[2024] SASC 132

Applicant: ANDREW MOFFA No Attendance First Respondent: ROSA STARR Counsel: MR D ELIX - Solicitor: 1878 ELIX LAWYERS Second Respondent: ANDREW MOFFA Counsel: MR D STARKE - Solicitor: STARKE LAWYERS Third Respondent: LISA WALSH No Attendance Fourth Respondent: MARINA WOOD Counsel: MR D ELIX - Solicitor: 1878 ELIX LAWYERS Fifth Respondent: MICHELLE THOMPSON No Attendance Sixth Respondent: ANGELA CATHERINE MOFFA Counsel: MR D STARKE - Solicitor: STARKE LAWYERS Seventh Respondent: SOPHIA PARIS DREW Counsel: MR D STARKE - Solicitor: STARKE LAWYERS Eighth Respondent: ISABELLA KAY MOFFA Counsel: MR D STARKE - Solicitor: STARKE LAWYERS Ninth Respondent: RILEY WALSH Counsel: MS M YULE - Solicitor: ADELTA LEGAL Tenth Respondent: KATIE THOMPSON No Attendance Eleventh Respondent: SAMUEL THOMPSON No Attendance Twelfth Respondent: MITCHELL WOOD No Attendance Thirteenth Respondent: CHAD WOOD No Attendance Fourteenth Respondent: BLAKE WOOD No Attendance Fifteenth Respondent: ADAM STARR No Attendance Sixteenth Respondent: EMMA STARR No Attendance Seventeenth Respondent : ALFIO MACOLINO Counsel: MR M SPENCER - Solicitor: O'LOUGHLINS LAWYERS Hearing Date/s: 04/10/2024 File No/s: SCCIV-18-506 B SUPREME COURT OF SOUTH AUSTRALIA (Civil: Application) DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment. The onus remains on any person using material in the judgment to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court in which it was generated. MOFFA v STARR (No 2) [2024] SASC 132 Judgment of the Honourable Justice B Doyle 27 November 2024 SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - MATTERS RELATING TO BENEFICIARIES SUCCESSION - ADMINISTRATION OF ESTATE - DISTRIBUTION - GENERALLY -- 1 of 17 -- The ninth respondent, Riley Walsh, filed an interlocutory application (FDN 255) seeking an order for an interim distribution from the estate of the late Michele Moffa, having regard to personal and financial circumstances. He further seeks that the costs of this application be paid from the estate. The administrator of the estate resists the application and submits that he has regularly reviewed whether it is appropriate for interim distributions to be made. The administrator gave evidence that because funds may be required to finalise the administration of the estate and because the administration has been notified of claims against the estate that are significant in complexity and amount, he does not consider it prudent or appropriate to make an interim distribution to beneficiaries at this time. Held: 1. The administrator has not been shown to be unrealistically cautious. 2. It is not otherwise appropriate to require the administrator to make an interim distribution to beneficiaries. 3. The costs of the application should be reserved. Administration and Probate Act 1919 (SA) s 69; Inheritance (Family Provision) Act 1972 (SA); Law of Property Act 1936 (SA) s 70; Supreme Court Act 1935 (SA) s 18; Trustee Act 1936 (SA) s 29, referred to. Gonzales v Claridades (2003) 58 NSWLR 188, applied. Burke v Public Trustee for the State of South Australia [2022] SASCA 64; Gonzales v Claridades (2003) 58 NSWLR 211; Munro v Munro [2017] SASC 48; Re Ward; Peirce v Ward [2020] VSC 467; Walker v Walker [2022] NSWSC 1104, considered. -- 2 of 17 -- MOFFA v STARR (No 2) [2024] SASC 132 Civil 1 B DOYLE J: The ninth respondent, Riley Walsh (‘Riley’) is one of ten residuary beneficiaries of the estate of the late Michele Moffa (‘the deceased’). By interlocutory application made on 28 August 2024,1 he seeks an order that the seventeenth respondent and administrator of the estate, Mr Alfio Macolino, make an interim distribution to him from the estate. Background 2 At the date of his death in August 2017, the deceased was a widower with five children: Rosa Starr (‘Rosa’), Andrew Moffa (‘Andrew’), Michelle Thomson (‘Michelle’), Lisa Walsh (‘Lisa’) and Marina Wood (‘Marina’). The deceased had made a will on 25 November 2016 (‘the 2016 will’) by which he appointed Andrew and a solicitor, Mr Nicola Minicozzi, as his executors. 3 At the time of his death, the deceased owned an interest in five properties in metropolitan Adelaide. One such property is in Stephen Street, Norwood, in which the estate and Andrew each hold a half interest. The deceased also owned one quarter of the units in the Adelaide Democratic Unit Trust (the ‘Unit Trust’), the other three quarters of which were owned by Andrew. The deceased had other assets and, according to the administrator, has a claim against the trustee of the Unit Trust (Democratic Chambers Pty Ltd) for repayment of a beneficiary loan account, in the amount of approximately $250,000. Andrew is the secretary of Democratic Chambers Pty Ltd and, together with his wife Sonia, is one of the two directors of that company.2 4 Under the terms of the 2016 will, the residue of the deceased’s estate was left to his trustee on trust to divide in ten equal parts and to: • give a one-tenth part to each of Rosa, Andrew, Lisa and Marina; • give a one-tenth part to each of the children of Rosa, Andrew, Lisa and Marina; • hold a one-tenth part on a testamentary trust as set out in clause 6 of the will (‘Michelle’s trust fund’); • hold a one-tenth part on a testamentary trust as set out in clause 7 of the will (‘Michelle’s children’s trust fund’). 1 FDN 255. 2 The shares in the company are owned as to 50% by Andrew, as to 25% by Sonia and as to 25% by the estate. -- 3 of 17 -- [2024] SASC 132 B Doyle J 2 5 The estate proceedings in which this application is made were first commenced in 2018. They have a lengthy history and have involved, inter alia: • a contest to the validity of the 2016 will; • a contest as to the appointment of the executor and later administrator of the estate; • questions as to the costs entitlements of the parties and their quantification; • the prospect of claims pursuant to the Inheritance (Family Provision) Act 1972 (SA) (‘IFP Act’). 6 Mr Macolino was appointed administrator pendente lite in late 2018 and administered the estate by calling in and holding the assets until further order. 7 On 8 April 2022, Michelle made an application by her litigation guardian seeking directions that Mr Macolino take steps to sell the Stephen Street property and another property owned by the estate and Andrew in Edward Street Norwood, and, if Andrew were to refuse to join in a sale, that Mr Macolino apply under s 70 of the Law of Property Act 1936 (SA) for an order for sale. 8 At the time of the ultimate hearing of that application, the question whether probate should be granted in respect of the 2016 will had not been resolved. That had a potential bearing on the question whether the properties should be sold. Andrew is a beneficiary under the 2016 will but not, to any significant extent, under an earlier 2003 will. A sale of the Stephen Street property had the potential effectively to deprive Andrew of the opportunity to appropriate the estate’s interest in the Stephen Street property to himself in satisfaction of his entitlement under the 2016 will. 9 For reasons that are set out in his judgment,3 Blue J made orders that the administrator take steps to sell the Edward Street property, but not the Stephen Street property. 10 In connection with that application, Andrew gave an undertaking to the Court that, in the event that a grant of probate of the 2016 will were to issue to him as the executor named therein, he would use all reasonable endeavours to procure the consent of the other beneficiaries to, or a direction by the Court approving, a transaction whereby the moiety interest of the deceased in the Stephen Street property is appropriated to him in or towards satisfaction of his interest in the residuary estate of the deceased under the will on the basis that it be treated as having a specific value either agreed by all other beneficiaries or determined by the Court on an application for directions and, subject to obtaining such consents, 3 Moffa v Starr [2023] SASC 2. -- 4 of 17 -- [2024] SASC 132 B Doyle J 3 exercise his powers as executor accordingly, and as beneficiary, accept the appropriation. 11 Mr Macolino was subsequently appointed administrator of the estate pursuant to a grant of letters of administration with the 2016 will in solemn form annexed to the will on 28 July 2023, pursuant to an order made by Blue J on 23 May 2023. It follows that the undertaking referred to above is not binding upon Andrew. 12 The orders of the Court made on 23 July 2023 also provided for the costs of the parties to be paid from the estate.4 In respect of some parties, the costs were fixed, and in respect of others, the order was for the costs to be taxed if not agreed. 13 By an order made on 8 May 2024,5 Blue J gave advice and directions that it would not be appropriate for Michelle, through her litigation guardian, to commence a claim against the estate under the IFP Act. All other beneficiaries are now out of time to make a claim under the IFP Act. 14 The status of the administration of the estate was the subject of a report to beneficiaries by the administrator dated 14 May 2024. 15 That report disclosed that save in respect of the half interest of the estate in the Stephen Street property, the estate’s interests in real estate have been realised. The estate has not realised the value of its unit in the Unit Trust, nor recovered the claimed value of a beneficiary loan account in respect of that trust. 16 Various costs claims of the parties to the estate proceedings had been resolved. At that time, the unpaid balance of costs claims that had not been paid (or reviewed by the administrator’s costs consultant) came to approximately $475,000. 17 A more recent update to beneficiaries given by letter dated 5 September 2024 disclosed that the only outstanding claim for costs relates to the claim by Andrew. 18 The May 2024 report indicated that whilst the estimated net value of the estate was in the order of $3.285 m, the cash funds then available were in the order of $2.090 m, with estimated liabilities in the order of $533,000, with the result that the cash currently available to the estate at that time was in the order of $1.555 m. 19 In addition to the unresolved claim for costs, the matters to which the administrator must still attend include dealing with the Stephen Street property, dealing with the estate’s interests in respect of the Unit Trust, and dealing with any other claims by or against the estate. The administrator’s concern is that there is a risk that substantial funds may be required in relation to dealing with these matters. 4 Orders dated 23 May 2023 (FDN 232) [7]-[12]. 5 Orders dated 8 May 2024 (FDN 251) [2]. -- 5 of 17 -- [2024] SASC 132 B Doyle J 4 In light of the significant costs already incurred in the estate proceedings, he is concerned that the legal costs alone of any further disputation could be significant. Riley’s application 20 As has been noted, Riley’s application seeks that the administrator, Mr Macolino, make an interim distribution to him from the estate of the deceased. The application is supported by an affidavit affirmed by him on 23 August 2024.6 Riley filed written submissions before7 and after8 the hearing on 4 October 2024 and made oral submissions at the hearing. 21 In his affidavit, Riley deposes to his previous request that an interim distribution be made, and the administrator’s refusal to do so. He affirms that he is in financial difficulty in that he has bipolar disorder which affects him to the point that he is unable to maintain employment; he is presently in receipt of JobSeeker allowance; that allowance is insufficient to meet his living expenses (such that he intermittently relies on contributions from his friends and family); he does not own real property and has no superannuation or investments; and he has minimal savings (in the order of $3,550 at the time of affirming his affidavit). 22 Riley’s written submissions quantified the interim distribution he sought. Starting with the presently available cash of $1.555 m (and therefore excluding the value attributable to the estate’s interest in the Stephens Street property and in respect of the Unit Trust), he calculated a 10% interest as equating to approximately $155,000. He sought an interim distribution as to half of that amount, or such lesser amount as the Court deems appropriate. Riley submits that his financial circumstances are such that even a small interim distribution will alleviate his situation. 23 Riley contended that the Court may grant the direction sought by him in its original jurisdiction in relation to the administration of deceased estates. He pointed to the conferral by s 18 of the Supreme Court Act 1935 (SA) of full authority to determine all questions relating to testamentary cause and matters. 24 The Uniform Civil Rules 2020 (SA) make provision with respect to aspects of the exercise of the Court’s jurisdiction with respect to deceased estates. Rule 232.2(1) provides that a person who is eligible to apply to the Court for the administration of a deceased estate under Rule 232.1 (the rule concerning applications for general administration) may instead apply for the determination of any question or for any relief which could be determined or granted in such an application. Without limiting that sub-rule, Rule 232.2(2) provides that an action may be brought, inter alia, for an order directing an administrator to do or abstain from doing any act. 6 FDN 256. 7 Written Submissions of Riley Kevin Walsh filed on 25 September 2024 (FDN 262). 8 Supplementary Written Submissions of Riley Kevin Walsh filed on 28 October 2024 (FDN 270). Those submissions addressed the Twelfth Macolino Affidavit, to which reference is made below. -- 6 of 17 -- [2024] SASC 132 B Doyle J 5 25 Riley’s submissions also referred to the Court’s jurisdiction to give advice and provide directions. That jurisdiction may be invoked by an executor or administrator who seeks advice that they are justified in making, or refraining from making, an early9 or interim distribution of an estate.10 That jurisdiction has not yet been invoked, and it is available only at the suit of the trustee, executor or administrator, as the case may be.11 It is not open to Riley to invoke the Court’s jurisdiction to provide advice or direction to an administrator. 26 Rule 232.2, like the similarly expressed Rule 206 of the Supreme Court Rules 2006 (SA):12 applies to questions arising in the administration of the estate as between the executor and the beneficiaries13 and, like the administration action, is designed to deal with problems arising within the administration of the estate14 and to enforce administration according to legal and equitable principle, not to authorise or to direct departures from it.15 This includes orders for accounts and inspection of documents and orders compelling an executor to act where the executor has failed to administer the estate or complete its administration.16 27 The Court is not, on an application proceeding under Rule 232.2, and absent reliance on some statutory power,17 empowered to make orders with respect to the administration of an estate which do not reflect the rights, liabilities or duties of the parties in relation to the estate. As Farwell LJ said in Re Hazeldine’s Trusts:18 … if the trustees cannot do it, neither can the Court, for, as Lord Chancellor Law says in Fitzpatrick v Waring [(1882) 11 LR Ir 35, 44]: ‘In the exercise of its jurisdiction for the administration of trusts this Court, I apprehend, has no power to make or authorize any leases or other dispositions of the trust property which the trustee could not have made himself. The Court, in such a case, whether it assumes the place of the trustee, or guides him in the discharge of his duties, is still confined within the limits of the trust as constituted by its author, and has no authority to go beyond those limits. Its business is to execute the trusts, not to alter them’. 28 The right of a beneficiary such as Riley is not to an identifiable share of the estate, but to its due administration. His right is correlative with the duty owed by Mr Macolino as administrator. 9 GE Dal Pont, Equity and Trusts in Australia (8th ed, 2023) at [23.180], referring to Re Cassidy [1979] VR 369 and Bullas v Public Trustee [1981] 1 NSWLR 641. 10 Ex parte Schneider; Re Estate Blashild [2009] NSWSC 566. 11 Administration and Probate Act 1919 (SA), s 69(1). 12 Munro v Munro [2017] SASC 48 at [28] (Stanley J). 13 In re Davies (1888) 38 Ch D 210 at 212; In re Giles (1890) 43 Ch D 391 at 398; Hudson v Gray (1927) 39 CLR 473 at 501-504 (Higgins J). 14 Gonzales v Claridades (2003) 58 NSWLR 211 at [31] (Mason P). 15 Gonzales v Claridades (2003) 58 NSWLR 211 at [34] (Mason P); Templeton v Leviathan Pty Ltd (1921) 30 CLR 34 at 56, 65, and 73; In re Davies (1888) 38 Ch D 210 at 212. 16 Haines, Succession Law in South Australia (2003), [27.3], [25.4] referring to the predecessor to 6SCR206 r 63.04 of the 1987 Supreme Court Rules. 17 Cf Trustee Act 1936 (SA) s 59C. 18 [1908] 1 Ch 34 at 40-41. -- 7 of 17 -- [2024] SASC 132 B Doyle J 6 Duty to make interim distributions 29 It is plain that there are circumstances in which a legal personal representative can come under a duty to make an interim distribution of residue to a residuary beneficiary prior to the estate being fully administered.19 30 In Gonazles v Claridades,20 Campbell J said: Sometimes it can be the duty of a legal personal representative to make an appropriation of estate assets so that he or she can pay a pecuniary legacy or distribute a specific legacy or devise, or make an interim distribution of pecuniary legacies or interests in residue, even though the duties of administration are not complete. If the legal personal representative is in a situation of knowing that there are some distributions of the estate which could be made in accordance with the will or the rules of intestacy which govern the distributions of that estate, that there was no realistic prospect that that distribution could be cut down or affected by those aspects of administration of the estate which remained unperformed, and that the remaining tasks of administration were not likely to be completed soon, then it may be the duty of the legal personal representatives to make an interim distribution to that extent. … A further example can arise if there were expenses of administration which would need to be paid in the future from the estate. If those expenses were of uncertain amount (as could be the case if the legal personal representative were engaged in litigation on behalf of the estate) the legal personal representative would be entitled to adopt a very cautious (though not unrealistically cautious) view about what the possible extent of those expenses might be, in deciding whether, or to what extent, a gift might be cut down. If, however, after taking such a cautious view of what the expenses of the estate might be, it was clear that the assets of the estate were more than enough to meet them, and if there were no other problems of administration outstanding, it could be the obligation of a legal personal representative to make an interim distribution of those assets in the estate which are not at risk of being used up in the future administration of the estate, at least in circumstances when it was clear who the correct recipient of those assets was. 31 As Richmond J subsequently observed in Walker v Walker:21 There is a clear recognition in these observations that a duty to make an interim distribution of residue can arise even if the residue has not been finally ascertained because the expenses of the administration were uncertain, provided that on a cautious view those expenses of administration could be adequately provided for. There are several examples in the authorities where an interim distribution of residue has been accepted as necessary and appropriate in such circumstances.22 19 Walker v Walker [2022] NSWSC 1104 at [62] (Richmond J), referring to Gonzales v Claridades (2003) 58 NSWLR 188 at [47], [50] (affirmed on appeal (2003) 58 NSWLR 211 at [16]); Ex parte Schneider; Re Estate Blashild [2009] NSWSC 566 at [55]-[75]; Re Badstuebner (2020) 4 QR 490 at [35]; Re Ward [2020] VSC 467 at [49]. See also GE Dal Pont, Law of Succession (3rd ed, 2021) at [14.47]-[14.48]. 20 (2003) 58 NSWLR 188 at [47], [50]. 21 [2022] NSWSC 1104 at [64] (Richmond J). 22 Ford v Princehorn [2012] NSWSC 1165 at [27]-[29]; Dawson v Snedden [2019] NZHC 736; (2019) 5 NZTR 29-009 at [62]; Re Badstuebner [2020] QSC 144 at [35]; Re Ward [2020] VSC 467 at [49]. -- 8 of 17 -- [2024] SASC 132 B Doyle J 7 32 It follows that where the circumstances might call for an interim distribution, the administrator may come under an anterior duty to give due consideration to the making of an interim distribution. That proposition is common ground between Riley and the administrator. 33 I did not understand Riley’s complaint to be that the question of whether to make an interim distribution had not been considered by Mr Macolino;23 indeed, he made clear that he did not submit that the administrator had failed to act ‘in good faith or with genuine consideration’.24 Furthermore, I am satisfied, having regard to the evidence, that the administrator has given, and will continue to give, consideration to whether an interim distribution should be made. 34 In the course of argument, Riley’s counsel submitted that it was not being suggested that the administrator had ‘done anything wrong’ and that the highest that any criticism was made was to say that he was being unrealistically cautious.25 In his supplementary submissions, Riley submitted that:26 It is conceded that the Administrator does not necessarily have an obligation to make interim distributions, but rather an obligation to consider whether to make those distributions. Riley’s complaint is that the Administrator has been unrealistically cautious in deciding not to make any interim distribution. 35 It may be accepted that Riley intends no personal criticism of the administrator’s conduct. But where a legal personal representative has given consideration to making an interim distribution, and has resolved that he or she should not do so, it is difficult to see that the Court can, or if it can, should, direct them to make an interim distribution unless the Court is satisfied that, in the circumstances, to fail to do so would be to fail to discharge their duties. 36 If the position is merely that an administrator might be justified in making an interim distribution, but could not be said to have come under a duty to do so because, for example, refraining to do so would be very, but not unrealistically, cautious, it seems to me that a direction by the Court compelling him or her to make an interim distribution in a particular amount would risk the Court itself assuming the role to which the administrator has been appointed, and in circumstances where it may be, as it is here, that the Court is not aware of all of the matters that bear on the decision whether a distribution is appropriate. 37 It is to be remembered that even where a Court gives judicial advice and direction, the Court does not conventionally compel the trustee or legal personal representative to act in a particular way. The form of relief granted is usually 23 Riley’s counsel submitted during argument that he was not saying that Mr Macolino had not considered his duty: T17. 24 Supplementary Written Submissions of Riley Kevin Walsh (FDN 270) at [3.9]. 25 T16. 26 Supplementary Written Submissions of Riley Kevin Walsh (FDN 270) at [3.6]-[3.7]. -- 9 of 17 -- [2024] SASC 132 B Doyle J 8 permissive: it typically constitutes advice that the trustee or legal personal representative ‘would be justified’ in acting in a particular way.27 38 That is not to deny that proceedings commenced under s 69 of the Administration and Probate Act 1919 (SA) may be adapted and conducted so as to result in binding determinations in appropriate cases.28 39 It is, however, a distinct and different question whether, where different courses of conduct are available to an administrator, neither of which would amount to a breach of duty, and where no general order for administration is sought or has been made,29 the Court would mandate the pursuit of one over the other at the suit of a beneficiary. 40 Bearing in mind the nature of the Court’s jurisdiction in respect of the administration of estates, I would not conclude that the Court would never do so. But having regard to the undesirability of the Court assuming the role and responsibility that the law recognises rests on another, I consider that the Court should at least exercise significant caution, and would require special circumstances, before doing so in a case where the administrator is not him or herself seeking direction and has not become unable to make, or disabled from making, a decision in his or her own right by reason of some conflict or other difficulty.30 Unrealistically cautious? 41 Riley submits that the costs and expenses incurred in the estate proceeding, although vast, were incurred in circumstances where there was a multiplicity of parties. Riley submits that, by contrast, any further litigation that may be commenced or resisted by the administrator would not involve all the beneficiaries. 42 Further, the administrator will only likely institute or actively defend such proceedings with the Court’s imprimatur, which will not be given if the prospects 27 See, eg, Ansett Australia Ground Staff Superannuation Plan Pty Ltd v Ansett Australia Ltd (2004) 49 ACSR 1 at [53] (Goldberg J), Re Application of NSW Trustee and Guardian [2014] NSWSC 423 at [24] (Kunc J), Burke v Public Trustee for the State of South Australia [2022] SASCA 64 at [364] (Doyle JA). 28 See, eg, Re Magarey Farlam Lawyers Trust Accounts (No 2) (2006) 96 SASR 323 at [28] (Debelle J), approved in Re Magarey Farlam Lawyers Trust Accounts (2007) 99 SASR 40 at [43] (White J, Nyland and Kelly JJ agreeing). 29 Cf McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 at 633 (Young J). 30 In a different but analogous context in Kelly v Connell as executor of the Estate of John Kelly [2024] WASC 274, after observing (at [33]) that the ‘limitless variety of circumstances in which the inherent jurisdiction may be invoked means that inflexible statements about the limits of the court’s inherent jurisdiction are incompatible with the very nature of the jurisdiction’, Tottle J expressed (at [34]) ‘serious reservations as to whether making an order directing an executor, who has not breached any relevant duty or otherwise acted improperly, to make an interim payment to a beneficiary making a claim under the Family Provision Act, is a proper exercise of the inherent jurisdiction’. He said that ‘such an order would go beyond the exercise of a supervisory jurisdiction and would involve the substitution of the court’s discretion as to the appropriate steps to be taken in the administration for that of the executor. To exercise the discretion in this way would be to invite disgruntled beneficiaries to invoke the court’s jurisdiction to challenge otherwise unimpeachable decisions of executors in the hope that they may secure a different outcome from the court’. -- 10 of 17 -- [2024] SASC 132 B Doyle J 9 of success are low. Riley submits that in the case of litigation against Andrew, should the administrator succeed, the costs are likely to be borne by him, rather than the estate. 43 These submissions may be accepted, but it is necessary to consider the administrator’s position in more detail before it can be decided whether, as Riley submits (on the facts known to him at least), the administrator is taking an unrealistically cautious approach, such that he is under a duty to make an interim distribution. The administrator’s position 44 The administrator resists the application, and he relies upon an affidavit sworn by him on 11 September 2024 (‘Tenth Macolino Affidavit’).31 45 In the Tenth Macolino Affidavit, Mr Macolino swore that he has regularly reviewed whether it is appropriate for interim distributions to be made to the beneficiaries. 46 He identified five matters in respect of which the estate may need funds for the purpose of litigation. They are: • the outstanding quantification of Andrew’s costs entitlement; • recovery of a beneficiary loan account from the trustee of the Unit Trust; • pre-action discovery against Democratic Chambers Pty Ltd, the trustee of the Unit Trust, arising out of an asserted failure to produce documents requested under s 84B of the Trustee Act 1936 (SA); • action to compel the transfer to the administrator of the estate’s unit in the Unit Trust; and • an application for the partition and sale of the Stephens Street property. 47 Mr Macolino has sworn that funds will likely also be needed for any advice and direction applications (including, for example, seeking any Re Beddoe orders) associated with such litigation. 48 Mr Macolino also deposed that he is aware of ‘further significant claims that may be made against the estate’. His evidence is that he is not at liberty to disclose the details of those claims having regard to the effect of Rule 61.4 of the Uniform Civil Rules 2020 (SA). 49 The prospect of those claims has prompted the administrator to publish a public notice in The Advertiser on 4 September 2024 requiring that particulars of any claims against the estate should be provided to the administrator’s solicitors 31 FDN 257. -- 11 of 17 -- [2024] SASC 132 B Doyle J 10 by 2 October 2024. That notice, which has been provided to the beneficiaries, was published for the purpose of invoking s 29 of the Trustee Act 1936 (SA).32 50 Mr Macolino deposed that in all the circumstances he was concerned that there are potentially a number of disputes that may require significant amounts of cash in order that the rights associated with the estate can be asserted by way of future litigation and that any distribution to beneficiaries at this time may leave the estate without adequate means to meet its potential liabilities associated with future litigation. He was also concerned that the estate may be at a tactical disadvantage in any litigation against a beneficiary who (by virtue of receiving reports in that capacity) is aware of the estate’s capacity, or incapacity, to fund litigation. 51 Mr Macolino’s evidence is that although the commerciality of any such litigation would be a matter he would take into account in his decision-making as administrator (and which would be taken into account by the Court in providing any advice or making any Re Beddoe order), it may still be necessary and appropriate for the estate’s cash to be used in funding such litigation in anticipation of recovering costs at the end of such litigation. If there are insufficient funds to meet the estate’s liabilities (as a result of actions he may take as administrator) then Mr Macolino might find himself personally financially liable for those liabilities. 52 His further concern is that if a distribution is made to one beneficiary, then others may seek distributions. Given his fiduciary duty, he is concerned that a preferential approach would (in the absence of a direction from the Court) not be consistent with such a duty. 53 Mr Macolino also swore a further affidavit on the same day (‘Eleventh Macolino Affidavit’).33 He filed an application that, both on an interim and final basis, the affidavit be filed on a judiciary access only basis under Rule 32.2.34 There being no opposition to me doing so, I permitted the affidavit to be filed on a judiciary access only basis until further order.35 However, at the hearing of the matter, I expressed concern as to whether, in the context of an inter partes application, as distinct from an application for advice and direction which will 32 The effect of s 29(1) is that where appropriate notice has been given, the representative or trustee may, at the expiration of the time given in the notice, distribute the estate of the deceased person or the trust property or any part thereof amongst the persons entitled thereto, having regard only to the claims of which he then has notice, and shall not be liable for the estate or property or any part thereof so distributed to any person of whose claim he had no notice at the time of the distribution. Pursuant to s 29(2) of the Trustee Act 1936 (SA), where a representative or trustee has received a claim or notice of claim against the estate of a deceased person or against trust property, and they dispute the claim, they may give to the person making the claim, or giving the notice, a notice in writing that the claim is disputed and requiring the claimant either to withdraw the claim or institute proceedings to enforce it within six months of the service of the dispute notice. If the claim is neither withdrawn nor prosecuted, they may apply to the Supreme Court seeking an order that the claim be absolutely barred. 33 FDN 258. 34 FDN 259. 35 Orders made on 12 September 2024 (FDN 260). -- 12 of 17 -- [2024] SASC 132 B Doyle J 11 often appropriately proceed ex parte,36 it was appropriate for me to place reliance upon material that had not been made available to the other parties, or at least Riley. I gave Mr Macolino a further opportunity to consider whether any of the content of the affidavit could in fact be disclosed in an open affidavit. I also granted the parties permission to make further submissions with respect to any such affidavit.37 54 As matters transpired, Mr Macolino did file and rely upon a further open affidavit, being the Twelfth Affidavit of Alfio Macolino made on 10 October 2024 (‘Twelfth Macolino Affidavit’) and withdrew any reliance upon the Eleventh Macolino Affidavit.38 55 In the Twelfth Macolino Affidavit, Mr Macolino has deposed to a number of matters in greater detail. 56 With respect to the outstanding question of the quantification of Andrew’s costs entitlement, Mr Macolino has annexed recent correspondence concerning the claim for costs and associated requests for documents and sworn that he is concerned that the Court will ultimately need to assess and determine the claim for costs. 57 With respect to his attempts to secure repayment of a beneficiary loan from the Unit Trust, Mr Macolino explained that he was restricted by rules relating to pre-action communications from providing detail, but explained that the issue was unresolved and ongoing. 58 In relation to the obtaining of documents from the trustee of that trust, Mr Macolino provided further background to the difficulties that he has encountered, and the fact that he considers he will need to consider whether those documents support further claims by the estate arising out of the administration of the trust, including on the basis that: • Andrew and Sonia having been paid management fees from the trust over the past decade; • the trust has not made distributions to the estate since the deceased’s death; • whilst not paying down the deceased’s beneficiary loan, the beneficiary loan of Andrew had been reduced; 36 Assistant Commissioner Michael James Condon v Pompano Pty Ltd (2013) 252 CLR 38 at [70] (French CJ); Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar the Diocesan Bishop of Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 at [64]-[65] (Gummow ACJ, Kirby, Hayne and Heydon JJ); Burke v Public Trustee for the State of South Australia [2022] SASCA 64 at [365] (Doyle JA). 37 Orders made on 4 October 2024 (FDN 264). 38 Mr Macolino made an interlocutory application seeking permission to uplift the Eleventh Macolino Affidavit from the file (FDN 265). I granted the application (FDN 267) and have not placed any reliance upon its contents. -- 13 of 17 -- [2024] SASC 132 B Doyle J 12 • no unit holder meetings at which the estate has been represented have been held in the past six years. 59 Mr Macolino also swears that despite requests by correspondence, the transfer of the estate’s share into his name has yet to be facilitated and he is concerned that he may need to seek the intervention of the Court. 60 In respect of the claims that may be made against the estate, Mr Macolino has deposed that he has received correspondence setting out further possible claims against the estate and that he is restricted by pre-action rules from disclosing the detail of those claims. Mr Macolino has received claims following the publication of his notice under the Trustee Act but not on an open basis. Importantly, to the extent that he is aware of the particulars of the proposed claims, Mr Macolino has sworn that, having regard to his experience as a legal practitioner, the foreshadowed claims are significant in complexity and amount. 61 Mr Macolino’s evidence is that he therefore considers it prudent for the estate to retain funds to meet any claims against the estate for damages and interest, to meet the costs of prosecuting or defending (as relevant) those matters, to meet any adverse costs orders that could be made against the estate and to meet the costs of seeking advice and direction from the Court (as required) in relation to those matters. 62 In his submissions, Mr Macolino submits that he does not consider that he can have regard to Riley’s request for an interim distribution on a stand-alone basis because he should not favour one beneficiary over another. On the hearing of the application, counsel representing one other group of beneficiaries indicated that if there was to be a distribution to Riley, those beneficiaries would submit that there should be a distribution to them as well. Riley has indicated, in light of this, that he accepts that it would not be appropriate for the Court to make an order for an interim distribution to him alone, and that any order would need to be made on an equal footing as between the residuary beneficiaries. 63 Mr Macolino submits that by reason of some restrictions on the disclosure that he can make, he is left to exercise his judgment with respect to the question of any interim distribution based upon a broader picture than the other beneficiaries and the Court can see and, to that extent, were the Court to direct the making of an interim distribution, it would be doing so in circumstances where it is partially blind as to the risk that future litigation and disputation could leave the estate insolvent. Consideration 64 Riley’s personal circumstances are such that his requests for an interim distribution are entirely understandable. His need is a relevant consideration for the administrator in exercising his judgment about whether an interim distribution -- 14 of 17 -- [2024] SASC 132 B Doyle J 13 should be made,39 but absent the consent of other beneficiaries to a differential approach, it is appropriate for the administrator to proceed on the basis that any distribution he makes to Riley may (subject to adjustment to reflect his percentage entitlement in respect of the residuary estate) need to be made to the other beneficiaries. 65 A complication that arises here is that a distribution to beneficiaries will include a distribution to beneficiaries with whom, directly or indirectly, the administrator apprehends there may be further and significant legal disputation. 66 If the only reason for the administrator refraining from making an interim distribution here were his concern about costs that might be incurred in pursuing possible claims on behalf of the estate, finalising the existing quantification of its undisputed liability to Andrew for costs, and dealing with the Stephen Street property, I would incline to the view that the administrator is being unrealistically cautious. I would conclude that whilst he is entitled to take a very cautious approach in light of those unresolved matters, it would still be appropriate, particularly in view of Riley’s need, to make a modest interim distribution to each of the residuary beneficiaries. That is in part because, as Riley submits, the administrator ought not embark on litigation, or incur significant expenditure in relation to the unresolved matters, which is not more likely than not to augment, rather than deplete, the estate, on a net basis. 67 There is, however, more to it than that. The administrator is on notice of potentially complex and significant claims against the estate. It is an unfortunate but notorious fact that litigation generally, including litigation on behalf of, against, or in respect of, deceased estates, has the potential to become complex and expensive. In particular, claims against estates which may involve the conduct of a deceased give rise to their own difficulties. 68 Apart from the possible exposure to adverse claims, and the costs that might be involved in defending them, the administrator is concerned that if the estate is, to the knowledge of possible claimants, depleted to the point that its ability robustly to defend claims that he might consider should be defended is compromised, this might be highly prejudicial to the estate. In considering the weight to be given to that concern, I bear in mind that the administrator is himself an experienced legal practitioner without any personal interest in prolonging the administration. 69 Having regard to those additional considerations, and bearing in mind that the administrator has more information about the risks than he has been able to disclose, I consider that the administrator is adopting an approach which appears to be very cautious, but which I cannot and do not find to be unrealistically cautious. 39 See, eg, Re Ward; Peirce v Ward [2020] VSC 467 at [49] (Englefield JR). -- 15 of 17 -- [2024] SASC 132 B Doyle J 14 70 I do not accept the submission made in Riley’s supplementary submissions that unrealistic caution generally might be inferred by reference to the administrator’s approach to the Stephen Street property. The submission was in part based upon the proposition that Andrew had undertaken to appropriate the estate’s interest in Stephen Street to him in satisfaction of his entitlement under the will, with the result that if he were to refuse to meet that undertaking, an application under s 70 of the Law of Property Act 1936 (SA) would likely succeed without complication. As was noted earlier, the undertaking given is not presently operative. In any event, I would be reluctant to infer that the administrator’s caution about the complication that might be involved in dealing with the estate’s interest in the Stephen Street property is a basis to deprecate the caution expressed in relation to other matters which, on their face, appear to have the potential for complexity and expense. 71 Whilst I accept that the disputes that have arisen and been resolved already in relation to the estate necessarily involved a wider group of parties than might be involved in any outstanding future disputes, I nevertheless consider that the fact of the earlier disputation and the preparedness of the parties to incur significant expense advancing their positions fortifies my conclusion that the administrator has not been shown to be unrealistically cautious.40 72 I decline to find that in refraining from making interim distributions the administrator has been unrealistically cautious or has otherwise failed to give genuine consideration to the making of an interim distribution. 73 If there are circumstances in which, absent such a conclusion, the Court might nevertheless direct the making of an interim distribution, I do not consider that there is a proper reason to do so here. 74 I would expect, and I see no reason to doubt, that the administrator will keep the position under very close review. It is plain that the circumstances relevant to the possible claims of and against the estate will be developing in the coming weeks and months. 75 Needless to say, if the administrator considers that a distribution can be made which would assist Riley’s difficult circumstances, he should not delay in exploring that course. If he is in doubt about his proposed course of action, no doubt he will seek appropriate direction from the Court. As well, it should go without saying that the outstanding matters in respect of which the estate may be the moving party need to be expeditiously progressed. 76 In respect of the costs of this application, the administrator asks only that the costs of this application be reserved and considered after the litigation involving 40 I add, however, that nothing in these reasons should be taken to constitute a finding adverse to Andrew in relation to any claims in which he may be involved. Whilst he was represented during the hearing of this matter, there was no occasion for him to enter into the merits of any of the underlying matters, and I draw no inference from the absence of any evidence or submissions on his behalf about them. -- 16 of 17 -- [2024] SASC 132 B Doyle J 15 the estate has been resolved. In my view, given Riley’s circumstances, the potential for any adverse costs order that might be made to be set-off against a future distribution, and the information asymmetry between him and the administrator in relation to the question whether an interim distribution is appropriate, that is an appropriate course. 77 I therefore dismiss the interlocutory application and reserve the question of costs of and incidental to it. -- 17 of 17 --