Zemunik v Zemunik
[2024] WASC 235
•2 JULY 2024
JURISDICTION : SUPREME COURT OF WESTERN AUSTRALIA
IN CHAMBERS
CITATION: ZEMUNIK v ZEMUNIK [2024] WASC 235
CORAM: MASTER RUSSELL
HEARD: 28 MAY 2024 & 27 JUNE 2024
DELIVERED : 2 JULY 2024
FILE NO/S: CIV 1546 of 2024
BETWEEN: MAGDALENA DEWI ZEMUNIK as administrator of the estate of SEAN JAMES ZEMUNIK
Plaintiff
AND
MAGDALENA DEWI ZEMUNIK as Trustee for Aaron Jacob Zemunik, James Daniel Zemunik, Faith Eva Zemunik and Matthew Bill Zemunik
First Named First Defendant
ANDREA ALMA TACKO as Trustee for Aaron Jacob Zemunik, James Daniel Zemunik, Faith Eva Zemunik and Matthew Bill Zemunik
Second Named First Defendant
NATALIE ELIZABETH HEIECK as Trustee for Aaron Jacob Zemunik, James Daniel Zemunik, Faith Eva Zemunik and Matthew Bill Zemunik
Third Named First Defendant
MAGDALENA DEWI ZEMUNIK
Second Defendant
Catchwords:
Administration of estates – Intestacy – Appropriation of an asset in satisfaction of intestate entitlement – Effect on other beneficiaries – Infants – Court approval where administrator also beneficiary – Turns on own facts
Legislation:
Administration Act 1903 (WA), s 17A
Trustees Act 1962 (WA), s 30(1)(k), s 30(3)
Result:
Approval of appropriation by administrator of property to herself
Category: B
Representation:
Counsel:
| Plaintiff | : | Dr D Cox |
| First Named First Defendant | : | No appearance |
| Second Named First Defendant | : | In Person |
| Third Named First Defendant | : | In Person |
| Second Defendant | : | No appearance |
Solicitors:
| Plaintiff | : | Great Southern Community Legal Services |
| First Named First Defendant | : | No appearance |
| Second Named First Defendant | : | In Person |
| Third Named First Defendant | : | In Person |
| Second Defendant | : | No appearance |
Case referred to in decision(s):
Tagliaferri v Tagliaferri [2013] WASC 321
MASTER RUSSELL:
Introduction
The plaintiff, Magdalena Dewi Zemunik, is the administrator of the estate of her late husband, Sean James Zemunik (Deceased). Letters of administration were granted to her on 22 December 2020. Mrs Zemunik is also the second defendant in this proceeding in her own capacity. When referring to Mrs Zemunik in her own capacity in these reasons, I refer to her as Mrs Zemunik.
By originating summons filed on 10 May 2024, the plaintiff seeks orders to appropriate to herself the whole of the estate interest in the family home, owned by the Deceased, in satisfaction of her entitlement to distribution upon intestacy. Such an appropriation can be made by the plaintiff as trustee pursuant to s 30(1)(k) of the Trustees Act 1962 (WA) but, because the plaintiff has a personal interest in addition to her interest as administrator, the court's approval is required under s 30(3) of the Trustees Act.
The only others entitled in distribution of the Deceased's estate are the four children of Mrs Zemunik and the Deceased. They are Aaron Jacob Zemunik, James Daniel Zemunik, Faith Eva Zemunik and Matthew Bill Zemunik, who are all under the age of 18 years. With no disrespect to any of them, I will refer to the children together as the Children, or by their first names.
The Children are represented in this application by the second and third named first defendants, their paternal aunts, Andrea Alma Tacko and Natalie Elizabeth Heieck who, together with their mother, Mrs Zemunik, have been appointed by deed made on 14 December 2020 under s 17A of the Administration Act 1903 (WA) (s 17A Deed) as trustees of the Children's interests in the Deceased's intestate estate. Mrs Zemunik is joined as the first named first defendant in her capacity as trustee for the Children under the s 17A Deed.
The family home is located at Lot 151 on Plan 52851, being the whole of the land in Certificate of Title Volume 2641 Folio 134, otherwise known as 19 Leonora Street, Yakamia in Western Australia (Family Home).
The application first came before me on 28 May 2024. At that stage, a memorandum of consent orders had been filed, which contained signatures for each of the parties to the action, but no appearances had been entered by any of the defendants. The s 17A Deed was not in evidence, and further evidence was required in relation to the valuation of the Family Home for the purpose of the proposed appropriation.
I made an order for further affidavit evidence to be filed and adjourned the application to 27 June 2024. A further affidavit sworn by Mrs Zemunik was filed on 18 June 2024. The second and third named first defendants each entered an appearance on 13 and 14 June 2024 respectively. Mrs Zemunik has not entered an appearance and has not sought to be heard in her capacity as the first named first defendant or as second defendant.
At the adjourned hearing of the application on 27 June 2024, the plaintiff was represented by counsel, the second and third named first defendants each appeared in person and confirmed their consent to the orders sought. I made orders approving appropriation of the Family Home to Mrs Zemunik, and said I would provide written reasons for my decision. These are my reasons.
The application
The plaintiff's application was supported by two affidavits sworn by her on 12 April 2024 and 18 June 2024.
The application was not contested. The second and third named first defendants, Ms Tacko and Ms Heieck, as trustees of the Children with no personal interest in the outcome of the application, each confirmed their consent to the orders sought.
As observed by EM Heenan J in Tagliaferri v Tagliaferri,[1] although the provisions of O 70 rr 10 and 11 of the Rules of the Supreme Court 1971 (WA) do not apply, the underlying principles of the court's role in scrutinising and protecting the interests of infants or persons under a disability apply in an application such as this. It is not necessary for the court to be satisfied that the appropriation proposed is for the benefit of the Children, but it does need to be satisfied it is not adverse to their interests in any material way.
[1] Tagliaferri v Tagliaferri [2013] WASC 321 (Tagliaferri) [2], [20], [51].
Based on the value of the estate and the Family Home and the circumstances of this case, I do not consider it necessary for any opinion to be provided by independent counsel. For the reasons that follow, I am satisfied on the evidence before me that the appropriation of the Family Home to Mrs Zemunik on the terms proposed is not adverse to the interests of the Children and should be approved under s 30(3) of the Trustees Act.
Appropriation under s 30(1)(k) of the Trustees Act
Section 30(1)(k) of the Trustees Act relevantly provides:
30.Property, miscellaneous powers as to
(1)Every trustee, in respect of any property for the time being vested in him, may —
…
(k)appropriate any part of the property in or towards satisfaction of any legacy payable thereout, or in or towards satisfaction of any share of the trust property, (whether settled, contingent or absolute) to which any person is entitled, and for that purpose value the whole or any part of the property in accordance with section 50; but —
(i) the appropriation shall not be made so as to affect adversely any specific gift; and
(ii)before any such appropriation is effectual, notice thereof shall be given to all persons of full age and full mental capacity who are interested in the appropriation, and to the parent or guardian of any infant who is interested in the appropriation, and to the person having the care and management of the estate of any person who is not of full mental capacity, and any such person may, within one calendar month after receipt of the notice, or, where the person to whom notice has been given is out of the jurisdiction, within such extended period as the Court may, on the application of the trustee or of any person interested, allow, apply to the Court to vary the appropriation, and the appropriation shall be conclusive save as otherwise directed by the Court[.]
Where an appropriation under s 30(1)(k) of the Trustees Act is sought, and where a trustee is herself interested in or affected by the appropriation, then the trustee need not give herself notice of an appropriation under s 30(1)(k)(ii). However, the appropriation will not be effected until it has been approved by the court on the ex parte application of the trustee or otherwise, pursuant to s 30(3) of the Trustees Act.
The nature of a trustee or personal representative's statutory power of appropriation, the operation of s 30(1)(k) of the Trustees Act, and the principles that apply to an application for the court's approval pursuant to s 30(3) were considered in detail by EM Heenan J in Tagliaferri.[2] It is not necessary for me to repeat those matters in any detail. I have applied the relevant principles in my determination of the application.
[2] Tagliaferri [6] - [11].
In Tagliaferri, his Honour also considered the provisions of the Fourth Schedule to the Administration Act 1903 (WA), which confers upon a surviving partner of a deceased intestate an entitlement to elect to have appropriated to him or her the family home or dwelling house in the circumstances prescribed in those provisions, and the relationship between the two forms of application.[3]
[3] Tagliaferri [12] ‑ [25].
The orders sought in the originating summons are for appropriation of the Family Home by the plaintiff to herself in satisfaction of her share in the Deceased's estate, pursuant to s 30(1)(k) of the Trustees Act. In her affidavit sworn on 12 April 2024 and a minute of proposed orders filed on 23 May 2024, the plaintiff sought an order, in the alternative, that she have the estate interest in the Family Home appropriated to her under the Fourth Schedule of the Administration Act. However, by the time of the adjourned hearing, she no longer sought that in the alternative.
Factual background
The relevant factual background and the context in which the application is made is derived from the affidavits filed in support. I do not repeat all the evidence. What follows is a summary.
The Deceased died intestate on 24 March 2020 in tragic circumstances. He was 42 years old.
The Deceased was survived by his wife, Mrs Zemunik, and their four children, Aaron, James, Faith and Matthew. Since the Deceased's passing, Mrs Zemunik has been the sole full-time carer of the Children.
Aaron was born on 20 July 2020 and is presently 13 years old, soon to be 14 years. James was born on 23 June 2022 and has just turned 12 years. Faith was born on 16 April 2015 and is nine years old. Matthew was born on 13 September 2017 and is presently seven years old.
The Deceased and Mrs Zemunik started living together after they married on 27 June 2009. The Deceased purchased the Family Home on 30 May 2013 as the sole proprietor. He and Mrs Zemunik had lived together in the Family Home since then and with the Children, from when they were each born until the Deceased's death. Mrs Zemunik and the Children have continued living in the Family Home.
Mrs Zemunik does not have any of her own family in Australia, however she and the Children have good friends living in the vicinity of the Family Home who help her and provide support. The Deceased's mother lives in Perth and travels to Albany to visit Mrs Zemunik and the Children from time to time.
The Children are currently enrolled in a local school where they are settled and progressing well. The school has been very supportive of Mrs Zemunik and the Children. They enjoy their lives in Albany and have no plans to relocate.
The plaintiff was granted letters of administration of the Deceased's estate on 22 December 2020. At the date of his death, the total net asset value of the Deceased's estate was $61,760. The only significant asset is the Family Home. Its estimated value at the time of death was $300,000, encumbered by a mortgage securing a home loan with a balance, at that time, of approximately $244,527.
According to the entitlements set out in the Table in s 14 of the Administration Act (as it applied at the time of the Deceased's death), the distribution of the estate on the Deceased's intestacy would be $53,920 to Mrs Zemunik and $1,960 to each of the Children.
Mrs Zemunik was the sole beneficiary of the Deceased's superannuation death benefit under a binding death benefit nomination, in respect of which she received payments totalling approximately $227,994. In September 2021, she paid $220,030 of the benefit she received against the home loan account secured by the mortgage on the Family Home, which significantly reduced the amount outstanding on the home loan.
Mrs Zemunik has been able to meet the mortgage repayments and other outgoings from her income from casual employment around school hours and with the assistance of Centrelink payments.
In seeking an appropriation, it is Mrs Zemunik's intention to retain the Family Home for her and the Children to reside in. If the plaintiff was required to sell the Family Home to meet the distributions to herself and the Children to hold the amount they are each entitled to on trust for them, she and the Children would have to leave the Family Home and be left with no home to live in.
The value of the Family Home has increased since December 2020. On 21 February 2024, a valuation report was prepared by a licensed valuer for the purpose of the application, which valued the Family Home at $450,000 as at the date of valuation. Taking into account the revised valuation of the Family Home and the value of the repayments made against the home loan funded by Mrs Zemunik in her own capacity, the total net asset value of the estate has been recalculated as $211,760 as at 21 February 2024.
Applying the Table in s 14 of the Administration Act, the entitlement in distribution of the estate on the Deceased's intestacy on the revised figure is $103,920 to Mrs Zemunik and $26,960 to each of the Children, subject to payment of any costs and expenses of the estate.
Mrs Zemunik deposes that she has approval for a loan to be secured against the Family Home, if the appropriation of the Family Home to herself is approved by the court and once beneficial ownership of it is transferred to her. She deposes that this will enable her to pay the amount of each of the Children's entitlements to be held on trust for them until they become of age.
Disposition
I am satisfied that the proposed appropriation of the Family Home to Mrs Zemunik would not be adverse or prejudicial to the interests of the Children.
Appropriation of the Family Home to Mrs Zemunik will allow the Family Home to be transferred to her, and facilitate her obtaining the proposed loan to fund amounts being paid into trust for each of the Children. The result is that the Children will each receive their entitlement in distribution and the benefits associated with remaining in the nurturing and familiar environment of the Family Home, which is in the vicinity of the family's existing support network and the Children's school.
As observed by EM Heenan J in Tagliaferri,[4] upon appropriation, a valuation of the asset to be appropriated to the beneficiary will need to be made. The date of the valuation will be the date of appropriation if it precedes eventual transfer.
[4] Tagliaferri [26].
A valuation of the Family Home has been provided by a licensed valuer, ascribing a market value of $450,000 as at 21 February 2024. Given the proximity of the valuation to the date of the hearing, I consider it unlikely there would be any material variation in the value of the Family Home that would outweigh the benefits to the Children as I have outlined.
I accept that, for the purpose of the appropriation, the Family Home should be treated as having a value of $211,760 at the date of the appropriation, which shall be treated as being 21 February 2024. That figure takes into account the value of the Family Home as at 21 February 2024 and the mortgage over it, which the plaintiff has significantly reduced and serviced from her own funds, as set out in the affidavit evidence.
Conclusion and orders
For these reasons, I made orders as follows:
(1)Appropriation by the plaintiff, Magdalena Dewi Zemunik, to herself of the property situated at and known as 19 Leonard Street, Yakamia, in the State of Western Australia, being all that piece of land more particularly described as Lot 151 on Plan 52851 and being the whole of the land in Certificate of Title Volume 2641 Folio 134 (Property) in satisfaction of her entitlement in the estate of Sean James Zemunik, late of 19 Leonora Street, Yakamia (Estate) pursuant to s 30(1)(k) of the Trustees Act 1962 (WA) is approved.
(2)For the purposes of the appropriation approved pursuant to order 1, the Property shall be treated as having a value of $211,760 at the date of the appropriation, which shall be treated as being 21 February 2024.
(3)The costs of the application, including the costs of the valuation, shall be costs in the administration of the Estate.
(4)Liberty to apply.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Supreme Court of Western Australia.
AM
Associate to Master Russell
2 JULY 2024
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