The Estate of Hertslet; Richard John William d’Apice Administrator of the late John Leo Hertslet

[2016] NSWSC 1240

Supreme Court

New South Wales

• Amendment notes

Medium Neutral Citation:

The Estate of Hertslet; Richard John William d’Apice Administrator of the late John Leo Hertslet [2016] NSWSC 1240

Hearing dates:

18 August 2016 and 2 September 2016

Date of orders:

02 September 2016

Decision date:

02 September 2016

Jurisdiction:

Equity

Before:

Slattery J

Decision:

Judicial advice given that the plaintiff would be justified in treating the letter of 4 August 2014 as not being notice of a claim under either the Family Provision Act 1982 or the Succession Act 2006. Order that the plaintiff’s costs of and incidental to this application be paid out of the deceased’s estate.

Catchwords:

JUDICIAL ADVICE – TRUSTEE ACT, s 63 – letter received by the administrator of a deceased estate making money claims against the estate – the author of the letter, a son of the deceased, becomes bankrupt – son’s trustee in bankruptcy gives releases but the bankrupt son’s potential claims against the estate, under the Family Provision Act 1982 and the Succession Act 2006 are not the subject of the releases – administrator proposes to distribute the estate – whether the administrator would be justified in treating the letter as not being notice of a claim for provision out of the deceased’s estate pursuant to Family Provision Act 1982 or Succession Act 2006.

Legislation Cited:

Bankruptcy Act 1966 (Cth), s 156A
Probate and Administration Act 1898 (NSW), s 93
Family Provision Act 1982 (NSW)
Succession Act 2006 (NSW)
Trustee Act 1925 (NSW), s 63

Cases Cited:

Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653
Macedonian Orthodox Church St Petka Inc. v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66

Category:

Principal judgment

Parties:

Plaintiff: Richard John William d’Apice, Administrator of the estate of the late John Leo Hertslet

Representation:

Counsel

 

Plaintiff: N. Bilinsky for administrator
of the estate
Defendant: M. Finnane, P. Hart for administrator of the estate of Marjorie Hertslet

  Solicitor
Plaintiff: Paul Aidan Evans, Makinson d’Apice Lawyers
Defendant: Christopher Raymond Messenger

File Number(s):

2016/205530

Publication restriction:

No

Judgment

1. Mr Richard John William d’Apice, the administrator of the estate of the late John Leo Hertslet (“the deceased”) applies as plaintiff for the opinion, advice or direction of the Court pursuant to Trustee Act 1925, s 63, in respect of the following question: whether a letter received by the plaintiff from John Charles Hertslet (“John”), a son of the deceased, on or about 4 August 2014 constitutes notice of a claim by John that he may bring family provision proceedings against the estate.

The Administration of the Deceased’s Estate and John’s Letter

2. The plaintiff/administrator’s Statement of Facts in support of the application for judicial advice gives the necessary background. The deceased died on 28 June 2008. The plaintiff was appointed administrator of the deceased’s estate on 7 March 2013, after the revocation the same day of a prior grant of administration to another son of the deceased, Douglas James Hertslet (“Douglas”).

3. By the deceased’s last will dated 21 October 1959 he left his entire estate to his wife, Marjorie Hertslet (“Marjorie”) on condition that she survive him by at least 3 months. Marjorie survived her husband by the requisite period. She died on 11 July 2013 and was survived by her and the deceased’s two children, Douglas and John.

4. By her will dated 2 April 2013 Marjorie named Douglas and John as executors of her estate. But probate of Marjorie’s will was granted only to Douglas on 17 February 2014. Marjorie’s will left the residue of her estate to Douglas and John in equal shares.

5. On 7 March 2014 the Federal Circuit Court of Australia made a sequestration order against John’s estate. Mr Allen Nicholls was appointed as trustee of his estate pursuant to Bankruptcy Act 1966 (Cth), s 156A.

6. Following Marjorie’s death the administration of both the deceased’s and Marjorie’s estate proceeded and the plaintiff made interim distributions totalling approximately $370,000 to Douglas in his capacity as executor of Marjorie’s estate. These distributions included cash sums of $20,000 made on 23 April and 16 June 2014 respectively and certain in specie goods, namely wool and livestock, which were held on the deceased’s land.

7. But since mid-2014 the plaintiff has not distributed the remaining assets of the deceased’s estate. This has been for reasons principally connected with John’s possession of the deceased’s real estate since 2008, which in summary are the following: John has for a long time been in possession of the real estate and financial records of the deceased; John has not fully delivered to the plaintiff the deceased’s financial records in accordance with directions of White J on 27 March 2013; orders for possession of the deceased’s real estate eventually had to be sought against John and were made by Lindsay J on 14 April 2014; no tax returns had been lodged for the deceased for four years prior to the death of the deceased and very few financial records were made available to the administrator who was required to collate and consider a miscellany of complex, incomplete and unsatisfactory financial information relating to the deceased’s estate; the administrator had to assemble draft tax returns from poor financial information, partly sourced from John and Douglas; the administrator was required to assess a trust claim in respect of certain real estate John held at Narromine; complications emerged from the assignment of water access entitlements within the Trangie-Nevertine irrigation system from the deceased’s estate to Douglas as administrator of Marjorie’s estate, which involved the construction of fresh irrigation works which were not completed until early 2015; pastoral land at Trangie had to be sold and other lands at Brewarrina are still under instruction for sale; and, in the plaintiff’s opinion John consistently, and Douglas from time to time, have each failed to co-operate with the plaintiff in the administration of the deceased’s estate.

8. During the administration of John’s estate in bankruptcy by Mr Nicholls on or about 4 August 2014 John himself, rather than Mr Nicholls, wrote a letter addressed to the plaintiff which was marked for the attention of the plaintiff’s solicitor, a Mr Paul Evans.

9. The matter for the Court’s judicial advice arises out of the wording of the last three paragraphs of this letter. But the whole letter provides necessary context and is set out below. The annexures to the letter are not included.

“The Administrator of the Estate of

John Leo HERTSLET.

Attention Mr Paul EVANS

Dear Paul,

I am writing to you regarding the administration of the estate of my late father,

John Leo HERTSLET.

I want to dispute the recent actions of the Administrator, regarding the sale of stock on the property located at [address not published], Trangie.

The stock that were removed from the property, and subsequently sold, are solely my property.

I hereby make claim to all the proceeds of this sale forthwith. I require the funds received to be paid to me within fourteen days. A Bank cheque is satisfactory.

The grounds and information upon which I rely are as follows:

1.   Email dated 15 March 2013 contained in which is the insurance cover covering 80 head of cattle and 600 head of sheep. The stock on the property by May 2014 was over 400 head of cattle, and over 1000 sheep. See annuxure A.

It is reasonable to conclude from this that the Administrator does not make claim to all the stock on the property.

2.   There were also more than 30 bales of wool that have been removed from the property. This wool was produced from my livestock, and I shore the sheep, pressed and packaged the wool, and paid the expenses to do this.

3.   On 2.11.12 I attended a mediation session at Orange with my brother Douglas, and the mediator Mr John Tancred. Before the session I was asked to provide a list of assets. This list is attached, Annexure B. in this list I stated that I own 150 head of cattle. This was not disputed. Additionally I listed specific items of machinery and several vehicles, cash at bank, and specified an amount of a debt owed to me by the partnership of my father and mother.

None of this was challenged.

4.   Specifically in relation to the international Tractor, in 1983 I secured a lease agreement from NatWest finance, and leased it over a period of four years. I then purchased it by paying out the residual.

5.   I direct attention to Page 35 of M.C.Smith solicitor, for the defendant, my brother Douglas. Item No.171 on the 18.2.13, where the defendant

informed Mr Smith that his mother (our mother Marjorie) "owned no stock". Annexure c.

6.   I direct your attention to an error contained in your letter dated 28.5.2014, whereas the following paragraph appears,

"we are instructed that at the hearing of the RSPCA prosecution you advised the court that you did not own any of the cattle on these

properties." Refer to Annexure D.

I further direct your attention to Annexure E. This is taken from the transcript of my hearing at The Local Court, Dubbo on 10/12/2008. I was asked this question, " You tell this court do you that you owned none of the cattle at all at the Brewarrina property?"

I replied, "I didn't own any of the cattle at the Brewarrina property at that time."

I reiterate the words, "at that time."

To conclude from "instructions" given by other persons that their instructions are reliable and truthful has clearly lead the Administrator into error on the question of ownership of my stock. I have attached the facts as contained in court documents/transcripts. These can be verified by the court.

In addition to these matters regarding my stock, I was the Executor of the estate of my father the late J.L.Hertslet. This resulted from his will dated in 2005. AS part of my duties as Executor I was required to attend to debts due, and debts owing. As specified in Annexure B, the partnership was en-debted to me in the amount of $88,331.61.

With the consent of my mother I reduced this debt in 2009 by transferring ownership of the Nissan Ute [registration number not published] into my name. She signed the transfer

papers required by the RTA. The debt was reduced by $4400.

By the authority of my mother I cleared the remaining debt by transferring ownership of all the remaining stock, and other ancilary machinery into my name, she had a share in a partnership with my father, but she did not own any of the properties. The partnership had no cash at hand, and a debt to the CBA, so I accepted this stock and machinery from my mother as complete settlement of the debt to the partnership. I advise the monetary value of the aforementioned ancilary machinery and stock did not cover the debt.

I was in regular telephone contact with my mother, and visited her frequently in Orange.

The ongoing cost for caring for my mother, paying the care facility bills, was done by applying for the aged pension.

The process was entirely handled by my brother Douglas, and he has reported my mother’s income and assets during the process of this application. His information as stated is a matter of record.

The case concerning myself and the RSPCA has been raised in these proceedings.

This arose from the operation of the farm, and therefore the partnership.

As a result of these prosecutions, I have incurred fees and costs as follows:

RSPCA legal fees and fines                  $194,000

My legal fees  $150,000

Total claim  $344,000

I make a further claim for my time and effort which I contributed to the operation of the farm and business, this time and effort resulted in capital growth, income production which allowed increase of the asset base, and the business to prosper under my direction, and prevent collapse during times of drought and hardship. This allowed continuing ownership, whereas everything

could have been lost.

My brother Douglas left the farm when he was aged 17. He never returned, or contributed to the success of the property.

I calculate the value of this to be $2,500,000,

Yours Sincerely,

John Charles HERTSLET”

10. The plaintiff has not received any other communication from John either before or after this letter. John has not commenced legal action of any kind against the estate.

11. On 15 September 2014 the plaintiff caused a notice of intended distribution of the deceased’s estate to be published on the Supreme Court online registry. This notice was published pursuant to Probate and Administration Act 1898, s 92. On 19 June 2015 the plaintiff entered into a deed with Mr Nicholls, the trustee in bankruptcy of John’s estate. This deed compromised all past, present and future claims against the estate, including such claims as had been made against the estate by John in his letter of 4 August 2014.

12. But the June 2015 deed of compromise only gave a release in respect of John’s rights against the estate which had vested in the trustee on his appointment and became divisible among his creditors upon his bankruptcy. But John’s statutory rights under the Family Provision Act 1982 or equivalent registration are not property divisible among his creditors in his bankruptcy: see Bankruptcy Act 1966, s 116(1) and (2)(g)(ii).

13. The impasses in the administration of each of these two estates led to Mr Nicholls taking legal action in March 2016. On 20 March 2016 Mr Nicholls filed a Statement of Claim in the Probate List of the Equity Division of this Court (“the Probate List proceedings”) to remove Douglas as the executor of Marjorie’s estate. Mr Nicholls’ grounds for action were that despite repeated requests to Douglas as executor of Marjorie’s estate, he as John’s trustee, had not received any part of the estate of the deceased that had been distributed to Marjorie’s estate.

14. The deceased died before the commencement of Succession Act 2006, Chapter 3 on 1 March 2009. For that reason the Family Provision Act, and not Succession Act 2006, Chapter 3 applies to claims against the deceased’s estate. On 2 May the plaintiff published a notice of intended distribution of the deceased’s estate in the Sydney Morning Herald pursuant to Family Provision Act, s 35 and on 4 May 2016 in The Narromine News and The Trangie Advocate. The plaintiff has received no response to any of these notices of intended distribution.

15. On 27 May 2016 the deceased’s gross distributable estate in the administrator’s hands was approximately $2,127,987.58, comprising (a) $1,840,107.58 held in various bank accounts; (b) a property known as “Westholme”, Brewarrina, New South Wales with an estimated value at the date of death of the deceased at $287,880; and (c) a one half share in the JL and NAM Hertslet partnership, a partnership share said to have no realisable commercial value. The estate has no outstanding liabilities aside from legal fees and the plaintiff’s fees and commission as administrator. Such amounts remain to be quantified or determined.

16. Shortly after the Summons for judicial advice was filed, Douglas agreed to orders revoking the grant of probate of Marjorie’s estate to him and to the appointment of an independent administrator. Orders to that effect were made by consent in July 2016 in the Probate List proceedings. There appear to be unresolved costs issues in those proceedings, which issues are not presently before the Court. But as a result of those orders Marjorie’s estate is now being professionally administered by a solicitor, Mr Christopher Messenger of Orange.

Parties and Service

17. These proceedings had pre-trial directions on 15 August 2016 and were heard on 18 August 2016. They were stood over to 2 September 2016 to permit an opportunity for John to appear on the application if he chose to do so, once additional notice of the potential effect of the proceedings had been given to him. Mr N. Bilinsky of counsel appears for the plaintiff. Mr Messenger appeared at the hearing as administrator of Marjorie’s estate by his counsel Mr M. Finnane QC leading Ms P. Hart. But Mr Messenger did not take an active part in these judicial advice proceedings.

18. The Court posed at the directions hearing the question of whether the plaintiff wished to put the estate in the position of being able to argue at some future time, should it ever become necessary, that John was bound by the judicial advice now being given. In relation to that question, the Court raised with Mr Bilinsky whether John had been given notice of these proceedings in accordance with the procedure set out in Trustee Act, s 63(8) to (11).

19. Notice of these proceedings has been given to John in advance of the hearing. The plaintiff read an affidavit of Mr Indran Craig Sinnadurai, solicitor, which establishes to the Court’s satisfaction that copies of the Summons and the Statement of Facts together with other related documents were served on John by email on 5 August 2016. To be in a better position to prove service by that email, Mr Sinnadurai selected the option in Microsoft Outlook to generate an email delivery receipt, when the email was received. Outlook generated an email delivery receipt for the email of 5 August 2016.

20. Mr Sinnadurai sent a follow-up email before the hearing on Friday, 12 August 2016. By this follow-up email Mr Sinnadurai informed John that these proceedings were listed for a pre-trial directions hearing on Monday, 15 August 2016 and confirmed the proceedings had been fixed for final hearing on Thursday, 18 August 2016. The 12 August 2016 email contained a further copy of all the documents attached to the 5 August 2016 email. Again, Mr Sinnadurai selected the Microsoft Outlook option to generate an email delivery receipt. Mr Sinnadurai received an email delivery receipt the same day, 12 August 2016, indicating that the email sent that day had been received.

21. Following the pre-trial directions hearing on 15 August 2016 at which John did not appear, Mr Sinnadurai telephoned John on his mobile telephone at about 4.30pm. The substance of Mr Sinnadurai’s conversation with John was that Mr Sinnadurai indicated that the plaintiff would be asking the Supreme Court for advice about whether or not “he would be justified in administering the estate without reference to any further claims by you”. In answer to this John indicated that he remembered his letter to the estate. Mr Sinnadurai then conveyed to John the Court’s directions to ensure that John was informed that proceedings have been fixed for hearing on 18 August 2016. To this John indicated he was “not sure” that he would be able to attend.

22. The following day Mr Sinnadurai sent further copies of the Court process to John. Once again he selected the Microsoft Outlook option to generate an email delivery receipt and in this case an email read receipt which was received from John’s email address on the evening of the same day. I infer from this that John had received and had at least electronically opened the material forwarded by email.

23. At the hearing on 18 August 2016 the Court expressed concern to Mr Bilinsky that this correspondence may nevertheless not have made clear to John that one consequence of obtaining judicial advice after service of this material upon him might be that he could arguably be said to be bound by the Court’s opinion. The Court indicated to Mr Bilinsky that if the plaintiff wanted to contend at a future time that John was bound by the Court’s opinion that it would be much fairer if that were directly pointed out to John in the correspondence. In light of the clear notice of the proceedings that had already been given of the hearing on the 18 August 2016 the Court proceeded to hear the application on 18 August 2016. But the Court reserved John’s right to make application to the Court once the plaintiff had made clear to John that the plaintiff may wish to argue that he was bound by this opinion on a future occasion.

24. A further email was sent to John on 19 August 2016. This email expressly pointed out to John the provisions of the Trustee Act, s 63(8) to (11) and advised him as an interested person that he was entitled to apply to the Supreme Court for such orders and directions as he considered appropriate in the circumstances. The email then went on to say “we also informed you that you will be bound by such advice or directions as the Supreme Court might give”. This email also forwarded a transcript of the hearing before the Court on 18 August 2016, the Short Minutes of Order which were to be sought by the plaintiff on the adjourned date of 2 September 2016, a copy of s 63 of the Trustee Act and Mr Sinnadurai’s affidavit of 18 August 2016. Email delivery and email read receipts show that John received and opened these emails. All of this material was proved by a supplementary affidavit of Mr Sinnadurai, sworn on 31 August 2016.

17. The Court is satisfied that John has ample notice of the notice of the full nature of the plaintiff’s application and its possible effect on his rights.

18. The effect of service of this material and Trustee Act, s 63 would appear to be the following. Trustee Act, s 63 provides as follows:

“63 Advice

(1)   A trustee may apply to the Court for an opinion advice or direction on any question respecting the management or administration of the trust property, or respecting the interpretation of the trust instrument.

(2)   If the trustee acts in accordance with the opinion advice or direction, the trustee shall be deemed, so far as regards the trustee’s own responsibility, to have discharged the trustee’s duty as trustee in the subject matter of the application, provided that the trustee has not been guilty of any fraud or wilful concealment or misrepresentation in obtaining the opinion advice or direction.

(3)   Rules of court may provide for the use, on an application under this section, of a written statement signed by the trustee or the trustee’s Australian legal practitioner, or for the use of other material, instead of evidence.

(4)   Unless the rules of court otherwise provide, or the Court otherwise directs, it shall not be necessary to serve notice of the application on any person, or to adduce evidence by affidavit or otherwise in support of the application.

(8)   Where the question is who are the beneficiaries or what are their rights as between themselves, the trustee before conveying or distributing any property in accordance with the opinion advice or direction shall, unless the Court otherwise directs, give notice to any person whose rights as beneficiary may be prejudiced by the conveyance or distribution.

(9)   The notice shall state shortly the opinion advice or direction, and the intention of the trustee to convey or distribute in accordance therewith.

(10)   Any person who claims that the person’s rights as beneficiary will be prejudiced by the conveyance or distribution may within such time as may be prescribed by rules of court, or as may be fixed by the Court, apply to the Court for such order or directions as the circumstances may require, and during such time and while the application is pending, the trustee shall abstain from making the conveyance or distribution.

(11)   Subject to subsection (10), and subject to any appeal, any person on whom notice of any application under this section is served, or to whom notice is given in accordance with subsection (8), shall be bound by any opinion advice direction or order given or made under this section as if the opinion advice direction or order had been given or made in proceedings to which the person was a party.”

27. The Court’s power to give advice to the trustees under s 63 has been fully discussed by the High Court in Macedonian Orthodox Church St Petka Inc. v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42 (“Macedonian Orthodox”). And Macedonian Orthodox makes clear: (at [57]) that the Court may give advice where there are controversies among the beneficiaries or where the beneficiaries are in dispute with the trustees, provided there is a question about the management or administration of trust property (at [58]). There is such a question in this case, created by the receipt of John’s letter of 4 August 2014, a letter from beneficiary to trustee.

28. Trustee Act, s 63(11) provides that subject to s 63(10) “any person on whom notice of any application under this section is served” shall “be bound by any opinion, advice or direction given or made under this section” as if the opinion, advice or direction had been given or made “in proceedings to which the person was a party”. Macedonian Orthodox states (at [65]) that the persons to whom notice is given are not strictly “parties” but are still “bound” in the terms of the section: see also Hughes v NM Superannuation Pty Ltd (1993) 29 NSWLR 653. The giving of the notice of these proceedings to John identified above, is “notice of [an] application under this section”. So s 63(11) would ordinarily have the effect of binding John to the Court’s opinion expressed in these reasons.

The Court’s Advice and Opinion

29. Mr Bilinsky has advised the plaintiff in an opinion dated 6 July 2016 that John’s letter of 4 August 2014 does not evince an intention to bring a family provision claim, whether out of time or otherwise. He further advises that the plaintiff would be justified in distributing the estate upon publication of his intention to do so in accordance with the applicable rules, notwithstanding receipt of the 4 August 2014 letter and that upon such notice of intended distribution that the administrator would enjoy the statutory protection provided by Family Provision Act, s 35.

30. I agree with the analysis of the 4 August 2014 letter in Mr Bilinsky’s opinion. In my opinion the letter does not evince an intention to bring a family provision claim. My reasons for so concluding are the following.

31. First, the 4 August 2014 letter covers a variety of complaints against the plaintiff: the removal and sale of livestock, claims to specific assets or their value and the identification of benefits that John claims to have conferred on the estate over the years and which are now said to be deserving of reimbursement for his time and effort. None of this earlier material expressly suggests a claim for family provision.

32. Secondly, the last three paragraphs of the letter do resemble the kind of contentions that are sometimes made in claims for family provision. But read in context the paragraphs are not couched in a form that makes such a claim. Rather they found a claim that is consistent with the preceding text in the letter, which appears to be more in the nature of a restitutionary claim.

33. Thirdly, there is no indirect evidence in the letter of the making of a claim for family provision. For example the letter does not use the language of need for John’s education, maintenance or advancement in life or of his standing as a potential object of the deceased’s testamentary bounty.

34. Fourthly, were the 4 August 2014 letter to be construed as a notice of intention to make a claim for family provision, it does not seem that even John himself has treated it that way. As a claim for family provision it would be well out of time: under Family Provision Act, s 16(1)(b) claims should be commenced within 18 months. John’s failure to follow up this letter by promptly filing family provision proceedings and seeking an extension of time is not consistent with an intention that the letter was intended to be carried through as a family provision claim. This inference is strengthened by two matters: the absence of any subsequent communications from John in the two years since the letter was sent; and, John’s silence in the face of the clear notice of these proceedings given to him on several occasions.

Conclusions and Orders

35. In the Court’s view, the administrator would be justified in treating John’s 14 August 2014 letter as not being a notice of intended claim under the Family Provision Act (or like legislation) or indeed as such a claim.

36. The Court therefore gives its opinion and advice, as follows:

Pursuant to the Trustee Act 1925, s 63 the Court advises the plaintiff as administrator of the estate of the late John Leo Hertslet (“the Estate”) that the plaintiff would be justified in treating the letter from John Hertslet dated 4 August 2014 to the plaintiff as: (a) not constituting a notice of intention to make a claim for provision out of the Estate under the Family Provision Act 1982 or under the Succession Act 2006; and (b) as not constituting a claim for provision out of the Estate under the Family Provision Act or the Succession Act.

That the plaintiff’s costs of and incidental to this application be paid out of the estate on the indemnity basis.

**********

Amendments

07 September 2016 - [8] "August 2015" changed to "August 2014"

[12] "on his and" changed to "on his appointment and"

[12] "among his creditors bankruptcy" to "among his creditors upon his bankruptcy"

[27] "to the trustee's" changed to "to the trustees"

[28] "application under which the section was served...in accordance with sub-section (8)" changed to "any application under this section is served shall"

[30] "August 2016" changed to "August 2014"

[33] "of his standing on a" changed to "of his standing as a"

Decision last updated: 07 September 2016