Zerella v Zerella - [2014] SASC 100

SUPREME COURT OF SOUTH AUSTRALIA
(Appeal from a Master)
ZERELLA & ORS v ZERELLA & ORS
[2014] SASC 100
Judgment of The Honourable Justice Bampton
4 August 2014
SUCCESSION - FAMILY PROVISION - PROPERTY WHICH MAY BE SUBJECT TO ORDER - WHAT CONSTITUTES ESTATE AND DISTRIBUTION
PROCEDURE - SUPREME COURT PROCEDURE - SOUTH AUSTRALIA - PROCEDURE UNDER RULES OF COURT - PARTIES - JOINDER OF PARTIES
Appeal from an order of a Master ordering joinder of a trustee company as a defendant in Inheritance (Family Provision) Act 1972 (SA) proceedings – principal asset of the estate is a debt owed by Zerella Investment Trust – the plaintiff disputes the value of the debt owed and asserts that the true value of the debt includes the total of the four adjustments made reducing the amount owed – trustee company appeals Master’s order – whether the plaintiff has standing to seek order – whether the Court has power to make the order for joinder in Inheritance Family Provision proceedings.
Held: the value of the debt is a matter that is directly relevant to the value of the estate and therefore the subject matter of the Inheritance Family Provision proceedings – the Court has jurisdiction to determine the size and value of the estate in such proceedings – it is appropriate to order joinder of the trustee company for it to be bound by any finding as to value of the debt – appeal dismissed.
Inheritance (Family Provision) Act 1972 (SA) s 7, s 9, s 10; Supreme Court Civil Rules 2006 (SA) r 74, r 312; Administration and Probate Act 1919 (SA) s 69; Trustee Act 1936 (SA) s 91, referred to.
Goodman v Windeyer & Ors (1980) 144 CLR 490; In the Estate of Indran Sanmuganathan [2000] NSWSC 1214; Re Davis (Deceased) [1952] VLR 517; Mataska v Browne [2013] VSC 62; Wood v McLean [2010] VSC 550; Blore v Lang (1960) 104 CLR 124; Clarke & Ors v Edwards [2012] SASC 213, considered.

ZERELLA & ORS v ZERELLA & ORS
[2014] SASC 100
Civil: Appeal from a Master

BAMPTON J: This is an appeal by Zerella Investments Pty Ltd (the appellant) against an order of a Master of this Court that it be joined as a defendant to these Inheritance (Family Provision) Act 1972 (SA) (the Act) proceedings.
The proceedings
Vito Zerella died on 18 September 2009. Vito Zerella’s only child by his first marriage, Paul Zerella (the respondent), received no legacy under his father’s will. The respondent’s three daughters are beneficiaries under the will to the sum of $200,000 each provided that the residuary estate is valued at not less than $3,000,000.
Vito Zerella’s widow, Silvana Zerella, and his sons by his second marriage to Silvana, Jim and Joseph Zerella, are each residuary beneficiaries under the will and executors of the estate.
The respondent is the initiating claimant who began these proceedings for provision out of his father’s estate pursuant to 6R 312 of…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Zerella v Zerella

Details

AGLC: Zerella v Zerella [2014] SASC 100
Case: [2014] SASC 100
Decision Date

CaseChat Overview and Summary

This matter involved the parties Zerella, in which the appellant challenged the Master's decision to order the joinder of Zerella Investments Pty Ltd. The primary issue was whether the Court had the jurisdiction to decide claims that an Independent Family Provision (IFP) claimant seeks to advance as part of IFP proceedings. Specifically, the respondent sought to challenge certain adjustments made by the Zerella Investment Trust post the deceased's death, which resulted in a reduction of the amount owed by the trust to the estate. The respondent also sought to assert the value of the estate by determining the value of the debt owed by the Zerella Investment Trust.

The court had to consider the scope of the Court’s jurisdiction under the Family Law Act to decide claims that an IFP claimant seeks to advance as part of IFP proceedings. The court examined whether the Act permits an IFP claimant to bring claims that involve challenging adjustments made post-decease or determining the value of claims against third parties not previously advanced by the executors. The Master's decision suggested that the value of the estate could be agitated in IFP proceedings, but did not address the central question of whether such claims fall within the jurisdiction of the Court under the Act.

The court held that the Master did not adequately address the jurisdictional issues raised by the appellant. The court found that the Master had not sufficiently considered whether the Act permits an IFP claimant to bring claims that challenge post-death adjustments or claims against third parties not advanced by the executors. The court emphasised that the value of the estate could be determined in IFP proceedings, but this did not necessarily encompass all claims that the respondent sought to advance. The Master's decision to join Zerella Investments Pty Ltd was vacated, as the court found that the Master did not directly address the jurisdictional issues raised by the appellant's submissions.

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

FDN 28 is supported by an affidavit of the respondent’s solicitor sworn on 7 August 2013. Exhibited to that affidavit is a copy of a report of a forensic accountant relied on in support of the order sought. A copy of the proposed second statement of claim is also exhibited to the affidavit. The proposed second statement of claim pleads that:-the accountant for the Zerella Investment Trust recorded after the deceased’s death four adjustments reducing the amount owed by the Zerella Investment Trust to the estate. -the debt owed by the Zerella Investment Trust includes the additional amounts pertaining to each of the four adjustments.-the true value of the debt owed to the estate by the Zerella Investment Trust is $6,086,915.90. The Master’s decision In his reasons for ordering joinder of Zerella Investments Pty Ltd, the Master stated that:-the respondent, as trustee for three beneficiaries of the deceased’s estate, might have “standing in any event … to bring an action in respect of the estate’s value and to seek that the executors pursue the alleged shortfall in the estate but that is not an issue presently before me”.[1]-the executors may be in a position of conflict of interest in assessing some of the adjustments that the respondent challenges, a matter affecting their apparent objectivity in determining whether or not it is appropriate for the action to be taken to remedy those adjustments.[2]-the value of the estate may be agitated as part of the proceedings under the Act.[3] Even if the “value of that debt may not be equivalent to its legal liability or legal entitlement. The realistic value will be that which is properly recoverable having regard to the available assets of all concerned”.[4]-the Court has permitted the value of an estate where a claim has been made under the Act to be agitated in IFP proceedings.-the Court seeks to determine all issues in dispute between the parties in one action insofar as that is possible.-the Court, for the purposes of the IFP claim, needs to ascertain the value of the estate by making a determination of the value of the debt owed by the Zerella Investment Trust.[1] Zerella v Zerella & Ors (Unreported, Judge Withers, 31 January 2014) at [27].[2] Zerella v Zerella & Ors (Unreported, Judge Withers, 31 January 2014) at [28].[3] Zerella v Zerella & Ors (Unreported, Judge Withers, 31 January 2014) at [29].[4] Zerella v Zerella & Ors (Unreported, Judge Withers, 31 January 2014) at [31].The appellant’s submissions The appellant argues that the Master did not directly address the submissions put by it and did not grapple with the central question of whether or not the Act permits an IFP claimant to advance the claims the respondent seeks to advance or whether the Court has jurisdiction to decide such claims as part of IFP proceedings. The appellant also complains that the Master considered that the question of the value of estate assets may be properly ventilated in the proceedings without grappling with the distinction between:(1)a claim that the value (or worth) put on an asset acknowledged by the executors to be part of the estate is incorrect; and(2)a claim that the assets of the estate include various claims against one or more third parties that the executors have not advanced;against the proper construction of the provisions of the Act.

Ratio Decidendi

Legal Principle Established

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