Theodorou v BOUTEAS - [2010] SASC 177

SUPREME COURT OF SOUTH AUSTRALIA
(Civil)
THEODOROU v BOUTEAS
[2010] SASC 177
Reasons of Judge Lunn a Master of the Supreme Court
16 June 2010
SUCCESSION - EXECUTORS AND ADMINISTRATORS
Application under s 56A of Administration and Probate Act 1919 for order administrator give an account to a beneficiary in an intestate estate - time for administrator to deliver her account to Public Trustee extended by Public Trustee under s 56 of the Act - held order under s 56A not limited to where default under s 56 and Court not bound by any extension granted by Public Trustee - held any inability of administrator to comply with Form 78 to give a proper valuation of an estate asset not in itself a ground to refuse an order under s 56A - order made for account.

THEODOROU v BOUTEAS
[2010] SASC 177
JUDGE LUNN:
Reasons on plaintiff’s application that defendant/administrator give an account

Aristoteous Theodorou died on 3 September 2004 intestate. The plaintiff and the defendant are some of his siblings. Each of the siblings are beneficiaries on the intestacy. There is considerable acrimony between the plaintiff and the defendant.
On 3 November 2008 this Court granted letters of administration over the estate of the deceased to the defendant. There were registered in the name of the deceased two properties situated at Whyalla and Coober Pedy. The defendant sold the Whyalla property in December 2008. The plaintiff continues to occupy the Coober Pedy property over which he claims a constructive trust which is the subject of other proceedings. The defendant has requested the plaintiff to allow access to this property by a valuer employed by her for the purpose of obtaining a valuation of it, but up to now such access has not been given. The defendant has counterclaimed in this action for an order that the plaintiff give such access. It is inappropriate that I should make any comment about the rights and wrongs of this claim in these reasons. It is sufficient for present purposes to note that such access has not been given and therefore the defendant has been unable to obtain a valuation of the Coober Pedy property from her valuer.
Under s 56 of the Administration and Probate Act 1919 (“the Act”), quoted below, the defendant was required to deliver an account to Public Trustee by 3 May 2009. She did not do so. She has never delivered such an account to Public Trustee. By a letter of 1 June 2010 addressed to the defendant’s solicitor, Public Trustee granted an extension of the time for the delivery of the account under s 56 to 1 December 2010. The material on which Public Trustee acted in granting such an extension was not part of the evidence put before me.
Sections 56 and 56A of the Act provide:
56—Statement and account to be delivered
(1)Every administrator shall, within six months from the date of the administration, or within such extended time as the Public Trustee upon application by the administrator shall allow, deliver at the office of the Public Trustee a statement and account, verified by his declaration, of all the estate of the deceased and of his administration thereof.
(2)This section shall not apply in any case where the administrator is a limited company incorporated or taken to be incorporated under the Corporations Act 2001 of the Commonwealth and is acting as administrator in pursuance of any powers granted to it by any Act.
56A—Court may order delivery of statement and account
The Court may at any time, upon the application of the Public Trustee or any person interested in the estate of a deceased person, or on its own initiative, order an administrator to deliver at the office of the Public Trustee a statement and account, verified by the administrator's declaration, of all the estate of the deceased, and of his administration thereof.
On 1 March 2010 the plaintiff instituted this action seeking, inter alia, such an accounting. He also issued an interlocutory application, which is now before me, seeking the order for the account.
The plaintiff’s counsel also relied upon general authorities about the obligation of a fiduciary to account to a beneficiary, but the application can be decided on the operation of s 56A.
The defendant’s counsel submitted that there was no proper basis established upon which any order could be made against the defendant under s 56A. His argument was that the operation of s 56A was limited to where the administrator was in breach of her obligations under s 56(1). He contended she was not so in breach because Public Trustee had now extended the time to 1 December 2010. I do not accept that s 56A on its proper construction is confined to where an administrator is in breach of her obligations under s 56(1). It does not say so. The words “at any time” in s 56A are much broader than where the administrator is in breach of s 56. Those words seemingly grant the Court power to make the order under s 56A, if there is good reason to do so, either before the six months referred to in s 56 has expired or after s 56 has been complied with where there are issues arising in the administration of the estate after s 56 has been complied with.
I do not accept that this Court is bound by any extension of time granted by Public Trustee under s 56(1) to find that there is no proper basis to make an order under s 56A. Here the Court does not know the material on which Public Trustee acted in granting the extension. Although the plaintiff had had some communications with Public Trustee, there was no suggestion that he had put, or had been invited to put, formal submissions and evidence to Public Trustee about whether an extension of time should be granted. While in exercising its discretion under s 56A, the Court can take into account what Public Trustee has done in extending time under s 56, or refusing it, the Court must exercise its discretion under s 56A as is proper on the evidence then before it.
Counsel for the defendant further submitted that no order should be made under s 56A because up to the present time it has been impossible for the defendant to comply with s 56. This argument is based on Form 78 of the Probate Rules 2004 of this Court which is a prescribed form to be used for administrators giving accounts under s 56 of the Act.[1] The Form specifies that “in describing the real property held by the administrator … proper valuations must be produced”. The defendant argued that such a “proper valuation” was a valuation by a licensed valuer, but the refusal of the plaintiff to allow access to the valuer to inspect the property meant that up to the present she was unable to obtain such a “proper valuation”, and thus it was impossible for her to comply with s 56(1). Her counsel said that she only had a government valuation for the property, which he submitted was insufficient for this purpose. Hence, she was not in a position to comply with a requirement of Form 78, and thus s 56.
[1] The rule is made under s 122(1)(e) of the Act.
I do not accept this argument. The statute is not to be construed by the terms of delegated legislation made under it.[2] Section 56 itself does not require the account given to be in a particular prescribed form. Whether an account given by the administrator complies with s 56(1), and is sufficient for its purposes, is a matter to be assessed against the particular circumstances of the individual estate. Rule 83 of the Probate Rules 2004 provides:
83The forms set out in the First Schedule, must be used with such modifications as the circumstances may require.
[2] D Pearce and R Geddes, Statutory Interpretation in Australia (6th ed, 2006) para 3.41.
Section 25 of the Acts Interpretation Act 1915 provides:
Whenever forms are prescribed or approved under any Act, forms to the same effect are sufficient provided that deviations from the prescribed or approved forms are not calculated to mislead.
This section applies to the Probate Rules 2004 which is a statutory instrument for the purpose of that Act.[3] Hence, literal or slavish adherence to the form is not mandatory.
[3] See ss 4 and 14A of that Act.
I do not accept that at least in some circumstances a government valuation may not be a “proper valuation” for the purposes of Form 78. It may be that the cost or difficulty of obtaining a formal valuation would not be justified or there may not be sufficient funds available to an administrator to pay for such a valuation. The requirement of s 56 is for the benefit of all beneficiaries. Here there are other beneficiaries in the deceased’s estate other than the plaintiff and the defendant. There seems no good reason why an administrator should be able to defer accounting for other aspects of the estate merely because one beneficiary is preventing her from obtaining a formal valuation of one asset of the estate.
In any event, Form 78 does not apply to an accounting ordered under s 56A. The submission made about the effect of the requirements of Form 78 fails for the reason, stated above, that the failure to comply with s 56 is not a prerequisite for the exercise of the Court’s discretion under s 56A, although it may be a discretionary factor to be taken into account. I find that none of the submissions put forward by the defendant provide an answer to the plaintiff’s application for an order for an account under s 56A.
Beneficiaries are generally entitled to know what is occurring in the administration of an estate and to see what the administrator has done with the assets. The discretion under s 56A should be exercised generally in accordance with the equitable principles of accounting by trustees and fiduciaries.[4] There is nothing to show that the plaintiff’s request for an accounting is vexatious. However, the ultimate sanction of the Court about whether a request for an accounting is justified or not will be reflected in the order for the costs of the application. I intend to reserve these until the account has been given as its contents may be relevant to this issue.
[4] See generally G Dal Pont, Equity and Trusts in Australia and New Zealand (2nd ed, 2000) 619 et seq.
I have today made the following orders on FDN3:
1Within 21 days the defendant is to file and deliver to Public Trustee, and serve on the plaintiff’s solicitors, a statement and account verified by her declaration of all of the estate of the deceased and of her administration thereof in a proper and sufficient form.
2Question of costs reserved.
3Fit for counsel.
4Directions hearing to be held on Thursday 1 July 2010 at 11.40am.