In the Estate of ZBIGNIEW FRANCZAK - [2011] SASC 70

SUPREME COURT OF SOUTH AUSTRALIA
(Testamentary Causes Jurisdiction)
In the Estate of ZBIGNIEW FRANCZAK
[2011] SASC 70
Judgment of The Honourable Justice Gray
29 April 2011
EQUITY - TRUSTS AND TRUSTEES - APPLICATIONS TO COURT FOR ADVICE AND AUTHORITY - APPLICATIONS FOR AUTHORITY NOT CONFERRED BY TRUST INSTRUMENT - IMPROVEMENTS AND BENEFICIAL ACTS
SUCCESSION - EXECUTORS AND ADMINISTRATORS - RIGHTS, POWERS AND DUTIES - OTHER CASES
Deceased died intestate and was survived by his widow and his two sons, one of whom is an infant - the most substantial asset of the estate was the family home - pursuant to section 72G of the Administration and Probate Act 1919 (SA), $100, 000 and one-half of the balance of the intestate estate, was to be distributed to the widow of deceased, and the balance of intestate estate was to be distributed equally to the deceased’s sons - pursuant to section 65 of the Administration and Probate Act, the administrator was obliged to transfer the infant son's share of the estate to Public Trustee - there were insufficient cash assets to provide the infant's share to the Public Trustee - administrators applied for an order pursuant to section 64 of the Administration and Probate Act postponing the realisation of the family home until the infant attains 18 years of age.
Held: application granted - order pursuant to section 64 is meritorious - order for protection of the infant's interest by caveat.
Administration and Probate Act 1919 (SA) s 64, s 65 and s 72G, referred to.
In the Estate of Marden [2008] SASC 312; Re McComb [1999] 3 VR 485; State of New South Wales v Amery (2006) 230 CLR 174; Bridge Shipping Pty Ltd v Grant Shipping SA (1991) 173 CLR 231; Qantas Airways Ltd v Christie (1998) 193 CLR 280; IW v City of Perth (1996) 191 CLR 1; In the Estate of Freebairn (2005) 93 SASR 415, considered.

In the Estate of ZBIGNIEW FRANCZAK
[2011] SASC 70
Testamentary Causes Jurisdiction
GRAY J:

This is an application by the administrators of an intestate estate made pursuant to section 64 of the Administration and Probate Act 1919 (SA) for permission to postpone the realisation of an asset of the estate.
Introduction
The deceased, Zbigniew Franczak, died on 20 December 2009. He was survived by his widow, Malgorzata Tunkiewicz-Franczak, and his two sons, Dawid Franczak and Thomas Franczak who are 21 and nine years of age respectively.
A grant of letters of administration of the deceased’s estate was made to Ms Tunkiewicz-Franczak and Richard Gregory Eckermann on 4 August 2010. The net value of the deceased’s estate, which was disclosed to the Probate Registry, was $381, 016.88. This amount included the deceased’s superannuation funds. However, following that disclosure, the trustee of the superannuation fund determined that the deceased’s superannuation funds were to be paid directly to Ms Tunkiewicz-Franczak and, consequently, those funds are not part of the deceased’s estate. The resulting net value of the deceased’s estate is $256, 164.86.
The most significant asset of the deceased’s estate is a property situated at Paralowie. Ms Tunkiewicz-Franczak, Thomas and Dawid reside in the family home at the Paralowie property.
Pursuant to section 72G of the Administration and Probate Act which concerns distribution on an intestacy, Ms Tunkiewicz-Franczak is entitled to $100, 000.00 together with one half of the balance of the estate, and Dawid and Thomas are entitled to share equally the remaining half of the estate. Consequently, Ms Tunkiewicz-Franczak is entitled to $178, 082.43 and Dawid and Thomas are each entitled to $39, 041.22.
Pursuant to section 65 of the Administration and Probate Act, as Thomas is an infant and is therefore not sui juris, Ms Tunkiewicz-Franczak and Mr Eckermann “shall deliver, convey, or transfer [Thomas’s entitlement] to the Public Trustee immediately after the expiration of one year from the date of the death of [the deceased], or within six months after such sooner time as the same or such portion thereof as is available for that purpose, has been sold, realised, collected, or got in”.
There are insufficient cash assets to provide Thomas’s share to the Public Trustee. Consequently, the distribution of the estate pursuant to the Administration and Probate Act requires the Paralowie property to be sold.
The Application
Ms Tunkiewicz-Franczak and Mr Eckermann applied by summons for an order pursuant to section 64 of the Administration and Probate Act to postpone the realisation of the Paralowie property until Thomas attains 18 years of age.
The Public Trustee, who was named in the summons, does not oppose the application. However, in the event that the application is granted, the Public Trustee has requested that the applicants place a caveat over the Paralowie property in favour of the Public Trustee as trustee for Thomas.
Dawid does not oppose the application and has instructed the applicants that he does not want a caveat over the Paralowie property in his favour.
Legal Principles
The general administrative jurisdiction of the Supreme Court provides the Court with the power to relieve executors, trustees and administrators from their obligations at common law and under statute. Section 64 of the Administration and Probate Act provides a statutory example of this power. This power is generally to be exercised cautiously, having regard to the demands of the interests of justice.
Section 64 is in the following terms:
(1)     The Court may, where it thinks it beneficial so to do, give permission to an executor, administrator, or trustee of a deceased person, or to the Public Trustee—
(a)to postpone for such period as the Court thinks expedient the realisation of the estate or trust property:
…
(2)     An executor, administrator, or trustee acting in accordance with permission given under this section shall not be answerable for consequent loss, except in case of breach of trust, negligence, or wilful default.
(3)     An order under this section may be made either without notice or on such notice as the Court in any case thinks proper, and may be varied from time to time as the Court thinks fit.
[Emphasis added.]
I addressed the legal principles applicable to applications made pursuant to section 64 of the Administration and Probate Act in my reasons in In the Estate of Marden Deceased.[1] In that decision, I concluded that the Court will consider whether making an order under section 64 will be of advantage to the due and proper administration of the estate.
[1] In the estate of Marden [2008] SASC 312.
With respect to the import of the phrase “thinks it beneficial so to do”, in Marden I observed:[2]
Section 64 confers power to grant the relevant permission where the Court “thinks it beneficial to do so”. Accordingly, s 64 has a beneficial and remedial purpose. A beneficial or remedial statutory provision is one that gives some benefit to a person and thereby remedies some injustice.[3] It is well established that beneficial and remedial legislation must be given a liberal construction, which constitutes “the widest interpretation which its language will permit”.[4] In IW v City of Perth,[5] Brennan CJ and McHugh J outlined the appropriate approach to statutory construction of beneficial and remedial statutory provisions:
[It is a] rule of construction that beneficial and remedial legislation … is to be given a liberal construction. It is to be given “a fair, large and liberal” interpretation rather than one which is “literal or technical”. Nevertheless, the task remains one of statutory construction. Although a provision of the Act must be given a liberal and beneficial construction, a court or tribunal is not at liberty to give it a construction that is unreasonable or unnatural.
[2]    In the estate of Marden [2008] SASC 312, [14].
[3]    Re McComb [1999] 3 VR 485, [22].
[4]    State of New South Wales v Amery (2006) 230 CLR 174, [138] (Kirby J) citing Bridge Shipping Pty Ltd v Grant Shipping SA (1991) 173 CLR 231, 260-261 (McHugh J) and Qantas Airways Ltd v Christie (1998) 193 CLR 280, [152] (Kirby J).
[5]    IW v City of Perth (1996) 191 CLR 1, 12 (Brennan CJ and McHugh J) (footnotes omitted).
Besanko J made the following pertinent observations in In the Estate of Freebairn when considering the phrase “beneficial or expedient to do so” in the context of a section of the Administration and Probate Act allowing for an order dispensing with the requirement that an administrator provide a surety:[6]
It seems to me that the criterion requires a careful consideration of the facts of the particular case, and the important consideration is the due and proper administration of the estate. If the particular circumstances of the case suggest that there is a reduced risk of maladministration or less difficulty is likely to be encountered in recovering loss and damage, should there be maladministration, and there are disadvantages or detriments associated with the provision of a guarantee, then the court may form the view that it is beneficial or expedient to dispense with the requirement of a guarantee.
[6] In the Estate of Freebairn (2005) 93 SASR 415, [25].
The Merits
The present application would allow Ms Tunkiewicz-Franczak, Thomas and Dawid to continue living in the family home until Thomas attains 18 years of age. This would avoid the costs and disruptions involved in selling the property and finding an alternative place to live, and it would ensure stability of Thomas’s life and would promote continuity in his lifestyle. It would also have the benefit of preserving the family unit. Further, granting the application would protect the interests of all beneficiaries concerned as housing represents an appreciable and stable asset. The fact that the Public Trustee and Dawid do not oppose the application is also a relevant factor. Therefore, in my view, it is beneficial to grant the application in that it would be beneficial for the due and proper administration of the estate.
I would however order for Thomas’s interest in the Paralowie property to be protected by caveat.
Conclusion
I order that the application for permission to postpone the realisation of an asset of the estate be granted. I make an order in terms of the minutes attached to these reasons.
ORDER
UPON the application by Summons dated 9 February 2011 of Malgorzata Tunkiewicz-Franczak of 12 Orinoco Street, Paralowie in the State of South Australia, Accountant and Richard Gregory Eckermann of Suite 813, 147 Pirie Street, Adelaide in the said State, Solicitor UPON READING the affidavit filed in this matter and UPON HEARING Ms K Huddleston, Solicitor for the applicants, IT IS ORDERED THAT:-
1Until the determination of this order or an order is made for the realisation and administration of the real estate of Zbigniew Franczak, late of 12 Orinoco Street, Paralowie in the State of South Australia, Retired Software Engineer, deceased, the administrators of the estate of the deceased, Malgorzata Tunkiewicz-Franczak and Richard Gregory Eckermann may postpone the realisation of the real estate of the deceased namely the land comprised in Certificate of Title Volume 5219 Folio 432 (“the land”) until the infant child of the deceased, Thomas Franczak, shall have attained the age of 18 years.
2Until the determination of this order or an order is made for the realisation and administration of the real estate, Malgorzata Tunkiewicz-Franczak may occupy the dwelling house erected on the land as a home for herself and the infant child of the deceased.
3During the continuance of this order, Malgorzata Tunkiewicz-Franczak shall:
a.insure the premises presently erected upon the land to their full insurable value against loss or damage by fire, storm and tempest;
b.maintain the premises in good and substantial repair and condition;
c.duly and punctually pay and discharge all rates, taxes, charges and other outgoings accruing due in respect of the land; and
d.pay the premiums necessary for keeping and maintaining the improvements insured in accordance with the provisions of this order.
4By way of security for the share of the infant child in the estate of the deceased, Malgorzata Tunkiewicz-Franczak and Richard Gregory Eckermann do, upon the discharge of Memorandum of Mortgage Number 10707931 registered over the land, deposit with Public Trustee the duplicate Certificate of Title in relation to the land and the policy or policies of insurance issued in respect of the premises.
5Public Trustee be permitted to register a caveat over the title to the land in respect of the infant child’s interest, such caveat not to be warned by Malgorzata Tunkiewicz-Franczak or Richard Gregory Eckermann.
6The cost of the caveat, its ultimate discharge and transfer of the share of the infant child to Public Trustee is to be paid out of the estate of the deceased.
7Malgorzata Tunkiewicz-Franczak and Richard Gregory Eckermann, as administrators of the estate of the deceased, be not bound by Section 65 of the Administration and Probate Act 1919 (SA) as regards the land unless and until this order is determined.
8Upon the deposit of the duplicate Certificate of Title any surety to the bond given to Public Trustee upon the granting of Letters of Administration by this Court to Malgorzata Tunkiewicz-Franczak and Richard Gregory Eckermann be discharged.
9The costs of the application be paid out of the estate of the deceased.
10Malgorzata Tunkiewicz-Franczak, Richard Gregory Eckermann, Public Trustee and any other person interested may apply for further orders and directions.