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Rattigan v Hanly

Rattigan v Hanly

Case [2020] NSWSC 1722 2 December 2020

Executors and Administrators

Repayment of Costs

Proceedings against Executor

Succession Law

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Supreme Court

New South Wales

Medium Neutral Citation: Rattigan v Hanly [2020] NSWSC 1722
Hearing dates: 18 November 2020
Date of orders: 2 December 2020
Decision date: 02 December 2020
Jurisdiction: Equity
Before: Hallen J
Decision:
The Court, in respect of the amended notice of motion filed 15 October 2020:
(1) Orders that, within 35 days of the making of these orders, the respondents, or either of them, reimburse the estate of the deceased, the amount of $230,000, which amount is to be paid into Court, pending the determination of the substantive proceedings, or any appeal therefrom, whichever is later.
(2) Orders the respondents to pay the applicant’s costs of the notice of motion.

Catchwords:
SUCCESSION – Executors and administrators – Proceedings brought against executor alleging maladministration of deceased’s estate – Whether substantive proceeding is hostile litigation – Where substantive proceeding not yet determined and no costs order has been made in favour of the executor – No Beddoe order and no application for pre-emptive costs order sought by executor – Where no consent of beneficiaries sought or given for deduction of executor’s costs – Executor deducting costs and disbursements out of the estate – Plaintiff on behalf of the estate seeks order for repayment of legal costs deducted – Whether the executor, or his solicitor, required to repay to the estate the amounts taken out of the estate for legal costs of the substantive proceedings

Legislation Cited:
Corporations Act 2001 (Cth), ss 180, 181
Probate and Administration Act 1898 (NSW), ss 84, 85
Supreme Court Act 1970 (NSW), s 66
Supreme Court Rules 1970 (NSW), Pt 78 r 94
Uniform Civil Procedure Rules 2005 (NSW), rr 54.1, 54.3

Cases Cited:
Alsop Wilkinson (a firm) v Neary [1996] 1 WLR 1220
Application of Uncle’s Joint Pty Ltd (2014) 12 ASTLR 487; [2014] NSWSC 321
Australian Broadcasting Corporation v Lenah Game Meats Pty Ltd (2001) 208 CLR 199; [2001] HCA 63
Australian Broadcasting Corporation v O’Neill (2006) 227 CLR 57; [2006] HCA 46
BE Australia WD Pty Ltd (subject to a Deed of Company Arrangement) v Sutton (2011) 82 NSWLR 336; [2011] NSWCA 414
Blake v Norris (1990) 20 NSWLR 300
In Re Beddoe; Downes v Cottam [1893] 1 Ch 547
In the matter of Bevillesta Pty Limited [2011] NSWSC 1378
Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42
McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623; (1985) 9 ACLR 926
Miller v Cameron (1936) 54 CLR 572; [1936] HCA 13
National Trustees Executors and Agency Company of Australasia Limited v Barnes (1941) 64 CLR 268; [1941] HCA 3
Northey v Juul [2014] NSWSC 464
O’Brien v McCormick [2005] NSWSC 619
Palmer v Ayres; Ferguson v Ayres (2017) 259 CLR 478; [2017] HCA 5
Re Estate Schwartz, Deceased; Application of Gellert; Gellert v Bentwood and Schwartz…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Rattigan v Hanly

Details

AGLC: Rattigan v Hanly [2020] NSWSC 1722
Case: [2020] NSWSC 1722
Decision Date: 02 December 2020

CaseChat Overview and Summary

In the matter of Rattigan v Hanly, the dispute revolves around the executors' administration of a deceased estate. The executors, acting on behalf of the estate, have deducted certain legal costs from the estate's assets in relation to a substantive proceeding. The plaintiff, on behalf of the estate, has sought an order compelling the executors to repay these costs to the estate. The court was tasked with determining whether the executors, or their solicitor, are required to repay the deducted legal costs to the estate, especially given that the substantive proceeding has not yet been determined, no costs order has been made in favour of the executors, and no Beddoe order or pre-emptive costs order application has been made by the executors. Furthermore, the court had to consider whether the consent of the beneficiaries was sought or given for the deduction of these costs.

The court examined the legal framework governing executors' duties and the circumstances under which they can deduct costs from an estate. It analysed the principles applicable to the recovery of costs deducted by executors, focusing on whether such costs constitute a debt of the estate or merely an anticipated liability. The court also considered the absence of a final determination in the substantive proceeding and the implications of this for the executors' authority to deduct costs. Additionally, the court scrutinised the procedural steps taken by the executors and the necessity of seeking beneficiary consent for cost deductions, as well as the implications of not doing so.

In its reasoning, the court concluded that the executors were not entitled to deduct the costs from the estate without a final determination in the substantive proceeding and without the consent of the beneficiaries. The court found that the costs deducted constituted an anticipated liability rather than a debt of the estate. Consequently, the executors, or their solicitor, were required to repay the deducted amounts to the estate. The court emphasised the importance of following proper procedures and obtaining necessary consents to ensure that executors act within the bounds of their authority and in the best interests of the estate and its beneficiaries.

The final orders of the court required the executors to repay the deducted legal costs to the estate within a specified timeframe. The court's decision underscores the necessity for executors to adhere to legal and procedural requirements when managing an estate, particularly regarding the deduction of costs from estate assets.

Orders