Pappas v Priakos

[2007] NSWSC 410

CITATION:	Pappas v Priakos [2007] NSWSC 410
HEARING DATE(S):	13 March 2007
JURISDICTION:	Equity Division Duty Judge List
JUDGMENT OF:	Brereton J
EX TEMPORE JUDGMENT DATE:	13 March 2007
DECISION:	Order approving sale by one of two executors of estate property and authorising Registrar to execute any conveyance on behalf of the other
CATCHWORDS:	ADMINISTRATION OF ESTATES – where one of two joint executors refuses to sell property – where evidence establishes that offer is a proper one and refusal is misconceived – other executor authorised to sell
LEGISLATION CITED:	(NSW) Family Provision Act 1982 (NSW) Supreme Court Rules 1970 Pt 68 r 2
PARTIES:	Nicholas George Pappas (plaintiff) Penelope Priakos (defendant)
FILE NUMBER(S):	SC 1324/07
COUNSEL:	Mr M K Meek (plaintiff) Ms Priakos (in person) (defendant)
SOLICITORS:	Nicholas G Pappas & Co (plaintiff)

IN THE SUPREME COURT
OF NEW SOUTH WALES
EQUITY DIVISION
DUTY LIST

BRERETON J

Tuesday, 13 March 2007

1324/07 Nicholas George Pappas v Penelope Priakos

JUDGMENT (ex tempore)

1 HIS HONOUR: By summons filed on 31 January 2007 the plaintiff Nicholas George Pappas, one of the executors of the estate of the late Adreanna Pritchett – who died on 18 May 2004, leaving a will, probate of which was granted on 23 December 2004 to Mr Pappas and the defendant, the deceased's sister, Penelope Priakos – sues for the following orders:

1. An order approving the sale by private treaty by the Plaintiff of the property known as Unit 9, 1 Wyuna Road, Point Piper to Paul and Katherine Swain for $620,000.

2. An order authorising execution of all documents in relation to the sale of Unit 9, 1 Wyuna Road, Point Piper on behalf of the Defendant by a Deputy Registrar of this Honourable Court.

3. An order authorising the Plainitiff to pay all the liabilities of the Estate of the Late Andreanna Pritchett and thereafter to distribute the net Estate.

4. Such further or other orders as the Court deems fit.

5. Costs.

2 By her will the deceased, after giving jewellery and personal effects to the defendant, gave the balance of her estate to her executor upon trust for her husband Ronald Joseph Pritchett for life, and after his death for the defendant. When probate was granted, the inventory of property declared as assets of the deceased 4,500 shares in Alvingon Home Units Pty Limited (said to be worth $750,000), 200 shares in the Commonwealth Bank (said to be worth $6,200) and jewellery (said to be worth $1,500). The shares in Alvingon were shares in a home unit company which entitled the holder to occupy unit 9/1 Wyuna Road, Point Piper. A valuation obtained by Mr Pappas, in connection with a (NSW) Family Provision Act 1982 application brought by Mr Pritchett, valued the home unit as at 15 September 2005 at $770,000.

3 The Family Provision Act application was heard on 25 October 2005 and McLaughlin AsJ gave judgment on 11 April 2006. In that judgment, his Honour proceeded on the basis that the value of the distributable estate was about $662,000, comprising the then value of the assets (totalling $779,000), less about $100,000 for costs of the proceedings and some other debts of the estate.

4 In the course of the Family Provision proceedings, evidence was given as to the financial position of Ms Priakos, the residuary beneficiary, including that she had liabilities totalling US$65,800. Mr Pritchett acknowledged in his evidence that it was appropriate that Ms Priakos should receive from the estate a sum sufficient to discharge her present debts, amounting to approximately the equivalent of A$83,000. Thus Mr Pritchett did not seek that he should receive the entirety of the estate to the total exclusion of Ms Priakos. The Associate Judge concluded that Mr Pritchett should receive a legacy of $600,000, which on the then valuation of the net distributable estate, would have left about $62,000 for Ms Priakos – which, his Honour suggested, would enable her to discharge most of her present liabilities totalling $65,800. This appears to involve an element of confusion of United States and Australian dollars; as Ms Priakos’ liabilities were US$65,800.

5 In any event, his Honour made an order that Mr Pritchett receive a legacy of $600,000 in lieu of the benefits given to him by the will of the deceased, not to bear interest if paid by 11 July 2006, and if not so paid, to bear interest at the rate for unpaid legacies. The balance of the estate was to be held for Ms Priakos absolutely, and the costs of the plaintiff and the defendants on the indemnity basis were to be paid out of the estate.

6 Since the Family Provision judgment was delivered, it has become evident that the value of the Wyuna Road unit has depreciated. Various attempts, including an unsuccessful auction, have been made to sell it. The evidence is quite plain that at present its value is about $620,000, and there is no reasonable prospect of obtaining an offer at a significantly higher price than about $620,000. Because the orders gave Mr Pritchett a legacy and left Ms Priakos with residue, the legal effect is that the legacy has priority and must be satisfied before there is any residue. It is that circumstance which, in the context of depreciation in the value of the property, has led to the present difficulty and to the understandable, but incorrect, misapprehension that Ms Priakos has formed about her entitlements.

7 The estate gave consideration to an appeal from McLaughlin AsJ's judgment, including obtaining the advice of Senior Counsel. Consideration was also given to an application to vary the orders on the basis that the value of the property had declined. In each case, the advice was that such an appeal or application had practically no prospects of success.

8 An offer for Wyuna has been made at $600,000, by offerors who have since increased their offer to $620,000. Mr Pappas wishes to accept that offer. Ms Priakos refuses to do so unless certain terms are accepted, including that she be paid $83,000 (the Australian dollar equivalent of her debts).

9 As I have sought to explain, Ms Priakos is not legally entitled to receive from the estate $83,000. It is very regrettably the case that as a result of the depreciation of the property since the date of death of the deceased, there is now insufficient equity in the estate to satisfy Mr Pritchett’s legacy of $600,000 plus interest, let alone to leave any residue.

10 The obligation of the executors, to which they swore when applying for a grant, is to well and truly administer the estate. That involves realising the assets, paying the creditors and distributing the proceeds to the beneficiaries entitled. As things stand, the only person who is likely to have a beneficial entitlement is Mr Pritchett. Ms Priakos, for reasons I can understand, but which are wrong, refuses to consent to that course.

11 In those circumstances, the Court is empowered under (NSW) Supreme Court Rules 1970, Pt 68 r 2, to determine any question arising in the administration of an estate. As there seems to me no prospect that a more attractive offer for the unit will be made than that by Paul and Katherine Swain for $620,000, and in view of the absence of consent from Ms Priakos, it is appropriate that the Court approve the sale of that property by Mr Pappas acting alone, and make an ancillary order requiring or authorising the Registrar to sign any conveyance on behalf of Ms Priakos.

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