Re Brown

IN THE SUPREME COURT OF VICTORIA

Not Restricted

AT MELBOURNE

COMMON LAW DIVISION

TRUSTS, EQUITY AND PROBATE LIST

S PRB 2020 29637

IN THE MATTER of the deceased estate of MATTHEW JAMES BROWN, deceased

ROBERT GEORGE BROWN

Plaintiff

---

JUDGE:	McMillan J
WHERE HELD:	Melbourne
DATE OF HEARING:	On the papers
DATE OF JUDGMENT:	15 March 2021
CASE MAY BE CITED AS:	Re Brown
MEDIUM NEUTRAL CITATION:	[2021] VSC 119

---

WILLS & ESTATES — Where deceased died intestate — Where no application for grant of letters of administration made by intestacy beneficiaries — Where deceased’s father made application for a limited grant ad colligenda bona as next of kin and is also a creditor of the estate — Application misconceived—Whether plaintiff should bear costs of application — Re Mayes [2015] VSC 708.

---

APPEARANCES:	Counsel	Solicitors
For the Plaintiff	Ms E Konstantinou	Succession Legal

HER HONOUR:

Introduction

Matthew James Brown died on 6 November 2019 (‘the deceased’). He was survived by his three children, Sarah, Tyler and Connor.
By originating motion filed 4 November 2020, the plaintiff urgently sought a limited grant of letters of administration ad colligenda bona in the estate of the deceased. In his affidavit, the plaintiff deposed that he is the next of kin of the deceased and the most appropriate person to administer the estate.
The plaintiff is the deceased’s father. The plaintiff deposed that he was uncertain whether the deceased and the mother of Tyler and Connor were in a de facto relationship at the date of the deceased’s death. The plaintiff considers the mother of Tyler and Connor is not a fit and proper person for the purposes of administering the estate. In any event, the mother of Tyler and Connor consents to the plaintiff’s application.
Tyler and Connor are both under the age of 18 years. They reside with the plaintiff and his wife, subject to interim accommodation orders made by the Family Court of Australia. The plaintiff deposed to a further application for accommodation orders to be heard by the Family Court in November 2020.
The eldest child of the deceased is aged 18 years and is a person under a disability for the purposes of r 15.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
Assets of the estate
The assets of the estate comprise a property in Winchelsea valued at $500,000 (‘the Winchelsea property’) and a life insurance policy held with MLC providing a death benefit payout valued at $44,309. The liabilities of the estate comprise a mortgage debt against the Winchelsea property, comprising two loan accounts, valued at $209,459.40 owing to AWA Credit Union and a purported debt owed to the plaintiff and his wife valued at $46,600. The estimated net value of the estate is approximately $288,249.60.
As at his death, the deceased also held approximately $108,000 in superannuation benefits with First State Super and an insured benefit of approximately $152,000 with MetLife Insurance Limited. The plaintiff is unclear as to whether these additional assets will form part of the estate of the deceased.
No mortgage repayments have been made since the deceased’s death and the Winchelsea property is currently uninsured. The purported debt owed by the deceased to the plaintiff and his wife commenced around 1 October 2009 when they loaned $60,000 to the deceased on the settlement of the Winchelsea property. The loan amount was borrowed by the plaintiff and his wife through a facility with their bank and was secured against their own property.
The plaintiff seeks to call in the assets of the estate, discharge the mortgage debt and distribute the estate to the beneficiaries entitled under the laws of intestacy; subject to the estate’s indebtedness to himself and his wife first being discharged.
After finalisation of the administration of the estate under the limited grant, the plaintiff proposes to seek final administration orders as a creditor of the estate, pursuant to r 4.06 of the Supreme Court (Administration and Probate) Rules 2014 (Vic) and pay the net amount of the estate to the intestacy beneficiaries, being the three children of the deceased and the mother of Tyler and Connor, although he is unsure of the entitlement of the mother. All of the intestacy beneficiaries are under a disability and he proposes that the funds be paid into Funds in Court, pursuant to r 15.01 of the Supreme Court (General Civil Procedure) Rules 2015 (Vic).
Ruling on the papers
Consideration of the application was made on the papers and, on 16 December 2020, the plaintiff’s solicitors were notified that the application was misconceived, as follows:
Her Honour has considered the application on the papers. The application is unable to proceed and will be dismissed for the reasons now set out.
The deceased died intestate leaving one asset, being a property at 8 McDonald Drive, Winchelsea, which is mortgaged and uninsured. The applicant is the deceased’s father and he seeks a limited grant ad colligenda bona for the purpose of selling the deceased’s property and paying the deceased’s debts, including the mortgage and possibly a purported loan to the applicant. The deceased’s former domestic partner consents to the application.
The deceased’s intestacy beneficiaries are his three children, two of whom are minors aged 12 and 8 years and the other being aged 18. The 18 year old has a disability and does not have capacity to make an application for a grant or to administer the estate.
In circumstances where the applicant does not have an interest in the estate, he does not have standing to make the application. In any event, given that the estate comprises a single asset being the Winchelsea property, a limited grant is not appropriate. Further, it is noted there may be a conflict for the applicant due to the purported loan.
That said, it is desirable that the estate of the deceased be finalised and the net funds in the estate then be paid into Funds in Court. On the basis of the information provided, there appear to be two avenues to consider:
(a)the applicant refers to an application to be heard in the Family Court in November of this year. The outcome of that application is unknown, however, if that application included parenting orders for the two minors who reside with the applicant and his wife, then those parenting orders would provide the applicant with standing to make an application for a full grant on intestacy;
(b)pursuant to r 5.01(2) of the Supreme Court (Administration and Probate) Rules 2014, a minor aged 12 years or over may elect a guardian and in other cases a guardian may be assigned by the Court or Registrar of Probates for the purposes of a grant of administration durante minore;
(c)in the event no parenting orders have been made, and the minor aged 12 years is not capable of providing an election, consideration ought be given as to whether an independent administrator or State Trustees should apply for a full-grant on intestacy. If such application is made, special circumstances would need to be established; and
(d)in either application, the Registrar of Probates may require a surety guarantee to be provided in all of the above circumstances.
If you wish to discuss these avenues further, you should contact the Registrar of Probates, Kate Price, on (03) 8600 2167.
As the application filed with the Court will be dismissed, there remains the issue of the costs of the application. Her Honour’s view is that the applicant should not bear the costs as it was a misconceived application. If you disagree to that proposal, please provide short submissions.
Plaintiff’s submissions
The plaintiff’s solicitors filed submissions as to the costs of the application and sought that the costs be borne by the estate on the basis that the application was considered to be one with a proper basis and made in good faith.
They submitted that the plaintiff has standing to make the application for the limited grant, as a creditor of the estate pursuant to r 4.06 of the Supreme Court (Administration and Probate) Rules 2014 (Vic). In making an application as a creditor of the estate, the affidavit in support must state that the applicant is a creditor of the deceased, the amount of the debt due to the applicant from the deceased and the particulars of the debt together with such evidence proving the debt as may be appropriate. They submitted that the plaintiff deposed to all necessary matters in his affidavit, including details of the debt supported by bank statements, the circumstances surrounding the debt being raised and bank statements of the deceased that showed part payment of the debt and the balance outstanding at the date of death.
They submitted that it was necessary for the plaintiff to make the application for a limited grant given the nature of the assets and the dangers of wastage and damage, as well as there being no one else in the family who was capable of applying for a full grant. Further, they state it was always understood by them that the Court preferred members of a family and next of kin when applying for a grant of representation, as opposed to strangers. In the peculiar and tragic circumstances, they considered that the plaintiff had standing to make the application as the only capable next of kin and a creditor of the deceased estate.
Consideration
Applications for administration ad colligendum bona are commonly made in circumstances of urgency. Such circumstances are where a grant of probate or administration cannot be made promptly and the nature of the estate of the deceased person requires protection. In those circumstances, the Court has power to authorise an administrator with confined powers to act on behalf of an estate for a specific purpose or for a specific time. It allows a person with standing to collect, preserve and protect assets of a precarious or perishable nature where there is an unavoidable delay in the Court making a general grant of representation.[1] Although the plaintiff sought a limited grant, the effect of making the grant would be to allow the plaintiff to administer the estate without a full grant made in the estate.
[1]Re Cohen deceased [1975] VR 187.
The application was made one year after the deceased’s death. The nature of the assets and liabilities of the estate are not complicated and would have been known to the plaintiff well before the application. No explanation was provided for the delay.
While the plaintiff is the deceased’s next of kin and his application was made with the consent of the mother of Tyler and Connor, he is not an intestacy beneficiary and thus lacks standing to make the application. Practitioners in the probate jurisdiction are well aware of that standing is a prerequisite when making an application for a grant of representation. The solicitors’ view that family members and next of kin are preferred applicants for a grant of representation is misconceived as they must still establish standing in an application.
The submissions incorrectly state that the plaintiff’s application was made on the basis that he is a creditor of the estate. However, the plaintiff deposed that he would make an application for a full grant of representation after he called in the assets of the estate, discharged the mortgage debt and distributed the estate to the intestacy beneficiaries; subject to the estate’s indebtedness to himself first being discharged.
Prima facie, the plaintiff is a creditor of the estate and, in that capacity, he would have standing to make an application for a full grant. Insofar as the Court is aware, no application by a creditor for a limited grant has ever been made and applications by a creditor for a full grant of representation are rare. There are sound reasons for this. First, an application for a limited grant is not advertised so the plaintiff would be unware of other claims that may be made by other creditors. Secondly, as a creditor administrator, whether under a limited or full grant, the plaintiff would be required to adjudicate on the terms of his own loan and that of his wife’s loan, placing him in a position of inherent conflict with the estate. The loan does not appear to have been formally documented in regard to its term or repayment and there may be issue of whether part of it is statute barred. Thirdly, other creditors may come forward after advertisements are made for claims. Finally, it is usual that a creditor applicant is required to provide a surety guarantee.[2]
[2]Re Mayes [2015] VSC 708.
The plaintiff’s solicitors referred to In the Will of Johnson[3] where they submitted that Molesworth J made a full grant of administration to a creditor where the sole legatee had disclaimed his executorship. However, in that case, his Honour was considering a creditor application that was substantially different to the plaintiff’s application. The applicant creditor was seeking a full grant of representation in circumstances where the creditor had proved the debt before a Master of the Court and the next of kin had no interest in the estate.
[3](1886) 12 VLR 296.
The plaintiff’s solicitors also referred to the loose leaf Wills Probate and Administration Service (Vic) advice which refers to the meaning of the phrase ‘any party interested’ in making a grant of representation in the context of an application pursuant s 15 of the Administration and Probate Act 1958 (Vic). They rely on Re Randall (deceased)[4] to submit that a creditor may be granted administration of a deceased estate where the creditor is sufficiently interested in the estate to have standing to invoke the Court’s jurisdiction. While a creditor may have standing to invoke the Court’s jurisdiction, the difficulties in the plaintiff’s application must be addressed to the satisfaction of the Court before a grant could be made.
[4][1927] VLR 535.
The difficulties in the plaintiff’s application were set out in the ruling. The plaintiff’s solicitors were also provided with detailed guidance for other options that could have been pursued without the need for the application for the limited grant. Where the application was determined as misconceived for the reasons set out, it is difficult to justify that the plaintiff should pay the costs of the application. As the solicitors now have the guidance for other appropriate options, some of the work undertaken in this proceeding may well be able to be utilised in pursuing those options, but the plaintiff should not bear the burden of the costs of this proceeding.
The Court orders that the plaintiff not bear the costs of the proceeding and otherwise the proceeding be dismissed.

---

[2021] VSC 119

15 March 2021