Executor Granted Permission to Issue Subpoenas

The court granted leave for a beneficiary to issue subpoenas seeking information about the deceased's superannuation benefits from their employer and any related funds, in order to determine the solvency of an estate. The matter was directed towards further steps including mediation if necessary.

New South Wales Supreme Court

CITATION : The Estate of [NAME], late of [NAME] [2010] NSWSC 1057

HEARING DATE(S) : 10 September 2010

JUDGMENT DATE : 13 September 2010

JUDGMENT OF : Slattery J at [ADDRESS] orders:

1. Grant leave to the plaintiff to issue a subpoena to [COMPANY] returnable before the Registrar in probate.

DECISION :

2. Further grant leave to the plaintiff to issue a subpoena to any industry or other superannuation fund identified by [COMPANY] in relation to the deceased.

3. Before exercising the leave granted in paragraphs 1 and 2, the plaintiff should attempt to ascertain from [NAME] whether such information is already available.

4. Order that the matter be re-listed before the Registrar in probate at a date to be fixed with a view to taking one or more of the courses outlined.

5. Direct the plaintiff to send a copy of this judgment by registered post to each of the defendants at their last known addresses.

CATCHWORDS : EXECUTORS AND TRUSTEES - very small estate - beneficiary seeks orders for passing accounts and completion of estate administration - estate may be insolvent - need to determine solvency to decide whether or not proceedings are futile - Civil Procedure Act, s 56 used to allow the issue of a subpoena for information as to solvency of the estate.

LEGISLATION CITED : Civil Procedure Act 2006, s 56

CATEGORY : Procedural and other rulings

Plaintiff- [NAME] PARTIES : First Defendant- [NAME] Defendant- [NAME](S) : SC 2008/304609

SOLICITORS : [redacted]

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION DUTY JUDGE LIST

SLATTERY J

MONDAY, 13 SEPTEMBER 2010

2009/112765 THE ESTATE OF [NAME], LATE OF [NAME]

EX TEMPORE

JUDGMENT 1 HIS HONOUR: This matter came before me in the duty list on 10 September 2010. The proceedings concern the administration of an extremely small estate. The plaintiff is one of the beneficiaries. The defendants are the executors. The Further Amended Summons seeks an order that the defendants verify, file and pass accounts and complete the administration of the estate. In default of the defendants doing so, the plaintiff seeks that the Public Trustee be appointed as administrator of the estate. [NAME], solicitor, appeared for the plaintiff. The defendants were not represented. 2 The press of business in the duty list on Friday, 10 September 2010 meant that I took the affidavits into evidence, but reserved consideration of them over the weekend. I am now in a position to give judgment. 3 The real question in this case is whether the plaintiff can obtain any relief at all. On the available evidence the estate is probably insolvent. One course may simply be to dismiss the Further Amended Summons on the basis that the plaintiff's claim for relief is futile. But the matter was barely argued in the duty list. So I am reluctant to do this. I have decided to give some directions to allow the plaintiff an opportunity to show why relief should be granted. If the plaintiff is not able to show that, the plaintiff himself may wish to have the Summons dismissed. Background 4 A little background is necessary. The deceased died on 1 May 2007 leaving a will dated 27 April 2007. Probate of the will was granted on 20 August 2008. The deceased's will appointed the defendants as executors; gave the deceased's Ford Falcon motor vehicle to the first defendant, [NAME]; gave his Toyota Hilux utility to the second defendant, [NAME]; and then divided the residue of his estate equally between his four children, [NAME] and [NAME]. At the time of his death the deceased lived in [NAME], a small hamlet close to the [ADDRESS] south of Mendooran, which town is itself south of Coonabarabran in mid-western New South Wales. 5 Complications arise in this small estate. At least one executor lives in Victoria. For a period of time the executors retained solicitors in Echuca, Victoria, [NAME]. That firm no longer acts for the executors. In June this year when informing the plaintiff that that [NAME] was ceasing to act, that firm provided information that it still held $5,183.77 in the firm's trust account after realizing all the estate's assets. But [NAME] foreshadowed that the estate faced anticipated further expenditure totalling $10,939.02. Of this anticipated expenditure, some $4,500 represents reimbursement of the executors for amounts they advanced on account of administration expenses. A sum of a little over $6,000 is also owing for the deceased's funeral. 6 Even if the executors forgo repayment to them of the advances they made to the estate, the amount in trust would still not cover funeral expenses. An application to Court for relief in these circumstances may seem surprising. But one is made, partly because the estate may not be as insolvent as these figures at first might suggest. 7 On 14 December 2009 the matter came before Palmer J as duty judge. It has been mentioned a number of times since then. On Friday it was referred to me in the duty list. It is important that issues relating to the administration of a very small estate like this be resolved as quickly as possible, so that further legal costs are not wasted. Three Issues of Concern 8 In the course of his short submissions I ascertained from [NAME] that there are really three matters which concern the plaintiff. The first is the plaintiff seeks completion of the administration of the estate. He seeks orders that the defendants verify, file and pass accounts and complete the administration of the estate. The background already shows that this may be a futile endeavour. 9 The plaintiff's second matter of concern is his contention that the executors are in possession of what he claims is his motor vehicle, a Toyota Hilux truck worth about $4,000. 10 The third matter which concerns the plaintiff is that he has reason to believe that the deceased had accumulated substantial superannuation benefits as a result of his employment with [COMPANY], which benefits have not yet been brought to account in the administration of the estate. There is no evidence before me in what capacity the deceased worked for that company or what were his net annual earnings. Administration of the Estate So Far 11 The executors have in fact progressed the administration of the estate. The executors filed with the Court an inventory of property which showed the estate had a total gross value of $63,623.30 of which the largest single asset was the deceased's home in [ADDRESS], [NAME], which upon the executors' estimate was worth $48,000. As it turns out, the property was worth much less than that. 12 The course of correspondence between the plaintiff and the defendants reveals the plaintiff asked for orders for administration of the estate and for access to accounts from about April 2009. During November 2009 the correspondence intensified in anticipation of the then forthcoming sale of the [ADDRESS] property in [NAME]. The executors' solicitors obtained a professional valuation of the property at $25,000. But the property could not be sold for even that sum. One of the executors, [NAME], offered to buy it. The plaintiff objected. [NAME] made clear that the sale of the [ADDRESS] property would finalise the estate. But they complained to the plaintiff about the amount of legal costs being generated by his resistance to the sale. 13 The [NAME] property was sold by auction just before Christmas 2009. [NAME]'s statement of account of 23 June 2010 shows, that the net proceeds of sale were only $12,248.91. That same statement of account showed that approximately $11,000 had been spent in legal fees by the estate. Thus the amount left in the [NAME] trust account largely represents the original money advanced by the executors to that firm. Almost the whole of the proceeds of sale of the [ADDRESS] property had been consumed in administration costs, experts fees and legal fees. 14 [NAME] ceased acting in the matter in June 2010. Their correspondence with the plaintiff since April 2009 shows their continuing efforts to contact their own clients and their difficulty in doing so. Resolving the Three Issues of Concern 15 On the first issue of concern, if the [NAME] accounting in respect of the estate is correct and, if there are no other assets available, or if the estate is insolvent, there seems little point in allowing this proceeding to continue. But the Court can utilise Civil Procedure Act, s 56 to give the plaintiff more information than he presently has about the estate's solvency to facilitate the just, quick and cheap resolution of these proceedings. 16 The second issue of concern relates to the Hilux truck. This is not a matter which should occupy the [ADDRESS]. I am not convinced that the plaintiff's claim to the truck has anything to do with estate administration. The plaintiff claims this truck is his. But it seems to be the very same Hilux truck which was bequeathed under the deceased's will to [NAME]. It would be reasonable to infer from the contents of the will that the deceased thought that the truck was his to bequeath. Even the correspondence written on behalf of the plaintiff in April 2008 claims that, in fact, the plaintiff lent $4,000 to the deceased to purchase the vehicle. It seems to me that the plaintiff's real claim is one in conversion of the vehicle, assuming that it is his. This issue can be adjudicated cheaply in the [ADDRESS] as a simple claim in conversion. 17 The third and final issue, concerns any superannuation payments made on behalf of the deceased by [COMPANY]. If there are no further superannuation funds now available the estate is probably insolvent; if there are it may be solvent. The plaintiff will keep asking for information about the deceased's superannuation money. The executors have not responded to the plaintiff's correspondence on this issue. The estate's solicitors have not confirmed that this issue has been investigated. They are no longer acting. Without the Court's intervention the plaintiff is unlikely to obtain any information about this issue. Conclusion and Orders 18 For the plaintiff to know whether or not these proceedings are futile is an issue of significance. I will allow the plaintiff leave to issue a subpoena to [COMPANY] or any superannuation fund into which that company paid the deceased's superannuation. Once the subpoena is answered the plaintiff will be able to work out whether the proceedings should be continued or not. 19 If the estate is insolvent or has no net assets the proceedings should be dismissed. If the estate is solvent then, the existing dispute should probably be mediated in the cheaply and informally as soon as possible. There is ample power for the Court to refer the matter to mediation: Civil Procedure Act, s 26. That mediation will take place in circumstances where the parties should be aware of the total value of the estate. The subpoena to [COMPANY] will allow these choices to be made.

20 I make the following orders: 1. I grant leave to the plaintiff to issue a subpoena to [COMPANY] returnable before the Registrar in probate.

2. I further grant leave to the plaintiff to issue a subpoena to any industry or other superannuation fund identified by [COMPANY] in relation to the deceased.

4. I order that the matter be re-listed before the Registrar in probate at a date to be fixed with a view to taking one or more of the courses outlined.

5. I direct the plaintiff to send a copy of this judgment by registered post to each of the defendants at their last known addresses. **********

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