An application to the Supreme Court of NSW, under s63 of the Trustee Act 1925 NSW, allows a plaintiff “trustee” to seek “an opinion, advice or direction” from the Court on a “question” or questions presented for the Court’s examination. 

The High Court of Australia provided a comprehensive discussion concerning the provision of judicial advice in Macedonian Orthodox Community Church St Petka Inc v Bishop Petar (2008) 237 CLR 66; [2008] HCA 42,

Including the following general observations regarding s 63:

1. It is not appropriate to impose interpretations or constraints on the workings of s 63 that are not explicitly stated in the section’s wording.

2. no restriction within s 63 confines its use to “non-adversarial” situations.

3. nothing in s 63 or implied by s 63 suggests certain discretionary factors are inherently more important or overriding than others. The adversarial nature of the proceedings does not make it a discretionary factor so significant that it would lead the Court to deny judicial advice under s 63.

4. Proceedings initiated under s 63 are summary in nature. They aid the Court in managing trusts by enabling it to issue orders less severe than those that could be issued in more costly general administrative proceedings.

5. Section 63 permits a trustee to seek private and personal counsel from the Court. This advice is considered personal because it primarily aims to protect the trustee. The section is “an exception to the Court’s usual role of resolving disputes between opposing parties.”

6. The application of s 63 differs depending on the type of trust involved. Various factors are at play for non-charitable private trusts compared to those created for charitable purposes that may include public interest. This situation may also change for charitable trusts established for religious aims.

7. One function of s 63 enables a trustee to seek judicial counsel regarding initiating or defending legal actions, acknowledging that the trustee’s role is generally unpaid. The estate can only reimburse a Trustee for costs and expenses reasonably incurred while fulfilling their duties. Seeking judicial advice ensures the trustee is confident it is appropriate to incur legal costs and expenses. The availability of s 63 judicial advice helps to safeguard the trust’s interests rather than having them “subordinated to the trustee’s anxiety about personal liability for expenses.”

8. The NSW Court of Appeal articulated general principles concerning s 63. In response to those principles, the High Court indicated that “not all the propositions articulated represent reliable guides for applications under s 63.”

The High Court emphasised that categorising legal proceedings as “adversarial” does not help determine whether the Court should grant advice under s 63.

In general terms, the practical aim of such a request is twofold. First, it enables a cost-effective, quick resolution of questions regarding the proper administration of an estate. Second, it offers a way for a trustee to obtain protection against claims that they have acted in breach of trust. The fact that a trustee has or has not sought judicial advice from the Court may influence the likelihood of an order (under s85 of the Trustee Act 1925) stating that the trustee, having acted honestly and reasonably, should somewhat be relieved from liability for a breach of trust.

More formally stated, the two primary objectives of the judicial advice jurisdiction concerning trust administration are to safeguard the trust and its interests and to protect the trustee: Susan Kiefel, “Judicial Advice to Trustees: Its Origins, Purposes and Nature” (2019) 42 Melbourne University Law Review 993 at 1001.

It should not be presumed from the nature of an application for judicial advice that a trustee who seeks “advice” is unaware of the answer to any question posed for the Court’s assessment. A trustee may be sure of the answer yet still pursue the protection of a court order to counter a beneficiary’s lack of confidence in that answer.

While a judge may provide reasons for judgment, the true significance lies in the specifics of any order concerning the application’s resolution. This process ensures a fair and just outcome for all parties involved.

Background

The case of Australian artist Ross Woodcock, who passed away on February 22, 2018, leaving his estate unsettled even six years later, is a compelling example. In Kammoora v James [2024] NSWSC 1490, his children and beneficiaries, Bessie Kammoora (the Plaintiff) and Oliver James(the Defendant), the executor of the estate, were involved in a significant legal battle. 

The deceased left four children: the Defendant, the Plaintiff, Daniel, and Joshua Woodcock. The Will, dated December 22, 2015, named Oliver executor and outlined bequests, including $100,000 to a friend, the establishment of the Woodcock Fine Art Trust, and equal shares of the estate for the children.

Probate was granted to the Defendant on May 1, 2018, but the estate administration faced delays. An inventory valued the estate at $1,942,186.03, with assets including properties worth $1.9 million and various accounts, but lacked liquidity.

The Plaintiff challenged the valuation, claiming it undervalued the estate and initiated a Statement of Claim in October 2023, seeking the revocation of the Defendant’s probate and the appointment of an independent administrator. Lindsay J managed the case and ordered the probate submission in December 2023.

On June 28, 2024, the Court issued further orders to expedite estate administration, including an auction for subdivided lots of the Ellismore Road property. The Defendant claimed delays were due to subdivision processes and uncontrollable factors, while the Plaintiff argued there were periods of inactivity. The Court appointed Mr. Dornan as a temporary administrator, pending the Defendant’s compliance with a management schedule. An offer of $850,000 was made for one of the properties, which the Plaintiff did not accept.

The Judicial Advice

The Defendant seeks judicial advice indicating he would be justified in accepting the current proposal and finalising contracts for the sale of 570 Ellsmore Road for $785,000. The Plaintiff, however, disagrees with the Defendant’s suggested course of action, arguing that the property could fetch a higher price if sold later.

The facts are undisputed. The Defendant marketed the four properties within the completed subdivision individually. One of these properties, not 570 Ellsmore Road, has already been sold for $850,000, which will soon enhance the estate’s liquidity.

The Defendant has received several proposals for 570 Ellsmore Road, all originating from owners of neighbouring properties. The offer of $850,000 active during the June 28 Orders has not been renewed despite two marketing campaigns since June 2024 and two auctions. No additional interest in purchasing 570 Ellsmore Road has materialised. There is an offer of $785,000 for 570 Ellsmore Road. Three out of four beneficiaries support accepting the $785,000 offer, while the only beneficiary opposing this proposed action is the Plaintiff.1

The real estate agent retained by the Defendant has advised that he has negotiated this offer from potential buyers, increasing it from $740,000 to $785,000. These potential buyers only have financing approved for the purchase at $785,000 until November 12 2024. This urgency is why the Defendant has sought to exercise the liberty to apply for and requested immediate judicial advice on November 7. The estate’s real estate advice indicates that the market may improve around mid-next year, but there is no guarantee.

The Plaintiff presented four main arguments against granting the requested judicial advice. Below are these arguments, followed by the Court’s reasoning for finding each argument unpersuasive.

First, the Plaintiff notes that 570 Ellsmore Road was valued at between $900,000 and $1 million in August. The Plaintiff, argues that even though there hasn’t been any buyer interest in the short term, the property has been valued, and the Defendant would not be justified in accepting an offer that is $115,000 below the lower end of the valuation range.

Valuations need to align with market realities. The absence of third-party offers for 570 Ellsmore Road after two marketing efforts since June would allow a prudent executor in the Defendant’s position to reconsider the valuation range instead of waiting for an offer within that range.

Secondly, Plaintiff argues that the agent’s advice does not indicate that future price increases for 570 Ellsmore Road are unattainable. The agent does not assert that this is the best offer the estate can achieve over time. Therefore, the Plaintiff contends that the Defendant should entertain an offer within the valuation range if they postpone the sale.

A prudent executor would not presume that real estate will continuously attract higher offers. The opposite can occur, and postponing may yield lower offers depending on market conditions. It is reasonable for a responsible executor to seek certainty for the beneficiaries, particularly given that the sale timing and price of the other two properties remain uncertain.

Thirdly, Plaintiff argues that, considering there has already been a notable delay in this estate since 2018, waiting another six months for an offer should not be regarded as a substantial burden on the estate’s administration. There are no urgent factors related to the health or needs of the beneficiaries that necessitate immediate acceptance of the offer instead of waiting six months.

The Court believes the delays in managing the estate do not support further postponement. As he has, the executor could reasonably determine that this opportunity to sell at the offered price should be accepted now, particularly since an $850,000 offer was allowed to lapse.

Fourthly, the plaintiff argues that since 570 Ellsmore Road is still one of two properties to be sold, it would be sensible to remarket it while marketing the other two properties and allow time to secure a better price.

However, the executor should conclude that having more properties unsold could prolong the estate’s finalisation, and there is a risk that waiting may lead to a lower rather than higher price than $785,000 for 570 Ellsmore Road in the future.

The current application has provided the Court with a chance to examine the overall situation regarding the management of this estate. Several aspects of that management thus far warrant discussion.

Other Estate Administration Issues

On July 31, 2024, the Court issued an order for the estate to pay the Plaintiff and the Defendant costs from the proceedings up to that date on an indemnity basis. After the hearing on November 7 2024, the parties reached an agreement on the amount of those costs, totalling roughly $75,000 for each side, and those specified cost orders are included in this judgment.

However, in addition to the costs associated with the current application, additional costs have continued to accrue for both parties beyond July 31, 2024. The Plaintiff’s latest evidence generally reflects a diminished trust in the Defendant’s handling of the estate’s details regarding the deceased’s papers, accounts, and artworks, leading to further negotiations between the parties. One interpretation of the disputes evident in the recent affidavits is that there has been significant miscommunication between the Defendant and the Plaintiff in the recent handling of the estate. The Court held that this unsatisfactory situation must not persist.

These disputes have been partially settled on an interim basis through the agreements outlined in the Orders below. However, whether the measures taken have effectively resolved all pending issues between the parties should become apparent shortly after November 21 2024. Suppose disputes continue concerning the papers, accounts, and artworks of the deceased and the assets of the Woodcock Trust; the parties should relist these proceedings for the Court to issue further directions and orders to finalise the estate.

If the tension between the parties remains unmanageable, the Court may need to reconsider lifting the stay on appointing Mr. Dornan as an administrator of the estate. This stay is only provisional and can be lifted anytime if the Court loses faith in the executor’s estate management, which should prioritise the best interests of all beneficiaries, whom the executor must treat pretty, reasonably, and efficiently.

Alternatively, a Court expert may be appointed under r 31.46 of the Uniform Civil Procedure Rules to oversee specific paperwork and estate assets. The expert could determine which assets should be assigned to the Woodcock Trust and which should stay within the estate under the executor’s control. The parties should recognise that this issue will not be allowed to linger.

Conclusions and Orders

Slattery J addressed outstanding costs incurred after July 31 2024, that do not pertain to the current application for judicial advice. The parties must refrain from wasting resources on back-and-forth correspondence and disputes over these costs, as the Court can quickly resolve this matter, thereby simplifying the administration of this estate. If the parties desire to settle any lingering questions about costs to facilitate the estate’s management, the Court can address these matters by the next scheduled directions date of February 5 2025.

The Court will not allow extensive arguments regarding costs or the accumulation of significant costs associated with disputing costs. This practice contradicts the principles outlined in the Civil Procedure Act 2005, s 60, which mandates that cost expenditures should be “proportionate to the significance and complexity of the matters under dispute.” If the Court relists the case for this purpose, it will only allow brief oral arguments based on a concise written outline of no more than two pages.

Court Orders

For the following reasons, the Court orders:

  • the Defendant is authorised in their capacity as Executor of the estate of the late Ross Frederick Woodcock (the estate) to exchange Contracts of Sale concerning the property located at 570 Ellsmore Road, Exeter, NSW, for a sale amount of $785,000.
  • the Plaintiff shall pay $65,000 to the estate under Order 13, issued on June 28 2024
  • the amount stated in Order 2 shall be subtracted from the Plaintiff’s entitlement from the estate per Order 15, dated June 28 2024.

The Court acknowledges the defendants commitment

  • to provide an electronic copy of all documents related to Gunya Shelters, Forged Iron Art, photographs, and other business records, as detailed in Annexure A to these Orders, to Plaintiff no later than November 21 2024.
  • to delivering the original sketches included in “Box 1” and “Drawers”, as detailed in Annexure A to these Orders to Plaintiff by November 21 2024.

The Court acknowledges 

  • Order 2, dated July 31 2024, rules that the estate will cover the Plaintiff’s costs in the agreed amount of $75,417.78.
  • Order 3, dated July 31 2024, rules that the estate will cover the Defendant’s costs in the agreed amount of $75,960.76.

The Court orders that 

  • the Plaintiff is responsible for her costs related to the hearing on November 7 2024.
  • the Defendant’s costs related to the hearing on November 7 2024, shall be paid or retained, as appropriate, from the deceased’s estate on an indemnity basis.

The Court grants any party the liberty to seek consequential and ancillary orders with three days’ notice.

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