Ponting and Murray v Dec'd Estate of M. Boden
[2001] FMCA 65
•28 August 2001
FEDERAL MAGISTRATES COURT OF AUSTRALIA
PONTING & MURRAY v DEC’D ESTATE OF M. BODEN [2001] FMCA 65
BANKRUPTCY – Application for administration of deceased estate – executors claim estate insolvent – beneficiary opposes application – s 247 of Bankruptcy Act 1966
| Applicant: | BERNARD PONTING & JOAN MURRAY |
| Respondent: | DECEASED ESTATE OF MARGARET GRACE BODEN |
| File No: | BZ36 of 2001 |
| Delivered on: | 28 August 2001 |
| Delivered at: | Brisbane |
| Hearing Date: | 7 August 2001 |
| Judgment of: | Baumann FM |
REPRESENTATION
| Counsel for the Applicant: | Mr Ambrose |
| Solicitors for the Applicant: | Bernard Ponting & Co |
| Solicitors for the Respondent: | Mr Barker of Shine Roche McGowan |
ORDERS
That pursuant to s 33(1)(a) of the Bankruptcy Act 1966, the Application for administration of the Estate of the late MARGARET GRACE BODEN, be adjourned for further hearing at 9.30 am on 27 November 2001.
The costs of all parties be reserved.
FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE
BZ36 of 2001
BERNARD PONTING & JOAN MURRAY
Applicant
And
DECEASED ESTATE OF MARGARET GRACE BODEN
Respondent
REASONS FOR JUDGMENT
Introduction
BERNARD PONTING and JOAN MURRAY (“the Applicants”) are the Executors appointed under the Will and Codicil of the late MARGARET GRACE BODEN (“the deceased”). They have filed a petition under
s 247 of the Bankruptcy Act 1966 (“the Act”) seeking an order that the Estate of the Deceased, who died on 5 April 1995, be administered under the provisions of the Act.
The application is opposed by GRACE FINLAY MACKLEMAN (“the Respondent”) on the grounds that:
a)The Estate is not insolvent;
b)The debts of the Estate are legal fees which may be payable by the Applicant’s personally or either of them;
c)The assets of the Estate could be substantially increased if the Supreme Court of Queensland sets aside a transaction as claimed in action 1977/96, and that the prospects of success in such action are good.
Issues
a) The effect and prospects of a successful result in Supreme Court action 1977/96.
b)Whether the discretion to order administration, provided by
s 247(1A), should be exercised.
I made it clear at the commencement of the hearing, that I would not allow these proceedings to be used to ventilate long standing issues relating to the conduct of the Applicants (as Executors) in the administration of the Estate – particularly so far as it related to the existence or otherwise of certain jewellery. The inherent jurisdiction of the Supreme Court of Queensland and that Court’s powers under the Succession Act 1981 (Qld) and Trusts Act 1973 (Qld), provide the appropriate forum for such matters to be considered.
Background
The deceased died on 5 April 1995, having published her Last Will and Testament dated 5 October 1994 and first Codicil to that Will dated 29 March 1995. The Respondent is a beneficiary under the Will, as is her brother MALCOLM FINLAY BODEN (“Mr Boden”).
It is clear that the Respondent holds concerns about aspects relating to the deceased’s capacity at the time she made her Codicil and signed a transfer in respect of the Mitchelton property to Mr Boden. Because of these concerns the Respondent has:
a)Caveated the application by the Applicants for probate in common form (“the probate action”);
b)Commenced action 1977/96 for an order setting aside the transfer of the Mitchelton property (“the property action”);
c)Commenced an action for further provision under the Succession Act 1981 (“the TFM action”);
The probate action, which requires the Applicants to proceed to seek an order for Probate in solemn form, has not progressed beyond the preliminary steps. The Applicants say no real benefit flows from progressing that action, because there are no assets available to meet the costs of so doing. The Respondent appears to have conceded that even if the Probate action proceeds, the best and most likely result is that the Codicil would be disregarded, however the Will would stand. That Will provides essentially that:
a)The Respondent shall receive all jewellery; any cash or investments and half of the residency estate;
b)A Legacy of $5000.00 is to be paid to the deceased’s grand-daughter, ANNE;
c)Mr Boden receives the Mitchelton property and all contents and half of the residuary estate.
The effect of the codicil was to leave the whole of the Estate to the son, Mr Boden.
The Respondent conceded in submissions that the TFM Application has little chance of success and has been adjourned sine die.
The property action is dealt with below in more detail, however the Respondent says that if successful the result will be that the property will return to the estate under administration and any debts can be paid rateably from that asset.
The Applicants, in their affidavit filed 19 January 2001, say that the current position of the estate is:
ASSETS Jewellery $ 3000.00
Moneys invested $35088.15
$38088.15
LIABILITIES PAID
Funeral Expenses $2306.50
Outlays to Bernard Ponting & Co $ 537.52 $ 2844.02
LIABILITIES OWING
(identified in the Statement of Affairs signed 14 July 2000 at page 10)
Mullins & Mullins Solicitors $11310.75
Justin F O’Sullivan & Edgar Solicitors
(estimate) $ 6500.00
Bernard Ponting & Co Solicitors
(estimate) $18000.00 $35810.75
The Applicants say they have undertaken many attempts to resolve all actions (which have been unsuccessful) and that:
“As the Estate is currently insolvent and unable to finalise the proceedings which are currently pending, we would ask this Honourable Court to grant our application”.
The property action (1977/96)
It follows from the background facts not in dispute, that the success or otherwise of the property action is of critical importance. In this regard:
a)The Respondent says:
i)the basis of challenging the transfer of the Mitchelton property to Mr Boden is that at the date of transfer, the deceased did not have legal capacity;
ii)She relies on reports by Professor Tess Crammond (dated 4 January 1996) and gastroenterologist Dr Roderick Roberts (dated 28 May 1997) which both conclude that the deceased would not have had the capacity to execute the Codicil and transfer on 29 March 1995. To date that evidence does not appear to be challenged by the Applicants;
iii)The Mitchelton property has a value of $300,000.00;
iv)
She, as Plaintiff, was required to commence the property action as the Applicants (as Executors) were not prepared to do so. The action was commenced by writ issued
6 March 1996.
d)The Applicants say:
i)They were named as a defendant in the property action commenced by the Respondent and were forced to incur costs in preparing and filing a defence;
ii)The Respondent’s action is unable to proceed further, without leave of the Supreme Court, by reason of Rule 289(2) UNIFORM CIVIL PROCEEDURE RULES (QLD);
iii)That “as a result of the manner in which the Respondent has failed to protect her “interest” and her delay in prosecuting the manner that the property is not now capable for forming part of the estate”.
Conclusions
An order for the Administration of a deceased estate pursuant to
s 247 of the Act (or its predecessor, s 156 of the Bankruptcy Act 1924) has, it appears, generated relatively little judicial activity. The reason for this seems to clearly be the preference for administrators to abide the procedures and laws under appropriate State Legislation (eg. Wills, Probate and Administration Act (NSW) 1898; Administration and Probate Act (Vic) 1958; Succession Act (Qld) 1981). It has been said, that administration under the Bankruptcy Act may be preferred where the clawback provisions in ss 115–122 of the Act (which allow the recovery of assets) may offer a more appropriate procedure.
On the evidence before me, it appears the Respondent would have reasonable prospects of success in the property action, a view apparently shared by Senior Counsel (see letter from Messrs O’Shea Corser and Wadley dated 12 April 1999 – Exhibit “C” to Respondent’s affidavit). Whilst the applicants were named as the first defendants, the pleading makes it clear that their joiner was simply to put them on notice of the relief sought, namely an order that the property be restored to the ownership of the Applicants, as Executors and Trustees under the Will.
The Respondent produced no evidence to enable me to be satisfied that:
a)any application under Rule 289(2) of the UNIFORM CIVIL PROCEDURE RULES (QLD) has a reasonable prospect of success;
b)That if she can proceed in the property action, it will be possible for the property to be restored to the Estate. No evidence was produced as to the current registered proprietor or the whereabouts of Mr Boden, who is unable to be located by his solicitors. I would think that these issues will be relevant to the exercise of any discretion by the Supreme Court to grant leave to proceed.
In the circumstances, I propose to use my discretion under s 33(1)(a) of the Act, to adjourned this application to 9.30 am on 27 November 2001. So as to allow the Respondent to pursue her application for leave to proceed in Action 1977/96 if she, as Plaintiff, wishes to do so.
If the Respondent does not make such an application, or is unsuccessful, then I would propose, on the current available evidence, to grant the relief sought by the Applicants.
For completeness, the Respondent’s legal representative submitted that the debts alleged by the Applicants are not properly debts because of an alleged failure to comply with Queensland Law Society Act 1952 (and the Rules thereunder) regulating retainers of solicitors and client agreements. It is not necessary for me to consider those submissions. The enforceability and/or quantum of any debt claimed is initially a matter for the trustee of a bankrupt. If I ultimately decide to make an order for administration under s 247 of the Act, the Respondent may raise those matters with the Trustee so appointed.
I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of Baumann FM
Associate:
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