Re Coffey; O'Halloran v Coffey
[2020] VSC 649
•2 October 2020
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUSTS, EQUITY AND PROBATE LIST
S ECI 2019 00898
IN THE MATTER of s 15 of the Administration and Probate Act 1958
-and-
IN THE MATTER of the will and estate of JOAN JACKMAN COFFEY, deceased
BETWEEN:
| RUTH STANISLAUS O’HALLORAN | Plaintiff |
| v | |
| JOHN LAWRENCE COFFEY | First Defendant |
| -and- | |
| JOHN BLANCH | Second Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 2 October 2020 |
CASE MAY BE CITED AS: | Re Coffey; O’Halloran v Coffey |
MEDIUM NEUTRAL CITATION: | [2020] VSC 649 |
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WILLS AND ESTATES — Where no grant of probate despite death of deceased six years ago — Where executors in dispute over assets of the estate — Where each executor alleges the other in situation of conflict — Where plaintiff agrees to be passed over and seeks other executor also be passed over and appointment of independent administrator — Where defendant objects to being passed over — In the Goods of Loveday [1900] P 154; Re Crane (2005) 93 SASR 198; Tsaknis v Lilburne [2010] WASC 152; Re Munro [2018] VSC 747 — Administration and Probate Act 1958 (Vic) s 15.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms R Grayson Morison | McNab McNab & Starke |
| First Defendant in person | ||
| Second Defendant in person |
HER HONOUR:
Introduction
Joan Jackman Coffey (‘the deceased’) died on 17 February 2014, leaving a will dated 26 September 2008 (‘the will’).
The will appoints the plaintiff, the first defendant and Robert Henry Wald as executors and trustees of the estate. Mr Wald executed a deed of renunciation on 25 March 2015.
The plaintiff and the first defendant are two of the deceased’s children. Due to substantial ongoing differences between the plaintiff and the first defendant, an application for a grant of probate of the deceased’s will has not yet been filed with the Court. The exact value of the estate is unknown, however, the plaintiff’s best estimate based on 2019 values is that the assets are in the vicinity of $6.9 million.
Plaintiff’s application
By originating motion filed 4 March 2019, the plaintiff sought orders pursuant to s 15 of the Administration and Probate Act 1958 (‘the Act’), inter alia, that:
(a) the first defendant show cause why he should not, within such time as the Court may specify, bring the will into Court, and, by authorising and directing the second defendant holding the will to do so, either prove the will or, alternatively, renounce probate thereof;
(b) in the alternative, the plaintiff be entitled to prove the will;
(c) the second defendant deliver the original will of the deceased to the Registrar of Probates; and
(d) the costs of and incidental to the application be paid by the first defendant personally, without recourse to the estate of the deceased.
Background
In March 2014, the plaintiff and the first defendant engaged John Blanch, solicitor, (‘the second defendant’) to prepare an application for a grant of probate of the deceased’s will.
On 21 April 2014, the executors signed an authority directing the second defendant to hold estate funds on trust in an interest-bearing bank account.
On 7 May 2014, an advertisement was posted on the Supreme Court’s website of the executors’ intention to make an application for a grant of probate of the deceased’s will.
The second defendant prepared a draft application for probate and forwarded those documents to the executors on 25 June 2014. On 27 July 2014, the first defendant indicated that he did not agree with the draft inventory of assets and liabilities, and opined that it was premature to execute the draft documents. The plaintiff signed the draft documents on 28 July 2014. Also on 28 July 2014, the first defendant and his siblings, Michael Coffey and Frances Coffey, informed the second defendant that they did not support the signing of the draft documents until the assets and liabilities were clarified.
On 24 April 2015, the second defendant corresponded with the first defendant, providing further information concerning the inventory of assets and liabilities and estate accounts, and encouraged the first defendant to sign the documents. The first defendant did not sign them. The plaintiff and the first defendant dispute who is responsible for the delay and failure to obtain a grant of probate.
Against this background, the second defendant wrote to the first defendant on 3 July 2018, encouraging him to proceed with the application for probate, noting the potential for the estate to be subject to litigation and other problems due to the delay. By email dated 6 July 2018, the second defendant again informed the plaintiff and the first defendant that they had an obligation to obtain a grant of probate.
Procedural history
The second defendant filed an appearance on 18 April 2019.
On the first return of the proceeding on 17 May 2019, the first defendant appeared in person. On the same day, he filed an appearance listing a residential address in Manunda, Queensland and an address for service in Kew, Victoria.
The plaintiff informed the Court that the second defendant had delivered the will to the Registrar of Probates, pursuant to s 5A of the Act, and sought an order that the first defendant be passed over as an executor. The Court sought the attitude of the plaintiff and the first defendant on both executors being passed over in favour of an independent administrator as a means of resolving the ongoing conflict between them and expediting the administration of the estate. The plaintiff considered such proposal to be acceptable and appropriate. The first defendant enquired whether any of the beneficiaries could be appointed as administrator. The plaintiff considered that this would not be appropriate. The first defendant said he wanted further time to consider the Court’s proposal. The plaintiff also raised her difficulties with communicating with the first defendant as he did not reside at his Queensland address. The first defendant was also directed to the Court’s coordinator for self-represented litigants. The proceeding was adjourned to 19 July 2019.
In correspondence after the hearing, Mark Maier, solicitor for the plaintiff, reiterated to the first defendant that the Court’s coordinator is able to assist self-represented litigants with the Court processes, but is unable to provide legal advice.
By affidavit sworn on 15 July 2019, Mr Maier deposed to his many communications with the first defendant between 23 May and 10 July 2019 concerning the appointment of a suitable independent administrator. Mr Maier suggested that the first defendant identify suitable candidates. On 16 June 2019, the first defendant proposed his brother, Michael Coffey, and Rod Jones, who was said to be a family friend with probate and executorial experience.
On 4 July 2019, Mr Maier informed the first defendant that his brother and Rod Jones were not suitable candidates and reiterated that the administrators needed to be impartial and without risk of partisan influence from within the family. In the case of Michael Coffey, he is a sibling and beneficiary and Mr Maier’s instructions were that he was aligned with the interests of the first defendant. In the case of Rod Jones, he is the husband of Frances Coffey, another beneficiary and sibling, and Mr Maier’s instructions were that he is also aligned with the interests of the first defendant. Mr Maier informed the first defendant that on a number of occasions the Court had approached Nathan Kuperholz, solicitor, for the role of independent administrator. Mr Maier informed the first defendant that he had approached Mr Kuperholz and enclosed his response. Mr Maier also informed the first defendant that, if a truly independent person with the requisite skills were to be put forward by him, that person would be considered, but, as matters stood, the plaintiff would seek the appointment of Mr Kuperholz at the next hearing.
By 11 July 2019, Mr Maier had not received a substantive reply on the issue from the first defendant and informed him that, if he did not receive a reply by 12 July 2019, he would proceed at the next hearing on the basis that the plaintiff’s application would be contested. On 12 July 2019, the first defendant forwarded two emails to Mr Maier which were not responsive to the issue of an independent administrator.
At the hearing on 19 July 2019, the Court was informed that agreement had not been reached in relation to the appointment of an independent administrator. The plaintiff sought the appointment of Mr Kuperholz as independent administrator in her proposed orders before the Court. The first defendant disagreed with the plaintiff’s proposal and nominated Michael Coffey and Rod Jones as joint administrators of the estate. The plaintiff objected to this proposal on the basis that, amongst other issues, both were conflicted and neither had appropriate experience in the administration of estates. The plaintiff informed the Court that at the next hearing date she would continue to seek orders that both executors be passed over and for the appointment of an independent administrator. The plaintiff informed the Court that she was continuing to have communication difficulties with the first defendant. Orders were made for the first defendant to file affidavits in response to the passing over application by 16 August 2019 and the plaintiff to file any affidavits in reply by 30 August 2019. The Court noted in the orders that the plaintiff had reserved the right to seek orders in the nature of final relief, being her orders dated 19 July 2019. The proceeding was adjourned to 20 September 2019.
On 22 July 2019, Mr Maier emailed the first defendant, noting that he was an experienced self-represented litigant, and requested that he file the proper basis and overarching obligations certificates under the Civil Procedure Act 2010. No such certificates have been filed by the first defendant.
On 23 August 2019, Mr Maier emailed the first defendant, informing him again that at the next hearing the plaintiff would seek orders that both executors be passed over and that Mr Kuperholz be entitled to apply for a grant of letters of administration with the will annexed. Mr Maier attached a copy of the proposed orders to his email.
At the hearing on 20 September 2019, the plaintiff sought final orders for the passing over of both executors and the appointment of Mr Kuperholz in the form provided to the first defendant on 23 August 2019. The first defendant did not consent to those orders and raised concerns over the plaintiff’s conduct. He also had concerns over the orders sought in the originating motion as they did not reflect the relief now sought by the plaintiff. He requested an adjournment so that he could file further material. The Court acknowledged the change in the relief sought by the plaintiff and informed the first defendant that he was on ‘clear notice’ of the orders sought by the plaintiff. The orders for the filing of any further affidavits by the first defendant were specifically confined to the relevant issues in dispute, namely, whether the first defendant should be passed over and the identity and suitability of any proposed person to be appointed administrator of the estate. The proceeding was adjourned to 11 October 2019, with the further procedural management of the proceeding to be addressed at that time.
On 11 October 2019, the first defendant again raised his concerns that the plaintiff was not formally seeking orders for his passing over in the originating motion. Orders were made for the first defendant to file submissions in opposition to the plaintiff’s application, the plaintiff to file reply submissions, and thereafter for the application to be determined on the papers.
Applicable principles
An executor's ability to act commences upon the death of the testator. The due and proper administration of the estate requires an executor to call in the assets, pay the testator's debts with reasonable diligence having regard to the assets available and properly applicable for that purpose, secure the estate assets, and ascertain the liabilities of the estate.
Prima facie, a person nominated as executor by a testator is entitled to a grant of probate.[1] However, the Court has both statutory and inherent power to pass over a named executor and grant the right to administer an estate to another person.[2] The statutory power is found in s 15 of the Act, which provides that the Court may order an executor of a will who neglects to prove the will, within six weeks of the date of death, to show cause why he or she should not prove the will or alternatively renounce probate thereof. The power to pass over an executor has long been recognised as part of the Court’s inherent jurisdiction concerning the administration of deceased estates.[3]
[1]Evans v Tyler (1849) 2 Rob Ecc 128, 131; 163 ER 1266, 1267 (Sir Herbert Jenner Fust); Tsaknis v Lilburne [2010] WASC 152, [60]–[61] (EM Heenan J).
[2]Re Crane (2005) 93 SASR 198.
[3]See, eg, Re Swale [1960] SASR 391, 394 (Napier J); In the Estate of Smith (deceased) (1972) 2 SASR 477, 478–9 (Walters J); Re Crane (n 2) [15]–[30] (Besanko J), Re Munro [2018] VSC 747, [35] (Derham AsJ).
In Re Munro, Derham AsJ stated:
[T]his Court's jurisdiction in Victoria is unlimited and its probate jurisdiction pursuant to the [Act] and the Supreme Court Act 1986 (Vic) is broad and brings with it an inherent power necessary to the effective exercise of the jurisdiction granted. That power extends to prevent steps being taken that would lead to injustice or render the grant inefficacious. This is expressed in different ways depending on the circumstances. Another way of expressing the power is that it is a power to maintain the authority of the court and to prevent its processes from being obstructed and abused. Where an application for a grant of probate is made to an executor appointed by a deceased's will and the circumstances show that the executor is liable to be removed, passing over that executor will prevent the grant leading to injustice or being rendered inefficacious, obstructed or abused.
Where the Court exercises the power to pass over a named executor, it does so having regard to the due and proper administration of the estate and the interests of the parties beneficially entitled to the estate. The consequence is that either the other named executors will receive a grant of representation or letters of administration with the will annexed will be granted to someone else.[4]
[4]Munro v Munro (n 3) [35]–[36] (citations omitted).
His Honour referred to the type of circumstances where orders may be made passing over an executor, as identified by Besanko J in Re Crane.[5] These include where an executor is of bad character, has neglected his or her duties, has intermeddled in the estate and refused to take out a grant, is absent abroad, suffers from ill health, is of unsound mind, is not competent to take probate, has disappeared, or where the estate is insolvent.[6] In Re Crane, a co-executor had lodged a caveat and sought orders that the other executor be passed over on the basis of a conflict of interest and duty, the other executor being in dispute with the estate about the ownership of significant assets. Besanko J considered the executor was unlikely, because of a conflict of interest, to consent to the estate asserting rights in relation to particular assets and made the orders passing over the executor.
[5]Re Crane (n 2) [25] (Besanko J).
[6]Munro v Munro (n 3) [38] (Derham AsJ); Re Crane (n 2) [25] (Besanko J).
Plaintiff’s affidavits and submissions
The plaintiff filed submissions on 23 September 2019 and submissions in reply on 25 October 2019.
The plaintiff relied on three affidavits sworn by her on 15 November 2018, 18 July 2019 and 17 September 2019.[7] She also relied on five affidavits by Mark Albert Maier, being two sworn on 15 May 2019, two sworn on 15 July 2019 and one sworn on 24 October 2019.
[7] In the plaintiff’s submissions, the affidavit sworn 15 November 2018 was described as having been sworn on 4 March 2019, being in fact the date it was filed. The first defendant raised this in his written submissions. The plaintiff accepted that the date in the submissions was incorrect.
The plaintiff alleges that, since the date of death, disputes have arisen between the executors concerning the administration of the estate, including the following:
(a) There have been issues regarding the management of a farm property known as Kewell Park Homestead owned jointly by the deceased and Tampa Holdings Pty Ltd (‘Tampa’) as trustee for the John L Coffey Trust and upon which is plant and equipment belonging to the estate. By letter dated 13 August 2014, the first defendant prohibited the plaintiff from entering the property without authorisation from Tampa and payment of an entry fee.
(b) In March and April 2016, the plaintiff and first defendant negotiated a deed of variation of lease for a proposed Telstra installation on another of the deceased’s properties known as the 640 property. During the negotiations, the first defendant insisted on including Tampa as a signatory to the deed, notwithstanding that it is not an owner of the property.
(c) In 2016, further issues arose with the first defendant concerning share farming contracts on the 640 property and on other farm properties owned by the deceased.
(d) Between April 2017 and January 2018, the plaintiff and the first defendant were in dispute over the validity of certain share farming contracts on estate property and whether certain decisions relating to the contracts bind the estate. In addition, they had disagreements regarding ratification of Grower Registration Numbers on the National Grower Register and ensuring tracing of produce and proper accounting from relevant share farmers. The share farming issues continue remain contentious in the administration of the estate.
(e) In September 2017, the first defendant purported to appoint Ms Frances Coffey as an agent of the estate in negotiating a lease with Vodafone to place a telephone tower on the 640 property.
In addition, there have been disputes regarding:
(a) the approval of the payment of certain expenses, including council and water rates incurred on various estate properties;
(b) the payment of the estate’s accounting fees, with the first defendant allegedly not providing instructions for the payment of the accountant for the preparation of tax returns of the deceased’s estate; and
(c) the payment of outstanding legal fees incurred by the second defendant regarding the administration of the estate.
The plaintiff rejected the first defendant’s proposal that he be the sole legal personal representative of the estate on the grounds of certain issues of conflict as follows:
(a) Tampa owns land adjacent and nearby to estate land. The plaintiff deposed that the Tampa land is treated by the first defendant as land at his direction and control. The estate land is used by Tampa pursuant to an arrangement between the first defendant and his parents. Despite requests by the plaintiff, the first defendant has not produced any papers documenting the arrangement. The plaintiff’s position is that the arrangement should be reconsidered with land usage reverting to land ownership. There may also be adjustments to be made between the estate and Tampa for the use of the estate land since the deceased’s death.
(b) In November 2013, the first defendant withdrew $16,900 from an account in the name of JM JJ & JL Coffey and B Halloran sheep account. These funds were allocated for the partnership BAS payments. The deceased funded the BAS payments personally. Despite a request by the plaintiff in May 2014, the first defendant has not refunded the funds to the partnership. An administrator will need to establish whether the estate has a claim against the first defendant for reimbursement of those funds.
In response to the first defendant’s proposal that Michael Coffey and Rod Jones be appointed as administrators of the estate, the plaintiff’s position is that neither of them would be able to dispassionately discharge the obligations of the office. The plaintiff has regard to the fact that she is a beneficiary of the estate and an administrator will need to address the following issues:
(a) The first defendant claims that there are various forms of indebtedness amounting to over $2 million owed by the plaintiff and her husband to the estate. These claims are denied by the plaintiff and her husband. One component of the claim is an allegation about accounting for proceeds of grain sales said to exceed $1 million. This claim is supported by Frances Coffey and Rod Jones.
(b) There will be a dispute over what plant and equipment falls within clause 4(a) of the deceased’s will, which provides for the plant and equipment to pass to the plaintiff. Plant and equipment not falling within that clause falls into the residue or passes to entities in which the plaintiff has no interest.
(c) The deceased was a member of a farming partnership known as the Coffey O’Halloran partnership. The first defendant asserts that the plaintiff has an indebtedness to the partnership and, through that, to the estate in an amount of $646,844. The plaintiff denies any indebtedness.
The plaintiff denies the claims made against her. The second defendant and the estate accountants have informed the plaintiff that the claims by the first defendant have no substance. The plaintiff notes that the claims potentially increase the size of the residue of the estate and therefore would benefit each of the first defendant, Michael Coffey and Frances Coffey.
Further, the plaintiff contends that the interests of Rod Jones and Frances Coffey are aligned. The plaintiff notes that Rod Jones is the longstanding partner of Frances Coffey and both of them have agitated the grain sales claim against the plaintiff. In addition, since 2013, the first defendant and Frances Coffey have been directors of a company known as Tazzak Pty Ltd. The first defendant is the secretary of the company. The shares were owned by the first defendant and are now owned by Frances Coffey.
In respect of Michael Coffey, the plaintiff deposed that, as well as him living in the United States of America, she also understands that he was a bankrupt at the date of the deceased’s death and his bankruptcy would be an issue in considering him as an administrator of the estate.
On 15 May 2019, Mr Maier deposed to the steps that he had taken since the proceeding was issued to effect formal service of the relevant documents on the first defendant. He states that it can be inferred from the circumstances that the first defendant had received notice of the proceeding. After having been informed by the second defendant that he was admonished by the first defendant for posting documents to the Queensland address of the first defendant and was instructed that all documents were to be sent by email, Mr Maier satisfied himself that he had the correct email address of the first defendant. Between 3 April and 22 April 2019, Mr Maier forwarded the relevant documents by email to the first defendant but did not receive any response from him. On 12 May 2019, the first defendant emailed the second defendant enquiring whether any court documents had been filed in relation to the estate. On 13 May 2019, the second defendant forwarded this email to Mr Maier as he was aware that Mr Maier required notice of any recognition given by the first defendant as to the existence of the proceeding. On 15 May 2019, Mr Maier forwarded to the first defendant a copy of his first affidavit and a letter informing him that the proceeding was listed for 17 May 2019.
On 15 July 2019, Mr Maier deposed that, since the hearing on 21 May 2019, he had been unable to obtain any agreement with the first defendant as to the appointment of an independent administrator of the estate in place of the named executors or the choice of a suitable person to be appointed in the event that the Court proposed to appoint an independent administrator. Mr Maier exhibited the documents evidencing the communications between himself and the first defendant between 23 May to 15 July 2019.
In June 2019, the plaintiff sought the consent of Mr Kuperholz to act as an independent administrator of the estate. Mr Kuperholz indicated that he consented to such an appointment if the Court deemed that to be appropriate, subject to a representative of the estate signing his disclosure statement and costs agreement.
On 24 October 2019, Mr Maier referred to the first defendant’s submissions filed 18 October 2019 and deposed that he had not put into evidence an email from Mr Kuperholz to the first defendant dated 17 October 2019. Mr Maier had enquired of the first defendant on the evening of 17 October 2019 whether that email would be before the Court but did not receive a reply from the first defendant. Mr Maier’s online search of the proceeding did not disclose that the email would be before the Court. Accordingly, Mr Maier exhibited the relevant email and reiterated that the plaintiff would support the choice of any independent administrator selected by the Court. Mr Kuperholz’s email to the first defendant informed him that he would be prepared to accept appointment as an independent administrator if the Court considered it appropriate and that he would expect the terms of an appointment would be those set out in an email to Mr Maier dated 13 June 2019 which the first defendant had attached to his email dated 11 October 2019.
The plaintiff submits that an independent administrator is appropriate as the estate has not been administered at all, the defendant is conflicted, and there are ongoing disputes between the executors and beneficiaries. The plaintiff also alleges that the defendant has intermeddled in the estate and has refused to take out a grant of probate. She submits that, having regard to the due administration of the estate and the interests of the beneficiaries, it is appropriate to appoint an independent administrator.
The plaintiff seeks orders that both named executors be passed over, an independent administrator be appointed, and that the first defendant pay the costs of the application on an indemnity basis without recourse to the estate of the deceased.
First defendant’s affidavits and submissions
The first defendant filed written submissions dated and filed 9 October 2019, and further submissions also dated 9 October 2019 but filed 18 October 2019.
The first defendant relied on a number of affidavits sworn by him, some of which were duplicates.[8] The first affidavit was sworn on 29 July 2019 and filed 1 August 2019. It exhibits documents comprising 181 pages, being communications between the plaintiff, the second defendant, himself and others between 10 April 2014 to 27 August 2015.
[8]The affidavits that are substantively duplicates are not treated as separate in this judgment.
The second affidavit was sworn on 17 August 2019, exhibiting further communications comprising 894 pages between the plaintiff, the second defendant, himself and others from 17 March 2014 onwards.
The third affidavit was sworn on 19 September 2019 and exhibits 562 pages. The fourth affidavit was sworn on 24 September 2019 and exhibits 115 pages. The fifth affidavit was sworn on 3 October 2019, comprising 37 paragraphs with no exhibits. The sixth affidavit was sworn on 17 October 2019, exhibiting 51 pages and includes copy letters from the beneficiaries of the estate, letters from Mr Andrew Bell, solicitor, and Mr Ray Richardson, accountant, and others whom the first defendant claimed would take on the role of administrator of the estate.
The first defendant also relied on an affidavit by Michael Coffey sworn in California on 16 October 2019.
The first defendant disputes the plaintiff’s assertions that he is responsible for the delay in obtaining probate. He states that he has been prepared to obtain a grant of probate, but has been waiting for the plaintiff to provide information and accounts concerning the deceased’s estate. He says the plaintiff has refused to provide an accurate inventory of the assets and liabilities of estate which has prevented a grant of probate from being obtained. The first defendant indicated that he, along with the other beneficiaries of the estate, have made numerous requests of the plaintiff for this information.
The first defendant also raised concerns over the plaintiff’s conduct since the date of death and her fitness to act as an executor. He submitted that the plaintiff has frustrated the administration of the estate and has conflicts of interest with the estate. He submitted that he has no conflicts of interest with the estate and wishes to carry out the duties of executor diligently. He submits that he has the support of the beneficiaries entitled to 90 per cent of the estate, has acted in the estate’s best interests since the death of the deceased and has done nothing to warrant being passed over.
Although no longer relevant, the first defendant opposed the plaintiff being an executor. He submitted either he should be the executor as, save for the plaintiff, the remaining beneficiaries want him to administer the estate. The first defendant submitted that Michael Coffey as a beneficiary of the estate wants the sort of careful and considerate treatment that only the first defendant, as one of the 90 per cent beneficiaries, could bring to the administration of the estate.
Alternatively, the first defendant submitted that both Michael Coffey and Rod Jones were willing to take on the role as joint administrators of the estate and both of them should be appointed. The first defendant described Rod Jones as a family friend and partner of Frances Coffey, who is a beneficiary of the estate. He said that Rod Jones is willing to act as an administrator on the basis that he is paid a maximum of $20,000 plus expenses.
The first defendant states that Michael Coffey is in his late sixties, is disabled, lives on a small pension in the United States of America, and is willing to be an administrator with Rod Jones. An affidavit by Michael Coffey was filed in the proceeding. He expressed the view that the first defendant should be given more time for his responses, and that the plaintiff is the person creating delays and she needs to be removed. He said the other beneficiaries of the estate also expressed the same sentiment to him. He was confident that the best solution would be for the first defendant to continue on with the administration of the estate with help from the other beneficiaries. In the alternative, he sought that Rod Jones and himself be appointed administrators of the estate, stating that the remaining beneficiaries, save for the plaintiff, had sent letters to this effect to the first defendant.
Michael Coffey’s view was that a ‘very poor last choice’ would be for an administrator to be installed by the Court. His reason for this view was that such a person would know nothing about the deceased’s wishes passed on to her children through discussions over the years, how the estate operates, what the beneficiaries would like, and other details that were important to the beneficiaries. He also expressed a view that ‘a cabal’, consisting of the second defendant and the estate accountants, only does what is dictated by the plaintiff and all issues that the plaintiff has with the estate should be handed to arbitrators, with those decisions being final.
If the Court were to appoint others as administrators, the first defendant referred to letters dated 10 and 14 October 2019, respectively, from Mr Andrew Bell, solicitor, and Mr R Richardson, accountant, who stated they would be willing to be appointed as administrators. Both provided an estimate of their costs ‘without having full knowledge of the estate’. Mr Bell estimated his costs at $20,000 and Mr Richardson estimated his costs at $18,000. The first defendant considered the amount of $20,000 would be adequate compensation for an independent administrator.
The first defendant objected to Mr Kuperholz as an independent administrator on the grounds of the potential cost to the estate.
The first defendant also submitted that the plaintiff or the Court denied him procedural fairness, and also raised other objections as follows:
(a) The plaintiff circumvented formal service on him and he did not have the documents at the first hearing on 17 May 2019.
(b) On 17 May 2019, the plaintiff asked for default judgment and at every mention thereafter. On 20 September 2019 Justice Moore set the matter down for trial before an Associate Justice, then I ‘picked up the file’ and the plaintiff pushed for default judgment at the first mention before myself as the new judge.
(c) The defendant managed to download the plaintiff’s documents on 26 May 2019 and thereafter he has been consistently filing material and there is more to come. The filing of the first defendant’s documents was partly done but there is much more evidence to reveal and the first defendant is only now starting to make progress.
(d) The first defendant’s submissions are only partially done due to the limited time allowed for the filing of submissions.
(e) The Court has not yet ordered the first defendant to show cause, which is the remedy provided by s 15 of the Act.
(f) The first defendant was summarily refused a trial when the Court opted to determine the proceeding on the papers.
(g) The application does not refer to, or expressly seek, passing over orders in the originating motion and the plaintiff has refused to amend the document to clarify that she is seeking this relief.
(h) Only part of the relief under s 15 of the Act is sought, which misrepresents the relief and remedy provided by that section. In addition, the plaintiff’s alternative order that she be entitled to prove the will falls outside the scope of the application and unnecessarily invokes the inherent jurisdiction of the Court.
(i) The originating motion appears to seek summary judgment without leave of the Court to do so and thus contravenes r 8.02 of the Supreme Court (General Civil Procedure) Rules2015.
Plaintiff’s reply submissions
The plaintiff noted that the first defendant did not refer to any specific orders sought by him in the proceeding. However, his submissions appear to seek that some part of the relief be struck out, that the proceeding be adjourned, and that he be granted ‘leave to file a counter suit by way of summons or other process alleging that the plaintiff is unfit for office’.
Insofar as that is the position, the plaintiff opposed such relief. She noted that the relief sought by the plaintiff in the originating motion is the standard form of relief sought in applications made pursuant to s 15 of the Act, and that the plaintiff is not seeking orders to enable her to prove the will of the deceased alone.
The plaintiff responded to the points made by the first defendant as to procedural fairness and the numerous other objections made by the first defendant.
The plaintiff objected to the appointment of Michael Coffey and Rod Jones on the basis that both are conflicted, amongst other issues, and neither has experience in administering estates. The plaintiff noted that Mr Maier raised these issues with the first defendant at an early stage, but he did not respond to them.
Consideration
Throughout the proceeding, the first defendant represented himself. At the first hearing, he was directed to the self-represented litigants coordinator within the Court for assistance and was also given the opportunity to seek legal advice. He elected to continue to represent himself.
The first defendant was also granted numerous adjournments which provided him with the opportunity to seek legal advice, if he wished, as well as substantial time to file any documents and affidavits in support of his opposition to the application. The first defendant was first aware that the plaintiff sought the appointment of an independent administrator from the first directions hearing on 17 May 2019.
Procedural and other objections of the first defendant
Service on first defendant
The first defendant submitted that the plaintiff circumvented formal service on him and he had not been formally served with documents in the proceeding. The plaintiff acknowledged that the originating motion and summons were not formally served on the first defendant. In his two affidavits sworn 15 May 2019, Mr Maier deposed to the various attempts made to serve the first defendant, as well as the attempts to bring the proceeding to his attention, including a letter dated 15 May 2019, stating that the first hearing was on 17 May 2019. Having regard to the evidence, it cannot be concluded that the plaintiff circumvented formal service of the proceeding. In any event, the proceeding was brought to the first defendant’s attention before the first directions hearing as he appeared on that date and knew the relief sought by the plaintiff.
Plaintiff asked for default judgment at every mention
The first defendant submitted that the plaintiff was seeking default judgment against him at the hearing on 17 May 2019 and at every mention thereafter. This was not the case. The plaintiff’s application was initially for the first defendant to be passed over. On the first return of the application, the Court sought the attitude of the plaintiff and first defendant as to their both being passed over in favour of an independent administrator as a means of resolving the ongoing conflict between them and expediting the administration of the estate. The plaintiff accepted the Court’s proposal as appropriate and thereafter maintained that position. The first defendant said he would consider the proposal and, on the next hearing date, his position was that he did not agree to it. At no stage of the proceeding did the plaintiff seek default judgment against the first defendant. On each occasion after the directions hearings, the first defendant was provided with the plaintiff’s proposed orders for the appointment of an independent administrator.
Filing of further documents, more evidence to be filed
The first defendant accessed the file online and also filed affidavits in response to the plaintiff’s affidavits. The first defendant stated that he responded to the plaintiff’s application ‘by methodically filing and referencing five years of documentary evidence’. Although he indicated this task would take a further month or two to complete, his submissions filed 18 October 2020 stated that the communications over the five years since the deceased’s death were ‘all filed on Redcrest’. Excluding his duplicate affidavits, the first defendant filed seven affidavits. Five were filed before the last hearing date on 11 October 2019 and two were filed afterwards. The first defendant was provided with ample time to file his affidavits.
Limited time to complete submissions
The first defendant filed written submissions dated 9 October 2019, comprising seven pages, and further submissions also dated 9 October 2019, but filed 18 October 2019, comprising 17 pages. These submissions included the first defendant’s response to the plaintiff’s written submissions filed 23 September 2019. The proceeding was commenced in March 2019 and, since then, it has been heard at four directions hearings. The first defendant filed affidavits between the months of July and October 2019. The first defendant has been provided with procedural fairness in respect of his submissions.
Whether first defendant should be ordered to show cause
The first defendant submitted that the Court has not yet ordered him to ‘show cause’, which is the remedy under s 15 of the Act. The jurisdiction of the Court under s 15 is enlivened where there has been a delay in obtaining probate of more than six weeks since the deceased’s death and the plaintiff has an interest in the estate. The Court will often consider making an order passing over an executor in the context of a s 15 application.
In this proceeding, the plaintiff considered the proposal made by the Court at the first directions hearing that both the plaintiff and first defendant be passed over as a means of resolving matters between them and consented to such a course. From that point on, the plaintiff did not seek that the defendant show cause pursuant to s 15 of the Act, but rather sought the passing over of both herself and the first defendant. The Court’s inherent jurisdiction to pass over executors is not predicated on a failure to show cause under s 15 of the Act. It is unnecessary for specific orders to be made for the first defendant to show cause and there is no failure of procedural fairness in such an order not being made.
Trial of proceeding
The first defendant submitted that he was summarily refused a trial, with the Court opting to determine the proceeding on the papers. At the September 2019 directions hearing, the Court foreshadowed the possibility of setting the proceeding down for hearing, possibly before an Associate Justice. However, on that day the first defendant sought an adjournment to file further material. At the last directions hearing, the first defendant said that he wanted a trial on the basis that he had a ‘chance to defend himself’. It was explained to him that passing over applications could also be determined on the papers, that he would be given additional time to file any further submissions, and that in this way he could defend his position. Orders were subsequently made for the application to be determined on the papers and for the filing of written submissions. That this matter has been considered on the papers has caused no unfairness to the first defendant, who was given ample opportunity to defend his position through his affidavits and submissions.
First defendant’s objections to the application
The first defendant submitted that the application does not refer to or expressly seek passing over orders in the originating motion and that the plaintiff has refused to amend the document to clarify that she is seeking this relief. As observed, at the first directions hearing, the plaintiff accepted as appropriate the Court’s proposal for the appointment of an independent administrator. At each of the directions hearings thereafter, the plaintiff’s position remained the same. The first defendant was present at each of those hearings and understood the plaintiff’s position. At the hearing on 20 September 2019, the Court informed the first defendant that he was on ‘clear notice’ of the orders sought by the plaintiff. The orders for the filing of any further affidavits by the first defendant specifically required that they be confined to the relevant issues in dispute. In such circumstances, it was unnecessary for the application to be amended formally to reflect that the plaintiff sought the appointment of an independent administrator.
The first defendant submitted that only part of the relief under s 15 of the Act was sought, which misrepresents the relief and remedy provided by that section. In his view, the plaintiff’s alternative order that she be entitled to prove the will falls outside the scope of the application and unnecessarily invokes the inherent jurisdiction of the Court. This objection is misconceived. The plaintiff is an executor and is entitled to prove the will, however, she also seeks the appointment of an independent administrator for the estate. As observed, the Court has both statutory and inherent power to pass over a named executor in special circumstances and grant the right to administer an estate to another person.
The first defendant submitted the originating motion appears to seek summary judgment, without leave of the Court, and thus contravenes r 8.02 of the Supreme Court (General Civil Procedure) Rules2015. The originating motion does not seek summary judgment. Further, r 8.02 provides that, except as provided by rr 8.08 and 8.09 or by leave of the Court, a defendant shall not take a step in a proceeding unless the defendant has filed an appearance. The defendant signed an appearance on 16 May 2019, filed it on 17 May 2019, and appeared at each directions hearing.
The first defendant also claimed that the second defendant ‘has not made an appearance’. On 18 April 2019, the second defendant filed a notice of appearance. On 17 May 2019, he attended at Court and informed counsel for the plaintiff that he had deposited the will with the Registrar of Probates. Counsel for the plaintiff informed the Court that the plaintiff would not therefore be seeking the usual orders against the second defendant to deliver the will to the Registrar. This was the only relief sought against the second defendant. He appeared again on 11 October 2019 and was excused from attending at Court thereafter.
Should the first defendant be passed over?
The plaintiff was content that she be passed over as an executor of the deceased’s estate. She sought that the first defendant also be passed over and an independent administrator be appointed in place of both executors. The issue to be determined is whether the circumstances warrant the first defendant being passed over. If that is the case, then the final issue is the appointment of an appropriate independent administrator.
The plaintiff relies on the substantial delay in the administration of the estate, with probate not yet granted despite the fact that the deceased died in February 2014. The parties have been unable to agree on an inventory of assets and liabilities, and the many disputes between them resulted in an impasse and allegations of conflicts of interest on the part of both of them.
Delay
In June 2014, the second defendant sent the draft application for probate to the executors for signing. The plaintiff signed the documents but the first defendant disagreed with the inventory of assets and liabilities and did not sign the documents. Michael Coffey and Frances Coffey supported the first defendant’s position. The second defendant corresponded further with the first defendant in 2015 and encouraged him to sign the documents. In his written submissions, the first defendant submitted that the plaintiff and the second defendant gave him and the other beneficiaries a choice of either swearing to an inventory that he considered untrue or being stonewalled by the plaintiff when trying to obtain further information on the estate assets and liabilities. In July 2018, the second defendant again wrote to the first defendant encouraging him to proceed with the application.
As at the date of the commencement of the proceeding, the delay in the administration of the estate was over five years. In that time no progress has been made on the impasse. The inventory was prepared by the second defendant from his enquiries and the information provided by both executors. The first defendant, Michael Coffey and Frances Coffey did not agree with it. The issues in dispute were ongoing and the second defendant corresponded with both executors in an effort to find a way forward to finalise the inventory. In his correspondence, the second defendant responded to the various queries with the assistance of the deceased’s accountants and land valuations determined by estate agents. The communications between the parties show substantial disagreement between them with little hope of resolution. This caused the substantial delay which has meant that no grant has been made and the estate has not been administered. The substantial delay is unacceptable.
Conflict
The first defendant raised concerns about the plaintiff’s conflicts and her fitness to act as executor. His allegations included that the plaintiff stripped assets from the deceased prior to her death and that she frustrated the administration of the estate by being ‘the main obstacle to an inventory’. He maintained that, if she renounced probate, that obstacle would be removed and ‘[t]he family has the resources and the will to handle it from now on’.
The plaintiff’s alleged conflicts and fitness to act not are not at issue in the proceeding as she has accepted that she be passed over. However, the first defendant’s submissions highlight the difficulties he would have in remaining impartial as the sole executor.
The first defendant denies the substantial number of conflict issues concerning him advanced by the plaintiff. In the ordinary course, a potential conflict of interest would not justify the first defendant being passed over. In Uniting Church in Australia Property Trust (NSW) v Millane, Windeyer J observed that not infrequently an executor will have some conflict, such as being a debtor to the estate.[9] In this case, however, the alleged conflicts are numerous and substantial. The conflicts are merely denied by the first defendant without any reasons being provided by him. There is a strong likelihood that he would continue to maintain that position if he became the sole executor and would not approach his role with the requisite impartiality. This, in turn, would likely lead to further litigation, meaning further delays and cost to the estate.
Wishes of the deceased
[9][2002] NSWSC 1070, [8].
The Court has taken into consideration the wishes of the deceased in appointing the first defendant as co-executor. The deceased’s wishes, however, are not determinative, and must give way to a facilitation of the due and proper administration of the estate.
Wishes of the beneficiaries
The first defendant submitted that all the beneficiaries, save for the plaintiff, want him to administer the estate as the sole executor. He referred to letters from his siblings, Edwina Coffey, Janiece Coffey, Michael Coffey and Frances Coffey. He submitted that if he were passed over against their wishes, in a situation where they represent 90 per cent of the beneficial interest in the estate, they ‘will lose the last vestige of influence and control of their assets left to them’.
Edwina and Janiece received letters from the first defendant informing them that, at the hearing on 17 May 2019, the first defendant agreed in principle with the plaintiff that both of them would stand aside as executors and that the first defendant had decided to ask the Court to appoint Michael Coffey and Rod Jones to administer the estate. The letter asks whether they approve of his choice. Edwina and Janiece each signed their letters approving Michael Coffey and Rod Jones as administrators of the estate on 4 and 5 July 2019, respectively. The letter to Michael Coffey was premised on the same understanding and he agreed to the proposal on 13 June 2019. By letter dated 14 July 2019, Frances Coffey supported the first defendant’s nomination of Rod Jones and Michael Coffey as administrators of the estate.
The letters to the beneficiaries fail to capture the true state of affairs as at the first directions hearing. On that occasion, the first defendant enquired whether any of the beneficiaries could be appointed as administrator. The plaintiff considered that an appointment of a beneficiary would not be appropriate and the first defendant stated that he wanted time to consider the Court’s proposal. This exchange cannot be characterised as agreement in principle with the plaintiff. In any event, even if the first defendant had earlier agreed in principle to stand aside, and his siblings had expressed agreement with his proposal of family members as administrators, this proposal undermines his assertion that, if he were passed over as the sole executor, this would be disagreeable to them on the basis that they would lose their influence and control.
Conclusions
There is substantial conflict between the executors that has caused serious delay in the administration of the estate. The parties have not been able to agree on the inventory of assets and no grant has been obtained. Even if a grant were obtained by one or other of the executors, there can be no confidence that the estate would be administered in a timely, efficient and impartial manner.
The plaintiff has agreed to be passed over. The first defendant’s explanation for his delay was that he disagrees with many matters, principally the draft inventory of assets and liabilities. The first defendant does not possess the necessary impartiality to navigate these conflicts and the issues he raises with the plaintiff. He failed to provide any response of substance to the alleged conflicts of interest in him administering the estate. There is a compelling need for the estate to be administered in a timely manner with the focus on the due administration and distribution of the estate. Accordingly, the first defendant will be passed over.
Should the first defendant’s proposed administrators be appointed?
The first defendant’s position was that, if he were passed over, Michael Coffey and Rod Jones should be appointed joint administrators of the estate.
Michael Coffey does not live in Victoria, is aged in his late sixties and the first defendant submits that he ‘is disabled’. His affidavit does not address whether he has any experience as an administrator of an estate. He has expressed clear partisan views in favour of the first defendant and his comments suggest that he would be willing to administer the estate not necessarily in accordance with the deceased’s will or in the best interests of all beneficiaries. Michael Coffey’s circumstances, views and comments as set out in his affidavit demonstrate that he is not a suitable candidate to administer the estate.
Rod Jones is the partner of Frances Coffey, who is a beneficiary of the estate. The plaintiff has set out certain claims that an administrator will need to address and, in some of those claims, Rod Jones and Frances Coffey support the first defendant and agitated against the plaintiff’s claims. The first defendant and Frances Coffey are together involved in Tazzack Pty Ltd, indicating an alignment of interests. By reason of being the partner of Frances Coffey and aligned with her in supporting the first defendant, Rod Jones is conflicted. There is also no evidence that he has the requisite experience to administer an estate.
Michael Coffey and Rod Jones are either a beneficiary or a partner of a beneficiary of the estate. They are aligned with the first defendant and are conflicted. They are not suitable candidates for appointment as independent administrators of the estate.
Appointment of independent administrator
Having regard to the due and proper administration of the estate and the interests of all beneficiaries, the Court will appoint an independent administrator. The disputes between the parties and the history of the proceeding illustrate the substantial tasks to be undertaken by an independent administrator. The volume of documentation over the years since the deceased’s death highlights the need for an independent person removed from the family acrimony. An independent administrator will not ‘adopt’ any pre-existing inventory, as suggested by the first defendant, but will investigate any dealings with estate assets or debts of the estate, as warranted. In the event of any doubt or question in respect of the administration of the estate, the administrator may approach the Court and seek judicial advice.
The identity of an appropriate administrator is a matter for the Court. The first defendant proposed as independent administrators Mr Andrew Bell, solicitor, and Mr R Richardson, accountant. Both stated they would be willing to be appointed as independent administrators and provided costs estimates of $18,000 to $20,000 on the basis that they do not have full knowledge of issues concerning the estate. These estimates aligned with the first defendant’s view that the amount of $20,000 would be adequate compensation for an independent administrator. It is unlikely that such an amount would be sufficient to resolve the current issues in dispute.
The plaintiff proposed Mr Kuperholz, solicitor, as independent administrator. Mr Maier informed the first defendant in early July 2019 he had approached Mr Kuperholz for the role. The first defendant objected to his appointment on the grounds of the potential cost to the estate. Mr Kuperholz was unable to provide an estimate of his total costs for the administration of the estate without knowing more about the current position of the estate. He stated that, if appointed, he would be prepared to provide estimates from time to time. His terms are set out in his email to Mr Maier dated 13 June 2019, which was attached to the first defendant’s email of 11 October 2019.
Mr Kuperholz is an experienced practitioner in the area of estate administration, including in the context of ongoing family disputes. He has been appointed by the Court as an independent administrator in the past. The Court is satisfied that he has the appropriate expertise and skills to properly manage the administration of this estate.
Orders
The Court orders that the plaintiff and first defendant be passed over as executors of the will and estate of the deceased, and that Mr Kuperholz be allowed to obtain a grant of letters of administration with the will dated 26 September 2008 annexed. The plaintiff is to provide a proposed minute of order within 14 days.
The parties are to provide their proposed orders as to costs, together with any short written submissions, within 14 days.
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