The plaintiffs, Ayleen and Elise Assim, are the only daughters of Tanju also known as Andrew Assim, who died suddenly earlier this month. They seek appointment as administrators of their father's estate under Probate and Administration Act 1898 s 74. This matter came into the equity duty list late in the afternoon on 27 March 2015. The matter is clearly urgent. The Court considered the application over the weekend. For the reasons which follow the Court has decided to grant the orders sought. But the Court places limitations on the powers of the plaintiffs to administer their father's estate, until a full grant of administration is made
Mr C. Tannous solicitor appeared for the plaintiffs on 27 March 2015 and Mr Condon SC on 30 March 2015. The need for urgency may be shortly explained.
The late Tanju Assim, his family and his estate
The deceased died on 12 March 2015. Despite the plaintiffs' extensive searches during the last two weeks, no executed will of the deceased has been found among his papers. The evidence shows that he gave instructions to a solicitor in mid-2012 for the drafting of a will. In that draft will he gave the whole of his estate to the plaintiffs. Although the solicitor sent the draft will to him, an executed copy cannot be located. The deceased did not communicate again with the solicitor who drafted the will. Some five other law firms that undertook legal work for the deceased in the past have declared that they do not hold a signed will for him. It appears on this evidence that he died intestate.
The plaintiffs, who are both aged in their early 20s, are the deceased's only children. The deceased divorced the plaintiffs' mother in about 1998. At the time of his death he was single and living with his parents. At the time of the present application a death certificate has not yet issued.
Andrew Assim was a real estate agent. The immediate need to carry on his real estate agency business founds the basis for this urgent application. The deceased was the sole director and shareholder of three proprietary companies, Andrew T Assim Pty Limited, Taylor Street Gallery Pty Limited, and Elizabeth Bay Real Estate Pty Limited. Their full Australian company numbers are available from the Court file.
Elizabeth Bay Real Estate Pty Limited currently operates a real estate business known as "Elizabeth Bay Real Estate". The deceased was licensed under the Property, Stock and Business Agents Act 2002 to conduct this real estate business, which managed rental properties for clients and collected rent on behalf of owners of those properties. Since the deceased's death the senior property portfolio manager for the business, and its only employee, Mr Tayfun Demirezen, has been managing the rent roll of the business. Mr Demirezen is also a licensed real estate agent.
The deceased was the sole signatory on the trust account of the real estate business. Rent money is received monthly into the business trust account. After the deduction of the management fees of the business and after meeting any necessary disbursements for the property being managed, the business ordinarily pays out the net rental to clients at the end of each month, which is now rapidly approaching.
The immediate problem is that there is no signatory to the trust account of the business to enable these monies now to be paid out. The plaintiffs are concerned that unless an urgent appointment of an administrator is made under Probate and Administration Act s 74 to allow a director to be appointed to Elizabeth Bay Real Estate Pty Limited, so as to enable monies to be paid out at the end of the month, the goodwill of the business will be seriously damaged.
The plaintiffs seek upon their appointment as administrators the exercise of the power under Corporations Act 2001 (Cth), s 201F to appoint directors to the company controlling the real estate business so that the company can appoint Mr Demirezen as a signatory on the trust account and have him conduct the day-to-day affairs of the real estate business and possibly fo the same for the other companies.
The case for an urgent appointment of an administrator is made out. I accept that unless an appointment is made that the value of the business, an important estate asset, is likely to be impaired. But the question this case raises is the extent to which the appointment should be limited under the Court's order of appointment.
The deceased's other two companies should be mentioned briefly. Neither of them conducts an active business requiring the same level of day-to-day management attention as the real estate business. Andrew T Assim Pty Limited is the registered proprietor of a property located in Potts Point. The Potts Point property is leased out by the real estate business. Taylor Street Gallery Pty Limited is the registered proprietor of a property located in Darlinghurst that is currently leased to 3 tenants.
The deceased's estate is substantial. It has a gross value of over $4.442 million and a net value of over $4.424 million. Most of the estate's value is in the Darlinghurst and the Potts Point properties, although the real estate business is itself of not insubstantial value. The deceased held substantially the whole of his estate at death through his shareholdings in these three companies.
The plaintiffs' evidence also indicates that Mr Demirezen has located a potential purchaser for the real estate business which would enable it to be sold for the benefit of the estate. But the evidence about this potential purchaser does not indicate that a sale is necessary in the next few days or weeks. Nor does the evidence indicate that an orderly marketing of the business for sale in an attempt to achieve the best market price should not take place, rather than simply offering the business quickly to the potential purchaser who has just been identified. The urgency for the sale of the business seems less self-evident than the urgency of administering its rent roll. That may change if further evidence were adduced to support the conclusion that the value of the agency will erode if it is not sold quickly.
Probate and Administration Act s 74
The plaintiffs' move on a summons seeking orders under Probate and Administration Act 1898, s 74, which provides:
"74 Power as to appointment of administrator
The Court may, in any case where a person dies:
(a) intestate, or
(b) leaving a will, but without having appointed an executor thereof, or
(c) leaving a will and having appointed an executor thereof, where such executor:
(i) is not willing and competent to take probate, or
(ii) is resident out of New South Wales,
if it thinks it necessary or convenient, appoint some person to be the administrator of the estate of the deceased or of any part thereof, upon the appointed person giving such security (if any) as the Court directs, and every such administration may be limited as the Court thinks fit."
The plaintiffs have sufficiently demonstrated that their father died intestate, so Probate and Administration Act, s 74(a) is attracted. They have otherwise demonstrated they should be appointed administrators. The Court ordinarily appoints as administrators the persons with the largest interest that will promote the speedy administration of the estate. This is often but not always the largest beneficiary. Pursuant to Succession Act 2006, s 127(1) on intestacy the plaintiffs will take the whole of the deceased's estate. The plaintiffs are natural primary objects of the deceased's testamentary intentions. And the currently available evidence of an unexecuted will in the plaintiffs favour also tends to show that if an executed will is located after further searches, such a will is likely to favour the plaintiffs. The plaintiffs are in their early 20s and have consented to their appointment as administrators. No other consent is required. There is evidence of their fitness to assume office as administrators, were the Court to appoint them, and of their declarations that they will properly administer the estate.
Recent cases on the application of the section make clear that where the need to preserve particular estate assets is not contentious and where, whatever other disputes exist in relation to the estate, the need for such preservation is common ground, a Probate and Administration Act s 74 appointment should be made and will usually be made without the need for an administration bond: Re McCorquodale v Guth [2008] NSWSC 1420 and Re Estate of Edith Macdougall [2013] NSWSC 990. The Court will not require an administration bond in this case.
[2]
Consideration
The purpose of this proposed appointment is principally to preserve the value of the real estate business from the damage that would flow from an inability in the immediate future to disburse money from the rent roll. In my view the appointment should therefore be limited to achieve that objective. After the usual advertising and procedural steps are taken in their proper time, a full grant of administration can then take place.
Under Probate and Administration Act, s 74 where the requirements of necessity or convenience are satisfied, the Court may "appoint" a person to act as administrator. The Court also has power to "grant" administration on an intestacy under Probate and Administration Act, s 63. A wide range of persons have been appointed under powers equivalent to those that s 74 confers. Even strangers may be appointed in an appropriate case to meet the occasion: Re Wyckoff (1862) 3 Sw & Tr 20. The exercise of the s 74 power is grounded in convenience or necessity. The appointment should be crafted to meet that convenience or necessity. For example, the appointment of a creditor will usually be limited to collecting the estate in order to pay the debt due to the creditor: Re Stewart (1869) LR 1 P & D 727. A common objective of such appointments is to preserve the estate by collecting, securing and prevent the wasting of estate assets, as the old Latin title of this form of appointment suggests - the administration is ad colligenda bona defuncti. Such limited grants do not normally encompass the investment, sale or distribution of estate assets.
Here in my view a limitation should be placed on the plaintiffs' appointment so that the ordinary business affairs of the three companies can continue to be conducted to preserve their value and particularly so that the trust account of the real estate business may be conducted in conformity with the Property, Stock and Business Agents Act. But the present appointment of the plaintiffs does not in my view mean that the plaintiff should be given all the powers administrators would possess with a full grant of administration, for example, to sell estate assets. The need to confer such broader powers on the plaintiffs now has not been demonstrated.
In first propounding their application the plaintiffs proposed a form of limitation on their appointment, which in my view is not an effective limitation. The plaintiffs' summons seeks interim relief that their appointment as administrators be limited to "the appointment of directors to" the deceased's three companies pursuant to Corporations Act 2001 (Cth) s 201F "until letters of administration…be granted". They then sought a full grant of administration as final relief.
Corporations Act s 201 sets out special rules for the appointment of directors for single director/single shareholder proprietary companies. It covers the situation where a single director/single shareholder dies and relevantly provides as follows:
"201F Special rules for the appointment of directors for single director/single shareholder proprietary companies
(1) The director of a proprietary company who is its only director and only shareholder may appoint another director by recording the appointment and signing the record.
Appointment of new director on death, mental incapacity or bankruptcy
(2) If a person who is the only director and the only shareholder of a proprietary company:
(a) dies; or
(b) cannot manage the company because of the person's mental incapacity;
and a personal representative or trustee is appointed to administer the person's estate or property, the personal representative or trustee may appoint a person as the director of the company.
(3) If:
(a) the office of the director of a proprietary company is vacated under subsection 206B(3) or (4) because of the bankruptcy of the director; and
(b) the person is the only director and the only shareholder of the company; and
(c) a trustee in bankruptcy is appointed to the person's property;
the trustee may appoint a person as the director of the company.
(4) A person who has a power of appointment under subsection (2) or (3) may appoint themselves as director.
(5) A person appointed as a director of a company under subsection (2), (3) or (4) holds office as if they had been appointed in the usual way.
The plaintiffs seek specifically to exercise the power under section 201F (2) to appoint a director to each of these three companies.
The plaintiffs' argued that once they made a Corporations Act s 201F(2) appointment of a new director to each of these three companies (after their interim Wills and Probate Act, s 74 appointment) they could then act in relation to the companies as they see fit and without any other restriction. But were they to do so, in my view they would, based on the current evidence, be exceeding the purpose of a Wills and Probate Act, s 74 urgent appointment.
The deceased's estate is substantially held through these three companies. The orders the plaintiffs have framed place no practical limit on what the plaintiffs can do with the assets of these companies until the plaintiffs obtain a full grant of administration.
It is appropriate to appoint the plaintiffs as administrators in order to make a Corporations Act s 201F appointment of a new director to each of these three companies. And Corporations Act s 201F makes clear that the plaintiffs may appoint themselves. That is what the Court understands they propose to do. It is also necessary for Mr Demirezen to be appointed as a director of Elizabeth Bay Real Estate Pty Limited as he does, and the plaintiff do not, have a real estate agent's licence.
But the grant will be limited so that the plaintiffs' short-term conduct of the affairs of the company is restricted until a full grant is received. They will be restricted to carrying on the operations of the three companies in the ordinary course of those companies current businesses and doing such other acts as are necessary for the preservation of the assets of those companies. The orders made below reflect these limitations.
The plaintiffs are youthful. Their father died very recently. Their business experience is probably limited. They will no doubt wish to take and consider counsel from trusted independent advisors acting in their best interests in relation to important issues such as the disposal of the deceased's shares in these three companies or the realisation of the assets held by the companies. A grant of administration to them, as was originally sought, in my view may apply unnecessary pressure to these plaintiffs quickly to perform asset sales, which are not on the present evidence demonstrated to be urgent. Should that situation change then liberty to apply is granted, and the Court may be reapproached.
[3]
Orders
For these reasons, the Court orders as follows:
1. Upon the undertaking of Charly Tannous to pay the filing fee by 4 pm on Monday, 30 March 2015, the Court grants leave to the plaintiffs to file in Court a summons for administration.
2. The Court grants leave to the plaintiffs to file in Court:
1. the affidavit of Tayfun Mustafa Demirezen sworn on 27 March 2015;
2. the affidavit of Ayleen Frances Assim sworn on 27 March 2015; and
3. the affidavit of Elise Catherine Assim sworn on 27 March 2015.
1. The Court notes the undertakings given to it by the plaintiffs and by Tayfun Mustafa Demirezen (to the extent he is appointed a director), as follows:
They will not, until further order or until a grant of probate or letters of administration, and as directors of Elizabeth Bay Real Estate Pty Limited, Andrew T Assim Pty Limited and Taylor Street Gallery Pty Limited:
1. make any application to wind- up any of the foregoing companies, or place then in any form of external control; and
2. deal with any of the assets of the said companies except in the normal course of business (although this undertaking does not prevent them from taking steps preparatory to entering into an agreement to sell the rent roll or business of Elizabeth Bay Real Estate Pty Limited).
1. The Court orders that the plaintiffs be appointed administrators of the estate of the late Tanju (also known as Andrew) Assim (the Estate), formerly of 25A Victory Street, Rose Bay in the state of New South Wales, company director, deceased, subject to the limitations described in orders 5 and 6 hereof.
2. The Court dispenses with:
1. publication of the notice of intention to make this application;
2. the need for any administration bond or sureties; and
3. the further requirements of the Probate Rules in relation to the plaintiffs' application for interim relief.
1. The plaintiffs' administration of the Estate is limited to:
1. appointing directors to the three companies, Andrew T Assim Pty Limited, Taylor Street Gallery Pty Limited, and of Elizabeth Bay Real Estate Pty Ltd; and after such appointment,
2. conducting the affairs of each of the said three companies in the ordinary course of their existing businesses and doing only such other acts as are necessary for the preservation of the assets of those companies pending a grant of probate or administration of the deceased's estate,
and is also limited until a grant of probate or general administration be made or until further order and such administration shall proceed no further or otherwise than as aforesaid or in any other manner whatsoever.
1. The Court orders that the plaintiffs have power to execute all or any instruments as may be necessary and proper to give effect to the activities referred to in order 6 hereof.
2. The Court orders that the plaintiffs do deliver up to the Court this grant of letters of administration when required to do so by the Court.
3. The Court grants liberty to apply to Slattery J on 1 day's notice.
4. The Court orders that the plaintiffs' claims for final relief in the summons be referred to the Registrar in Probate to be dealt with in accordance with the rules of Court.
5. The Court orders that the costs of this proceeding to date be paid out of the estate of Tanju Assim on the indemnity basis.
6. The Court orders that these orders be entered forthwith.
[4]
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Decision last updated: 30 March 2015