Scallan v Scallan [2001] NSWSC 1129 | Case summary

Facts 2 Gail Anne Scallan died on 18 May 2000. She had two children, Victoria Scallan and Eden Scallan. Victoria and Mr Peter Khoury are the executors named in a will of the deceased dated 30 March 2000. They have applied for probate in solemn form of that will. Eden Scallan claims that document is not a valid will, principally because the deceased lacked testamentary capacity at the time that was made, but there are other defences. He has cross-claimed for probate of a bill of his mother dated 19 March 1997 of which he is appointed sole executor. 3 Under the 1997 will, after some relatively minor bequests, the estate is divided between Victoria and Eden in equal shares. Under the 2000 will, after the same bequests, two real estate properties are given to Victoria and one is given to Eden. The balance of the estate is given to the mother of the deceased or if she pre-deceased her daughter, then to Victoria. The mother was a Mrs Florence Rose, who died six days before her daughter. Under a will dated 7 February 2000, Mrs Rose gave the whole of her estate to Victoria, but there are contested proceedings in relation to that will as well, which are not really relevant here. 4 In the proceedings under consideration in this notice of motion, the plaintiff, Victoria, purporting to sue as representative of her mother's estate, sues Eden claiming that two transactions entered into between the deceased and Eden in 1995 and 1997 respectively, whereby considerable sums of money totalling over $1.3 million, were transferred to Eden procured by his undue influence, or perhaps by unconscionable conduct. While quite inadequately pleaded, the plaintiff seeks to set aside those transactions on the grounds of either undue influence, unconscionable conduct and in the alternative under the Contracts Review Act 1980. 5 The contested probate proceedings have not been determined. There is neither a grant of probate nor any grant of administration general or limited in the estate of Gail Anne Scallan, deceased. 6 One fact relevant to this case which would not necessarily be apparent is that the will made in 2000 was admittedly made and executed having regard to the transaction which these proceedings endeavour to set aside. I think it is accepted that if the claim of Victoria and Mr Khoury for probate of the later will succeeds, then these equity proceedings will be otiose. It is only if that will is not admitted to probate and a grant is made in respect of the 1997 will that the claim in this action would be pursued. The provisions of the later will in favour of Victoria are said to counterbalance the challenged transactions. Procedural matters 7 No appearance or defence had been filed at the time the proceedings first came before me on 12 November 2001, pursuant to a notice of motion filed by the plaintiff on 5 November 2001. By that notice of motion the plaintiff sought an order for trial as a separate issue, the question of whether the plaintiff was entitled to bring the proceedings; and in the alternative that she was entitled to be appointed to represent the estate, that being an order sought in the statement of claim, or that she should be so appointed. All arguments relevant to this question and the question which I will ultimately decide under the new notice of motion were addressed on that day. It eventually became clear that the plaintiff considered or her advisors considered that unless the orders sought were made, there was a risk that the claim of the estate against Eden might be defeated by a defence under the Limitation Act 1969. When that became clear an undertaking was given to the court by Eden through his counsel that no such defence would be raised in proceedings properly constituted after a grant of representation was obtained. One might then therefore be forgiven for thinking that the court is now being asked to determine a question of academic interest only but the parties, or at least one of them, required that to be done. 8 As there was no defence and thus no issue between the parties, I advised them after reserving my decision that I did not consider an order for separate trial under Pt 31 r2 of the Rules was appropriate. The defendant then filed the notice of motion which I am dealing with now. It was filed in court on 3 December, returnable immediately. Both parties informed the court that their arguments were concluded as the same question really arose on the plaintiff's earlier motion and it was agreed that I would give judgment on that later motion. Claim and decision 9 The chose in action being the cause of action for undue influence and setting aside the transactions relevant to the present proceedings was an asset vested in Gail Anne Scallan, now deceased. It would continue after death for the benefit of her estate. At the present time no legal personal representative of her estate has been appointed. The defendant's claim on the notice of motion is that the plaintiff has no standing to bring the action, that it is therefore a nullity and that it should be dismissed. 10 The argument of the plaintiff is that she is a beneficiary under the 1997 will of which her brother is executor; that clearly enough he would not be willing to bring an action in undue influence against himself, even if that were possible; that therefore the position of the plaintiff is analogous to that of a beneficiary seeking to bring proceedings for enforcement of a right of action vested in a trustee which the trustee refuses to bring. Counsel for the plaintiff relied on a number of cases including Ramage v Waclaw (1988) 12 NSWLR 84; Hilliard v Eiffe [1874] LR 7 HL 39 and Hayim v Citibank NA [1987] AC 730. None of these cases really bear upon the situation. In all of them there was a legal personal representative of the estate or trustee of a trust, who either refused to take action or was unwilling to do so. It is not necessary to write a treatise on this interesting subject. In Marshall v D G Sundin & Co Limited (1989) 16 NSWLR 463, it was held that proceedings by a named executor before a grant were a nullity. That decision was followed in Darrington vCalderbeck (1990) 20 NSWLR 212. The power to appoint a person to represent an estate given by Pt 8 r16 of the Rules cannot assist if the proceedings cannot be instituted without such order. The difficulty can be solved in appropriate cases by obtaining a grant of administration ad litem. That is not to say that the present claim would have been a case for the appointment of Victoria as administrator as the claim which she wishes to make in these proceedings is contrary to the claim which she makes in the probate action. 11 As a final fall back the plaintiff relies on s61 of the Wills Probate and Administration Act 1898. The plaintiff's solicitor has written to the Public Trustee asking whether he would be prepared to be substituted as plaintiff or joined as co-plaintiff. Not surprisingly the Public Trustee has replied saying that s61 does not give him any active role. The plaintiff says that as the estate of the deceased is deemed to be vested in the Public Trustee and as he is unwilling to take proceedings, then by analogy to the cases where a beneficiary is entitled to bring proceedings on behalf of an estate or on behalf of a trust, if the executor or trustee refuses to do so, then she should be held so entitled in this case. 12 I do not consider that this argument has substance. Without going into the matter in detail, I consider it is established by ex parte The Public Trustee re Birch (1951) 51 SR NSW 345 that the fact the estate of the deceased before grant is deemed to vest in the Public Trustee "in the same manner and to the same extent as aforetime the personal estate and effects vested in the Ordinary" does not mean that the Public Trustee has power, in respect of the estate of a deceased person before grant of administration, to bring an action to recover property transferred as a result of undue influence or unconscionable conduct. Andrews v Hogan (1952) 86 CLR 223, which held that a notice to quit can be served on the Public Trustee, and perhaps that the Public Trustee has capacity to surrender a lease, does not go so far as to hold that the Public Trustee would be empowered under s61 to commence the action the plaintiff purports to bring as representative of the estate. In Foy v Public Trustee (1942) 64 SR(NSW) 209 at 211, Roper J held there was no such power. As power to take possession of assets and to hand them to the administrator for distribution does not extend to power to pursue a chose in action in Court proceedings; refusal to do so cannot be relied upon as a ground to entitle a beneficiary to take proceedings on behalf of the estate. It must be remembered that limited grants for the purpose of bringing actions can be made in appropriate circumstances. Assuming that the chose in action is vested in the Public Trustee (which it is) and the Public Trustee has power to take action to recover it, (which he has not) it would not be appropriate for a beneficiary in the estate to take action on the basis that the Public Trustee refused to do so. The appropriate course would be to apply for a limited grant for appointment of an administrator ad litem who would then pursue the claim. 13 I consider the proceedings to be a nullity. As I have said at the commencement, the plaintiff is not prejudiced by that decision. I should say that had I not come to the conclusion the proceedings should be dismissed, I would have thought that they should be stayed pending the determination of the contested proceeding for probate of the will of the deceased. Orders 14 The plaintiff's notice of motion be dismissed. 15 The proceedings be dismissed. 16 The plaintiff pay the defendant's costs of the proceedings including the costs of the notices of motion. **********

Scallan v Scallan

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