Ella Dorothy Egberts v Shelley Lee Evans & Anor

These proceedings concern the estate of the late Harold Sydney Dwyer, who died on 11 November 2017, aged 82, and to whom I shall refer to as the “deceased”.

The deceased, by his will, appointed his daughters, Nancy Caroline Davis and Shelley Evans, as his executors. By his will, dated 8 August 2014, the deceased gave a life interest to his de facto Ms Ella Egberts, the Plaintiff, who is now 71 years of age, in the house which they had resided in for a number of years. He gave the residue of his estate to Ms Evans, Ms Davis and three other daughters, Ms Caley Causley, Ms Cindy Boyce and Ms Carlene Dwyer-Dockrey in equal shares. There was a gift to a Mr Clint Causley, a grandson, of some stock horses and equipment, but I am told that it is of very small value. Those items were excluded from the residue of the estate.

The estate is small, having a net value of approximately $480,000, after taking into account legal costs of the executors but not including the legal costs claimed by the Plaintiff, which I am informed are in the order of $56,000.

The parties took a number of steps in attempted resolution of the proceedings, including a mediation conducted by a solicitor in Coffs Harbour, at which a number of offers were made. Ultimately, the Plaintiff accepted an offer of compromise made by the Defendants. The offer which was accepted involves the payment of $175,000 to the Plaintiff, plus the payment of her costs as agreed or assessed.

The executors and the Plaintiff have prepared an agreement as to the orders that they seek to have made in the proceedings, but they have, quite properly, drawn the attention of the Court to the fact that two of the non-executor beneficiaries of the residuary estate, that is, Carlene and Cindy, have expressed dissatisfaction with the agreement reached by the executors. Hallen J, who manages the Family Provisions List, directed the attention of the parties to his decision in Sackelariou, Edward v O’Donnell; Sackelariou, George v O’Donnell [2018] NSWSC 1651, a case in which his Honour expressed the view that beneficiaries are entitled to be heard on the issue of whether orders should be made in accordance with an agreement reached between a Plaintiff and the executors: see, in particular, [76] - [84] of his Honour’s judgment.

In this case, his Honour directed that the matter be listed before me today for consideration of the opposition of the two beneficiaries, Cindy and Carlene. The question of whether, and to what extent, the Court should give consideration to beneficiaries who are not happy with the settlement reached by an executor is not without interest. There may be a difference in approach between the question of settlement between the estate and the claimant, on the one hand, and how the burden on the estate produced by such a settlement is to be borne, on the other.

There is no doubt that, on the authority of Bartlett v Coomber & Anor [2008] NSWCA 100, the Court has a residual discretion not to approve the settlement agreed between the claimant and executors. This was expressed by Mason P (with whom Hodgson JA and Bryson AJA agreed) at paragraphs [56] - [60] of that judgment, which was in the following terms:

Neither Cindy nor Carlene have chosen to appear, either by themselves or through legal representatives, to advance their contentions regarding the settlement. Mr Hadley pointed out that all of the parties are from the country and not resident in Sydney. The mediation which took place occurred in Coffs Harbour. Cindy and Carlene’s position concerning attendance today is contained in Annexure D to the affidavit of Mr Scott Matthew Flynn of 14 November 2018, in which Carlene says: “I think it best that the Court determine this matter on the papers at the listed time tomorrow.”

I note that the letter referred to in that email is a letter which was marked “without prejudice” and is not before the Court. That email to which I have just referred was a response to a letter from, or an email from, Mr Flynn, which is Annexure C to the affidavit of 14 November 2018, in which Mr Flynn advised Carlene and Cindy in separate letters that the matter would be listed today, that the Court had been informed of the objection to the orders for provision, and to the proposed burden of provision. The letter advised that the “proceedings remain listed on Thursday 15 November 2018, principally to enable you to have the opportunity to address the Court as your interest may be affected, if orders are made.”

I proceed on the basis that the non-executor beneficiaries, Carlene and Cindy, do have a right to be heard and that their position should be considered even though they have chosen not to appear. I note that neither Mr M. Hadley, of Counsel who appears for the Plaintiff, or Mr C. Birtles, of Counsel who appears for the Defendants, contended that I should proceed to make the orders without reference to the complaints by Carlene and Cindy made through correspondence.

Mr Birtles filed two affidavits of his instructing solicitor, Mr Flynn, one of which I have referred to already of 14 November 2018 and an earlier affidavit of 13 November 2018 setting out letters sent to and received from Cindy and Carlene. Mr Birtles also provided detailed and helpful written submissions as to why the settlement should be approved. He took me to those portions of the affidavits filed in the proceedings which deal with the financial position of the estate and each of the daughters, other than Shelley, who has filed no material relating to her financial position.

I also had the benefit of submissions of both Mr Hadley and Mr Birtles in the substantive proceedings, which were provided to the Court in advance of the hearing.

The correspondence from Carlene and Cindy, annexed to Mr Flynn’s affidavit, points to three different areas of concern on the part of Cindy and Carlene. One involves allegations of fact that the Plaintiff has more assets than she has revealed and that she is receiving more income than she has made known to the Court. The second area relates to the form of settlement, and the third area relates to how the burden of settlement should be borne by the beneficiaries.

The first area amounts to allegations of fact for which the executors say there is simply no proof. It appears from more recent correspondence that Carlene and Cindy do not now seem to advance this as a matter for rejecting the settlement. The second area relates to the form of settlement with the Plaintiff. There is evidence that Carlene and Cindy agreed to a settlement of up to $190,000 to be paid to the Plaintiff plus $25,000 of costs, but they revoked that agreement within a few weeks of having given it. They then advanced the contention that the settlement should be based on a Crisp order, by which the Plaintiff would obtain the life interest in alternative housing with a reversionary interest to the estate to be divided equally between the five daughters.

As in Bartlett (supra), the executors had the benefit of advice of a solicitor and barrister appearing, as did the Plaintiff. The Plaintiff preferred not to live in the house that was the subject of the life estate but, in any event, this option was removed if the executor’s legal costs were to be paid by the estate since there were insufficient funds to meet the legal costs of the executors.

There is insufficient evidence to know precisely what alternative accommodation, for the purpose of a Crisp order, would have cost out of the net proceeds of sale. In circumstances where a Crisp order is made, it is common for the Court to also make provision for a contingency fund. The closer the total amount required (for the Crisp order and the contingency fund) to the $420,000, the less that would remain available to the estate and, hence, to the beneficiaries at any time in the near future. I say $420,000 because I have taken into account, just as a rough indication, the amount of the prospective costs of the Plaintiff, which would very likely be ordered if the Plaintiff was successful in the proceedings.

There is a real benefit in the estate being finalised and in there being no continuing contact required between the Plaintiff and the executors and, indeed, between any other members of the deceased’s family. There are many considerations which would need to be taken into account by the executors in relation to a prospective settlement of the proceedings, including the worst case scenario from the estate’s point of view; the benefit of finality and the ability for distribution of the estate to the residuary beneficiaries now rather than at some uncertain time in the future. There is nothing in the settlement which points to the outcome reached by the executors as being unreasonable or inappropriate. The settlement affects the executor beneficiaries equally with the non-executor beneficiaries so that, unlike in the case of Sackelariou (supra), there is no suggestion that the settlement favours the executors, such as it might if they were, for example, part of one group of beneficiaries in comparison to the non-executor beneficiaries. In my view, there is nothing to indicate that the executors were not fully justified in taking the course which they did.

There remains only the question of whether there should be some adjustment of how the beneficiaries are to bear the burden of the settlement. The deceased made no distinction between any of his five daughters in his will. The evidence, to which I was taken, suggests that Cindy, whose husband earns a substantial income and has already superannuation rights slightly in excess of a million dollars, is not in any obvious and dire need of financial assistance. Carlene’s financial position is far less satisfactory. It appears she has debts of approximately $35,000. If she receives the $50,000, that is, her one-fifth share of the residual estate produced by the settlement, this will assist her, but it is clear she will not, even with that amount, be in a good financial position.

The difficulty is that the only way to increase her portion is to reduce the portion of the other sisters. Cindy is not here to contest the reduction of her amount, indeed her claim is that her amount should be increased, and none of the other sisters have been given notice of the possibility that their shares might be reduced. Such a proposal, following the approach taken in relation to Cindy and Carlene, would, in the interests of fairness, require each of them to be represented and would deplete the prospective $50,000 even further, as today itself has done.

I am not persuaded that it is appropriate to do other than what the testator has done by his will, which is to distribute the residue of his estate equally between the residuary beneficiaries. As Kunc J observed, due weight should be given to the deceased’s testamentary scheme, see Webster v Strang; Steiner v Strang [No 2] [2018] NSWSC 1411, although see also the comments of White J (as his Honour then was) in Hoobin v Hoobin [2004] NSWSC 705 at [139].

In these circumstances, I think the appropriate course is to make the orders in accordance with the Short Minutes of Order that have been handed up by the Plaintiff and Defendants, and I shall do so.

I make orders in accordance with the Short Minutes of Order that have been signed by Counsel for the parties, initialled by me and dated with today’s date. I further note that no application has been made by the executors for an order adjusting Carlene and Cindy’s distribution as a result of their opposition to the orders that were sought by the Plaintiff and the Defendant.