Re MacDonald[2023] QSC 149

SUPREME COURT OF QUEENSLAND

REASONS

1. [1]
   Muriel Ann MacDonald (the deceased) died on 18 January 2020. The deceased was widowed and is survived by four children: Julie-Ann Campbell, Mary-Ann Ringrose, Hamish MacDonald, and Angus MacDonald – the applicant. The parties, in their submissions, referred to the four children by their first names. For convenience I will do the same.
2. [2]
   The following statement of the facts is taken from the submissions of the applicant’s counsel – with which the respondent’s counsel agrees.

Factual Background

3. [3]
   The deceased’s Will dated 7 January 2019 appointed Hamish and Angus as co-executors. Angus alone applied for a grant of probate, with leave reserved to Hamish. However, Hamish filed a caveat alleging lack of capacity or suspicious circumstances relating to the 2019 will.
4. [4]
   As a result, a solemn form probate application will be necessary. This has not yet occurred, in Angus’ case because of the needs of the farming business – in which Hamish and the deceased’s estate all have an interest – and because of cancer treatment.
5. [5]
   The estate comprises, in large part, a half interest in properties known as Moorfield and Dundoon and associated businesses near Blackall. Moorfield is the more substantial property and comprises 3278 hectares and in February 2023 was valued at $6.55m. Dundoon comprises 2837 hectares and was valued at $3.425m.^[1]The properties are cattle properties but have recently been expanded to include a mix of sheep and goat.
6. [6]
   The properties were originally owned as tenants in common in equal shares by the deceased and her husband. On his death, his half share passed to Hamish and Angus so that the properties and business interests are now held 50% by the deceased’s estate and 25% by each of Hamish and Angus.
7. [7]
   The business of Moorfield, including ownership of its plant and equipment, occurs primarily through a company, Tayban Pty Ltd, as trustee for the DA MacDonald Family Trust. The shareholdings in Tayban are in the same proportions – 50% held by the estate and 25% held by each of Hamish and Angus.  
8. [8]
   Angus has lived and worked full-time on Moorfield since 1999.  He originally worked with both his parents (the deceased and her husband), and later with just the deceased, in running the business of the property.  The extent and nature of his involvement and the tasks he has and continues to undertake are set out in paragraphs 34-37 of the Angus affidavit.  Hamish is not involved in the running of or management of the properties or the business and does not live there.
9. [9]
   Since the deceased’s death, Angus has continued living and working at Moorfield, and is currently the only person living on and managing the properties and the cattle business.   Because the assets of the estate are tied up and cannot be dealt with until the probate situation is finally dealt with, he has contributed his own funds to maintain the property and business where necessary, and he does not draw a salary.
10. [10]
    However, the affairs of Moorfield and Tayban have reached a point where simply having Angus live on the property and contribute personally is insufficient to address pressing issues.  There is now a need for a limited grant of representation, for the following reasons:

    1. (a)
       There are Queensland Rural Industry Development Authority (QRIDA) loans which require servicing, and for which the deceased, Hamish and Angus have given guarantees.
    2. (b)
       Angus has exhausted his capacity to meet all Moorfield and Tayban’s obligations personally, including to payroll where necessary.   Although his contributions can presumably ultimately be partially recovered from his co-owners, he is not in a position to make further contributions.
    3. (c)
       To the extent that the estate needs or ought to contribute to its share of expenses for Moorfield or its businesses, it holds valuable shareholdings which could be realised for that purpose.   However, those shareholdings cannot be dealt with in the absence of a grant.
    4. (d)
       A mining tenement holder over certain land including Moorfield is seeking to commence an exploration programme.  For that purpose, it is trying to negotiate access and compensation agreements with the owners of Moorfield, but the estate – as a 50% owner – has no-one through whom it can act.
11. [11]
    The estate is said by Angus to be worth $6,233,318 with liabilities estimated to be $819,386 resulting in a net estate of approximately $5,413,932.^[2] The assets of the estate include the 50% interest in Moorfield and the 50% interest in Dundoon, cash of $80,706.39 and a share portfolio worth approximately $675,509. As explained, recent valuations of Moorfield and Dundoon record that that they have market values of $6.55m and $3.425m – a total of just under $10m. The cattle properties are a significant enterprise.
12. [12]
    Both Angus and Hamish already have a significant interest in the cattle properties, and both may take a further interest if the 2019 Will takes effect. Both will, regardless of the outcome of the anticipated solemn form proceedings, be appointed executors of the estate of the deceased unless one renounces or is removed.

Administrator pendente lite

13. [13]
    As the applicant’s submissions explain, the court has power under rule 638 of the Uniform Civil Procedure Rules 1999 to appoint an administrator for an estate pending the outcome of probate proceedings (an “administrator pendente lite”).  It can do so on a limited basis, imposing conditions as appropriate.
14. [14]
    Appointing an administrator pendente lite is not done as a matter of course. There needs to be some reason for making the appointment.  Their task varies from estate to estate but is essentially to get in the assets of the estate, manage them, and preserve them.
15. [15]
    Here, Angus applies to be appointed as the administrator pendente lite.
16. [16]
    Hamish does not oppose the appointment of an administrator pendente lite pursuant to rule 638 but opposes the appointment of Angus. Hamish seeks the appointment of an independent administrator pendente lite, Mr Kent Dalziel,  a solicitor experienced in the area of succession and estates. In the alternative, Hamish seeks the appointment of both he and Angus as administrators.

Applicant’s Submissions on the Principles

17. [17]
    The applicant submits that:

    1. (a)
       The choice of person to be appointed turns on the facts of the estate.  Historically, it was often thought that an executor appointed under any of the disputed wills ought not be appointed on this basis, but this is not a hard and fast rule and modern cases tend to be more concerned with whether there would be an adverse impact on the estate;^[3] and
    2. (b)
       Reasons telling against the appointment of a party to the probate proceedings include where there is concern about conflict, dissipation of assets, or a failure to act appropriately in the time leading up to the potential appointment.^[4] By contrast, where the proposed appointee is an executor under each of the potential Wills, is familiar with the estate, and has been carrying out similar duties already without incident, an executor appointed by the Will can be an appropriate administrator.

Respondent’s Submissions on the Principles  

18. [18]
    The respondent contended that, as a general rule, a person unconnected with the action is the most suitable person to be appointed as administrator pendente lite”. It was contended that the appointment of one of the parties to the litigation was limited to circumstances that were “quite exceptional”. The respondent contended for a number of propositions:

    1. (a)
       the appointment of a party personally and actively involved in the substantive litigation might be made only where the circumstances are “quite exceptional” – Hempseed v Ward;^[5]
    2. (b)
       the “general practice” is to appoint “some independent person” – Gray v Hart;^[6]
    3. (c)
       the cost of an independent administrator often would not be sufficient to justify the appointment of a party to the litigation;
    4. (d)
       any actual or potential conflict of interest is not itself a ground for refusal but may be an important matter in determining to appoint an independent administrator “with no conflict of interest” – Esplin v Timms;^[7]
    5. (e)
       the consent or agreement of the parties to the appointment of one as a limited administrator may permit the Court to appoint that party – as occurred in Jones v Toomer;^[8]
19. [19]
    The general rule relied on by the respondent was derived from the decision of McMeekin J in Hempseed v Ward,^[9] which itself relied on the judgment of Cox J in Tomkinson v Hersey.^[10]
20. [20]
    In Tomkinson v Hersey Cox J said:

“It is hardly surprising that the textbooks and the few reported decisions on the question are generally opposed to the notion of appointing as an administrator pendente lite someone who is personally and actively involved in the lis itself. The desirability of having the estate administered by someone who stands quite outside the litigious battle is obvious. The cases support the Acting Master's conclusion that, as a general rule, a person unconnected with the action is the most suitable person to be appointed as administrator pendente lite”.^[11]

21. [21]
    Cox J determined that the circumstances would need to be “quite exceptional” for a party to the lis to be appointed as administrator. In response to the arguments put to him Cox J said:

“To follow the established and, in my view, sound practice of not making such an appointment unless the case is an exceptional one is not to prejudge the issue between litigants or to reflect in any way upon the good name of the applicant. It is merely to ensure that the administrator remains aloof from the court proceedings and indifferent to the outcome.”

22. [22]
    As Cox J observed the two decisions cited in the texts where executors have been appointed as administrators pendente lite - Re Griffin^[12] and Wright v Rogers^[13] - do not necessarily contradict this approach. The plaintiff here did not advance any other examples to support his application.
23. [23]
    Both Re Griffin and Wright v Rogers did involve the appointment of a party to the proceeding as an administrator pendente lite. The facts of Re Griffin are instructive. As McMeekin J explained,^[14] Re Griffin involved a timber business. The testator's widow had been managing the business as receiver under a lunacy order prior to the testator's death. It was necessary for someone to carry on the business until the action could be disposed of. The widow was appointed administrator pendente lite even though she was a party to the action.
24. [24]
    Cox J attempted to reconcile Re Griffin with the general rule by interpreting the decision as an application of the principle that the court will not generally, by an administration order, take property out of the hands of a litigant party who was actually and lawfully in possession of it. Similarly, Wright v Rogers was explained as a case that involved no positive opposition to the appointment of executors as administrators and that there had been a determination that the executor had a right to take in the assets and deal with them.
25. [25]
    In truth, all four cases discussed above demonstrate that the discretion to appoint a person as an administrator pendente lite under rule 638 is not a discretion that is fettered by a general rule or by a requirement to demonstrate quite exceptional circumstances. Rather, the principles relevant to the discretion to appoint a particular person as an administrator pendente lite are these (without intending to be exhaustive):

    1. (a)
       It is desirable and there is an obvious advantage in having the estate administered by someone who stands quite outside the litigious battle;
    2. (b)
       A factor to consider is the nature and extent of the issues to be fought in the litigation;
    3. (c)
       Another factor is the nature of the task or tasks required of the administrator – a confined task or a task confined to managing a specific asset will involve different considerations compared with the broad management of a complex estate;
    4. (d)
       It is relevant to consider the candidate’s suitability and qualifications for the role;
    5. (e)
       Any cost or other practical advantages or disadvantages is a factor to consider, as well as the views of the beneficiaries and the choice of executors made by the deceased;
    6. (f)
       At the core of the discretion, of course, is the purpose of the appointment, namely, for the benefit of the estate, to get in the assets of the estate, manage them, and preserve them.
26. [26]
    Of course, on one view, it may be that there are some semantics involved here. The first factor stated above, the preference for an independent administrator, can be expressed as a general rule. But, in so far as it is expressed as a general rule, it is in reality a broad discretion that is subject to the particular circumstances and the good sense and practicalities of the particular appointment.
27. [27]
    On the other hand, there is problem with starting from the position that there is a general rule that a party to the substantive litigation should not be appointed as the administrator pendente lite, and imposing that general rule except in “quite exceptional” circumstances.^[15] The end product of such an approach is a largely subjective assessment as to whether the circumstances can be characterised as “quite exceptional”. Rule 638 does not confine the discretion in that way. And, the authorities reflect a discretion tailored to the circumstances of each case but reflecting the obvious advantage of an administrator who is disinterested and independent.

The Principles Applied – Angus’ Suitability & Expertise 

28. [28]
    Angus has worked on Moorfield since 1996 and he has lived and worked full-time on Moorfield since 1999. That is a very significant period of time. Angus’ work has involved these tasks:

    1. (a)
       Overseeing stockwork and husbandry;
    2. (b)
       Overseeing livestock management including the acquisition and sale of livestock;
    3. (c)
       Running breeding operations;
    4. (d)
       Overseeing the feeding operations of the livestock;
    5. (e)
       Overseeing the health and medical needs of the livestock;
    6. (f)
       Property maintenance, including fencing and upkeep of the property;
    7. (g)
       Maintaining plant and equipment and cattle; and
    8. (h)
       Personally attending to the transport of stock, both for sale and acquisition purposes.^[16]  
29. [29]
    As his mother aged, her involvement in the property decreased and Angus’s role involved oversight of all of the property’s operations, including:

    1. (a)
       All management operations of the business;
    2. (b)
       Financial forecasting, including developing budgets and financial projections;
    3. (c)
       Arranging necessary financing for the business operations including the necessary loans to undertake capital improvements to the property;
    4. (d)
       Undertaking improvements to the property including fencing, development of water pipelines and watering channels for the livestock, installing additional water tanks and installing and expansion of watering points on the property for better stock management and feed utilisation;
    5. (e)
       Continuing to undertake research and development and implementation of property management improvements, including implementation of rotational grazing activities to promote better livestock management as well as the sustainability of the property long term and avoidance of overgrazing and land degradation;
    6. (f)
       Overseeing the day-to-day property operations and management of staff; and
    7. (g)
       Installing predator fencing on Moorfield and Dundoon. To date, Moorfield is 100% predator fenced and Dundoon is approximately predator fenced to 50% of the property. I continue to install predator fencing as cashflow allows.^[17]
30. [30]
    Since his mother’s death, Angus has had oversight over all operations on Moorfield including:

    1. (a)
       All management operations of the business;
    2. (b)
       All day-to-day operations of the property;
    3. (c)
       Financial forecasting;
    4. (d)
       Repaying loans relating to the business and refinancing as necessary to ensure the financial obligations are met;
    5. (e)
       Maintaining all plant and equipment;
    6. (f)
       Undertaking improvements to the property, including continual research, development and implementation of livestock and property management activities; and
    7. (g)
       Undertaking all tasks relating or incidental to the running of the property.^[18]
31. [31]
    Those tasks need to be addressed on a regular basis, sometimes daily, in order to keep the operations and interests of Moorfield progressing in the short and medium term. The property has no employees or contractors at present and the operations are run by Angus alone. It has been a challenging task, especially through drought and poor weather conditions.^[19]

The Principles Applied - Mr Dalziel’s Suitability & Expertise 

32. [32]
    Mr Kent Dalziel is an experienced estate solicitor. But there is no suggestion that he has any competence, let alone expertise, in any of those tasks presently being performed by Angus. Curiously, Mr Dalziel’s affidavit says that he has previously been appointed by the Supreme Court as administrator, including in relation to deceased estates whereby an asset of the estate was an interest in a farming property and involving family trusts. That experience, whether it was one or more occasions, is not said to have equipped Mr Dalziel to manage livestock properties like Moorfield and Dundoon.
33. [33]
    The central problem is that there is no evidence that Mr Dalziel has any knowledge of cattle or livestock properties. There is no evidence that he has any knowledge of these specific properties. It not said that he has even set foot on Moorfield. Nor is there as suggestion that Mr Dalziel is able or willing to move to Moorfield. What is proposed is that Mr Dalziel will manage Moorfield in the manner that he manages other estate matters through his law firm, and with the assistance of other solicitors in his law firm.^[20]
34. [34]
    When this problem was raised in the course of argument the respondent suggested that the preferred course was that Mr Dalziel would manage the property, presumably from his office in Brisbane, and that the intention was that Angus would be kept on as a manager of the property. There is no evidence that Angus would be willing to accept such an arrangement, let alone how the arrangement would work. It is hard to see what management role a solicitor might have in relation to any of the tasks listed above. The likelihood is that a solicitor would need to accept the advice and recommendations of Angus in relation to stockwork and husbandry, livestock management including the acquisition and sale of livestock, breeding and feeding operations, attending to the health and medical needs of the livestock, property maintenance, fencing and maintenance of plant and equipment. And, obviously enough, it would also be necessary to leave the day-to-day management of the property to Angus. Thus, the likelihood is that Mr Dalziel’s role as an administrator would simply add to Angus’ burden without any commensurate benefit.
35. [35]
    Mr Dalziel says that, if a matter requires advice from another law firm, especially in relation to the mining tenement holder, he will seek advice from a law firm with suitable expertise in that area. That is sensible. But one wonders what instructions Mr Dalziel, or the other solicitors in his firm, could give to specialist mining lawyers. They have no specific knowledge of the property, or the areas likely to be impacted, or the likely effects of the mining tenement on the operations of the property. And so, for almost every aspect of the management of the property, Mr Dalziel will need to rely on and defer to the advice and recommendations of Angus. Even for niche areas like mining Angus’ knowledge and expertise will be necessary.
36. [36]
    On the other hand, because he has managed the property for many years, Angus will have existing relationships with contractors and professionals. He will be able to directly engage appropriately qualified people.
37. [37]
    The result is that an appointment of Angus will ensure that this major enterprise is managed by a person with relevant expertise. An appointment of Mr Dalziel will require Angus’ detailed knowledge and expertise, and a level of management above Angus that is superfluous. 

Principles Applied – The Status Quo

38. [38]
    There is no suggestion of any complaint about Angus’ management of the property. Indeed, counsel for Hamish conceded that the property has been well run. Angus has a significant interest in the cattle properties and so he has every reason to properly operate and manage and preserve the value in the assets. The evidence is that Angus has been properly caring for and managing the properties.
39. [39]
    On this ground alone the discretion favours the appointment of Angus over anybody else. To change the management of these properties now, after Angus’ decades of experience, would certainly disturb the status quo in favour of management with no relevant experience. And, there are likely to be risks to the estate in such a change.
40. [40]
    Even if one approached the appointment on the basis of the general rule, the special circumstances outlined constitute circumstances that qualify as ‘quite exceptional’.

Principles Applied – Prospect of Conflicts

41. [41]
    The litigation that has been foreshadowed is likely to involve an assessment of whether the deceased has capacity at the time she executed the 2019 Will. One can expect that there will be medical and legal witnesses as well as many lay witnesses, including Angus and Hamish. That dispute is a relatively narrow one and there is no direct conflict between litigation involving that capacity issue and Angus’ continued management of the properties.
42. [42]
    It is worth noting that the orders sought by Angus do not seek to have him act as administrator of the whole estate. What is proposed is a limited grant. The orders sought comprise a list of tasks which are required for the on-going management of the properties. The administration will be subject to any application to the court.

Principles Applied – Costs & other issues

43. [43]
    One can expect that the retention of Mr Dalziel to manage the properties would come at a cost to the estate. Counsel for the respondent downplayed that cost because of the relatively large value of the estate. However, the likely cost of having Mr Dalziel manage the properties is clouded in some mystery because it is unclear how his management would work. Certainly, there is no detail or even a fee proposal from Mr Dalziel. Similarly, it is unknown how Hamish’s management of the property would work or whether he would need to retain others, or the cost.
44. [44]
    Somewhat generously, and perhaps reflecting his good faith and his interest in maintaining the property, Angus has worked on the property without remuneration.
45. [45]
    It is certainly relevant that the deceased chose both Angus and Hamish as executors. That Will is challenged. It is also relevant that Hamish wishes an independent administrator. On balance, though, the issues of expertise are more compelling factors affecting the discretion. 

Conclusion

46. [46]
    In my view, for the reasons stated, the estate’s interests are best served by having Angus continue to manage the properties.