007) 230 CLR 89 and Consul Development Pty Ltd v DPC Estates Pty Ltd (1975) 132 CLR 373.
Conclusion
Sonia and Brian submit that, having regard to the circumstances of Linda’s estate, they are entitled to be indemnified out of Linda’s estate as pursuing the three actions is clearly an expense properly incurred in the performance of their duties in administering Linda’s estate.
In determining whether it is appropriate that the probate action continue and that the proposed action against George be commenced, I have not undertaken a detailed assessment of the merits. I have had regard to the opinions of counsel as to the merits and have had regard to the evidence as to the value and composition of the estate as detailed in Mr Wood’s affidavit. I have also had regard to the nature of the three actions and the issues raised as deposed to in Ms Hooper’s first affidavit and am satisfied that the probate action and the proposed action are not fruitless.[35] Further, having regard to Mr Woods affidavit, Ms Hooper’s first affidavit and counsel’s oral submissions, I am satisfied it is appropriate and necessary for Sonia and Brian to appear, make submissions, and lead evidence on behalf of Linda’s estate as respondents in the administration action.
[35] Tschirn v Australian Executor Trustees Ltd [2016] SASC 149 at [62].
In respect of all three actions, I have considered the estimate of the costs likely to be incurred as deposed to in Ms Hooper’s second affidavit. I am satisfied that the estimate of costs to be incurred is proportionate to the issues raised in each of the three actions.
Sonia and Brian have undertaken to pay the costs incurred out of the funds held in their solicitors’ trust account which are subject to the gift in clause 3.6 of Linda’s will and unaffected by the validity or otherwise of the codicil.
Having made the undertaking as to costs, should Sonia and Brian seek an adjustment or marshalling as between the monies subject to the gift in clause 3.6 of Linda’s will (unaffected by the validity or otherwise of the codicil) and Linda’s residuary estate and/or that Linda’s residuary estate be used for their reimbursement and indemnity, they must make application in these proceedings and serve it on the George, Paul, and Leslie.
In the circumstances of Linda’s estate, I am satisfied that it is appropriate to provide Sonia and Brian with the necessary advice or direction in favour of pursuing the three actions and that a Beddoe order by way of indemnity is justified.
Orders
1.Pursuant to s 69 of the Administration and Probate Act 1919 (SA), Sonia and Brian in their capacity as executors of the estate of Linda Nemer, late of 10 Cross Road, Malvern, South Australia, deceased, who died on 10 October 2017 (“Linda”), are advised and directed that they would be justified and should:
1.1.continue to propound the alleged codicil dated 24 May 2017 by prosecuting action SCCIV‑18‑1323 but only up to and including the holding of a mediation, with such mediation to be held at the completion of all reasonable interlocutory steps but prior to trial; and
1.2.institute and prosecute further proceedings against George Nemer in the Supreme Court of South Australia in terms of the draft pleading exhibited to Ms Hooper’s affidavit affirmed 7 August 2020, but only up to and including the holding of a mediation, with such mediation to be held at the completion of all reasonable interlocutory steps but prior to trial; and
1.3.appear, make submissions and lead evidence on behalf of Linda’s estate as respondents in action SCCIV‑19‑724;
but that:
1.4.they are only entitled to be indemnified and reimbursed for their costs, charges and expenses incurred in conducting the proceedings referred to in 1.1, 1.2 and 1.3 above out of the funds held in the trust account of Wallmans Lawyers on behalf of Linda’s estate, being the funds formerly held in National Australia Bank Account 28 299 9624 and 19 723 1645 that are subject to the gift in clause 3.6 of the will of Linda dated 23 July 2015; and
1.5.such indemnity and reimbursement may be the subject of an application that there be an adjustment or marshalling as between the monies referred to in order 1.4 and the residuary estate of Linda and/or that the indemnity and reimbursement should be from the residuary estate, with such application to be served on the residuary beneficiaries.
2.Sonia and Brian’s costs of these proceedings be paid out of the funds referred to in order 1.4 above, such costs to be taxed on a solicitor-client basis.
3.Liberty to apply for further advice or direction (including any application referred to in order 1.5 above) in these proceedings.