New South Wales Supreme Court CITATION : Estate of Indran Sanmuganathan [2000] NSWSC 1214 CURRENT JURISDICTION: Equity Division Probate List FILE NUMBER(S) : SC 114299/99 HEARING DATE(S) : 04/12/2000 JUDGMENT DATE : 4 December 2000 PARTIES : Nicole Tiffany Harris (Plaintiff/Respondent) Rudran Sanmuganathan and Mithran Sanmuganathan (Applicants) JUDGMENT OF : Young J COUNSEL : W Haffenden (Plaintiff/Respondent) P Bushby (S) (Applicants) SOLICITORS : Lobban McNally & Harney (Plaintiff/Respondent) Phillip Bushby International (Applicants) CATCHWORDS : EQUITY [191]- Trusts- General administration- Applicants for Family Provision order have no standing to seek general administration or require accounts- Even if they had standing, order would only be made at applicants' cost SUCCESSION [335]- Family Provision- Applicants do not have standing to seek general administration or require accounts. LEGISLATION CITED : Supreme Court Rules Pt 68(2) & (5) Family Provision Act 1982, s 6, 9(1) McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623 CASES CITED : Packo v Packo (1989) 17 NSWLR 316 Re Blake (1885) 29 Ch D 913 DECISION : Notice of motion dismissed. THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION PROBATE LIST YOUNG J MONDAY 4 DECEMBER 2000 114299/99 - ESTATE OF INDRAN SANMUGANATHAN JUDGMENT 1 HIS HONOUR: This is an academically interesting application for administration of a deceased estate. 2 The applicants are two relatives of the deceased, Indran Sanmuganathan, who died on 25 December 1998. 3 Although letters of administration were first granted to another person, when a will was found, probate was granted to Ms Nicole Tiffany Harris, the present plaintiff, on 23 November 1999. 4 The plaintiff considered that the assets of the estate included moneys that would flow to her as executor from superannuation policies owned by the deceased. However, the trustees of the relevant superannuation scheme had a discretion as to whom they would pay moneys under that scheme and, in the result, no moneys passed to the plaintiff, although five per cent of the moneys passed to each of the applicants, a matter, I believe, of about $20,000 each. 5 The applicants have commenced proceedings under the Family Provision Act 1982 in this Court. The first applicant indicated that he is now 51 years of age, unmarried and that he came to Australia and lived here between March 1994 and April 1996. Whilst he was in Australia he could not find suitable employment and the deceased supported him by giving him $240 a month and also gave him money when he returned to Sri Lanka. There is no evidence at the moment that the first applicant ever resided with the deceased as part of his household so as to fall within para (d) of the definition of "eligible person" in s 6 of the Family Provision Act 1982. If the evidence remains the same, one would have thought his claim would be summarily dismissed. 6 The second applicant indicated that he is now 53 years of age. He lives in Australia and describes himself as an accountant. He says that he moved into the deceased's flat in 1992 at a time when he was financially embarrassed and separated from his wife and that he lived with the deceased until March 1997, never paying any rent as he could not afford to do so. The deceased helped him financially and continued to do so until December 1998 when the second applicant was reconciled with his wife. It may be that that is sufficient to come within para (d) of the definition of "eligible person" although I would imagine in order to qualify the second applicant would have to put on far more detailed evidence. He would also have to get over the hurdle in s 9(1) of the Family Provision Act; that is as to whether in all the circumstances of the case there are circumstances warranting the making of the application by that applicant. 7 The plaintiff says that the deceased's estate is insolvent and she has made an application to the Federal Court of Australia under s 247 of the Bankruptcy Act 1966 for the estate to be administered in bankruptcy. The applicants have sought to be joined in those proceedings as opponents. The Federal Court has the widest possible discretion under s 247(1A) of the Bankruptcy Act as to whether to make an order. The Federal Court has not finally dealt with the matter. 8 In these circumstances the applicants have filed a notice of motion seeking orders in this Court. The orders sought are that the plaintiff be removed as executor, or that the grant of probate be revoked, or that a receiver and manager be appointed (paras 1 to 9 of the notice of motion). In the alternative, they seek general administration of the estate (para 10) or specific orders requiring the plaintiff to disclose further assets. During argument this morning the applicants sought an order short of general administration under Pt 68(2)(3) of the Supreme Court Rules requiring the plaintiff to file further accounts. 9 The problems that arise in determining whether the estate is solvent or not can be left to the Federal Court. The figures that have been produced by the plaintiff show that at the very least there is some doubt about the matter. Paragraph 48 of the plaintiff's affidavit of 1 December 2000 in this Court shows that the estate has a deficiency of about $280,000. However, what has happened is that the liability section of the accounts contains the maximum amounts claimed by the alleged creditors rather than any realistic opinion as to what their claims are really worth. For instance, one claimant against the estate says that she paid the deceased a fee for doing some tax work but that he did it badly or not at all, so she wants the fee of $4,500 returned plus $50,000 for pain and suffering. Any real examination of claims against the estate would have discounted that claim very, very considerably, yet it appears for its full worth in the schedule of liabilities. 10 The other principal problem is that the deceased was in a joint venture with a Mr Djordjevic, which joint venture involved the corporate vehicle Sharben Pty Ltd. The accounts in the joint venture are complex. The plaintiff, who was a friend rather than a business associate of the deceased, has little or no personal knowledge of those affairs and would be limited to the documents and what Mr Djordjevic told her. 11 It would seem that when moneys were borrowed from the St George Bank for the purposes of the business, the bank suggested that keyman insurance be taken out, not as a condition of the loan, but as friendly financial advice, which advice was taken. There is a strong suggestion that it was agreed between the joint venturers that the proceeds of that policy be used to discharge the debts of the business. If this is established then the position of the estate is better than would appear in para 48 of the plaintiff's affidavit. 12 The plaintiff has been endeavouring to make a settlement with Mr Djordjevic to get the best she can, but when the present proceedings came up she abandoned those attempts and is more than happy for the Official Trustee in Bankruptcy to use his or her skills to get the best deal possible. 13 The plaintiff's general attitude is that she believes the estate is insolvent and she is more than happy to hand it over to the Official Trustee. The applicants say once that happens, any chance they have in the Family Provision Act proceedings would virtually disappear because they will need to persuade the Official Trustee there is money in the estate and they believe that persuading a judge or master might be easier. 14 The first question that arises is whether the applicants have standing to obtain any of the orders which they seek. 15 The applicants are not beneficiaries of the estate, nor are they creditors. They are applicants for statutory relief where on the evidence presently available, one claim could not succeed and the other claim might get to the first hurdle. 16 There are some decisions of the Court, such as my decision in Packo v Packo (1989) 17 NSWLR 316, that the Court will interfere at the behest of an applicant under the Family Provision Act to restrain the executor from parting with the assets of the estate pending the decision in the Family Provision Act proceedings. However, as appears from the decision in Packo at page 318, that jurisdiction is based on the inherent power of the Court to preserve the subject matter of an application before the Court. One cannot, in my view, reason by analogy from that line of authority that such a claimant has any right to interfere with the estate or its administration generally. 17 Accordingly, in my view, the applicants do not have standing to obtain the first nine orders in the notice of motion. 18 I now turn to the question of administration. 19 As is said in Jacobs on Trusts 6th ed (Butterworths, Sydney, 1997) at para [2306] which is based on Re Blake (1885) 29 Ch D 913, 916: "Under the old Chancery practice, any trustee or beneficiary and also, in the case of testamentary trusts, any personal representative or creditor was entitled as of right to have the trust or estate administered by the Court of Chancery and to that end to obtain a decree for general administration." 20 I considered that right in McLean v Burns Philp Trustee Co Pty Ltd (1985) 2 NSWLR 623, 636 where I said: "I think it comes down to this. A beneficiary, if he complains to the court about the administration of a trust is, as a matter of course, entitled to the appropriate order, either to answer his question as to the construction of a trust instrument, or to settle a dispute as to the administration of the trust in whole or in part under the authority of the court, unless the court is satisfied that there is no question which requires its decision. Suspicion of irregularities on very scant material with respect to mal-administration may be sufficient because the sanction is if, on the court's further inquiry, its initial order is made wrongly, then it will be discharged and the plaintiff must pay the costs of the inquiry." 21 The learned authors of Jacobs on Trusts say that that decision went further than the older cases, but, as far as I am aware, it has never been judicially condemned. 22 Have then the applicants got locus standi to make this application? Again they are not beneficiaries, nor are they creditors. The principle of preserving the subject matter of the estate would not seem to be sufficiently wide to base an order for administration. 23 Although I think the matter is arguable, the better view is that the applicants do not have sufficient standing to bring the application. They are not people who come within Part 68(5) of the Supreme Court Rules, that is persons who have a claim against the estate as a "claimant" are limited to persons who are creditors or beneficiaries under the will; see Part 68(2). 24 However, if that is wrong, then I would not grant general administration even if the applicants had standing, for the reasons set out in Jacobs on Trusts at para [2306] at p 694. The real issue between the parties is what are the assets and liabilities of the estate. Part 68 of the Rules directs the Court to determine the assets and liabilities by the simplest process without general administration. The simplest process is contained in Pt 68(2)(3) of the Supreme Court Rules, namely requiring the executor to file an account, be examined on the account and then requiring surcharges and falsifications to be filed so that the Master can determine what are the assets and liabilities. 25 In my view, such an order would, in the present circumstances, where the applicants only have a very peripheral chance of success in the Family Provision Act proceedings and the estate is so close to the line of solvency, only be made on the basis that the applicants would pay the costs of the accounting procedure in the first instance. 26 Accordingly, in my view, the applicants do not have sufficient standing and, even if they did, the only order that should be made is for filing of accounts by the plaintiff, at the applicants' expense in the first instance. 27 There are two other methods of discovering what the assets are in the estate. One is to proceed with the Family Provision Act proceedings where the executor will have to file an affidavit as to the estate's assets; or secondly, if the applicants have standing in the Federal Court to oppose the plaintiff's petition to have the estate administered in bankruptcy and for the matter to be dealt with there. However, in the present motion, despite the very helpful and deep submissions that Mr Bushby for the applicants has put to the Court, the only order I can make is to dismiss the notice of motion of 16 November 2000 with costs. 28 The exhibits may be returned. 29 I have omitted to deal with the applications under paras 11 and 12 of the notice of motion. However, these are applications in the nature of administration or claims by a beneficiary. They are in the nature of devastavit, and I would not consider that applicants under the Family Provision Act have standing to make these claims. It may be different once the Court has made an order in favour of the applicants as by the operation of the Family Provision Act, the applicants will probably then become beneficiaries. ********************* Last Modified: 12/18/2000 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.