Stanley v Stanley

[2000] NSWSC 1133

CITATION:	STANLEY v STANLEY [2000] NSWSC 1133
CURRENT JURISDICTION:	EQUITY - PROBATE
FILE NUMBER(S):	SC 113308/98
HEARING DATE(S):	30/11/00
JUDGMENT DATE:	8 December 2000
PARTIES :	Thomas Stanley v Dusan Stanley (Estate of Velika Stanley)
JUDGMENT OF:	Bryson J at 1

COUNSEL :	R. Wilson & P. Livingstone - Plaintiff M. Meek - Defendant
SOLICITORS:	WS & PJ Quinn - Plaintiff Cox Wiseman & Davidson - Defendant
CATCHWORDS:	PROBATE - application for revocation of grant of administration - whether testator had capacity - administrator managed affairs of testator under power of attorney - small estate - consideration of suitability of competing applicant and prospects of proposed claim - revocation refused.
LEGISLATION CITED:	Conveyancing Act 1919 (NSW) s 163B Supreme Court Rules 1970 Pt 40 r 9(3), Pt 74 rr 24A(3), 25 Wills Probate & Administration Act 1898 ss 40D, 66
CASES CITED:	Bates v Messner (1967) 67 SR(NSW) 187 Bramston v Morris; Estate of Murray (unreported, SC(NSW), Powell J, 20 August 1993) In the Goods of Loveday [1900] P 154 Mavrideros v Mack (1998) 45 NSWLR 80
DECISION:	I give judgment to the defendant with costs

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

BRYSON J.

FRIDAY 8 DECEMBER 2000

113308/98 THOMAS STANLEY v DUSAN STANLEY
Estate of Velika Stanley (aka Velika Stanoevska)

JUDGMENT

1 HIS HONOUR: Velika Stanley, formerly named Velika Stanoevska, late of the Coniston Nursing Home, widow, died there intestate on 16 May 1996. She was the widow of the late Vasil Stanley who died there on 21 March 1989, and she was survived by their five children, in order of age Angelina Elik, Fanka Kocovska, Thomas (or Tome) Stanley (the plaintiff in these proceedings), Donka Tanoff and Dusan Stanley (who is the defendant). Each is entitled to a one-fifth share of her estate. 2 Mr Dusan Stanley applied for a grant of Administration by Summons for Administration in common form on 3 August 1998. The application was considered in the ordinary way by a Deputy Registrar, who regarded it as in order and granted Administration on 5 August 1998. In the present proceedings by Statement of Claim dated 9 September 1998 Mr Thomas Stanley claims orders pursuant to s.66 of the Wills Probate & Administration Act 1898 revoking the earlier grant of Administration and granting administration to Mr Thomas Stanley. 3 There was a serious irregularity in Mr Dusan Stanley’s application for Administration, which was not conducted in an appropriate way. A race to apply for a grant developed. Mr Thomas Stanley’s solicitors told Mr Dusan Stanley’s solicitors by a letter of 24 July 1998 that they had instructions to apply, and that they held consents of the three sisters. Their proposal was to apply for letters of administration ad litem for proceedings against Mr Dusan Stanley. On 16 July 1998 Mr Dusan Stanley’s solicitors stated by letter that it was his intention to apply for administration. Correspondence followed, and neither side withdrew from its position of expressed intention to make an application. Mr Dusan Stanley published newspaper notices on 17 July 1998 and Mr Thomas Stanley on 23 July. 4 Mr Dusan Stanley’s application was not supported by the Affidavit of Service of Notice required by Pt.74 rr.24A(3)(b) and 25(3) acting together; notice of not less than 14 days’ is required to each person interested whose consent is not filed. It seems the notices were sent off on 3 August 1998, the day on which the summons for administration was filed. This was a significant irregularity, especially as it was known by Mr Dusan Stanley and his solicitor that Mr Thomas Stanley was supported by consents of three other beneficiaries. It was unseemly to proceed with irregularity and haste and to obtain a grant of administration ex parte. One significant letter from the correspondence between solicitors was shown to the Registrar, who may possibly have regarded the irregularity as one which should be disregarded because the value of the estate sworn to by Mr Dusan Stanley was gross $1182.12 and net nil. 5 The grant in common form may be set aside under the powers in Pt.40 r.9(3) of the Supreme Court Rules and also under the power in s.66 of the Wills Probate and Administration Act. It is a matter for the Court’s discretion whether the order should be set aside. The object of the notices is to enable all other interested parties who wish to make an application to do so; Mr Thomas Stanley is the only such person and his application is now before the Court. While such irregularity should not occur, it would be incorrect to set aside administration merely to vindicate the Rules of Court. 6 The power conferred by s.66 is expressed in these terms:

The Court may at any time, upon the application of any person interested in the estate:
(a) revoke the administration already granted; or
(b) order the administrator to execute a further bond in such sum and within such time as may seem right with or without sureties as aforesaid; and
(c) upon default remove the administrator and appoint an administrator in the removed administrator’s place, with power to sue or be sued upon any contract made by the removed administrator.

7   Section 40D of the Wills Probate and Administration Act makes provisions consequent on revocation of a grant of probate or administration. 8   Section 66 leaves the ground on which the Court is to act unstated. This power is not exercised as of course or even as a matter of right, and the court is to make a discretionary decision having regard to all the circumstances of the case: see Bramston v. Morris; Estate of Murray, Powell J unreported 20 August 1993 at 20 and the cases there cited. 9   In Bates v. Messner (1967) 67 SR(NSW) 187 at 192 Asprey JA, after reviewing authorities including the decision of Jeune P. in In the Goods of Loveday [1900] P 154 at 165, said:

… I am of the opinion that the essential basis of the exercise of the court’s inherent jurisdiction to revoke a grant of probate is that emphasised by Jeune P, namely, that the real object which the court must always keep in view is the due and proper administration of the estate in the interest of the parties beneficially entitled thereto on the part of the person to whom and by whose oath as to the faithful performance of his duties the court has been induced to entrust the office of executor.

10   Passages in this judgment and in the judgment of Sugerman JA also referring to In the Goods of Loveday were followed in the judgment of Sheller JA for the Court of Appeal in Mavrideros v. Mack (1998) 45 NSWLR 80 at 101-3. In my opinion the same principle is essential to the consideration of the statutory power to set aside a grant of Administration. The Court can to some degree be more ready to act upon its own view as to the appropriate person to be administrator than where a testator has appointed an executor. 11 Although the circumstances of irregularity are not unimportant, they are less important than the application of the essential principle. It is necessary to consider what there is for an administrator to do, and how best the administrator’s task may be carried out. 12 As the position is put by the defendant there is in practical terms nothing left for the administrator to do. The deceased was an age pensioner, and lived in a nursing home supported by pension income and social security for the last seven years of her life. Mr Dusan Stanley managed her affairs under a Power of Attorney which she executed (making her mark, as she was illiterate) on 2 November 1987. The Power of Attorney conferred the authority referred to in s.163B of the Conveyancing Act 1919, which is altogether general authority with exceptions stated in subs.163B(2). The exceptions include para.(b), which relates to acts as a result of which a benefit would be conferred on the attorney. In this case there is no suggestion of a benefit being conferred on the attorney. 13 The late Mr Vasil Stanley by his will dated 20 September 1978 appointed Mrs Velika Stanley and Mr Thomas Stanley as executors and trustees. Mrs Velika Stanley renounced probate, by a renunciation executed on her behalf by Mr Dusan Stanley under the Power of Attorney, and Mr Thomas Stanley obtained probate on 5 July 1989. Mrs Velika Stanley was unsuited to undertake executorship because she suffered from dementia, and also because she was illiterate in any language and did not speak English. Mr Vasil Stanley at his death owned the house at 15 Norman Street Fairy Meadow, and in cl.3 of his will he gave an interest in that house to his widow, and after her death an interest to Mr Thomas Stanley absolutely. The gift to his widow is expressed in terms of a right to use, occupy and enjoy the property, but on the whole terms of the will including particularly cl.3 it should be understood that she received a life estate in the property. If not otherwise clear this conclusion follows from the fact that the will gave no other person an interest in the house except after her death, and it should not be understood that there was a partial intestacy. At the time of Mr Vasil Stanley’s death he was and had for some time been a patient in the Coniston Nursing Home, and his wife had become a patient there on 28 February 1989, so she was not in a position to take advantage of a right to occupy the property. Her entitlement to a life estate brought with it an entitlement to rents and profits, as well as the liability expressly imposed by cl.3 of the will to pay rates, taxes, insurance and repair costs. 14 In managing Mrs Velika Stanley’s affairs in 1989 Mr Dusan Stanley had control of her bank account and funds, and he managed disposition of her age pension and other entitlements so that her nursing home board was paid, leaving a small surplus for personal needs. On 23 August 1990 she had $9853.90 in a Commonwealth Bank Savings Account, and no other significant assets apart from her interest under her late husband’s will. 15 Soon after her husband’s death Mr Dusan Stanley, managing his mother’s affairs under the Power of Attorney, decided that she should not apply for probate and authorised his then solicitors to say, in a letter of 10 April 1989:

We note that Mrs Velika Stanley, the wife of the deceased and your mother, was also appointed executrix of the will but that the state of her health, particularly her lack of mental capacity, prevents her from acting in that capacity.

16 Before the letter of 10 April 1989 was written Mr Dusan Stanley had approached Mr Thomas Stanley about collecting rent for the use of the house, and this was not assented to. The letter went on to claim that Mr Thomas Stanley should ensure that the occupants of the house at Fairy Meadow, who included one of his sons, paid a proper rental for the house and also for the workshop, which was at the time used by Mr Anthony Stanley the son of Mr Thomas Stanley. The proposition that Mrs Velika Stanley was entitled to rental income from the property, as well as being liable under the terms of the will to pay outgoings, and that Mr Thomas Stanley was responsible for managing estate affairs so as to accord her this right was obviously correct and not reasonably open to dispute, but it was not acknowledged by Mr Thomas Stanley. 17 On 11 January 1990 Mr Dusan Stanley commenced Probate Division proceedings 100366/1990 seeking administration of Mr Vasil Stanley’s will and, by a later Amended Summons, claimed orders compelling Mr Thomas Stanley to perform his duty as trustee of the estate and to pay monetary compensation. In 1990 Mr Anthony Stanley also known as Tony Stanley commenced Equity Division proceedings 2992/1990 making a claim under the Family Provision Act out of the estate. Both proceedings were resolved by agreement, expressed in an order consented to by Mr Thomas Stanley and Mr Dusan Stanley in the Family Provision Act proceedings dated 22 July 1993. Under that agreement Mr Anthony Stanley received the house at Fairy Meadow and furniture, and Mrs Velika Stanley received a legacy of $35,000. This legacy was the only benefit which she received out of her late husband’s estate. Mr Dusan Stanley paid the legacy, and a further sum for costs, into Mrs Velika Stanley’s bank account and soon afterwards paid out gifts from that account. 18 Mr Dusan Stanley acknowledged in oral evidence that Mrs Velika Stanley had a problem with dementia although he said that it was not a problem for her at all times. He put forward in an affidavit of 10 January 1990 the position that Mrs Stanley was then in very poor health, was residing at the nursing home and suffered from Alzheimer’s disease. He supported this with a certificate from a general practitioner Dr D.M. Scruby dated 9 January 1990 which said of her, “This is to certify that she suffers from senile dementia and is of unsound mind. She is unable to perform the duties of executrix.” In the Family Provision Act litigation Mr Dusan Stanley said in an affidavit of 23 August 1990:

My mother is ill and unable to care for herself. She needs the rent from the property to provide her with some small luxuries and as a nest egg in case she needs some expensive medical treatment in the future.

19   From 28 February 1989 Mrs Velika Stanley was a patient in the nursing home, to which she had been admitted from Coledale Hospital. The grounds for the admission were recorded as being “senile dementia” and there was a history of wandering (Ex E). She was admitted on a medical report also dated 28 February 1989 which recorded that her general practitioner Dr Scruby had given a history of senile dementia, agitation and wandering which had made her a danger to herself. She had a history of not taking medication and of running away on at least two occasions. The report on her nursing treatment at Coledale Hospital stated “Very confused and disorientated. Restraint necessary as to wandering.” 20   Nursing notes from March 1989 record behaviour consistent with her suffering from dementia, with a number of instances of unsettled behaviour and wandering, as well as records of good days and relatively settled behaviour. Nursing notes at about the times Mr Dusan Stanley speaks of, after Mothers Day and before Christmas, show a pattern of behaviour such as might be expected in a confused dementia patient, without however any gross behaviour. The nursing notes give no real indication of reasoning powers or of capacity to bring her mind to bear upon dispositions of property. 21   In evidence in these proceedings Mr Dusan Stanley has said, dealing with the resolution of the litigation in August 1993 and the payments then made:

I did not inform my mother Velika of the circumstances relating to the settlement and the fact that I had made the payments as at that time she was unable to understand or communicate effectively.

22   The payments which he made were these: (i) He sent to Mrs Angelina Elik a bank draft for US currency dated 17 August 1993 for which he paid $20,008.00.
(ii) On 19 August 1993 he obtained a bank cheque in favour of his son Mr S. Stanley for $10,000.
(iii) On 20 August 1993 he obtained another bank cheque in favour of his son Mr S. Stanley for $10,000.
(iv) On 21 September 1993 he paid his son Mr R. Stanley $5000.

These totalled $45,008.00.

23   The resources left available for Mrs Velika Stanley were then about $5000 remaining in her bank account and her age pension income, most of which went towards nursing home charges. At the time of her death she had no liabilities and the balance remaining in her bank account was $1182.12. Apart from the disputed gifts the plaintiff’s counsel told me there was nothing else relating to the estate which required investigation. There is no significant task for an administrator to do, and there are no assets, except in relation to a prospective claim by the estate against Mr Dusan Stanley relating to his dealings with Mrs Velika Stanley’s property and the gifts which were made in August and September 1993. An address to whether Administration should be revoked with a view to the due and proper administration of the estate and the interest of parties with beneficial entitlement to the estate requires an appraisal of the need to put some new administrator in a position to make claims and if need be bring proceedings against Mr Dusan Stanley. Obviously there is no prospect that he will accept that he ought to account to the estate for the amounts of those gifts. 24   Under the Power of Attorney Mr Dusan Stanley had legal power to make gifts of property, the only limitation being that he had no power to make gifts to himself (which he did not do). In August 1993 he was in a fiduciary relationship with Mrs Velika Stanley, having regard to her disability in August 1993 and the control which he had over her property. As a fiduciary he would be accountable to her and to her estate for any moneys which he paid out in breach of his fiduciary duty. He was obliged not to abuse his power, and he was obliged to exercise it in good faith for the purpose for which the power was conferred on him. In the circumstances its purpose was to serve the interest and wishes of Mrs Velika Stanley. In a claim against him it would be necessary to show that he acted in abuse of his power in making the gifts. 25   Mr Dusan Stanley’s position as shown in his evidence is that he visited Mrs Velika Stanley at least every second day, sometimes more often, from the time when she took up residence in the Coniston Nursing Home on 28 February 1989, that he would take her for walks and spend time with her, often accompanied by his wife. A few days after Mothers’ Day in May 1989, when he was visiting her on his own, and she was bright and in good spirits, he asked her in Macedonian:

Mother, what do you want me to do with your money that you have in the bank and any other moneys which you may receive in the future from the house?

26  

She said:

I want you to give Angelina half the rest, to your sons as you like. I’m leaving everything up to you. Only don’t give Tome (Thomas) or his sons anything.

27   At that time she had relatively little money, in the order of $10,000, and nothing had happened to quantify what she would receive from her interest in the house. A few weeks prior to Christmas 1989 Mr Dusan Stanley said to her:

Tome is still ignoring our request for collection of rent from his son in occupying the premises and he’s making us spend money on legal costs.

She reaffirmed her previous instructions and wishes.

28 There is no witness to these conversations, there was no later confirmation of them, and there was no instruction nominating any particular amount of money at about the time in August 1993 when the proceeds of the litigation were received and the gifts were made. By that time Mrs Velika Stanley was no longer in a position to give any clear expression of wishes. 29 It is reasonably open to question whether Mrs Velika Stanley had capacity to give instructions which would authorise dispositions of her property at the times in May and December 1989 of which Mr Dusan Stanley speaks. I do not doubt, having heard his evidence challenged in cross-examination, that she did speak to him generally to the effect which he claims. Of course at that time, some years before the dispositions were made, the amounts of money likely to be involved in gifts were unknown and could not be known. If the justification for the gifts depended on actual authorisation of the gifts by Mrs Velika Stanley, they would be reasonably open to challenge. 30 Notwithstanding the doubts which must attend her capacity, the expressions of Mrs Stanley’s wishes have a part to play in considering whether decisions made in 1993 in exercise of powers as attorney should or could be shown to have been abuses of that power. Expressions of wishes by a principal who had good days as well as bad days, but made on a good day, could reasonably have a part to play in a decision of an attorney about what to do with property, including making gifts. The wishes attributed to Mrs Velika Stanley are well within the range of those she might have expressed; there were deep divisions in the family, she was well disposed to Angelina whereas another of her daughters had not spoken to either parent for about eight years, and Mr Thomas Stanley had practical control of her late husband’s house and was not managing it in a way which produced income for her. In my finding she did make these expressions of her wishes, and although these probably did not bind her attorney to take any particular action, it is an indication against bad faith that he had regard to them and acted in accordance with them in the circumstances which emerged several years later. 31 I accept that in fact Mr Dusan Stanley believed that in making the gifts he was acting in accordance with his mother’s wishes as expressed in 1989. He said in evidence that he did not have any doubts in May or at Christmas 1989 about whether Mrs Velika Stanley had the capacity to give instructions as to what was to be done with the money. In my finding a person reasonably could have doubted her capacity, but I accept that Mr Dusan Stanley did not have any doubt, and sincerely believed that she had given a reliable expression of her wishes. In my view there are only very poor prospects that a claim on behalf of the estate against Mr Dusan Stanley seeking to fix him with liability for the amount of these gifts would succeed. 32 Mr Thomas Stanley spoke in evidence of wishing of challenge the disposition of $35,000. It is implicit that his own interest in the matter of challenge is worth $7000. If I treat the amount to which the claim would relate as $45,000 his interest would be worth $9000. He has affidavits supporting his claim for administration from two of his sisters, but not from the third Angelina. Obviously enough the wish to bring such proceedings is not supported by Mr Dusan Stanley and it is very unlikely that it would be supported by Angelina because a successful claim would lead to claim against her for $20,000. If Mr Thomas Stanley can marshal the interests of two sisters behind him, the substance of the dispute relates at most to $27,000. 33 If a claim were made by a new administrator on behalf of the estate, it would lead to orders for recovery and payment to the estate, at its best success in the amount of $45,000, which would if recovered pass through estate administration and be redistributed in equal shares. In my view Mr Thomas Stanley is entitled to bring a claim for his own alleged interest against Mr Dusan Stanley, relying on Pt.68 of the Supreme Court Rules, but limited to recovery of his own interest; the amount in suit would be no more than $9000. Any sisters who wished to do so could bring or join in such proceedings. Of course in saying this I offer no encouragement to do so, as my view is that the probabilities are very much against success and recovery of costs could not be expected. Leaving Administration as it is will not preclude advancing the substance of the claim, although it will preclude the great inconveniences of recovery and redistribution of a somewhat larger amount. 34 While the Court should not make a decision which would close off or prevent a claim being advanced and adjudicated, the nature of the claim now under consideration, both in its merits and its amount, leads me to think that the Court should not, in a discretionary decision, do anything to foster the claim. Refusal of Mr Thomas Stanley’s application is not a barrier to adjudication of his claim; but it is a barrier to his presenting his claim in a form which maximises its danger and inconvenience to Mr Dusan Stanley. 35 If a claim ought to be brought, Mr Dusan Stanley obviously is not an appropriate person to remain as administrator because of his conflict of interest; he could not be expected to advance the claim. Factors favouring Mr Thomas Stanley’s application are the irregularity of the application on which administration was granted to Mr Dusan Stanley, and the fact that Mr Thomas Stanley has, and at that time had consents of three other beneficiaries to the grant of administration to him. It is plain from his evidence, particularly its presentation in the witness box, that he is not at all adept at business; he was unable to explain or at times even to understand quite simple matters and questions which were directed to him in relatively plain language and interpreted into his mother tongue. His evidence shows that he was confused and unclear about basic facts of the case. In my opinion he has no real understanding or ability for business. It was obvious to me that he is not a suitable person to be entrusted with serious business affairs on behalf of other persons. The history of his administration of his late father’s estate is very adverse to entrusting him with a further administration, bearing in mind that it took over four years before any benefits were received by Mrs Velika Stanley, and that the estate was involved in two lawsuits. He did not take and would not acknowledge any responsible position with respect to his mother’s entitlement to rent from the occupant, who was his son. He did not collect rent for his mother’s benefit, but refused to do so, and had to be sued to obtain any remedy. Even if it were otherwise appropriate to revoke the grant of administration and appoint a new administrator, I would not appoint Mr Thomas Stanley in view of his lack of personal suitability to exercise the office. 36 The grounds for the claim have little substance and the intervention of the Court to assist making a claim is not warranted. In my judgment the just disposition of the proceedings is that administration should be left in the form it now is. 37 I give judgment to the defendant with costs.

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Last Modified: 12/18/2000