Executor, De facto, Family Provision, Devastivit

A devastavit means ‘to have laid waste’ defined legally as – a mismanagement of the estate by the deceased’s legal personal representatives

in squandering and misapplying the assets, contrary to the duty imposed on them”;

for which they shall answer out of their own pockets as far as they had, or might have had, assets of the deceased’.

Devastavit actions are usually brought against executors who have spent estate money extravagantly or misapplied estate assets.

Chronology

Olga Hart and James Ross lived together for about 20 years; separating ‘in or around 2003’. Neither Olga, nor James sought a property settlement under the Domestic Relationships Act 1993 (ACT), the Family Law Act 1975 (Cth), or by informal arrangement.

Olga made wills in 1996, 2009, 2015, 2016, and 2017. James claimed that in each of these wills he was named executor and was to receive a percentage of the value of Olga’s residential property upon her death.

The Trust

In December 2017, Olga suffered a heart attack and was diagnosed with stage four lung cancer in February 2018, in August 2018, she met with a solicitor who advised that a “no contest” clause in her will would be unenforceable however in the ACT if a deceased estate has no net value there would be no funds available for a family provision claim. Olga was advised to create an express trust and to write cheques to the trust to “exhaust” her estate.

On 29 August 2018, Olga as settlor, appointor and trustee established the Olga Hart Trust (“the Trust”); around this time Olga drew two cheques (the Cheques) totalling $1.2M  in favour of the Trust. Clause 10 of the Trust deed provided that upon Olga’s death her daughter Donna Gordon succeeded her as trustee.

Olga’s Last Will

On 5 September 2018, Olga prepared her final will (the Will) naming Donna as the sole executor and making a provision that James receive a cash sum of $200,000.00 but no property from the estate. James was not made aware of the existence of this will until after Olga’s death.

Following Olga’s death on September 30 2018 Donna became the trustee of the Trust. James filed a caveat on 18 October 2018  against the probate of Olga’s estate (the Estate). On 25 October, James was informed that the Estate had insufficient assets to pay the Cheques issued by Olga to the Trust, therefore any gifts and bequests in the Will would not be satisfied. However, if James agreed to abandon any rights against the Estate by 14 November 2018 he would be paid the bequest in the Will.

Relief sought

In commencing proceedings seeking declaratory relief and an order for provision under s 8 of the Family Provision Act 1969 (ACT) (Family Provision Act) James claimed, (and Donna denied) that following the separation he and Olga maintained a close relationship based upon mutual emotional and financial support. In the alternative, James sought damages for the tort of devastavit, and relief in equity against Donna in her own right; in her capacity as trustee of the Trust, and, in her capacity as Executor of the estate.

Donna was granted probate on 25 March 2019. In late April 2019 the Cheques were presented and dishonoured by a financial institution. The Cheques were dishonoured on 26 April 2019.

Issues before the Court

The issues for the Court to determine was does the Estate, have sufficient assets to make the bequests provided for in the Will?

If the answer is “No”, has the defendant, by presenting the Cheques: Laid waste to the estate giving rise to liability for devastavit ? Committed a fraud on the power? or; Breached her fiduciary duty?

Donna submitted and the Court agreed the Cheques, indorsed by Olga were held in her capacity as trustee of the Trust. Similarly, the Cheques were each a chose in action, and therefore property (or value) capable of being held on trust prior to Olga’s death. As such, all of her assets were held in the Trust under the control of the trustee, as prescribed under the terms of the Trust deed. Therefore, immediately before Olga’s death, the liabilities exceed the assets of the Estate.

In the Court’s analysis of the law and the facts of the case James claims for declaratory relief, damages for the tort of devastavit, relief in equity, and further provision pursuant to s 8 of the Family Provision Act all fail. Alternatively, the trustee has established a claim under the Cheques Act. Therefore the Estate has no positive value.

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