Wardy v NSW Trustee and Guardian

The New South Wales Court of Appeal considered an appeal by Mr. Wardy against a decision of Slattery J concerning the administration of an estate. The dispute arose because the NSW Trustee and Guardian, as administrator, sold a property that had been specifically devised to Mr. Wardy in order to pay a debt of the deceased. Mr. Wardy contended that he should be placed in the same position as if the sale had not occurred, seeking an appropriate substitute for the specific devise.

The Court was required to determine how the rights of beneficiaries should be adjusted when property subject to a specific devise is sold by an administrator to meet estate debts. Specifically, the Court had to consider whether substituting specific property from the residuary real estate was an appropriate remedy and, if so, whether there needed to be equivalence in value between the original devise and any substitute property. The Court also considered whether the primary judge erred in discounting the value of property for contingencies and the scope of the Court's powers under the *Trustee Act 1925* (NSW) and the Uniform Civil Procedure Rules (UCPR).

The Court of Appeal applied the principle that a specific devisee should be put in materially the same position as they would have been had the sale not occurred. This involved an assessment of the value of the specific devise and the consideration of whether a substitute from the residuary estate was appropriate, requiring equivalence in value. The Court affirmed that the standard of appellate review for valuation issues was analogous to that in *House v The King*, requiring deference to the primary judge's evaluative conclusions unless an error of principle was demonstrated. The Court also noted the broad powers of the Court under UCPR r 54.3 and the parties' concurrence in the primary judge determining the adjustment of beneficiaries' rights.

The appeal was dismissed with costs. The appellant's notice of motion was also dismissed with costs. Leave was granted to the respondent to file a notice of cross-appeal, and the respondent was directed to file and serve it within 14 days. The cross-appeal was allowed, and Declaration (5) made by Slattery J was set aside. The respondent was ordered to pay the appellant’s costs of supplementary submissions, but otherwise, no order was made as to the costs of the cross-appeal.