Estate of Raynish

This judgment resolves another round in a bitter dispute between two sisters about their late mother’s estate.

The applicant is Ms Susan Shine. She was represented by Mr I Pike of Senior Counsel with Mr P F Santucci of Counsel. The respondent is Ms Jeannette Raynish. She was represented by Mr R Wilson of Senior Counsel with Mr N Bilinsky of Counsel. The parties’ late mother, Ms Helena Raynish, died on 6 September 2015, aged 93. Without disrespect, I shall refer to the various family members by their given names.

Probate of Helena’s estate was granted to Susan and Jeannette on 13 September 2016. They are co-executrices and each is a 50 per cent beneficiary. The estate is substantial, with a current value of nearly $11 million. Unfortunately, there is no love lost between Susan and Jeannette.

By notice of motion filed on 29 November 2017, Susan seeks these orders:

During the course of argument, in a process for which the parties and their lawyers are to be commended, the parties agreed that if the Court were minded to make an order for interim distribution, the amount of that distribution should be $4,452,942 to be divided equally between Susan and Jeannette. I will direct that the handwritten document setting out how that amount is calculated, entitled “Respondent’s Schedule”, which I have initialled and dated today, be kept with the Court’s file.

The debate before me ultimately focussed on two reasons why Jeannette argued that no interim distribution should be made (or at least why what was sought should be significantly reduced): that Susan was in contempt of orders made in related proceedings, or, further and alternatively, as a matter of discretion because of other proceedings in which Jeannette alleged Susan had breached her fiduciary duties to Helena.

For reasons which I will now set out, the Court does not accept either of these arguments. It is satisfied that an order for interim distribution should be made in the amount agreed by the parties.

Jeannette submitted that Susan was in contempt of consent orders made by the Court in related proceedings and that, accordingly, she should not be heard on her motion and that the Court had no discretion but to dismiss that motion: Young v Jackman (1986) 7 NSWLR 97 (“Young”).

The contempt was said to arise in this way:

Susan’s response to this submission was that the Withdrawal was made pursuant to the Compensation Agreement.

At this point it is appropriate that I record that by statement of claim filed on 3 March 2017 (the “Equity Proceedings”), Jeannette alleges that Susan is obliged to repay to Helena’s estate at least approximately $1.2 million which it is alleged Susan paid herself from Helena’s funds in breach of a fiduciary duty that she (Susan) is said to have owed to Helena. The Withdrawal is included as part of that claim. In the Equity Proceedings, Susan has admitted the Withdrawal, averred that it was made pursuant to the Compensation Agreement, and denied any breach of any alleged duty.

Because the Withdrawal is part of the Equity Proceedings, I wish to make it clear that the only issue upon which I am expressing a conclusion is whether or not, on the material before me, the Withdrawal is a prima facie contempt of the 17 June 2015 Orders. In my respectful view, it is not, because it is at least clearly arguable that if the Withdrawal was made under the Compensation Agreement, it constitutes part of Helena’s “reasonable living ... expenses” for the purposes of the 17 June 2015 Orders.

As Mr Pike SC submitted, the terms of the Compensation Agreement make clear that the rate of compensation was calculated by reference to care agency rates. Whether the care was provided by an agency or by Susan, it is well arguable that payment for that care was for living expenses, i.e. care that Helena needed to live. Putting it another way, the ambiguity in the expression “living ... expenses” in the 17 June 2015 Orders is sufficient to preclude something as serious as a finding of even prima facie contempt.

This conclusion means it is not necessary to resolve the precise status or effect of the rule or principle for which Young is said to stand. However, if it were necessary for me to do so, I would respectfully adopt the analysis set out in two more recent cases.

In Stokes (by a tutor) v McCourt [2013] NSWSC 1014, Lindsay J said:

That analysis was adopted by McDougall J in Stojic v Stojic [2018] NSWSC 723 (citations omitted):

Adopting the approach taken in those two cases, and on the assumption that the Court has a discretion even where there is a prima facie contempt established, I would not have dismissed the present motion but exercised the discretion to determine it for these reasons:

Mr Wilson SC submitted that, at least insofar as any moneys which Susan might owe the estate pursuant to a judgment in the Equity Proceedings was concerned, it was not correct to characterise the present application as one for interim distribution. He submitted that the approach which Susan was inviting the Court to adopt was to avoid or overcome her liability to account to the estate as a defaulting fiduciary for the full value of the claim. It was said that the proper approach was to require Susan, at least notionally at this stage, to account fully for the amount of her alleged liability. Mr Wilson SC argued that what was in fact being proposed by only allowing half of any such liability to be retained in the estate (on the basis that the other half of any such liability would be repaid to Susan as a 50 per cent beneficiary in the estate) was to offer a reward to a defaulting fiduciary. It was submitted that this was a discretionary basis on which any interim distribution should be reduced (at least in relation to the amount said to be owed in the Equity Proceedings was concerned).

Mr Wilson SC fairly conceded that he was unable to point to any authority in support of the proposition which he had advanced.

In response, Mr Pike SC submitted that the approach which Mr Wilson SC urged upon the Court was itself unprincipled. By that, I understood him to mean that Mr Wilson SC’s approach ignored the fact that Susan denied any liability in the Equity Proceedings. The estate would be sufficiently protected by an allowance being made in the amount retained to represent half of the liability which the evidence suggested Susan might have to the estate if judgment was ultimately entered against her in the Equity Proceedings.

I accept Mr Pike SC’s submission. In my view, the appropriate exercise of the Court’s discretion in an application under s 84 of the Probate and Administration Act 1898 (NSW) (the “Act”) is, as I will further set out in a moment, to ensure that the estate is fully protected against any contingencies that might arise in the course of its administration. In the present case that is satisfied by ensuring that the estate is credited with (and there is retained) half the amount which might be repayable by Susan to it pursuant to a judgment in the Equity Proceedings. To adopt any other course would involve the Court in the highly undesirable consequence of having to ascertain the merits or otherwise of the case brought against Susan in the Equity Proceedings. Nevertheless, the Court should approach an application of this kind recognising the practical reality that, even if the Equity Proceedings were to be determined against Susan, any amount which Susan had to repay to the estate would necessarily recognise that half of it was hers as a 50 per cent beneficiary. I accept Mr Pike SC’s submission that to adopt the approach urged by Mr Wilson SC would, in effect, punish Susan in respect of what is presently no more than an unproven and vigorously contested allegation.

Section 84 of the Act provides:

There was no dispute that the applicable principles for the making of an order under s 84 are set out by Barrett J (as his Honour then was) in Romano v Romano; Estate of Giacomo Romano [2004] NSWSC 775, in particular that the Court should act with “the greatest degree of conservation and prudence called for by the circumstances of the case” at [18].

There are some uncertainties about the future liabilities and entitlements of the estate. The parties have agreed an amount to be distributed which would leave an amount in the estate that I am satisfied would enable the estate to meet or have the benefit of those matters. The Court finds that the amount reflects the greatest degree of conservation and prudence based on the evidence and assuming that all the postulated contingencies (negative and positive) come to pass.

Against that background the Court is satisfied that it is appropriate for an interim distribution to be made in the amount agreed by the parties for these reasons:

Mr Pike SC submitted that costs should follow the event with orders that, insofar as any costs come out of the estate, they should not be visited on his client’s share. Mr Wilson SC submitted that each side had had a measure of success, that his client had been acting in the interests of the estate as an executrix and had not been unreasonable such that either each party should pay their own costs or that Susan’s entitlement be reduced to reflect her incomplete success.

The court accepts Mr Pike SC’s submission. Susan has succeeded in obtaining an order for a substantial distribution. There is no reason why costs should not follow the event. To some extent it is true to say that Jeannette’s role was as an executrix. That should be reflected by an indemnity from the estate. However, her role was also significantly, and to my observation primarily, adversarial. That should be recognised by orders that any indemnity should be limited to come from her share of the estate.

The orders and directions of the Court are: