Re Moormann; Hurst v Naunton
[2021] VSC 751
•16 November 2021
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S ECI 2020 01051
IN THE MATTER of Part IV of the Administration and Probate Act 1958
- and –
IN THE MATTER of the Will and Estate of MARGARET MOORMANN, deceased
BETWEEN:
| GEOFFREY MICHAEL HURST (deceased) | Plaintiff |
| - and - | |
| DONALD NAUNTON (who is sued in his capacity as the Executor of the Estate of the abovenamed deceased) | Defendant |
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JUDICIAL OFFICER: | Englefield JR |
DATE OF HEARING: | 28 October 2021 |
DATE OF RULING: | 16 November 2021 |
CASE MAY BE CITED AS: | Re Moormann; Hurst v Naunton |
MEDIUM NEUTRAL CITATION: | [2021] VSC 751 |
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PRACTICE AND PROCEDURE – Death of a party – Appointment of a person to represent the estate of the deceased litigant where there is no personal representative under r 16.03 of the Supreme Court (General Civil Procedure) Rules 2015 – Two competing applications for appointment as sole representative under r 16.03.
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APPEARANCES: | Counsel | Solicitors |
| For the Applicant, Brendan Francis Pendergast | R Wells of counsel | Maddens Lawyers |
| For the Applicant, Claire Cox | A Lyall, solicitor | Cahills |
| For the Defendant | S Marshall of counsel | Peter Cahill |
Judicial Registrar:
Introduction
This proceeding presents an unfortunate situation in which the plaintiff, an adult son in dire financial circumstances and with significant medical needs, made a claim for further provision from his deceased mother’s estate under Pt IV of the Administration and Probate Act 1958 (Vic) (‘the Act’), but died after entering conditional terms of settlement and prior to the completion of the proceeding.
This ruling deals with two competing applications for appointment to represent the estate of the plaintiff in this proceeding under r 16.03 of the Supreme Court (General Civil Procedure) Rules2015 (Vic) (‘the Rules’). The first application is made by a solicitor of the firm Maddens Lawyers, who was acting for the plaintiff prior to his death, Brendan Francis Pendergast. The second application is made by the plaintiff’s former wife, Claire Cox, who is the mother of his five children, aged between 10 and 20 years of age. The plaintiff is said to have died intestate, making his children the beneficiaries of his estate under Pt IA of the Act.
The deceased’s estate, the subject of this proceeding, was valued at $568,559.00 in the probate inventory and left by his will to be distributed, at the absolute and unfettered discretion of her executor (the deceased’s brother), between the plaintiff, the plaintiff’s children, all of the deceased’s nieces and nephews (which includes the executor’s children) and their respective children, “without any obligation” to make distribution to all of them or to ensure equality among those to whom payments are made.
On 12 May 2021, the plaintiff and the executor, as defendant to this proceeding, entered a “Deed of Settlement” to resolve this proceeding, which was subject to the approval of the Court on behalf of the minor beneficiaries under the deceased’s will (‘Deed’). Under the Deed, the plaintiff was to receive $50,000.00 by way of cash provision, $25,000.00 for his legal costs and, after payment of various agreed estate expenses, including legal costs, the balance of the estate was to be held for the plaintiff’s benefit for life, with the possibility of using the balance to purchase accommodation for the plaintiff, and the remainder interest to be held for the beneficiaries of the will, excluding the plaintiff.
On 24 May 2021, the plaintiff died.
On 6 August 2021, after informing Maddens Lawyers of the plaintiff’s death and requesting their response, the executor applied by summons that the proceeding be struck out, with no order as to costs (‘the summons for dismissal’).
On 17 August 2021, Maddens Lawyers, instructed counsel to appear at a directions hearing, apparently on behalf of the estate of the plaintiff, seeking directions for an opposed hearing of the summons for dismissal. Subsequently, the Court made timetabling orders for an application for appointment to represent the estate of their deceased client, to be considered ‘on the papers’, and for exchange of material and a hearing of the summons for dismissal.
On 14 September 2021, by summons, Mr Pendergast applied to be appointed to represent the estate of the plaintiff in this proceeding under r 16.03 of the Rules.
On 28 September 2021, by summons, Ms Cox, also applied to be appointed to represent the estate of the plaintiff in this proceeding under r 16.03 of the Rules, with the consent of her adult children and as guardian of her minor children.
The competing applications under r 16.03 were subsequently listed for hearing on 28 October 2021 and the timetable for the hearing of the summons for dismissal was extended.
Common Assumptions
A copy of the plaintiff’s death certificate is before the Court, but there has been no evidence produced as to:
(a) probate searches to establish that no applications have been made for a grant of representation;
(b) the existence of an intestacy and the absence of a valid will; and
(c) the potential solvency of the plaintiff’s estate.
Notwithstanding this lack of evidence, both of the applicants and the defendant have presented the Court with their common assumptions that:
(a) the plaintiff died without a will;
(b) no application has been made for a grant of representation in his estate; and
(c) his estate is insolvent.
In the interests of avoiding unnecessary costs, it is appropriate to determine the competing applications for appointment under r 16.03 of the Rules with these common assumptions.
Necessity for appointment
For the purposes of an appointment to represent the plaintiff’s estate under r 16.03(1) of the Rules, I am satisfied of the following:
(a) that the estate of the plaintiff is interested in a question in this proceeding;
(b) that the plaintiff’s estate presently has no personal representative; and
(c) given that the summons for dismissal is currently listed for hearing and there are two competing applications for appointment under r 16.03 of the Rules, that it is not appropriate to proceed in the absence of a person to represent the plaintiff’s estate.
Deciding between competing claims for appointment
Neither applicant was able to direct me to any authority dealing with competing claims for appointment under r 16.03(1)(b) of the Rules, despite there being counterparts and predecessor rules dating back to the nineteenth century.[1]
[1]Hewitt v Gardner; Hewitt v Gardner [2009] NSWSC 705 [77] (Ward J).
As Sloss J noted in Talacko & Ors v Talacko (‘Talacko’), there is a there is a dearth of authority on r 16.03(1)(b), and what factors should guide the exercise of the Court’s discretion to appoint a person to represent the estate of a deceased for the purposes of an application or trial of a proceeding.[2]
[2]Talacko & Ors v Talacko [2015] VSC 624 [165] (Sloss J) (‘Talacko’).
Talacko itself, among other things, involved competing claims for appointment under r 16.03(1)(b). One made by the widow of the deceased defendant and another made by the deceased defendant’s former solicitor, who had no financial interest in the estate of the deceased litigant, but had been a close personal friend over many decades. The widow was in effect the sole beneficiary of the deceased litigant’s estate, as her children intended to renounce their rights. Her Honour found both were suitable and capable candidates for appointment under r 16.03, and in a ‘finely balanced contest’ exercised discretion in favour of the widow, given her status as widow and her willingness and desire to act.[3] Like many decisions involving an exercise of discretion, that decision was specific to the facts of that proceeding and, whilst helpful, does not provide a binding precedent for applications made under r 16.03.
[3]Talacko (n 2) [170] (Sloss J).
Turning to r 16.03 of the Rules itself, as a whole, for guidance, it can first be noted that, in effect, r 16.03 is the statutory equivalent to an administrator ad litem.[4] The inherent purpose for an appointment to represent the estate, whether under r 16.03 or ad litem, is to protect the interests of the beneficiaries of the estate of the deceased litigant in a proceeding. Evincing this purpose is the ability of the Court, under r 16.03(3), to require notice to be given to any person having an interest in the estate, prior to making an appointment.
[4]Australia and New Zealand Banking Group Limited v The Estate of Balding [2016] VSC 728 [27] (Derham AsJ).
By analogy, if there is a contested application for a grant of Letters of Administration on intestacy, the Court will usually make the grant to the person with the greatest interest in the intestate estate.[5] This again exemplifies that the purpose of an appointment to represent an estate is to protect the interests of all beneficiaries of the estate, as generally the holder of the greatest interest will have the greatest incentive to administer the estate efficiently.
[5]See In Re Pierce (1886) 12 VLR 733 (Webb J).
On this basis, Ms Cox has an overwhelming claim for an appointment to represent the estate of the plaintiff in this proceeding. Her children are the sole beneficiaries of the plaintiff’s estate, notwithstanding the Court is told that it is ‘insolvent’.[6] These children are also among a number of discretionary beneficiaries of the deceased’s estate, the subject of this proceeding, which is solvent, although modest and impacted upon by the costs of this proceeding. I am satisfied Ms Cox is best placed to avoid unnecessary cost, delay and inter-family disputation in the complex interplay between the estates of the plaintiff and the deceased, in the interests of her children as beneficiaries of the estate of the plaintiff.
[6]Affidavit of Donald Naunton sworn 10 August 2021 [5].
Mr Pendergast’s claim for appointment, on the other hand, is not so strong. He states in his affidavit in support of his application that his employer, Maddens Lawyers, is a creditor of the plaintiff’s estate, as no legal costs arising from this proceeding have been paid, but provides no proof of such.[7] Maddens Lawyers were called on by Ms Cox’s solicitors in three separate letters dated 30 September 2021, 8 October 2021 and 15 October 2021 to produce any costs agreement entered into with the plaintiff and all invoices payable by the plaintiff, together with any correspondence enclosing any invoice sent to the plaintiff.[8] No reply was made.
[7]Affidavit of Brendan Francis Pendergast sworn 13 September 2021 [11].
[8]Affidavit of Alastair Gellatly Lyall sworn 25 October 2021 [2]-[3].
Ms Cox’s solicitors also asked at the hearing whether or not any cost agreement between the plaintiff and Maddens Lawyers might be ‘conditional’, and if so, whether in all the circumstances, liability to pay costs under such an arrangement has been triggered in the circumstances of the plaintiff’s death.
Maddens Lawyers should have been able to produce material regarding its own costs. It is central to Mr Pendergast’s application for appointment. In these circumstances, I can comfortably apply the rule in Jones v Dunkel[9] and infer that the unexplained failure to tender any costs agreement means that it would not have assisted Mr Pendergast. Alternatively, I find that Mr Pendergast has not discharged his burden of proof, and I remain unsatisfied that any liability arises under any costs agreement, conditional or not, between the plaintiff and Maddens Lawyers.
[9](1959) 101 CLR 298; see also Kuhl v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 [64] (Heydon, Crennan and Bell JJ).
I note that wherever a creditor seeks Letters of Administration of a deceased estate, they must prove the amount and the particulars of the debt upon which they rely for standing, in addition to the usual requirements of an application for a grant of Letters of Administration.[10] This exposes the claim of the creditor, who is proving its own debt in the administration, to the scrutiny of the Court and any interested parties, whether beneficiaries or other creditors. This additional requirement is necessary as a creditor who is appointed by the Court to administer an estate is then empowered to pay to itself the amount it alleges it is owed, thereby accepting the veracity of its own claim against the estate it controls. This additional requirement in a creditor’s application provides yet another example of the principle that, in any application for appointment to administer an estate, the central purpose is protection of the interests of the beneficiaries of the estate. Here, Maddens Lawyers have not presented any material to satisfy the Court that it is a creditor. In any event, ordinarily a creditor would only seek administration where an estate is otherwise unadministered and would not compete with any alternative applicant with a stronger claim for appointment. Therefore, even had Maddens Lawyers proven themselves to be creditors, Ms Cox’s claim for appointment on behalf of her five children as beneficiaries has primacy.
[10]See r 4.06 of the Supreme Court (Administration and Probate) Rules 2014 (Vic).
Ms Cox’s solicitors raised the issue of Mr Pendergast’s potential position of conflict. This conflict arises between his self-interest in seeking payment of legal costs to Maddens Lawyers and his duty to the beneficiaries of the plaintiff’s estate, noting Mr Pendergast’s position as an employee, and potential profit recipient,[11] of Maddens Lawyers. This conflict does not prevent a creditor from appointment where an estate is otherwise unadministered and the creditor’s application is well supported. However, Ms Cox’s application is to be preferred for the reasons outlined above and this issue does not arise for determination and is not a part of my decision.
[11]There was no evidence from Mr Pendergast one way or the other as to his entitlement to the profit of Maddens Lawyers.
To be clear, the legal costs in question relate to the period up to the execution of the Deed. Mr Pendergast, as a solicitor, understands that any appointment under r 16.03 is a personal appointment and he is unable to charge professional fees for performance of this role. Further, Mr Pendergast’s counsel informed the Court that if appointed, neither Mr Pendergast nor Maddens Lawyers would charge any future professional fees whatsoever for this application for appointment or otherwise in the representation of the plaintiff’s estate in this proceeding. In addition, Mr Pendergast disclaimed any indemnity from the plaintiff’s estate for potential future disbursements arising in this proceeding. The Court was informed by counsel that Mr Pendergast had a ‘conditional’ arrangement with counsel to the effect that counsel’s fees would only be charged to Mr Pendergast if orders were made for these fees to be paid from the estate of the deceased. Ms Cox was silent on her future legal costs, but her solicitor appeared for her at the hearing of these applications. Therefore, on the question of future legal costs which may be ordered from the deceased’s estate, if Ms Cox continues to rely on her solicitor to appear as counsel on her behalf, the applications may be relatively evenly balanced.
Mr Pendergast, if appointed, foreshadowed an intention to contest the summary dismissal application, seeking to “enforce” the Deed[12] or if necessary, pursue the very limited claim that remains, given the plaintiff’s death,[13] to trial. Ms Cox is silent as to her intention. Mr Pendergast criticises that silence, however, Ms Cox is ably represented independently of the estate (although the solicitors’ firms have similar names, there is no professional association). Once appointed, I am confident that Ms Cox will receive and accept advice in accordance with the overarching obligations and paramount duty which will fall on her as a litigant in this proceeding.
[12]Clause 14 of the Deed states that “[T]he parties these Terms of Settlement acknowledge that all benefits and obligations created in these Terms of Settlement are binding upon and enure for the benefit of their respective estates, should any party die prior to the completion of all obligations created by these Terms of Settlement.” The recitals and Clause 11 of the Deed indicated that the Deed was conditional on approval of Court for the minor beneficiaries of the estate.
[13]See Groser v Equity Trustees Ltd [2008] VSC 163 [40] (Habersberger J). His Honour held that a cause of action under pt IV of the Act ceases on death, except to a very limited extent where, on proof of lack of maintenance and support between the death of the deceased and the death of the plaintiff, debts for self-maintenance were incurred, but such limited provision is only for debts incurred in self‑maintenance, not to ‘swell’ the estate of a deceased plaintiff.
Conclusion
Ms Cox will be appointed to represent the estate of the plaintiff for the purpose of this proceeding under r 16.03 of the Rules. The applicants are to provide draft Orders to Chambers giving effect to these reasons. If the parties are unable to agree on the question of costs, a further hearing can be arranged.
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