Key Learnings
- Jurisdiction to pass over: A Court will not readily exercise its jurisdiction to pass over a named executor, who is generally entitled to a grant of probate. That jurisdiction is to be exercised having regard to the due and proper administration of the estate and interests of the beneficiaries.
- Factors which support an order for passing over: The conduct of the plaintiff, who was an executor of the estate, overwhelmingly supported an application for her to be passed over. This included the plaintiff:
- mismanaging the estate and neglecting her executorial duties;
- having various unmanaged conflicts of interest; and
- having deficiencies in her overall character such that she was unfit to act as executor.
Background/Facts
Marshall Raymond Mace (deceased) left a Will dated 17 May 2018 appointing three executors, one of whom renounced probate. The remaining two executors were the deceased’s domestic partner, Margaret Cavanagh (plaintiff), and his son from a previous marriage, Christopher Mace (defendant).
The net value of the estate was modest, approximately $417,972. The main asset was the deceased’s half interest in a property located in Bairnsdale (farm). The plaintiff was the registered owner of the other half interest in the farm.
The deceased’s Will gave a life interest in his interest in the farm to the plaintiff, with the remainder of his interest going in equal shares to the defendant, his daughter Laura Mace, and to the plaintiff’s son from a previous relationship, Luke Dogger. The residuary estate passed to the plaintiff.
On 14 May 2018, a written ‘Granny Flat Agreement’ was entered into by the deceased’s mother Beverley Joyce Frances Mace (Mrs Mace), the deceased and the plaintiff. The Granny Flat Agreement provided that the deceased and the plaintiff would care for Mrs Mace, who was residing in the granny flat on the farm by providing meals, cleaning and laundry, assisting her with personal affairs, health care and the like.
Mrs Mace lived in the granny flat without incident from Christmas 2017 until about April 2019 when the plaintiff’s son, Mr Dogger, and his domestic partner, Angelina De Brincat, arrived at the farm. Mr Dogger and Ms De Brincat came and went at all hours.
On 18 September 2019, the deceased died. Thereafter, the plaintiff and Mr Dogger often said to Mrs Mace that the farm was theirs, and would threaten Mrs Mace to leave the farm. Mrs Mace felt unsafe and intimidated such that she sometimes stayed elsewhere with friends, or her son Greg Mace would sometimes stay with her at the granny flat.
By mid-February 2020, the plaintiff had changed the locks to the granny flat, without Mrs Mace’s permission. Upon entering the granny flat with the help of a locksmith, Mrs Mace saw that all her possessions had been removed, or missing, and there was damage to the property.
On 20 March 2020, the plaintiff purported to give notice to Mrs Mace to revoke her licence to reside in the granny flat.
On 31 March 2020, an occupational hygienist assessed the granny flat for methamphetamine contamination, which was detected on all sampled surfaces. The granny flat was deemed unfit for occupancy and required extensive decontamination works.
On 9 May 2020, Mrs Mace obtained and continues to reside in crisis accommodation.
Issues considered
Grounds of objection for passing over
The Court considered the four grounds of objection filed by the defendant, seeking that the plaintiff be passed over as executor and that Mark Maier, a solicitor, be appointed as independent administrator; at trial the defendant proposed that he too be passed over.
The four grounds of objection were that the plaintiff:
- mismanaged the estate in its dealings with Mrs Mace, thereby exposing the estate to liability;
- neglected her duties as executor to preserve the assets of the estate;
- had a conflict of interest and duty between her duty as executor and her interest as a life tenant of the farm; and
- was of bad character.
Decision
As a starting point, a Court will not readily pass over a named executor, as they are generally entitled to a grant of probate. The Court referred to the case of O’Halloran v Coffey (No 2) [2023] VSC 51, [52]-[73], citing that the jurisdiction is to be exercised having regard to the due and proper administration of the estate and the interests of the beneficiaries.
The Court also took into account the modest size of the estate, which militates against the costs of appointing an independent administrator.
Even so, the Court granted the defendant’s application, and appointed Mark Maier as independent administrator. In making this decision, the Court had regard to the following matters.
Mismanagement of estate in dealings with Mrs Mace
The Court did not find the plaintiff to be a reliable witness, as she was often not responsive of the questions asked of her, and invented claims. To that end, the Court rejected the plaintiff’s evidence that Mrs Mace told her that she had left the granny flat to live on a farm which she had purchased.
In changing the locks to the granny flat prior to the purported revocation of Mrs Mace’s licence to reside in the granny flat, the plaintiff exposed the estate to potential liabilities for breach of the Granny Flat Agreement. In fact, Mrs Mace commenced a proceeding in the Supreme Court on 22 December 2022 against the plaintiff in her personal capacity and against the deceased’s estate (Mrs Mace’s proceeding), claiming that the plaintiff breached the terms of the Granny Flat Agreement and damages in the amount of $263,694.39. Damages in default of defence was entered against the plaintiff in Mrs Mace’s proceeding.
Neglect of executorial duties to preserve assets
The Court found that the plaintiff failed to prevent loss and damage to the estate property. The granny flat was damaged and rendered uninhabitable because of methamphetamine contamination, jeopardising the security of the estate property and the remainder beneficiaries’ interests. In response to the occupational hygienist’s report, the plaintiff maintained a cavalier view that the granny flat just needed a ‘good wipe over’ with ‘soapy water’. The Court took this as confirmation of the plaintiff’s lack of fitness to act as executor.
Conflicts of interest
The plaintiff was conflicted in various ways and showed no capacity to manage them. The Court considered these conflicts to be profound and readily distinguishable from ordinary types of conflicts such as when an executor is also a beneficiary.
The plaintiff was conflicted between her duties as executor to preserve the estate and to uphold the Granny Flat Agreement, and her personal interest in excluding Mrs Mace from the granny flat so that she could use the farm. The plaintiff was also conflicted between her interest in defending Mrs Mace’s proceeding in her personal capacity, against her duty as executor in defending that proceeding. The beneficiaries of the estate could have no confidence that their interests in relation to that proceeding would be protected if the plaintiff remained as executor.
Lastly, the course of the trial revealed the plaintiff’s hostility towards the defendant. There was no realistic prospect of the estate being properly administered whilst the two remained as executors.
The plaintiff’s bad character
In concluding that the plaintiff was unfit to hold office as executor, the Court had regard to the conduct which demonstrated deficiencies in her character, namely the plaintiff’s:
- dismissiveness of the occupational hygienist’s expert opinion about the methamphetamine contamination;
- wild and unsubstantiated allegations about her former legal representatives deliberately drafting an untruthful affidavit;
- preparedness to invent claims to advance her personal interests, such as the claim that Mrs Mace had moved out of the granny flat;
- failure to prevent damage to Mrs Mace’s personal property; and
- threats and intimidation to drive Mrs Mace out of the farm, described as a ‘coercive campaign’ and ‘elder abuse’.
Conclusion
Despite the usual position that a named executor is generally entitled to a grant of probate, a Court may exercise its powers to pass over an executor if the due and proper administration of the estate, and interests of the beneficiaries requires it.
Factors which favour an order to pass over an executor include, for example, where the executor has:
- mismanaged the estate and neglected their executorial duties, exposing the estate to liability;
- conflicts of interest beyond the ordinary type, such as where an executor is also a beneficiary; and/or
- demonstrated bad character such that they are unfit to hold office as executor.
This article was written by Simon Crawford, Partner and Jinny Guo, Solicitor.
