In the Estate of PETER CHARLES CORNFORD (DECEASED) - [2015] SASC 15

Supreme Court of South Australia
(Testamentary Causes Jurisdiction: Application)
In the Estate of PETER CHARLES CORNFORD (DECEASED)
[2015] SASC 15
Reasons for Ruling of The Honourable Justice Stanley (ex tempore)
28 January 2015
SUCCESSION - ADMINISTRATION OF ESTATE - ASSETS
SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION
Application for advice and directions pursuant to s 69 of the Administration and Probate Act 1919 (SA).
The deceased, Peter Charles Cornford, died intestate on 15 August 2008. His spouse, Sarah Jane Cornford, was appointed as the administrator of his estate. The deceased had three children, Stacey Lee Cornford, born on 24 February 1986, Erin Ashlee Cornford, born on 28 October 1987, and Georgina Jane Cornford born on 26 May 1996.
The administrator retained a solicitor Mr David L. Evans to advise in relation to the administration of the estate. He prepared a deed of family arrangement which purported to alter the distribution of the estate and superannuation benefits and death benefit payments. The deceased left significant debts and liabilities. One effect of the deed of family arrangement was wrongly to appropriate superannuation benefits to the payment of estate liabilities. Those superannuation benefits fall into two categories. First, the estate received sums amounting to a total of $20430.91 from AMP, CGU, BT and Colonial. Those sums ought not to have been applied to pay estate liabilities by reason of the provisions of s 205 of the Life Insurance Act 1995 (Cth). Secondly, MLC, as trustee of the superannuation fund, paid the sum of $373,870.54 to Georgina Cornford in the exercise of the trustee’s discretion and accordingly that amount did not form part of the deceased’s estate and was not available to pay estate liabilities. The distributions and payments made in accordance with the deed resulted in the beneficiaries of the estate not receiving their entitlements to distribution of the protected estate in accordance with s 72G of the Administration of Probate Act, Georgina not receiving the benefit and the entitlement of the MLC policy and the creditors of the estate being overpaid.
There are funds now available to the administrator in excess of $180,000. Advice and directions sought from the court by the administrator as to the distribution of these funds.
Held:
1. Orders in the terms of the draft minutes handed up by counsel for the applicant (at [14]).
Administration and Probate Act 1919 (SA) s 69, s 72G, s 65; Minors Contracts (Miscellaneous Provisions) Act 1979 (SA); Life Insurance Act 1995 (Cth) s 205, referred to.

WORDS AND PHRASES CONSIDERED/DEFINED
"assets” “distribution” “superannuation"

In the Estate of PETER CHARLES CORNFORD (DECEASED)
[2015] SASC 15
Ex Tempore

STANLEY J: This is an application for advice and directions pursuant to s 69 of the Administration and Probate Act 1919 (SA).
The deceased, Peter Charles Cornford, died intestate on 15 August 2008. His spouse, Sarah Jane Cornford, was appointed as the administrator of his estate. The deceased had three children, Stacey Lee Cornford, born on 24 February 1986, Erin Ashlee Cornford, born on 28 October 1987, and Georgina Jane Cornford born on 26 May 1996. The administrator, Sarah Jane Cornford, is the mother of Georgina but not the mother of the older daughters of the deceased.
The administrator retained a solicitor Mr David L. Evans to advise in relation to the administration of the estate. He prepared a deed of family arrangement which purported to alter the distribution of the estate and superannuation benefits and death benefit payments. The deed was not approved by the court on behalf of Georgina and is not binding on her pursuant to the provisions of the Minors Contracts (Miscellaneous Provisions) Act 1979 (SA).
The deceased left significant debts and liabilities. One effect of the deed of family arrangement was wrongly to appropriate superannuation benefits to the payment of estate liabilities. Those superannuation benefits conveniently fall into two discrete categories. First, the estate received sums amounting to a total of $20430.91 from AMP, CGU, BT and Colonial. Those sums ought not to have been applied to pay estate liabilities by reason of the provisions of s 205 of the Life Insurance Act 1995 (Cth). Those moneys can be referred to as the ‘protected estate’.
Secondly, MLC, as trustee of the superannuation fund, paid the sum of $373,870.54 to Georgina Cornford in the exercise of the trustee’s discretion and accordingly that amount did not form part of the deceased’s estate and was not available to pay estate liabilities.
The distributions and payments made in accordance with the deed have resulted in the beneficiaries of the estate not receiving their entitlements to distribution of the protected estate in accordance with s 72G of the Administration of Probate Act, Georgina not receiving the benefit and the entitlement of the MLC policy and the creditors of the estate being overpaid. It does not appear to be in issue that this has been caused by the acts or omissions of Mr David L. Evans. It is these circumstances which have precipitated this application.
The court has been provided with an opinion of independent counsel, Mr Martin Keith, dated 24 January 2014, in relation to the matter. Mr Keith, in his opinion, identifies that there are funds now available to the administrator in excess of $180,000. Those funds comprise, firstly: the sum of $49,566.34 standing to the credit of the deceased’s estate and now held in a Bank SA cash account in the name of David L. Evans as trustee for the estate of the late Peter Charles Cornford; secondly, the sum of $1,641.44 standing to the credit of the estate in the Mason Westover Homburg trust account which resulted from the administrator instructing that firm after Mr Evans, in particular in relation to sale of land that formed an asset of the deceased’s estate; and thirdly, a term deposit with the Commonwealth Bank which had an opening balance of $130,000, together with interest accrued thereon, controlled by the administrator and the partners of Mason Westover Homburg representing the proceeds of the sale of that land. Advice and directions are sought from the court by the administrator as to the distribution of the available funds.
Mr Keith, in his opinion, advises that in accordance with s 72G of the Administration and Probate Act, the sum representing the protected estate for the purposes of s 205 of the Life Insurance Act should be distributed as follows: to Sarah Cornford a sum of $14,401.58 subject to adjustment; to Stacey Cornford the sum of $1,467.20; to Erin Cornford the sum of $1,467.19 subject to adjustment; and to Georgina Cornford the sum of $1,467.19.
Adjustments are necessary because payments have been made to Sarah Cornford and Erin Cornford as follows: Sarah received $2,700 and Erin has received $3,500.
Mr Keith, in his opinion, has concluded that the amount of $1,467.19 from the protected estate, which would otherwise have been due to Georgina Cornford, is not of a sufficient size to warrant a separate payment. The cost of separately managing that small fund in accordance with s 65 of the Administration and Probate Act results in that sum not being of any benefit to Georgina. However, that opinion was premised on Georgina being an infant, giving rise to the necessity to administer those funds on trust pending her attaining her majority. That occurred on 26 May 2014. Accordingly, there is no impediment to payment of the sum of $1,467.19 direct to Georgina. That can be adequately addressed by a claim for that additional sum against Mr Evans.
Mr Keith also advises that the balance of the funds available to the administrator should be paid to Sarah Cornford as trustee for Georgina representing funds to which Georgina was entitled from the MLC superannuation fund. I accept the validity of that opinion save and except that as Georgina has now attained her majority the balance of the funds available to the administrator should be paid directly to Georgina.
I am also satisfied, on the basis of Mr Keith’s opinion, that the administrator ought not to have to pay the costs of this application for advice and directions either personally or from the funds available for distribution. Those costs should fall on Mr Evans. Mr Evans does not oppose this course.
I am also satisfied on the basis of the affidavit material that there are no competing claims and no other party would be prejudiced by distribution of funds in accordance with the advice and directions sought, save and except that the original application sought a payment of moneys to Sarah Cornford to be held on trust for Georgina on the basis that she was an infant. That is no longer the case and accordingly I am satisfied that sums to which Georgina is entitled should be paid directly to her.
Accordingly, I make orders in terms of the draft minutes handed up by Ms McEwin to me today and now dated and initialled by me. I order accordingly.