Introduction

Executors that have doubt in respect of the deceased’s testamentary intentions can make an application to the Supreme Court for judicial advice.

These applications are often made by the executor ex-parte and there is an obligation that full disclosure be made to the Court about the relevant facts without any fraud or misrepresentation.

The outcome of the judicial advice is dependent on the circumstances of each case and there is no one rule fits all scenarios.

Legislative provisions

New South Wales and Victoria (as well as other states) have legislative provisions which allow for these applications. Each state has its own procedural elements that must be followed to ensure that the application is made properly.

In New South Wales, an application for judicial advice can be made pursuant to s 63(1) of the Trustee Act 1925 which provides as follows:

A trustee may apply to the Court for an opinion advice or direction on any question respective the management or administration of the trust property, or respecting the interpretation of the trust instrument.

In Victoria, an application for judicial advice can be made pursuant to rule 54.02 of the Supreme Court (General Civil Procedure) Rules 2015 which provides as follows:

A proceeding may be brought for any relief which could be granted in an administration proceeding and claim need not be made for the administration or execution under the direction of the Court of the estate or trust in respect of which relief is sought.

In other words, rule 54.02 provides that judicial advice can be sought in respect of a broad range of issues, including the proper construction of a will and as to the administration of the deceased’s estate.

Reasons for applying for judicial advice

1. it provides clarification as to the manner in which the will is to be interpreted which in turn will enable to proper discharge of duties by the executor; and
2. it provides protection to the applicant vis-à-vis the beneficiaries and cannot be criticised (or found liable) for any breach of trust.

Supreme Court of Victoria

Barret AsJ was recently required to make a determination in respect of, among other things, an application for judicial advice made by the executor in the matter of Alexopoulos v Krasovec [2022] VSC 749.

Briefly, the facts of the case were as follows:

1. The testator, Mr Frank Krasovec (Deceased) died on 28 February 2021 and left a will dated 14 July 2018 (Will) in which he left the entirety of his estate to his two children, Michael Krasovec (Michael) and Frank Geoffrey Krasovec (Frank) to be divided equally between them.
2. Probate was granted to the executor of the Will, Paula Alexopoulos on 1 July 2021.
3. The Deceased’s estate was valued at approx. $1.970,000. The main asset was a property valued at approx. $1,925,000 and the balance of approximately $45,000 consisted of an Omega watch, a Mercedes-Benz and $27,692.32 in cash
4. The executor’s doubt in respect of the Will related to clause 4(a) which provided as follows:
   4. Subject to the payment of my debts, funeral and testamentary expenses and all probate an estate and other duties payable in respect of my estate to any State or Federal Authority in consequence of my death I GIVE AND BEQUEATH my estate as follows:
   (a) the property … to Michael on the basis that … within six months of the date of the grant of Probate, the property should be valued and half the value of the property to be paid to Frank, only after paying the half the value of the property Michael can take possession of the property. Till such time, the property needs to be vacant.
5. The Will also had a residue clause which provided as follows:
   (e) the rest and residue of my estate to be divided equally between my sons Michael and Frank.
6. Valuations in respect of the property were obtained on 11 March 2021 by Michael and on 12 October 2021 by the Executor but Michael did not pay half of the value to Frank (or any other amounts as may have been agreed between them) within six months of Probate being granted.
7. The Executor made the application for judicial advice on 28 April 2022.
8. As at August 2022, the estate had incurred approx. $123,200 for administration costs, which were not disputed by the beneficiaries. From the total debt, approx. $22,500 had already been paid and a balance of approx. $100,700 was owed.
9. Some of the submissions put forward by the Executor were that:
   1. the Deceased’s use of phrase “on the basis that” was used to create conditions to the gift, although perhaps not as clearly as words such as “on the condition that” or “on the basis that”;
   2. the conditions created by the Deceased were that a valuation was to be obtained within six (6) months of probate and that Michael pay half that value to Frank within six (6) months of probate; and
   3. the property had to be realised in order to properly finalise the administration of the estate and pay all liabilities before dividing the balance equally between Michael and Frank.

General Principles

His Honour repeated the principles of construction of a will that were identified in the recent decision of McMillan J in Re Nial [2019] VSC 423:

In construing a will, the task of a court is to give effect to the testator’s intention through examination of the words used in the will, having regard to the will as a whole, aided as necessary by any admissible extrinsic evidence. Prima facie, the words of a will must be given their ordinary meaning.

In the event of the words used in the will being meaningless, uncertain, ambiguous or would lead to a capricious result, extrinsic evidence may be relied on to assist in the interpretation of that language (see s 39 of the Wills Act 1997 (Vic)).

His Honour also outlined various duties that executors have during the administration of the estate and said as follows:

Even if there is no dispute as to the terms of the gift or bequest in a will, an executor is obliged to pay the debts of the deceased in due course of administration, and may have resort to the ‘real and personal estate, whether legal or equitable, of a deceased person’ to pay such debts. No disposition in a will can stand in the way of payment of creditors.

Outcome

Based on the evidence before the Court and the way in which clause 4 of the Deceased’s Will was drafted, his Honour ultimately decided that:

1. the gift outlined in clause 4(a) of the Will was conditional on the two things (the valuation of the property and the payment of half of the property value by Michael to Frank) occurring within the identified six (6) month period and if not satisfied within the six (6) month period, the gift was to fail and fall into residue;
2. because the liabilities of the estate could not be paid by the Executor, it was not improper for the sale of the property to occur in order to discharge her obligations to pay the debts of the estate; and
3. after the payment of the debts of the estate, the balance falls into residue to be distributed equally between Michael and Frank.

Seek advice early

It is important that you seek advice early if you have doubt about the terms of the will. Each scenario must be considered to decide whether it is proper to make an application for judicial advice in order to ensure that your duties as executor are discharged properly.

Costin Stan at FCW Lawyers is a Contested Estates practitioner and is always willing to help you understand what your rights are and will always guide you to make the best decisions.