Application of Harnett and Cutts [2016] NSWSC 427

Supreme Court New South Wales

Medium Neutral Citation: Application of Harnett and Cutts [2016] NSWSC 427 Hearing dates: 8 April 2016 Date of orders: 18 April 2016 Decision date: 18 April 2016 Jurisdiction: Equity Before: Pembroke J Decision: See paragraph [24] Catchwords: NEXT OF KIN INQUIRY – plaintiffs justified in distributing the estate – Benjamin Order Cases Cited: Application by NSW Trustee & Guardian (Estate of the late Marko Sijakovic) [2012] NSWSC 1532 NSW Trustee & Guardian; In the Estate of Rex [2015] NSWSC 841 NSW Trustee and Guardian (Estate of Peter Urso) [2013] NSWSC 903 Re Benjamin; Neville v Benjamin [1902] 1 Ch 723 Category: Principal judgment Parties: John Frederick Hartnett – first plaintiff Allan Frederick Cutts – second plaintiff No defendant Representation: Counsel: J Donoghue – for the first and second plaintiffs

Solicitors: Avondale Lawyers – for the first and second plaintiffs File Number(s): 2016/050005

Judgment 1. This is an application by the executors of the estate of the late Frederick Cutts who died on 21 October 1954. It relates to their inability to locate the last known beneficiary of the estate and effectively seeks to excuse them from any further attempt to do so.

Benjamin Order 1. The executors have sought a 'Benjamin order', a form of order derived from Re Benjamin; Neville v Benjamin [1902] 1 Ch 723. In Application by NSW Trustee & Guardian (Estate of the late Marko Sijakovic) [2012] NSWSC 1532, Hallen J made the following observations about Benjamin orders, which I gratefully adopt: [23] In Williams, Mortimer & Sunnucks, Executors, Administrators and Probate, 17th ed, (1993), at 938, the learned authors state: It may happen that distribution is held up because the representatives cannot be sure who is entitled. Thus a person's right to share in the estate may turn on the question whether another predeceased the testator, predeceased him without issue, and it may be uncertain on the facts whether this happened. In these circumstances, the representatives may apply to the court for a "Benjamin" order - Re Benjamin [1902] 1 Ch 723, that is, an order permitting them to distribute the estate on the footing that certain events have or have not happened. The effect of such an order is to relieve the representatives of liability in their capacity as representatives should the hypothesis on which they are to be permitted to distribute turn out to be wrong. Thus, where a beneficiary who was thought to have predeceased a testator subsequently appears, he will not be entitled to bring a claim against the representatives for his share of the estate. He may, however, be entitled to claim in equity against the beneficiaries who have been wrongly paid or perhaps bring a tracing action against the recipients of the share - Re Diplock [1951] AC 251. [25] In Lempens v Reid [2009] SASC 179, Gray J, at [32], said: The effect of a Re Benjamin order is to enable the executor to distribute the estate to those members of the class which have been ascertained at the time of distribution, whilst ensuring protection of the executor if a person entitled to a portion of the estate subsequently appears. If such a person does appear, he or she is not entitled to make a claim against the executor for that portion but may claim against beneficiaries who have been paid incorrectly. If a Re Benjamin type order were considered appropriate in the circumstances of these proceedings, it may be necessary for the Court to order that further enquiries be undertaken, to ascertain whether members of the class can be located, prior to any distribution of the gift contained in the subject clause. 1. Hallen J also explained in NSW Trustee and Guardian (Estate of Peter Urso) [2013] NSWSC 903: [39] Thus, in a case where a trustee is faced with a practical difficulty in establishing the existence of possible beneficiaries or other claimants, the Court will give a direction to the trustee enabling it to distribute the trust property on an assumption of fact that there is no such beneficiary or claimant. In the case where a beneficiary has disappeared in circumstances where the absence leads to an inference of death, an order may be made that the trust estate be distributed on the basis that the beneficiary is dead: Re Reynolds Trusts (No 2) [1942] QWN 40; Nolan As Administratrix of the Estate Of Barbara Nolan, deceased v Nolan [2011] WASC 224 at [33]. [40] As Nourse J explained in Re Green's Will Trusts [1985] 3 All ER 445, at 446: The true view is that a Re Benjamin order does not vary or destroy beneficial interests. It merely enables trust property to be distributed in accordance with the practical probabilities... At 462, his Lordship added: I do not think that the question whether such an order should be made depends on whether or not there will be administrative inconveniences caused by the trustees retaining the fund. I think it depends on whether in all the circumstances the trustees ought to be allowed to distribute and the beneficiaries to enjoy their apparent interests now rather than later. 1. See also the decision of Kunc J in NSW Trustee & Guardian; In the Estate of Rex [2015] NSWSC 841 at [8].