Russell v Lee - [2017] WASC 361

JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS

CITATION: RUSSELL -v- LEE [2017] WASC 361

CORAM: TOTTLE J

HEARD: 21 NOVEMBER 2017

DELIVERED : 21 NOVEMBER 2017

FILE NO/S: CIV 2952 of 2017

MATTER :The estate of RONALD WILLIAM LEE late of 214 Marine Parade Cottesloe in the State of Western Australia, Retired, deceased

BETWEEN: SHANA FRANCINNE RUSSELL
First Plaintiff
NERIDA JAYNE PUANGKHAM
Second Plaintiff
AND
FAY EILEEN LEE
First Defendant
JOHN ANTHONY CAMPBELL LEE
Second Defendant
AUSTRALIAN EXECUTOR TRUSTEES LTD AS TRUSTEE OF THE ESTATE OF THE LATE RONALD WILLIAM LEE
Third Defendant

Catchwords:

Wills and estates - Administration of estate - Where third party administrator sought to be appointed pending the grant of probate in respect of the estate - Where independent administrator required to protect value of estate - Application granted

Legislation:

Administration Act 1903 (WA), s 29, s 32, s 35, s 36
Non-contentious Probate Rules 1967 (WA), reg 28

Result:

The letters of administration granted to the third defendant be revoked
The third defendant be appointed administrator of the estate pending the determination of the action

Category: B

Representation:

Counsel:

First Plaintiff                  :     Mr M A MacLennan
Second Plaintiff             :     Mr M A MacLennan
First Defendant              :     In person
Second Defendant         :     In person
Third Defendant            :     Mr R J Eaton

Solicitors:

First Plaintiff                  :     Bennett + Co
Second Plaintiff             :     Bennett + Co
First Defendant              :     In person
Second Defendant         :     In person
Third Defendant            :     Australian Executor Trustees Ltd

Case(s) referred to in judgment(s):

Nil
TOTTLE J:
(This judgment was delivered extemporaneously on 21 November 2017 and has been edited from the transcript.)

Introduction

The plaintiffs are the daughters of the late Ronald William Lee and his widow, the first defendant, Mrs Fay Lee. The second defendant is the plaintiffs' brother. By chamber summons issued on 17 November 2017 the plaintiffs applied for the following substantive interlocutory relief:
1Pursuant to section 29 of the Administration Act 1903 (WA) the grant of letters of administration (Grant) obtained by Australian Executor Trustees Ltd (AET) on or about 28 August 2017 in respect of the estate (Estate) of the late Ronald William Lee (the deceased) be revoked.
2Pending any further or other order AET be appointed pursuant to section 35 of the Administration Act 1903 (WA) to act as an interim administrator of the personal estate and receiver of the real estate of the deceased in all respects.
3AET be indemnified for its costs from the assets of the Estate prior to distribution to any beneficiary or any subsequent administrator or executor of the Estate.
4The defendants pay the plaintiffs' and AET's costs of and incidental to this application.
The application is brought within proceedings commenced by the plaintiffs by writ issued on 16 November 2017. The plaintiffs' claims as they appear from the indorsement in the writ included the following:
2.1a declaration that by reason of her conduct the first defendant is estopped from taking any step to seek or obtain a grant of probate in respect of the deceased's Estate;
2.2a declaration that pursuant to regulation 28 of the Non-contentious Probate Rules 1967 (WA) and section 32 of the Administration Act 1903 (WA) by her conduct the first defendant has renounced her right to obtain a grant of probate in respect of the deceased's Estate and that her right in respect of the executorship has wholly ceased; and
2.3a declaration pursuant to section 36 of the Administration Act 1903 (WA) that:
2.3.1.the first defendant is not competent to take a grant of probate in respect of the deceased's Estate; and
2.3.2.there shall be a grant of letters of administration with the Purported Will annexed to Australian Executor Trustees Limited, at Level 28 Central Park, 152 - 158 St Georges Terrace, Perth in the State of Western Australia, subject to that company making an application to this Honourable Court by Motion with an Affidavit in Support deposing to the various matters necessary to lead to a grant of letters of administration with the will annexed set out in the Non‑contentious Probate Rules 1967 (WA) (Application), within fourteen (14) days of the date of these orders;
Mrs Lee and Mr John Lee appeared in person at the hearing of the application.

Factual background

The following account of the factual background is derived from three affidavits sworn in support of the application by the plaintiff's solicitor, Ms Amy Joanne Rumble.
Mr Ronald Lee died on 26 July 2016 at the age of 88. Until shortly before his death, he and Mrs Lee had lived together in the family home in Cottesloe. After Mr Lee died, Mrs Lee searched her home for a will but did not find one. In an affidavit sworn on 5 July 2017 in other proceedings concerning Mr Lee's estate, Mrs Lee deposed that:
I have made a careful search of the residence and all belongings to ascertain whether there is a Will of Ron and to the best of my knowledge and belief he did not leave any Will. Therefore, Ron died intestate.
In the absence of a will, a dispute arose as to who should apply for a grant of letters of administration and, thereafter, administer Mr Lee's estate. Mrs Lee contended that she should do so. The plaintiff's contended that an independent administrator should be appointed and proposed the third defendant as a company qualified to fulfil that role.
Before Mr Lee died, disputes between family members over the affairs of various family companies had arisen. Those disputes gave rise to litigation. The disputes continued following Mr Lee's death. Putting to one side litigation concerning the estate of Mr Lee, the following proceedings have been commenced in this Court:
(i)CIV 2605 of 2015. These proceedings were case managed by Pritchard J and concerned a commercial dispute regarding the conduct of the business known as Western Meat Processors Pty Ltd and a counterclaim regarding the conduct of Lee family companies, Lee Holdings Pty Ltd, Lee Brothers Pty Ltd and Lee Pastoral Pty Ltd. These proceedings were discontinued pursuant to the terms of a settlement deed dated 27 June 2017.
(ii)CIV 2378 of 2017. These proceedings were commenced by originating summons by the plaintiffs for orders for pre-action discovery from Mrs Lee, Mr John Lee and Lee Holdings Pty Ltd, and the production of Lee Holdings Pty Ltd's books and records pursuant to s 247A of the Corporations Act 2001 (Cth). The documents being sought were those relevant to a share issue in July 2016 in which Lee Holdings Pty Ltd had participated. Substantive orders in those proceedings were made by consent on 16 October 2017. Those orders required Mrs Fay Lee and Mr John Lee to give pre-action discovery of the documents to which I have referred.
(iii)COR 227 of 2017. These proceedings were commenced by the plaintiffs. They are Corporations Act proceedings that concern the conduct of the business of Lee Holdings Proprietary Limited and they are currently being managed by Kenneth Martin J. Those proceedings are currently listed for mediation on 7 February 2018.
I return to the facts concerning the dispute about the administration of the estate. On 7 September 2016 the first plaintiff lodged a caveat over the estate because several months had passed without any beneficiary making an application for a grant of letters of administration.
On or about 5 October 2016 citations were served on Mrs Lee and Mr John Lee. Neither filed a notification of their intention to be heard within the time limit specified in those citations.
On 12 December 2016, the plaintiffs commenced proceedings in the probate jurisdiction of the court for orders that the third defendant be appointed to administer Mr Lee's estate (the Estate Proceedings). Mrs Lee counterclaimed for an order that a grant of letters of administration be made in her favour.
On 23 February 2017 Pritchard J appointed the third defendant as an interim administrator of the estate. The application was not opposed by Mrs Lee. The Estate Proceedings were listed for hearing in August 2017. Shortly before the hearing commenced Mrs Lee decided to withdraw her defence in the Estate Proceedings without an admission and did not proceed with her counterclaim.
Mrs Lee's decision was explained in a letter from her solicitors, King & Wood Mallesons, to the plaintiff's solicitors dated 31 July 2017 in the following terms:
Our client's instructions are that she was willing to participate in and defend to the Estate Proceedings until the recent amendments to the statement of claim (and the issues of subpoenas by your clients). These unforeseen actions were a significant departure from the previously understood scope of the dispute, raising a number of new issues and significant new complexities. As a result, our client now considers that the probable cost (which will be significantly higher than previously thought) and the difficulties involved in defending the Estate Proceedings, outweighs her resolve to being appointed as the administrator of her late husband's estate (and bearing in mind the compelling argument that a wife ought be appointed administrator of her late husband's estate).
In short, your clients' recent actions have made our client's continued defence of the Estate Proceedings uncommercial, and she has made the reasonable decision to withdraw her defence to your client's application without admission. In addition, our client's health has deteriorated, including a concerning incident which occurred last week.
In light of these matters, our client now no longer wishes to defend your clients' application to have an independent administrator appointed, or to pursue the relief set out in her counterclaim. Our client, thus, proposes to consent to orders being entered in the Estate Proceedings to have an independent administrator appointed.
Subsequently, on 1 August 2017, Pritchard J made a number of orders by consent. Those orders included a declaration that:
[P]ursuant to section 25 of the Administration Act 1903, and the failure of the Defendants to respond to the citations issued by the Plaintiffs, there is no person entitled in distribution to the estate of [Ronald William Lee], late of 214 Marine Parade Cottesloe in the State of Western Australia (Estate), resident within the jurisdiction and fit to be so entrusted who has applied for or who, when duly cited, appeared and applied for, administration of the Estate.
Her Honour also ordered that there be a grant of letters of administration to the third defendant. On 28 August 2017 a grant of letters of administration to the late Mr Lee's estate was made in favour of the third defendant. Pursuant to the grant the third defendant has progressed the administration of the estate.
On 17 October 2017 Mrs Lee and Mr John Lee met with Mr Ryan Eaton and Mr Steven Pass of the third defendant. Mrs Lee told Mr Eaton and Mr Pass that she had found a will made by Mr Lee appointing her as executrix. Mrs Lee did not produce the will or provide a copy of it at that meeting. But on the following day, 18 October 2017, a copy was provided to the third defendant, the plaintiffs and the plaintiffs' solicitors.
The will is dated 5 June 2008 and appears to have been signed by Mr Lee in the presence of two witnesses who had also signed the will underneath a conventional attestation clause. The will is a pro forma pre-printed document, parts of which have been completed. The printed clauses address, amongst other things, the appointment of an executor or executrix, the appointment of a guardian for minor children, special gifts and the disposition of the residue of the estate, funeral directions and body organ donations.
Each of the pro forma printed clauses had spaces left blank for completion by the testator or testatrix. The only clause that had been completed to any extent was the clause dealing with the appointment of the executor or executrix. Mrs Lee's name and address had been inserted in this clause. The will contained no dispositive provisions.
On 30 October 2017 the third defendant surrendered the grant of letters of administration to the court pending an application by Mrs Lee for a grant of probate in respect of the will dated 5 June 2008.
The third defendant has prepared a report dated 17 November 2017 outlining the assets which it understands makes up the estate, the steps taken by it to administer the estate, and a number of issues requiring attention and management.
On 6 November 2017 the plaintiffs' solicitors sent a letter to Mrs Lee, a copy of which was sent to Mr John Lee. That letter enclosed a draft of the chamber summons and a draft of the writ that have been issued in these proceedings. The present application was foreshadowed in the letter of 6 November 2017. No response to that letter was received.
On 16 November 2017 the present proceedings were commenced. Copies of the writ and the chamber summons were sent by email to Mrs Lee at an email address that the plaintiffs solicitors had for her.
At 4.03 pm on Friday, 17 November 207, Mrs Lee sent an email to the plaintiffs' solicitors stating:
The application for probate has begun, and I expect the application to be complete by this Monday.
Significantly, Mrs Lee's email of 17 November 2017 was a reply to the email sent to her by the plaintiffs' solicitors on 16 November 2017.

Issues

The plaintiffs contest both the validity of the will and, for various reasons, Mrs Lee's competence to be entrusted with the administration of the estate. The plaintiffs submit that the issues concerning those matters must be determined at trial and that this will involve a delay of some months.
The precise extent and value of the estate's assets is unknown, but by any measure the estate is significant. Mrs Lee estimates that the net value of the estate is $8.5 million and the plaintiffs think it is worth more than that.
The third defendant has commenced getting in the assets of the estate and investigating claims involving the estate including matters that are the subject of the proceedings to which I have referred. The third defendant's report on the administration of the estate asserts a lack of cooperation in the administration of the estate on the part of Mrs Lee and Mr John Lee. This assertion is disputed by Mrs Lee and Mr John Lee and for the present purposes I attach no weight to it.
There are matters relating to the administration of the estate that require attention. These include matters concerning the taking of some land that forms part of the estate for the purpose of the construction of the Perth to Darwin Highway NorthLink project and a drainage issue affecting commercial and retail property held by the estate.
The plaintiffs submit that the appointment of an interim administrator is necessary because:
(i)a failure to address matters affecting the estate may result in a diminution in the value of the estates' net assets;
(ii)the parties are involved in separate proceedings before this court (principally the Corporations Act proceedings to which I have referred) in which the estate is likely to be joined as a party, and those proceedings involve allegations of oppression arising from the conduct of the directors of one of the Lee family companies, Lee Holdings Pty Ltd, prior to Mr Lee's death (Mr Lee was a director of that company and was apparently involved in the conduct the subject of that action);
(iii)if an interim appointment is not made there is a possibility that assets of the estate may go to waste or that opportunities now available to the estate may be lost.

Disposition

There was no opposition to the first order sought, that is that the letters of administration granted to the third defendant should be revoked. The revocation of the letters of administration is required before an order appointing an interim administrator may be made.
I consider that sufficient reasons exist to appoint the third defendant as an administrator of the estate pending the determination of this action. My reasons are as follows.
First, the assets of the estate include assets that require management to avoid loss to the estate. Somebody must be appointed to administer the estate on an interim basis to manage those assets in order to protect the value of the estate.
Second, I am satisfied that the third defendant is an appropriate entity to be appointed as interim administrator and take those steps. My satisfaction on this point is based in part on the fact that the third defendant has performed the role of interim administrator and administrator since February, and in part the fact that Mrs Lee herself accepted that the third defendant was an appropriate entity to manage the estate of her late husband. That acceptance is evidenced by her consent to the orders made by Pritchard J on 1 August 2017.
Third, it is plain that there are conflicts between (in particular) the first plaintiff and her mother, Mrs Lee, the first defendant and her brother, Mr John Lee, the second defendant.
In my view, the existence of those conflicts would impinge upon the management and administration of the estate were someone who was not independent appointed as an interim administrator. In particular if Mrs Lee was appointed as interim administrator I consider that the potential for conflict would be increased and this would have the capacity to impede the administration of the estate.
In concluding that it is not appropriate for Mrs Lee to be appointed as an interim administrator of the estate I have taken into account the fact that Mrs Lee was named as the executrix in her late husband's will and her submissions that her husband's wishes should be observed.
It is my view that it is appropriate, preferable and necessary for an independent person to be appointed as an interim administrator. In reaching that view I have also taken into account the acknowledgement implicit in Mrs Lee's consent to the orders made by Pritchard J on 1 August 2017 that she was not a person who was fit to be entrusted with the administration of the estate.
I appreciate that that acknowledgement was made in the context of a situation where it was contemplated that a grant of letters of administration to the estate would be made. But nonetheless I am entitled to rely on Mrs Lee's consent to that order as evidence that she is not fit to be entrusted to administer the estate. This is, of course, a provisional view made in the context of this interlocutory application based upon limited evidence. It should not be accorded greater significance than that.
Finally, I should say this. I am acutely conscious that this application has been brought at short notice.
Whilst I will accede to the plaintiffs' application I do so on the basis that Mrs Lee and Mr Lee should have the opportunity to apply for orders varying the orders I make today by, amongst other things, if they are so advised, seeking the removal of the third defendant as interim administrator and either to renew the application that Mrs Lee should be appointed to fulfil that role or that an independent party should be appointed to fulfil that role.