Salkanovic v Polites

Case [2025] SASC 86

SUPREME COURT OF SOUTH AUSTRALIA

(Testamentary Causes Jurisdiction)

In the Estate of FLORENCE GEMENIS POLITES

SALKANOVIC v POLITES

[2025] SASC 86

Reasons for Decision of the Honourable Justice Stanley  

30 May 2025

SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF PROBATE AND LETTERS OF ADMINISTRATION - LIMITED, SPECIAL AND CONDITIONAL GRANTS OF PROBATE AND ADMINISTRATION

SUCCESSION - PROBATE AND LETTERS OF ADMINISTRATION - GRANTS OF PROBATE AND LETTERS OF ADMINISTRATION - ADMINISTRATION OF GOODS NOT ADMINISTERED

PROCEDURE - CIVIL PROCEEDINGS IN STATE AND TERRITORY COURTS - SECURITY FOR COSTS - FACTORS RELEVANT TO EXERCISE OF DISCRETION - PUBLIC INTEREST

On 5 March 2024 Florence Gemenis Polites (the deceased) died. The applicant is a beneficiary of the estate and the grandson of the deceased. The respondent is the executor of the deceased’s estate and the son of the deceased. The executor has not sought a grant of probate, claiming that he has fully administered the deceased’s estate and that it is insolvent being in deficit in an amount of approximately $2.8 million.

The applicant instituted proceedings seeking a grant of letters of administration ad colligenda bona. The applicant’s stated objective in bringing the application was to enable him to bring a claim against the estate for further provision pursuant to the Inheritance (Family Provision) Act 1972 (SA) (IFP Act) before it was repealed by the Succession Act 2023 (SA) on 1 January 2025 and for the protection and preservation of the assets of the deceased’s estate.

The respondent resisted the application and made an application seeking security for costs and a stay of the proceedings until such time as security was paid. The respondent submitted that the application was an abuse of process, a “stalking-horse” for facilitating a claim under the IFP Act and that there was no threat to any of the assets of the estate. He also submitted the Court should refuse the application because the applicant had engaged in disentitling conduct pursuant to section 7(3) of the IFP Act. 

Held (dismissing the respondent’s application for security for costs and granting the applicant’s application):

1.An order for security for costs pursuant to rule 115.1(1)(a) of the Uniform Civil Rules 2020 (SA) will not be appropriate in circumstances where an applicant brings a claim for his own benefit, but incidentally in doing so, other persons will also benefit. That there may be other persons interested in the proceedings is not a sound basis for inferring that the application has been brought for their benefit.

2.The purpose of seeking an order for a grant of letters of administration ad colligenda bona in the estate of the deceased, where no grant of probate has been made, is not an ulterior purpose even if the consequence of making a grant is that the applicant will be able, as an eligible applicant, to make a claim for further provision out of the estate, once the order of appointment is made.

3.Where there are concerns about an executor’s failure to act on…

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Salkanovic v Polites [2025] SASC 86
Case
[2025] SASC 86
Decision Date

CaseChat Overview and Summary

In Salkanovic v Polites, the applicants sought a limited grant of probate ad colligenda bona and an order for an administrator ad colligenda bona to be appointed. The applicants, who are beneficiaries of the deceased's estate, argued that the executor had failed to provide information and documents related to the estate, including a significant debt claimed by the executor to be owed to Nominated Manager Ltd, a company controlled by the executor. This alleged debt is central to the executor's claim that the estate is insolvent. The applicants sought the court's intervention to protect the estate's assets and ensure proper administration.

The central legal issue was whether the applicant had established sufficient grounds for the court to grant letters of administration ad colligenda bona to protect the estate's assets. The applicants argued that the executor's refusal to provide information and documents and the transfer of the deceased's shares to a company controlled by the executor created an urgent need to protect the estate. The executor, on the other hand, contended that the estate was insolvent and that probate could not be granted due to insufficient assets. The court had to determine whether the applicants' concerns about the executor's conduct warranted the appointment of an administrator ad colligenda bona.

The court found that the applicants had demonstrated a genuine concern about the executor's handling of the estate and the potential for assets to be improperly disposed of. The lack of transparency and cooperation from the executor, coupled with the transfer of significant assets to a company he controlled, justified the appointment of an administrator ad colligenda bona. The court held that the applicants' interests in ensuring the proper administration of the estate and the protection of its assets were compelling enough to warrant the intervention of the court. Consequently, the court granted the applicants' requests for a limited grant of probate ad colligenda bona and ordered the appointment of an administrator ad colligenda bona.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

I accept that it would not have been possible to treat this application for a limited grant of probate ad colligenda bona as warranting the provision of security for costs before the Court had even considered the appropriateness of making such a grant. In this case where the justification for seeking the grant of letters of administration was, in part, the conduct of the executor in parting with assets of the estate, coupled with his refusal to provide information and documents sought by the applicant, who is a person with an interest in the administration of the estate, this gave rise to a degree of urgency in taking steps to protect those assets. Conclusion In this case, the executor is and was unwilling to take a grant of probate of the will. As was the case in Mataska, it was appropriate and proper for the applicant, being a person with an interest in the deceased’s estate, both as a beneficiary and as a person entitled to make a claim for family provision, to apply to the Court for the appointment of an administrator ad colligenda bona. The basis of the applicant’s concern is the executor’s failure to act on his requests for the provision of information and documents relating to the estate, in particular, documents which are alleged to evidence the debt of $4,431,293.04 owed by the deceased’s estate to Nominated Manager Ltd, which is the basis for the executor’s conduct in transferring shares from the deceased’s estate to Nominated Manager Ltd and, as a result, the consequent contention that the deceased’s estate is insolvent. These circumstances give rise to a reasonable concern on the part of the applicant that the executor may have breached his executorial duty by parting with the assets of the deceased’s estate. In my view that requires investigation. That investigation may identify an urgent need to protect the estate and its assets. This concern is not allayed by the fact that the executor has not descended into giving evidence but rather has relied upon affidavits of his solicitor. The applicant has a personal interest in the estate of the deceased and, as a beneficiary of the unadministered estate of the deceased, has a right to “secure that the assets are properly dealt with” during the course of administration.[36][36] Commissioner of Stamp Duties (Qld) v Livingston [1965] HCA 54 at [24]; (1964) 112 CLR 12 at 22. In Official Receiver in Bankruptcy v Schultz[37] the High Court said:[38] The right which any beneficiary has in an unadministered estate springs from the duty of the executor to administer the estate, to preserve the assets and to deal with them in the proper manner. Each beneficiary has an interest in seeing that the whole of the assets are treated in accordance with the executor's duties. [37] (1990) 170 CLR 306.[38] (1990) 170 CLR 306 at 313. The executor’s failure to do these things established the justification for the appointment of an administrator ad colligenda bona to rectify the position with respect to the deceased’s estate and was a sufficient basis for the orders made by the Court.

Ratio Decidendi

Legal Principle Established

I am satisfied the applicant sought a grant of letters of administration ad colligenda bona not only to enable the bringing of an IFP claim against the deceased’s estate but also to protect the assets of the estate. I consider that to be a genuine, albeit secondary purpose. The protection of the assets of the estate is inextricably linked to any IFP claim. The successful outcome of any IFP claim depends on there being recoverable assets in the deceased’s estate. The executor’s conduct in the administration of the estate The executor contended that probate was not obtained by him due to the deficiency of assets in the estate. The basis of the assertion that the estate was insolvent is the claim by the executor that at the date of the deceased’s death there was a liability to repay a debt to Nominated Manager Ltd as trustee of the Ambassador’s Trust (the trust) in an amount of $4,431,293.04. Nominated Manager Ltd is a company controlled by the executor. The liability was said to have been incurred by monies advanced to the deceased through Nominated Manager Ltd for a number of years prior to her death to pay all her living, care and medical expenses. The estate is now unable to pay this debt. As at the date of the deceased’s death the executor claims she only had assets of $1,630,069.45. There was limited evidence put before the Court of the value of the estate of the deceased as at her death. Mr Griffin in his affidavit of 18 October 2024 exhibited a copy of a document entitled “Statements of Assets and Liabilities.”[6] The Statement of Assets and Liabilities includes an “executor’s estimate” of $50,000 for the personal effects of the deceased. The only description for this estimate is “jewellery, fur coats and statutes”. There was no evidence that the executor had taken any steps to have the assets of the deceased valued as at the date of death. Insofar as the executor sought to rely on values of the deceased’s assets in shares at an earlier date, he failed to provide to the applicant the valuations obtained from a third party. [6] Exhibit B to the Affidavit of Gregory Michael Griffin sworn 18 October 2024. The evidence is that at the date of the deceased’s death she held shares in a number of the Polites Group entities. On 27 March 2024, i.e. about three weeks after the deceased’s death, each of the shareholdings in the Polites Group entities in the estate were transferred to Nominated Manager Ltd. ASIC records were said to have been updated accordingly. Mr Griffin deposed to the executor transferring title to the deceased’s shareholdings in the companies listed in Annexure B to Mr Griffin’s affidavit of 18 October 2024 to Nominated Manager Ltd. It can be inferred that each of the Polites Group companies in which the deceased held shareholdings, which are controlled by the executor, have acted in a manner to effect a change in the register of shareholdings so as to record Nominated Manager Ltd as the shareholder in place of the deceased. Is the estate insolvent?