Dubyna v Seggan - [2015] SASC 67

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
DUBYNA & ANOR v SEGGAN & ORS
[2015] SASC 67
Judgment of The Honourable Justice Stanley
16 April 2015
SUCCESSION - MAKING OF A WILL - TESTAMENTARY INSTRUMENTS - WHEN LOST, MISLAID, DESTROYED OR NOT AVAILABLE
SUCCESSION - MAKING OF A WILL - EXECUTION
Application seeking an order that the court pronounce against the purported will of Alexey Tzeegankoff late of 5 Queen Street, Pennington in the State of South Australia (the deceased) being a script bearing the date 13 September 2002, an order that a grant of letters of administration be made to the Public Trustee in respect of the estate of the deceased on the basis that he died intestate, orders in relation to the costs of the parties and the approval of terms of settlement of the action for the benefit of the third defendant, Anatoly Tzeegankoff, and the sixth defendant, David Tzeegankoff, being persons under a disability, and that those terms of settlement be made a rule of court.
Held:
1. The terms of settlement are approved and made a rule of court (at [2]).
Public Trustee Act 1995 (SA) s 9, s 5(3); Supreme Court Civil Rules 2006 (SA) r 205, r 227, r 257, referred to.
Re Grey-Smith [1978] VR 596; Spoehr v Health Services Charitable Gifts Board (2014) 121 SASR 174; Docking v Schwarzkopf [2015] SASC 18, considered.

DUBYNA & ANOR v SEGGAN & ORS
[2015] SASC 67
Civil
STANLEY J:

By an application made pursuant to s 9 of the Public Trustee Act 1995 (SA) (the Act) and 6SCR 205, 227 and 257 the plaintiffs sought an order that the court pronounce against the purported will of Alexey Tzeegankoff late of 5 Queen Street, Pennington in the State of South Australia (the deceased) being a script bearing the date 13 September 2002, an order that a grant of letters of administration be made to the Public Trustee in respect of the estate of the deceased on the basis that he died intestate, orders in relation to the costs of the parties and the approval of terms of settlement of the action for the benefit of the third defendant, Anatoly Tzeegankoff (Anatoly) and the sixth defendant David Tzeegankoff (David), being persons under a disability, and that those terms of settlement be made a rule of court. On 16 April 2015 I made those orders.
The terms of settlement which I approved and made a rule of court are:
1.Public Trustee is to apply for letters of administration in respect of the estate of Alexey Tzeegankoff, late of 5 Queen Street, Pennington, South Australia, deceased, in accordance with the terms of this agreement and administer the assets of the estate in accordance with this agreement.
2.Public Trustee shall:
2.1    sell the property located at 5 Queen Street, Pennington, South Australia (“the Pennington Property”) for an amount and by a method to be determined by Public Trustee;
2.2    pay out of the proceeds of sale of the Pennington Property:
2.2.1the testamentary expenses incurred by Public Trustee acting as executors and administering the estate;
2.2.2the legal fees incurred by the parties to the action (including the fees incurred by Mr Frost on behalf of the First Defendant and all fees incurred by the Plaintiffs), such costs to be assessed on the basis of an indemnity; and
2.2.3the sum of $70,000 to the First Defendant, with the Public Trustee to advance a portion of the First Defendant’s share in the estate to him to assist with his moving costs, such amount to be determined by the Public Trustee.
2.3    Pay the remaining funds in the estate to each of the Deceased’s children equally as tenants in common, with the share of the Fifth Defendant Feodor Tzeegankoff to be divided and paid equally between David Tzeegankoff and Anatoly Tzeegankoff.
3.Public Trustee shall:
3.1    permit the First Defendant and the Seventh Defendant to complete any minor renovations and touch ups to the Pennington property within 8 weeks of the date of a grant of letters of administration being issued to Public Trustee; and
3.2    permit the First Defendant and the Seventh Defendant to continue to reside in the Pennington Property until the day prior to the settlement of any sale,
on the conditions that the First Defendant and the Seventh Defendant:
3.3    keep the Pennington Property clean and in good order at your own expense;
3.4    will not be at the Pennington Property when the real estate agent or any other persons engaged by Public Trustee attend at the property; and
3.5    not interfere with the sale process in anyway.
3.6    Any breach of these conditions by the First Defendant or the Seventh Defendant shall give the Public Trustee liberty to take vacant possession of the Pennington Property immediately.
4.The First Defendant shall, upon receipt of the payment of the sum of $70,000 and the share of the residue to him:
4.1    release all of the other parties to the action from any claims that he may have relating to the estate of the Deceased or the Pennington Property;
4.2    acknowledge that the money received by him under this agreement is in full satisfaction of any claim that he have may have against the Deceased’s estate under the Inheritance (Family Provision) Act 1972 (SA); and
4.3    be released by the Deceased’s estate and all of the other parties to the action from any claims that they may have in relation to the First Defendant’s use and occupation of the Pennington Property since the death of the Deceased.
These are my reasons for doing so.
The deceased, a retired washing machine mechanic, died at the Lutheran Nursing Home at 24 Avenue Road, Glynde in the State of South Australia on 15 November 2005. The deceased was married to Agrafena Chirkoff Gerasimnova. They had 11 children. The deceased’s wife died on 17 August 2002. One of their children, Dimitry, died on 31 October 2008.
The plaintiffs are two of the surviving children of the deceased and his wife. The first to eighth defendants are the remaining eight children. Initially the four children of Dimitry, who are the grandchildren of the deceased, were joined as the ninth to twelfth defendants. They were inadvertently joined as parties to the action but have no entitlement to the estate of the deceased as the deceased died before Dimitry. An application was made to have these four parties disjoined and instead have the Public Trustee in its capacity as administrator of Dimitry’s estate joined. I made those orders.
The third and sixth defendants, namely, Anatoly and David, are subject to administration orders made by the Guardianship Board on 8 March 2013 in respect of Anatoly and 11 February 2014 in respect of David. Those orders appoint the Public Trustee as administrators of their affairs.
His Honour Master Withers made an order granting approval to the Public Trustee to act in multiple capacities in this matter pursuant to s 5(3) of the Act on 17 November 2014. Those capacities are as administrator of the personal estates of Anatoly and David and administrator of the deceased estate of Dimitry and administrator of the deceased estate of Alexey.
On 23 April 2013 the plaintiffs filed a summons and statement of claim seeking a grant of probate in solemn form of a will of the deceased dated 13 September 2002 (“the will”).
The will has not been found. The action sought a grant of probate of a copy of that will, limited until the original will is brought into the registry of the court.
The plaintiffs are two of the three executors named in the will which they originally sought to propound in these proceedings. The third executor is the second defendant who does not wish to act as executor. Pursuant to the will the residue of the estate is left equally to the three executors appointed by the deceased, namely, the plaintiffs and the second defendant.
I am satisfied on the basis of the affidavit evidence that the sole asset of the deceased’s estate is the residential property at 5 Queen Street, Pennington. There is evidence of an appraisal of the property undertaken in July 2014 by a real estate agent which values the property in a range between $380,000 and $420,000. The Public Trustee was the administrator of the deceased’s protected estate at the time of his death. The Public Trustee does not hold any funds on behalf of the deceased.
The first defendant alleged that the will is a fraud or was obtained under duress and does not truly represent the testamentary intentions of the deceased, particularly given the special needs of at least Anatoly and David who suffer severe mental health disorders and who are protected persons whose estates are under the management and control of the Public Trustee. The first defendant also alleges that the deceased would have lacked testamentary capacity at the time of the making of the will and that language difficulties would have affected the deceased’s understanding of the effect of the purported disposition of his estate set out in the will.
The will is not the only testamentary document in existence. There is also an unexecuted document dated 5 December 1999 purportedly setting out testamentary intentions of the deceased and his wife which was allegedly found in the roof of the Pennington property.
Since the death of the deceased the first defendant has resided in the Pennington property with his wife and the third and sixth defendants. The first defendant claims that he undertook significant work on the Pennington property and spent upwards of $200,000 in making improvements to that property. He claims to be able to substantiate that expenditure. He asserted an entitlement against the estate on this basis.
The first defendant could not make a claim against the deceased’s estate for maintaining and improving the Pennington property without also submitting to payment of an occupation fee for a period since the death of the deceased. No doubt the amount of any occupation fee would have represented a significant offset against his claim on the estate. The basis of the compromise agreed between the parties for which the court’s approval was sought proposed a payment to the first defendant of $70,000 from the proceeds of sale of the Pennington property in addition to any other entitlement due from the estate.
As the third defendant Anatoly and the sixth defendant David are persons under a disability, any settlement of the proceedings is not binding on them unless the court approves the terms of settlement. The test for whether the court should approve the settlement is whether or not the compromise is for the benefit of the person or persons under a disability. To that end, the court considered whether the proposed compromise was reasonable and whether or not it benefited Anatoly and David.
In deciding whether the compromise was reasonable, it is necessary to consider whether Anatoly and David would have had any claim on the deceased’s estate other than on intestacy. That turns on whether one or both of them stood to inherit under a valid testamentary disposition by the deceased in their favour which would make better provision for them than the proposed compromise. Plainly they did not stand to inherit under the will. If the copy of the will is admitted to probate they will not benefit from the deceased’s estate. Pursuant to the unexecuted document dated 5 December 1999, Anatoly and David are to have a life interest in the Pennington property. If that document was admitted to probate they would have obtained some benefit. But no one sought to propound that document. In any event, the document is not duly executed. This conveniently brings me to the basis upon which I made the order pronouncing against the purported will of the deceased dated 13 September 2002.
The principles applied by the court in respect of an application to pronounce against a will by consent or default were considered in Re Grey-Smith[1] and applied by this court in Spoehr v Health Services Charitable Gifts Board[2] and Docking v Schwarzkopf.[3]In summary those principles are as follows:
·The onus of proof and proving a will lies in those propounding it;
·Evidence of due execution gives rise to a presumption that the will should be admitted to probate, and that it gives rise to a presumption of testamentary capacity, and knowledge and approval;
·Where evidence is led giving rise to a “well-founded suspicion” that the document is not valid for whatever reason, the relevant presumption is rebutted;
·In such circumstances, the onus remains on those propounding the will to satisfy the court in relation to the issue, whether it be testamentary capacity, knowledge and approval, et cetera; and
·If no party comes forward to do so, the court should pronounce against the will.
[1] [1978] VR 596 at 604.
[2] [2014] SASC 171 at [37] – [38], (2014) 121 SASR 174 at 184 – 185.
[3] [2015] SASC 18 at [8].
Pursuant to the terms of settlement proposed by the parties the plaintiffs no longer sought to propound admission of a copy of the will to probate. They accept that the estate of the deceased should be administered on the footing that the deceased died intestate. In order to have had a copy of the will admitted to probate, the plaintiffs would have had to account for the non-production of the original will, and would have had to rebut the presumption of revocation or destruction by the testator of the will which arises where an original will is not found on the death of the testator. In this case there is no evidence concerning the making of the 2002 will. There is no evidence of due execution of the 2002 will although the plaintiffs depose to recognising their father’s signature and handwriting. There is further doubt on the basis of the evidence of Dr Ting, the deceased’s general practitioner, as to whether the deceased possessed testamentary capacity at the time the 2002 will was purportedly made.
In the circumstances, there was an arguable basis upon which the court could have formed a well-founded suspicion that the 2002 will was not a valid document providing a basis upon which the court should pronounce against it.
In any event, resolution of this issue would have involved the incurring of significant additional legal costs.
In these circumstances I considered that the proposed compromise was reasonable. It was in the interests of Anatoly and David that the 2002 will not be admitted to probate. Given no one sought to propound the 1999 document, this would have resulted in the estate being administered on the basis of intestacy. In these circumstances Anatoly and David stood to benefit.
That left the question of whether the proposed compromise was in the best interests of Anatoly and David.
The Public Trustee obtained an opinion from independent counsel as to whether the compromise was in the best interests of Anatoly and David. I was provided with that opinion. Counsel considered that the proposed compromise was for the benefit of Anatoly and David.
In that regard there were a number of relevant considerations. First, the fifth defendant, Feodor Tzeegankoff, has expressed a wish that his share of the deceased’s estate should be divided equally between the third and sixth defendants. Accordingly, they stood to receive a 50 per cent greater share on settlement than they would on intestacy. Secondly, legal fees already incurred were substantial relative to the size of the estate. Further proceedings would have likely resulted in a further erosion of the estate to the probable disadvantage of most of the beneficiaries, including Anatoly and David. Thirdly, although the children of Dimitry were erroneously joined to the proceedings, I was advised by Mr Cronshaw, who was acting for them, that no additional costs were incurred for which the estate was to be liable pursuant to the proposed compromise by reason of them having been parties to the proceedings.
The Public Trustee agreed to the proposed compromise subject to the approval of the court.
The parties agreed to costs being paid out of the estate of the deceased on an indemnity basis rather than a solicitor/client basis. The purposes of seeking an indemnity was to put the burden on any party who wished to dispute the relevant costs to show that they were unreasonably incurred. I was satisfied, on the basis of this rationale, that the terms of the settlement as to costs were appropriate where there was no question of the estate paying the costs of the erroneous joinder of the children of Dimitry.
On this basis I approved the compromise and made the orders proposed.