Application of Jordan; Estate of Michael Galanis (aka Michael Galanakis) [2023] NSWSC 221

Supreme Court of NSW|2023-03-15|Before: Hallen J, Adam P

882 In the Estate of Stanley George Mizon (deceased) [2021] ACTSC 240 In the Goods of Barker [1891] P 251 Kelly v Kelly (2019) 17 ASTLR 429; [2019] NSWSC 994 Mondous v Canzoneri [2018] VSC 194 Nolan As Administratrix of the Estate of Barbara Nolan, deceased v Nolan (2011) 6 ASTLR 80; [2011] WASC 224 NSW Trustee & Guardian; In the Estate of Francis [2014] NSWSC 123 NSW Trustee & Guardian; In the Estate of Rex [2015] NSWSC 841 NSW Trustee and Guardian (Estate of Peter Urso) [2013] NSWSC 903 Re Benjamin; Neville v Benjamin [1902] 1 Ch 723 Re Gess; Gess v Royal Exchange Assurance [1942] Ch 37 Reidy as Court appointed Trustee [2021] NSWSC 836 Robinson v Robinson (2020) 102 NSWLR 1; [2020] NSWCA 4 Russell v Russell [1956] P 283 The Application of Jill May Morison; In the matter of Neil Walter Morison [2022] NSWSC 1758 Yu Yee Luen v So Yu Lung [2022] HKCFI 2403 Texts Cited: L Tucker, N Poidevin QC and J Brightwell, Lewin on Trusts (20th ed, 2020, Sweet & Maxwell) Category: Principal judgment Parties: James Jordan as Attorney for the Estate of Michael Galanis (aka Michael Galanakis) (Plaintiff) Representation: Counsel: A G Todd (Plaintiff)

Solicitors: Jordan Djundja Lawyers (Plaintiff) File Number(s): 2023/33584 Publication restriction: Nil

Introduction

These reasons concern the estate of Michael Galanis (also known as Michael Galanakis) (the deceased) who died, intestate, on 29 November 2019, in New South Wales, and a prospective beneficiary who has been missing for almost 50 years. For this reason, distribution of the deceased's estate has been held up and its administration cannot be completed.
The deceased left property in New South Wales and on 11 November 2022, this Court granted Letters of Administration to James Jordan, a solicitor, as Attorney of Konstantinos Galanakis, a nephew of the deceased, for the use and benefit of Konstantinos Galanakis, limited until he returned to the jurisdiction and obtained a grant.
(This type of grant is known as a grant of administration durante absentia (during the absence from the jurisdiction of a person entitled to a grant). It may be made where an absent executor gives a power of attorney to an agent, who will receive the grant of administration with the will annexed, as attorney of the executor: In the Goods of Barker [1891] P 251.) Such a grant is made under s 76 of the Probate and Administration Act 1898 (NSW).
As part of the proceedings to obtain the grant of Letters of Administration, and in response to a requisition of a Probate Registrar, Mr Jordan filed an affidavit made on 22 November 2022 which included an undertaking that he would not distribute one quarter of the deceased's estate representing the share to which Kyriakos Galanakis (to whom I shall refer as "the propositus") may have been entitled. This undertaking was given for reasons that will be explained below.

The Proceedings

By Summons filed on 1 February 2023, Mr Jordan seeks: 1. An order that he be discharged from his undertaking not to distribute the one quarter share of the deceased's estate representing the share of Kyriakos Galanakis. 2. A declaration as to entitlement to distribute the estate to the exclusion of Kyriakos Galanakis. 3. A consequential order that, in the event that Kyriakos Galanakis is established to be alive, then Konstantinos Galanakis shall repay to the administrator one half of the amount distributed to him from the estate of Michael Galanis (aka Galanakis) to the intent that there will be an equal division between those brothers. 4. An order that his costs, calculated on the indemnity basis, be paid out of the estate of the deceased.
The evidence filed in support of the application by the administrator provides a clear picture of the extent to which the administrator, and others, have gone to determine what has happened to the propositus and the attempts made to find him.
The Court was requested to deal with the matter in Chambers as there was no contradictor and because the evidence appears to be all one way.
There is ample power given to the Court to deal with a matter in Chambers: s 11 of the Supreme Court Act 1970 (NSW). Section 71 of the Civil Procedure Act 2005 (NSW) also provides that the business of a court in relation to any proceedings may be conducted in the absence of the public in circumstances including "(f) if, in proceedings in the Equity Division … the court thinks fit".
In the Succession List, the Court, frequently, makes orders in Chambers. The procedure enables matters to be determined informally and expeditiously. It saves the costs of a hearing conducted with oral submissions. The documents in the Court file, where relevant, are read, and those documents are identified in the Court's record of proceedings: Kelly v Kelly (2019) 17 ASTLR 429; [2019] NSWSC 994 at [79]; Robinson v Robinson (2020) 102 NSWLR 1; [2020] NSWCA 4 at [131]; The Application of Jill May Morison; In the matter of Neil Walter Morison [2022] NSWSC 1758 at [18].
Having received submissions dated 3 March 2023 from Mr A G Todd of counsel, I determined that the Court should deal with the matter in Chambers.

Background Facts

In considering the relief claimed, it is necessary to set out the facts, which are taken from Mr Jordan's affidavit sworn 31 January 2023. There are also documents, annexed to the affidavit upon which reliance has been placed.
The deceased was born on 3 July 1927. He migrated to Australia in 1955. As stated, he died in 2019, aged 92 years.
Succession to the deceased's intestate estate is governed by the law of NSW at the date of death. As the deceased died intestate after the commencement of the Succession Amendment (Intestacy) Act 2009 (NSW), Chapter 4 of the Succession Act 2006 (NSW) applies.
A copy of the Death Certificate reveals that the deceased had never been married and had no children. I am satisfied that he died leaving no spouse and no issue.
Pursuant to s 128 of the Succession Act, the parents of an intestate are entitled to the whole of the intestate estate if the intestate leaves no spouse, and no issue.
The deceased's father, Kyriakos Galanakis Snr, was born in March 1877 and died in December 1938. The deceased's mother, Zafeiria, was born in March 1895 and died in April 1984.
Pursuant to s 129 of the Succession Act, the brothers and sisters of an intestate are entitled to the whole of the intestate estate if the intestate leaves no spouse, no issue, and no parent. Section 129(3) of the Succession Act provides that: If a brother or sister predeceased the intestate leaving issue who survived the intestate: (a) allowance must be made in the division of the estate between brothers and sisters for the presumptive share of any such deceased brother or sister, and (b) the presumptive share of any such deceased brother or sister is to be divided between the brother's or sister's children and, if any of these children predeceased the intestate leaving issue who survived the intestate, the deceased child's presumptive share is to be divided between the child's children (again allowing for the presumptive share of a grandchild who predeceased the intestate leaving issue who survived the intestate), and so on until the entitlement is exhausted.
The parents of the deceased had three other children, being Antonios, who was born in September 1916 and who died in February 2001, leaving two children, Konstantinos, who was born in 1963, and the propositus, who was born in 1964; Konstantinos, who was born in September 1919 and who died in June 1946 without issue; and Eirini, who was born in September 1925 and who survived the deceased but who died in January 2021 without issue.
In his affidavit filed in support of his application for the grant, Mr Jordan deposed that the persons entitled to the deceased's estate were the issue of Antonios, being Konstantinos (as to one quarter) and the propositus (as to one quarter), and the estate of Eirini (as to one half). This is correct: s 129 of the Succession Act.
The problem that has arisen relates to the share of the propositus, one of the two children of Antonios, who, it appears, disappeared whilst returning from a trip with Antonios, to Odessa in Russia, via Crete, in about 1985.
The evidence is that the propositus left the hotel for recreational purposes and disappeared thereafter. Despite searches and enquiries made in Greece and Turkey at that time, the propositus has not been seen, or heard of, and no family member has had any contact with him: Affidavit of James Jordan, 31 January 2023 at par 9.
In October 2008, the municipal court in Chania, a city on the island of Crete, in an extensive and reasoned judgment, determined that the propositus had disappeared and should be declared "dead in absentia for the reason that from 1985 till this day he is absent without any news, so that his death is very probable". In doing so, the Court determined the commencement year of "absentia" was 1985. (As I understand it, in this context, one who is 'in absentia' is not just away from home. He, or she, has left no clue as to his, or her, whereabouts, and it is impossible to ascertain whether he, or she, is alive or dead and so, his, or her, death is probable).
The evidence does not reveal any person having had contact with the propositus since 2008. It follows that an additional 14.5 years has passed since the Court's decision, which results in him having not been heard from for about 38 years.
The deceased's estate has an estimated, or known, value of about $5.63 million with the result that the one quarter share held is approximately $1.4 million.

The Law - Distribution

The need for some means of dealing with the problem of a missing beneficiary has been recognised for over 120 years. The Court may make an order that the executor or administrator is at liberty to distribute on a particular factual basis. It is this type of order that is termed "a Benjamin order". It derives from the case of Re Benjamin; Neville v Benjamin [1902] 1 Ch 723.
The purpose of such an order is to enable the court to provide effective assistance to an executor, administrator, or trustee, by arriving at a practical outcome, while ensuring that further delay and costs are kept to a minimum. Helpful guidance on the relevant principle is found in Lewin on Trusts (20th ed) as to the nature of this jurisdiction, at pars 39-032 to 39-033: "A Benjamin order is useful where there is doubt as to the existence, or the continued existence, of a person who, if alive, would be prejudiced by a distribution on the proposed footing."
Thus, the requisite basis for a Benjamin order is "evidence of practical impossibility of proof of the fact or event sought to be established": Re Gess; Gess v Royal Exchange Assurance [1942] Ch 37 at 39 (Morton J). (I appreciate that in Re Gess, a similar order involved creditors in Poland of the deceased rather than a beneficiary. Because of the War, it was impossible to advertise in Poland for claims. Morton J acknowledged that it would be an extension of the decision in Re Benjamin to apply it to creditors, rather than beneficiaries, but it "would only be following the principle of that decision".)
It also applies where every reasonable step has been taken to trace the individual in question and it is most improbable that any such individual would ever establish a claim: In re Lowe's Will Trusts [1973] 1 WLR 882 at 887 (Russell LJ).
In broad summary, the effect of the order sought is to protect the executor or administrator and enable the estate to be distributed without having to wait until what might be unprovable can be proved: Yu Yee Luen v So Yu Lung [2022] HKCFI 2403 at [6] (Deputy High Court Judge Jonathan Chang SC).
It is also possible for leave to be given to distribute on the basis that a person died without issue: Nolan as Administratrix of the Estate of Barbara Nolan, deceased v Nolan (2011) 6 ASTLR 80; [2011] WASC 224 at [28] (EM Heenan J).
In Application by NSW Trustee & Guardian (Estate of the late Marko Sijakovic) [2012] NSWSC 1532 at [23]-[25], and in NSW Trustee and Guardian (Estate of Peter Urso) [2013] NSWSC 903 at [38]-[40], I discussed Benjamin orders in some detail. It is not necessary to repeat what I wrote in those cases.
I note that what I wrote was followed by Kunc J in NSW Trustee & Guardian; In the Estate of Francis [2014] NSWSC 123 at [2] and in NSW Trustee & Guardian; In the Estate of Rex [2015] NSWSC 841 at [8]; by Pembroke J in Application of Harnett and Cutts [2016] NSWSC 427 at [2]-[3]; by Slattery J in Application by NSW Trustee and Guardian (Estate of the late Frederick John Vermaak) [2016] NSWSC 1436 at [8]-[9]; by Henry J in Application by NSW Trustee and Guardian; Estate of Esme Veronica Hennessy [2019] NSWSC 340 at [11] and in Application of NSW Trustee & Guardian; Estate of Dudley Keith Vaughn [2019] NSWSC 850 at [11]; by Ward CJ in Eq in Reidy as Court appointed Trustee [2021] NSWSC 836 at [20]; and by McWilliam AsJ in In the Estate of Stanley George Mizon (deceased) [2021] ACTSC 240 at [21]. I repeated the principles more recently in Application by Peter John Clark (Estate of John Andrew Wardell) [2022] NSWSC 798 at [30]-[39].

The Law - release and discharge from undertaking

The law relating to a party being released and discharged from his, or her, undertaking to the Court can be briefly stated.
This Court has the power, as part of its jurisdiction to control its own orders, to release a person from an undertaking.
In Russell v Russell [1956] P 283, Jenkins LJ wrote at 294: "Any undertaking given to the court is capable of being discharged by the court whenever it appears to the court that circumstances have arisen which make that course a proper one in the interests of justice."
His Lordship added at 297: "It is always competent to the court to discharge an undertaking given to it, if in its discretion the court comes to the conclusion that that is the proper course in the interests of justice."
In Hutchinson v Nominal Defendant [1972] 1 NSWLR 443, 447-448, Isaacs J dealt with an application to lift a stay of proceedings which had been granted until the costs of another, earlier, action (which had been commenced without compliance with a requirement to notify the nominal defendant) were paid, or security given, for the payment. His Honour wrote that: "a judge has power to vary, discharge or suspend any order made by any other judge where, for example, the order was conditional and the conditions have been fulfilled, necessitating some formal order, or circumstances arise which warrant in the judge's view a cessation of the continuance of the order as earlier made. Such power is an inherent power of the court or judge and any such variation, discharge or suspension is not in any sense an appeal from the order made by an earlier judge, because it does not proceed upon any supposed error in the initial making of the order. It predicates the validity of such an order and deals solely with the question as to whether there is established such change of circumstances that it is just and proper that the further continuance of the order should be varied, suspended or discharged."
The test to be applied in determining if a party should be released from an undertaking is whether it would be 'unjust' for the undertaking to continue in force: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 178; [1981] HCA 39 at [10] (Gibbs CJ, Aickin, Wilson and Brennan JJ).
Once there is a material change of circumstance shown, the court has a discretion in determining whether to release the undertaking. Of course, the context, including the nature of the proceedings in which the undertaking was given, as well as the circumstances in which the application is made must be considered. In this case, both are important.
There does not seem to be any rigid, or confined, rule, or test, in respect of the exercise of the Court's discretion to permit the discharge of an undertaking: Mondous v Canzoneri [2018] VSC 194 at [18] (Digby J).

Determination

As earlier stated, applying the operation of the rules of intestacy, the persons entitled to the deceased's estate were the issue of Antonios, being Konstantinos (as to one quarter), the propositus (as to one quarter), and the estate of Eirini (as to one half).
I have considered the sufficiency of the inquiries that have been made by the Plaintiff, or otherwise, both before, and after, the death of the deceased; how much time has elapsed since the death of the deceased, and, as importantly, since the propositus was last heard from; the inquiries that have been made; that a municipal Court, which was qualified to investigate the matters at issue, has considered the matter; whether pursuing further avenues of enquiry, or deferring the decision, might result in a claim being made by the propositus, or otherwise generate further information; and the likely delay associated with pursuing any other avenues, and the likelihood that such investigations may result in additional information.
Naturally, I have also considered the amount at stake, which is substantial.
Having regard to all the evidence, I am satisfied that there is no utility in continuing any further searches concerning the propositus. I am satisfied that all avenues of search have been exhausted. Any further searches are unlikely to improve the state of the evidence. The chance of ascertaining that the propositus remains alive may be properly characterised as remote, if not impossible. There is simply no evidence that further efforts will yield positive results. No useful purpose will be served by delaying the further distribution of the estate. The time has come to end the administration of the deceased's estate.
In relation to the release of the Plaintiff from his undertaking, it must be remembered that it was given in the context that there would need to be searches to determine the identity of the person, or persons, entitled to the deceased's estate under the operation of the rules of intestacy. As a result of the conclusion reached, that search has now ended and there is no longer any need to require the undertaking to remain in existence. Importantly, without being released therefrom, contravention would involve the Plaintiff being in contempt of court if he distributed the estate.
There is no other person who would be affected if the Plaintiff were released from the undertaking; there is no public interest in its maintenance; and releasing the Plaintiff from it would be of practical utility since it would enable him to complete the administration of the deceased's estate. In the circumstances, the release of Mr Jordan, as administrator, from the undertaking given is both convenient and just.
In the circumstances, I am prepared to make the orders as sought by the Plaintiff.
The Court: 1. Orders that the Plaintiff, as administrator of the estate of Michael Galanis be released from his undertaking to not distribute the one quarter share of the deceased's estate representing the share of Kyriakos Galanakis. 2. Declares that the Plaintiff may distribute the estate of Michael Galanis (aka Galanakis) as if Kyriakos Galanakis had predeceased the deceased without issue, and that the one quarter share to which he would have been entitled had he been proved to have survived the deceased may be distributed to Konstantinos Galanakis. 3. Orders that, if Kyriakos Galanakis, or any issue, is established to be alive, then Konstantinos Galanakis shall repay to the administrator one half of the total amount distributed to him from the estate of Michael Galanis (aka Galanakis) to the intent that there will be an equal division between those brothers. 4. Orders that the Plaintiff's costs, calculated on the indemnity basis, of the proceedings, be paid out of the estate of the deceased.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 16 March 2023

Succession Amendment (Intestacy) Act 2009(NSW)

Succession Act 2006(NSW)ss 128, 129

At a glance

Court

Decision date

Before

Catchwords

Source

Catchwords

Judgment (9 paragraphs)

Legislation Cited (5)

Cases Cited (19)

Cited By (1)