DISTRICT COURT OF QUEENSLAND CITATION: Vickers v Pickering [2016] QDC 58 PARTIES: NOELA FRANCES VICKERS (first applicant) MARIA ANNE GEARING (second applicant) v HELEN PICKERING (first respondent) FILE NO/S: BD 4560/2015 DIVISION: PROCEEDING: ORIGINATING COURT: JULIE LEANNE WISEMAN (second respondent) Application District Court at Brisbane DELIVERED ON: 24 March 2016 DELIVERED AT: Brisbane HEARING DATE: 14 December 2015 JUDGE: ORDER: CATCHWORDS: McGill SC DCJ Order that the first respondent be joined as a respondent in her personal capacity. Application otherwise dismissed. Order the first respondent to pay the costs of the application personally. TESTATORS FAMILY MAINTENANCE Time for making application whether application to be dismissed summarily effect of distribution of estate distribution without notice after invitation to negotiate possibility of estoppel summary dismissal refused. Succession Act 1981 s 41, 44(3). Atthow v McElhone [2010] QSC 177 followed. Baker v Williams [2007] QSC 226 cited. Blunden v Blunden [2008] SASC 286 considered. Re Crowley [1949] St R Qd 189 cited. Curran v McGrath [2010] QCA 308 applied. Re Donkin dec [1966] Qd R 96 considered. Re Donohue dec [1933] NZLR 477 cited. Easterbrook v Young (1977) 136 CLR 308 cited. Re Faulkner [1999] 2 Qd R 49 considered.
2 Guardian Trust and Executors Company of New Zealand v Public Trustee of New Zealand [1942] AC 115 cited. Re Hill (Supreme Court, Carter J, OS 1079/1987, unreported, BC 8802419) cited. Holdway v Arcuri Lawyers [2009] 2 Qd R 18 considered. Lindsay v Smith [2002] 1 Qd R 610 considered. Re Lowe dec [1964] QWN 37 cited. Re McPherson [1987] 2 Qd R 394 cited. Morris v FAI General Insurance Co Ltd [1996] 1 Qd R 495 considered. Newton, Bellamy and Wolfe v State Government Insurance Office [1986] 1 Qd R 431 cited. Public Trustee v Kidd [1931] NZLR 1 cited. Re Simson dec [1950] Ch 38 cited. Re Winwood dec [1959] NZLR 246 cited. Younan v Younan (No. 2) [2015] VSC 549 applied. COUNSEL: SOLICITORS: A B Fraser for the applicants. R D Williams for the first respondent. O Sullivan s Law Firm for the applicants. Smith & Stanton Lawyers for the first respondent. [1] Norman Alfred Knight died on 27 December 2014. He was survived by four adult daughters, all children of his marriage to a wife who predeceased him. By his last will dated 12 November 1992 he appointed the first respondent the executor of his will, and divided his estate equally between such of the first and second respondents as survived him. No provision was made for the applicants, who had a different mother. On 23 November 2015 the applicants applied for provision out of the estate of the deceased under the Succession Act 1981 s 41. By an application filed 7 December 2015, the first respondent sought the summary dismissal of that application, essentially on the ground that effectively all of the estate had already been distributed at the time the originating application was filed. Background [2] By letter dated 6 March 2015 solicitors for the first applicant wrote to the executor seeking a copy of the will. On 10 March solicitors for the executor provided the solicitors for the first applicant with a copy of the will and advised that they did not propose to obtain a grant of probate of it. On 8 April 2015 solicitors for the applicants gave notice of intention to make a family provision claim against the estate pursuant to s 44(4) of the Act. 1 On 1 May 2015 the solicitors for the executor wrote to the solicitors for the applicants, 2 referring to the notice and continuing: It is the writer s view that it is preferable in such matters to reach an early resolution of such claims, if possible, without the need for the parties to incur the expense and delay of litigation, particularly in an estate of a small value. As you may be aware, there have been several cases in which courts have made comments as to the positive 1 Affidavit of Vickers filed 23 November 2015, Exhibit NFV2 Document 2. 2 Affidavit of Pickering, exhibit HP 2.
3 obligations of both parties and their legal representatives to endeavour to reach a resolution in such estates. We therefore suggest that it would be appropriate for your clients to provide us with an outline of the basis of their claims, including details as to their (and their spouses) financial position, so that our client can consider the merits of those claims and whether an early resolution is possible. [3] They went on to assert that the estate was valued at $330,000 to $350,000, said to consist largely of particular real estate, the deceased had received effectively nothing from the estate of his late wife, the applicants were estranged from their father, whereas the respondents had a close relationship with him, and neither were without need. In response on 6 May 2015 solicitors for the applicants advised that their clients were also keen to reach an early resolution to avoid the expense and delay of litigation, and made an offer of settlement. 3 On 8 May that offer was rejected, and solicitors for the executor again invited the applicants to provide relevant information, including details of their and their spouses financial positions, state of health and what needs they have that cannot be met from their own resources. 4 It was said that without that information the executor could not give proper consideration to any resolution. [4] On 1 June 2015 solicitors for the executor wrote a follow up letter pointing out that the information sought was information which would have to be provided with the filing of an application, and asking for advice as to whether that information was to be provided and, if so, when it might be expected. 5 On 25 August 2015 solicitors for the applicant wrote, referring to the earlier letters, apologising for the delay, and providing information about the state of health of each of the applicants and some information about their financial position and in relation to needs. 6 Overall the letter went for two and a half pages, and attached some medical documents. It concluded we trust this is satisfactory and await your favourable response and proposal to settle our clients claim without recourse to an expensive court case. [5] The solicitors for the executor wrote to the solicitors for the applicants on 7 September 2015, referring to the earlier letter and stating that the documents provided do not sufficiently detail your clients financial position, particularly in the case of Noela Vickers. 7 This was expounded in some detail in relation to the financial position of each of the applicants, setting out various information which was not provided. Reference was also made to an absence of certain information relevant to her medical position, and as to what effect her age and health problems would have on her financial position. The letter went on to assert that the applicants were estranged from the deceased for many years, whereas the respondents had a close relationship with the deceased, and the executor had assisted him financially in a number of ways, not particularised. A summary was set out of the respondents financial position, which was less complete than the summary of the applicants financial position in the letter of 25 August 2015. Apart from that, the general tone and content of the letter was directed to belittling the applicants claims, in what certainly reads as a negotiating tactic. For example the solicitors ended by saying that they consider that the deceased had no obligation or moral duty to provide for the applicants, that if they proceeded 3 Affidavit of Vickers, Exhibit NFV2 document 4. 4 Ibid document 5. 5 Ibid document 6. 6 Ibid document 7. 7 Ibid document 8.
4 with an application the Court would have little difficulty in dismissing it, and that the respondents would be relying on the letter on the question of costs in that event. 8 [6] The period of nine months from the date of death referred to in s 41(8) expired on 28 September 2015. The following day a transmission of title to the land, which formed the bulk of the estate, to the respondents as tenants in common was lodged in the Titles Office, and registered prior to 30 October 2015. 9 Apart from the land, the estate consisted of some Commonwealth Bank shares valued at a little under $7,000, a bank account with the Bank of Queensland, some household furniture of nominal value and a refund of care fees, and there were liabilities for the funeral. 10 Legal and estate administration costs had been incurred in an amount of excess of $6,500. According to the executor, the Commonwealth Bank shares have been appropriated to herself, and the majority of the proceeds of the bank account and the care fees, after payment of debts, were distributed between the respondents on 7 October 2015. There was said to be an amount of just under $7,000 held by the executor as trustee for the estate. [7] None of this of course was done with prior notice to the applicants or their solicitors. The solicitors for the applicants certainly did not understand that the effect of the letter of 7 September 2015 was that negotiations were at an end. They took it as an indication that the information obtained thus far was insufficient, which implied an invitation to provide more information, to fill in the gaps. 11 Having read the letter, I consider their approach was understandable and natural. They obtained further instructions, and on 19 October 2015 wrote again to the solicitors for the executor putting forward additional information, in an attempt to plug any gaps that existed in the information previously provided, and to answer some of the allegations which were made in the earlier letter from the solicitors for the executor. 12 It is unnecessary to go into the letter in detail, except to note that it recorded instructions to continue to negotiate, though it did foreshadow an application to a court if there was no agreement or reasonable prospects for such an agreement. In fact they received prompt advice, in a letter of 21 October 2015, that the estate had been distributed, and that there were therefore no assets from which any order for provision could be made. 13 Effect of distribution of the estate [8] Family provision legislation in the common law world started with the passage of the Family Maintenance Act of 1900 in New Zealand, a short enactment of 22 lines. 14 It was replaced by a more extensive Act in 1908, which was the basis of the Testators Family Maintenance Act 1914 in Queensland, which had only five sections. It permitted, in appropriate circumstances, the Court to order provision out of the estate of the testator. The Succession Act Amendment Act 1968 repealed the 1914 Act, and inserted equivalent provisions in Part 5 of the Succession Act 1867. That Act, in turn, was repealed by the Succession Act 1981, which dealt with family provision applications in Part IV. This consisted of only five sections, s 40 containing definitions, s 41, the operative provision, s 42 permitting a Court to vary an order, s 8 It would not have impressed me much if they had. The letter certainly did not reflect a constructive attempt to resolve the claim without resort to expensive litigation. 9 Affidavit of Vickers, Exhibit NFV4. 10 Affidavit of Pickering para 5. 11 Affidavit of O Sullivan para 11. (See also para 13). 12 Affidavit of Vickers, Exhibit NFV2 document 9. 13 Ibid, document 10. 14 Family Provision in Australia and New Zealand, De Groot and Nickel (4 th Ed, 2012) p 4.
5 43 dealing with the manner of computing duties on an estate, and s 44 containing certain protections for personal representatives. [9] The power to order provision in s 41(1) was (and is) to order that provision be made out of the estate of the deceased person. The effect of a provision in these terms has long been recognised as meaning that the power to make provision under the Act can be exercised only in respect of property that belonged to the testator and has not yet passed absolutely to any other person. Accordingly, once the personal representatives had distributed assets from the estate, they cease to be part of the estate and cease to be available for the exercise of the statutory power to order provision. That was decided in New Zealand in Public Trustee v Kidd [1931] NZLR 1, and by the Full Court in Re Donohue dec [1933] NZLR 477. The former decision was followed in Queensland in Re Lowe dec [1964] QWN 37, where it was held that the estate of the testator meant the estate existing at the time of the proceeding, which did not include any part of the estate which had already been distributed. [10] It was also followed by Gibbs J in Re Donkin dec [1966] Qd R 96 at 117, and his Honour went on to hold that, if a will provides for certain property to be held by the executors on trust, once the executors cease to hold property as executors and began to hold it as trustees, that property has also ceased to form part of the estate of the deceased which was amenable to an order. Hanger J reached the same conclusion, but without reference to authority; the third member of the Court, Mack J, concurred in the order of the Court but on different grounds. [11] That analysis was subsequently endorsed in a number of single judge decisions referred to by de Jersey CJ in Baker v Williams [2007] QSC 226. His Honour also analysed the decision of the High Court in Easterbrook v Young (1977) 136 CLR 308, a case which turned on certain provisions of the equivalent New South Wales statute which permitted, in some circumstances, property which would in Queensland be regarded as having been distributed still to be subject to an order for provision. That had the effect that, to a limited extent, certain provisions of the legislation then in force in New South Wales had a wider anti-avoidance operation than the Queensland Act, which essentially contains no anti-avoidance provisions whatever. [12] The matter was considered further by the Court of Appeal in Holdway v Arcuri Lawyers [2009] 2 Qd R 18, though on a somewhat indirect basis. The deceased by his will appointed his son executor and left his estate to him. The applicant, who had been in a de-facto relationship with the deceased for some 10 years, consulted solicitors about an application and they gave fairly prompt notice of intention to make a claim. Confirmation that the assets would not be distributed without notice was sought but not provided: [14]. A settlement conference was held within the nine month period and after it failed the applicant instructed the solicitor to commence proceedings. An application was filed just within time, but counsel was seeking additional information for the supporting affidavit which was not then filed, and the application was not at that time served. A few months after the application was filed, but before it was served, the executor s solicitor filed a transfer of the land to the executor as devisee. That was the bulk of the estate. Soon after, the applicant changed solicitors, the new solicitors contacted the executor s solicitors, and were told that the estate had been largely distributed. The claim for provision was compromised, but the applicant then alleged that her first solicitors had been negligent and that as a result she had lost the prospect of obtaining further provision out of the estate.
6 [13] One question which was litigated at the trial was whether the effect of the transfer by the executor of the property to himself beneficially had the effect that it ceased to be part of the estate. The trial judge had concluded on the evidence that in fact it had not because the estate had not at that time been fully administered, so that the transfer was premature, but rejected that conclusion on the basis that the defendant s pleading had admitted the contrary, considering that he was bound by that admission. The Court of Appeal held that he should have given effect to the finding that he made, which was not challenged on appeal. On the basis of that finding the estate had not been properly distributed, so that the executor continued to hold the land in his representative capacity, and the application could have succeeded, so the plaintiff s claim for negligence against her solicitors ought to have been dismissed. [14] On the question of whether the estate had been distributed, Keane JA with whom the other members of the Court agreed, said at [72]: A transfer of real property of a deceased by an executor to himself as a beneficiary under the will, will usually be regarded as effecting a distribution of the asset to the beneficiary. That is because the asset transferred is to be held beneficially by the transferee in his own right and not for the purposes of administering the estate. [15] In that particular case, however, his Honour took the view that in circumstances where the debts of the estate had not been paid at the time of the transfer, the executor when effecting the transfer must have intended that they remain available if required to meet the debts of the estate, with the result that there was not the assent to a distribution which was essential to a distribution of the beneficial interest in the asset to the devisee under the will: [76]. This would be the case for example if the transfer was to enable the property to be sold to pay debts of the estate: [77]. That was what had been found by the trial judge, and accordingly the proposition that the estate had been distributed was not correct. Significantly however, nothing was said by his Honour to cast any doubt on the proposition that, if an estate has been administered, and there is a transfer to the beneficiaries of the property forming the net estate, that property has been distributed, and in that way ceases to form part of the estate available to meet an order under s 41. [16] On the face of the statute there is not even a provision dealing with property distributed by a personal representative prior to the time when an order is made on an application properly made within time. The courts, however, have to some extent filled the gap, by characterising such a distribution as a wrongful distribution which gives rise to a claim for damages against the personal representative, at least in circumstances where the personal representative does not obtain protection in relation to the distribution from s 44 of the Act. In Re Hill (Supreme Court, Carter J, OS 1079/1987, unreported, BC 8802419) an order was made under s 52(2) against a personal representative who had distributed property from an estate within six months of the death, and procured the registration of the transmission by death of the freehold within three months of having received notice of an application, so that he did not have protection for it by s 44. That was a remedy against the personal representative, rather than an exercise of bringing the property distributed back into the estate to make it available for an order. [17] In Re Faulkner [1999] 2 Qd R 49 an application under s 41 was filed within time, and had come before the court and directions had been made, but the executors then distributed the estate. Moynihan J said at pp 52-3:
7 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 The obligation is to preserve the estate until the claim is resolved. Distribution with notice of claim under similar legislation was held to be a failure by the executors to provide for contingent liabilities so as to constitute a breach of trust in Re Winwood dec [1959] NZLR 246. 15 [18] In that case relief was granted under the Trusts Act 1973 s 8, to set aside the distributions and order the retransfer of the properties to the executor, in order to make them available to satisfy the application under s 41. That case was referred to by Muir JA, with whom the other members of the court agreed, in Curran v McGrath [2010] QCA 308 where his Honour noted that the circumstances in that case were different because in Re Faulkner the assets had been distributed after an application had been made within time and the executors had notice of it: [46]. His Honour went on to say however at [47], [48]: The expiration of the nine month period allowed by s 41(8) changed each appellant s rights or interests under the [Succession] Act. Within the nine month period each had a right to have any application made by her heard and determined by the court. After the expiration of that period such a right only arose if the court otherwise directed. 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 this case there is evidence, which the primary judge accepted, that the respondents understood for a substantial period prior to 25 November 2008 that no appellant would pursue a claim under s 41(1). I think it correct to infer from the reasons that the primary judge regarded such beliefs as reasonable. In view of the conclusions reached earlier, however, about the approach taken at first instance, it is not necessary to pursue this matter further. [19] That was a reference to an earlier conclusion that arguments about this question could not be run on appeal because they have not been run at trial, and there was the possibility that if they had been run there could have been further evidence which could have prevented the point from succeeding: [44]. In these circumstances the comments by his Honour were perhaps not intended to be a definitive exposition of the limits of the circumstances under which an executor might be personally liable, but they do at least provide some guidance on that point. [20] In that particular case there was a lengthy delay in making the application, and there were circumstances which were regarded as justifying the executor s view that no such application would be made. His Honour referred to three cases in relation to the question of whether an executor who distributed estate property in such circumstances was exposed to personal liability: Re Simson dec [1950] Ch 38; Re Winwood dec (supra) and Blunden v Blunden [2008] SASC 286. The point however that was made 15 Citation of other authority omitted.
8 by his Honour was that in these circumstances there may be a personal remedy against the executor, rather than a capacity to make an order under s 41. There is an important difference between a claim for provision out of the estate and a claim for relief against a personal representative, and different statutory provisions apply to them. [21] The problem of the absence of what might be described as anti-avoidance provisions of such a fundamental nature as a statutory capacity for the court to interfere in a premature distribution from an estate has long been recognised. In 1997 the Queensland Law Reform Commission prepared a report to the Standing Committee of Attorneys-General on family provision 16 which considered this point in Chapter 6, where it was pointed out that in 1982 the Family Provision Act of New South Wales contained provisions for a notional estate which could include, for example, property distributed from the estate prior to the hearing and determination of the family provision application. It was noted that similar provisions had been included in the Inheritance (Provision for Family Independence) Act 1975 in England, and had been recommended by the Law Reform Commission in New Zealand: p 76. The Law Reform Commission concluded that evidence suggested that the New South Wales provisions were working well, though very few such cases actually go to Court. On the other hand, in Queensland and the other jurisdictions in Australia there were no anti-avoidance provisions: p 89. [22] The Commission recommended the inclusion of anti-avoidance provisions in a uniform law based on the New South Wales provisions: p 93. Some additional issues were considered by the Queensland Law Reform Commission in a supplementary report to the Standing Committee of Attorneys-General in July 2004, 17 but this did not alter the basic thrust of the earlier report: p iii. As far as I am aware, however, these legislative reforms have not been progressed in Queensland at all. The omission of even the most basic anti-avoidance provisions from the family provision legislation in this state remains, in my opinion, a continuing serious deficiency in the legislation. [23] In these circumstances, it is unsurprising the courts have been willing to attempt to deal with situations where property has been distributed from the estate so as to defeat an application for family provision, by granting relief against the executor personally. I have already mentioned some of these cases. In Re McPherson [1987] 2 Qd R 394 Connolly J said at page 398-9: The act does not of its own force impose any obligation on personal representatives in respect of distributions which may have the effect of defeating claims or possible claims. However, that such an obligation may arise is recognised in the cases collected by Gibbs J in Donkin at p 114. To these may be added Re Gimblett [1960] NZLR 664 at 666 and Re Ralphs [1968] 1 WLR 1522 at 1525. In that case by the time the application was made the estate had been entirely distributed, but the steps taken leading to the distribution of the estate were all done on notice to the applicant s solicitors, so there was nothing clandestine in the executors actions. An application for provision out of the estate was dismissed, though his Honour expressed no view as to whether the applicant could make out a claim against the executors: p 400. 16 Queensland Law Reform Commission miscellaneous paper no. 28. 17 Queensland Law Reform Commission report no. 58.
9 [24] The reference to R v Donkin at p 114 was the reference to a statement of Gibbs J in that case where, after noting that an order could only be made in respect of assets remaining in the testator s estate, his Honour added: I say nothing of course of the position that would arise if the distribution were made before six months had elapsed from the date of probate, or even afterwards with notice of an impending claim under the Act. 18 His Honour cited authority from New Zealand and England, including the decision of the Privy Council in Guardian Trust and Executors Company of New Zealand v Public Trustee of New Zealand [1942] AC 115, where it was said at 127: 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 to be well founded. [25] In that case, the executors had paid out pecuniary legacies after notice that next of kin intended or contemplated applying for revocation of the grant of probate on the ground of want of testamentary capacity. After such a proceeding had been brought, successfully, the executors were found personally liable for the sums so paid out. 19 [26] Hence in Re Hill (supra) where the executor had transferred the property to himself within six months from the date of death, and indeed within three months from a notice of a proposed application under the then Act, an order was made against him personally to the extent which would otherwise had been made out of the estate. In Re Faulkner, where an application had been made within time and a directions order had been made, and the estate was then wholly distributed, and it was held an order could be made under the Trust Act 1973 s 8 against the beneficiaries to whom the real property from the estate had been transferred, that the properties be transferred back to the estate. The effect of the order would seem to be that after that transference there was again property in the estate from which provision could be made. In that matter his Honour relied particularly on the Privy Council decision, and Re Simson dec (supra), Re Crowley [1949] St R Qd 189 at 192, and Re Winwood dec [1959] NZLR 246. However, as pointed out by Muir JA in Curran (supra) at [47], none of these was a case where the distribution was made after the time for making an application for provision out of the estate had expired. [27] One of the matters referred to by Muir JA in Curran was Blunden v Blunden [2008] SASC 286. In that case the estate was distributed within the six month period during which an application for provision could be made, but the application was not in fact made until after that period had expired. There was power to extend that period, but only if the application for extension was made before final distribution of the estate: [18]. In that case it was held that the executor was protected by a particular section of the applicable statue, which is not in the same terms as s 44 of the Queensland Act, so that there could be no question of personal liability on the part of the executor. Leave to amend to add a claim against the executor personally was therefore refused. It appears to follow however from what was said in that case that if the executor had not been within the terms of the applicable section of that statue he would have been 18 At that time the application had to be made within six months of the date of the grant in Queensland of probate of the will unless the court directed otherwise: Testator s Family Maintenance Act 1914 s 3(8). 19 Reference may also be made to the statement in Re Simson dec [1950] Ch 38 at 42-3.
10 personally liable, if the application had been made within time and the applicant had suffered loss as a result of the disruption. The decision left open the liability of an executor who was not within the terms of the statutory protection where an application was brought out of time. [28] The analysis was similar, and the result the same, in Younan v Younan (No. 2) [2015] VSC 549. The case is interesting however because there was some discussion of the effect of s 99A of the Administration and Probate Act 1958, which is similar to s 44 of the Queensland Act, though not the same. One matter noted by his Honour was that provisions such as these have received very little judicial attention, and nothing determinative has been said about them; there was no Victorian authority on the Victorian sections: [13]. In that particular matter there was an argument about whether the application had actually been made within the statutory limitation period, but in the alternative it was argued that if it had not been, there should be an extension of time. The court held that the application was in fact outside the period allowed for bringing such an application so that an extension of time was required, but that there was no power to grant the extension under the statute. Nevertheless his Honour said something about the liability or potential liability of executors, at [9]: It is well established the executors who carry out early distribution of an estate, especially with notice of an intended application for family provision, are at risk of personal liability to a successful applicant. 20 [29] His Honour also said at [24]: In support of this submission, counsel for Mona called in aid the many statements of distinguished judges decrying the practice of making early distributions, especially in the face of a pending or impending application for family provision. While I too would decry this practice, and add a wish that courts be given power to do more about it, under the present law there is no absolute prohibition on such distributions. It has not been held that a premature final distribution, by which I mean one made before six months after the grant of probate and in the face of a pending or impending application for family provision, is to be regarded as improper and therefore not a final distribution within s 99, and I am not at liberty so to hold. True, executors are at risk of personal liability where a successful application is subsequently made. 21 [30] His Honour went on to point out that the effect of the distribution was that there was a jurisdictional bar to an application for extension of time. It seems to me that in this matter his Honour went further than in Blunden, and indicated that in the circumstances there was a personal liability on the part of the executors, even though an application under the family provision sections could not be made. That would be consistent with the discussion of Muir JA in Curran, discussed earlier. It is I think of some significance that in Curran his Honour referred specifically to the fact that at the time the distribution was made in that case the personal representatives had understood for a substantial period that no claim for family provision would be made. If the mere fact that the nine month provision referred to in s 44(3)(b) of the Act had 20 Citing Re Simson; Blunden; Curran. 21 Again citing Re Simson; Blunden; Curran.
11 expired was enough to ensure that no action would lie against the personal representative under that section, one would have expected his Honour to say so. [31] When considering the application of s 44(3), it is significant to note that it applies only to a distribution properly made by the personal representative. I am not aware, of any authority which establishes just what is meant by a distribution properly made, or which, more importantly, shows that a distribution will be properly made once the nine month period has expired even if there is every indication that an application under s 41 is to be made. In the light of the authorities referred to earlier, and the strong statements against distributing assets from an estate where there has been notice of a claim against the estate, it must be at least fairly arguable that a distribution as soon as the nine month period has expired is not one properly made, so as to protect an executor from personal liability. [32] Even apart from that consideration, however, in my opinion there is another factor which may at least serve to strengthen an argument that the distribution was not in the present case properly made. That arises because, in response to the notice of the claim, the executor invited the applicants to attempt to negotiate a settlement of the claim without resort to litigation. At the least, this amounted to an acknowledgement that the applicants are persons entitled to claim. In those circumstances, it seems to me that there is some analogy to the cases in relation to claims for damages for personal injuries, where an insurer, having been given notice of the claim, has admitted liability and has invited the lawyers for the claimant to attempt to resolve the claim by negotiation. [33] There is a line of authority that in that situation, if the attempts to negotiate extend beyond the expiry of the limitation period, the insurer will not be entitled to rely on the expiry of the limitation period as a defence if the negotiations are ultimately unsuccessful and proceedings have to be commenced. In Newton, Bellamy and Wolfe v State Government Insurance Office [1986] 1 Qd R 431, it was held that in those circumstances there was an agreement between the parties which contained an implied term not to plead the statute of limitations. It may be that there would be some difficulty in spelling out a contract in the present case from the correspondence, but in a subsequent case, Morris v FAI General Insurance Co Ltd [1996] 1 Qd R 495, the matter was put on the basis of estoppel. [34] In Morris the judge at first instance held that the relevant letter from the insurer did not amount to a contract but that there was an estoppel based on the view that it was reasonable for the plaintiff to rely upon the appellant s acceptance of her claim for personal injuries as indicating an admission of liability, and an indication of the defendant s intention not to rely upon the limitation period: p 499. Two members of the court in the joint judgment said at p 501: Once one accepts that the assumption mentioned by the primary judge was adopted by the respondent as a result of the letter of 11 September 1987, the question becomes whether it would be unjust and oppressive on the part of the appellant to depart from it. It was not necessary for the respondent to show that every recipient of such a letter would treat it as making the institution of proceedings unnecessary; it is enough that the respondent did so. Then the appellant s difficulty is that its letter of 11 September 1987 is well capable of conveying to a prospective plaintiff that liability will not be disputed and that it is unnecessary to institute the proceedings
12 threatened by the letter to which the appellant s letter was an answer. Further, it must have been evident to the appellant that its letter could give rise to the very assumption which the respondent adopted; [counsel for the appellant] stressed that people involved with litigation of this sort would be familiar with the Giblin case, in which a similar letter led to the identical assumption. Subject, then, to the question of detriment, it must follow that a departure from the assumption thus induced would be unconscionable and cannot be permitted. 22 [35] That decision was cited with approval by Chesterman J, with whom the other members of the court, agreed in Lindsay v Smith [2002] 1 Qd R 610 at 618-9. The main point in issue in that decision was whether the position had been changed by the terms of the Motor Accident Insurance Act 1994. In that case the court upheld the finding that there was both a contract and an estoppel: [38]. I am not aware of any later decision which would modify the effect of these decisions in that area. [36] Although there cases arose in the context of an admission of liability, either within or outside a statutory framework, it does not seem to me to be essential that there be an admission of liability for an estoppel to arise. The position would I expect be different in relation to a contract, where it is alleged in effect that there is a contractual entitlement to reasonable damages arising from the admission. In all of the cases however there was more than a bare admission of liability; there was an invitation to attempt to resolve the claim through negotiations. In my opinion the effect of these decisions is that an invitation to attempt to resolve a claim by negotiation without resort to litigation implies a representation that the party issuing the invitation will not, without reasonable notice to the claimant, act so as to prejudice the position of the claimant in the foreshadowed litigation if the attempt to negotiate proves to be unsuccessful. [37] There is this difference in the position so far as estoppel is concerned: in relation to a claim for damages for personal injury, the decision whether or not to plead a defence under the Limitation of Actions Act is a matter within the hands of the defendant, and therefore a matter which can be the subject of a binding estoppel. On the other hand, although the attitude of the respondent is relevant on an application for an extension of time under s 41(8), it remains a matter within the discretion of the court. More importantly however is the question of whether the executor will preserve the estate. If the estate remains in the hands of the executor and hence available for an order under s 41, and if the reason for the failure to commence proceedings within time was that the parties were attempting first to negotiate a resolution of the claims without resort to litigation, at the invitation of the executor, I think it likely that a court would grant a reasonable extension of time if ultimately the negotiations broke down and it was necessary to have to resort to a proceeding in court. It is important, particularly in smaller estates, for parties to resolve claims by negotiation without resort to litigation, an approach supported by the court. 23 [38] I do not want to say anything too definite in relation to this issue, partly because the question of estoppel was not fully argued before me, and partly because this is an application for summary dismissal, not an occasion when I am deciding whether or not to grant any and what final relief. The significance of an implied representation 22 Pincus and Davies JJA; the third member of the court, Fitzgerald P agreed, adding that the alternative outcome would produce an injustice: p 497. 23 See for example Practice Direction No. 8 of 2001, with its emphasis on ADR.
13 along the lines indicated may be to give rise to an estoppel against the first respondent, for example preventing her from relying on the distribution of the estate for the purpose of defeating the application. Alternatively, it may justify an order such as was made in Re Faulkner (supra), which would have the effect of reconstituting the estate so as to enable an order to be made under s 41. Or it may mean that an application could be successfully made against the executor personally, on the basis that the estate had been distributed in the face of notice of an impending claim, where there was no ground for thinking that no application would be made under s 41, bearing in mind that an application can be made out of time and the court has a discretion to extend time, where the executor did not have the protection of s 44(3) because in such circumstances the distribution was not properly made. Any of those outcomes is at least fairly arguable. [39] As noted in Younan (supra), there are many statements of distinguished judges decrying the practice of making early distributions especially in the face of a pending or impending application for family provision. Given the circumstances here, I certainly regard the behaviour of the executor as disgraceful. To permit such behaviour to defeat the applicant s claims entirely would in my opinion produce an injustice, something which courts should not encourage. 24 In these circumstances, I certainly could not be satisfied with the necessary degree of confidence that the applicants claims will be unsuccessful 25, and the executor s application must be dismissed. The cases to which I have referred however emphasize that there is a clear distinction between the grant of relief under s 41 and the grant of relief against the executor personally, and for that reason the first respondent ought to be before the court in her personal capacity as well as in her capacity as executor, so that both claims can be pursued in the one proceeding, without adding further to the costs which have already been incurred in relation to this dispute. Costs should follow the event. Given the financial position of the estate, at least on a prima facie basis, there would be little point in making an order for the applicants costs of this application out of the estate, and in those circumstances they ought to be paid by the first respondent personally. [40] Finally, I would add this comment. There would have been no seriously arguable ground in this matter for the summary dismissal of the application on any basis other than that the estate had been essentially already distributed. This is certainly not a case where the applicants claims to an entitlement to proper provision out of the estate of the deceased are so weak as to justify summary dismissal. Without going into the merits of the application in detail, which did not occur during argument, it strikes me as a conventional application of a kind frequently made, which frequently result in a compromise on a commercial basis, particularly in the case of a small estate, as this is. In my opinion these claims should be readily susceptible of settlement on a commercial, pragmatic basis, and would easily be settled if the first respondent were persuaded to abandon reliance on overstated correspondence, and shabby tricks. I hope that, ultimately, good sense will prevail. [41] I order that the first respondent be joined as a party to the proceeding in a personal capacity. The application filed 7 December 2015 is otherwise dismissed. I order the first respondent personally to pay the applicants costs of the application. 24 Morris (supra) at 497 per Fitzgerald P. 25 Atthow v McElhone [2010] QSC 177 at [19], [29].