Mavridis v Andronescu
[2018] VSC 227
•8 May 2018
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMON LAW DIVISION
TESTATORS FAMILY MAINTENANCE LIST
S CI 2017 03378
IN THE MATTER of Part IV of the Administration and Probate Act 1958
- and -
IN THE MATTER of the Will and Estate of ADRIAN CLAUDIU ROSCA, deceased
| VICKY MAVRIDIS | Plaintiff |
| v | |
| CORNELIA ANDRONESCU (who is sued as the Executor of the Will of the abovenamed deceased) | Defendant |
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JUDGE: | Derham AsJ |
WHERE HELD: | Melbourne |
DATE OF HEARING: | 8 May 2018 |
DATE OF JUDGMENT: | 8 May 2018 |
CASE MAY BE CITED AS: | Mavridis v Andronescu |
MEDIUM NEUTRAL CITATION: | [2018] VSC 227 |
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PRACTICE AND PROCEDURE – Application for approval of compromise of a claim under Part IV of the Administration and Probate Act 1958 (Vic) – Plaintiff bankrupt – When compromise entered into parties believed plaintiff to have been discharged from bankruptcy – Whether substratum of compromise changed – Whether appropriate to approve compromise – Bankruptcy of plaintiff is a relevant consideration in any provision made by the Court under Part IV of the Act – Substratum for approval of compromise changed – Application adjourned – Collicoat v McMillan [1999] 3 VR 803; PatriciaMorris v Smoel [2014] VSC 31; Poesch v Grosvero [2013] VSC 596 referred to.
BANKRUPTCY — Approval of compromise – Plaintiff an undischarged bankrupt at time of entry into compromise – Rights of trustee in bankruptcy to intervene – Trustee holds a statutory interest in the entitlement of the plaintiff under the compromise – Right to intervene – Levy v Victoria (1997) 189 CLR 579; Collicoat v McMillan [1999] 3 VR 803.
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APPEARANCES: | Counsel | Solicitors |
| The Plaintiff appeared on her own behalf | ||
| For the Defendant | Mr R N J Young | Waters Lawyers |
| For the Trustee of the Bankrupt Estate of the Plaintiff | Mr M T Sowden | Zervos Lawyers |
| For the stepson of the deceased | Mr N Wallace, solicitor Amicus curiae | Hentys Lawyers |
HIS HONOUR:
Introduction
The application before the Court is made by the defendant by summons for approval of a compromise of a claim made by the plaintiff under Part IV of the Administration and Probate Act 1958 (Vic) (‘Act’). It has been necessary to adjourn the application for reasons which are unusual in applications of this kind.
Background
Adrian Claudiu Rosca (‘deceased’) died on 3 March 2017 leaving a will made on 9 February 2015 (‘Will’), probate of which was granted to the defendant, Cornelia Andronescu on 24 April 2017.
The plaintiff is the domestic partner of the deceased and as such an eligible person for the purposes of s 91 of the Act. The proceeding was commenced by the plaintiff on 23 August 2017 claiming further provision from the estate of the deceased for her proper maintenance and support pursuant to s 91 of the Act.
The residuary beneficiaries of the estate are minors. They are Jordan Claude Rosca born 22 December 2003 (‘Jordan’) and Monique Chloe Rosca, born 27 November 2005 (‘Monique’). Their interests under the Will are affected by the compromise.
The compromise is in consequence of terms of settlement made 7 December 2017 (‘Terms of Settlement’), between the plaintiff and the defendant, in her capacity as executor of the deceased’s estate, subject to approval of the Court. The substance of the compromise so far as relevant to these reasons was for the principal asset of the estate, being a property at Unit 14, 3A Baileyana Drive, Endeavour Hills, Victoria, to be sold and after the payment of the expenses of sale, the parties’ costs of the proceeding, and other expenses, to pay from the then net residuary estate:
(a) 33.33% (less the plaintiff’s share of the deposit monies that have been paid) to the plaintiff;
(b) 33.33% to the defendant, in her personal capacity; and
(c) 33.33% to be paid to the Senior Master of the Supreme Court of Victoria and held on behalf of Jordan and Monique, in equal shares, until they attain the age of 18 years, respectively.
Plaintiff’s bankruptcy
The plaintiff is also an undischarged bankrupt. It is clear that the right to make a claim for further provision under Part IV of the Act does not pass to the plaintiff’s trustee in bankruptcy. It is a personal right and thus the Trustee is not in this case a relevant party to the proceeding.[1] However, any amount ordered to be paid to the plaintiff, or to which the plaintiff is entitled pursuant to a settlement, vests in the trustee of her bankrupt estate. If there is any surplus once her debts and costs have been paid, that surplus would be payable to her.[2]
[1]Poesch v Grosvero [2013] VSC 596.
[2]Official Receiver in Bankruptcy v Schultz (1990) 170 CLR 306, 311–4 (Mason CJ, Brennan, Deane, Dawson & Gaudron JJ); Re Hemming’s Estate [2009] Ch 313, 320–7 (Snowden QC); Patricia Morris v Smoel [2014] VSC 31 [8].
In this case, the plaintiff’s trustee, Mr Michael Carrafa (‘Trustee’), applies to intervene in the application for approval of compromise. The Trustee claims a legal interest in the compromise by virtue of the provisions of the Bankruptcy Act 1966 (Cth) (‘Bankruptcy Act’).
The affidavit sworn on behalf of the Trustee shows that the plaintiff was the subject of a sequestration order made on 7 August 2014 and that the plaintiff’s statement of affairs was filed with the Australian Financial Security Authority and accepted on 14 July 2015.
Pursuant to s 149(4) of the Bankruptcy Act, the bankrupt is discharged at the end of the period of 3 years from the date on which the bankrupt filed her statement of affairs. In consequence, the date for an automatic discharge of the plaintiff from her bankruptcy is 15 July 2018, subject to extensions. Thus, being an undischarged bankrupt, by reason of s 58 and s 116 of the Bankruptcy Act, the entitlement of the plaintiff under the compromise vests in her Trustee once the compromise is approved and the Terms of Settlement become unconditional. Indeed, because the approval of the Court is a condition subsequent, or resolutive, the Trustee has, in my view, a present contingent interest in the fund to be paid to the plaintiff under the compromise.
For these reasons, the interests of the Trustee are directly affected by the orders proposed by the defendants to be made under which the plaintiff will receive 33% of the net residuary estate. It is therefore appropriate that he be granted leave to intervene and be made a party to the application for approval of compromise.[3]
[3]Re Estate of Robert Frangos (unreported, Court of Appeal, 7 July 1995); cited in Collicoat v McMillan [1999] 3 VR 803 [51]; Levy v Victoria (1997) 189 CLR 579, 603-4.
Complication
However, the plaintiff entered into the compromise in the belief that she had been discharged from bankruptcy. This is evident from her position paper filed pursuant to orders of the Court. In the application for approval the defendant has, in the usual way and as required in applications for approval of a compromise, obtained the advice of independent Counsel on behalf of the minor beneficiaries, Jordan and Monique. It is apparent from the advice of Counsel that the instructions given on behalf of the defendant were that the defendant entered into the Terms of Settlement in the belief that the plaintiff had been discharged from bankruptcy. The advice of Counsel assumes that to be so in giving advice that the Terms of Settlement are for the benefit of Jordan and Monique. In giving advice that the compromise is for the benefit of Jordan and Monique, Counsel necessarily considered what the Court might order by way of further provision for the plaintiff out of the estate of the deceased.
Had Counsel who advised in relation to the interests of Jordan and Monique known of the continuing bankruptcy of the plaintiff, she might have considered the principle that an order for further provision is intended to provide for the plaintiff’s maintenance and support, and if it were to be made by the Court where the plaintiff is an undischarged bankrupt, it would go to her creditors and provide no other benefit to the plaintiff. In those circumstances, it would not be appropriate for the Court to exercise the discretion in the plaintiff’s favour. That is so even if, as appears to be the position in this case, a decision were made that the deceased had failed in the distribution of his estate to make adequate provision for the plaintiff’s proper maintenance and support.[4]
[4]Collicoat v McMillan [1999] 3 VR 803 [51].
In this case it is not presently known to the Court, or to those advising on behalf of Jordan and Monique, whether the provision for the plaintiff agreed under the Terms of Settlement will all go to the Trustee for the benefit of the plaintiff’s creditors, or whether there will be sufficient to pay those creditors and leave a sum available for the benefit of the plaintiff. The indications given in Court – from the Bar table – are that the bankrupt estate will absorb all of the further provision for the plaintiff agreed by the Terms of Settlement.
The advice of Counsel for Jordan and Monique is therefore given on a false premise. It is necessary that the advice be reconsidered to take into account the bankruptcy of the plaintiff. There are, however, further reasons why it is not appropriate to approve the compromise, at least at present.
The defendant appeared by Counsel and was not in a position to obtain instructions either as to the application of the Trustee to intervene, the impact of the bankruptcy on the advice of Counsel or as to the application made to adjourn the application to which I refer below. It is tolerably clear, however, that the defendant entered into the Terms of Settlement on the assumption that the plaintiff had been discharged from her bankruptcy. If that is so, the defendant may have a right to set aside the Terms of Settlement as having been entered whilst the parties laboured under a mutual mistake of mixed fact and law.
The plaintiff, who had been represented throughout the course of the proceeding by a solicitor, became self-represented very recently. Her former solicitor attended Court, presumably as a courtesy to the Court. He has not filed a notice that he has ceased to act, as far as the Court is presently aware.
What a judge must do to assist a litigant in person depends on the litigant, the nature of the case, and the litigant’s intelligence and understanding of the case.[5] Here, the advice and assistance which the plaintiff was entitled to receive from the Court was limited to that which was necessary to diminish the disadvantage which she suffered when faced by lawyers, and to prevent the destruction or depletion of her rights by the making of an order today approving the compromise.[6]
[5]Abram v Bank of New Zealand (1996) ATPR 41-507, 42341, 42347; Minogue v HREOC (1999) 84 FCR 438 [27]-[29], [33]; Platcher v Joseph [2004] FCAFC 68 [104]; Tomasevic v Travaglini (2007) 17 VR 100, 130.
[6]Rajski v Scitec Corporation Pty Ltd [1986] NSWCA 1, 14.
The Court followed these precepts, and explained to the plaintiff that she may have a cause of action to set aside the Terms of Settlement for mistake, the mistake being common to the parties and being a mistake of mixed fact and law as to her status as a discharged bankrupt. The plaintiff said to the Court that she did desire to make such an application, did not agree to the approval of the compromise, and sought an adjournment of the application.
Further, Mr N Wallace, solicitor, appeared and sought leave to inform the Court that he represented Constantinos Kalamatas, a step son of the deceased and a minor. Mr Wallace informed the Court that he had recently received instructions to commence a proceeding on behalf of the step son, represented by his father as litigation guardian, seeking to extend the time within which to make application for provision pursuant to Part IV of the Act, and if leave is granted, for such provision. As friend of the Court, Mr Wallace sought an adjournment of the application for approval of the Compromise to enable his client’s application to proceed. If the compromise is approved, that will severely limit the efficacy of the step son’s proposed proceeding. Mr Wallace assured the court that this application on behalf of the step son, who is the son of the plaintiff, is no ‘device’ to maintain an otherwise fragile claim by the plaintiff.
It is therefore desirable to adjourn the application for approval for a number of reasons. I will not attempt to give primacy to any of them. They are:
(a) that the Court’s approval of the compromise is based significantly upon the assessment made by Counsel engaged by the defendant to advise, or more properly, give an opinion, as to whether the compromise is for the benefit of Jordan and Monique. The substratum of that advice has changed, and the advice is no longer sufficient to the purpose;
(b) the plaintiff entered into the compromise under a mistake of mixed fact and law, being that she was discharged from her bankruptcy. It is clear on the material presently before the Court that she remains a bankrupt. It is likely, on the present material, that the defendant entered into the Terms of Settlement on the same mistaken assumption. The plaintiff, or the defendant, may have a right to set aside that Terms of Settlement;
(c) there is a prospect of a further claim on the estate of the deceased being permitted to be commenced, and application will shortly be made on behalf of the step son for leave to commence that claim out of time, that is after 6 months from the grant of probate on 24 April 2017. It cannot be foretold at present what might be the outcome of that application. Approval of the compromise will undoubtedly make it more difficult to pursue such a claim.
Conclusion
In these circumstances, I have determined that the appropriate course is to adjourn the application to enable the plaintiff to apply to set aside the Terms of Settlement, if she decides to do so, and for the commencement of the proceeding by the step son of the deceased.
What ultimately happens when the matter comes back to Court will turn on whether the plaintiff (or defendant) apply to set aside the Terms of Settlement, what consequences flow from the commencement of proceedings on behalf of the step son, whether the defendant seeks to maintain the compromise and, no doubt, submissions by the Trustee. The Court has indicated its willingness to order an early judicial mediation of all disputes.
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