Bowing to demands by niece Lara Unkovich that a $65,000 bequest from of her late grandfather’s estate be paid out early to support a tennis scholarship at a US university left the estate executor personally liable for litigation costs after the High Court ruled initial refusals to pay out were not justified.
Margaret Clapham was appointed executor of her father’s estate following his death in 2016. The will distributed his estate equally between three children and three grandchildren. Granddaughter Lara’s share was not payable until she reached age 21. The will did allow for an earlier payout provided the funds were used for her maintenance or education. Lara sought immediate release of the money to further her education in the United States. The High Court was told Lara was a pupil at Sydney’s Mosman High School, ranked then in the top two hundred tennis players in her age group for Australia. Prospects of a US tennis scholarship were promising.
As executor, Margaret initially refused to release any money. There were concerns a tennis career was too speculative. Later concerns were expressed about the financial stability of Lara’s parents. They would be taking control of the money on Lara’s behalf. There was legal advice, later found to be erroneous, that the full bequest could not be paid out before age 21. With legal threats flying and legal proceedings underway, an offer was made to Lara in late 2019: the sum of $63,000 would be handed over, but she would have to bear her own legal fees. Lara declined the offer. By this time Margaret’s legal fees had reached more than $40,000.
Then everyone fronted up at court. Margaret dropped all opposition to payment being made. The only issue: who had to bear the legal fees. This turned on whether Margaret had acted appropriately as executor. Margaret had not acted dishonestly, Justice Whata said. But she had allowed herself to be distracted by views over the merits of a career as a professional tennis player. The money sought was to go towards Lara’s tertiary education in the United States, something permitted by the will. It was reasonable Margaret sought legal advice regarding Lara’s request. These legal costs come out of the estate, Justice Whata ruled. But Margaret was personally liable for legal costs once litigation was underway up to the point where the $63,000 offer was made in 2019, he ruled.
Unkovich v. Clapham – High Court (11.05.20)
20.076