[Heading references refer to the paragraphs or sections of the service for which the comment/update is relevant]

Chapter 4 Estate Administration

444 Distribution to beneficiaries
444.1 Preliminary considerations

Application of Doolan [2023] NSWSC 320 (5 April 2023). The testator had been a legal practitioner, practising principally in family law. The executors sought judicial advice because of concerns that he may have acted negligently, particularly in regard to prenuptial and cohabitation financial agreements. The issue was whether the executors would be justified in distributing the whole estate, valued at more than $6.5 million, without retaining an amount to cover any potential contingent liability arising from a claim against the testator for negligence.

The executors submitted an opinion from a senior counsel who expressed significant doubt as to whether a notice published pursuant to s 92, Probate and Administration Act 1898 (NSW) would protect the executors from all possible claims relating to the testator’s legal practice.

Senior counsel also expressed the opinion that, given the long period of time that the testator had practised as a solicitor, an audit of his files to assess the potential risk of a claim would be difficult, time- consuming and costly. Further, since the testator’s firm did not participate in the Law Society’s NSW Professional Standards Scheme from 2001 and 2006, the estate would not have the benefit of the cap on liability for any claims arising during those years.

Meek J made the following findings and observations:

•  There was no evidence that the testator had acted negligently. He had no history of claims made against him. His precedent agreements were revised constantly and did not exhibit any issues. His Honour considered the possibility of a claim made
  against the estate to be remote.
• While the executors were not presently aware of any specific claim, there was a possibility that they might have knowledge of circumstances that could give rise to a claim. His Honour accepted counsel’s proposition that a court could find a potential claim of which the executors presently had such sufficient knowledge and of which they were not protected by the publication of the s 92 notice. In any event, ‘the comments of Lindsay J in Re Yorke [[1997] 4 All ER 907] point up the fact that there are some types of contingent claims for which an advertising procedure as a means of protecting LPRs is not entirely apt because such advertising might not also give fair notice to potential claimants and a reasonable opportunity to bring forward their claims’.

The court advised and directed, pursuant to s 63, Trustee Act 1925 (NSW), that the executors would be justified in distributing the entire estate. The costs of the application were to be paid out of the estate on the indemnity basis.

Chapter 7 Family Provision 715 Considerations relevant to specific categories of applicant

1. 715.1 Widows/widowers simpliciter (whether first or subsequent) Kirk v Withington [2023] QSC 141 (27 June 2023). The applicant for family provision, Barbara Kirk (Barbara), and the testator, both widowed and each with three adult children, had ‘struck up a relationship’ in 1997, and later married. The respondents were the testator’s children, the executors of his will. The parties reached a settlement which was approved in the present proceedings.

The applicant and testator purchased a house in 2000 which they sold and purchased a residential unit (the property) in 2019. Both purchases were as tenants in common in equal shares. The estate was 4 valued at $771,226, and the testator’s half share of the property at $550,00. Under the will, the testator left his half interest in the property to his children, provided that Barbara be permitted to reside there for a minimum period of six months from the testator’s death. The property was then to be sold and the testator’s half interest in the sale proceeds to form part of the residuary estate.

Davis J made the following findings and observations:

• Under the will, Barbara became co-owner of the property with the testator’s three children who had the right to appoint a statutory trustee for sale.
• Barbara had ‘substantial assets’, including a property valued between $360,000 and $390,000, and almost $500,000 cash in the bank. She was aged 78 years, retired with limited income and suffering multiple chronic illnesses.

Orders were made that the applicant occupy the testator’s half interest in the property rent free, until the ‘distribution date’, subject to the conditions of her occupation. The distribution date was the date when the applicant ceased to occupy the property or the date of her death. It was ordered that on the sale of the property, the half share of the sale proceeds pass to the residuary estate, of which the testator’s children were the beneficiaries. The applicant was ordered to pay her own costs and the respondent’s costs were to be paid from the estate on the indemnity basis.

2. 715.5 Adult daughters Waters v Odell [2023] QDC 44 (14 June 2023). The applicant, Philippa Waters (Philippa), aged 64, applied for family provision from her mother’s estate. The respondent, Christine Odell (Christine), the second daughter of the testator, was the executor. The will provided that the estate, valued at approximately $480,000 at the date of death, 8 August 2020, be divided among the testator’s three children: $20,000 to Philippa and the residuary estate in equal shares to Christine and the third child, Rodney, aged 67.

The two principal issues were: from 1995, Philippa, a single mother with one child, had lived in a house purchased for her by her parents. In December 2019, she was told by her mother to vacate the house which was to be sold because her mother needed the money. It was Christine who demanded possession of the house in ‘a callous and hostile way’. Philippa vacated the house in January 2020. The second issue was the conduct of Christine in her dealings with her mother’s financial affairs. Christine had been appointed her mother’s attorney in 2002. In March 2020, the house was sold. From the sale proceeds of $724,608, Christine paid $74,608 to her personal account and the balance to her joint account with her mother.

Porter DCJ made the following findings and observations:

• The net value of the estate at the time of death was approximately $480,000. At the time of the hearing, it was $317,577. His Honour found that the $20,000 gift to Phillipa was ‘woefully inadequate’.
•  Allowing generously for the costs of administration, His Honour considered adequate provision for Philippa, at the date of the testator’s death, to be $330,000 in addition to her legacy of $20,000.
• Under s 41(1), Succession Act and in all the circumstances, a wise and just testator had a ‘compelling obligation’ to make provision of a house for Philippa, then to consider Rodney, if possible. Christine had a very modest claim.
• His Honour decided not to make a costs order at that stage. In the circumstances, orders would be made to allow for the impact of costs on the size of the estate. The question arose concerning the sum of $168,000, being the difference between the net funds at the date of death and at the date of the hearing. There was ‘a strong argument’ that funds, calculated at $139,454 and taken by Christine, be repaid to the estate.
• The contingent claims for costs were contested by each party. Assessing the costs might affect the size of the estate. Based on the analysis of notional provision from the estate at the date of death, His Honour concluded that where the estate was $300,000 or more, a sum of $300,000 was a proper payment to order for Philippa. Presently, the estate was over $300,000.
• His Honour considered $280,000 to be the proper provision from the estate. If after the costs orders, there was less than $280,000 in the estate, Christine would have to meet the provision order, if possible (see Official Receiver v Schultz [1990] HCA 45).

The court ordered that the applicant receive $280,000 in addition to the legacy of $20,000.

Practice Direction No 14 of 2023 – Supreme Court of Queensland 14 June 2023 The Wills and Estates List applies only to proceedings commenced or transferred to the Brisbane Registry. It does not apply to proceedings which can be conveniently dealt with in the Applications jurisdiction. ‘A proceeding will only be placed on the list if its nature and complexity warrant judicial jurisdiction’ (see www.courts.qld.gov.au).