Estate of the late Janice Gruer; Application of Gail Elizabeth Rands [2018] NSWSC 401

Supreme Court New South Wales

Medium Neutral Citation: Estate of the late Janice Gruer; Application of Gail Elizabeth Rands [2018] NSWSC 401 Hearing dates: 28 March 2018 Date of orders: 28 March 2018 Decision date: 28 March 2018 Jurisdiction: Equity - Probate List Before: Kunc J Decision: Judicial advice given Catchwords: EQUITY – Trusts and trustees – Judicial advice – No issue of principle – Small estate Legislation Cited: Trustee Act 1925 (NSW) Cases Cited: Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171 Category: Principal judgment Parties: Gail Elizabeth Rands (Plaintiff) Representation: Counsel: L Clarke (Plaintiff)

Solicitors: Eden Legal & Conveyancing (Plaintiff) File Number(s): 2017/388369 Publication restriction: No

EX TEMPORE Judgment (REVISED) 1. This is an application for judicial advice pursuant to s 63 of the Trustee Act 1925 (NSW) (the "Act") in relation to the administration of the estate of the late Janice Mary Gruer, who died on 1 April 2016. 2. The application is brought by the executrix of Ms Gruer's estate, who is her niece Ms Gail Rands. 3. Ms L Clarke of Counsel appeared for Ms Rands and, as is customary in such applications, the Court has had regard to an opinion of Ms Clarke on the question of how Ms Rands should proceed in the circumstances which have presented themselves. 4. The facts may be shortly stated. 5. Ms Gruer's will was made on 23 April 2013. It provided for two specific legacies, being gifts of $20,000 to Ms Gruer's great-nephew and $10,000 to Ms Rands. There was then a specific devise of Ms Gruer's unit in Merimbula (the "Unit") to her partner, Mr Lars Nystrom. The will concludes with a gift of the residue of the estate (if any) to be divided equally between Mr Nystrom and Ms Rands. 6. On the same day that Ms Gruer made her will, she conferred a general power of attorney on Mr Nystrom (the "Power"). That included the following additional powers and restrictions: "1. I authorise my attorney to give reasonable gifts as provide by section 11(2) of the Powers of Attorney Act 2003. 2. I authorise my attorney to confer benefits on the attorney namely LARS CHRISTER NYSTROM to meet his reasonable living and medical expenses as provided by section 12(2) of the Powers of Attorney Act 2003." 1. Ms Gruer moved into care on or about 26 February 2014. 2. Ms Rands has reviewed Ms Gruer's bank statements. These show that during the period 1 January 2014 to 20 April 2016 (i.e. a few weeks before Ms Gruer went into care and three weeks after her death) a sum of approximately $109,000 appears to have been withdrawn from Ms Gruer's bank account which Ms Rands regards as being unaccounted for. Mr Nystrom is the only person who could have made those withdrawals. These include: 1. Multiple withdrawals from the Merimbula RSL Club. 2. Large cash withdrawals prior to Ms Gruer's death. 3. Withdrawals made after Ms Gruer's death. 4. 28 $1,000 ATM withdrawals in the period 1 May 2015 to 29 May 2015. 5. A $25,000 term deposit which was closed out on 18 March 2016 with $18,000 transferred to another account and the remainder withdrawn. 1. It appears from the evidence before the Court that after Ms Gruer's death, Mr Nystrom continued to reside in the Unit without paying rent to the estate. He subsequently entered into a residential tenancy agreement to lease the Unit. That agreement was entered into without Ms Rands' knowledge or approval. It appears that the rent from that arrangement was paid directly to Mr Nystrom and only later to the estate. Ms Rands has also become aware of a garnishee order issued on behalf of Bega Valley Shire Council to the Unit's managing agent in respect of unpaid rates. 2. There has been correspondence between Ms Rands' solicitor and Mr Nystrom's solicitor in which Mr Nystrom has been requested to account for the withdrawals. The correspondence has not yielded any explanation for the withdrawals which Ms Rands regards as satisfactory. 3. The present application has been motivated by the lack of funds in the estate. The only cash at the time of Ms Gruer's death was a sum of approximately $18,000. A summary of accounts has been tendered on the present application which makes it clear that, in particular, once the costs of the present application are charged to the estate, the estate will have no available cash. 4. The nub of the present problem is as follows. Ms Rands is considering taking further action on behalf of the estate in an attempt to ascertain and recover the debt which she says Mr Nystrom owes the estate as a result of the withdrawals which, prima facie, may have exceeded Mr Nystrom's authority under the Power. If she does so, the Unit - to which Mr Nystrom is otherwise entitled – will have to be sold to fund that activity. In recording this, I am not expressing any view about the outcome of any claim by the estate against Mr Nystrom. 5. The effect of Ms Clarke's advice to Ms Rands is that, pursuant to the rule Cherry v Boultbee (1839) 4 My & Cr 442; 41 ER 171, if it is the case that Mr Nystrom owes a significant debt to the estate, he will not be entitled to participate in the benefit of the bequest to him of the Unit without paying that debt. Ms Clarke has advised that the appropriate course is for Ms Rands to take proceedings in either NCAT or this Court for an account from Mr Nystrom of his use of the Power. 6. Ms Rands has a duty as executrix properly to administer the estate in the interests of all the beneficiaries including to call in and, where there appears good grounds to do so, pursue debts owed to the estate. In my view, Ms Rands is entitled to the Court's advice that she is justified in acting in the way postulated by Ms Clarke's advice, with some small variations which I shall set out in what follows. 7. Notice of this application was served on Mr Nystrom through his solicitors. The Court computer seems to have listed Mr Nystrom as a defendant when, correctly, no defendant has been named in the summons. I am satisfied from the evidence before the Court that such service brought these proceedings to the attention of Mr Nystrom and that his solicitor is aware of today's hearing. Mr Nystrom's notice of the application is nevertheless relevant for the purposes of s 63(11) of the Act. Mr Nystrom was called outside the Court and there was no appearance. For more abundant caution, I will make an order confirming service on Mr Nystrom by his solicitor. 8. In my view, the first step which Ms Rands is justified in taking is to write to Mr Nystrom through his solicitor making formal demand for such amount of money as she believes, on the advice of counsel, is owing to the estate by Mr Nystrom. That demand should work through the mathematics (including likely future costs of administration) on the assumption of a repayment by Mr Nystrom to demonstrate how much Mr Nystrom would owe the estate after allowance for the fact that he is entitled to half the residue. 9. In the course of Ms Clarke's submissions, I endeavoured to do such an exercise with her assistance which suggested that, on the assumption that Mr Nystrom owed the estate $110,000, after payment of the pecuniary legacies and outstanding costs in relation to the administration of the estate, the amount of residue would be such that, if it were to be set-off against the $110,000, an amount of $70,000 or less would be payable by Mr Nystrom to make good the estate. Ms Rands should undertake that calculation to the best of her ability for the purposes of the letter of demand to Mr Nystrom and make clear in that letter that, if he fails to make good the amount, the estate will have to take steps for an account which will necessitate (in the absence of any other action by Mr Nystrom) the Unit having to be sold in due course to meet the estate's expenses. 10. Next, if that correspondence does not yield what Ms Rands considers to be a satisfactory outcome for the estate, the Court advises that Ms Rands would be justified in commencing proceedings in either NCAT or this Court for an account from Mr Nystrom of funds obtained by him pursuant to the Power. That action should be taken in whichever jurisdiction Miss Rands is advised would be the most cost efficient and is capable of yielding a judgment against Mr Nystrom to the extent that it is found that his withdrawals were unauthorised. 11. Finally, Ms Rands is entitled to indemnity from the estate in relation to the steps set out in paragraphs 16 to 18 above. 12. It is not appropriate in the present circumstances for the Court to provide any further advice on what steps Ms Rands should take after those referred to in the preceding paragraphs. 13. It will be a matter for Ms Rands to take advice on those steps, including whether further judicial advice is required, in all the circumstances as they present themselves at that future time. Those circumstances may include whatever Mr Nystrom may proffer by way of answer or defence. 14. The formal orders of the Court are: 1. Direct pursuant to UCPR Part 10, r 10.14(3) that service of the summons and statement of facts in these proceedings be taken to have been served on Lars Christer Nystrom on 22 December 2018 by service on Mark Hagen, solicitor. 2. The Court provides the advice set out in paragraphs [16] – [19] of the reasons herein. 3. The plaintiff is entitled to her costs of these proceedings on the indemnity basis out of the estate.