English v Stewart

The Plaintiff, Nola May English, is the administrator of the estate of Vivienne Violet Snape (the deceased). The deceased died, intestate, on 30 March 2017. This Court granted Letters of Administration of her estate to the Plaintiff, a cousin of the deceased, on 8 April 2020.

At the time of the grant of administration, the estate was said to have an estimated value of approximately $3.1 million, comprising three parcels of real property in Gunnedah ($885,000), money in bank on deposit ($2.21 million) and shares in a public company ($9,470).

By Summons filed on 23 November 2021, the Plaintiff sought an order pursuant to s 93 of the Probate and Administration Act 1898 (NSW) (the PA Act) that the Defendant be barred from making any claim against the Plaintiff, as administrator of the deceased’s estate.

The Defendant named in the Summons is Donald Richard Charles Stewart. He asserted that, through his parents, he had a close familial relationship with the deceased for many years, and, in circumstances to which I shall return, that he has a claim against the estate of the deceased. In April 2020, he was said to be 73 years old.

So that the application made can be considered in its context, it is next convenient to set out the background to the Plaintiff’s application.

The Plaintiff, by her solicitors, McArthur Legal Services (McArthur Legal), sent the Defendant a letter dated 16 October 2017. A copy of the letter is not in evidence, but it is referred to in a letter dated 23 August 2018 from Mertens Lawyers (Mr H G Mertens), who then acted for the Defendant.

The letter dated 23 August 2018, stated that those solicitors were “assisting Donald Stewart to assess his prospects of a claim in relation to the estate”. A request was made that until the claim was resolved, the Plaintiff not distribute the estate of the deceased. The solicitor’s letter also stated that the solicitors “understand that Mr Barry Thomson also has a claim pending”.

The next correspondence in time, which is in evidence, is a copy letter dated 10 June 2020 from Mertens Lawyers to McArthur Legal. Attached to the letter were “1. Statement and Claim by Donald Stewart; 2. Copy of receipts Lightfoot Funerals Gunnedah; 3. Copy of Northern Daily Leader article; 4. Letter from Ms Sandra Robinson dated 18 June 2019”.

The “Statement and Claim” was written in the first person, signed by the Defendant and was dated 3 April 2020. However, it was not prepared as an affidavit and its contents were not verified. It comprises 6 closely typed pages, the content of which it is not necessary to repeat in any detail. The other three documents were provided “by way of corroboration”.

The letter from Mertens Lawyers went on to assert that the Defendant had:

On 16 June 2020, McArthur Legal responded, in writing, to Mertens Lawyers informing it that there were claims made by Mr and Mrs Thomson in proceedings in the Equity Division, and that there was the possibility of another claim, which was anticipated from Mr and Mrs Holloway. (The nature of the claims was not identified.) The letter stated that it had been sent as “a courtesy to you as, if all claimants file proceedings against the Estate, [we] would anticipate [the] Court joining them for a single proceeding.”

It appears that on 20 July 2020, Mertens Lawyers sent an email to McArthur Legal requesting “a copy of Mr Thomson’s summons” as it would “assist … greatly”. The request was refused, although a copy of the Inventory of Property in the estate of the deceased was provided.

On 26 August 2020, Mertens Lawyers informed McArthur Legal that the Defendant “has instructed he will not be proceeding with a claim against the estate”. In response, on 27 August 2020, McArthur Legal, wrote an email to Mertens Lawyers proposing that there be a deed of release entered into in relation to the Defendant’s claim.

On 28 August 2020, Mertens Lawyers responded in the following terms:

In February 2021, McArthur Legal were contacted, by email, sent from Mark Merrifield (Mr Merrifield), who stated that he was a friend of the Defendant and that he was writing on the Defendant’s behalf. Between 12 February 2021 and 7 July 2021, McArthur Legal exchanged emails with Mr Merrifield. An email sent by Mr Merrifield on 8 April 2021, included the statement that “Mr Stewart is now investigating his options for pursuing this claim”. However, the email did not identify any such steps that were being taken.

In the meantime, on 18 May 2021, McArthur Legal, on behalf of the Plaintiff, published a Notice of Intended Distribution of an Estate via the Online Registry website of the Supreme Court, in accordance with s 92(1) of the PA Act. The notice was in the approved UCPR form 114, and was in the following terms:

The final email dated 7 July 2021, from Mr Merrifield, stated that the Defendant had been unwell and was recuperating in Boggabri.

The evidence does not disclose any further correspondence from, or on behalf of, the Defendant.

Despite the passage of time since he first asserted that he had a claim against the estate of the deceased, the Defendant has not commenced any proceedings. The only elaboration of the nature and bases of his alleged claim was as set out in the document entitled “Statement and Claim” dated 3 April 2020 and in Mr Merten’s covering letter dated 10 June 2020, provided to the Plaintiff’s solicitors.

In her affidavit made on 6 December 2021 filed in support of the Summons, at [8], the Plaintiff states:

On 23 July 2021, Tomislav Gajic, a process server, served the Defendant, personally, with a notice dated 28 June 2021 pursuant to s 93(1) of the PA Act, calling on the Defendant to take proceedings to enforce his claim.

On 5 August 2021, McArthur Legal sent a letter dated that day, by express post, to the Defendant, at his place of residence, enclosing a copy of the affidavit of service of the s 93(1) notice.

There is no evidence that the Defendant responded orally, or in writing, to the notice or to the correspondence.

During the 3 months following the date of service of the notice, and thereafter, the Defendant has not taken any proceedings to enforce his claim.

On 22 December 2021, Roderick Bruce Duncombe, a licensed process server, served the Defendant, personally, with the Plaintiff’s Summons.

The Summons disclosed that it was returnable, in the Succession List, on 31 January 2022. The Defendant had not, and still has not, filed an Appearance in the proceedings, and he did not then appear.

McArthur Legal sent a letter dated 31 January 2021, to the Defendant, seeking his acknowledgement of receipt of the Summons and his consent to the orders set out therein. There is an affidavit of service sworn on 9 February 2022, of Mr Duncombe, deposing to service upon the Defendant of the letter and a copy of the Summons, at Glentarkie Aged Care Living, at Boggabri, personally, on 7 February 2022.

Mr Duncombe states that the Defendant responded that he refused to provide the acknowledgement or his consent and that “I will speak to my lawyers who are in the UK”. The Defendant was also notified in the letter that the proceedings had been stood over to Monday, 14 February 2022.

Once again, the Defendant did not appear, personally, or by a legal representative, on this occasion. So far as is known, nor has the Defendant, communicated, otherwise, with the Plaintiff’s solicitors or the Court.

On 14 February 2022, the matter was referred to Chambers, in order to save delay, and unnecessary costs being incurred by setting the matter down for a hearing. The Court directed the Plaintiff to deliver, in hard and soft copy, an outline of submissions, which was to include an index of affidavits upon which reliance was to be placed, by 4:00 p.m. on Friday, 18 February 2022. The direction was complied with and I have carefully read the written submissions that were provided.

Rule 6.1 of the Uniform Civil Procedure Rules 2005 (NSW) (UCPR), relevantly, provides that except by leave of the court, a party may not take any step in proceedings (including any appearance in court) unless the party has entered an appearance in the proceedings. UCPR rule 6.10(1)(b), relevantly, requires an Appearance to be filed, in the case of proceedings commenced by summons on or before the return day stated in the summons. In the circumstances, the defendant is not an "active party" in the proceedings (UCPR r 1.2).

I am satisfied that all reasonable efforts have been made to bring the commencement, and the nature, of the proceedings, as well as the contents of the Summons and the principal affidavit of the Plaintiff, and also the dates on which the matter has been listed in the Succession List, to the attention of the Defendant. In light of all of the evidence, I am also satisfied that the Defendant has, for some time, continued to ignore contact made with him and has chosen to not engage, at all, in the litigation.

The Plaintiff submits that, in the circumstances of this case, it is appropriate for the Court to make an order under s 93(2) of the PA Act barring the Defendant’s claim. She submits that she has good reason to seek the order. Having been on notice of the Defendant’s “claim”, before the notice of intention to distribute the estate was published, s 92(2) makes the Plaintiff, as administrator, liable with respect to the distribution of assets affected by the claim if it were proved. An order under s 93(2) will relieve her of that risk.

It is also submitted that the Defendant has had sufficient opportunity, over some years, to pursue his claim. Furthermore, he has been on notice, since July 2021, of the Plaintiff’s intention to seek an order barring his claim, and has been personally served with the documents informing him of the relief that she has sought.

Very fairly, if I may say, the Plaintiff has stated that, in the event that the Court grants the relief sought, she does not seek an order for costs against the Defendant, but does seek an order that her costs, calculated on the indemnity basis, of the proceedings be paid out of the deceased’s estate.

Section 11 of the Supreme Court Act 1970 (NSW) provides:

Under s 11, there is no restriction on where the Supreme Court may exercise its powers, apart possibly from constitutional limits, not relevant in this case, requiring there to be a nexus with New South Wales. This is apparent from s 11(2) of the Supreme Court Act, which, by the use of the phrase “or otherwise”, contemplates no restriction on where the business of the Court might be conducted: King Investment Solutions v Hussain (2005) 64 NSWLR 441; [2005] NSWSC 1076 at [147] (Campbell J). Indeed, the section specifically “abolishes the distinction between court and chambers”: Hassan v Sydney Local Health District (No 4) [2021] NSWCA 187 at [9].

In addition, the business of the Court, whether conducted in court, or otherwise, is taken to be conducted in court.

I should also refer to s 71 of the Civil Procedure Act 2005 (NSW), which section permits the business of a court, in relation to any proceedings, to be conducted in the absence of the public, “...(f) if, in proceedings in the Equity Division of the Supreme Court, the court thinks fit”.

Whilst a chambers hearing is in private, in the sense that members of the public are not given admission as of right to the courtroom, dealing with a matter “in chambers” does not mean that the proceedings are dealt with in secret. To deal with a matter in chambers means no more than a less formal procedure may be adopted by the Court where there is no opposition to the Court making the orders sought: Le Grand v Criminal Justice Commission (No 2) [2001] QCA 432 at [19] (White J with whom Davies and Williams JJA agreed).

In the Succession List, the Court, frequently, makes orders in chambers. The procedure enables matters to be determined informally and expeditiously. Dealing with the matter in chambers still requires the documents in the Court file, where relevant, to be read, and those documents to be identified in the Court’s record of proceedings: Kelly v Kelly (2019) 17 ASTLR 429; [2019] NSWSC 994 at [79].

In the present case, having regard to the apparent lack of opposition to the orders sought, I am satisfied that it is appropriate to deal with the matter in this way. That determination will still enable the Court to deal with the proceedings justly and at proportionate cost.

I am also satisfied that the Defendant has had adequate notice of the application and has done nothing to advance any claim that he asserts he has against the estate or to defend the current proceedings. Indeed, other than making his assertions in correspondence, there has been a complete failure by him to engage in the processes of the Court.

It is next convenient to refer to the legal principles that apply in such an application.

One starting principle that is to be kept in mind is that an executor or an administrator, in administering an estate, is responsible for the proper distribution of the assets amongst those entitled to them, whether creditors or beneficiaries. The creditors of the deceased and the estate must be paid in priority to the beneficiaries. If the executor or administrator fails to fulfil her, his or its, obligations, she, he or it, may be personally liable. Yet, the duty placed on the executor or administrator to pay the debts and liabilities of the estate is not an absolute one.

Section 92 of the PA Act, relevantly, provides:

Section 92 is designed to enable an executor or administrator of an estate to distribute the assets of an estate to the beneficiaries leaving out of account any claims of which she, he, or it, does not have notice. In this way, the executor or administrator may distribute the assets free of the risk that she, he, or it, will remain liable to pay creditors of which she, he, or it, has no notice, by means of the publication of the approved notice, and delaying the distribution of the assets for the period required by the section.

Thus, at least one purpose of s 92 is to facilitate the due administration of the deceased’s estate.

As will be appreciated, the section does not apply to a claim of which the executor or administrator, at the time of distribution, had “notice”. In Scottish Equitable Life Assurance Society v Beatty [1889] 29 LR (Ir) 290, Fitzgibbon LJ wrote, at 298:

There is no definition of “claims” in the PA Act. However, a wide view has been taken of the word. In McGrath v Troy as administratrix of the estate of the Late Warren Terence Wade [2010] NSWSC 1470, White J, in a case concerned with ss 92 and 93, wrote at [92]:

At [99], his Honour added:

For the purposes of s 93, a claim against the estate not only includes a claim by a creditor, but also includes claims by the deceased’s next of kin or a legatee: Aitken; Re Maier v Hearne [2020] VSC 432 at [35] (McMillan J).

An executor or administrator cannot disregard the claim, because she, he or it, honestly believes that the claim is without substance: Guardian Trust & Executors Company of New Zealand Limited v Public Trustee of New Zealand [1942] AC 115 at 128.

Thus, if the executor or administrator knows, or has notice, of a claim, then she, he or it distributes at her, his or its, peril. If the executor or administrator wishes to bar a claim of which he, she, or it, has notice, then he, she, or it must proceed by giving notice under s 93 of the PA Act, the effect of which would require the claimant to institute a proceeding within three months, failing which the claim would be barred.

Section 93 of the PA Act relevantly provides:

It can be seen that s 93 provides a mechanism for giving reasonable notice to a claimant to prosecute the claim, and, in the absence of such proceedings being commenced, to obtain an order from the Court barring the proposed claim. By s 93, relevantly, the executor or administrator is relieved from liability for claims of which she, he, or it, has had notice, if the necessary steps are taken and, not being the NSW Trustee and Guardian, she, he, or it, subsequently obtains the order of the Court barring the claim.

Thus, a notice given under s 93 is not designed to give to an executor or administrator a means of determining questions that have arisen in the course of her, his, or its, administration, as to her, his, or its, rights or obligations. It has a different object. Having made up her, his, or its, mind that a claim against the estate is not maintainable, the executor or administrator is faced with the difficulty, that if the claim is disregarded and the estate property is distributed, an action might subsequently be brought against the estate, and if she, he or it, were wrong in the opinion upon which she, he or it had acted, would find herself, himself, or itself, liable to pay the quantum of the proved claim out of her, his or its, own pocket.

In In the Will of Walker (1943) 43 SR (NSW) 305, the relevant notices calling on the defendants to take proceedings to enforce their respective claims by instituting proceedings within six months had been published, but neither of them had done so. Nicholas CJ in Eq held that the claims of the two respondents should be barred. His Honour wrote, at 307:

In In re Long (decd) [1951] NZLR 661 at 672, the New Zealand Court of Appeal summarised the conclusions which were reached following the review of the case law relating to an equivalent section and said that the section:

In Olsen v James [2020] NSWSC 1015, Parker J at [118] described the s 93 procedure as “the most direct way of bringing the question about the potential claim … to a head”. It requires a potential plaintiff to “put up or shut up”, particularly in respect of allegations which impact on the proper administration of the deceased’s estate.

His Honour had earlier written in Application of Lewis; Estate of the late Shirley Jean Coleman [2020] NSWSC 192 at [21], that if the procedure were followed and no claim were brought within the three-month period, then the administrator could make an application for a barring order, which would:

Ordinarily, the service of a s 93 notice, and the failure of the person upon whom it is served to prosecute the claim, provides a jurisdictional basis for the court to then make an order barring the claim, if in the circumstances the court thinks that is appropriate.

Of course, if the s 93 notice is given and proceedings are then brought in response to that notice, no question of protecting the executor or administrator will arise. The executor or administrator will simply defend those proceedings in the usual way.

There are a limited number of reported decisions on an application under s 93. It seems to me that the following procedure and principles should be remembered in an application to bar a claim:

With these principles in mind, the question the Court must answer is whether the threatened claim by the Defendant should be barred.

The documents submitted to the Plaintiff, by the Defendant’s solicitors, satisfies me that the Plaintiff was given notice of “a claim”. It is to be remembered that the notice of claim submitted to the administrator needs not be formal, and here, some particulars of the Defendant’s claim were also provided to her.

Having read the evidence, I am satisfied that:

The threatened claim by the Defendant should be barred. The deceased died almost 5 years ago. The administration of the estate has proceeded since then. Notice of the claim was given within 18 months of the deceased’s death and particulars concerning the claim were provided to the Plaintiff, as administrator, over 2 years later. In this way, the Plaintiff had notice of the Defendant’s claim.

The Defendant has known that the Plaintiff disputed his claim since at least July 2020, if not before that date. Then, at one time, the lawyers acting for the Defendant stated explicitly that his claim was not being pressed.

Virtually nothing has been done by the Defendant since that time and no explanation has been given going to why no steps have been taken to commence proceedings from when he had knowledge that the Plaintiff, as administrator of the deceased’s estate, was disputing the claim. All this reveals that the Defendant’s asserted claim has not been prosecuted with due diligence.

Even since July and August 2021, the Defendant has failed to take any steps to progress his claim and even now, over 6 months since the notice was served upon him, he has still done nothing. He has provided no, let alone no satisfactory, reasons for his failure to do so.

The proceedings were commenced in November 2021, were served in late December 2021 and have been before the Court twice since then, with no appearance by, or on behalf of, the Defendant. I am satisfied that the Defendant does not appear to wish to proceed with any claim that he has asserted that he has against the estate, and I am satisfied the Plaintiff has taken more than reasonable steps to advise the Defendant of these proceedings and to provide him with an opportunity to be heard.

I am satisfied that the actions of the Defendant have caused some delay in the administration of the deceased’s estate. In all the circumstances, the orders sought by the Plaintiff should now be made. Otherwise, it would be oppressive and prejudicial not only to the administrator, but also to those entitled to the distribution of the estate.

The Court in Chambers: