Walter William Nespolon v Lindy van Camp

[2022] NSWSC 1190

Supreme Court

New South Wales

Medium Neutral Citation:

Walter William Nespolon v Lindy van Camp [2022] NSWSC 1190

Hearing dates:

25 August 2022

Date of orders:

06 September 2022

Decision date:

06 September 2022

Jurisdiction:

Equity

Before:

Williams J

Decision:

See paragraph [80]

Catchwords:

TRUSTEES – judicial advice under the Trustee Act 1925 (NSW), s 63 – where advice is sought in relation to two trusts with different trustees, one being a superannuation fund and the other being a deceased’s estate – advice sought in relation to whether the trustee and executors are justified in defending proceedings and prosecuting a cross-claim in other proceedings and whether they are entitled to pay their legal costs incurred in those proceedings from the trust fund and the deceased’s estate – whether Court has jurisdiction under s 63 to give all of the judicial advice sought by both trustee and executors

Legislation Cited:

Probate and Administration Act 1898 (NSW), ss 3, 44

Succession Act2006 (NSW), ss 57, 60, 79

Trustee Act 1925 (NSW), ss 5, 63

Uniform Civil Procedure Rules 2005 (NSW), rr 7.11, 55.1

Cases Cited:

Alexander v Perpetual Trustees NA Ltd (2003) 216 CLR 109; [2004] HCA

Bartlett v Coomber [2008] NSWCA 100

Gillespies Cranes Nominees Pty Ltd v Gillespie [2022] NSWSC 1184

Ludwig v Jeffrey (2021) 394 ALR 360; [2021] NSWCA 256

Macedonian Orthodox Community Church St Petka Inc v His Eminence PetarDioscesan Bishop (2008) 237 CLR 66; [2008] HCA 42

Re Application of Macedonian Orthodox Community Church St Petkar Inc (No. 3) [2006] NSWSC 1247

Wilcox v Chapple [2020] NSWSC 1859

Category:

Principal judgment

Parties:

Walter William Nespolon (First Plaintiff)
James Edwin Dickson (Second Plaintiff)
Bellahealth Pty Ltd ABN 39 084 955 699 (Third Plaintiff)
Lindy van Camp (First Defendant)

Representation:

Counsel:
C Birtles (Plaintiffs)
D C Price (First Defendant)

Solicitors:
Iles Selley Lawyers (Plaintiffs)
Bridges Lawyers (First Defendant)

File Number(s):

2022/133972

Publication restriction:

N/A

Judgment

Introduction

1. Dr Harry Nespolon died on 26 July 2020. He is survived by his partner Ms Lindy van Camp and their two daughters who were aged approximately five years and two and a half years at the time of his death (the Nespolon children).

2. In these proceedings (which I will refer to as the advice proceedings), two of the three executors of the deceased’s last will and the trustee of a superannuation fund of which the deceased was the sole member seek judicial advice under s 63 of the Trustee Act 1925 (NSW) in relation to the conduct of other proceedings in this Court (proceedings number 2021/200360). In those other proceedings (which I will refer to as the main proceedings), Ms van Camp seeks to enforce a nomination made by the deceased in her favour in respect of benefits payable by the deceased’s superannuation fund upon his death and also makes a claim for provision out of the deceased’s estate.

3. The matters set out below are drawn from the amended statement of facts tendered by the applicants for judicial advice and the documents attached thereto.

The deceased’s last will

4. Dr Nespolon’s last will dated 23 July 2020 appointed Ms van Camp, his brother Mr Walter Nespolon and Mr James Dickson as his executors.

5. The assets of the deceased’s estate have an estimated value of $8,145,269 and there are estimated liabilities of $3,554,075, leaving net assets of approximately $4,591,194. Those figures do not include the value of additional companies and trusts in which the deceased had a direct or indirect interest. The value of those additional companies and trusts has not yet been ascertained and it is not clear whether those companies and trusts, or the deceased’s interest in them, form part of his estate or might be designated as notional estate pursuant to s 79 of the Succession Act 2006 (NSW).

6. By clause 18 of the will, the deceased gave his household furniture, personal effects, motor vehicle, clothing, jewellery and other articles of personal use to Ms van Camp.

7. By clause 19 of the will, the deceased gave Ms van Camp a right to reside in a property at Cremorne for the term of her life or until such time as she ceases permanently residing there, terminates the right of residence by notice in writing to the executors or fails to comply with the conditions of the right of residence which require her to keep the improvements in a reasonable state of repair and to allow her co-executors to inspect the property.

8. By clause 21 of the will, the residue of the deceased’s estate is settled on a testamentary trust of which the executors are the trustees and the primary beneficiaries are Ms van Camp and the Nespolon children. Other beneficiaries include any children of the Nespolon children, the deceased’s mother, any trust or entity in which a beneficiary has an interest, and any charity.

9. Clause 21 provides that the trustees of the testamentary trust are to apply the capital and income of the trust for the benefit of the primary and other beneficiaries in such proportions as the trustees shall in their absolute discretion decide.

10. In clause 33 of the will, the deceased expressed the following wish:

“Where the Primary Beneficiary has not attained the Preservation Age, I express the wish (without limiting the discretion of the Trustees) that the Trustees preserve the Capital of the Fund as far as is reasonably possible and to limit the application of Capital to the Primary Beneficiary’s medical and dental treatment, education (including vocational training), reasonable maintenance and welfare.”

11. The will defines the “Preservation Age” as 25 years. The Nespolon children have not reached that age.

12. Clause 19 of the will requires the trustees of the testamentary trust to pay the outgoings, insurance premiums and the costs of repair and maintenance of the Cremorne residence in which Ms van Camp has the right to reside.

13. Clauses 17 and 39 to 41 of the will contemplate that superannuation or life insurance proceeds may be paid into the deceased’s estate. Clause 17 provides that such proceeds are to be held by the executors on trust to pay (if the executors consider it necessary) any outstanding debts owing by the deceased as at the date of his death and thereafter to form part of the residue of his estate. Any such proceeds which form part of the residue of the estate will form part of the assets held on the terms of the testamentary trust referred to above.

The superannuation fund

14. Bellahealth Pty Ltd (Bellahealth) is the trustee of the Nespolon Superannuation Fund, which was established pursuant to a trust deed dated 5 February 2003, that was subsequently amended by a deed dated 3 October 2012 (the Fund). Pursuant to the trust deed (as amended), the assets of the Fund are vested in the trustee upon trust to apply in the manner set out in the rules of the Fund (the Rules).

15. The deceased was the sole member of the Fund.

16. Pursuant to Rule 12.6, a member death benefit of approximately $4,401,422 (including life insurance) was payable by the Fund upon the death of the deceased.

17. Rule 13.5(a) of the Rules relevantly provides:

“Any death benefit shall be paid, as the Trustee in its absolute discretion decides, by way of purchased annuities, pensions or other periodical payments … or lump sum payments, or any combination of such methods of payment, either:

(i)   to such one or more of the nominated beneficiaries (if any) or other Dependants of the Member and in such proportions as the Trustee in its absolute discretion decides; or

(ii)   to the legal personal representative of a Member.”

18. Rule 13.5(b) of the Rules provides:

“If the Trustee of the Fund holds, at the time of a Member’s death, a Notice of Binding Death Benefit Beneficiary Nomination (‘BDBBN Notice’), which is effective and valid, the Trustee must pay a Member’s superannuation death benefit to the Nominated Beneficiary referred in the BDBBN Notice.”

19. On the date of his death, the deceased executed a “Binding Death Benefits Notice” form nominating Ms van Camp to receive all of the member’s death benefit payable by the Fund in the event of his death. The deceased executed the form in his capacities as both the member of the Fund and the sole director of Bellahealth. I will refer to this as the Nomination.

The main proceedings

20. In the main proceedings, Ms van Camp claims:

1. a declaration that the Nomination is valid and binding and an order that Bellahealth pay to her the deceased’s benefits; and

2. further or alternatively:

1. an order pursuant to Chapter 3 of the Succession Act 2006 (NSW) for provision out of the deceased’s estate for her maintenance, education and advancement in life; and

2. an order pursuant to s 79 of the Succession Act designating as notional estate such property as the evidence reveals to be notional estate, including but not limited to the deceased’s member’s benefits from the Fund.

21. The defendants to the main proceedings are Bellahealth, Mr Nespolon and Mr Dickson. They have common legal representation and have filed one defence. In the context of the main proceedings, I will refer to them as the defendants.

22. The defendants deny that the Nomination is valid and binding and contend that the deceased lacked capacity to understand the Nomination at the time that he signed it because he was in the intensive care unit of Royal North Shore Hospital suffering from terminal pancreatic cancer and had been administered morphine and midazolam for pain relief.

23. The defendants further contend that the Nomination is liable to be set aside by reason of alleged unconscionable conduct on the part of Ms van Camp in procuring the deceased’s signature on the death benefit nomination form. One of the matters relied on by the defendants in support of their claim to set aside the Nomination on the grounds of unconscionability is that the Nomination was improvident because it will result in the deceased’s death benefit not being paid to the deceased’s estate as a consequence of which it is said that there will be insufficient funds in the estate to pay the deceased’s debts and meet what the defendants contend were the deceased’s testamentary objectives.

24. The defendants plead that the deceased’s testamentary objectives were to provide a residence for Ms van Camp and their daughters and to protect his assets long term for the benefit of their daughters.

25. In a cross-claim filed in the main proceedings, the defendants seek an order setting aside the Nomination or alternatively a declaration that the Nomination is void and unenforceable. In support of those claims for relief, they plead the same contentions referred to above, namely the deceased’s lack of capacity, unconscionability and the improvidence of the Nomination having regard to the deceased’s testamentary objectives.

26. In her defence to the cross-claim, Ms van Camp does not admit that the deceased’s testamentary objectives were as pleaded by the defendants, does not admit that the deceased lacked capacity to enter into the Nomination, does not admit that the deceased was suffering any special disadvantage at the time he executed the Nomination and denies that her conduct was unconscionable. Ms van Camp pleads that the improvidence allegation is embarrassing and ought to be struck out and otherwise does not admit that the Nomination was improvident.

27. It was common ground at the hearing of the advice proceedings that, if the Nomination is set aside or declared to be invalid, Bellahealth will then be required to exercise its discretion under Rule 3.5(a) and pay the death benefit to some or all of the deceased’s dependants, to his executors or to some combination of dependants and the executors in one, or some combination of, the payment methods identified in Rule 13.5(a).

28. In relation to Ms van Camp’s family provision claim, the defendants admit that Ms van Camp was living with the deceased and their two daughters at the date of his death and is an eligible person pursuant to s 57(1)(b) of the Succession Act. The defendants also admit that, under the terms of the deceased’s last will, Ms van Camp receives the deceased’s personal effects, motor vehicles and household goods, receives a licence to live in the house in which she resided with the deceased (or a substitute residence, as defined in the will) and is designated as a discretionary object of a testamentary trust. The defendants deny that the will makes inadequate provision for the proper maintenance, education and advancement in life of the plaintiff.

29. In her statement of claim filed in the main proceedings, Ms van Camp has sought an order pursuant to rule 7.8 of the Uniform Civil Procedure Rules 2005 (NSW) appointing Mr Nespolon and Mr Dickson to represent the deceased’s estate for the purpose of her family provision claim. At the hearing of the advice proceedings, the Court was informed that no such order has been made in the main proceedings but it is anticipated that the order will be made in due course without controversy.

30. Mr Nespolon and Mr Dickson have not sought an order in the main proceedings that they be appointed to represent the deceased’s estate for the purpose of defending Ms van Camp’s claims in relation to the Nomination for the purpose of prosecuting the cross-claim. At the hearing of the advice proceedings, the Court was informed that they intend to do so in due course.

The advice proceedings

31. By summons filed on 14 April 2022, Mr Nespolon, Mr Dickson and Bellahealth commenced these proceedings seeking advice under s 63 of the Trustee Act 1925 (NSW) as to:

1. whether they are justified in defending Ms van Camp’s claims in the main proceedings;

2. whether they are justified in advancing the cross-claim in the main proceedings; and

3. whether they are entitled to pay costs incurred in defending Ms van Camp’s claims and in advancing the cross-claim in the main proceedings from the deceased’s estate and from the Fund.

32. I will refer to Mr Nespolon, Mr Dickson and Bellahealth in the context of the advice proceedings as the applicants.

33. Advice in the terms set out above is sought on the basis of the facts set out in an amended statement of facts filed on 8 June 2022 that was tendered at the hearing.

34. The Court has also been provided with a confidential opinion of counsel for the applicants. An order prohibiting the disclosure of that opinion has been made under ss 7 and 8(1)(a) of the Court Suppression and Non-Publication Orders Act 2010 (NSW).

35. The application for judicial advice was also supported by written submissions on behalf of the applicants and supplemented by oral submissions made by Mr Birtles of counsel who appeared for them at the hearing.

36. Contrary to r 7.11 of the Uniform Civil Procedure Rules 2005 (NSW), Ms van Camp was not a defendant to the advice proceedings. However, the applicants notified Ms van Camp of the advice proceedings and provided her with a copy of the summons and the amended statement of facts and their written submissions. Counsel for Ms van Camp provided written submissions to the effect that the Court lacked jurisdiction to give the advice sought or, alternatively, should decline to give the advice. Mr Price of counsel appeared for Ms van Camp at the hearing of the advice proceedings. An order was made at the outset of that hearing, without opposition from the applicants, joining Ms van Camp to the advice proceedings as a defendant.

Applicable principles

37. Section 63(1) of the Trustee Act provides that 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”.

38. As Gummow ACJ, Kirby, Hayne and Heydon JJ said in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar Dioscesan Bishop (2008) 237 CLR 66; [2008] HCA 42 at [58]:

“Only one jurisdictional bar to s 63 relief exists: the applicant must point to the existence of a question respecting the management or administration of the trust property or a question respecting the interpretation of the trust instrument.”

39. Their Honours went on to say (at [71]-[72], emphasis in original):

“In short, provision is made for a trustee to obtain judicial advice about the prosecution or defence of litigation in recognition of both the fact that the office of trustee is ordinarily a gratuitous office and the fact that the trustee is entitled to an indemnity for all costs and expenses properly incurred in performance of the trustee’s duties. Obtaining judicial advice resolves doubt about whether it is proper for a trustee to incur the costs and expenses of prosecuting or defending litigation. No less importantly, however, resolving those doubts means that the interests of the trust will be protected; the interests of the trust will not be subordinated to the trustee’s fear of personal liability for costs.

It is, therefore, not right to see a trustee’s application for judicial advice about whether to sue or defend proceedings as directed only to the personal protection of the trustee. Proceedings for judicial advice have another and no less important purpose of protecting the interests of the trust.”

40. At [74], their Honours said:

“A necessary consequence of the provisions of s 63 of the Act is that a trustee who is sued should take no step in defence of the suit without first obtaining judicial advice about whether it is proper to defend the proceedings. In deciding that question a judge must determine whether, on the material then available, it would be proper for the trustee to defend the proceedings. But deciding whether it would be proper for a trustee to defend proceedings instituted about the trust is radically different from deciding the issues that are to be agitated in the principal proceeding. The two steps are not to be elided. In particular, the judicial advice proceedings are not to be treated as a trial of the issues that are to be agitated in the principal proceedings.”

41. The New South Wales Court of Appeal has held that the passage extracted immediately above is not to be understood as imposing a legal obligation on a trustee to seek judicial advice before commencing or defending proceedings. Rather, it is prudent for a trustee to do so because, if the trustee’s prosecution or defence of legal proceedings is unsuccessful, the trustee may be deprived of its entitlement to be indemnified out of the trust assets for the costs of the proceedings if the trustee did not act reasonably in prosecuting or defending them. The rationale for seeking judicial advice as to whether the trustee would be justified in prosecuting or defending the proceedings is to avoid that argument at the end of the day after the costs have already been incurred: Ludwig v Jeffrey (2021) 394 ALR 360; [2021] NSWCA 256 at [82]-[84] (Emmett AJA, Meagher and Brereton JJA agreeing).

42. At [162], Gummow ACJ, Kirby, Hayne and Heydon JJ cited with approval the following passage from the judgment of Palmer J at first instance:^[1]

“In a judicial advice application in which the trustee asks whether it is justified in prosecuting or defending litigation, all the Court does is to reach a view as to whether the Opinion of Counsel satisfies it that there are sufficient prospects of success to warrant the trustee in proceeding with the litigation. Counsel’s Opinion must address the facts necessary to support the legal conclusions reached and must demonstrate that the propositions of law relied upon for those conclusions are properly arguable. Whether, in the light of Counsel’s Opinion, there are ‘sufficient’ prospects of success calls for another judgment, founded upon such considerations as:

-   the nature of the case and the issues raised;

-   the amounts involved, including likely costs;

-   whether the likely costs to be incurred by the trustee are proportionate to the issues and [the] significance of the case;

-   the consequences of the litigation to the parties concerned;

-   in the case of a charitable trust, any relevant public interest factors.”

1. Re Application of Macedonian Orthodox Community Church St Petkar Inc (No. 3) [2006] NSWSC 1247 at [80].

43. Their Honours referred with approval at [163] to Palmer J’s distinction between the question whether propositions were properly arguable and the question whether there were “sufficient” prospects of success.

44. At [84], their Honours referred approvingly to the following further passage from the judgment of Palmer J:^[2]

“Where a trustee seeks an order that it is justified in defending a claim against the trust estate by recourse to the trust assets for the costs of the litigation, the question will be whether it is more practical, and fairer, to leave the competing claimants to the beneficial interest in the trust estate to fight the litigation out amongst themselves, at their own risk as to costs and leaving the trustee as a necessary but inactive party in the proceedings, or whether it is more practical, and fairer, that the trustee be the active litigant with recourse to the trust fund for the costs of the litigation. What is ‘practical and fair’ will depend on the particular circumstances of each case and will include:

-   whether the beneficiaries of the trust estate have a substantial financial interest in defending the claim;

-   what are the financial means of the beneficiaries to fund the defence;

-   the merits and strengths of the claim against the trust estate;

-   the extent to which recourse to the trust estate for defence costs would deprive the successful claimant of the fruits of the litigation; and

-   if the trust is a charitable trust rather than a private trust, what, if any, are the considerations of public interest.”

2. Re Application of Macedonian Orthodox Community Church St Petkar Inc (No. 3) [2006] NSWSC 1247 at [62].

Consideration and determination

45. The main proceedings involve two distinct sets of claims: the competing claims relating to the Nomination and Ms van Camp’s family provision claim.

46. The defendants in the main proceedings, who are the applicants in the advice proceedings, are trustees of two different trusts. Bellahealth is the trustee of the Fund. Mr Nespolon and Mr Dickson are two of the three executors of Dr Nespolon’s deceased estate and two of three trustees of the testamentary trust created by his last will. As I have already mentioned, no order has been sought or made in the main proceedings appointing Mr Nespolon and Mr Dickson to represent the estate or the testamentary trust.

47. The terms of the judicial advice sought do not distinguish between the different trusts and trustees or between the different claims in the main proceedings. It is necessary to draw those distinctions in order to identify whether the Court has jurisdiction to give to each applicant each element of the advice that has been sought in rolled up terms and, if so, whether such advice should be given.

Properly arguable questions concerning the validity of the Nomination

48. The amended statement of facts refers to evidence prepared by the defendants in the main proceedings concerning the circumstances in which the deceased signed the Nomination and some of the evidence served by Ms van Camp in the main proceedings.

49. The evidence referred to in the amended statement of facts includes contemporaneous correspondence between the deceased, Ms van Camp, the deceased’s accountant, and the solicitor who drafted the deceased’s last will. That correspondence suggests that the deceased telephoned his solicitor one day after he signed his last will and two days before his death and requested her to urgently prepare a binding death benefit nomination in favour of Ms van Camp. Statements attributed to the deceased in the solicitor’s file note of the conversation suggest that the deceased believed, after speaking with his accountant, that there would be tax advantages in doing so. It appears from the solicitor’s file note that she raised issues with the deceased about the different outcomes that would flow from a binding nomination in favour of Ms van Camp compared to the provisions of the deceased’s will. The file note records that the deceased was to provide his solicitor with a copy of the deed for the Fund and they would then have a further discussion. The file note includes the statement: “Concerned re capacity – sounded drugged up”.

50. The amended statement of facts refers to Ms van Camp’s evidence that she subsequently sent the deed to the solicitor using the deceased’s email address because the deceased was unable to do so due to connectivity problems. A subsequent email from the solicitor to the deceased attached the binding death benefit nomination and set out in the body of the email some matters that the solicitor “thought prudent to point out” before the deceased executed the Nomination. According to the amended statement of facts, Ms van Camp printed the nomination form (but not the solicitor’s email) and took it to the deceased in hospital where he then executed it.

51. The evidence referred to in the amended statement of facts includes expert medical evidence concerning the deceased’s condition at the time, as revealed by his medical records, the pain relief and other medication that had been administered to him at the time that he signed the Nomination and the likely effect of that medication on his cognitive function.

52. I proceed on the assumption that the factual and expert opinion evidence relied on by the applicants will be contested at the trial of the main proceedings and I express no view about the likely outcome of that contest.

53. I note that counsel for Ms van Camp complained that the amended statement of facts did not present a complete picture of the evidence that she has served in the main proceedings. It was submitted that, if the Court has jurisdiction to give the judicial advice sought (which Ms van Camp disputed in respect of Mr Nespolon and Mr Dickson, as referred to below), it should decline to do so on the basis that this would be futile and would simply lead to later litigation about the applicants’ conduct of the main proceedings and whether any judicial advice given affords them any protection.

54. I reject that submission. Ms van Camp’s complaint about the adequacy of the information disclosed to the Court did not rise above the level of bare assertion. Ms van Camp did not seek to adduce any evidence of the existence of the matters that were said not to have been disclosed. The applicants denied that the amended statement of facts misstated or omitted material matters. In the circumstances, it is appropriate for the Court to proceed on the basis of the amended statement of facts in accordance with s 63(3) of the Trustee Act and r 55.1 of the Uniform Civil Procedure Rules. Any judicial advice will be given on the basis of the amended statement of facts, which has presumably been prepared by the applicants bearing in mind the provisions of s 63(2) of the Trustee Act and the limitations on the protection afforded to them by any judicial advice given.

55. The confidential opinion canvasses the evidence referred to in the amended statement of facts and addresses the principles applicable to determining whether a person had the requisite mental capacity to enter into a transaction and the principles concerning the setting aside of transactions entered into as a result of unconscionable conduct.

56. I am satisfied on the basis of the amended statement of facts and the confidential opinion of the applicants’ counsel that there are properly arguable questions about whether the deceased lacked the capacity to understand what he was signing and whether the Nomination is void and unenforceable for that reason or liable to be set aside on the grounds of unconscionability.

The application for judicial advice that Mr Nespolon and Mr Dickson would be justified in defending Ms van Camp’s claims relating to the Nomination and prosecuting the cross-claim in the main proceedings

57. The judicial advice sought in rolled up terms includes advice sought by Mr Nespolon and Mr Dickson that they would be justified in defending Ms van Camp’s claims in relation to the Nomination in the main proceedings and in prosecuting the cross-claim in the main proceedings and in paying the costs thereby incurred from the deceased’s estate.

58. The applicants submitted that the deceased was an object of the Fund and that his right to enforce due administration of Fund is part of his “personal estate” as defined in s 3 of the Probate and Administration Act 1898 (NSW) vested in his executors upon the grant of probate of his will pursuant to s 44 of that Act and is “property” as defined in s 5 of the Trustee Act. The applicants further submitted that the executors themselves are objects of the Fund, at least insofar as Rule 13.5 applies, and therefore have a right to compel due administration of the Fund and a right to be considered for the exercise of Bellahealth’s discretion concerning the payment of the death benefit in the event that the Nomination is not effective and valid. The applicants submitted that these rights of the executors are also “property” and the executors are “trustees” within the meaning of s 5 of the Trustee Act.

59. I accept that the deceased had, and the executors have, a right to compel due administration of the Fund and that the executors also have a right to be considered for the exercise of the discretion under Rule 13.5(a) if it applies: Lewin On Trusts (20^th ed, 2020) at [1-061] and the authorities there referred to. I proceed on the assumption (without deciding) that the rights referred to above are “property” within the meaning of the Trustee Act. However, I reject the applicants’ submission that the question whether Mr Nespolon and Mr Dickson would be justified in defending Ms van Camp’s claims in relation to the Nomination and prosecuting the cross-claim in the main proceedings is a question respecting the management or administration of that property. That is because there is no suggestion that Bellahealth is failing to attend to the due administration of the Fund or that it will not exercise the discretion under Rule 13.5(a) if the Nomination is held to be invalid or is set aside. Bellahealth is defending Ms van Camp’s claims relating to the Nomination and prosecuting the cross-claim in the main proceedings. There are no special circumstances that would warrant any object of Fund taking the defence of Ms van Camp’s claim and the prosecution of the cross-claim into their own hands: Alexander v Perpetual Trustees WA Ltd (2003) 216 CLR 109; [2004] HCA 7 at [55] (Gleeson Cj, Gummow and Hayne JJ); Gillespie Cranes Nominees Pty Ltd v Gillespie [2022] NSWSC 1184 at [41]-[54]; J D Heydon and M J Leeming, Jacobs’ Law of Trusts in Australia (8^th ed, 2016) at [23-03] and the authorities there cited. Whatever Mr Nespolon and Mr Dickson may be doing or wishing to do in relation to Ms van Camp’s claim concerning the Nomination and the cross-claim in the main proceedings, it does not involve enforcement of the deceased’s rights vested in them as executors or their rights as the deceased’s legal personal representatives to be considered for the exercise of the discretion under Rule 13.5(a). They are not taking action against Bellahealth to enforce those rights.

60. For those reasons, s 63 of the Trustee Act does not confer jurisdiction on the Court to provide judicial advice to Mr Nespolon and Mr Dickson as to whether they would be justified in defending Ms van Camp’s claims in relation to the Nomination in the main proceedings and in prosecuting the cross-claim in the main proceedings and in paying the costs thereby incurred from the deceased’s estate.

61. Even if the Court had jurisdiction, I would have declined to give the judicial advice sought in circumstances where Bellahealth is defending that claim and prosecuting the cross-claim consistently with its obligations as trustee of the Fund, as referred to below.

The application for judicial advice that Bellahealth would be justified in defending Ms van Camp’s claims relating to the Nomination and prosecuting the cross-claim in the main proceedings

62. The rolled up terms of the judicial advice sought also include advice that Bellahealth would be justified in defending Ms van Camp’s claims in relation to the Nomination in the main proceedings and in prosecuting the cross-claim in the main proceedings and in paying the costs thereby incurred from the Fund.

63. I reject the submission made on behalf of Ms van Camp that, since the death benefit must be paid out of the Fund either in accordance with the Nomination or otherwise in accordance with Rule 13.5(a), Bellahealth has no interest in the question to whom the death benefit is to be paid and should simply pay the death benefit into Court in the main proceedings so as to avoid burdening the Fund with the costs of defending Ms van Camp’s claims and the costs of prosecuting the cross-claim.

64. Bellahealth has an interest in discharging its duty as trustee of the Fund by paying the death benefit in accordance with Rule 13.5(b) if the Nomination is effective and valid and otherwise in accordance with Rule 13.5(a). Bellahealth is on notice of the matters referred to in the amended statement of facts that give rise to properly arguable questions about whether the Nomination is effective and valid. In those circumstances, by defending Ms van Camp’s claims relating to the Nomination and by prosecuting the cross-claim in the main proceedings, Bellahealth is seeking to discharge its duties as trustee of the Fund by ensuring that it pays the death benefit in accordance with the applicable provisions of Rule 13.5. As the applicants submitted, the question whether Bellahealth is justified in doing so is a question respecting the management or administration of the property of the Fund. The Court has jurisdiction under s 63 of the Trustee Act to give judicial advice to Bellahealth as trustee of the Fund in respect of that question.

65. For completeness, I should add that it would be wholly inappropriate in my view for Bellahealth to simply pay the death benefit into Court. If the Nomination is held to be unenforceable or is set aside, Bellahealth will be required to exercise the discretion under Rule 13.5(a) and pay the death benefit accordingly. It is not entitled to abrogate that responsibility by paying the death benefit into Court.

66. For the reasons that I have already explained, I am satisfied that the cross-claim and the defence of Ms van Camp’s claims in relation to the Nomination are properly arguable. The outcome will determine whether Rule 13.5(a) or Rule 13.5(b) applies and that will facilitate Bellahealth discharging its obligation to pay the death benefit of $4,401,422 in accordance with the applicable Rule. Despite having some misgivings about the estimated costs of the main proceedings, to which I will return below, the information presently before the Court indicates that the costs of defending Ms van Camp’s claims relating to the Nomination and prosecuting the cross-claim will not be disproportionate to the importance of Bellahealth discharging its duty as trustee of the Fund to pay the death benefit of $4,401,422 in accordance with the applicable provision of the Rules. Having regard to all of those matters, I consider that the prospects of success are sufficient to warrant Bellahealth defending Ms van Camp’s claims in relation to the Nomination and prosecuting the cross-claim in the main proceedings.

67. For those reasons, the Court will give judicial advice to Bellahealth in its capacity as trustee of the Fund that it would be justified in defending Ms van Camp’s claims relating to the Nomination and in prosecuting the cross-claim in the main proceedings and in paying the reasonable costs properly incurred in doing so out of the Fund.

68. I consider that it is appropriate to record my misgivings in relation to costs. According to an affidavit sworn by the applicants’ solicitor on 24 August 2022, the estimated legal costs of Bellahealth defending the main proceedings and prosecuting the cross-claim (including costs incurred to date) are some proportion of $215,000. That amount is an estimate of the total legal costs (past and future) of Mr Nespolon, Mr Dickson and Bellahealth of the main proceedings, including the family provision claim. Mr Nespolon, Mr Dickson and Bellahealth have common legal representation in the main proceedings and expect to continue to do so. The amount of costs seems to me to be high for what is expected to be a four day trial. The estimate is not supported by a detailed breakdown, but it is broken down into categories of solicitors, counsel, experts and disbursements. The counsel and expert components are relatively modest, but the solicitors’ past fees and estimated future fees are double the fees of counsel. I do not understand why that should be so, particularly in relation to the future fees where one would expect that the majority of the work required to prepare for and conduct the trial will be undertaken by counsel. In any event, Bellahealth will only be entitled to pay its reasonable legal costs out of the Fund. Even assuming that the reasonable costs do turn out to be a total amount of $215,000, the non-family provision claim component of those costs would not be disproportionate to the importance of Bellahealth complying with its obligations in respect of the payment of the $4,401,422 death benefit.

The application for judicial advice insofar as it concerns the family provision claim

69. I now turn to Mr Nespolon’s and Mr Dickson’s application for judicial advice that they would be justified in defending Ms van Camp’s family provision claim in the main proceedings.

70. The executor of a deceased estate is the proper defendant to a family provision claim in respect of the estate. The executor’s duty is to either compromise the claim or to contest it and seek to uphold the provisions of the will. If the executor contests the claim, it is to be expected that they will adduce evidence that is relevant to the issues raised by the claim: see Bartlett v Coomber [2008] NSWCA 100 at [70]-[71] (Hodgson JA) and the authorities there referred to.

71. Contrary to Ms van Camp’s submissions, it does not follow that there is no question enlivening the Court’s jurisdiction under s 63 of the Trustee Act. There is a question as to whether to defend the claim, as opposed to compromising it, and defending the claim will necessarily commit some of the assets of the estate to pay the reasonable legal costs of the defence. That involves a question concerning the management or administration of the estate: see Wilcox v Chapple [2020] NSWSC 1859 at [23] (Rees J).

72. However, there is insufficient information before the Court to give the advice sought. The amended statement of facts does not specify the quantum of provision claimed by Ms van Camp and provides no information about many of the matters in s 60 of the Succession Act that are likely to be relevant to the fact-specific evaluative exercise that will ultimately determine the outcome of the family provision claim. There is some vague and inconsistent information about her past income and it is clear that she is now the sole parent of her two young daughters. However, the amended statement of facts is silent about many relevant matters. By way of example only, the amended statement of facts contains no information about Ms van Camp’s age, health and life expectancy. Nor does it contain any information about her assets and financial position (other than the assets bequeathed to her in the will) or her skills, qualifications, employment (if any) and future earning capacity. The Court therefore lacks a proper basis to consider whether counsel’s confidential opinion establishes sufficient prospects of successfully defending the family provision claim to warrant the defence of that claim in the main proceedings.

69. For those reasons, the Court will not give the judicial advice sought by Mr Nespolon and Mr Dickson in relation to the defence of Ms van Camp’s family provision claim and the costs of that defence.

70. The rolled up terms of the judicial advice sought extends to advice that Bellahealth would be justified in defending Ms van Camp’s family provision claim in the main proceedings.

71. The defence of Ms van Camp’s family provision claim is a matter for Mr Nespolon and Mr Dickson. Bellahealth may be entitled to be heard in relation to discrete issues concerning whether the death benefit should be designated as notional estate and, if so, questions about whether the burden of any provision ordered in favour of Ms van Camp should fall on the estate or the notional estate. However, the defence of the family provision claim is not a matter for Bellahealth. I raised this matter with counsel for the applicants during the hearing. Counsel for the applicants directed submissions to Bellahealth being entitled to be heard in relation to notional estate issues but did not seek advice in narrower terms that Bellahealth would reflect a limited role for Bellahealth in relation to the family provision claim.

72. For those reasons, the Court will not give the judicial advice sought by Bellahealth insofar as it relates to the defence of Ms van Camp’s family provision claim in the main proceedings.

Costs of the advice proceedings

77. The advice proceedings are not adversarial litigation but an application by a trustee for private advice. Ms van Camp was a defendant to the proceedings only because she was entitled to be joined as a co-executor of the deceased’s estate. Although the applicants have not succeeded in obtaining all of the judicial advice sought, the application was properly made. I note that most of the amended statement of facts and submissions were directed to the defence of the Nomination claims and the prosecution of the cross-claim in the main proceedings. Bellahealth has succeeded in obtaining the judicial advice sought in relation to those aspects of the main proceedings.

78. Mr Nespolon and Mr Dickson are entitled to be indemnified out of the deceased’s estate for their reasonable legal costs of the advice proceedings. Bellahealth is entitled to be indemnified out of the Fund for its reasonable legal costs of the advice proceedings. According to the affidavit of the applicants’ solicitor, their estimated total legal costs of the advice proceedings are $18,191.80 (including GST). The Court has no information about those costs other than the total amount. Before paying any costs out of the deceased’s estate and the Fund (respectively), Mr Nespolon and Mr Dickson and Bellahealth will need to scrutinise the costs and satisfy themselves as to the reasonableness of the amount and the propriety of the apportionment of the reasonable costs between them.

79. Ms van Camp did not seek any order in relation to her costs of the advice proceedings.

Conclusion and orders

80. For all of the foregoing reasons, the orders of the Court are as follows:

1. On the basis of the facts set out in the amended statement of facts filed in these proceedings on 8 June 2022 and the confidential opinion of counsel for the plaintiffs in these proceedings dated 22 August 2022, order pursuant to s 63 of the Trustee Act 1925 (NSW) that the third plaintiff (Bellahealth Pty Ltd) in its capacity as trustee of the Nespolon Superannuation Fund would be justified in:

1. defending the claims made by the plaintiff in proceedings 2021/200360 in prayers 1 and 2 and paragraphs 1 to 6 of the statement of claim filed on 19 November 2021; and

2. prosecuting the first cross-claim as pleaded in the statement of cross-claim filed on 13 December 2021 in proceedings 2021/200360; and

3. in paying its reasonable costs incurred in defending those claims and prosecuting that cross-claim out of the assets of the Nespolon Superannuation Fund.

2. Order that the summons filed in these proceedings is otherwise dismissed.

3. Order that the first and second plaintiffs (Mr Nespolon and Mr Dickson) in their capacity as executors of the estate of the late Dr Harry Nespolon would be justified in paying their reasonable costs of these proceedings out of the assets of the deceased’s estate.

4. Order that the third plaintiff (Bellahealth Pty Ltd) in its capacity as trustee of the Nespolon Superannuation Fund would be justified in paying its reasonable costs of these proceedings out of the assets of the Nespolon Superannuation Fund.

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Endnotes

Decision last updated: 06 September 2022