Sadri v Samian (No 2)
[2009] VSC 354
•28 August 2009
| IN THE SUPREME COURT OF VICTORIA | Not Restricted |
AT MELBOURNE
COMMERCIAL AND EQUITY DIVISION
No. 6652 of 2006
| SEPIDEH SADRI | Plaintiff |
| v | |
| ALI REZA SAMIAN | Defendant |
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JUDGE: | HANSEN J | |
WHERE HELD: | Melbourne | |
DATE OF HEARING: | 29 June 2009 | |
DATE OF JUDGMENT: | 28 August 2009 | |
CASE MAY BE CITED AS: | Sadri v Samian (No 2) | |
MEDIUM NEUTRAL CITATION: | [2009] VSC 354 | |
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ADMINISTRATION AND PROBATE – Uncertainty as to value of estate – Previous order that executor adduce further evidence on two properties arguably estate assets – Insufficiency of evidence – Need for further evidence.
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APPEARANCES: | Counsel | Solicitors |
| For the Plaintiff | Mr D Perkins | David Perkins |
| The Defendant appeared in person |
HIS HONOUR:
The plaintiff and her two brothers are the beneficiaries of a trust created by their late mother, Mona Samian (“the deceased”) who died on 2 June 2004. The defendant is the brother of the deceased and the executor of her estate. Following a hearing last year, on 26 March 2009 I gave judgment[1] upholding the plaintiff’s claim (which was actually not disputed by the defendant) that the deceased was, both prior to and at the time of her death, in breach of a trust she had created in favour of her children.
[1][2009] VSC 99. That judgment should be read in conjunction with the present judgment.
Although the plaintiff claimed a raft of relief, including declarations of breach of trust, orders for the reimbursement of trust money and orders for an accounting by the defendant, in his final address at the hearing last year the plaintiff’s counsel sought only orders for the taking of accounts in order that the financial position be clarified with a view to then considering the ultimate relief.
For reasons set out in my first judgment, I did not then make a general order for accounts and inquiries as the plaintiff sought, as such orders seemed to me to be unwarranted by the evidence and unjustifiable in terms of cost. Rather, in circumstances where a question was raised as to whether the estate was solvent, and the answer to that question seemed to depend on the value of two assets which were, or probably were, part of the estate, namely the Southbank unit and the Iranian land, I considered that further evidence was required as to those two assets.
I made orders adjourning the further hearing of the proceeding to 5 June 2009 for the purpose of the Court receiving evidence on:
(a)The market value of the Southbank unit and the amount owing thereon, including the contract of purchase by the deceased and any financing documents, at the date of death and six months thereafter; and
(b)The deceased’s ownership of the Iranian land, including documents pertaining to its sale, the receipt and disposition of the proceeds of sale, and the law of Iran relating thereto.
I ordered that evidence at the hearing be on affidavit with a right of cross-examination, that the defendant file and serve an affidavit or affidavits deposing as to the two matters, such evidence to include an account of his administration of the estate of the deceased in relation to such matters. I also made provision for the plaintiff to file answering affidavits and the defendant to file affidavits in reply.
The parties filed affidavits pursuant to my orders. Before referring to the contents of the affidavits, it is convenient to summarise briefly the findings in my earlier judgment which demonstrated the need for further evidence about the Southbank unit and the Iranian land.
As to the Southbank unit, by the codicil to her will, the deceased gave the unit to her husband “from whom I am separated”. This was a reference to Peter Kay (“Kay”). The inventory of assets and liabilities lodged in connection with the application for probate did not list the unit as an asset of the estate, but rather referred to a liability of $25,500 in respect of the Contract of sale for the purchase of the unit. The plaintiff, however, alleged that the deposit paid on the unit, and the unit, was an asset of the estate. The defendant denied this, on the basis that while the deceased had paid a deposit of $28,500 on the unit, by the codicil she had given the unit to Kay and he had been the registered proprietor since 24 March 2005.
As to the Iranian land, it was sold by the deceased’s father on 27 June 2004, which was only 25 days after the death of the deceased. As I noted (at [84]), the probate inventory stated that assets outside Victoria were “Nil”. The defendant sought to explain this by alleging that in approximately April 1999 the deceased agreed to transfer the Iranian land to her father in full satisfaction of her debt to him of some $15,800 and provided him with a power of attorney no. 21845 dated 18 April 1999 to enable him (her father) to sell the land. I indicated that it was possible, on the defendant’s evidence, that there was an intended but incomplete transaction whether by way of gift or otherwise but, without more, the evidence appeared to indicate that the land should have been included in the inventory. I concluded (at [95](d)) that the proceeds of sale of the land had not been accounted for, and expressed concern (at [100]) that the land had not been dealt with by the defendant as it ought to have been in accordance with his duties as executor.
In addition to these two matters, I noted (at [94]) that there was a lack of evidence about superannuation. At the hearing last year, the defendant was cross-examined as to whether he had taken steps to ensure that the children received the superannuation. He said that he had written to the superannuation trustee asking that the money be distributed into three equal shares for the children, and that that had happened. He said that the plaintiff and Kay each wanted the whole amount but he wanted it distributed in three equal shares. It seemed from exhibit K that the estate had received a superannuation payment of $9,000, but apart from the deceased’s assertion as to distribution, there was no evidence as to whether any part of the superannuation had been paid to the plaintiff and her brothers.
I also noted (at [90] to [91]) that the plaintiff gave no evidence to sustain the allegation in her statement of claim to the effect that she was entitled to jewellery, furniture and personal effects which the defendant had not provided to her. The defence had denied these allegations and alleged further, by reference to a list, that the defendant had distributed particular items of jewellery, furniture and personal effects to the plaintiff. And in cross-examination the defendant denied the plaintiff’s allegations and sought to confirm the correctness of the defence.
As to the Bulleen property, which was the main asset in the estate, I concluded (at [113]) that the defendant acted reasonably in taking the view that his only option was to sell the property, as the estate was unable to bear the burden of the mortgage. After settlement and payment of the mortgage and sale expenses and some debts and liabilities, the estate holds $19,948 which has apparently been held in the trust account of Costanzo Lawyers since November 2005. It should have been held in an interest bearing account but was not. I noted that this amount would be less if the defendant had recouped himself for amounts he advanced from his own pocket. As against that, however, the amount in the estate would be increased by the proceeds of sale of the Iranian land, assuming that the land was an asset of the estate, and the value of the deceased’s interest in the Southbank unit.
Finally, I concluded (at [116]) that no question of personal liability in the defendant could arise, or be determined, until the financial position of the estate was clarified. That was so because, if the estate was financially unable to make good the breach of trust, then the defendant could not bear a personal responsibility to do so.
It was in this context, then, that I made the orders referred to above, pursuant to which the parties filed their affidavits.
The affidavits
Defendant
In an affidavit sworn on 24 April 2009 the defendant deposed as follows. As to the value of the Southbank unit, he made enquiries of Hocking Stuart who provided a letter dated 23 April 2009, exhibited to the affidavit, which stated that the value of the unit in March 2005 would have been approximately $285,000 and that in March 2005 it would have been hard to sell at that price “as it was a struggling market”. The defendant deposed that the deceased had purchased the unit in her own name “off the plan” by contract of sale dated 30 October 2000, which was exhibited. The purchase price was $285,000 as to which a deposit of $28,500 was payable by 13 November 2000. The balance of $256,500 was payable upon settlement, as to which no date was stated in the contract, the building still being under construction. The defendant deposed that “no financing was made on the purchase of the unit by the deceased before and after her death”.
After the death of the deceased, Kay made a claim to be entitled to the unit, asserting that he had contributed to payment of the deposit. Kay had also lodged a caveat over the Bulleen property dated 30 July 2004, claiming a constructive trust. Settlement of the sale of the unit was due to take place on 10 November 2004. The settlement date was extended to 30 March 2005, but the defendant was not able to raise the finance necessary to complete the purchase. He deposed that in these circumstances, he formed the view that there would be no benefit to the estate in contesting Kay’s claim, and thus agreed that the unit should pass to Kay. He deposed that settlement took place on 24 March 2005. On 23 March, Kay signed a release and indemnity in favour of the defendant as executor in relation to the Southbank unit. It is to be noted that the affidavit exhibited an unsigned and undated transfer of the unit from Eureka Tower Pty Ltd to the defendant, and a signed (but undated) transfer of the unit from the defendant to Kay. Finally, the defendant deposed that Kay executed a withdrawal of caveat over the Bulleen property, dated 2 February 2005. The caveat was withdrawn on the condition, as to which the defendant signed an (undated) undertaking to Leo Dimos & Associates, that he not disburse the proceeds of sale of the Bulleen property (save as to costs of $10,061.72 to Victoria Legal Aid) until “all matters between the Estate and Kay arising out of Kay’s caveat over the Bulleen property have been resolved”.
As to the Iranian land, the defendant repeated his evidence (referred to in my judgment at [84]) as to the deceased’s agreement to transfer the land to her father in repayment of her debt to him. The defendant also exhibited a certified translation of an Iranian will purportedly[2] made by the deceased on 20 May 2004. It is convenient to refer to this as the Iranian will. The Iranian will referred to the earlier power of attorney and stated, in effect, that the deceased had given her father the right to sell the land to repay the loan of $15,800 she owed her father, with any surplus from the proceeds of sale to be spent on her pilgrimage to Mecca. The Iranian will concluded by reiterating that the deceased’s father had “full authority to keep the proceeds of sale” and stating that the deceased’s spouse and children “have no right of objection or claim”. The defendant deposed that at the time of her death, the land was still in the deceased’s name. Further, the deceased had instructed the defendant that “since she had transferred the subject parcel of land to her father in replacement of her debts back in February 1999, she did not include that [the land] in her Will dated 4 May 2004”.
[2]I say “purportedly”, because the plaintiff disputes the authenticity of this document and the defendant never sought a grant of probate in respect thereof.
The defendant deposed that after the deceased’s death, the defendant instructed his father to act as per the deceased’s Iranian will and sell the land in Iran as he (the father) had not previously had the chance to sell it. Upon receiving advice on Iranian law to the effect that the executor must act in accordance with the deceased’s will in relation to the property, the defendant asked his father to make enquiries as to the value of the land and, after getting appraisals from two different organisations, the land was sold on 27 June 2004 for 105,000,000 Iranian Rials, which the defendant deposed converted to approximately AUD$15,000 at the time. The proceeds of sale were used to pay “some” of the deceased’s debts to her father, the pilgrimage, and in accordance with the Iranian will.
I interpolate that the defendant also filed an administration account dated 24 April 2009, which referred to the Southbank unit (valued therein at $285,000) being distributed to Kay and the Iranian land (valued therein at $15,000) being distributed to the deceased’s father.
Plaintiff
The plaintiff and her father (“Mr Sadri”) affirmed affidavits on 18 May 2009.
In her affidavit the plaintiff deposed that the Southbank unit was an asset of the estate. The deceased paid for the deposit, “without any sign to indicate that the deposit was from anyone else”. She believed that the deceased had access to enough funds to cover settlement on the unit as she had not sought any loan for settlement. She questioned why the defendant considered the deposit on the unit to be a gift to Kay when the defendant “knew full well” the extent of the estate’s debt to the trust. In short, the unit was an asset of the estate which the defendant should have used to discharge the liabilities of the estate including the debt of the estate to the trust. She also complained that the defendant did not seek legal advice as to whether he should pass the unit to Kay, that he failed to cooperate in terms of providing “the full documents involved in this issue”, and he ignored her solicitor’s letters of request in relation to the unit.
As to the Iranian land, she asserted that the documents provided by the defendant on this issue, including the Iranian will, were forged. The deceased never had a debt to her (the deceased’s) father and there was no arrangement by the deceased to sell or give the land to anybody. On the contrary, the deceased’s parents owed $100,000 to the deceased, which the plaintiff sought be included as an asset of the estate. Further, she deposed that even if the Iranian will was authentic, under Iranian law the power of attorney (the authenticity of which she also disputed) ceased to be valid upon the deceased’s death, as to which she exhibited two legal opinions to this effect provided to her in email communications with Iranian lawyers. It followed, she said, that the defendant’s father should not have sold the land pursuant to the power of attorney. She also requested an explanation as to why the defendant gave priority to the deceased’s alleged debt to her (the deceased’s) father as against the estate’s debt to the trust. As to the value of the land, she deposed to her belief, based on internet research exhibited to her affidavit, that the land was worth more than $250,000.
The plaintiff also deposed to an extensive range of matters unrelated to the Southbank unit and the Iranian land. For example, she asserted (at para 10) that she did not believe that the codicil to the will represented her mother’s wishes, and (at para 8) that she was certain that her mother would not waste money or bring her financial circumstances to the state that the defendant claims. She deposed (at para 11) to her belief that the deceased left jewellery valued “well in excess of $110,000”. As to that, she exhibited her parents’ marriage certificate from 1983 which refers to a dowry payment of 300 Bahar Azadi gold coins being “payable to the wife any time on her demand”, followed by a translation of a declaration by the deceased in 1995 to the effect that she had received the whole of the dowry. The plaintiff also exhibited a page printed from the internet stating that the price of a 1979 Azadi coin is US$99.
The plaintiff denied having received furniture, jewellery and other personal effects from the defendant. She also asserted that the defendant had failed to account for rent he was collecting from a unit located at the Bulleen property. In seeking to establish that the unit was rented out, she exhibited a real estate advertisement[3] which states that the Bulleen property has a rental unit “currently rented out at $140 per week”.
[3]The advertisement is an undated page from the internet but refers to upcoming inspections on Saturday 7 and Sunday 8 August, which days were in 2004. I would infer that the advertisement was published in late July or early August 2004.
In short, the plaintiff claimed that the probate inventory did not reflect the true nature of the estate at the time of lodging. The defendant had failed to state the true value of the jewellery, furniture and superannuation, and had failed to mention the Iranian land, the collection of rents on the unit at the Bulleen property, and the deceased’s parents’ debt of $100,000 to the estate. Taking into account all the estate’s assets, there was sufficient to cover the breach of trust. She also requested that the defendant tell her what share of her mother’s estate he has paid to her.
In his affidavit, Mr Sadri deposed to a belief that the deceased’s equity in the Southbank unit was “at least $30,000” and the value of the Iranian land was “at least $250,000 but probably far more”.
Mr Sadri also deposed to a wide range of matters unrelated to the Southbank unit and the Iranian land. He asserted that the value of the estate, including superannuation, was approximately $900,000. The furniture was “approximately $80,000”, the jewellery “at least $110,000” and the deceased’s father’s debt to the estate was “approximately $100,000”.
As to this alleged debt, which Mr Sadri asserts is an asset of the estate, the circumstances giving rise to it were as follows. Mr Sadri’s father loaned the deceased’s parents $100,000 to purchase a house at Chirnside Park. The loan “was given to [the deceased] who paid for the purchase directly out of her account”. The debt was “always considered and treated as a debt of her parents”. It was never paid back and “is an asset of the estate”.
As to the superannuation, Mr Sadri deposed that he was “aware that the plaintiff has received – directly from the Trustees of the superannuation fund, and despite strenuous and sustained opposition from the executor and Kay – one third of the superannuation”.
Mr Sadri also deposed that the deceased’s mother and the defendant told him that Kay had taken part of the deceased’s jewellery, including some of the gold coins which were the deceased’s dowry. As to the jewellery, he deposed that the deceased had “many valuable gold coins and pure gold nuggets” and other high-quality valuable items made of 18 carat gold. He deposed to a belief that “a taking of accounts relating to those coins may provide the plaintiff with a way of showing the value of these coins”.
Mr Sadri also asserted that the signature on the codicil did not appear to be that of the deceased, and that he “had previously had occasion to be wary concerning dealings with [the deceased’s] family” as the deceased’s father had fraudulently witnessed a passport application. The general tenor of the affidavit was to seek to dredge past history in an attempt to undermine the honesty and credibility of the defendant and his family.
Defendant’s affidavits in reply
The defendant swore two affidavits on 10 June 2009, in reply to the affidavits of the plaintiff and Mr Sadri respectively. The defendant’s affidavits contained much irrelevant material, by which he sought to meet the similarly irrelevant material contained in the plaintiff’s and Mr Sadri’s affidavits. It is not necessary to set out the detail of the assertions made in the two affidavits, it being sufficient to note the following.
In effect, the defendant denied the plaintiff’s allegations referred to above, and stated that he had acted honestly and transparently at all times in relation the estate.
As to the Southbank unit, he alleged that the plaintiff was “fully aware” of the issues relating to the unit, the codicil, the contract of sale and the settlement. He referred to, and exhibited, a statutory declaration completed by the plaintiff on 23 November 2004 in relation to her application to the superannuation trustees Mercer for payment of the deceased’s superannuation, in which she stated, among other things, that the “Estate is currently undergoing probate with an estimated value of $15,000 (after expenses of the house’s sale) to be distributed if current caveats are removed and probate granted between three children. The Eureka apartment will go to the spouse”.
As to the Iranian land he said that he has “acted to achieve the ultimate outcome that would have been to sell and convert the subject land to money and assure that the deceased’s wish was achieved”.
As to the superannuation, he denied what Mr Sadri said in the relevant paragraph of his affidavit. He then asserted (referring to the statutory declaration mentioned above) that the plaintiff has received “in excess of $94,000 from the superannuation”.
Finally, the plaintiff’s brother, Amir Hosain Samian, swore an affidavit on 10 June 2009, supporting the defendant’s position generally. The affidavit contained numerous irrelevant allegations of a personal nature, which need not be repeated. It is sufficient to note that Amir disputed the plaintiff’s allegation that she had not received furniture, jewellery and other items from the estate. He further alleged that the defendant had kept the deceased’s children informed about the administration of the estate at all relevant times.
Hearing on 29 June 2009
Counsel for the plaintiff submitted from the outset that many paragraphs in the defendant’s affidavits (identified in an email counsel had sent to the defendant and the Court prior to the hearing) were inadmissible. In my view, that was plainly so. Counsel also sensibly conceded that the plaintiff’s affidavits contained inadmissible material. The inadmissibility on both sides arose from the form of the evidence (e.g. hearsay, opinion etc) and also the fact that the affidavits went beyond the two matters ordered to be addressed by the affidavits, namely the Southbank unit and the Iranian land. In the circumstances, however, and given the large amount of irrelevant material and the number of objections, it was neither necessary nor practical to rule on each objection individually. Rather, the hearing proceeded on the basis that I would receive the affidavits in whole but decide the case only on admissible material.
After brief opening addresses from counsel and the defendant, the defendant stated that he wished to cross-examine the plaintiff and Mr Sadri.
The defendant first cross-examined the plaintiff. Questions were put on a wide range of matters, including the health and testamentary capacity of the deceased, whether the plaintiff had asked to see the will, whether the defendant had ever prevented the plaintiff from seeing the will or applying for superannuation, whether the plaintiff was aware that the deceased had debts to her (the deceased’s) father at the time of her death, and generally whether the defendant had kept the plaintiff informed about a range of matters involved with the administration of the estate. Most of the questions went to irrelevant matters, although I note that some of these (irrelevant) matters were raised in the affidavits.
The defendant put to the plaintiff that he had discussed with her “The contents of the will such as the jewellery, the furniture or the house and what was going to happen to it and the Eureka Tower and to discuss as to what should happen to the house [the Bulleen property] and even looking at options of renting it rather than selling it, if that was affordable, and that the banks would take over and discussing the caveats that were available on that house”. She replied “Yes”, however it is apparent that there were many matters rolled into the question, and the plaintiff clarified that “Of course I was aware that a house was needed – you were needing to sell our house, I was aware of that, yes, I was aware”. The defendant then asked her whether she agreed with the rest of the matters he had put to her, as to which she said that he never discussed the will with her.
As to the Southbank unit, the defendant put to the plaintiff that he had discussed with her and her brothers that a deposit was paid on the unit and that if the unit was not passed to Kay as per the codicil, they would have to settle the purchase and come up with the remaining 90 percent of the purchase price, as to which the plaintiff replied “Well, yes, I knew that if we didn’t sell – I knew that you were trying to sell the Eureka apartment because you didn’t want to be liable for a mortgage of the Eureka apartment”. At that point in the questioning, the defendant corrected the plaintiff, clarifying that he did not want the estate to be liable for the mortgage and that the best way was to pass that apartment to Kay instead of selling it, to pass it on to him as per the will and the deceased’s wish to get rid of a burden of the estate. He asked the plaintiff whether that was true, at which point discussion ensued as to how the matter was being put, an objection was raised as to the form of the question, and after my invitation to the defendant to start again with simple, short questions, he stated that he considered that the point was finished and he thus moved on to a different topic.
As to the Iranian land, the plaintiff agreed with the cross-examiner’s assertion that she was “with the family” at the time that the defendant’s father went to Iran to sell the land. She also agreed that the defendant and her grandmother had told her that the defendant’s father had gone to Iran to sell the land. I interpolate, however, that there was no clarification as to what being “with the family” meant in this context, nor was any timeframe put on the question as to when the plaintiff was told about the trip to Iran and the sale.
As to the superannuation, the plaintiff said that she had claimed the whole amount of the superannuation to go to herself, in circumstances where Mercer had told her that the superannuation was going to be distributed to Kay, and she wanted to avoid that result. She said that she was not aware that the defendant had (as he asserted while cross-examining the plaintiff) asked Mercer to distribute the superannuation equally between the three children. In re-examination the plaintiff refreshed her memory by reference to a letter from Mercer received in 2006. She stated that she had asked Mercer not to distribute the deceased’s superannuation to Kay but rather to the three children.
The plaintiff also said in re-examination that she received a letter from Costanzo lawyers in June 2006 which referred to the deceased signing a power of attorney giving the defendant’s father the right to sell the Iranian land, and attached the deceased’s “affidavit” and power of attorney dated April 1999. The plaintiff’s counsel called for production of the original of the deceased’s “affidavit” and power of attorney, but the defendant was unable to produce the original.
The defendant next cross-examined Mr Sadri. Much of the questioning related to the debt which Mr Sadri alleged was an asset of the estate. As to the payment of the dowry, he said that he initially gave the deceased some gold coins when they married, but he could not recall the exact number. The balance of the dowry was paid off during the marriage, in effect to offset the deceased’s debt to Mr Sadri’s father. When pressed as to the amount of the debt and who the debt was owed to, Mr Sadri asserted that the estate owed a debt of $100,000 “partially to my father, partially to the children”. There was cross-examination on a range of other matters to which it is not necessary to refer.
Submissions
Counsel for the plaintiff stated that, in effect, he sought leave to reopen and thus lead evidence on certain matters upon which I had concluded in my previous judgment, principally to raise the issue of the gold coins, as to which counsel conceded that the plaintiff had provided no strict proof of value, but nevertheless submitted that there were a significant number of coins which would have a significant value. As to the two matters on which I had sought further evidence, counsel submitted that the defendant had not provided admissible evidence as to the value of the Southbank unit, nor as to the steps taken in relation to the Iranian land. Further, as to the Iranian land, there was no identification of the land such as would enable the plaintiff to call independent valuation evidence, no evidence as to Iranian law in relation to the land and the power of attorney, and no evidence was given by the defendant’s father who had sold the land. Counsel chose not to cross-examine the defendant, effectively on the basis that because the defendant had not advanced the case by admissible evidence beyond the stage reached in my earlier judgment, there was nothing on which to cross-examine. Accordingly, counsel reiterated his submission that the appropriate relief in the circumstances was an order for the taking of accounts so as to clarify the position of the estate. He submitted that notwithstanding my observation in the previous judgment that general orders for the taking of accounts were unwarranted by the evidence and unjustifiable in terms of cost, the defendant’s failure to properly explain the position of the estate meant that, in the circumstances, it was appropriate to make a general order for the taking of accounts.
The defendant submitted that he had provided sufficient details of the Iranian land and the Southbank unit. He said that he had discussed with the plaintiff the deceased’s debts and roughly how much the Iranian land was going to be sold for, and that the plaintiff was aware that her grandfather went to Iran to sell the Iranian land. As to the Southbank unit, the defendant submitted that it was passed to Kay purely based on the codicil, in circumstances where he had discussed with the deceased’s children the fact that if the unit was not given to Kay, the estate would have to bear the purchase price of the unit. He also submitted that there was no proof as to the allegations about the gold coins, and queried why the matter had not been raised earlier.
Decision
It is convenient to first say something about the alleged debt of $100,000 which the plaintiff and her father contend is an asset of the estate. Mr Sadri effectively asserted in his affidavit that the debt was owed by the deceased’s father (or parents) to the estate. However, the main document relied on by Mr Sadri as establishing the debt, the document of acknowledgment of debt, purportedly[4] signed by the deceased, refers to a balance of $60,000 (not $100,000) being payable to Mr Sadri’s father or Mr Sadri, and that both the deceased’s parents and the deceased “remain liable for this debt until its complete payment”. In other words, the document relied on by Mr Sadri does not indicate that a debt is owing to the estate, but rather that the estate (and the deceased’s parents also) owed a debt to Mr Sadri and his father. Also, the amount of the alleged debt is $60,000 rather than $100,000 as asserted by the plaintiff and Mr Sadri. The difference in amount is not important for present purposes, but seems to relate to the allegation that Mr Sadri still owed the deceased an amount in relation to unpaid dowry, and that the debt of $100,000 was offset by the amount of unpaid dowry. I note also that Mr Sadri’s solicitors wrote a letter to Oboodi in September 2004 claiming that the deceased owed Mr Sadri $100,000 and that Mr Sadri should therefore be provided with a copy of the deceased’s will, but the simple fact is that some five years down the track no proceeding has been commenced by Mr Sadri (or the estate of Mr Sadri’s late father) to recover the alleged debt from the defendant as executor of the deceased’s estate. Accordingly, and notwithstanding the lengthy references to the matter in the affidavits and cross-examination, the issue of the alleged debt is not relevant for present purposes, and is not something in respect of which I would order an account or an inquiry.
[4]I say “purportedly” because the defendant alleged that this document was forged. Nothing turns on this allegation, which is unnecessary to resolve for present purposes.
As to the superannuation, as I understood the evidence, the plaintiff has received one third of the deceased’s superannuation, although the precise dollar figure was not specified. I reject the defendant’s assertion, unsupported by any evidence, that the plaintiff has received $94,000 in superannuation. But the point to note is that notwithstanding the complaint in her affidavit that the defendant had not been open in dealing with the superannuation, the end result is that the plaintiff has received superannuation.
As to the gold coins, this is conveniently dealt with in the context of considering the plaintiff’s evidence as to jewellery, furniture and personal effects. As I said in my earlier judgment ([90]-[91]), the plaintiff alleged in her pleading that the estate included jewellery, furniture and personal effects and further that the unit at the Bulleen property was rented out for $100 per week. In effect, the pleading alleged that the defendant had not accounted for these items. The defence denied these allegations and alleged further, by reference to a list, that the defendant had distributed particular items of jewellery, furniture and personal effects to the plaintiff. The plaintiff gave no evidence at the hearing last year, and in cross-examination the defendant denied the plaintiff’s allegations and confirmed the correctness of the defence. Now, the plaintiff has gone into evidence on these matters. As to the unit at the Bulleen property, the plaintiff’s evidence was hearsay, the relevant rental manager from the real estate agent not being called. Further, the alleged rental of $140 per week was higher than the figure claimed in the statement of claim. The overall difficulty with the evidence given by the plaintiff and Mr Sadri about these matters is that it is vague and speculative, both as to the nature and the value of the items said to form part of the estate. Ultimately, I am unpersuaded that that the plaintiff has established any proper evidentiary basis for the ordering of accounts on these particular matters.
That then leaves for consideration the two matters in respect of which I specifically sought further evidence.
As to the Southbank unit, I accept counsel’s submission that the defendant has not provided admissible evidence as to the market value of the unit. His affidavit contained hearsay evidence as to his enquiries, the effect of which was that the unit was said to be worth $285,000, which was the purchase price. The defendant did, however, provide a copy of the contract of purchase by the deceased, which indicates that a deposit was paid and a balance of $256,500 remained payable at settlement. Assuming that it was the deceased who paid the deposit of $28,500 on the unit, the deceased had an equitable interest in the unit as purchaser under an uncompleted contract of sale. And although the plaintiff and Mr Sadri sought to challenge the validity of the codicil in their affidavits, no proceeding has been commenced to challenge the probate granted in respect of the codicil. The simple position under the codicil is that the deceased gifted the unit to Kay. In effect, she gifted to Kay her equitable interest in the unit[5].
[5]See s 42 of the Wills Act 1997.
The difficulty was that the purchase of the unit remained to be settled. As to this, I accept the defendant’s statement that “no financing was made on the purchase of the unit by the deceased before and after her death”. This is supported by the plaintiff’s statement that the deceased “had not sought any loan for settlement”. In other words, if the estate wished to complete the purchase of the unit, it needed to raise sufficient funds to do so. As to this, I accept the defendant’s statement that the estate did not have the necessary funds to complete the purchase of the unit. I also accept that there was pressure from the owner of the building to complete the purchase, and in this regard the defendant, having already sought an extension of the settlement date, faced a situation where failure to complete risked the contract being rescinded and the deposit being forfeited, which obviously would not have benefited the estate. Further, I accept that there was an additional difficulty arising from the need to sell the Bulleen property in circumstances where Kay had lodged a caveat over the Bulleen property and, in circumstances where the codicil provided that the unit was to pass to Kay, I accept that the defendant took the view that the best option was to solve the problem by allowing Kay to take over the liability of the unit. It does not follow, however, that the defendant should have simply allowed Kay to take over the purchase of the unit. As I mentioned in my first judgment (at [114]) the unit was, in principle, amenable to be applied to pay the debts and liabilities of the estate.
As to the Iranian land, I reject the defendant’s suggestion that the plaintiff knew and consented to the deceased’s father going to Iran to sell the Iranian land, and that the defendant had discussed with the plaintiff the deceased’s debts and roughly how much the Iranian land was going to be sold for. The plaintiff’s answers in cross-examination (at [42] above) fell well short of establishing that the plaintiff agreed to the Iranian land being sold and the proceeds being dealt with by the defendant’s father. Further, I agree with counsel’s submission that the defendant has not provided a satisfactory account of his dealings with the land. He provided no admissible evidence as to the law of Iran, and nor did the plaintiff. The effect of this lack of evidence is that there is no basis on which I could conclude that the power of attorney[6] remained in force after the deceased’s death so as to permit the defendant’s father to sell the Iranian land. On the contrary, I would infer that the power lapsed upon the deceased’s death. Further, in circumstances where the plaintiff disputed the authenticity of the documents provided by the defendant in relation to the sale of the Iranian land, the defendant did not call evidence from his father as to the circumstances in which the sale occurred or as to any other matter which might establish that it was proper not to include the land as an asset of the estate. It is also to be noted that the defendant’s evidence as to the Iranian land in his reply affidavit was that he has acted to achieve “the ultimate outcome” of converting the subject land to money and assuring that the deceased’s wish was achieved. The difficulty is that the wish referred to is that expressed in the Iranian will, which is not the will admitted to probate. In short, the defendant was given an opportunity to adduce evidence that might establish that the Iranian land was not an asset of the estate. In the absence of such evidence, I am left with the same concern I expressed in my first judgment, namely that as the land was still owned by the deceased when she died it should have been included as an asset of the estate. And as the defendant has provided no admissible evidence as to the value of the land, and has not accounted for the proceeds of sale of the land, the Court and the beneficiaries under the deceased’s will remain uninformed as to the value of the Iranian land.
[6]Assuming that it was valid, as to which I say nothing about the plaintiff’s allegation that the documents were forged.
It is axiomatic that as executor, the defendant was obliged to pay funeral and testamentary expenses, ascertain and get in the assets of the estate and pay the debts of the estate, before distributing what was left in accordance with the deceased’s will and codicil. The difficulty in this case was, as I have indicated, the real possibility that the estate might ultimately prove to be insolvent. In such circumstances, it was all the more important that the executor properly ascertain the value of all the assets, including the Iranian land and the Southbank unit, and get in the proceeds of these assets to the greatest extent possible so as to discharge the duty of paying the estate’s debts in so far as he could - including the debts to the plaintiff and her brothers as the victims of the deceased’s breach of trust – before paying the legacies under the will and codicil.
In my view, the defendant has failed to properly account for the value of the Iranian land. In effect, he preferred his father’s alleged debt and used the proceeds of the Iranian land to pay that debt rather than get in the proceeds of the land to be dealt with in the due administration of the estate. As to the Southbank unit, the position is less clear. On the one hand, the defendant might have been able to assign the contract for a consideration at least equal to if not greater than the deposit, depending on the then value of the unit and the market. As against that, settlement loomed and the estate had a legitimate interest in making sure that the deposit was not forfeited and to avoid further disputation with Kay, which had the potential to further diminish the estate. Nevertheless, the defendant could not simply pass the unit to Kay on the basis that he was named in the codicil, without regard to his duties to get in the assets of the estate to pay the estate’s debts. It is possible that, in all the circumstances, the defendant acted reasonably in allowing Kay to take over the liability of completing the purchase of the unit, however I cannot determine that matter on the evidence presently before me.
Viewing the matter overall, the absence of proper evidence as to the value of the Iranian land and the Southbank unit means that the overall value of the estate cannot be determined. It follows that the question of the solvency or otherwise of the estate still cannot be resolved, with the result that it is not yet possible to determine the extent to which the defendant was in a position to remedy the deceased’s breach of trust to her children.
In the circumstances, the proceeding must again be stood over for the purpose of receiving admissible evidence on the value of the Iranian land and the value of the deceased’s interest in the Southbank unit, for which purpose I will make directions for the filing of affidavits including statements of experts under O 44.
I emphasise to the parties, but particularly the defendant, that I require evidence that is admissible. The extra cost, expense and delay in the case is the result of the defendant’s failure both to produce evidence that I required and to do so in admissible form. I will deal with the costs thus wasted in due course.