Super powers and personal representative problems

Super powers and personal representative problems
October 31, 2019 /

What is the extent of a personal representative’s duty to call on superannuation proceeds?

Given the analysis of this question undertaken in McIntosh v McIntosh [2014] QSC 99 (McIntosh) and Brine v Carter [2015] SASC 205 (Brine), practitioners would be forgiven for thinking the permutations around that duty were settled.

However, thanks to two recent Western Australian decisions – Denise Hilda Burgess as administrator of the estate of Brian Michael Burgess v Burgess [2018] WASC 279 (Burgess) and Gonciarz v Bienias [2019] WASC 104 (Gonciarz) – the courts have considered a number of nuanced circumstances that broaden and deepen our understanding of the extent of the duty.

In McIntosh and Brine, the conduct of the personal representatives was less than optimal. Both behaved in a covert and misleading manner to advance their own interests. But what of a personal representative who honestly, but mistakenly, makes a competing application, who then takes all steps to rectify the mistake, and who is transparent and open to the parties and the court as to the circumstances?

Burgess was one such circumstance. The court opened its judgement with an experience most of us have with clients.

“The facts underlying the present application are relatively commonplace, but the problem they present is legally complex.”1

A de facto couple with two young children was struck down when the husband and father died without a will. While at the time of his death he was in stable fixed employment, prior to that he was a fly-in, fly-out worker who had accumulated four different superannuation policies with benefits, including death benefits attaching on his death.2

There was about a year between his date of death and his de facto becoming appointed as administrator of his estate.3 Prior to her appointment, she made application for the proceeds of two funds to be paid to her in her personal capacity. One superannuation fund paid the proceeds to her prior to her appointment as administrator. However, the second fund paid it to her six months after her appointment.4 The third superannuation fund paid modest proceeds to the estate.5 The fourth fund had not made a determination at the time of the hearing.

So, the application presented “an issue concerning the likely conflict of interest”6 between her position as an administrator of the estate in which she owed fiduciary duties to the estate and that of her position and entitlements as one of three beneficiaries of the estate.

Underlying the application was the manner in which an intestate estate is distributed on death. This is relevant in the context that intestacy entitlements differ from state to state, as do the eligible persons.7

In this case, the intestate estate was distributed between the widow and her two infant children for which she had the responsibility of care.

The primary question before the court was whether the widow was required to account for the funds that she had received after the grant, and whether she was able to receive the funds being held in abeyance in the fourth fund. In seeking those answers, she sought for the court to distinguish McIntosh on the facts, or for it not to be followed.8

In considering the matters, the court was at pains to observe that there was not “the slightest suggestion of any misdealing conduct or misappropriation of any of the superannuation payment funds received by Mrs Burgess”.9 In respect of the facts of this matter, the court lamented that “hard cases make bad law”.10

The court went through how the widow had dealt with funds she received, with a significant portion being put towards a home for herself and her children,11 and the creation of an apparent estate’s proceeds trust for her children.12

Mrs Burgess sought to rely on s75 Trustee Act 1962 (WA), a provision that empowers the court to excuse the actions of a trustee when those actions are honest, reasonable and ought fairly to be excused. This provision is mirrored in other states.13

After carefully considering the submission and the applicable passages from McIntosh, the court focused on the duty. It found:

“The nature of an administrator’s fiduciary position is such that it requires the fiduciary’s undivided loyalty in pursuing exclusively the interests of beneficiary parties – to the exclusion of all other rival interests. The rigor of the fidelity required of trustees and those who discharge equivalent positions by courts of equity over centuries has never diminished. Across time, celebrated prior cases such as Keech v Sandford (1726) Sel Cas 61; 25 ER 223 and Boardman v Phipps [1966] UKHL 2; [ 1967] 2 AC 46 provide merely two of many examples of situations where what on the face of it might otherwise be regarded as a harsh result taken against the actions of a trustee, was necessary to preserve the integrity of the office of trustee…14

“In an age of increasing moral ambivalence in western society the rigor of a court of equity must endure. It will not be shaken as regards what is a sacred obligation of total and uncompromised fidelity required of a trustee. Here, that required the administrator not just to disclose the existence of the (rival) estate interest when claiming the superannuation moneys in her own right from the fund trustee. It required more. It required her to apply as administrator of the estate for it to receive the funds in any exercise of the fund trustee’s discretion.”15

Martin J went on to affirm that “…the approach of Atkinson J taken in McIntosh cannot be faulted as a matter of law. I would respectfully apply it here, even though the underlying facts are different. The interest of a deceased estate require a ‘champion’ who cannot be seen (even if they are not) to be acting halfheartedly, or with an eye to achieving outcomes other than an outcome that thoroughly advances the interests of the estate – to the exclusion of other claimants.”16 And on that basis the court refused her application and would not excuse her breach;17 and so ordered that she account, although the accounting was structured as a trust in the house for the children with offsets against the funds already placed into trust for them.

So, if the duty of a personal representative to the estate is one of “sacred obligation of total and uncompromised fidelity”18 and a court will not excuse the breach, is there another means open to disentangle what might otherwise be an innocently ignorant breach?

Gonciarz involved those elements.

It was a matter that came before the courts within about six months of the decision of Burgess, with the relevant events occurring before and crossing the decision. The deceased died intestate, on 4 August 2017, survived by his wife, brother and mother. His wife was appointed administrator of his estate on 18 December 2017.

His wife had two children from a prior relationship. Under West Australian intestacy laws, the deceased’s wife, brother and mother shared equally in his modest estate, the net value of which was $140,000.19 He, however, had a superannuation fund with a death benefit of $541,412.20. There was no binding nomination.

Prior to marrying the administrator, however, the deceased had made a non-binding nomination in favour of his brother. Prior to her appointment as administrator, the deceased’s wife completed a claim form calling for the superannuation to be paid to her. In completing the form, she did not identify any other claimant.

After she was appointed administrator, the fund sought for the details of the deceased’s stepchildren and brother to be provided. The wife’s solicitor complied with the request. The trustee subsequently determined to distribute the entire proceeds to the wife. However, the deceased’s brother objected to that decision.

Crucially, the brother asserted that he did not believe the deceased and the testator were living together at the date of the deceased’s death.20 The wife then commenced a claim for further provision from the estate, naming herself in her capacity as the administrator of the estate.

The brother and mother of the deceased then started a campaign of complaining about the administration of the estate. It escalated to the point that they lodged an application for her to file and serve accounts along with a plan of distribution.21 They then raised the issue of her claim for the superannuation fund, referring her to the decision of Burgess pressing the issue of conflict. As a result of becoming aware of the decision, the administrator promptly wrote to the superannuation trustees seeking for them to “disregard”22 all her previous claims on the funds. The trustee subsequently determined to pay the proceeds to the estate.

However, in advising of the decision the trustee revealed that the deceased’s brother asserted that the deceased and the administrator were not in a de facto relationship at the time of his death and that this was a factor in their determination.23

This allegation distressed the administrator and she sought for the brother and mother to consent to her resignation as administrator in order that she be free to respond to the allegation made to the superannuation trustee. They declined, resulting in the administrator applying to the court to resign as administrator.24 Relevantly, the administrator was suffering from depression and under medical care for the depression from within months of her husband’s death through to February 2019.25

The court considered its powers to revoke the grant,26 while considering, referring to and affirming the decisions of McIntosh and Burgess. The court considered the fact that she was making a claim for further provision in the estate, the acrimony between the parties, and how that would likely affect the matter moving forward.

Observing that the overarching principle in personal representatives acting in an estate is always contingent on the due administration of the estate, the court affirmed that “the death benefit is not an asset of the estate. Rather, it is a benefit that may vest in the estate, if, and only if, the Trustee exercises its discretion to pay the benefit to the estate and not wholly to the plaintiff.”27

The court found that the administrator was in a conflict of interest with the estate, that it was in her own interest to challenge the trustee’s decision, and that compelling her to administer the estate when she no longer wished to do so was not for the benefit of the estate. It would be “inimical to the due and proper administration of the estate and to the interests of the parties beneficially entitled to it. If the plaintiff was compelled against her wishes to continue with the administration I fear that is inevitable the level of disputation experienced in the past will be perpetuated.”28

So, what do the cases tell us?

1. A personal representative, be they an administrator or executor has the same fiduciary duty of “sacred obligation of
total and uncompromised fidelity”29 to the estate to the exclusion of all others.

2. A conflict will arise when a personal representative seeks to raise a claim on the superannuation for themselves after
they have been appointed, or receive the funds after they have been appointed.30

3. Timing is relevant to the duty being engaged, that is a decision or payment by the trustee made after the appointment will place the personal representative in conflict.31

4. In respect of an executor, the conflict can be authorised by the testator, however, it requires evidence that the deceased was fully informed of the circumstances.32

5. When the executor is not authorised by the testator, then as to whether the conflict is excused will be a matter of whether there was consent of the beneficiaries. Crucial to this aspect is a factor of causation.33

6. When in conflict a personal representative must account to the estate, however the mechanism of that accounting can
involve considerations of how the personal representative has dealt with the funds received at the time of the application.34

7. A personal representative who finds themselves in conflict may be able to extricate from that conflict by applying to the court to have the grant revoked. Whether it will be revoked is contingent on the status of the administration of the estate and the conduct of the parties.35

Christine Smyth is a former President of Queensland Law Society, a QLS Accredited Specialist (succession law) – Qld, and Consultant at Robbins Watson Solicitors. She is an executive committee member of the Law Council Australia – Legal Practice Section, Court Appointed Estate Account Assessor, and member of the QLS Specialist Accreditation Board,
Proctor Editorial Committee, QLS Succession Law Committee and STEP.

Notes
1 Burgess at [1].
2 At [2]-[3].
3 At [3].
4 At [8]-[9].
5 At [9].
6 At [13].
7 In Western Australia the entitlements of a de facto spouse will depend on the number of years the parties were in a de facto relationship. The precondition of the number of years changes and increases from two to five if the deceased was also
legally married at the time; if so it will then depend on the status of that marriage during that time frame. And it will also alter when there are children. See s15 Administration Act 1903 (WA).
8 At [11].
9 At [24].
10 Per Martin J at [16].
11 At [24].
12 For a discussion on estate proceeds trusts, see the writer’s co-authored article published by the Australian Tax Institute Journal, ‘Successful Succession: Estate proceeds trusts: benefits for families’, by Christine Smyth and Katerina Peiros, Taxation in Australia Vol.51(4).
13 See s76 Trusts Act 1973 (Qld); s85 Trustee Act 1925 (NSW); s67 Trustee Act 1958 (Vic.); s56 Trustee Act 1936 (SA); s50 Trustee Act 1898 (Tas.); s85 Trustee Act 1925 (ACT).
14 At [83].
15 At [84].
16 At [85].
17 At [86].
18 Ibid.
19 Gonciarz at [5].
20 At [8]-[13].
21 At [14].
22 At [22].
23 At [25]-[27].
24 At [27]-[29].
25 At [30].
26 At [31]-[38].
27 At [38]-[43].
28 At [40].
29 Burgess at [84].
30 McIntosh, Burgess.
31 Burgess.
32 Brine.
33 Brine.
34 Burgess.
35 Gonciarz.

It’s back to the future

It’s back to the future
September 30, 2019 /

Uncertainty returns to binding death benefit nominations. 

About this time last year, succession lawyers breathed a collective legal sigh of relief.

Why? Because her Honour Bowskill J, through the decision of Re Naruamon Pty Ltd [2018] QSC 185, gave us a judicial Alka-Seltzer, easing our legal indigestion over the question of whether a power of attorney could, or could not, make a binding death benefit nomination (BDBN) in a superannuation fund.

Succinctly, the answer was yes. We finally had certainty! Bowskill J determined that a BDBN was a financial matter within the meaning of the Powers of Attorney Act 1998 (Qld).1  Accordingly, if the fund deed permitted it and there were no other prohibiting factors, such as a conflict of interest, it could be done. 

Key to this conclusion was her Honour’s determination that the making of a BDBN in a superannuation fund, “is not a testamentary act and so is not captured, by analogy, by the restriction against delegating to an attorney the making of a will”.2  This principle has since been relied on in the decisions of: MZY v RYI [2019] QSC 89; Hartman v Nicotra (unreported BS 11925 of 2017, Mullins J, 19 December 2017); and Schafferius v Piper (unreported BS 12145 of 2016, Boddice J, 8 December 2016).

All was well in succession law land until Western Australia weighed in on the debate through the recent decision of SM [2019] WASAT 22.3  4  There, District Court Judge T Sharp, sitting as Deputy President of the State Administrative Tribunal, made a contrary determination that “(t)he making of a BDBN where the represented person has a beneficial interest in the funds the subject of the BDBN is a testamentary act or disposition”.5  And so it seems, the best of all minds can differ on fundamental things.

SM involved an application by a trustee for an order that they, as the administrators of the represented person’s estate, be authorised to execute a BDBN on their behalf. The five issues for the court’s determination were:

Could the tribunal confer on an administrator a power to make or confirm a BDBN?
Could an administrator with plenary powers make a BDBN for a represented person?
Could a represented person subject to an administration order make a BDBN themselves?
Is a BDBN a ‘testamentary disposition’ and thus a plenary administrator prohibited by s71(2a) of the Guardianship and Administration Act 1990 (WA) from making a BDBN?
If the tribunal had power to grant the additional function to an administrator, was it in SM’s best interests that the tribunal grant that function to the applicant?

The bulk of the judgment considered the tribunal’s powers under the Guardianship and Administration Act 1990 (WA). It should be noted that a number of the relevant provisions differ from the Guardianship and Administration Act 2000 (Qld), particularly the purpose of an administration order.6  That discussion is beyond the scope of this article.

For this article, what is critical, is Sharp J’s analysis around the question of whether a BDBN was a testamentary disposition. In reaching his conclusion that it is, Sharp J considered, at length, Bowskill J’s judgment, with particular focus on the two decisions on which her Honour relied to reach her conclusion about the testamentary 
nature of a BDBN: Re Application by Police Association of South Australia [2008] SASC 299; (2008) 102 SASR 
215, [75] (Re Police); and McFadden v Public Trustee for Victoria (1981) 1 NSWLR 15, 29–32 (McFadden).

Referring to Re Police, Sharp J observed that “The member had no equitable interest in the death benefit paid to the Police Association prior to death”.7  With respect to McFadden, Sharp J noted that that Holland J’s rejection of the nomination in question there, as not constituting a testamentary act, arose out of “the exercise of a contractual right not a testamentary power. Any dispositive effect that the nomination may have derives from the contract and the exercise of contractual rights inter vivos and not from the death of the contributor.”8

He then went on to rely on Bird v Perpetual Executors and Trustees Association of Australia Ltd,9  noting: “[T]he High Court distinguished a testamentary document from a binding agreement as: A document made to depend upon the event of death for its vigour and effect and as necessary to consummate it is a testamentary document. But a document is not testamentary if it takes effect immediately upon its execution through the enjoyment of the benefits conferred thereby be postponed until after the donor’s death.”

Sharp J concluded that “[t]he purpose of a BDBN is solely to enable transmission on a person’s death of their superannuation benefit”.10

Accordingly, “the making a BDBN is not for the purpose of carrying out his or her purpose as an administrator, namely the conservation of the estate of a person under an administration order for his or her own advantage and benefit. On this basis the Tribunal does not have power to grant the additional function to a limited or plenary administrator.”11  Having reached this conclusion, Sharp J noted that it was not necessary to determine the issue of the testamentary nature of a BDBN12  but he did so anyway, because he considered it was important.

He found:

97.  The distinguishing factors that the authorities have relied upon to determine if a nomination in a document is or is not a testamentary act or disposition is whether there is a legal entitlement to the object of the nomination and whether the nomination is binding when it is made.

98.  The ‘friendly society cases’ and the ‘nominee insurance policy cases’ support the proposition that a BDBN is a testamentary disposition. In these cases, where a BDBN is made in respect of funds in which the superannuation member has a beneficial interest up to the time of death, and is not made further to a contractual right, the nomination of a beneficiary to receive the funds on the member’s death is considered to be a testamentary 
disposition. 

99.  The Tribunal finds that the authorities support a finding that a BDBN is a testamentary disposition where the member of a pension/superannuation fund has a present equitable entitlement to the money in the pension/ superannuation fund and the BDBN was not made further to a contractual right. (emphasis added).

100. SM has a beneficial interest in the money from the Fund being paid into the Superannuation Fund.

101. The BDBN can be changed at any time up until SM’s death, subject to her capacity, and does not take effect until the death of SM.

102.Therefore it follows SM has proprietary rights and powers over the subject property during her lifetime which amounts to a beneficial interest in the property until her death.

103.Any BDBN she is able to make does not take effect until her death.

104.For the above reasons the Tribunal finds that the proposed BDBN is a testamentary disposition. (emphasis added.)

So where does this leave us? Only the ratio decidendi of a judgment binds a lower court; views in dissent on tangential matters are but mere obiter.13

Here we have a lower court in another jurisdiction concluding in obiter, that a BDBN is testamentary in nature. Nevertheless, Sharp J did undertake a detailed analysis of the law to reach his entirely opposite 
conclusion. In doing so he threw shade over the certainty of Bowskill J’s finding. Some might be forgiven for thinking this is ‘judicial activism’ at work, taking us back to the future?

Christine Smyth is a former President of Queensland Law Society, a QLS Accredited Specialist (succession law) – Qld, and Consultant at Robbins Watson Solicitors. She is an executive committee member of the Law Council Australia – Legal Practice Section, Court Appointed Estate Account Assessor, and member of the QLS Specialist Accreditation Board, Proctor Editorial Committee, QLS Succession Law Committee and STEP.

Notes
1   At [59].
2   At [71].
3   My thanks to Andrew Smyth, Managing Partner at Robbins Watson for bringing this judgment to my attention.
4   Note this decision was delivered a week after MZY v RYI [2019] QSC 89 was delivered
5   At[108] (4).
6   See s6 Guardianship And Administration Act 2000 (Qld): “This Act seeks to strike an appropriate balance between— (a) the right of an adult with impaired capacity to the greatest possible degree of autonomy in decision-making; and (b) the adult’s right to adequate and appropriate support for decision-making.”
7   At [72].
8   At [80] citing Jollan J in McFadden.
9   At [86] citing Stake J at 144–145.
10 At [90].
11 At [92] cf s6 Guardianship and Administration Act 2000 (Qld).
12 At [93].
13 International Academy Of Comparative Law Conference, Utrecht, The Netherlands 17 July 2006 Precedent – Report On Australia The Hon Justice Michael Kirby AC CMG citing Garcia v National Australia Bank Ltd (1998) 194 CLR 395, per Kirby J at 417; Federation Insurance Ltd v Wasson (1987) 163 CLR 303, per Mason CJ, Wilson, Dawson and Toohey JJ at 314. 

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Why see a Solicitor for your Will?

Why see a Solicitor for your Will?
September 5, 2019 /

Hot off the press is the matter of Drivas v Jakopovic [2019] NSWCA 218 which has reaffirmed the principle that the weight given to a solicitors evidence about testamentary capacity is both valuable and significant. Quoting Young J in Re Cooks Estate “[a]n experienced solicitor or solicitor’s secretary gets used to dealing with people making wills and are usually attuned to the red lights that flash when a person who is of suspect capacity comes across their paths [sic].”
So, if you want to discuss making your Will with us, call our office today on (07) 5576 9999.

Conflicts of interest

Conflicts of interest
September 2, 2019 /

To act or not to act?

To restrain or not to restrain?

The Australian Solicitor Conduct Rules (ASCR) commenced on 1 June 2012 in Queensland, 2  replacing the Legal Profession (Solicitors) Rule 2007 (Solicitors Rules).

Before that, reliance was primarily on the common law to direct us in our duties. The common law very much looks to community standards as a measure against which rights and wrongs are defined. Remembering, only as recently as 2017 the gay panic defence was abolished in Queensland law. 3

If you practise law long enough you get to experience these type of fundamental shifts, especially in how law is practised and the standards against which we are judged. However, for most, few areas of practice will have you concerned about a file you managed six years ago, or even a decade ago, unless you practise as a succession lawyer.

Why? Because that will you drafted yesterday may not be acted on for decades, and much can happen in that time, such as the introduction of the ASCR in 2012 to replace the Solicitors Rules, noting specifically ASCR rules 10 and 11, which replaced rules 4 and 8 in the Solicitors Rules, and all of which relate to conflicts of interest concerning former and current clients.

Prior to the 1980s, 1990s and much of 2000s, it was not uncommon for lawyers to act for related parties, not for nefarious reasons, but simply because most lawyers and law firms were a part of our local community, operating in our local towns  for families, often down the generations.

There was a connectedness to community and clients that many now pine for, but which rarely exists today. The difficulty is that between then and now much has changed in the way law is practised, including the rules and standards by which our courts judge our performance.

‘Rights can be considered wrongs, depending on who is judging.’1

It is against this history that I profile the matter of Hutchinson v Timmins: Estate of Kevin Henry Fox (Deceased) [2018] NSWSC 4 (Hutchinson), with a view to identifying for practitioners, both new and long-standing, how easily will instructions can descend into the murky waters of should you or shouldn’t you have, many years, if not decades, later.

Hutchinson explores the longtail impact of will instructions, how they can wrap their wrongdoings around the rights and reputations of others, exposing the risks in taking will instructions from two will-makers in circumstances where there is evidence of a mutual will agreement between them

– all of this compounded by the Daedalus nature of acquiring law firms, their files and employing their people.

The application that gave rise to this decision was for enforcement of a subpoena and an application to restrain a successor law firm from acting in the estate of Kevin Fox. The plaintiffs were the daughters of the late Joyce Fox, who was married to the late Kevin Fox for 38 years. 5

This proceeding was one of a number they issued against the estates of their late mother and late stepfather. 6  In reaching its decision, the court found it necessary to scrutinise the pleadings in the “revocation proceedings”. The revocation proceedings sought to set aside a settlement in the “FPA proceedings” on the grounds that the release in the FPA proceedings was “procured [by] the release of their rights by misleading and deceptive and unconscionable conduct, and non-disclosure of material facts (‘impugned conduct’)”. 7

The daughters’ revocation proceedings against Kevin’s estate included allegations that the solicitor for their mother and subsequently their stepfather, Mr Mitchell, was an active party in the impugned conduct. 8  Their submission was that by virtue of the evidence thrown up by the subpoena, Mr Mitchell (employed by Mason Lawyers) was a material witnesses to the revocation

proceedings, ergo the firm Mason Lawyers ought to be restrained from acting.

During her lifetime Joyce made a number of wills, all prepared by Mr Mitchell 9  while he was with the firm Thomas Mitchell Solicitors (and the former firm, Thomas, Mitchell & Co.). 10  Joyce and Kevin owned a home together in joint tenancy which formed the bulk of her estate. 11  In 2011,

Joyce consulted Mr Mitchell, who gave advice about severance of tenancy of the matrimonial home. 12

Joyce instructed that she and Kevin agreed Kevin would change his will to ensure her daughters would benefit from his estate should she predecease Kevin and that he would not change his will thereafter. With  that in mind, she did not sever the tenancy.

Afterwards, the firm Thomas Mitchell Solicitors dissolved. Mr Mitchell took on the files and records of that firm and he carried on (for a short time) as a sole practitioner, at which time, his sole practice and the records held, were acquired by Mason Lawyers Pty Ltd. Mason Lawyers Pty Ltd employed Mr Mitchell on a full-time basis for a number of years, reducing to a casual consultancy, at the time of this proceeding.

About three months after Joyce gave her instructions, by which time Mr Mitchell was in sole practice, Kevin attended Mr Mitchell and gave instructions for his will that reflected the agreement referred to by Joyce. 13  Joyce subsequently fell ill, was diagnosed with dementia and within a year of the diagnosis was admitted to hospital where she died  10 days later on 24 June 2014. 14

During the period of her illness and just prior to her death, Kevin attended on Mr Mitchell (who by this time was employed by Mason Lawyers Pty Ltd) and changed his will. There was evidence that, at the time Mr Mitchell was taking these subsequent instructions from Kevin, Mason Lawyers knew Joyce had dementia, provided Joyce’s daughter Gail a copy of her power of attorney 15  and that Kevin instructed Mr Mitchell not to send material related to his will instructions to the matrimonial home.  16

After Joyce died, her daughters issued proceedings seeking further provision from her estate. Mason Lawyers acted in that matter on behalf of Kevin. The daughters entered into an agreement with Kevin on that claim, which was then resolved by way of consent orders.

At the time of the agreement they said they were of the belief that they were beneficiaries of Kevin’s estate. Part of the recitals to the deed included a denial by Kevin that there was any agreed promise between him and Joyce, and that the parties acknowledged the recitals to the deed were correct to the best of their knowledge, and that Kevin had received legal advice. 17

Less than a year after the consent orders issue, Kevin died on 19 May 2016. His executor, Mr Timmins, then instructed Mason Lawyers to act in Kevin’s estate 18  to seek a grant of probate. Joyce’s daughters filed a caveat against Kevin’s will in the probate proceedings, issuing a subpoena. During the disclosure process in response to the subpoena, despite evidence of an extensive search, it becomes apparent that the controversial will file to Kevin’s 2011 will  could not be located. 19  With that, the plaintiff  daughters brought their application for compliance with the subpoena and seeking the restraint.

In respect of the subpoena, the court, found that “all the searches that could reasonably be expected” 20  had been done and that “a simple order now for Mason Lawyers to comply with the subpoena is pointless: Quach v Vu [2009] NSWSC 131 at [7]”. 21

On the restraint issue, both parties argued their positions around the principles “as stated by Brereton in Kallinicos at [76], together with the subsequent authorities such as Burrell”, with the court applying those principles: 22

“• The test to be applied in this inherent jurisdiction is whether a fair-minded, reasonably informed member of the public would conclude that the proper administration of justice requires that a legal practitioner should be prevented from acting, in the interests of the protection of the integrity of the judicial process and  the due administration of justice, including the appearance of justice;

•  The jurisdiction is to be regarded as exceptional and is to be exercised  with caution;

• Due weight should be given to the public interest in a litigant not being deprived of the lawyer of his or her choice without due cause;

• The timing of the application may be relevant, in that the cost, inconvenience  or impracticality of requiring lawyers to cease to act may provide a reason for refusing to grant relief.”

In coming to its conclusion, the court noted issues related to the quality of the daughters’ pleadings in the revocation proceedings and as well as noting possible issues around the quality of advice they received in the FPA proceedings. However, the court found that at critical times Mr Mitchell was involved in the events the  subject of the revocation proceedings 23  as such, “Mr Mitchell’s personal performance of various retainers is going to come under close scrutiny and  criticism. He will be a highly material witness in these proceedings. He is still a casual employee

of Mason Lawyers…the Court is concerned about the extent of the criticism of his conduct that is likely to arise and that may ultimately flow over to the firm Mason Lawyers defending its own reputation, whilst he and the firm attempt to defend  his reputation.”24

Taking into account that the application was “made early, so as to minimise any disruption to the defendant”, 25  the court ordered that  Mason Lawyers be restrained from acting on and from the conclusion of all issues relating to the defendant’s strike-out motion filed on  7 September 2017. 26

It remains a reasonably common practice that firms act for spouses in their will instructions, and this reality is recognised by the QLS Ethics and Practice Centre in its ethics note on mirror wills, which provides suggestions on how to manage the issue of changed instructions after separation or divorce. 27

It points out that ASCR Rule 10.2 permits the taking of instructions in this circumstance. However, there is a significant caveat in the rule and that is where to do so would not be detrimental to the interests of the former client.

And therein is the crux of the issue when deciding whether you ought to act or not act. If you choose to act, then your actions  may be sheeted home to your colleagues,  who in addition to the former client and their beneficiaries, you also owe a duty. And so in the words of Woody to Buzz Lightyear: conflicts, conflicts everywhere…

Postscript:

If a picture paints a thousand words, then a time-line table reduces a lengthy complex judgement of 12,334 words into a digestible format for time-poor readers and publishers with limited space. I have produced a table to assist practitioners process the labyrinthine factual matrix of  Hutchinson v Timmins: Estate of Kevin Henry Fox (Deceased) [2018] NSWSC. It can be accessed by this link at qls.com.au/successionseptember2019.

Notes:

1  Suzy Kassem, Rise Up and Salute the Sun: The Writings of Suzy Kassem.

2  New South Wales did not adopt the ASCR until 1 January 2014, at which time it replaced the Professional Conduct and Practice Rules (Solicitors Rules) (NSW).

3  Criminal Law Amendment Bill 2017 section 304.

4  Hutchinson– my thanks to QLS Ethics Solicitor Shane Budden for drawing this case to my attention.

5 At [5].

6 At [29 ] family provision proceedings 2015/98270;at [37] caveat in probate proceedings no 2016/175383; at [40] statement of claim (proceedings 2017/137987) (the revocation proceedings).

7  At [2].

8 At [3].

9 At [6].

10  The firm changed its name in 1985, see [6].

11  At [12] – noting in NSW jointly owned real property can be caught by the notional estate provisions of the NSW Succession Act – see section 80.

12 At [13].

13 At [13]-[15].

14 At [17].

15 At [21]-[26].

16 At [25].

17 At [77].

18 At [36], application for probate of Kevin Fox’s last will (proceedings no 2016/175383) (the probate proceedings).

19 At [53]-[60].

20 At [80].

21 At 82.

22 Noted at [91] applied by the court at [102]-[125].

23 At [104].

24 At [103].

25 At [123].

26 At [126].

27 qls.com.au/ethics > Ethics resources > Conflicts concerning former clients > Mirror wills…

Christine Smyth is a former President of Queensland Law Society, a QLS Accredited Specialist

(succession law) – Qld, and Consultant at Robbins Watson Solicitors. She is an executive committee member of the Law Council Australia – Legal Practice Section, Court Appointed Estate Account  Assessor, and member of the QLS Specialist  Accreditation Board, Proctor Editorial Committee, QLS Succession Law Committee and STEP.

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Moving in together? In a de facto relationship?

Final means final – no second bite of the cherry in parenting matters

Final means final – no second bite of the cherry in parenting matters
August 27, 2019 /

The Family Court of Australia has recently reiterated in a Brisbane case that final orders means final.

Where a final parenting order has been made, a parent must show a material change of circumstance since the final orders were made before the Court will allow a parenting matter to be re-litigated and make more parenting Orders.  

This case concerned one child, who was 3 years of age when the Court made final parenting orders. The child’s father applied to the Court again for new orders almost 2 years afterwards. The father sought to relitigate the order because he alleged the mother failed to comply with the final order, which the mother disputed, and relied on a change in his relationship and household status, taking up employment in another suburb and poor communication with the mother as changes which meant the final orders should be altered.

The court stated that ‘Although trite, it is worthwhile making clear that the father needed to demonstrate not just that there had been a change in circumstances, but that the change was sufficiently significant to warrant revision of the existing orders in any particular way’

This means it’s not enough for there to be a change of circumstances, but a parent must show that this change was so significant it warrants the re-opening of litigation in that particular case.  

What might be important in one matter might not be in a different set of circumstances.

The Judge was not satisfied that in the circumstances of that case that those changes were, individually or cumulatively, significant enough to entertain further litigation regarding the child. On appeal, the Family Court upheld that decision.

If you have final parenting orders and you are not sure if you meet the criteria to seek different orders, or the other parents wants more litigation and you want to know where you stand, see one of our experienced family lawyers by calling us on 5576 9999.

Case link;

http://www.austlii.edu.au/cgi-bin/viewdoc/au/cases/cth/FamCAFC/2019/137.html

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“Never Judge a Book by its Cover” – so said my Mum: Grants of Probate in Queensland

“Never Judge a Book by its Cover” – so said my Mum: Grants of Probate in Queensland
August 20, 2019 /

During many an appointment with grieving family members, one of the areas of law I advise on, is whether a grant of probate is necessary in order to proceed with the administration of an estate.  When charged with the responsibility of realising and administering an estate, aka being appointed as an Executor, the Executor must consider whether applying for a grant is necessary.

Generally, in Queensland (noting that all States and Territories in Australia have differing rules and legislation regarding wills and estates) informal administration is preferred.  “Why incur an expense in obtaining a Grant if it’s a simple estate – amirite?” Well, in circumstances where an estate is comprised of even the most modest assets there are many pitfalls for the novice Executor.  What if you have the wrong will?  What if there is an informal will that you don’t know about until it’s too late? What if there is a debt that you simply weren’t aware of?  It is recommended that the Executor apply for a grant, not only for the protection afforded by the Court’s imprimatur that you have the correct will, and security from estate creditors wrongly chasing you down, but also because many asset holders who will simply refuse to deal with the Executor until your appointment has been sanctioned by the court.

So, what is a Grant of Probate?” I hear you say indistinctly while reading this. To put it in to basic terms, it’s a piece of A4 cardboard which wears a big red, circular, seal.  This cardboard is stapled to the front of a photocopy of the Last Will and Testament of the deceased.  The seal is then embossed with the imprimatur of the Supreme Court of Queensland so that it indents all pages of the photocopied Will.

Now I’m sure you’ve all heard the saying “Never judge a book by its cover” and while my explanation of the physical appearance of the grant sounds simple, its effect and operation certainly isn’t.  The grant is both complicated and serious – I like to describe it as a passport; a critical document that allows you to travel from place-to-place while confirming who you are and that you’re not a stateless person purporting to hold some kind of authority and sense of identity.  An Executor’s passport allows the Executor to attend the offices of asset holders on behalf of the deceased and is the Executor’s valid authority to collect in the assets, liaise with creditors, satisfy payments of liabilities and then attend to the allocated distributions to those intended beneficiaries.

As a general guide, the following institutions will require an Executor to obtain a Grant of Probate:

-Bank accounts with certain thresholds, i.e. CBA requires a grant for over $50,000.00;

-Aged care facilities holding refundable accommodation deposits;

-Brokers and financial advisers managing the deceased’s share portfolio.

If you need assistance in applying for a grant of probate, then we invite you to contact our office and arrange a free 30-minute free consultation with one of our estate administration solicitors.

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Domestic Violence – Crossing the Cross Examination Line. Will you need a lawyer?

Domestic Violence – Crossing the Cross Examination Line. Will you need a lawyer?
August 12, 2019 /

Recent changes in the law mean that from 10 September 2019, the Family and Federal Circuit Courts will no longer allow a person to cross-examine the other litigant in some circumstances.

This applies where there is an allegation of family violence and one of the following applies;

  • (i)  either party has been convicted of, or is charged with, an offence involving violence, or a threat of violence, to the other party;
  • (ii)  a family violence order (other than an interim order) applies to both parties, such as an AVO or DV Protection Order;
  • (iii)  an injunction for the personal protection of either party is directed against the other party; or
  • (iv)  the court makes an order.

If these criteria are met then a self-represented litigant must have a legal practitioner (eg a solicitor or barrister) undertake the cross-examination of the other party on their behalf. This means that a self-represented litigant must either engage a lawyer to cross-examine for them or apply to the government’s scheme for a lawyer at least 12 weeks before the trial.   

The Court can also direct that when there is direct cross-examination by one party of the other, that this take place by video or audio link.

The interesting thing to note is that this language is broad so that this applies irrespective of which party wants to cross-examine and which party is being cross-examined. So for example, an aggrieved party to a DV order cannot themselves cross-examine the respondent to the Order.

It is not limited to litigation regarding children either, this applies to any family proceedings.

These changes do not replace other existing provisions regarding how witnesses are cross-examined, they are in addition to those measures.

For more information call us to see one of our dedicated family lawyers on 5576 9999. 

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PEXA Constant Improvements

PEXA Constant Improvements
July 31, 2019 /

With the upcoming PEXA release 10.1.0 on the 5th August 2019, I have taken the time to reflect on PEXA and their growth since going live in May 2015 in QLD. Robbins Watson became a PEXA subscriber in September 2015, thus we have been privy to most improvements over the last 4 years.

The pioneering nature  of this relatively new e-conveyancing platform allows legal practitioners to be involved in the building of an exciting and progressive platform. With each release I notice improvements to the platform that will hopefully become mandatory in QLD.

The recent update has seen email notifications of conversations also now displaying the content of the conversation (to limited extent not to breach privacy), this improvement makes the practicality of dealing with whatever is raised in the conversation quicker by not having to log into PEXA every time a notification comes through.

I encourage other legal practitioners to get involved, voice your concerns or ideas because PEXA do listen. My next idea I will be putting to PEXA is email notifications for when something changes after signing off on financial settlement and lodgment.   

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Herding cats

Herding cats
July 31, 2019 /

Dealing with recalcitrant executors and double probate 1

11,167 probate lodgments were filed in Queensland in 2017-18. 2

This was a 4.5% increase on the prior financial year, and a 21% increase over the last five years. 3

Along with this there is an inevitable increase in matters being referred to the court involving disputes as to whom a grant might issue. While no data is available, one area in which I have anecdotally noticed an increase is applications for a grant with the power reserved – double probate. 4

This occurs when there are multiple executors and one or more neither seek  to apply for a grant nor renounce their role, and your executor client/s are wrangling with the recalcitrant co-executor/s on making the application. An executor might take this course as a means of minimising the estate’s exposure to delays caused by obstinate and
uncooperative executor/s who cause the estate administration to languish in a state of suspended aggravation.

Recalcitrant executors who refuse to engage in or seek to unilaterally direct matters without regard to the view of the remaining executors can significantly impact the costs and time in administering a deceased estate. Typically, they cavil over if or when probate should be sought, who may represent the executor/s in seeking probate, and/or there may be issues of conflict of interest unable to be resolved by mutual agreement.

While co-executors must act jointly, 5  there is an anomaly in the Uniform Civil Procedure Rules 1999 (Qld) (UCPR) enabling one of multiple executors to apply for a grant in their sole name. There is no step by way 
of ‘clearing off’ in relation to the non-proving executor/s, which has to be evidenced. As a consequence an initial grant (reserving power) may issue, and if the other executor/s subsequently proves, two grants may be in
circulation concurrently – double probate.

A grant of double probate was explained in Tsaknis as Executor and Trustee of the Estate of Geoffrey Douglas Roland Lilburne (Dec) v Lilburne [2010] WASC 152 by EM Heenan J as follows:

[44] “Where several executors are named in a will, if a grant of probate is made only to one or to some of them it is the practice of the court to reserve the power to make a like grant to those others who are competent to act and who have not renounced — Martyn JR and Caddick N, Williams, Mortimer and Sunnucks on Executors, Administrators and Probate (19th ed., 2008) [25–14]. So, in this case where the late Geoffrey Lilburne made
a will appointing both his son, Mr David Lilburne, and his son-in-law, Mr Tsaknis, as his named executors and trustees, and when the original application for the grant of probate was made only by Mr Tsaknis, the grant was
made to him with, as already noted, leave being reserved for Mr David Lilburne to apply for probate, as he had not renounced his right to do so. When, as now, an executor who has not joined in applying or obtaining an original grant of probate but has been granted leave to apply, subsequently makes an application for probate, the ensuing grant, if it occurs, is known as a double probate. It is made in general terms and relates to the remaining unadministered estate at the date of the second or subsequent grant — Halsbury’s Laws of England (4th ed., 2005) Vol. 17(2) [152]. It runs concurrently with the first grant if any of the first grantees are still living and it confers the same rights as an original grant. It follows that there may be several current grants of double probate — D’Costa R and Winegarten J, Tristram and Cootes: Probate Practice (29th ed., 2002) [13.122].”

Where your executor client/s determine to proceed with an application for a grant with the power reserved, there is a caution that solicitors might follow to ensure compliance with their duties under the Australian Solicitors Conduct Rules 2012 (Qld) (ASCR). It is recommended that, if a solicitor acts for a party who is proposing to obtain a grant reserving power, the solicitor might take reasonable steps to inform the executor/s for whom the power is reserved, of the proposed application, typically in writing and outside of the usual advertising process. This recommendation arises out of consideration of ASCRs r3.1 and 4.1.2.

Otherwise, the process of applying for the grant is substantially the same as an ordinary grant with a minor difference. Form 101 – Application for probate must contain a clause that probate be issued to the applicant/s
“with power being reserved to make the same grant to [the non-proving executor/s] when s/he shall apply for a grant personally”. 

Aside from the duties under the ASCR, there is no requirement in the UCPR to prove anything further in respect of communications or service upon the non-proving executor. The matter does not need to be heard by a
judge and can be determined by the Probate Registrar on the papers. Without anything more, the Probate Registrar will issue the grant, however the wording on the grant is as follows: “As one of the executors, power being reserved to make the same grant to [nonproving executor/s name] the other executor when s/he shall apply for a grant personally.”

On the grant issuing, pursuant to s49(2) Succession Act 1981 (Qld) the named executor/s is/are solely authorised under that Act to administer the estate pursuant to the grant’s authority. Importantly, no other
person, including the non-proving executor, can intermeddle in the estate administration. The grant is their unassailable authority to administer the estate. Only upon the nonproving executor/s obtaining their own grant (a double grant) can that executor/s assert their executorial authority. And should that occur…

Notes)
1 See also ‘What’s new in Succession Law’, Proctor December 2013 where I first commented on double
probates. My thanks to Robbins Watson Law Clerk Rachel Mallard and Associate Solicitor Thomas Ashton for their assistance with updated research on this topic.
2 pc.gov.au/research/ongoing/report-on-governmentservices/2019/justice/courts/rogs-2019-partcchapter7.pdf
Table 7A.2.
3 courts.qld.gov.au/__data/assets/pdf_file/0020/606611/sc-ar-2017-18.pdf.
4 The Supreme Court records do not differentiate as to these grants.
5 Loughnan v McConnell [2006] QSC 359 at [49]: “The powers given by s49 of the Succession Act 1981 to an executor are now co-extensive with those given to a trustee. …they are now obliged, as are trustees, to act jointly…”

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