Application by Clauson [2017] NSWSC 1265

Supreme Court New South Wales

Medium Neutral Citation: Application by Clauson [2017] NSWSC 1265 Hearing dates: 23 June 2017 Date of orders: 26 September 2017 Decision date: 26 September 2017 Jurisdiction: Equity Before: Ward CJ in Eq Decision: 1. Pursuant to s 63 of the Trustee Act 1925 (NSW), advise the plaintiff that, as administrator of the estate of the late Patrick John David McKeon ("the deceased"), the plaintiff would be justified in administering the estate of the deceased on the basis that: (a) the proceeds of the Sunsuper superannuation policy held by the deceased are not liable to be applied in payment of the debts of the deceased, not being part of the deceased's estate; (b) the proceeds paid to the administrator by Abbey Life Assurance Company Limited and TAL Life Limited pursuant to claims made by the administrator on those policies on the death of the deceased, and the proceeds paid to PwC Nominees Pty Ltd as trustee for the deceased's estate by Metlife Insurance Limited under the PricewaterhouseCoopers Partners Group Life Plan, are (pursuant to s 205(1)(a) of the Life Insurance Act 1995 (Cth)) not liable to be applied in payment of such debts of the deceased as were incurred during his lifetime (the pre-death liabilities) but are not so protected in respect of such of the tax liabilities of the deceased as were incurred in respect of income earned after his death (the post-death liabilities). 2. Note that the advice in order 1(b) above is predicated, in relation to the proceeds of the Abbey Life Assurance Company Limited and TAL Life Limited policies, on the assumption that those policies were insurance policies effected on the life of the deceased within the meaning of s 205 of the Life Insurance Act 1995 (Cth) and, in relation to the proceeds of the Metlife Insurance Limited policy, on the assumption that there is no applicable trust deed (for the purposes of cl 15 of the said policy) pursuant to which PwC Nominees Pty Ltd was to hold the proceeds of the policy other than as bare trustee for the estate of the deceased. 3. The costs of the plaintiff be borne on the indemnity basis out of the estate of the deceased, with priority as an expense of the administration of the estate. 4. The costs of the Commissioner of Taxation be paid out of the assets of the estate on the ordinary basis, with no priority over unsecured creditors of the estate Catchwords: SUCCESSION – Wills, probate and administration – Executors and administrators – Application for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) – Whether administrator would be justified in administering estate on basis that proceeds of certain insurance policies are not liable to be applied in payment of debts of the deceased – Meaning of "the person's debts" in s 205 of the Life Insurance Act 1995 (Cth) Legislation Cited: Acts Interpretation Act 1901 (Cth), s 15AA Administration Act 1903 (WA), ss 87, 111 Administration and Probate Act 1915 (Vic), ss 132,133 Administration and Probate Act 1958 (Vic), ss 100, 104 Australian Mutual Provident Society Act 1857 (NSW), s 14 Bankruptcy Act 1996 (Cth) Companies Act 1915 (Vic), s 476 Companies Act 1928 (Vic), ss 476, 473 Companies Act 1938 (Vic), s 554 Duties on Deceased Persons' Estates Act 1895 (WA), ss 12, 13, 133 Income Tax Assessment Act 1936 (Cth), Div 7A Life Assurance Companies Act 1873 (Vic), s 37 Life Assurance Companies Act 1885 (Tas) Life Assurance Companies Act 1889 (WA), s 33 Life Assurance Companies Act 1936-1941 (SA), s 7 Life Assurance Companies Acts 1901-1934 (Qld), s 18 Life Assurance Encouragement Act 1862 (NSW), s 2 Life Assurance Encouragement Act 1873 (Vic) Life Insurance Act 1945 (Cth), ss 3(1), 92, 93, 94 Life Insurance Act 1995 (Cth), ss 9, 204, 205 Life Insurance Bill 1945 (Cth) Life Insurance Bill 1995 (Cth) Life, Fire and Marine Insurance Act 1902 (NSW), ss 4, 5, 6, 7 Married Women's Property Act 1882 (UK), s 11 Policies Protection Act 1887 (SA), ss 3, 4, 5 Probate and Administration Act 1898 (NSW), Sch 3 Stamp Duties Acts 1920-1959 (NSW), s 102 Succession Act 2006 (NSW), Ch 3 Trustee Act 1925 (NSW), s 63 Cases Cited: Addison v Shore [2016] WASC 223 Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41 Allen v Edmonds [1886] 12 VLR 789 Anderson v Egan (1905) 3 CLR 269 Attorney-General (NSW) v Curator of Intestate Estates [1907] AC 519 Burke v Commissioner of Taxation [2004] FCA 126 Certain Lloyd's Underwriters Subscribing to Contract No IH00AAQS v Cross (2012) 248 CLR 378; [2012] HCA 56 Attorney-General (NSW) v Curator of Intestate Estates [1907] AC 519 Commissioner of Probate Duties (Vic) v Mitchell (1960) 105 CLR 126 Davey v Pein; Colonial Mutual Life Assurance Society v Davey [1883] 9 VLR 169 Forsyth v Commissioner of Stamp Duties (1966) 114 CLR 194 Hill v Federal Commissioner of Taxation (1969) 119 CLR 72 In re Aylwin [1937] VLR 105 In re Clemow; Yeo v Clemow [1900] 2 Ch 182 In re Lesser; National Trustees Executors & Agency Co of Australasia Ltd v Lesser [1944] VLR 210 In re Perry (1963) 5 FLR 116 In re Wertheim [1934] VLR 321 In the Estate of Adams (1894) 15 LR (NSW) B & P 135 In the Estate of Cornford (Deceased) [2015] SASC 15 In the Estate of Mattson (1906) 6 SR (NSW) 11 In the Will of O'Brien (deceased) [1924] VLR 262; (1924) 30 ALR 260 Lennon v Gibson & Howes Ltd [1919] AC 709; [1919] UKPCHCA 2 Lilly & Steere v West Australian Trustee & Agency Co Ltd (1911) 13 CLR 416 Macedonian Orthodox Community Church St Petka Incorporated v His Eminence Petar the Diocesan Bishop of the Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66; [2008] HCA 42New Galaxy Investments Pty Ltd v Thomson [2017] NSWCA 153 NM Superannuation Pty Ltd v Young (1993) 41 FCR 182 Palmer v The Public Trustee (1916) 21 CLR 645 Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28 Quinn v Leathem [1901] AC 495; [1901] UKHL 2 Re Palmer; Perpetual Trustee Co Ltd v Palmer (1903) 3 SR (NSW) 141 Re Rosewood Research Pty Ltd (No 2) [2014] NSWSC 1226 Re the Estate of Robbins (Deceased); ex parte Robbins [2008] WASC 243 Riches v McInnes [2010] WASC 298White v Commissioner of Stamp Duties [1968] Qd R 140 Wilson v Transport Accident Commission [2017] VSC 209 Texts Cited: AC Gray, Life Insurance in Australia: An Historical and Descriptive Account (McCarron Bird, 1977) DC Pearce and RS Geddes, Statutory Interpretation in Australia (8th ed, 2014, LexisNexis) PC Wickens, The Law of Life Insurance in Australia (Lawbook Co, 1979 RA Woodman, Administration of Assets, (2nd ed, Lawbook Company, 1978) Category: Principal judgment Parties: Teresa Clauson (as administrator of the estate of the late Patrick McKeon) (Plaintiff) Commissioner of Taxation (Interested Party) Representation: Counsel: J Needham SC with FFF Salama (Plaintiff) S Lloyd SC with S Foda (Interested Party)