Application of Baldwin [2021] NSWSC 1438

Supreme Court New South Wales

Medium Neutral Citation: Application of Baldwin [2021] NSWSC 1438 Hearing dates: 13 October, 1 November 2021 Date of orders: 8 November 2021 Decision date: 08 November 2021 Jurisdiction: Equity Before: Parker J Decision: See [40] Catchwords: SUCCESSION – administration of estate – judicial advice – Trustee Act 1925, s 63 – continuation of proceedings by executors seeking repayment of amounts paid to a beneficiary of the estate prior to the deceased's death – defence of cross-claim alleging maladministration, including by instituting those proceedings Legislation Cited: Trustee Act 1925 (NSW), s 63 Cases Cited: Application of Macedonian Orthodox Community Church St Petka Inc [2004] NSWSC 388 Application of Macedonian Orthodox Community Church St Petka Inc (No 3) [2006] NSWSC 1247 Cherry v Boultbee (1839) 41 ER 171 Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 National Trustees Executors & Agency Co of Australasia Ltd v Barnes (1941) 64 CLR 268 Category: Principal judgment Parties: Peter Graeme Baldwin (First Plaintiff) Stephanie Anne Van Hilten (Second Plaintiff) Representation: Counsel: JE Thomson

Solicitors: Patricia Keith File Number(s): 2021/256596 Publication restriction: Nil

Judgment 1. Before the Court is an application for judicial advice under the Trustee Act 1925 (NSW), s 63, concerning the administration of a deceased estate. The executors have brought separate proceedings in the Court against a beneficiary of the estate and a company associated with him. They seek advice which would permit them to continue to pursue the proceedings on behalf of the estate. 2. The applicants, Peter Graeme Baldwin and Stephanie Ann Van Hilten, are the executors of the estate of the late Denise Melane who died in July 2019. Probate of the deceased's will (which had been made in November 2018) was granted in November 2019. Ms Van Hilten was the deceased's goddaughter. Mr Baldwin was described in the deceased's will as a friend, and is Ms Van Hilten's brother. I will refer to them as "the Executors". 3. The deceased's husband pre-deceased her. It appears that she left no immediate family. Under the will, most of the estate was to be shared between Julian Gary Field, who was a friend of the deceased; Ms Van Hilten; and Robert Edward Rye, presumably also a friend of the deceased. 4. Specifically, the deceased's will provided that Mr Field might choose to retain for himself any of the deceased's antiques, furniture, paintings, oriental rugs and heirlooms, with any items which Mr Field did not wish to retain to be shared between Ms Van Hilten and Mr Rye. The residue of the estate was to be divided between Mr Field (50%), Ms Van Hilten (20%), Mr Rye (20%) and a charity, Guide Dogs NSW/ACT (10%). According to the valuations obtained for the purposes of the probate application, the value of the residue was then about $2.1 million. 5. Mr Field became friendly with the deceased in about 2001. He was, or was believed by the deceased to be, experienced in the field of information technology. He apparently operates in his own name and also through a company which he controls, Lokdown Pty Limited ("Lokdown"). 6. The deceased was a Christian Scientist. Following her death, the Executors identified that the deceased had made substantial payments to Mr Field and Lokdown, apparently to establish and maintain a website for members of Christian Science Australia to post information about their activities. The website was called "Christian Science Australia.org Online Directory" and was referred to in the evidence before me as the "CSA website". 7. The Executors formed the view that Mr Field and Lokdown had grossly overcharged the deceased for the work done on the CSA website. In the course of the proceedings, to which I will refer in a moment, the Executors have obtained an opinion from an independent computing expert which supports these conclusions. According to the expert, the proper cost of establishing and setting up such a website would have been a fraction of the amounts apparently paid. Furthermore, the expert criticised the lack of security on the website and it appears that there were times where it was not operating at all. 8. Last year, the Executors brought proceedings in this Court concerning the matter ("the 2020 proceedings"). According to the advice from counsel which was before the Court on this application, the proceedings were commenced by summons in November 2020. 9. The 2020 proceedings were initially constituted as an application for judicial advice by the Executors. They sought advice that they would be justified in requiring Mr Field and Lokdown to repay certain payments allegedly made for the establishment and maintenance of the CSA website, and for this purpose to set off the repayments against Mr Field's entitlement to the residue of the estate pursuant to the rule in Cherry v Boultbee (1839) 41 ER 171. 10. Lokdown was not a beneficiary of the estate. Therefore, no question of satisfying any obligation it had to repay money pursuant to the rule in Cherry v Boultbee could, strictly speaking, arise. However, this point does not seem to have been adverted to. The payments were identified as having taken place between 5 June 2015 and 27 June 2019 and to have totalled $438,000. 11. Although Mr Field and Lokdown were not named as defendants in the proceedings at that stage, they were given notice of the application and appeared at the hearing which took place before Lindsay J on 16 April this year. They indicated that they contested the claim. Lindsay J therefore made orders for the 2020 proceedings to continue as adversarial proceedings between the Executors as plaintiffs and Mr Field and Lokdown as defendants. 12. The Executors' statement of claim was filed in May. This resulted in the scope of the claim being somewhat reduced. The statement of claim referred to payments made between 7 August 2015 and 27 June 2019, totalling $409,000. 13. Mr Field, as a beneficiary of the estate, then brought a cross-claim against the Executors. It is this cross-claim which has resulted in the application before me. 14. In his cross-claim Mr Field makes allegations of maladministration against the Executors, including but not limited to the pursuit of the claim against himself and Lokdown. He seeks orders removing the Executors from office, to be replaced by Mr Field himself. He also seeks orders requiring the Executors to account for estate monies allegedly misapplied, including in particular for the payment of legal costs. 15. Specifically, Mr Field makes five complaints. First, he alleges that the Executors failed to provide "copies of accounts" when requested. Second, they allegedly failed to administer the estate in a timely manner. In particular he claims that the Executors unnecessarily retained monies in the estate which should have been distributed to the beneficiaries. 16. Third, Mr Field complains about the bringing of the 2020 proceedings. He alleges that the Executors have persisted in prosecuting baseless claims against him "in an effort to diminish the gifts" to which he was entitled under the deceased's will. 17. Fourth, there is a dispute about the clause of the will concerning Mr Field's entitlement to retain antiques etc. Mr Field alleges that the Executors failed to administer the estate in accordance with the terms of the will. He says they preferred their own interests (presumably a reference to Ms Van Hilten's entitlement to a share of the antiques etc not required by Mr Field). 18. Finally, Mr Field makes further claims concerning the initiation of the 2020 proceedings. Mr Field's allegation appears to be that an application for judicial advice was misconceived because the issue was always a matter of adversarial dispute. He alleges that the 2020 proceedings were commenced without prior written advice from counsel and (correctly) that the Executors have never obtained judicial advice that they are justified in bringing the claims against Mr Field and Lokdown. Mr Field alleges that the costs of the proceedings have been wasted and should not be borne by the estate.