Re Kordos
[2024] VSCA 84
•2 May 2024
| SUPREME COURT OF VICTORIA COURT OF APPEAL | |
| S EAPCI 2023 0030 | |
| IN THE MATTER OF THE WILL AND ESTATE OF ERMIONI KORDOS (IN THE WILL CALLED ERIMONE KORDOS), DECEASED | |
| ZAFIRI KORDOS | Applicant |
| AND | |
| EVAAN KORDOS | Intervener |
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| JUDGES: | NIALL and LYONS JJA |
| WHERE HELD: | Melbourne |
| DATE OF HEARING: | 14 March 2024 |
| DATE OF JUDGMENT: | 2 May 2024 |
| MEDIUM NEUTRAL CITATION: | [2024] VSCA 84 |
| JUDGMENT APPEALED FROM: | [2023] VSC 14 (McMillan J) |
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WILLS AND ESTATES – Where applicant seeks limited grant as administrator ad litem – Whether judge erred in giving insufficient reasons despite factors weighing in favour of grant – No error in judge’s weighing of competing considerations – Whether judge erred in finding that applicant not sufficiently independent – No error in judge’s consideration of applicant’s independence – Whether judge erred in consideration of applicant’s inability to provide guarantee – No error in consideration of inability to provide guarantee – Whether judge erred in finding risk of maladministration – No error established – Whether judge gave insufficient weight to factors weighing in favour of grant – No error in weight given to such factors – Leave to appeal refused.
Administration and Probate Act1958, ss 22, 27 and 57.
Greenway v McKay (1911) 12 CLR 310; Hunter v Transport Accident Commission [2005] VSCA 1; Re Tratt [1980] VR 657, considered.
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| Counsel | |||
| Applicant: | Mr J Rizzi with Mr NJ Baum | ||
| Intervener: | Mr WF Gillies | ||
| Solicitors | |||
| Applicant: | Kyriacou Lawyers | ||
| Intervener: | TLM Law | ||
NIALL JA
LYONS JA:
Introduction
The applicant applied to a judge in the Trial Division of this Court to be appointed as the administrator ad litem of the estate of his late mother, Ermioni Kordos (‘the deceased’). At the time of the application, probate had not been granted in respect of the estate which, pursuant to a will, the validity of which is not in issue, was left entirely to the applicant’s nephew, Evaan Kordos (‘Evaan’).[1]
[1]Evaan took after his father (the applicant’s brother), who was the primary beneficiary but who predeceased his mother.
No provision was made in the will for the applicant and he has indicated an intention to lodge an application under pt IV of the Administration and Probate Act1958 (‘the Act’) for provision in his favour. At the present time, there are no assets in the estate. The applicant apprehends that, before his mother died, his mother’s main asset, being a residential property, was sold and the half of the net sale proceeds to which she was entitled, approximately $600,000, was transferred to his brother, Vasilios Kordos (‘Vasilios’).[2] At the time of that transfer, Vasilios held a power of attorney in respect of their mother.
[2]The residential property was held jointly by the deceased and Vasilios.
It is in these circumstances that the applicant made the application to be appointed administrator ad litem for the purpose of investigating the transfer of the proceeds of sale and, if appropriate, commencing an action as administrator to recover the funds. If that occurs, and the funds are returned to the estate, the applicant would then commence his proposed pt IV application.
In substance, if not in form, the applicant seeks pre-issue steps before commencing his pt IV proceeding to determine whether it is worth his while to pursue such a claim.
A judge of the Trial Division refused the application. The judge gave four reasons why she refused the order sought:
(a)the applicant was not sufficiently independent because he stood to gain from the restoration of the funds to the estate;[3]
(b)the form of the orders sought was too wide;[4]
(c)the applicant was unable to provide an administration guarantee pursuant to s 57 of the Act;[5] and
(d)in the event that funds were paid into the estate, the applicant would have control of them, resulting in a risk of maladministration of the estate.[6]
[3]Re Kordos [2023] VSC 14, [26] (‘Reasons’).
[4]Ibid [27].
[5]Ibid [30].
[6]Ibid [34].
The applicant seeks leave to appeal the decision. In doing so, the applicant accepts that the decision was discretionary and that his application attracts the principles in House v The King.[7] His proposed grounds of appeal, should leave be granted, are as follows:
(a)the judge erred in giving insufficient reasons for the conclusion that it was not appropriate to grant letters of administration ad litem to the applicant, notwithstanding the factors weighing in favour of the grant;
(b)the judge erred in giving insufficient weight to the factors weighing in favour of the grant;
(c)the judge erred in finding that the applicant was not sufficiently independent to be appointed administrator ad litem, on the basis that such a finding was not open on the evidence and, insofar as the finding was made on the basis that the applicant foreshadowed an intention to make a claim under pt IV of the Act, the judge acted on a wrong principle and/or took into account an extraneous or irrelevant matter;
(d)the judge erred in finding that the risk or potential for maladministration if the applicant were appointed as administrator ad litem was much greater compared to the appointment of an independent administrator, on the basis that such a finding was not open on the evidence; and
(e)the judge erred in finding that the applicant’s inability to provide an administration guarantee made it inappropriate to grant letters of administration ad litem, on the basis that the judge acted on a wrong principle and/or took into account an extraneous or irrelevant matter.
[7](1936) 55 CLR 499; [1936] HCA 40.
If leave is granted and the appeal allowed, the applicant seeks for this Court to grant the proposed letters of administration ad litem, although with an additional order requiring him to pay any net proceeds he recovers into Court.[8]
[8]The applicant also states that he will give an undertaking to make that payment into Court.
At the hearing of the application for leave to appeal, Evaan was granted leave to intervene and was represented by counsel.
For the reasons that follow we would refuse leave to appeal.
The facts in greater detail
Ermioni Kordos died on 22 October 2021, aged 87 years. The deceased’s husband, Evangelos Kordos (‘Evangelos’) predeceased her in 2006. The deceased and Evangelos had two children, Vasilios and Zafiri (the applicant).
The deceased’s will has been deposited with the Office of the Registrar of Probates (‘the will’). The deceased appointed Vasilios as executor of the will. The will leaves the estate to Vasilios or, in the event that Vasilios died before the deceased, to the son of Vasilios and Eleanor Kordos (‘Eleanor’), Evaan.
Vasilios also died before the deceased on 15 June 2021. On 23 September 2021, probate of Vasilios’ will was granted to his widow, Eleanor.
On 23 May 1985, the deceased and her late husband, Evangelos, were registered as joint proprietors of a property at 88 Ayr Street, Doncaster, Victoria (‘the Doncaster property’). A mortgage to the Commonwealth Bank was subsequently registered on the title of the Doncaster property in 1989. On 9 November 1992, Vasilios was registered as joint proprietor of the Doncaster property with the deceased and Evangelos. At that time, the Commonwealth Bank mortgage was discharged and a new mortgage to the National Bank Limited was registered on the title of the property.
As noted, Evangelos died in 2006. On 7 June 2011, the deceased and Vasilios became joint proprietors of the Doncaster property following a survivorship application, at which time the mortgage to the National Bank Limited was discharged.
On 15 June 2011, the deceased executed a power of attorney appointing Vasilios as her attorney.
On 21 April 2016, the deceased signed her will, which was drawn by her solicitors and witnessed by solicitors of the same firm.
The applicant asserts that the deceased began to suffer from Alzheimer’s disease in about October 2016.
On 22 May 2018, the deceased entered the Mercy Place Abbotsford Hostel. On 10 August 2018, Vasilios, as the deceased’s attorney, executed an agreement with Mercy Aged and Community Care Ltd on behalf of the deceased.
On 4 August 2019, Vasilios, as the deceased’s attorney, entered into a contract for the sale of the Doncaster property. Settlement occurred on 25 September 2019. The net sale proceeds were in the sum of $1,224,519.77. Half of the net sale proceeds, being the sum of $612,259.89, was deposited into the deceased’s bank account.
On 30 September 2019:
(a)The sum of $500,000 was withdrawn from the deceased’s bank account and deposited in the account of Vasilios and Eleanor. The applicant contends that the signature on the corresponding withdrawal slip was that of Vasilios.
(b)The sum of $100,000 was withdrawn from the deceased’s bank account and deposited in the account of Vasilios. The applicant contends that the signature on the corresponding withdrawal slip was that of Vasilios.
On 21 October 2019, Vasilios and Eleanor were registered as joint proprietors of a property at 102 Seventh Avenue, Rosebud, Victoria (‘the Rosebud property’). They paid the sum of $505,000 to purchase the property (excluding stamp duty, registration on title, conveyancing fees and other settlement costs). The applicant contends that Vasilios and Eleanor purchased the Rosebud property using the proceeds of sale from the Doncaster property which were paid into the deceased’s bank account.
Vasilios died on 15 June 2021. The applicant claims that, by 1 August 2021, the deceased was indebted to Mercy Health for the sum of approximately $23,037. The applicant claims that Mercy Health instituted a proceeding in the Victorian Civil and Administrative Tribunal (‘VCAT’) for outstanding fees.
On 19 August 2021, VCAT appointed the applicant as administrator of the deceased. The relevant orders contain a notation to the effect that the deceased’s power of attorney dated 15 June 2011 was invalid (without recording the reasons for that finding).
On 27 September 2021, probate of Vasilios’ will was granted to Eleanor. As a result of a survivorship application by Eleanor, she was registered as the sole proprietor of the Rosebud property on 1 October 2021. The Rosebud property is unencumbered.
On 5 October 2021, the applicant, in his capacity as the deceased’s administrator, lodged a caveat on the Rosebud property claiming an implied, resulting or constructive trust.
On 22 October 2021, the deceased died, whereupon the applicant ceased to be administrator of the deceased. The applicant, as informant on the deceased’s death certificate, recorded that the deceased had Alzheimer’s disease in the five years prior to her death.
Save for any choses in action, such as the asserted claim in relation to the proceeds of the Doncaster property, the estate currently contains no assets.
Other than this proceeding, there has been no application for a grant of probate or letters of administration in the deceased’s estate. Evaan elected not to appear at the hearing of the application before McMillan J.
The application to be appointed as administrator ad litem
Although the applicant is not a beneficiary under the will, as the deceased’s son, he is eligible to make a family provision claim under pt IV of the Act.[9] Further, the applicant claims that the estate is entitled to recover the traceable proceeds of the Doncaster property, part of which proceeds he alleges were transferred to Vasilios and Eleanor and used by them to fund the purchase of the Rosebud property.
[9]Sections 90 (paragraph (f) of the definition of ‘eligible person’) and 90A(1).
Consequently, on 6 July 2022, the applicant sought a limited grant ad litem of the estate of the deceased for the purpose of:
…
2(a) investigating the misappropriation of assets belonging to the deceased by Vasilios Kordos and others;
2(b) commencing and having the conduct and carriage of proceedings to recover the traceable proceeds of sale of [the Doncaster property] in which the plaintiff in his capacity as administrator of the estate of the deceased shall be the plaintiff (‘the proceeding’);
2(c) obtaining relevant discovery relating to the transfer of the Doncaster [p]roperty;
2(d) if appropriate, compromising the proceeding upon such terms as the plaintiff may think fit;
2(e) giving consent on behalf of the estate of the deceased to the making of orders and the entry of judgment by the Court to conclude the proceeding; and
2(f) otherwise prosecuting the proceeding to judgement (sic) and taking all such steps as may be appropriate to enforce any such judgment on behalf of the estate of the deceased.
…
The applicant also sought for the grant of letters of administration to be limited until a grant of general administration was made or until further order, and that the requirements that the applicant provide a surety guarantee in relation to his administration of the estate and post a notice of his intention to apply for the grant on the Court’s website be dispensed with.
The decision below
After setting out the applicable principles in relation to a grant of administration ad litem,[10] the judge accepted that the applicant had standing to seek the limited grant on the basis that he was an eligible person to seek a family provision order under pt IV of the Act.[11] Further, the judge considered that, based on the applicant’s evidence, there may be grounds for a careful investigation of what occurred with the proceeds of the sale of the Doncaster property.[12]
[10]Reasons, [7]–[12].
[11]Ibid [10].
[12]Ibid [13].
With that said, the judge observed that the Court will generally be more willing to appoint an independent person to act as administrator ad litem rather than an interested party whose interests in the litigation may conflict with those of the estate.[13] As noted, the applicant had a potential pt IV claim as the deceased’s son. Where a potential pt IV claimant seeks a grant ad litem, the judge considered that the application should be considered with caution due to the potential for a conflict of interest to arise.[14]
[13]Ibid [16].
[14]Ibid [19].
The judge noted that Evaan was the sole beneficiary of the deceased’s will and was therefore entitled to a grant as the sole beneficiary. The applicant contended that Evaan was unlikely to seek to be appointed as administrator given that the estate contained no real or personal property other than the asserted chose in action to recover the traceable proceeds of the Doncaster property. Further, the applicant argued that Evaan had a personal interest in seeking that Eleanor retain the Rosebud property and, therefore, the applicant would have a conflict between that interest and his duty to investigate Vasilios’ conduct on behalf of the deceased’s estate.[15] However, the judge considered that it was ‘not self-evident’ that Evaan had a personal interest in seeing his mother, Eleanor, retain the Rosebud property, as it was ‘more than likely’ that at his age (18 years old as at the date of the deceased’s death) he would not have understood the paperwork sent to him, and because he has no experience in litigation.[16]
[15]Ibid [20].
[16]Ibid [23].
In any event, even accepting that Evaan was either unwilling or unsuitable to act as administrator, the judge considered that it was not appropriate to appoint the applicant as an administrator ad litem because, in her view, he was not sufficiently independent. Her Honour considered that there was ‘substantial potential’ for him to be in a position of conflict between his own interest and the interests of the estate given his intention to make a pt IV claim.[17]
[17]Ibid [26].
Further, the judge considered that the orders sought by the applicant were more expansive than was appropriate in the circumstances. In particular, the proposed order enabling the applicant to compromise the proceeding on such terms as he may think fit entailed a risk that he would attempt to include discussions around the potential pt IV proceeding in any compromise of the proposed proceeding seeking to recover the traceable proceeds of the sale of the Doncaster property.[18] The applicant’s view that there was a straightforward case for recovery of the proceeds of sale also indicated to her Honour that the applicant could not bring the necessary independence to the task.[19]
[18]Ibid [27].
[19]Ibid [28].
The judge noted that the applicant was unable to provide an administration guarantee pursuant to s 57 of the Act and r 7.01 of the Supreme Court (Administration and Probate) Rules 2014 because he was unable to find an insurer in Victoria and his family members were unable to provide a guarantee.[20] The judge rejected the applicant’s submission that an administration guarantee was not necessary on the basis that there were currently no assets in the estate because the estate would then not be in a position to satisfy any costs order made against the estate in the event that the proposed litigation to recover the traceable proceeds of the Doncaster property was unsuccessful.[21]
[20]Ibid [30].
[21]Ibid [33].
Finally, the judge observed that the applicant intended to institute the proposed proceeding for the purpose of making a further claim in his own right against the estate of the deceased if substantial funds were returned to the estate. As he would have control of any funds paid back into the estate, there was a greater risk of maladministration than if an independent administrator were appointed.[22]
[22]Ibid [34].
Consequently, the judge dismissed the application.
Proposed grounds of appeal
The question of standing to bring an application to be appointed administrator is not free from controversy.[23] No issue was taken about the applicant’s standing and we proceed on that basis.
[23]Mataska v Browne [2013] VSC 62; Hogarth v Johnson [1987] 2 Qd R 383; cf Wood v McLean (2010) 31 VR 12; [2010] VSC 550.
It is convenient to deal with the allegations of specific error before dealing with ground 2.
Ground 1: The submissions
By ground 1, the applicant contends that the judge erred by giving insufficient reasons for her conclusion that it was not appropriate to grant letters of administration ad litem, notwithstanding the factors weighing in favour of the grant.
The applicant submits that the decision whether to grant letters of administration ad litem involves an exercise of judicial discretion and that the judge’s reasons do not disclose that any such weighing exercise was undertaken. He submits that it was critical for the judge to explain how she reached her conclusion, notwithstanding the factors weighing in favour of the grant, namely:
(a)the finding that there may be grounds for a careful investigation of what occurred with the deceased’s share of the proceeds of sale of the Doncaster property;
(b)the acceptance that the sole beneficiary of the deceased’s estate was either unwilling or unsuitable to act as administrator;
(c)the evidence that the only other person with any interest in undertaking the ‘careful investigation’ required is the applicant; and
(d)the finding that there are not currently any other assets in the estate.
Evaan argues that the judge’s path of reasoning was clear.
Ground 1: Decision
In Hunter v Transport Accident Commission,[24] Nettle JA stated the principles that are relevant to determining whether the reasons provided by a primary judge are sufficient. He said:
Furthermore, while the extent of the reasons will depend upon the circumstances of the case, the reasons should deal with the substantial points which have been raised; include findings on material questions of fact; refer to the evidence or other material upon which those finding[s] are based; and provide an intelligible explanation of the process of reasoning that has led the judge from the evidence to the findings and from the findings to the ultimate conclusion.[25]
[24][2005] VSCA 1.
[25]Ibid [21].
In applying those principles, the Court should not apply a standard of perfection, nor should it examine the judge’s reasons too critically, seeking to discern an inadequacy in them.[26]
[26]Dressing v Porter [2006] VSCA 215, [26] (Ashley JA, with whom Callaway and Buchanan JJA agreed).
In our opinion, the judge articulated the relevant principles, including by referring to relevant authority. The decision was discretionary and required the judge to weigh competing considerations. It was not necessary for the judge to ascribe a particular or precise weighting to each of the factors she identified. In our view, the judge referred to the matters which she regarded as relevant and explained, in sufficient terms, how she approached them. Inevitably, the synthesis of the various matters involved a judgment and required a statement of her conclusion but the reasons are much more than a bare statement of the outcome.
The applicant had no difficulty in formulating specific grounds of appeal based on the reasons, which gave an adequate explanation as to why the application was refused.
Ground 1 is rejected.
Ground 3: The submissions
By ground 3, the applicant contends that the judge erred in finding that the applicant is not sufficiently independent to be appointed administrator ad litem, both because the finding was not open and because the judge acted on a wrong principle and/or took into account an extraneous or irrelevant matter.
First, the applicant submits that the finding was not open to the judge because the mere fact that the applicant had foreshadowed an intention to make a family provision claim does not, as a matter of logic, shed light on whether the applicant is likely to be independent in undertaking the duties imposed under the limited grant proposed, especially in circumstances where the proposed grant did not entitle the applicant to resolve his own family provision claim. On the contrary, the applicant’s interest in recovering assets to meet a potential family provision claim is consistent with an administrator’s duty to get in the assets of the estate.
Second, the applicant contends that the proposition that the Court should be more willing to appoint an administrator at litem to prosecute a claim on behalf of the estate where the proposed administrator is independent is wrong in principle. Further, it is inconsistent for the judge to have found that the applicant’s interest as a potential beneficiary of the estate gives him standing to apply for a limited grant, but the same interest precludes his appointment.
Evaan argues that the applicant’s only reason to seek the limited grant was to further his interests in relation to a potential pt IV claim, which demonstrates his lack of independence.
Ground 3: Decision
The lack of independence in the present context arises as an issue if the appointment of the applicant might give rise to a conflict between his duty and interest.
There can be little doubt that the applicant seeks the appointment as administrator ad litem of his late mother’s estate to further his own interest. His end point is to obtain further provision from his mother’s estate, and his role as administrator ad litem would advance that interest in a number of ways. First, it would place him in a position to obtain material and information that the estate would be able to access but which might not otherwise be available to him or be more difficult for him to obtain. Second, it would enable him to commence an action to restore the funds to the estate. Third, if successful in that task, it would make his pt IV action potentially worthwhile.
It follows that the applicant’s interest is initially to maximise the size of the estate.
Were he appointed as administrator, his duty would be to act in the best interests of the estate. A primary duty of an administrator would be to realise the assets of the testator for the purpose of the estate’s distribution in accordance with the testamentary wishes as expressed in the will. At this level, it is difficult to discern a conflict between duty and interest. The fact that the beneficiary might prefer that the traceable proceeds of the sale of the Doncaster property be dealt with outside of the estate or might be indifferent as to that question does not change the equation.
That said, it may be accepted that the applicant’s assessment of the desirability and prudence of taking steps to recover the sale proceeds might conceivably be influenced by his personal stake. That is, he might be more willing to pursue a claim with only modest prospects than an independent administrator.
The argument proceeded before the judge on the basis that, because the estate had no assets, it was inevitable that the applicant would have to fund or underwrite any investigation or proceeding to recover funds into the estate and for that reason there was no risk to the estate. As administrator the applicant would personally incur any costs and liabilities of undertaking investigations and the prosecution of an action to restore the estate, but in the usual course he would have a right of indemnity from the estate. In that way, the estate might bear the burden of undertaking the exercise which is primarily intended to benefit the applicant.
Further, there is the possibility that the funds might be returned to the estate but the applicant might fail in his pt IV claim. In that eventuality, it is probable that the entire process would have been a waste of time. It is also likely in that eventuality that some of the estate will have been diminished by reason of the expenses incurred during the various processes involved.
By reason of these matters, the applicant’s lack of independence is material to the discretion to appoint him as administrator and the judge was not in error in taking it into account. We do not take her Honour as regarding the lack of independence as disqualifying or determinative — rather, it was a matter which she took into account. However, care should be taken not to overstate its significance. Conflicts of interest are not uncommon in the administration of estates.
Estate litigation has been described as interest litigation.[27] For example, an executor is often a beneficiary under a will. Further, it is not unheard of for an executor to wish to make an application for further provision under pt IV of the Act. Where a lack of independence is raised, it will be necessary to first identify the nature and extent of the conflict. There may be cases where the conflict would make it inappropriate for the person to be appointed as an administrator, even for a limited purpose. Equally, there may be cases where the conflict does not stand in the way of an appointment. Whether a potential or actual conflict will disqualify will depend on all the circumstances of the case. Questions may also arise as to how any conflict might be managed or ameliorated. In that context, it is noteworthy that the Court can impose such conditions on the appointment as it thinks fit to ensure that the estate and its beneficiaries are appropriately protected. Further, and importantly, the Act allows for the imposition of a surety or guarantee.
[27]Poulos v Pellicer [2004] NSWSC 504, [10].
It is convenient to turn next to ground 5, which addresses the judge’s finding about the lack of a guarantee under s 57 of the Act.
Ground 5: Submissions
By ground 5, the applicant contends that the judge acted on a wrong principle and/or took into account an extraneous or irrelevant matter in finding that the applicant’s inability to provide an administration guarantee made it inappropriate to grant letters of administration ad litem to the applicant.
As noted, the judge considered that there was not a good reason why a guarantee was not required because there was the potential for costs orders to be made against the estate if the proposed proceeding was unsuccessful. The applicant contends that that reasoning is wrong because the estate is not a legal entity capable of suing or being sued, so that any order for costs would be made against the applicant in his capacity as administrator. The purpose of a guarantee is to protect persons interested in the estate but, until such time as the administrator recovers funds into the estate, the applicant cannot cause any loss since there are currently no assets in the estate.
Further, the applicant alleges that the judge erred by failing to give any weight to the applicant’s evidence that he was unable to find an insurer or procure any family member to provide the guarantee — that is, that a guarantee would be unreasonably burdensome on the applicant.
Evaan contends that he would bear the costs if the applicant’s proposed proceeding failed, as the sole beneficiary of the estate. Further, the applicant was seeking to use an estate without assets to recover property that can be used by him to prosecute a potential claim against the estate.
Ground 5: Decision
In Re Tratt, Brooking J considered the circumstances in which the Court would not require an administration guarantee in the context of an application for a grant of administration ad colligenda bona.[28] At the time of that decision, s 57 of the Act was in the following form:
As a condition of granting administration to any person the Court or the registrar may, subject to and in accordance with any rules made under section 68, require one or more sureties to guarantee that they will make good, in an amount not exceeding the amount at which the property of the deceased is sworn, any loss which any person interested in the administration of the estate of a deceased may suffer in consequence of a breach by the administrator of his duties as such.
[28][1980] VR 657 (‘Re Tratt’).
As contemplated by s 57, the Administration and Probate (Guarantees) Rules 1978 addressed the giving of a guarantee. Relevantly to the issues in that case, the Rules then provided that ‘the Court or the Registrar shall not require a guarantee under s 57 of [the Act] as a condition of granting administration’ except in the cases falling within r 23(1)(a)–(h). Those paragraphs included a grant of administration ad colligenda bona and ad litem.
Justice Brooking considered that the sub-rule in relation to applications for a grant ad colligenda bona gave rise to three possible constructions: first, that the Court is obliged to require a guarantee as a condition of granting administration ad colligenda bona; second, that the Court is given a discretion to require a guarantee as a condition of making such a grant; and third, that the Court is to require a guarantee as a condition of making such a grant unless good reason is shown why a guarantee should not be required.[29] For reasons he gave, Brooking J preferred the third alternative. In short, his Honour considered that this construction provided a degree of certainty to those persons seeking administration which was better than simply listing the occasion in which a guarantee might be required, and it was consistent with English practice, which acknowledged that the identified categories in which a guarantee might be imposed under the sub-rule were of a kind in which the creditors or beneficiaries are considered to require special protection.[30]
[29]Ibid 659.
[30]Ibid 662.
The applicant points out that both s 57 and the relevant rule are now in a different form to that considered in ReTratt and for that reason ReTratt should not be followed. Section 57 no longer refers to the power being subject to and in accordance with any rules. Order 7 of the Supreme Court (Administration and Probate) Rules2023 deals with sureties and relevantly provides that:
(1)The power under this Rule may be exercised if application is made for a grant of administration—…
(g)to bring or defend a proceeding (being a grant formerly described as a grant ad litem);
…
(i)in any other case where the Court or the Registrar considers that there are special circumstances making it desirable to act under paragraph (2).
(2) The Court or the Registrar may require—
(a) a guarantee under section 57 of the Act;
…
The obvious difference between the current and former rules is that the former had a general prohibition on the imposition of a guarantee subject to certain exceptions whereas the current rule is expressed as a positive grant of power in certain cases.
As was the case with the former rule, Order 7 does not expressly qualify the grant of power. As noted, Brooking J found in the conferral of power the qualification that, in the cases where the Court was empowered to impose a guarantee, it should do so unless there is good reason not to do so.
The two animating features that drove Brooking J to his conclusion — namely, providing guidance as to how the power might be exercised and recognising that the circumstances in which a guarantee is authorised are likely to be those where there may be a degree of vulnerability or exposure on the part of beneficiaries or creditors — remain apposite to the current rule.
The question of construction is whether the starting point is to require a guarantee in the cases where the power exists unless there is good reason to the contrary or whether the power should not be exercised unless good reason is shown to require it. There is an obvious difference between the two, although in practice it may not matter: on either approach the Court will be required to assess for itself whether or not to impose a surety having regard to all of the relevant material.
In our view, the change in the rules was not intended to change the practice that had developed of requiring a guarantee in those identified cases unless there was a good reason not to do so. We acknowledge that powers conferred on courts generally should not be hedged with limitations not found in their express terms. But the power to order a surety is a protective one[31] and, given the nature of the cases in which the power exists, it is unsurprising that a surety will be ordered unless good reason is shown. That is not a high hurdle.
[31]Re Freebairn (2005) 93 SASR 415, 420 [22] (Besanko J); [2005] SASC 497.
It follows that the judge did not err in her approach to the giving of a bond. Further, the judge regarded it as one, no doubt important, factor that tended against the appointment. In circumstances in which the applicant had not formulated any conditions to protect the interests of the estate, the absence of a surety was a factor to be taken into account.
This ground must be rejected.
Ground 4: Submissions
By ground 4, the applicant argues that the judge’s finding that the risk of maladministration if the applicant were appointed as administrator ad litem is much greater compared to the appointment of an independent administrator was not open on the evidence.
The applicant submits that, as a matter of logic, the mere fact that the applicant may, if successful in the proposed proceeding, have temporary control of funds paid back into the estate does not shed any light on whether he was likely to maladminister such funds. He submits that there was no other evidence that the applicant was likely to engage in maladministration and that the applicant’s own evidence was to the contrary.
Evaan submits that the impugned passage in her Honour’s decision was an ‘observation only and not crucial to the decision’.
Ground 4: Decision
The observation made by the judge in relation to the potential risk of maladministration did not provide a freestanding reason for refusing the application. It was given in the context of considering the significance of the fact that no surety was being offered by the applicant. The statement that the appointment of a person with an interest in a fund as administrator may present some probity risks that could be ameliorated by an independent administrator was one that was open to the judge. It did not constitute a House v The King error of principle.[32]
[32](1936) 55 CLR 499, 505 (Dixon, Evatt and McTiernan JJ); [1936] HCA 40.
Ground 2: The submissions
By ground 2, the applicant submits that the judge erred by giving insufficient weight to the factors weighing in favour of the grant.
The applicant contends that, if a grant of administration ad litem was not made to the applicant, there would be no investigation into what occurred with the deceased’s share of the proceeds of sale of the Doncaster property. The judge should have given substantial weight to the prospect that there would be no investigation absent the grant. The other factors taken into account by the judge — the applicant’s alleged lack of independence, the alleged risk of maladministration, and the lack of an administration guarantee — should have been given little, if any, weight as they were, at most, grounds for imposing conditions on the grant rather than declining to make it.
Ground 2: Decision
As argued, this ground amounted to a submission that the decision was not open to the judge. That is, the applicant relied on the residual error referred to in House v The King.[33]
[33]Ibid.
For the reasons that follow, not only was the decision to refuse the application open to the judge, but also, had the applicant established error and it was necessary for us to decide the application afresh, we would come to the same conclusion.
The Court has undoubted power to make a limited grant of administration.[34] In Greenway v McKay, the High Court held that a widow of the deceased who died intestate could obtain a limited grant of administration to enable the estate to sue her husband’s former employer under the Wrongs Act 1890 (as it applied at the time) and the fact that she stood to gain from the suit was not a bar to her appointment.[35]
[34]Administration of Probate Act 1958, ss 22, 27.
[35](1911) 12 CLR 310, 316 (Griffiths CJ), 318 (Barton J).
We accept, as the judge found, that the transfer of the proceeds of sale from the Doncaster property to Vasilios at a time when he held a power of attorney in respect of his mother is worthy of careful investigation. As an attorney, Vasilios stood as a fiduciary in relation to his mother, and any self-dealing with his mother’s assets raises obvious questions. One means by which that investigation might occur is by an administrator appointed to the estate for that purpose.
On the other hand, as the judge accepted, there was the potential for a conflict of interest to arise in the administration of the estate, should the applicant’s application to be appointed as administrator be granted. We would regard the conflict of interest as relevant but not determinative. As we have noted, there may be cases where an appointment should be made notwithstanding that the executor ad litem seeks to benefit, directly or indirectly, from the proposed litigation. Had the applicant been able to show that he had a strong pt IV claim then, notwithstanding the potential or actual conflict, so long as a degree of protection for the estate was provided, short of a guarantee (for example, an undertaking not to seek reimbursement from the estate for costs incurred in investigating and seeking to recover the assets of the estate until after the pt IV case was determined in the applicant’s favour or further court order) then there would be a more powerful case for his appointment.
Notably, the applicant did not proffer a guarantee and said he was not in a position to give one. Nor did he volunteer any conditions that might avoid or reduce any risk to the estate that any investigation or proceeding might entail at the hearing before the judge. Equally, he did not propose any conditions that might address the costs or inconvenience that might be sustained by the beneficiary or third parties.
It was not for the judge, or indeed this Court, to formulate or extract conditions that might meet any potential concern for the estate.
In our view, this failure was a factor that tended against the application.
More fundamentally, there was a complete absence of any material that gave any colour to the prospects of a successful pt IV application in relation to the estate. Beyond the applicant saying that he was eligible to bring a pt IV application under the Act, there was no material that might illuminate the case for further provision. Although the applicant swore an affidavit in the proceeding in which he described himself as a ‘general manager’, there was no evidence as to his financial position.
In our opinion, in the absence of any evidence beyond the fact that the applicant is an adult son for whom no provision was made, the prospects of success in a future pt IV application are entirely speculative and the applicant has not established that the order for the appointment of an administrator would have any utility. Standing alone this, in our view, provided a sound basis for the judge’s decision, and in the absence of any attempt to formulate some protection for the estate, the conclusion reached by the judge was well open to her.
For these reasons ground 2 fails. Had it been necessary to do so, we too would have refused the application.
As none of the grounds have been made out, we would refuse leave to appeal.
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