Re Estate of R D Firns
[2001] NSWSC 184
•20 March 2001
CITATION: Re Estate of R D Firns [2001] NSWSC 184 CURRENT JURISDICTION: Equity Division
Probate ListFILE NUMBER(S): SC 109217/98 HEARING DATE(S): 09/10/2000 and 06/02/2001 JUDGMENT DATE:
20 March 2001PARTIES :
John Frederick Lord and David John Kerr (P)
Kenneth John Firns (D1)
Ronald Douglas Firns (Junior)(D2)JUDGMENT OF: Young J
COUNSEL : C J Bevan (P)
G Mackey (Solicitor)(D)SOLICITORS: Turner Freeman (P)
Tzovaras Legal (D)CATCHWORDS: PROCEDURE [750]- Declarations- In special cases may be made on motion. SUCCESSION [267]- Administration- Powers of administrator- Right to sell only concrete asset to fund litigation. LEGISLATION CITED: Conveyancing Act 1919, ss 152, 153 CASES CITED: Clarke v Chadburn [1985] 1 WLR 78
In re Woodman (1940) 11 ABC 159
Re Lowe [2000] NSWSC 1180
Re Prince [1898] 2 Ch 225
Sharp v Lush (1879) 10 Ch D 468DECISION: See para 16.
THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
PROBATE LIST
YOUNG J
TUESDAY 20 MARCH 2001
109217/98 - RE ESTATE OF R D FIRNS
JUDGMENT
1 HIS HONOUR: The present judgment is in respect of notice of motion D filed on 9 October 2000, whereby the administrators seek a declaration that they have power to mortgage part of the estate in order to raise funds to finance their administration and to finance litigation which had been commenced against the estate.
2 I heard the motion on 9 October 2000 and 6 February 2001 and reserved my decision.
3 Unfortunately, there were administrative errors in not making a prominent enough note in my notebook that I had reserved my decision on this motion as well as the one in which I gave judgment on 27 February 2001. There was the further fact that the notice of motion managed to get into the wrong file. Thus I overlooked the fact that I had not given my decision until the matter was called to my attention by Mr Bevan. All I can do is to offer my apologies for the delay.
4 Mr Bevan, who appeared for the administrators, said that the administrators considered that they had the necessary power, but thought in all the circumstances that they should give the beneficiary a chance to put his point of view to the Court.
5 Essentially, the circumstances of the estate are that there is one asset in New South Wales, real estate at 6 Emmett Street, Crows Nest, which was devised to the person I will call “the beneficiary”. However, there are reasonable grounds to suspect that the deceased had a large amount of other property, including property outside Australia which is being hidden from the administrators. The administrators seek funds to be able to pursue that property: they also seek funds to defend a Family Provision Act 1982 application being brought against the estate.
6 Mr Mackey, for the defendants, says that one must distinguish between the situation where an administrator needs funds to pay the ordinary costs and expenses of administration and where the administrator requires funds to defend litigation. In the second case, there should be evidence as to the likelihood of success of the litigation and also evidence as to the amount of the costs that are likely to be incurred.
7 Section 153(1)(a) of the Conveyancing Act 1919, provides that subject to the provisions of that section, “… executors and administrators may without the consent of any person or the order of a court, (a) sell or mortgage the real estate of the deceased person for the purposes of administration.” The section, of course, also empowers executors and administrators to sell for distribution, but I will focus solely on administration.
8 Section 152 of the Conveyancing Act, defines “purposes of administration” as including not only the payment of debts, funeral and testamentary expenses and the administrator’s costs, charges and expenses, but also “any costs which may be ordered to be paid out of the estate.” Clearly the administrators’ costs of probate proceedings are testamentary expenses: Re Prince [1898] 2 Ch 225, as are an administrator’s costs in an application under the Family Provision Act: In re Woodman (1940) 11 ABC 159, 175. I reviewed the extent of the power in Re Lowe [2000] NSWSC 1180.
9 In Sharp v Lush (1879) 10 Ch D 468, 470, Jessel MR said that testamentary or executorship expenses “are expenses incident to the proper performance of the duty of the executor”. He then asked himself what was involved in the proper performance of that duty and he said: “It is ascertaining the debts and liabilities due from the testator’s estate, the payment of such debts and liabilities, and the legal and proper distribution of the estate amongst the persons entitled” and that includes all proper costs occasioned by obtaining legal advice and the assistance of the Court.
10 When motion D initially came before me on 9 October 2000 I indicated that I thought that there should be further material given as to certain matters before I should make a decision. There is now the affidavit of Ian John Cheney of 6 February 2001 which annexes the correspondence between the administrators and the beneficiary of the real estate which was read before me on that day.
11 The reaction was that the beneficiary advised that he considered that if the matter could not be settled commercially, that the estate was owed very little from outside trusts and even if “a few hundred thousand” would be recovered it would not be worth the effort. He was further concerned that the administrators were not taking appropriate expert legal advice. He also advised the administrators that they would be better off suing some of the solicitors involved in the transactions than pursuing foreign assets.
12 It was wise for the Court and the administrators to take the beneficiary’s views into account. He has pointed things out to the administrators which they may think are weighty matters or they may think are a red herring. That is a matter for them. However, the responsibility for administering the estate is with the administrators and they must make their decision on what they consider to be appropriate advice, including legal advice.
13 It is clear that the property needs to be sold because there are just no other funds to administer the estate unless the beneficiary is prepared to advance moneys to the estate.
14 It seems to me that whilst I must make declarations 1 and 2 in notice of motion D, the administrators would be well advised before they sell to make an estimate of the administration expenses in say the next six months and give the beneficiary two or three weeks to decide whether he will advance that sum to the administrators and if he does not do so, then subject to any further order of the Court, they would be justified in putting the property up for sale.
15 It is unusual to make declarations on a notice of motion. However, it is appropriate in special cases to make a final declaration on a motion: see Clarke v Chadburn [1985] 1 WLR 78, 81. As what is sought are declarations which are of a procedural nature that arise within the proceedings, the present case is in this respect within the special category.
16 Accordingly, I make declarations 1 and 2 in notice of motion D and order that the costs of the notice of motion of both parties come out of the assets of the estate.
17 As far as I can see, this now completes all that needs to be done in the present proceedings. However, I will give liberty to apply for me to consider the matter further. This can be done by contacting my Associate so that the matter can be listed before the Probate List Judge on a Monday.
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