Jemal David Zagami (In his Capacity as Administrator of the Deceased's Estate) v James

[2017] WASC 292

JURISDICTION     :   SUPREME COURT OF WESTERN AUSTRALIA

IN CHAMBERS

CITATION:   JEMAL DAVID ZAGAMI (In his Capacity as Administrator of the Deceased's Estate) -v- JAMES [2017] WASC 292

CORAM:   ALLANSON J

HEARD:   20 SEPTEMBER 2017

DELIVERED          :   20 SEPTEMBER 2017

FILE NO/S:   CIV 1745 of 2017

MATTER                :Section 45(1) of the Administration Act 1903 (WA), Section 92(1) of the Trustees Act 1962 (WA) and Order 58 rule 2 of the Rules of the Supreme Court 1971 (WA)

The Estate of Jean Hilda Sharp late of Rosewood Care Group, 67 Cleaver Street, West Perth, Western Australia, Deceased Intestate Probate No 5501/2014

BETWEEN:   JEMAL DAVID ZAGAMI (In his Capacity as Administrator of the Deceased's Estate)

Plaintiff

AND

VANESSA JANE JAMES
First Defendant

ADRIAN ARTHUR ROOZEN
Second Defendant

Catchwords:

Administration of estate - Intestacy - Where disclaimer of entitlement to distribution by one beneficiary - Whether oral disclaimer effective - Effect of disclaimer on distribution - Turns on own facts

Legislation:

Administration Act 1903 (WA), s 6, s 8, s 13, s 14, s 15, s 45
Service and Execution of Process Act 1992 (Cth)

Result:

Orders made

Category:    B

Representation:

Counsel:

Plaintiff:     Ms S E Bruce

First Defendant              :     No appearance

Second Defendant         :     No appearance

Solicitors:

Plaintiff:     Jackson McDonald

First Defendant              :     No appearance

Second Defendant         :     No appearance

Case(s) referred to in judgment(s):

Application of the NSW Trustee and Guardian; Estate of SGB [2015] NSWSC 398

In the Estate of Simmons (deceased) (1990) 56 SASR 1

Re Scott (decd): Widdows v Friends of the Clergy Corporation and Others (1975) 2 All ER 1033

ALLANSON J: 

(These reasons were given orally immediately after the hearing and have been edited from the transcript)

1. Jean Hilda Jessie Sharp died intestate on 4 September 2011.  She had three children, two of whom survived her.  The plaintiff brings this action as administrator of the deceased's estate, with the two surviving children the first and second defendants.

2. The plaintiff applies by originating summons for the following orders:

   (1)A declaration that the second defendant, Adrian Arthur Roozen, has lawfully disclaimed his entitlement in distribution to the intestate estate of the deceased.

   (2)That the administrator is justified in distributing the remaining balance of the intestate estate of the deceased to the first defendant, Vanessa Jane James, being the only person entitled in the distribution.

   (3)The plaintiff's costs of the application be paid from the estate of the deceased as a testamentary expense.

The legislative scheme

1. All references are to the Administration Act 1903 (WA).

2. The Supreme Court has jurisdiction to grant administration of the estate of any deceased person leaving real or personal property in Western Australia: s 6. Upon the grant of administration, all real and personal estate which the deceased person died seised, possessed of, or entitled to in Western Australia shall, as from the death of that person, pass to become vested in the administrator: s 8. By s 13, the administrator holds the real and personal estate to which the intestacy applies, and which vests in him under s 8, on trust for the persons who are entitled under s 14 and s 15.

3. Section 14 provides that the property of a person who dies intestate shall be distributed according to the entitlements set out in the table in that section. Item 5 provides for a person who dies leaving issue but no husband or wife. The issue shall be entitled in accordance with s (2b) to the whole of the intestate property. By s 14(2b)(b) where there are two or more entitled issue of the intestate, being children of the intestate, the property shall be divided into as many equal parts as there are children of the intestate who survived him or her, and a child of the intestate who so survived shall be entitled to one of those parts.

4. The table in s 14 postpones the interests of the Crown to the intestate property by way of escheat to last, that is where the intestate dies leaving no husband or wife and no issue, parent, brother, sister, child of a brother or sister, grandparent, uncle, aunt or child of an uncle or aunt.

The facts

1. Ms James has four children:  affidavit of first defendant sworn 3 May 2017.  Mr Roozen has no children.

2. The facts regarding dealings with Mr Roozen are set out in two affidavits:  an affidavit of Jemal David Zagami, sworn 8 May 2017.  Mr Zagami is a solicitor with Jackson McDonald Lawyers.  He has been granted letters of administration of the intestate estate of Ms Sharp in his capacity as attorney of the first defendant.

3. On 25 June 2012, another firm of solicitors, who were then acting for Ms James, wrote to Mr Roozen asking if he would consent to a grant of letters of administration being made in favour of Ms James, or if he wished to be appointed as co-administrator.  They received no response.  It was the first of a series of letters, to none of which Mr Roozen replied.

4. On 17 January 2014, the solicitors now acting for the first defendant wrote again.  On this occasion the solicitors advised Mr Roozen that he was one of the nominated beneficiaries of an investment account and referred to 'requirements to enable the claims administrator to pay out the benefit'.  Mr Roozen was asked to contact the solicitors.

5. On 17 March, by registered mail, the solicitors for Ms James wrote again.  On this occasion they advised Mr Roozen:

   Under the rules of intestacy, our client and you are the only persons entitled to share in the distribution of your mother's estate.  Where only one of the beneficiaries is making the application for letters of administration, it is common for the remaining beneficiary or beneficiaries to give his or her consent to that application.

6. The letter referred again to the investment account.

7. On 15 January 2015, the solicitors wrote to Mr Roozen advising him that the grant of letters of administration had been made and that the estate held $175,326.90.  He was advised that he was one of two people entitled to share in the distribution of the estate and that the administrator had approved an interim distribution of $75,000 to each.  He was asked to contact the solicitors 'so that we can confirm payment to you of your share of the interim distribution'.

8. On 25 January 2015, the solicitors advised Mr Roozen that they were holding the interim distribution in the trust account pending contact from him to claim the funds.  On 15 June 2016, the solicitors again contacted the second defendant.  On this occasion they advised, 'if you do not wish to claim the funds you may authorise us to, as an alternative, pay the funds to your sister [the first defendant]'.  A further letter was sent on 24 August 2016, advising that in due course the funds could be lodged as unclaimed money with the Department of Treasury.

9. The plaintiff relies also on the affidavit of Sally Elizabeth Bruce sworn 8 May 2017.  Ms Bruce is a solicitor employed with the firm of Jackson McDonald lawyers.  In light of the ongoing difficulty in obtaining a response from Mr Roozen, on 16 November 2016 she telephoned him, explaining who she was and where she was from.  Ms Bruce deposes as follows:

   Mr Roozen then said to me words to the effect 'I do not want anything to do with the legals in Perth'. I explained to Mr Roozen that we had some $90,000 to send him from his mother's estate. Mr Roozen then said to me words to the effect 'I don't want anything to do with it' and 'you can hold me to that'. After making this point and saying 'thank you' a number of times, Mr Roozen hung up the phone before I had a chance to say anything further [5].

10. On 1 May 2017 the solicitors again wrote to Mr Roozen in these terms:

    We confirm that you do not wish to claim your share in your mother's intestate estate and that you have not signed the authority we sent you earlier to authorise us to pay your share of the estate to your sister …

    We have now decided to seek a declaration from the Supreme Court to the effect that you have disclaimed your interest in your mother's estate, and for a direction that, in the circumstances, the administrator is justified in paying your share of your mother's estate to your sister …  The only other person entitled in distribution.

    You will be made a party to the court proceedings and so will have an opportunity to put your view to the WA Supreme Court, if you wish to do so.  You are entitled to and we encourage you to seek your own independent legal advice about the matter.

11. The solicitors enclosed up-to-date administration statements of the estate, showing the balance of funds held, after the interim distribution and various costs, of $192,747.65.  Again there was no response.

Can you disclaim entitlements on intestacy?

1. There is no doubt that one can refuse to accept a gift, including a gift by will.  The entitlement in intestacy is set out by statute.  In that sense, it is not a gift.  I have been referred to cases where disclaimer of an interest in intestacy, notwithstanding that the entitlement arises under statute, has been held to be effective.

2. The first is Re Scott (decd): Widdows v Friends of the Clergy Corporation and Others (1975) 2 All ER 1033 in 1975 where Walton J in the Chancery Division said at 1044:

   Disclaimer is a refusal to accept an interest … It seems to me that it leaves the executor of the will of the deceased still holding the interest attempted to be disposed of under the statute, and still holding it as part of the estate of the deceased.  If somebody refuses to accept a slice of the estate of the deceased, then it still remains, in my judgment, part of the estate of the deceased.  Then the question becomes, how is that to be disposed of?  Well, it is to be disposed of in accordance with the Administration of Estates Act 1925, but the executor has tried once to dispose of it and the intended beneficiaries have refused to accept it.  What happens?  It seems to me that the absolutely inevitable result, where all the members of one particular class have disclaimed is to say, very well, for the purposes of the distribution of this estate, that class must simply be left out of consideration….

   It would seem to me to be quite extraordinary that if some of the members, but not all, of a class disclaim, there can be no doubt that the remaining member of the class takes the whole of the estate of the testatrix, whereas if, in fact, all the members of the class disclaim, instead of going to the next of kin down the line, the Crown, expressly postponed to all of them, comes in and says this is now property which is ownerless …  The effect of a disclaimer is not to throw the property on to the scrap heap, but to refuse to accept it in the first place, leaving the ownership with the people or the interest, or the estate, or whatever, from which it was derived in the first place.

3. Next in time is the decision of Legoe J in the Supreme Court of South Australia, In the Estate of Simmons (deceased) (1990) 56 SASR 1. The facts are sufficiently set out in the headnote. A bachelor without issue died intestate. He was survived by his parents and one brother. Upon a distribution pursuant to the Administration Act, his parents were entitled to the whole of the deceased's estate in equal shares.  The surviving brother would have been entitled to the whole, had the deceased survived his parents.  The parents executed a deed disclaiming all their rights to share in the estate.  The surviving brother then applied for administration.  Following a careful consideration of the authorities, including Re Scott, his Honour said at [14]:

   These cases appear to support the proposition that where there is a single 'lapse' of an interest under an intestacy, whether occasioned by the disqualification under the rule of public policy or by disclaimer, the interest does not go to the Crown bona vacantia, but devolves upon other members of that beneficiary class as if the disqualified or disclaiming person were non-existent …

4. I believe the reasoning of Justice Legoe applies in this case.  

Has Mr Roozen disclaimed his interest in the estate?

1. I have been referred to a useful article by Neville Crago, 'Principles of Disclaimer of Gifts' (1999) 28(1) UWA LR 65. Associate Professor Crago says, at 78

   An effective disclaimer must constitute an absolute rejection of the gift.  It must evince a final and non-negotiable refusal to accept the property which the donor proffers.  It must be 'simple':  it must not purport to do anything other than disclaim … A disclaimer must not purport to dispose of the property in some other way, such as by release. It must not purport to operate so as to change the terms of the gift. … A gift cannot be disclaimed subject to some qualification sought to be imposed by the donee, such as disclaimer only for a period of time.

   It is a necessary incident of an effective disclaimer that, being peremptory, it cannot be retracted.' A disclaimer is effective in and of itself.

2. The disclaimer must be communicated.  There is no formal requirement for communication.  Oral communication is sufficient:  see Application of the NSW Trustee and Guardian; Estate of SGB [2015] NSWSC 398 [20].

3. The oral disclaimer by Mr Roozen is effective.  Mr Roozen had been repeatedly advised by letter about what was happening with his mother's estate.  Mr Roozen was told the nature of the gift.  His rejection was expressed to be absolute, effective immediately, and unconditional.  He said that he wanted nothing to do with it. 

What is the effect of a disclaimer?

1. Mr Roozen has no issue, so the only persons with an interest in the estate of the deceased, following his disclaimer, is Ms James. It is not necessary for me to consider what would have been the result under s 14(2b)(b) had Mr Roozen disclaimed, but had children. The effect of the disclaimer is that the whole of the estate may be distributed to the only other member of the class entitled in distribution, Ms James.

2. Mr Roozen has been served with notice of this application on 11 August 2017:  see affidavit of Stephen John Wilken sworn 14 August 2017.  This was the second attempt to serve him - a previous attempt at service was made in May, but was ineffective because not compliant with the Service and Execution of Process Act.  I am satisfied that Mr Roozen has been given sufficient notice of this application, and the opportunity to be heard, but has not chosen to participate.

3. The court has power with respect to any question arising in the administration, or with reference to the distribution or application of any real or personal estate as the circumstances of the case may require: s 45. No final order shall be made except upon notice to all parties interested. I am satisfied that all parties have notice and it is appropriate to make the orders sought.