Re McQuillan
[2016] VSC 647
•28 October 2016
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TRUST, EQUITY AND PROBATE LIST
S CI 2016 02996
IN THE MATTER of an application by STATE TRUSTEES LIMITED (as the executor of the estate of FRANCIS JOHN McQUILLAN, deceased) pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 for directions in relation to the administration of the estate of Francis John McQuillan, deceased
APPLICATION BY:
| STATE TRUSTEES LIMITED (ACN 064 593 148) | Plaintiff |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | On the papers |
DATE OF JUDGMENT: | 28 October 2016 |
CASE MAY BE CITED AS: | Re McQuillan |
MEDIUM NEUTRAL CITATION: | [2016] VSC 647 |
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WILLS AND ESTATES — Small estates provisions — Where deemed grant of representation made in 1995 — Later discovery that estate exceeded the maximum monetary value for small estate provisions — Where grant of probate required to distribute real property of estate — Whether revocation of deemed grant required before application for grant of representation — Administration and Probate Act 1958, ss 71, 79.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr T Mah | State Trustees Limited |
HER HONOUR:
Introduction
The Administration and Probate Act 1958 (‘the Act’) makes provision for the administration of small estates, as defined in the Act, without the need to apply for a grant of probate or letters of administration. This proceeding concerns the administration of a small estate in 1995 by the plaintiff when a small estate was defined as an estate of $25,000 or less or, where the only persons entitled in the estate were the surviving spouse and/or children of the deceased, where the estate is $50,000 or less.[1]
[1]Administration and Probate Act 1958, s 79, as amended by State Trustees (State Owned Company) Act 1994.
Francis John McQuillan died on 30 March 1994 (‘the deceased’). By his will dated 9 April 1986 (‘the will’), the deceased appointed the Public Trustee for Victoria as the executor of his will and trustee of his estate. Pursuant to s 26 of the State Trustees (State Owned Company) Act 1994, a reference in a will to the Public Trustee for Victoria is construed as a reference to State Trustees Limited (‘the plaintiff’).[2]
[2]Pursuant to the State Trust Corporation of Victoria Act 1987 (‘the 1987 Act’), the Public Trustee for Victoria was replaced by State Trust Corporation of Victoria (‘State Trust’). The 1987 Act was repealed by s 24 of the State Trustees (State Owned Company) Act 1994. Pursuant to s 25(1)(a) of the State Trustees (State Owned Company) Act 1994, all rights in State Trust vested in the plaintiff and, pursuant to s 25(1)(c), the plaintiff is the successor in law of State Trust.
The plaintiff thought that the deceased’s estate amounted to $10,464.08, being undrawn pension moneys from the Department of Veterans Affairs.
Pursuant to s 5 of the State Trustees (State Owned Company) Act 1994, the plaintiff is entitled to give notice of its intention to administer the estate under s 79 of the Act as it existed in 1995 (‘the former s 79’) as it is the named executor in the deceased’s will.
On 10 December 1995, the plaintiff advertised its intention to administer the deceased’s estate as a small estate pursuant to the former s 79 as amended in 1994 by s 41 of the State Trustees (State Owned Company) Act 1994.[3] Upon the expiration of 14 days after publication of the notice, probate of the deceased’s will was deemed granted to the plaintiff (‘the deemed grant’). On 9 January 1996, a certificate for s 79 administration was filed with the Registrar of Probates, together with an inventory of the assets of the estate, a certificate stating that the value of the estate did not exceed $50,000 and a certificate stating that no other application for a grant of representation had been made by any other person and no caveat has been lodged.
[3]The former s 79 of the Act was inserted after s 78 of the principal Act by s 41 of the State Trustees (State Owned Company) Act 1994, being Act No 45 of 1994.Section 79 of the Act, s 5 of the State Trustees (State Owned Company) Act 1994 and ss 9, 10, 10A, 11 and 11A of the Trustees Companies Act 1984 set out a regime whereby, inter alia, State Trustees Limited or a trustee company could apply for a grant of representation in a small estate by advertising its intention to administer the estate in order to obtain a grant of representation.
At some unknown time, the plaintiff became aware that the deceased was the registered proprietor of a property situated at 22 Wilson Street, Morwell (‘the Morwell property’). The plaintiff is unable to determine the reasons why it was unaware of the Morwell property in 1995 as its file has been lost. This is unusual given that it was the address of the deceased in his will and the deceased specifically devised the Morwell property to his family by way of a life interest to his wife, Jean Frances McQuillan, and upon her death, the remainder interest to his sons, Denis John McQuillan and Peter Michael McQuillan, as tenants in common in equal shares.
The plaintiff is also unable to state what the value of the Morwell property might have been at the date of the deceased’s death but considers it is unlikely to have been less than $40,000. This means that the value of the deceased’s estate at the date of the notice to administer the estate as a small estate in 1995 exceeded the monetary limit and the plaintiff should not have utilised the small estate provisions to administer the estate in the circumstances.
The life tenant of the Morwell property died on 6 January 2006. The plaintiff is required to distribute the Morwell property to the deceased’s sons in accordance with the deceased’s will. The Registrar of Titles requires a grant of probate of the will of the deceased before he is able to register any dealings in relation to the Morwell property.
A grant of probate cannot be made whilst the deemed grant remains extant. It is the practice of the Registrar of Probates to require the plaintiff to apply to the Court for an order to revoke the deemed grant before he considers an application for a grant of representation in the same estate, a proper practice in the administration of estates.
Accordingly, by originating motion filed 29 July 2016, pursuant to r 54.02 of the Supreme Court (General Civil Procedure) Rules 2015, the plaintiff seeks orders in accordance with the answers to the following questions:
(a) In the event that has happened, does the plaintiff require an order from the Court revoking the grant of probate of the deceased’s will dated 9 April 1986 taken to have been granted to the plaintiff on 24 December 1995 pursuant to s 79 of the Act as at 1995?
(b) If yes, [is the plaintiff entitled to] an order revoking the grant of probate of the deceased’s will dated 9 April 1986 taken to have been granted to the plaintiff on 24 December 1995?
The application was supported by an affidavit of Mr Paul Pradolin, senior estate representative employed by the plaintiff, sworn on 25 July 2016.
Applicable legislation
In 1995, s 71(1) of the Act set out what constituted a small estate as follows:
PART II—SMALL ESTATES
71 Aid of registrar or clerk in procuring grant of probate etc.
(1) Save as hereinafter provided, if a person dies leaving property not exceeding $25,000 or (if the only person or persons entitled to take the property of the deceased person under the will or to share in the distribution of the surplus of the estate of such person is or are the children only or the partner only or the partner and children only or the sole surviving parent of such person) not exceeding $50,000 in value the person entitled to probate of the will or to letters of administration of the estate of such deceased person may apply…
The procedure for the administration of small estates in 1995 was set out in the former s 79 of the Act as follows:
79 Administration of small estates
(1)This section applies if—
(a)an estate is a small estate; and
(b)State Trustees could apply under section 5 of the State Trustees (State Owned Company) Act 1994 or section 9, 10, 10A or 11 of the Trustee Companies Act 1984 for a grant of probate or administration of the estate or elect under section 11A of the Trustee Companies Act 1984 to administer the estate.
(2)State Trustees must give a notice of intention to administer the estate under this section in a daily newspaper circulating generally throughout Victoria.
(3)State Trustees is to be taken to have been granted probate of the will or administration of the estate at the expiry of 14 days after the publication of the notice.
(4)This section does not affect the right of any person to recover the whole or any part of any payment made or property delivered under this section from any person who received it from State Trustees.
In 2014, the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 amended the Act with effect from 1 January 2015 (‘the 2014 amendments’). Section s 71(1A) of the 2014 amendments altered the monetary threshold for small estates from $50,000 to $100,000. Section 46 of the 2014 amendments included s 79(3A) which provides for the circumstance that is present on this application as follows:
79 Administration of small estates
…
(3A) If in the course of administering an estate to which this section applies the value of the estate is found to exceed 120 per cent of the maximum monetary value specified in section 71(1A), State Trustees must, as soon as practicable—
(a)notify the Registrar of Probates in writing of that fact; and
(b)apply for a grant of probate or administration of the estate.
However, the transitional provisions contained in the Justice Legislation Amendment (Succession and Surrogacy) Act 2014 provide that s 79(3A) does not apply to the administration of small estates commenced under the former s 79. Specifically, s 26 of the 2014 amendments provides that, despite the amendment of s 79 of the Act, the former s 79 as in force immediately before its amendment continues to apply to the administration of an estate commenced under the former s 79 as if the amendment had not been made.[4]
[4]Justice Legislation Amendment (Succession and Surrogacy) Act 2014, s 26 (which inserted s 103(5) into the Administration and Probate Act 1958).
Consideration
The administrative process for a deemed grant under the former s 79 bypasses the usual steps for obtaining a grant of probate or administration. Under the administrative process utilised by the plaintiff, there is no record of the administration in the Probate Office as the plaintiff is not required to file any document with the Court and the Court does not examine any of the relevant documents. A deemed grant is not an order of the Court as it is obtained administratively without notice to the Registrar of Probates. All that is required is that a notice of intention to administer the estate be advertised in a daily newspaper and, 14 days after the publication of the advertisement, the plaintiff will be taken to have been granted representation. There is no requirement for the plaintiff to file a will or inventory of assets, or to search for caveats, deposited wills or prior applications for a grant. This process increases the risk that a will may be overlooked or that more than one grant could be made in the same estate.[5]
[5]Victorian Law Reform Commission, Succession Laws, Report No 24 (2013) 204, [9.133], [9.137].
A grant of representation is different to a deemed grant: it is a judicial act in the character of a court order. The Court in its probate jurisdiction has the power to revoke a grant, a power which is exercised at the discretion of the Court having regard to all relevant circumstances.[6] The revocation of a grant of probate is equivalent to setting aside a court order. There is no provision under the former s 79 to revoke a deemed grant.
[6]Re Gardiner [2016] VSC 541 (9 September 2016) [24] (McMillan J) (citations omitted).
Under the 2014 amendments,[7] s 79(3A) provides a mechanism whereby State Trustees must notify the Registrar of Probates in writing as soon as practicable after, in the course of administering the estate as a small estate, becoming aware of the fact that the value of the estate is found to exceed 120 per cent of the maximum monetary value as specified in s 71(1A) of the Act, and then apply for a grant of representation. Although this provision has no application to the administration of the estate under the former s 79, for the avoidance of doubt and to resolve the difficulty arising from the inconsistent operation of the former s 79 and s 79(3A) in the 2014 amendments,[8] it is expedient that the same process be adopted in this proceeding. This means that the plaintiff must notify the Registrar of Probates in writing that the value of the deceased’s estate exceeds $50,000 and then file an application for a grant of probate with the Registrar of Probates. This is also consistent with the practice of the Registrar of Probates as it ensures that only one grant of representation is made in the same estate and protects the beneficiaries of the estate of the deceased.[9]
[7]Justice Legislation Amendment (Succession and Surrogacy) Act 2014, s 25(5).
[8]Pursuant to s 104 of the Act.
[9]This process is also consistent with applications made by trustee companies under the Trustee Companies Act 1984 (applicable until 1 January 2015) that provide ‘if after filing an election the gross value of the property to be administered is found to exceed $60,000 the trustee company must as soon as possible file with the Registrar of Probates a memorandum stating the fact and apply in the same manner as any other person for a grant of probate or administration (as the case requires)’: s 11A(10). Section 11A was repealed by the 2014 amendments, specifically s 46 of the Justice Legislation Amendment (Succession and Surrogacy) Act 2014.
The plaintiff also seeks that it be given protection and indemnity for payments or dispositions made in good faith pursuant to s 31 of the Act, notwithstanding any defect or circumstance affecting the validity of the representation. This is not possible without evidence as to the administration of the estate undertaken under the deemed grant. The plaintiff should file an affidavit setting out the administration of the deceased’s estate from the commencement of the deemed grant to the date of the order for revocation of the election so that the issue of its protection and indemnity may be considered.
There may be further issues arising from the delay in the administration of the estate, such as capital gains tax implications and, assuming the deceased’s widow lived in the Morwell property until her death on 2006, what has occurred with the property since then. I will hear any further submissions on these issues, if necessary.
The final issue to consider is the finalisation of the administration of the deceased’s estate. Upon a grant of representation being made, an estate ordinarily would not be distributed until six months after the date of the grant of representation. This is because any application for a family provision order being made against an estate must be made within six months of the grant of representation.[10] Any application for a family provision order in a small estate has practical difficulties because of the limited size of the estate. A deemed grant is unlikely to come to the notice of a potential applicant for provision from the estate as a deemed grant is not recorded in the Probate Office. Even if a caveat had been filed at the Probate Office, it would not have prevented the deemed grant from being made administratively. The possibility of an application for a family provision order being made so long after the death of the deceased would seem to be remote but it cannot be ruled out. For these reasons, the estate should not be finalised until the expiry of the six month period from the date of the grant of representation.
[10]Administration and Probate Act 1958, s 99(1).
Answers to questions
The questions and answers are as follows:
Question: In the event that has happened, does the plaintiff require an order from the Court revoking the grant of probate of the deceased’s will dated 9 April 1986 taken to have been granted to the plaintiff on 24 December 1995 pursuant to s 79 of the Act (as at 1995)?
Answer: No. The Court has no power to revoke a deemed grant pursuant to the former s 79 of the Act. The plaintiff must notify the Registrar of Probates in writing that the value of the deceased’s estate exceeds $50,000 and should then file an application for a grant of probate with the Registrar of Probates.
Question: If yes, [is the plaintiff entitled to] an order revoking the grant of probate of the deceased’s will dated 9 April 1986 taken to have been granted to the plaintiff on 24 December 1995?
Answer: Not applicable.
Orders
I will order that on or before 18 November 2016, the plaintiff file a true and perfect inventory and account of the real and personal estate of the deceased pursuant to s 28(1) of the Act.
Costs
My preliminary view as to the costs of this proceeding is that the estate should not bear any costs associated with the delay in the administration of the estate. If the plaintiff disagrees with this view, any submissions it wishes to make are to be filed on or before 18 November 2016.