Lees v Tighe[2011] QDC 27

[2011] QDC 27

DISTRICT COURT

CIVIL JURISDICTION

JUDGE JONES

No 499 of 2011

BRISBANE

DATE 10/03/2011

ORDER

HIS HONOUR:  Well, I will give my reasons ex tempore.  I think, in these sorts of matters it is preferable to deal with them as quickly as is practicable, but I reserve the right to tidy them up in due course before they make their way on to the Court's website.

This is an application seeking the following relief; that time be extended under the Succession Act 1988 to 17 February 2011, and that adequate provision be made for the proper maintenance and support of the applicant pursuant to section 40 and 41 of that Act.

The factual background to the application, which I do not intend to go into in great detail, is relevantly that the deceased died on 5 May 2010. She was survived by her son, Beric Lees, who is the applicant in these proceedings, and by her daughter, Wendy Tighe, who is the respondent.

The deceased made her will on 20 February 2004 in which she, among other things, appointed the respondent as the sole executrix and trustee and gave her the estate upon trust to, among other things, pay debts, funeral and testamentary expenses, distribute gifts as specified under the will and to otherwise distribute the property in accordance with the will.

It is not doubted that the most significant asset of the estate was a unit at Caloundra said to be worth in the order of $1 million. Other assets included personal items and furniture. The personal items included a number of items of jewellery.

Leaving aside specific gifts to the grandchildren of the deceased, the respondent received the bulk of the estate. By referring to the breakup as described in Mr Clutterbuck's outline of submissions, Mr Clutterbuck appearing for the applicant, the respondent received a number of items of jewellery and some furniture, but significantly the interest that the deceased held in the unit at Caloundra.

The applicant received specific requests in respect of a China cabinet, together with its contents and some framed photographs.

On 8 February 2011, the respondent finalised the administration of the estate and took steps to distribute the various gifts, including gifts to the grandchildren of the deceased.

There are some aspects of the estate yet to be finalised, and I will come back to those in a moment. Relevantly, a transmission application to have the Caloundra unit registered in the name of the respondent was lodged in the office of the Registrar of Titles on 10 February 2011. A confirmation statement from the Registrar of Titles confirmed that from 14 February 2011 the respondent became the registered proprietor or the registered owner of that unit.

The application brought is out of time, by my calculations, in the order of 10 to 12 days. It was recognised by both counsel that the time limit prescribed under section 41(8) of the Succession Act; namely, the time limit of nine months after the death of the deceased, is not simply a procedural matter easily dispensed with.

Both counsel referred me to the decision of Justice White, as she then was, in Bird v. Bird [2002] QSC 202 where her Honour relevantly said in paragraph 22:

"Time limits in statutes are for good reason.  Malcolm C J in Clayton v. Australia [1993] 9 WAR 364 quoted, 'with approval the approach of McGarry VC in Re Salmon (deceased)' [1981] Ch 167 at 175. "...the time limit is a substantive provision laid down in the act itself, and it is not a mere procedural time limit imposed by rules of court which will be treated with indulgence appropriate to procedural rules. The burden on the applicant is thus, I think, no triviality: the applicant must make out a substantial case for it being just and proper for the Court to exercise its statutory discretion to extend the time."

By reference to various cases, in deciding whether or not to exercise the discretion, a number of factors have to be brought into account. Relevantly, in this case, in my view, they include the extent of the delay. Here, as I have already said, it is only a matter of days, not weeks. Second, any explanation for the delay. Here the explanation for the delay is said to be the result of an oversight or error on the part of the applicant's solicitor concerning the final day on which the filing of an application could be completed. Third, the prejudice of the beneficiaries has to be taken into account as a consequence of any delay. Here some prejudice could not be ruled out, however, on balance, I do not consider the question of prejudice works against the applicant in this case.

The final two matters are the ones, in my view, central to the outcome of the case. As much, was really acknowledged by counsel. It was around these matters that their respective arguments really centred, and that is whether there was any conduct, unconscionable or otherwise inappropriate on the part of the respondent, concerning the distribution of the estate. And wrapped up with that issue, finally, the likely prospects of the applicant being successful if the proceedings were allowed to continue.

If I could pause here for just a moment to make two observations: First, as I have said, the estate has not yet been finally determined. According to the affidavit of the respondent, which was not challenged, as at 8 March 2011, there remained a positive balance of $2,276.99, less accounting fees and tax. Second, leaving aside for the moment questions concerning the unit at Caloundra, I consider the affidavit of the applicant, and particularly the matters summarised in paragraphs 9 (d), 10, 11, 12, 13 and 15 of Mr Clutterbuck's outline, provide evidence of at least reasonable prospects of the applicant succeeding if this matter were allowed to proceed.

However, it is also sufficiently clear, in my view, that if the unit at Caloundra cannot be traced or otherwise bought into account in dealing with the estate, then given the balance of the estate otherwise available, the applicant, on balance, would be likely to fail. Simply, insufficient funds are available.

As I have said, as counsel agreed, the real issues are the behaviour of the respondents and the status of the unit at Caloundra. Perhaps it would be relevant here to note that under section 44(3) of the Succession Act 1981 "No action shall lie against the personal representative by reason of the personal representative having distributed any part of the estate if the distribution was properly made by the personal representative."

Also under the laws of this State, where an estate has been fully administered, it has been consistently held that an extension of time ought not be granted save for what appear to be exceptional circumstances.

In the judgment of Baker v. Williams & Another [2007] QSC 226, the Chief Justice at paragraphs 8 and 9 said: "In 1966, the Full Court in Re Donkin deceased, Reichelmann and Donkin [1966] Qd R 96 determined that, 'Where an estate has previously been fully administered, an application for an extension of time for the bringing of such an application cannot proceed because there remains no estate from which further provision may be made.'" Hanger and Gibbs JJ took that view. Gibbs J dealt with the issue comprehensively as follows, at pages 113, 14 and 17. Thereafter, the Chief Justice went on to quote from the decision of Gibbs J in Donkin that, "The words, the estate of the testator (the statutory reserve from which further distributions may be ordered) refer to all property that belong to the testator and has not yet passed to any other person absolutely in his own right. Once the title of a beneficiary has become complete, so that he holds in his own right the property given to him by the will, that property ceases, in any ordinary sense, to be part of the estate of the testator and becomes part of the estate of the beneficiary. The (Testator's Family Maintenance Act) gives no power either to the Court to order that provision to be made out of the estate of the beneficiary or to the executors to recover former assets of the testator's estate that have been distributed to the beneficiaries entitled to receive them.

And then further: "Once an asset ceases to be an asset of the testator's estate, and the beneficiary to whom it is given has received it in his own right, there is no power to subject that asset to the incidence of an order under the acts, or to require the beneficiary to restore the asset to the estate or to make a payment in satisfaction of the order." Here the estate is yet to be fully administered, but title in the unit vested thin respondent on 14 February 2011. Other gifts under the will were finalised by the respondent on 8 February 2011.

The decision of Donkin referred to by the Chief Justice in Baker v. Williams & Another and has been referred to with approval and a number of other cases. I will mention just two.

Firstly, in the decision of his Honour Justice Keane, as he then was, in Holdway v. Arcuri Lawyers [2009] 2 Qd R 18; and by Justice McMeekin in Curran v. McGrath [2010] QSC 172. Justice McMeekin dealt with that particular matter at first instance. In paragraph 23, Justice McMeekin referred to the passage from Re Donkin, to which I have already referred. That being those elements of the judgment of Justice Gibbs as he then was.

Justice McMeekin at paragraph 24 then went on to say: "The question then is when does property cease to be part of a testator's estate? The principles that apply were most recently considered by the Court of Appeal in Holdway v. Arcuri Lawyers [2008] QCA 218 by Keane JA as he then was." The principles that Keane JA identified from the authorities can be summarised as follows: "(A), a transfer of real property of a deceased by an executor to himself as a beneficiary under the will, will usually be regarded as affecting a distribution of the asset to the beneficiary. (B), the question of whether there has been an assent by the executor such as to affect the distribution of the beneficial title to an asset is a question of fact to be determined on all of the circumstances of the case. (C), once executors who are also trustees have got in the estate and performed the duties of their office they thereafter hold the property remaining vested in them as trustees for the beneficiaries under the will and, at that point, those assets cease to be part of the estate of the testator."

And then, "(E), in absence of evidence to the contrary, it will be assumed that an executor intends to do what is right, so despite any transfer of assets by an executor to himself as beneficiary the asset nonetheless will remain available to the executor to meet the debts, if any, of the estate if any are outstanding."

By reference to the cases to which I have referred, it seems to me that the application must fail, unless I am sufficiently satisfied that the behaviour of the respondent was, in effect, to use the language of the cases to which I am about to refer, designed to deliberately avoid or defeat the applicant's claim.

In the Court of Appeal, decision of Curran & Ors v. McGrath [2010] QCA 308, that being an appeal against the decision of Justice McMeekin. And here I should pause to note that during argument, Mr Nevison comforted me by advising that that part of the judgment of Justice McMeekin, to which I have referred, was not disturbed on appeal.

In the Court of Appeal decision Justice Muir, in appeals, in paragraph 48, said in part, "The authorities do not establish that there is absolute prohibition on distributions by executors while a claim on the estate is pending or threatened, but an executor who distributes estate property in such circumstances runs the risk of being held personally liable to make up for any shortfall in the assets available to meet the claim."

In paragraph 46, his Honour said, "The appellants relied on Re Faulkner. In that case, the respondent executors distributed the estate assets after the applicant had made application for relief under section 41(1) of the Act within time and after the Court had made directions for the conduct of the proceeding. The applicant applied by originating summons, pursuant to section 8(1) of the Trusts Act 1973 for an order that the transfers of the relevant properties be set aside. The Judge, Moynihan J held that, 'It was impossible to avoid the conclusion that the respondents had made the distribution for the purpose of defeating the applicant's claim.' He found that the applicant had, at least, a 'contingent interest in the trust property and a right of due administration in respect of the trust property sufficient to give her standing to make the application.'"

The core of his Honour's reasons is to be found in the following passage. His Honour then referred to the following passage from Justice Moynihan in Re Faulkner.

"The applicant also has a right of due administration in respect of the trust constituted by the will. A trustee who has received notice that a fund in his possession is or may be claimed is liable to the claimant for dealing with the property in disregard of the notice should the claim prove well founded."

His Honour then went on to say, "Distribution with notice of claim under similar legislation was held to be a failure by the executers to provide for contingent liabilities so as to constitute a breach of trust."

Reference is then made to the case of Re Winwood (Deceased). There are a number of distinguishing features between the facts in this case, and cases such as those referred to in Faulkner, being Winwood and the Guardian Trust and Executers Company case.

Those cases, as best as I can discern, involved applications brought under trust legislation and not the legislation in issue here. However I do not think that is a definitive or determinative in anyway.

It is of note that in Faulkner a claim had already been made and, in fact, directions had been made by the Court for the future conduct of the case. The distribution, in the face of those facts, led Justice Moynihan to conclude that it was impossible to reach any conclusion other than the distribution was made so as to avoid the claim.

The other case to which his Honour, Justice Moynihan, referred to in Faulkner was that of Guardian Trust and Executor Company of New Zealand v. The Public Trustee of New Zealand [1942] Appeal Cases 115 at 127. A decision of the Privy Council.

The relevant passage is at 127, but before I read that I should note that, as Mr Nevison pointed out, that case is now quite dated in a number of respects and was dealing specifically with New Zealand legislation. But that aside it still seems to me to be worthy of consideration, particularly in circumstances where it was referred to by Justice Moynihan in Re Faulkner, that being a decision in 1999 and then, again, referred to with apparent approval by his Honour Justice Muir in Curran. It being a decision of the Court of Appeal in 2010. At page 127 Their Lordships relevantly said, "The question to be decided is whether they are by reason thereof liable to make good the said sum to Ms Smith's estate. There does not appear to be any statute enforced in New Zealand that governs the case. It falls, therefore, to be decided in accordance with the well established principles of equity. One of those principles is that, 'If a trustee or other person in a fiduciary capacity has received notice that a fund in his possession is, or may be claimed by A, he will be liable to A if he deals with the fund in disregard of that notice should the claim subsequently prove well founded.'" To my mind, this application can be decided by determining whether or not, to use the words in Faulkner; “The respondent acted so as to defeat or avoid a claim” or to use the words in the Guardian Trust case, "To have acted in disregard of the notice to defeat the claim." Those circumstances exist here.

Prima facie, the respondent was entitled to proceed on the basis that any claim against the estate would be brought within the timeframe prescribed under section 41 of the Act, namely nine months after the date of death. Indeed, to an extent, that expectation, if anything, was reinforced by the letter sent by the applicant's solicitors which relevantly stated that the application would be made within the time "Mandated". That could only be a reference to the time limit prescribed by the Act.

No representations were made by the respondent that she would not deal with the estate before a claim was received. And while the transmission application was executed on 27 January 2011 it was not lodged until after the time limit had been expired.

In paragraphs 8, 9 and 10 of the respondent's affidavit, she deposes, "On or around 8 July 2010, I was advised by my solicitors, Messrs Rees R & Sydney Jones' solicitors off Rockhampton that my brother, Beric Lees, the applicant herein, had notified their office by way of letter from his solicitor, Mylne Lawyers of the Gold Coast, that he intended to file a Family Provision application in the Court within nine months of the deceased's date of death.

The date, which is nine months from the date of the deceased's death, was Saturday, 5 February 2011. Following the close of business on Monday, 7 February 2011, I contacted my solicitor and made inquiries as to whether their offices had been served with any originating application. I was informed by my solicitor that, to their knowledge, no application had been filed in the Court by the applicant, and they had not received notice from the applicant's solicitor that the applicant had, or intended to imminently file such application. On 8 February 2011, I instructed my solicitor, though I intended to administer the deceased's estates in accordance with the deceased's will."

It is also relevant in this regard that the letter referring to the claim was dated 8 July 2010. Most of the documents sought in that letter were provided by the respondent's solicitor by 12 July 2010.

In paragraphs 6 to 9 of the affidavit of Ms Gillard, it is deposed that, "On or about 9 November 2010, Mr Clutterbuck was engaged as counsel in the matter, and the same day the applicant met with Mr Mylne and Mr Clutterbuck in chambers in Brisbane to provide instructions. On 22 December 2010, at approximately 1.03 p.m., Mrs King of this office telephoned the respondent's solicitors to request a copy of this death certificate of the late Mrs Lees."

And then in paragraph 8: "On or about 22 December 2010, Mylne Lawyers received a letter by facsimile from the respondent's solicitor enclosing a copy of the death certificate of the late Mrs Lees, recording the date of death as being 5 May 2010."

And then in paragraph 9: "On or about 16 February 2011, I am advised by Mr Mylne, the principal of Mylne Lawyers, and verily believe it to be true that when Mr Mylne was reviewing the applicant's forwarding affidavit material it came to his attention that a notation on the office file recording that the applicant was required to make an application to Court on or before March 2011 was incorrect and should have read 5 February 2011 or the next business day being 7 February 2011."

It seems to me that the application could have been brought at any time after, at least, 19 November 2010. No real explanation has been provided as to why the matter was left, or what appears to be left, relatively unattended until 16 February 2011 when the mistake as to the date was discovered.

The reference to the paragraphs, to which I have referred in the affidavit of the applicant, suggest to me, and leaves me to conclude, that I do not consider that the respondent acted in disregard of the notice. It would appear that she acted having regard to it. To put it another way: I do not consider that the behaviour of the respondent is such to justify the extension sought. As I have said, prima facie, in my view, absent any persuasive reason, which I have not found here, the respondent was entitled to act at the conclusion of the nine month period.

In reaching this conclusion, I am conscious that the applicant may or will suffer some hardship. However, as was recognised by counsel on both sides it is at least arguable that a remedy may lie elsewhere. Albeit, perhaps more costly and time consuming. But in any event I do not consider that those are factors that would justify making the orders sought.

Also, action may lie against the respondent personally for not acting properly in the distribution of the estate. But whatever options might be open to the applicant, they do not lie against the estate.

For these reasons the distribution of the property and more particularly the distribution of the unit at Caloundra has been lawfully finalised in my view. Accordingly, the application is dismissed. And I will hear from the parties as to costs.

...

HIS HONOUR:  On balance, whilst I consider the application for costs on an indemnity basis not to be, as sometimes is the case, as Mr Clutterbuck pointed out, based mainly bluster, here I think the application for costs on an indemnity basis is not without some merit. But on balance I do not consider that the application was so hopeless as to be doomed to fail nor could it be said, in my view, on any reasonable construction that it could be described as being vexatious or otherwise an abuse of process.

Therefore, on balance, costs will be ordered on a standard basis.

...

HIS HONOUR:  The orders will be in the terms that has been provided.