The established position in Queensland is that the court does not have power to make an order pursuant to s 41(1) of the Succession Act 1981 (Qld)1 after a final distribution to beneficiaries2. While this inevitably means that a disappointed claimant is left without recourse in circumstances where the estate was properly distributed by an executor who can bring himself within one of the safe harbours established by sub-s 44(2) or (3) of the Succession Act 3, a claimant isn’t inevitably left without recourse in circumstances where the executor distributed the estate outside one of those safe harbours. Accordingly, an executor who distributes prematurely does so at his peril.
Central to this area is the decision of Gibbs J (as he was) in Re Donkin, deceased; Riechelmann v Donkin [1966] Qd R 96 (FC). There, his Honour said (at 114) in relation to s 3(5) of the Testator’s Family Maintenance Act 1914 (now s 41(5) : 4
In my view once an asset ceases to be an asset in the testator’s estate, and the beneficiary to whom it is given has received it in his own right, there is no power to subject that asset to the incidence of an order under the Acts, or to require the beneficiary to restore the asset to the estate or to make a payment in satisfaction of the order. It was held by Hart J in Re Lower deceased (1964) QWN. 37 that when the estate of a testator has been fully distributed there has ceased to be any estate out of which provisions of The Testator’s Family Maintenance Acts, and with respect I agree with that conclusion. I say nothing of course of the position that would arise if the distribution were made before six months had elapsed from the date of probate, or even afterwards with notice of an impending claim under the Acts, cf. Sollitt v Fairhead (1924) NZGLR 533, at p. 534; In Re Donohue deceased, Donohue v Public Trustee (1933) NZLR 477, at p 486; In Re Simson deceased, Simson v National Provincial Bank Ltd (1950) Ch 38 at pp 42-3; In Re Lerwill deceased, Lankshear v Public Trustee (supra) at p 862 and Guardian Trust and Executors Company of New Zealand Ltd v Public Trustee of New Zealand (1942) AC 115, a p 127.
The exception marked by Gibbs J in the last sentence (above) was noticed in obiter dicta by Connolly J in Re McPherson [1987] 2 Qd R 394 where his Honour said (at 398-9):
Attention was directed in the course of argument to s. 44 which deals with the protection of the personal representative. The Act does not of its own force impose any obligation on personal representatives in respect of distributions which may have the effect of defeating claims or possible claims. However, that such an obligation may arise is recognised in the cases collected by Gibbs J. in Donkin at 114. To these may be added Re Gimblett [1960] NZLR 664, 666 and Re Ralphs [1968] 1 WLR 1522, 1525. The executor is not bound to wait for the expiration of this year before making distribution: Sollitt v Fairhead [1924] NZGLR 533, 534 citing Garthshore v Chalie (1804) 10 Ves Jun 1; 32 ER 743. Nevertheless it is suggested that he may act at his peril if he assents and distributes within the time for making application. No case actually decides the point and the closest to a statement of principle is to be found in Guardian Trust and Executors Company of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115, 127-128.
In Guardian Trust, Lord Romer, in the passage cited in Re McPherson, said (at AC 127):
There does not appear to be any statute in force in New Zealand that governs the case. It falls, therefore, to be decided in accordance with the well established principles of equity. One of those principles is that if a trustee or other person in a fiduciary capacity has received notice that a fund in his possession is, or may be, claimed by A, he will be liable to A if he deals with the fund in disregard of that notice should the claim subsequently prove to be well founded. This principle has, indeed, been recognised by the New Zealand legislature in dealing with cases which are closely akin to the present one.
The statement of principle in Guardian Trust was adopted in D’Albora v D’Albora [1999] NSWSC 468 ; BC9902597 at [65]ff and in Re Faulker [1999] 2 Qd R 49.
A related basis for relief, different from the principle in Guardian Trust though still drawing on the general law of trusts, is found in Re Winwood [1959] NZLR 246 (a decision on the then New Zealand analogue of s 41(1)) where McGregor J, after referring to Taylor v Taylor [1870] LR 10 Eq 477, said (at 250) that a disappointed claimant would at general law have a claim against an executor personally who distributed the estate prematurely on grounds that failure to provide for contingent liabilities would amount to a breach of trust. The approach in Re Winwood was referred to with approval in Blunden v Blunden [2008] SASC 286; BC200809761 per Bleby J at [24]. See generally Jervis v Wolferston (1874) LR 18 Eq 18; Whittaker v Kershaw (1890) 45 Ch D 320 at 325, 329.
Fifteen months after the decision in Re McPherson¸ in the only Queensland judgment to date actually deciding the point, the question of a claimant’s rights against an executor who distributed the estate prematurely came before Carter J in Re Hill (unreported, QSC, 17 June 1988); BC8802419 on an application under s 41(1), and an application for relief under s 52(2) of the Succession Act on the ground that the executor had neglected to perform his duties. The facts as found were that the executor had distributed assets to himself under the will within six months of the death, and with a view to defeating the rights of the claimant after she had given notice of intention to make a claim.
At BC8802419 pp7-8, after setting out the passage from Re McPherson (above), Carter J said:
It is obvious that s 44 is a legislative constraint upon an executor who seeks to administer an estate with indecent haste and in order to render nugatory the rights given to an applicant under s 41 of the Act. I am satisfied that in this case the respondent effected distribution of the only assets in the estate well within the six months of death and within three months of his having knowledge of an intended application. He was in my view in breach of s 52(1)(a) of the Act and the applicant is entitled to relief under s 52. I am empowered to make such order as I think fit.
[…]
I therefore propose to order that the respondent transfer to the applicant a one-third interest in the property so that it be held by them as tenants-in-common.
The court in Re Hill granted relief against the executor under s 52(2)5 without allowing relief under s 41(1). Nevertheless, there are statements indicating that, in a proper case, the court can equally grant relief conjointly under s 52(2) and s 41(1), by ordering the executor to restore assets to the estate, with the result that upon the assets being restored there are assets on which an order can operate in terms of s 41(1), and then making orders for provision: cf Ernst v Mowbray [2004] NSWSC 1140; BC200408563 per Young CJ in Eq (as he was) at [63]; Re McPherson [1987] 2 Qd R 394 at 398 . The availability of relief via a “two-step shuffle” is not closed out by the established position. Orthodoxy prevents the court making orders after a final distribution out of its concern with there being assets on which an order can operate .6
The decisions in Re McPherson and Re Hill offer discernibly divergent views as to the proper operation of sub-s 44(2) and (3), that is, whether the subsections do (as Carter J in Re Hill found), or do not (as Connolly J in Re McPherson said obiter), impose an obligation on an executor with respect to a distribution that has or may have the effect of defeating a claim under s 41(1). The conflict has not been resolved by the subsequent decisional law. The dicta of Connolly J in Re McPherson has been frequently cited although not on this point. The dicta of Carter J in Re Hill was applied by the first instance court in Holdway v Arcuri [No 2] [2007] QSC 378; BC200711098 at [48] (reversed on appeal on a different point [2008] QCA 218), and, is consistent with the analysis by Moynihan J in Re Faulkner [1999] 2 Qd R 49 at 52-3, though his Honour did not refer to Re Hill . It is also consistent with statements in Re Simpson (1950) Ch 38, where Vaisey J said (at 42-3) in relation to the then English analogue to s 41(1):
If these legacies have been paid, as I understand they have, the matter comes before me in a form which adds further embarrassment to an already embarrassing jurisdiction. I wish to be distinctly understood – I have said it before and I say it again, and I hope some notice will be taken of it – that where an application under the Inheritance (Family Provision) Act, 1938, is either pending or impending, that is to say, during the first six months after grant of representation, if it is a case in which there is any risk of such a thing happening, the executor distributes the estate at his risk. If beneficiaries come and pester him and say that they want their legacies and pressure is put on other beneficiaries to allow these anticipatory payments to be made, in my judgment it is the duty of the executor to resist any such pressure. I think it must be said that where the court has to deal with a matter under this Act the estate should be there intact . Of course, duties and debts, and that sort of thing, can be paid – there is no question about that – but no distribution to beneficiaries should be made while there is any possibility or expectation that an application under this Act will be made.
The statements of Vaisey J suggesting that an executor may be liable where he distributes while there is any “possibility” of a claim under s 41(1) find support in the decision in Re Winwood [1959] NZLR 246 where McGregor J allowed a claim against an executor who had distributed the estate without notice. Notice from the applicant that he was contemplating making a claim plainly will suffice;7whether something more than an awareness of the possibility of a claim will suffice is yet to be considered by the courts in Australia. Until the point is determined, Re Simpson and Re Winwood potentially offer claimants a source of rights against executors who elect to distribute an estate prematurely, with or without notice , and are a salutary warning to executors.
Footnotes
1. Subsection 41(1) provides:
41 Estate of deceased person liable for maintenance
(1) If any person (the deceased person) dies whether testate or intestate and in terms of the will or as a result of the intestacy adequate provision is not made from the estate for the proper maintenance and support of the deceased person’s spouse, child or dependant, the court may, in its discretion, on application by or on behalf of the said spouse, child or dependant, order that such provision as the court thinks fit shall be made out of the estate of the deceased person for such spouse, child or dependant.
2. See Re Burgess [1984] 2 Qd R 379; Re Oakley [1986] 2 Qd R 269; Re McPherson [1987] 2 Qd R 394; Re Hill (unreported, QSC, 17 June 1988); BC8802419 at p4; Re Prufert (unreported, QSC, OS 123/1991, 4 April 1991); Re Parry (unreported, QSC, 23/1990, 11 March 1991); Holmes v Webb [1992] QCA 172; BC9202491; Baker v Williams [2007] QSC 226; BC200707213; Re Faulkner [1999] 2 Qd R 49.
3. Subsections 44(2) and (3) provides:
44 Protection of personal representative
[…]
(2) No person who may have made or may be entitled to make an application under this part shall be entitled to bring an action against the personal representative by reason of the personal representative having distributed any part of the estate if the distribution was properly made by the personal representative after the person (being of full legal capacity) has notified the personal representative in writing that the person either–
(a) consents to the distribution; or
(b) does not intend to make any application that would affect the proposed distribution.
(3) No action shall lie against the personal representative by reason of the personal representative having distributed any part of the estate if the distribution was properly made by the personal representative–
(a) not earlier than 6 months after the deceased’s death and without notice of any application or intended application under section 41(1) or 42 in relation to the estate; or
(b) if notice under section 41(1) or 42 has been received–not earlier than 9 months after the deceased’s death, unless the personal representative receives written notice that the application has been commenced in the court or is served with a copy of the application.
4. Subsection 41(5) provides:
41 Estate of deceased person liable for maintenance
(5) The court may at any time fix a periodic payment or lump sum to be paid by any beneficiary in the estate, to represent, or in commutation of, such proportion of the sum ordered to be paid as falls upon the portion of the estate in which the beneficiary is interested, and exonerate such portion from further liability, and direct in what manner such periodic payment shall be secured, and to whom such lump sum shall be paid, and in what manner it shall be invested for the benefit of the person to whom the commuted payment was payable.
5. Subsection 52(2) provides:
52 The duties of personal representatives
(2) If the personal representative neglects to perform his or her duties as aforesaid the court may, upon the application of any person aggrieved by such neglect, make such order as it thinks fit including an order for damages and an order requiring the personal representative to pay interest on such sums of money as have been in the personal representative’s hands and the costs of the application.
6. Re Lowe deceased [1964] QWN 37 per Hart J; Re Donkin, deceased; Riechelmann v Donkin [1966] Qd R 96 at 113, 114 per Gibbs J; Baker v Williams [2007] QSC 226; BC200707213 at [22] per de Jersey CJ; cf Re McPherson [1987] 2 Qd R 394 at 398 per Connolly J and Ernst v Mowbray [2004] NSWSC 1140; BC200408563 per Young CJ in Eq (as he was) at [63].
7. Guardian Trust and Executors Company of New Zealand Ltd v Public Trustee of New Zealand [1942] AC 115; Re Hill (unreported, QSC, 17 June 1988); BC8802419.
