Plaintiff v Defendant

(a) The plaintiff be granted letters of administration ad litem of the estate of Jelka Simudvarac, deceased, so that she may bring a proceeding in a Court of appropriate jurisdiction against the defendant for the recovery of damages or other relief on behalf of the estate.

(b) The plaintiff, whether as aforesaid administrator or at all, not be permitted to distribute any sum or sums recovered in such proceeding without further order of the Court.

2 The plaintiff's application was supported by an affidavit of the plaintiff sworn 1 August 2013 and two affidavits sworn by her solicitor, Richard Joseph Cudlipp, sworn 4 November 2013 and 4 December 2014, respectively. The defendant did not file any affidavits in opposition to the orders sought but counsel appeared on her behalf to oppose the application.

3 Jelka Simudvarac ('the deceased') died on 1 August 2012, aged 86 years. Her will is dated 11 June 2004 ('the will') and was drawn by solicitors, Frank J Horvat & Co Pty, of Glenroy.

4 The deceased was survived by her two adult children, the plaintiff and the defendant. It was common ground between the parties that, at the date of her death, the deceased's estate comprised cash of $12,000.

5 By her will, the deceased appointed the defendant as her executrix and trustee and gave the whole of her estate to her. She excluded the defendant, stating that 'she had shown me no respect as her mother and she has chosen not to make any contact with me at all'. The plaintiff said that, during the years leading up to 2004, the deceased never said anything to her of any feelings of 'I did not respect her as a mother', as stated in her will.

6 In her affidavit, the plaintiff set out her family history. The plaintiff and the defendant were born in former Yugoslavia. The plaintiff is now aged 64 and the defendant is 52. They came to Australia with their parents in 1970 and lived at 5 Elphinstone Street, West Footscray. The parents also owned an investment property in Empire Street, Footscray.

7 The deceased's husband died in 1993. Around 1994, she moved in with the defendant. In her affidavit, the plaintiff sets out further details of her family history including her relationship with the deceased, the defendant and the defendant's husband, Joseph Crnogorac, and the details of her financial status at the date of death of the deceased. It is unnecessary to set out all of these details at this stage but they are relevant to the extent that they establish that the plaintiff has a prima facie case for provision from the estate of the deceased, pursuant to Part IV of the Administration and Probate Act 1958.

8 In his affidavits, Mr Cudlipp exhibits various documents to support a series of facts and events preceding the death of the deceased that form the basis of the plaintiff's application.

9 The year after the deceased made her will, when she was aged 79, she purported to make an enduring power of attorney on 4 May 2005 appointing the defendant as her attorney ('the enduring power of attorney'). It was subsequently declared invalid on 17 December 2007.[1]

10 Also in 2005, a proceeding was on foot in the Supreme Court of Victoria whereby the deceased was named as a defendant.[2] The plaintiff was not aware of this proceeding but now understands that it involved the sale of the Elphinstone Street property.

11 On 22 August 2006, Master Efthim of this Court made a referral to the Victorian Civil and Administration Tribunal ('the VCAT'), Guardianship List, pursuant to s 66 of the Guardianship and Administration Act 1986. As a result of that referral, the VCAT held that it was satisfied that the deceased (described as the represented person) had a disability and was unable by reason of that disability to make reasonable judgments about her estate and needed an administrator. The Tribunal ordered that State Trustees Limited ('State Trustees') be appointed administrator of the deceased's estate, with powers and duties limited to the conduct of Supreme Court proceedings ('the administration order').

12 On 14 December 2007, when the deceased was aged 81, the deceased by her attorney, the defendant, executed a transfer of land whereby she purchased a property at 1 Kings Domain, Caroline Springs ('the Caroline Springs property') from Genevieve Estate Pty Ltd for a consideration of $290,000.

13 On 17 December 2007, State Trustees made an application to the VCAT for reassessment of the administration order, which application was amended to include an application for orders regarding the enduring power of attorney. The VCAT:

(a) amended the administration order by revoking the appointment of State Trustees as administrator and appointed the defendant as the deceased's administrator;

(b) declared the enduring power of attorney invalid as it did not comply with the requirements of s 125A of the Instruments Act 1958;

(c) ordered that the administrator 'shall not, without prior approval of the [VCAT], dispose of the property of the [deceased] situated at 1 Kings Domain, Caroline Springs';

(d) ordered the Principal Registrar of the VCAT to send a copy of the order to Zeljko Stojakovic, solicitors, of St Albans and Frank J Horvat & Co Pty in Glenroy, as well as to the plaintiff.

14 On 20 December 2007, Zeljko Stojakovic registered a transfer of land for the purchase of the Caroline Springs property by the deceased.

15 On 24 July 2008, the deceased transferred two of a total of eight shares in the Caroline Springs property to the defendant as to one share and the remaining share the defendant's husband, Joseph Crnogorac. The ownership of the shares was held by the three of them as tenants in common. The consideration expressed in the transfer was '$50,000 due and owing by the deceased to the defendant and Joseph Crnogorac ... agreeing to accept the land in full satisfaction of such debt'. Zeljko Stojakovic lodged the transfer for registration on the same day.

16 On 13 February 2009, when the deceased was aged 83, she transferred her remaining shares in the Caroline Springs property to the defendant, with the ownership thereby being seven shares held by the defendant and one share held by Joseph Crnogorac as tenants in common. The consideration expressed in the transfer was expressed as the deceased's 'desire to make a gift'. Zeljko Stojakovic registered the transfer on 27 February 2009.

17 On 4 May 2009, the VCAT re-assessed the administration order of the deceased. It revoked the existing administration order and appointed State Trustees as administrator of the deceased's estate.

18 On 7 December 2009, State Trustees lodged a caveat over the Caroline Springs property.

19 On 17 June 2011, Victorian Legal Aid ('VLA'), on behalf of State Trustees, enquired of the VCAT as to whether any approval was sought or given by the VCAT for the disposition of the Caroline Springs, formerly owned and registered in the name of the deceased, whilst the defendant was her administrator. The VLA also sought that the VCAT make a demand upon the defendant to file immediately an account of her administration.

20 On 27 June 2011, the VCAT advised VLA that the defendant never sought the VCAT's approval to sell the Caroline Springs property.

21 On 19 September 2011, the VCAT made directions that, by 3 October 2011, the defendant as the former administrator of the deceased, account to the VCAT for all financial and property transactions for the deceased for the period 17 December 2007 to 4 May 2009 and for all receipts and payments made with respect to the rental of the Caroline Springs property.

22 On 16 April 2012, the VCAT again directed the defendant to account by 21 May 2012 for all financial property transactions for the deceased in the period 17 December 2007 to 4 May 2009 and for all receipts and payments made with respect to the rental of the Caroline Springs property.

23 On 1 August 2012, the deceased died aged 86 years.

24 By letter of 24 May 2013, the solicitors for the plaintiff wrote to the defendant seeking information, amongst other matters, concerning whether an application for a grant of probate had been made and the details of the defendant's dealings with the Caroline Springs property. A copy of this letter was sent to Joseph Crnogorac.

25 On 29 August 2013, the plaintiff filed her originating motion in this proceeding seeking the orders set out above.

26 In his affidavit sworn 4 November 2013, Mr Cudlipp exhibits a draft statement of claim against the defendant and Joseph Crnogorac alleging, amongst other things, breach of fiduciary duties in respect of the Caroline Springs property and seeking that the transfers in respect of that property be set aside and an accounting in respect of the property. In the event that the plaintiff succeeds in obtaining a limited grant, it is proposed that a proceeding will be issued based on this draft.

27 Counsel for the plaintiff submitted that the plaintiff's application disclosed factual matters that called for careful investigation of the administration of the deceased's affairs during her lifetime, relying on the decision of Mataska v Browne.[3]

28 A careful investigation of the transfers of the deceased's interest in the Caroline Springs property was required for the follow reasons:

(a) the deceased was a represented person under the Guardianship and Administration Act 1986 and entitled to have her administrator, the defendant, act in her best interests: ss 49 and 50A of the Act;

(b) the defendant twice disobeyed an order not to dispose of the Caroline Springs property of the deceased, without prior approval of the VCAT; and

(c) the transfers may have been unconscionable on equitable principles applying to fiduciaries.

29 It was submitted that the plaintiff, as a daughter of the deceased in financial need and having been excluded from the deceased's will entirely, had good prospects of a successful application under Part IV of the Administration and Probate Act 1958, although this would depend ultimately on the size of the estate.

30 It was contended that in circumstances where there are strong grounds upon which to conclude that the plaintiff has a prima facie case for further provision from the estate, an applicant such as the plaintiff, without more, has an interest in the estate of the deceased sufficient to justify the conclusion that she has standing to apply for a limited grant.[4]

31 It was, moreover, sensible that the determination of the composition of the estate should precede the question whether the plaintiff has required adequate provision from it.[5]

32 No application has been made by the defendant for a grant of probate of the will of the deceased and it is unlikely there will be an application. The defendant has an obvious motivation for leaving the value of the estate diminished by the transfers of the deceased's interest in her former major asset. If the defendant remains the executrix of the estate of the deceased, then the issue whether the Caroline Springs property should be returned to the estate will not be determined because there is an obvious conflict of interest on the part of the defendant. The due administration of the estate requires the appointment of another person who would be able to ensure that such a determination occurs. Given that the only person other than the defendant who has any financial interest in this issue is the plaintiff, she is the appropriate person.[6]

33 The application for a limited grant sought by the plaintiff arises under peculiar circumstances within Supreme Court (Administration and Probate) Rules 2004, r 5.02 for the necessity of the case. This is an appropriate case for a limited grant of representation to the plaintiff, limited for the purpose only of bringing an action against the defendant.[7]

34 The defendant opposed the application and relied on the fact that State Trustees lodged a caveat over the title to the Caroline Springs property on 7 December 2009. It was submitted that, from that time, State Trustees could have taken in respect of the transfers of the property under s 52(2) of the Guardianship and Administration Act 1986, which gives an administrator an express power to undo the transactions.[8] Because it did not do so, the plaintiff is now 'shut out' from doing so and this is particularly so in circumstances where State Trustees engaged the VLA on 7 June 2011 enquiring of the VCAT about the approval of any transfer.

35 On 27 June 2011, the VCAT said the defendant did not seek approval from it to sell the Caroline Springs property. No action was taken for 14 months after that. The defendant infers that, because State Trustees did not press or take any action to set aside the transaction, it must have taken the view that it was not in the interests of the represented person, the deceased, to do so.

36 It was submitted that an administrator is not bound to set aside such a transaction and is obliged to act in accordance with the general purport of the legislation in a manner that is the least restrictive of the life of the represented person and is in the interests of the represented person. It is apparent that State Trustees did not take any action to set aside the transaction.

37 It was submitted that this case differed in circumstances from those in Mataska v Browne because State Trustees, as administrator, did not take the steps when it might have taken them. Counsel for the defendant agreed that the fact that the administrator had not taken any action did not preclude any action being taken in the future and said he could not point to any authority for the proposition that an executor is prohibited or prevented from taking action because the administrator has not done so. He accepted that further action could be taken where allegations are made concerning breach of fiduciary duty.

38 He accepted that this was a case where an elderly person has made a will; purported to make statements in her will about her first daughter; and completely excluded one child from her will. Counsel agreed that the deceased was 78 when she made her will and deteriorated very quickly after that, as evidenced in the representative orders made by the VCAT. He did not quarrel with the proposition that a daughter for whom no provision has been made has a prima facie case for provision under Part IV of the Administration and Probate Act 1958.

39 In circumstances where it can be comfortably concluded, as in this case, that the plaintiff has a prima facie case in a potential Part IV claim, in my view, the plaintiff has a 'reasonable possibility of an interest' sufficient to conclude that she had standing.[9]

40 In the circumstances relied upon by the plaintiff, there is need for careful scrutiny and investigation of the transactions of the defendant in respect of the transfer of the Caroline Springs property. As the defendant has been the main beneficiary of the transactions, it is unlikely that she will undertake that investigation and her opposition to the plaintiff's application supports such a conclusion.

41 It is also sensible that the determination of the composition of the estate should precede the question whether the plaintiff has received adequate provision.[10]

42 I reject the defendant's submission that the fact that State Trustees did not take any steps concerning the transfer of the Caroline Springs property at an earlier stage is a credible ground for opposing the application. No authority was proffered in support of that submission.

43 Accordingly, having regard to the due and proper administration of the estate, the interests of those beneficially entitled to the estate, and the interests of the plaintiff in the estate of the deceased, I am satisfied that a limited grant of administration should be made in this matter.

44 I shall hear the parties as to the form of order, the appropriate person to be appointed as administrator, and costs.

[2] Supreme Court Proceeding No 6361 of 2005.

[3] [2013] VSC 62 (22 February 2014) [63].

[4] Mataska v Browne [2013] VSC 62 (22 February 2014) [51].

[7] Greenway v McKay [1911] HCA 25; (1911) 12 CLR 310.

[8] Section 52(2) of the Guardianship and Administration Act 1958 provides: 'Every dealing, transfer, alienation or charge by any represented person in respect of any part of the estate which is under the control of the administrator is void and of no effect, and the money or property subject of the dealing, transfer, allegation or charge is recoverable by the administrator in any court of competent jurisdiction.'

[9] Re Culina; Poulos v Pellicer [2004] NSWSC 504 (11 June 2004); Hogarth v Johnson [1987] 2 Qd R 383; Mataska v Browne [2013] VSC 62 (22 February 2014) [53]-[54].

[10] Re Davis, deceased; Davis v McEachern [1952] VicLawRp 68; [1952] VLR 517, 518; Hogarth v Johnson [1987] 2 Qd R 383, 388.