Robbins v Hume
[2015] VSC 128
•10 April 2015
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
PROBATE LIST
S CI 2015 00300
| DEBRA ROBBINS | Plaintiff |
| v | |
| JAMES ALEXANDER HUME (who is sued personally and as the executor of the will of ALEXANDER DAVID HUME, deceased) | Defendant |
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JUDGE: | McMillan J |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 27 March 2015 |
DATE OF JUDGMENT: | 10 April 2015 |
CASE MAY BE CITED AS: | Robbins v Hume |
MEDIUM NEUTRAL CITATION: | [2015] VSC 128 |
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WILLS AND ESTATES — Application by plaintiff to amend summons to seek leave to extend time within which to make a family provision claim — Where estate has been finally distributed — No jurisdiction to extend time where estate finally distributed — Application for leave to amend refused — Administration and Probate Act 1958, s 99
INJUNCTION — Where plaintiff alleges executor of the estate is in breach of fiduciary duty to safeguard her interests and his duty of even-handedness to her — Where plaintiff alleges sale proceeds of specific devise to defendant under the deceased’s will now held on constructive trust for the estate — Application by plaintiff for an injunction restraining the defendant from dealing in any way with the sale proceeds of the devise to the defendant — Where estate finally distributed — Where plaintiff seeks dispensation from undertaking as to damages
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Ms C McOmish | Arnold Thomas Becker |
| For the Defendant | Mr M McKenzie | McDonald Slater & Lay |
HER HONOUR:
Factual background
Alexander David Hume, deceased, died on 7 June 2013 leaving a will dated 28 May 2010. Probate of his will was granted to his executor, the defendant, on 30 August 2013.
The value of the estate of the deceased at the date of his death was $741,593 comprising the deceased’s property at 70 Boronia Road, Vermont (‘the Vermont property’) valued at $600,000 and his personal estate of $141,593.
By his will, the deceased left his Vermont property to the defendant and his personal estate equally between his five daughters.
After payment of expenses, the estate of the deceased was distributed with each of the five daughters receiving $28,228.20 in mid April 2014 and the defendant receiving the sale proceeds of the Vermont property in June 2014.
The plaintiff’s application
By summons filed 2 March 2015, the plaintiff, who is a daughter of the deceased, sought an order restraining the defendant from disposing of or dealing with or diminishing the net sale proceeds of the Vermont property.
Her application was supported by an affidavit sworn by her on 13 February 2015 and an affidavit of her friend and carer, Jeffrey Robert Peagram, sworn 25 March 2015.
At the hearing, the plaintiff sought leave to amend her summons by seeking an order, pursuant to s 99 of the Administration and Probate Act 1958 (‘the Act’), that the time within which she be permitted to commence an application for provision out of the estate of the deceased be extended.
The plaintiff explained her application being out of time as follows:
I found that the defendant was the executor of my father’s will after he died. The defendant visited me three times after my father died. We didn’t even discuss my father’s will.
The only notice that I received in relation to my father’s estate was a letter from the solicitors acting for the estate dated 21 January 2014 sent to me at Acacia Gardens [where the plaintiff resides]. This was the first time I found out what was in my father’s will, but did not understand what it meant. That letter was as follows (omitting formal parts):
We wish to advise that we act for your brother James in the estate of the abovenamed deceased.
We enclose a copy of Alexander David Hume’s last will from which you will note that you are entitled to the following:
1. One-fifth of the residuary estate.
The distribution cannot be made until after 28 February 2014.
We will keep you informed as to progress; however, if there are any matters you wish to discuss please do not hesitate to contact us.
The plaintiff deposes that she initially believed the $28,228.20 she received from the residuary estate was an interim distribution and that she was entitled to more money from the estate. After she received the letter, she said that she tried to contact the defendant. She cannot remember when she first tried to contact him but thought she left him a voice mail, although she cannot remember what she said in her voice mail. She then deposed that the defendant sent her a text message, she thinks in response to her voice mail, as follows:
G day Deb Hope u r well I have made several attempts to phone u Should u require financial help I am sorry to say that my money is locked into Fixed Term Deposits I survive on a reduced Old Age pension Kind regards Jim.
The plaintiff further deposed that she knew nothing about Part IV of the Act until she saw an article in the Herald Sun newspaper late last year in relation to potential changes to be made to the Act. After reading the article, she realised that she might have a claim, and contacted the solicitors mentioned in the article. She was subsequently advised by her solicitor, Ms Margalit, of the provisions of Part IV and the time limit in relation to bringing a claim for further provision from an estate.
On 17 December 2014, Ms Margalit forwarded a letter to the solicitors for the estate, McDonald Slater & Lay, which included the following:
As you are no doubt aware, our client suffered a serious stroke in April 2012. James, having visited our client at hospital and supported accommodation on numerous occasions, is aware that she is no longer able to care for her own needs.
In early 2014, within six months of the date of the grant of probate, our client put James on notice that she sought further provision from the estate. We consider that your client had constructive notice of a claim by our client.
We note your client’s text message to our client on 10 January 2014,
G day Deb Hope u r well I have made several attempts to phone u Should u require financial help I am sorry to say that my money is locked into Fixed Term Deposits I survive on a reduced Old Age pension Kind regards Jim.
…
We are of the opinion that our client will succeed in a claim pursuant to Part IV of the Administration and Probate Act 1958 as well as an extension of time application in which to bring such a claim.
…
We require that your client now agree to the proceeds of sale being held on trust in an interest bearing account under the names of McDonald Slater & Lay and Arnold Thomas & Becker pending mutual agreement by James and my client or an order of the court. Please advise by close of business on 18 December 2014 as to whether your client is agreeable to this proposition.
Should your client be unwilling to preserve the proceeds of sale we will be forced to make an application for a freezing order.
On 19 December 2014, McDonald Slater & Lay responded to the letter from Ms Margalit in the following terms:
… Whilst the estate file is closed and now in storage our computer records show that probate was granted 30 August 2013.
After waiting the 6 months after the grant of probate, the executor distributed the estate in accordance with the will.
The final distribution was made upon settlement of the sale of the real property, to the entitled beneficiary, [the defendant] in his personal beneficial capacity. That final distribution to the beneficiary occurred on or about 6 June 2014.
The estate administration was finally completed after the expiration of 6 months from the grant and the last distribution of any estate asset was finally made over 6 months ago. Your client is prevented from making any claim against the estate by operation of s 99 of the [Act].
[The defendant] denies that notice was given to him of any claim by your client. In any event, if such alleged notice was given, which is denied, then your client would have the additional obstacle that any such notice is required to be in writing and would have expired three months after it was provided in accordance with s 99A(4) of the Act.
As to your client’s foreshadowed application for a ‘freezing order’ made under the banner of ‘without prejudice’, we consider any application to be misconstrued, not only for the reasons that your client’s claim is legislatively barred, but that you have failed to provide any reason why you consider [the defendant] would act in such a manner as to necessitate such a restrictive order made against him.
In response to the plaintiff’s statement that the only notice she received in relation to the deceased’s estate was a letter from the estate solicitor dated 21 January 2014 which was the first time she found out what was in the deceased’s will, the defendant deposed, even if that were correct, the plaintiff admits that she had notice of the contents of the deceased’s will and the proposed distribution of the estate approximately three months prior to her receiving her distribution and over four months prior to the final distribution of the estate.
In addition, the defendant deposes to all communications between himself and the plaintiff and Mr Peagram, exhibiting copies of the text messages. In summary, the defendant says:
(a) on 30 September 2014, Mr Peagram asked the defendant to call the plaintiff;
(b) on 1 October 2014, the defendant attempted to call the plaintiff but she did not answer and he then sent a text message to her. On the same day, the defendant received a text message from Mr Peagram saying the plaintiff had no credit on her phone but she needed to speak to the defendant. The defendant deposes that he took from that message that the plaintiff wanted to contact him for money;
(c) on 2 October 2014 at 7.53am in response to the message in (b) above, the defendant sent the text message set out in [9] above.
In support of the fact that he sent the text message on 2 October 2014 and not on 10 January 2014 as alleged by the plaintiff’s solicitor, or after 21 January 2014 as alleged by the plaintiff, the defendant relies on the text message as exhibited and on the fact that, as at 10 January 2014, he did not have any money on term deposit prior to the settlement of the sale of the Vermont property in June 2014.
The plaintiff’s circumstances
The plaintiff has no assets and her only income is from a disability pension. She also contends that, at all material times, she was not of full mental capacity, having suffered a middle cerebral artery stroke in April 2012. The plaintiff says that she is a person for whom the deceased had responsibility to make adequate provision for her proper maintenance and support in his will.
As to the plaintiff’s capacity, Mr Peagram deposed that by order of the VCAT made 27 June 2012, the plaintiff’s daughter was appointed the plaintiff’s administrator. In support of the application for the appointment of the daughter, Mr Peagram exhibits a medical report dated 28 May 2012 and a social worker’s report dated 22 May 2012.
On 27 September 2012, the daughter resigned as the plaintiff’s administrator as the plaintiff and Mr Peagram fell out over how much money should be given to the plaintiff from her pension. Mr Peagram lived with the plaintiff after she was discharged from hospital in September 2012 until she was admitted to her present accommodation at Acacia Gardens SRS in April 2013. In a letter dated 9 December 2014, Acacia Gardens SRS recorded that the plaintiff was a resident paying rent of $425 per week, that she suffered from stroke and got depression and had an incident of overdose when she was self-medicating on 11 July 2014. After that incident, the staff at Acacia Gardens SRS took over the administration of the plaintiff’s medication.
On 13 March 2015, Mr Peagram was appointed as the plaintiff’s administrator, limited to providing instructions in this proceeding. Notwithstanding Mr Peagram’s recent appointment, counsel for the plaintiff submitted the plaintiff had capacity to give instructions for this application prior to 13 March 2015 as her instructing solicitor had assessed this to be the case.
The defendant’s circumstances
In his affidavit, the defendant deposed that after the sale of the Vermont property, he has used some of that money for his living expenses and he has also given $45,000 to each of his two children who were in financial need. He now holds the balance of $374,949 on term deposit. He is on a disability pension and lives in accommodation supplied by the Department of Human Services.
The plaintiff’s submissions
The plaintiff contends that as the executor and trustee of the estate of the deceased, the defendant has a fiduciary obligation to her that required him, in the circumstances, to safeguard her interests and that he has failed to do so. Alternatively, as executor and trustee of the estate of the deceased, the defendant had a duty to be even-handed between all of the beneficiaries of the estate, including the plaintiff being a person entitled or potentially entitled as a statutory beneficiary under Part IV of the Act.
In relying on the duty of even-handedness, counsel for the plaintiff relies on two recent decisions of this Court in which she contends the duty of even-handedness has been recognised and a number of New Zealand decisions which, she contended, had similar family provision legislation to that in Victorian and any statutory differences between the two regimes were not material. Counsel described the duty in the plaintiff’s case as follows: where an executor is aware of a potential claim or should be aware of a potential claim under the Act, he or she has a duty to take action to safeguard the interests of that person because, in this case, of the plaintiff’s mental capacity. That duty means the executor should have made contact either with staff at the plaintiff’s supported accommodation or with a social worker, leading perhaps to having an administrator appointed to consider whether or not the plaintiff should bring a Part IV claim. Alternatively, the defendant should have alerted the staff that the plaintiff needed legal advice or that she had potential legal rights or should have contacted Mr Peagram in relation to the plaintiff’s interests as a potential claimant under the Act.
Because the defendant failed to inform the plaintiff that he was about to make (purportedly) a final distribution of the estate and because he proceeded to appropriate the whole of the proceeds of sale of the Vermont property to himself, the defendant has breached of his duty to safeguard the plaintiff’s interests and to act even-handedly towards her.
The plaintiff relies on the fact that the defendant had knowledge of the plaintiff’s plight. Combined with his failure to respond to her plea for financial assistance, and his failure to take appropriate steps to ensure that she was aware of her rights before appropriating the funds to himself, the defendant has committed an egregious breach of his fiduciary duties. Alternatively, at the very least, the facts so far indicate that the plaintiff has a good cause of action in pursuing such a claim, and she has reasonable prospects of making out her case, which is sufficient to ground the interlocutory injunction sought by the plaintiff.
In her written submissions, counsel submits that because the proceeds of sale of the Vermont property have been paid to the defendant and are retained by him, the plaintiff seeks a declaration for the proceeds to be held by him on a constructive trust for the estate of the deceased. The plaintiff also seeks orders restraining the defendant from disposing of or dealing with or diminishing the net sale proceeds pending the hearing and determination of the claim.
The plaintiff also submits that the defendant cannot suffer any relevant loss or detriment as a result of any interlocutory injunction being granted. As the plaintiff is without assets, she also seeks dispensation from giving the usual undertaking as to damages, relying on the English decision of Allen v Jambo Holdings Pty Ltd.[1]
The plaintiff’s application for leave to amend summons for orders to extend time under s 99 of the Act
[1][1980] WLR 879.
In oral argument, counsel for the plaintiff agreed that the estate had been finally distributed. That final distribution has occurred is incontrovertible. All of the estate assets have been distributed in accordance with the terms of the deceased’s will. This occurred finally in June 2014 when settlement of the sale of the Vermont property took place and the net proceeds of sale were paid to the defendant as the beneficiary of the property under the deceased’s will.
The leading case in Australia as to when final distribution of an estate has occurred is Easterbrook v Young.[2] In its consideration of the issue, the High Court gave great weight to the policy and purpose of testator’s family maintenance legislation and said it ‘was the actual distribution of the estate, its removal from the hands or name of the personal representative and its placement in the hands or name of the … beneficiary’ that renders the estate finally distributed.[3] Accordingly, for the purposes of s 99 of the Act, an estate is finally distributed when the personal representative has done everything he or she is legally required to do to transfer the beneficial interests in the estate assets to the beneficiaries.
[2](1977) 136 CLR 308.
[3]Ibid, 316-317.
Where an estate has been finally distributed, the Court has no jurisdiction to extend time under s 99 of the Act.[4] It is unnecessary, therefore, to deal with the usual principles that apply to applications for leave to extend time pursuant to s 99 of the Act.
[4]Ibid; See also, Ashhurst v Moss (2006) 14 VR 291; [2006] VSC 287; Groser v Equity Trustees Ltd (2007) 16 VR 101; [2007] VSC 27.
The plaintiff’s application for a declaration and injunctive relief
The plaintiff seeks a declaration against the defendant both personally and as the executor of the deceased’s will, that the net proceeds of sale of the Vermont property are held by him on a constructive trust for the estate of the deceased. Although not addressed in oral submissions, a declaration such as the plaintiff seeks would not ordinarily be made on an interlocutory application, it being in the nature of final relief.
The plaintiff sought injunctive relief against the defendant on the grounds of the defendant’s breach of his fiduciary obligation to safeguard the plaintiff’s interests, alternatively, the defendant’s breach, as executor and trustee of the estate of the deceased, of his duty of even-handedness between all the beneficiaries of the estate, including the plaintiff, she being a person entitled or potentially entitled as a statutory beneficiary under Part IV of the Act.
Counsel for the plaintiff submitted that case law in New Zealand, together with two Victorian cases, addressing the issue of an executor's fiduciary position and the duty of even-handedness made the substantial difference to the plaintiff’s claim, notwithstanding the estate of the deceased had been finally distributed.
The New Zealand cases
The first New Zealand case relied on by the plaintiff is Irvine v Public Trustee.[5] The plaintiff relied on the following statement made by the Court of Appeal:
In a note in 17 Halsbury’s Laws of England (4th ed) para 1193, the view is expressed, without citation of supporting authority, that a personal representative’s duty to be even-handed between all the beneficiaries includes persons entitled or potentially entitled as statutory beneficiaries under family provision legislation. We think that this must be so as to persons whose claims the personal representative is aware. For present purposes there is no need to consider whether it is so as to persons of whose claims he ought be aware, although in the case of a person not of full age or mental capacity this Court has recognised that there is a duty in a clear case to take action to safe guard that person’s interests (Re Magson [1983] NZLR 592, 599).[6]
[5][1989] 1 NZLR 67 (‘Irvine’) (Cooke P, Richardson, McMullin, Somers, Casey and Bisson JJ).
[6]Ibid, 70.
The decision of Re Magson referred to in Irvine was an appeal by five daughters, one of whom was a minor, seeking leave to bring a claim for further provision against their father’s estate out of time. The assets of the estate were held by the representatives of the estate as trustees. It was held that the daughters had been indefinite or inactive in pursuing any claim under the family provision legislation, with the result that the appeal was not allowed.
In Re Magson, the Court specifically mentioned the application of a daughter who was a minor and said her claim was to be approached sympathetically because of that fact. In doing so, the Court referred to the special provisions in the Family Protection Act 1955 (NZ) regarding the claims of persons under age, specifically to ss 4(4) and 9(2)(a) of the Act, as follows:
(a)section 4(4) provides an administrator of the estate of the deceased may apply on behalf of any person who is not of full age or mental capacity in any case where the person might apply, or may apply, to the Court for advice or directions as to whether he ought so to apply; and, in the latter case, the Court may treat the application as an application on behalf of the person for the purpose of avoiding the effect of limitation; and
(b)section 9(2)(a) refers to a prescribed period which, in the case of an application by an administrator made on behalf of a person not of full age or mental capacity, is the period of two years from the date of the grant of administration in the estate.
In Re Magson[7], the Court stated that the fact that an extended period of two years has been allowed for a claim as of right suggested that the legislature could not have intended, notwithstanding the expiry of that period, leave for a claim by or on behalf of a minor should be granted as a matter of course or lightly. The Court then said:
Although an administrator is not necessarily bound to apply on behalf of a minor … in a clear case we think such a duty would arise.[8]
[7][1983] NZLR 592.
[8]Ibid, 598.
The decision of Irvine was next referred to in MacKenzie v MacKenzie.[9] In that case, at a meeting after the deceased’s death, an executrix, who was the deceased’s second wife and sole beneficiary of the estate, falsely told the deceased’s adult children from the first marriage, that there was no money in the deceased’s estate. Hammond J found that the executrix was guilty of deceit and, in the circumstances, she was in a fiduciary relationship with the plaintiffs and the fiduciary relationship was breached by her giving inaccurate and misleading information. His Honour said Irvine was authority for the proposition that the duty of even-handedness as between beneficiaries extends to statutory claims of which the personal representative was aware.
[9](1998) 16 FRNZ 487 (HC).
Following next is the decision of Price v Smith.[10] The executors followed the instructions of the deceased not to place a death notice in the papers, not to notify her two children of her death and to have a private burial. In the result, the Court left open whether a duty of even-handedness or some other duty of a fiduciary nature existed in the particular circumstances in favour of the children and whether it was breached by the executors.
[10][2004] NZFLR 329 (CA).
The final decision relied on by the plaintiff is Sadler v Public Trust.[11] In that case, the plaintiff was the daughter of the deceased. The deceased had left his estate to his partner. Probate was granted on 23 July 2002. The statutory time limit for the plaintiff to bring a claim as of right expired on 23 July 2003. The daughter did not hear of her father’s death until July 2004, by which time she was out of time to bring a claim under the Family Protection Act 1955. The daughter brought proceedings against the Public Trustee alleging a breach of the fiduciary duty of even-handedness because it had not informed her of her father’s death.
[11][2009] NZCA 364 (Glazbrook O’Regan and Baragwanath JJ) (19 August 2009).
The trial judge held that the trustee did not owe the daughter a duty as a potential claimant to advise her of the death of her father. On appeal, the court reviewed the authorities and summarised the current position in New Zealand as follows:
On the authorities as they currently stand, therefore:
(a) a duty of even-handedness extends to potential claimants against an estate where an executor is aware that they wish to make a claim (Irvine);
(b) the duty extends to ensuring that an executor does not actively and dishonestly conceal relevant material about the estate from potential claimants who seek information from the estate (MacKenzie);
(c) the duty of even-handedness may extend to those of whose the claim the executor ought to be aware, but the exact extent of any such duty has not been defined (Irvine);
(d) whether there is a general duty of even-handedness that extends to require executors to inform all potential claimants of the fact of death and when such a duty, exists, might arise, was left open by this court in Price v Smith. [12]
[12]Ibid, [35].
The Court agreed with the trial judge that there is no duty to advise all potential claimants of the death of a deceased or a general duty to advertise for claimants. The Court referred to the decision of Priestly J in Public Trust v Public Trust.[13] In that decision, Priestly J agreed with the trial judge’s analysis in Price v Smith and he then set out two further important policy considerations that weighed against such a general duty, considerations with which the Court of Appeal in Sadler agreed. The two further important policy considerations stated by Priestly J were:
[44] There is also an important policy consideration which lies behind what I perceive to be the current state of the law. As Venning J observed there are a number of classes of potential claimants. If a claim under the Act is filed then obviously those classes have to be cleared out. But to notify all such claimants would cause delay and expense, almost certainly unnecessarily, while such potential claimants are identified and their whereabouts ascertained.
[45] Quite apart from that consideration, notification would have the ability to encourage claimants to mount claims which otherwise they might not be motivated or disposed to bring. Human nature being what it is, to notify a person that he or she has a right to claim might well result in that person deciding to have a crack at the estate, particularly if there is a perception the estate is large. That dynamic too would add to expense and delay in the estate’s administration.[14]
[13]HC AK CIV 2008-404-3717 13 March 2009.
[14][2009] NZCA 364, at [39].
Finally, in Sadler, the Court left open, as Cooke P did in Irvine, whether the duty of even-handedness arises in cases where an executor ought to know of a claim and it also left open the exact content of any such duty and whether and in what circumstances it may extend to a duty to advise that potential claimant of the death of the testator.
The Victorian cases
The Victorian decisions relied upon by the plaintiff are the unreported decision of Emerton J of Dickson v Dickson[15] and the reported decision of Derham AsJ of O’Brien v Hall.[16]
[15] Unreported, Supreme Court of Victoria, Emerton J (8 March 2011) (‘Dixon’).
[16][2015] VSC 52 (‘O’Brien’).
In Dickson, her Honour heard an application seeking an extension of time to issue a Part IV claim. The plaintiff’s application was commenced eleven months after the grant of probate. At the end of the six month period after the grant of probate, the only property not distributed was a residence and, at the time the application was commenced, the property remained in the estate. The plaintiff contended that the defendant failed to inform him of the contents of the deceased’s will and that probate of the will had been granted and relied on Sadler to assert a duty of even-handedness. The plaintiff’s case was that the defendant ought to have been aware that the plaintiff would be dissatisfied with the terms of the will and had a duty, at the very least, to inform him of the terms of the will. The facts in issue were whether the plaintiff had managed to contact the executor, what had been said, and whether the plaintiff knew of the contents of the will.
The plaintiff sought to amend her claim to include relief under Part IV of the Act and also sought a declaration that the defendant held the property distributed to him as a constructive trustee. Alternatively, the plaintiff sought a declaration that the defendant had distributed the property in breach of his fiduciary duties, it having been unconscionable on his part not to have informed the plaintiff either of the contents of the will or that probate had been granted.
Emerton J referred to the submissions made by both the plaintiff and the defendant and said because the evidence at trial might have shown that the defendant ought to have been aware of the potential claim and the defendant deliberately avoided speaking to the plaintiff:
… there is an argument that the defendant knew or ought to have known that the plaintiff would wish to make an application for a larger distribution under Part IV of the Act. In my view, therefore the proposed amendments should not be refused on the grounds that they do not disclose a cause of action.[17]
[17]Dixon, [20].
In O’Brien, Derham AsJ set out the submissions of the parties where one party referred to an executor’s duty of even-handedness.[18] His Honour’s findings did not include any reference to the duty of even-handedness.
[18]O’Brien, [41]–[44].
The plaintiff contends the duty of even-handedness as developed in New Zealand applies in Victoria because the family provision legislation in the two jurisdictions is similar. The main differences between the two regimes were the distribution provisions and, importantly, in my view, that the New Zealand legislation provides for an extended period within which a family provision claim may be made where a person is a minor or under a disability. This special provision enables an administrator to apply for advice and directions on behalf of a person not of full age or mental capacity as to whether that person ought so apply.
The special provision is set in Re Magson at [35] above and, as stated at [36] above, the Court said in respect of them:
(a) leave for a claim was not intended by the legislature to be granted ‘as a matter of course or lightly’; and
(b) although an administrator is not necessarily bound to apply, ‘in a clear case we think such a duty would apply’.
The New Zealand cases make clear that a duty of even-handedness extends to potential claimants against an estate where an executor is aware they wish to make a claim and may extend to those claims of which the executor ought be aware, but the content of the duty had not been defined. Sadler specifically found there was no duty to advise all potential claimants of the death of a deceased or a general duty to advertise for claimants. The further policy considerations of the delay and expense involved in notifying all claimants and the fact that notification would encourage claimants would necessarily limit the content of any duty in relation to claims of which an executor ought be aware.
Importantly, the analysis of the content of the duty of even-handedness upon which some of the New Zealand cases are based refer, in part, to the special provision set out in Re Magson which is not found in the Victorian legislation. Specifically, the Victorian Act does not provide for applications to be made by an administrator for advice or directions in respect of persons who are not of full age or mental capacity.
The two Victorian cases relied on by the plaintiff did not address that issue, with O’Brien only setting out submissions made to the court on the duty of even-handedness and Dickson considering, in the context of an amendment application and where the estate had not been finally distributed, a duty, at the very least, to inform the plaintiff of the terms of the will, that the plaintiff had not been so informed and the defendant may have deliberately avoided speaking to the plaintiff at all.
The plaintiff’s case against the defendant is that he was aware of the plaintiff’s potential claim or should have been aware of her potential claim, with his awareness resulting from the fact that the defendant knew of the plaintiff’s plight and that he failed to respond to the plaintiff’s plea for financial assistance.
In respect of the plaintiff’s plight, the defendant visited the plaintiff in hospital after she suffered a stroke in April 2012 and the plaintiff says that he visited her three times after the death of the deceased. On 27 June 2012, the plaintiff’s daughter was appointed administrator of the plaintiff but the daughter then resigned from that position on 27 September 2012. After her time in hospital, in September 2012 she lived with Mr Peagram until April 2013 when she was moved to her accommodation at Acacia Gardens SRS. The plaintiff continued to manage without an administrator until recently when Mr Peagram was appointed administrator for the purposes of this litigation. How any awareness of the plaintiff’s situation translates into the claimed duty said to be owed by the defendant to the plaintiff in respect of the estate of the deceased was not established other than to rely on the cases referred to above. In my view, such a conclusion cannot be reached relying on the cases referred to by the plaintiff.
In respect of the defendant’s alleged failure to respond to the plaintiff’s plea for financial assistance, the evidence does not support a finding that the plaintiff sought assistance, only that the defendant took the text message from Mr Peagram to be a request for money for the plaintiff. There is disputed evidence as to the date of the communications between the plaintiff and the defendant.
The plaintiff says the communication was received after she received the letter dated 21 January 2014 although, in their letter dated 17 December 2014, the plaintiff’s solicitor states it was on 10 January 2014.[19] This assertion can probably be explained by the fact that it appears in the plaintiff’s phone in the American format (month, day, year) for recording dates rather than in the Australian format (day, month, year).
[19]See paragraph [8] above.
The defendant says the relevant communications were made on 30 September, 1 October 2014 and 2 October 2014. He says after the communication from Mr Peagram on 30 September, he reponded by telephoning the plaintiff on 1 October but did not get an no answer. He then followed up with a text message to the plaintiff in which he referred to ‘fixed term deposits’. The defendant exhibited his phone records and a photograph of the relevant text messages to his affidavit and deposed that the message was sent to his sister on 2 October 2014. Further, the defendant says he did not have any fixed term deposits in January 2014 and only had them as a result of the sale of the Vermont property in June 2014. This fact corroborates, and I accept, that the dates of the communications were 30 September, 1 October and 2 October 2014.
Although the cases relied on by the plaintiff state that the content of any duty of even-handedness is unclear, the plaintiff submits the duty of even-handedness and, I infer the duty to safeguard the plaintiff’s interests, means the defendant should have made contact with staff at Acacia Gardens SRS or with a social worker, leading, perhaps, to having an administrator appointed to consider whether or not the plaintiff should bring a Part IV claim; or to alert the staff that the plaintiff needed legal advice or that she had potential legal rights. Alternatively, given his previous contact with the plaintiff’s carer, the defendant ought to have contacted Mr Peagram in relation to the plaintiff’s interests.
In relation to the plaintiff’s submission that defendant ought contact staff or a social worker, to impose such broad obligations on the defendant could not form part of the duty of even-handedness or the duty to safeguard the plaintiff’s interests.
In relation to an obligation to contact Mr Peagram, I note that he has been the carer of the plaintiff since at least September 2012. As the carer, he should have seen the letter from the defendant’s solicitor dated 21 January 2014 but, in my view, the defendant had no obligation to contact Mr Peagram in relation to the plaintiff’s interests.
The starting point for the administration of an estate is that an executor’s primary obligation is to carry out the wishes of the testator, as expressed in the will. All of the deceased’s children were beneficiaries under the deceased’s will and, in the case of the plaintiff, she received a copy of the will with an explanation of what she was to receive under it. As a beneficiary, the plaintiff was entitled to the share that she was left by the deceased. As a potential claimant for further provision from the estate, she has the right to make a claim, which could have been rejected or accepted by the executor. Generally, an executor has a duty both to uphold the will, as well as seeking a compromise where a proper claim is made against the estate, so as to minimise any legal costs. In Victoria, there is no duty on an executor to notify claimants in the category of the plaintiff. An executor is not under an obligation to bring the fact of the availability of a right to make a claim to the attention of a potential claimant. If there were, one would think that the Victorian Parliament would have provided for that, just as the New Zealand Parliament did when they included the special provisions for a person not of full age or mental capacity. Executors are entitled to distribute an estate if there is no notice of a claim within the statutory timeframe. Executors and beneficiaries are entitled to certainty of administration against a reasonable time limit for claimants to take proceedings against an estate. These provisions support the conclusion that the claims asserted by the plaintiff cannot be upheld.
The defendant has acted in accordance with long-established practice in his administration of the estate. He has not concealed what he was doing in the administration of the estate of the estate. I reject the plaintiff’s submission that the defendant failed to inform the plaintiff that he was about to make a final distribution of the estate or that he proceeded to appropriate the sale proceeds of the Vermont property to himself. Insofar as the plaintiff claimed the defendant ‘proceeded to appropriate’ the sale proceeds of the Vermont property, there is no basis to make such a claim. Inherent in the submission is that the defendant has taken the sale proceeds when he is not entitled to them and that is not the case.
It is also wrong to submit that the defendant failed to inform the plaintiff that he was about to make a final distribution of the estate. The defendant’s solicitors sent the letter dated 21 January 2014 to the plaintiff in which she was given a copy of the deceased’s will, told what she was entitled to receive under it, told that distribution could not be made until after 28 February 2104 and told that she could contact the solicitors if she wished to discuss any matters. The plaintiff did not contact the defendant’s solicitors with any queries. Subsequently, on or about 14 April 2014, the plaintiff received her distribution of the residue of the estate. The plaintiff deposed that she thought this amount ‘was an interim distribution and that I was entitled to more money from the estate’. After receipt of the distribution and bearing in mind her thought, the plaintiff still did not contact the defendant’s solicitors with any of ‘her thoughts’ regarding the dates of any further distributions to which she believed she might be entitled from the estate.
In any event, the defendant in his personal capacity has no duty to safeguard the plaintiff’s interests or a duty of even-handedness towards the plaintiff. He has received the net proceeds of sale of the Vermont property as a beneficiary of the deceased’s estate, as is his entitlement. There is no cause of action against the defendant in his personal capacity.
In respect of the defendant’s capacity as the executor of the estate of the deceased, as discussed, the defendant as executor does not have any duty to safeguard the plaintiff’s interests or a duty of even-handedness towards the plaintiff of the type submitted by the plaintiff. In any event, the defendant’s executorial duties have finished with the estate finally distributed in accordance with the deceased’s will. The plaintiff is not entitled to any injunctive relief claimed by her against the defendant.
Although no longer necessary to address, the plaintiff submitted the defendant cannot suffer any relevant loss or detriment as a result of any interlocutory injunction being granted. It is important to remember that in seeking an equitable remedy, a plaintiff is required to ‘do equity’.[20] It is usual that a plaintiff be required to give an undertaking to the Court that if the interlocutory injunction is dissolved at a later stage, the plaintiff will compensate a defendant for any injury or loss caused by the injunction.[21] The plaintiff sought a dispensation from giving an undertaking as to damages, relying on the English decision of Allen v Jambo Holdings Pty Ltd.[22] That case concerned a plaintiff obtaining a Mareva injunction (now usually described as an asset protection order) without being required to give an undertaking because she had no assets. The Court of Appeal saw the injunction granted as a mode of requiring the defendant to give security for a personal injuries damages claim where the defendant was perceived not to be at risk of substantial loss.
[20]European Bank Ltd v Evans (2010) 240 CLR 432, [17] (French CJ, Gummow, Hayne, Heydon and Kiefel JJ).
[21]Beecham Group Ltd v Bristol Laboratories (1968) 118 CLR 618, 623 (Kitto, Taylor, Menzies and Owen JJ).
[22][1980] WLR 879.
The giving of an undertaking is, in general, an essential condition to the grant of an interlocutory injunction. The terms of an undertaking as to damages are a matter for the discretionary judgment of the Court and any undertaking may be moulded to fit the circumstances. If this proceeding continued, assuming proper grounds to do so, and the defendant were successful, he would incur costs in the litigation. Even if the defendant obtained an order for costs against the plaintiff, she would be unable to pay the defendant’s costs as her financial circumstances are such that she would be unable to meet any compensatory orders that may be made against her. In my view, that is relevant loss or detriment to the defendant.
Orders
Accordingly, I will make the following orders:
(a) leave to amend the plaintiff’s summons filed 2 March 2015, pursuant to s 99 of the Administration and Probate Act 1958 that the time within which she be permitted to commence an application for provision out of the estate of the deceased be extended, be refused; and
(b) the plaintiff’s summons filed 2 March 2015 be dismissed.
I will hear the parties as to costs of this application.
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