Jordan v Goldspring

Supreme Court of NSW|2024-01-29|Before: Henry J, Windeyer J

Background

The background to the Applicants' Amended Motion, the contempt charges and the Court's findings are set out in the Judgment but it is convenient to start by providing a brief summary of those matters.
These proceedings relate to the estate of the late Frederick Goldspring (deceased), who died on 2 November 2014.
The Applicants, the Executors (the first, second and third defendants) and Barry Goldspring (the fourth defendant) are the children of the deceased and his late wife. They are also beneficiaries under the deceased's will, dated 25 June 2007.
The Executors commenced proceedings in this Court by summons seeking probate of the deceased's estate. On 4 May 2016, they were granted probate of the deceased's will and a codicil dated 3 June 2008. The Inventory of Property admitted to probate disclosed assets valued at $2,398,993.60, which included $1,486,526.68 held in accounts and a 50% share in property located in Maitland, NSW.

Findings in Judgment

In relation to Lindsay J's Orders, I was satisfied the Applicants had established, beyond reasonable doubt, that the Executors breached Order 6 by filing and serving a statement of accounts that did not cover the period from the death of the deceased on 2 November 2014 up to and including 30 June 2016 and the period from 1 July 2019 to 11 February 2020 (a period of 27 months) as referred to in sub-paragraphs 3(b) and (c) of the Statements of Charge relating to Lindsay J's Orders: Judgment at [107].
I concluded that the Court should not make a finding that the Executors were in contempt of court as a consequence of their breach and held that the charges of contempt in relation to Lindsay J's Orders should be dismissed. I characterised the breach as giving rise to a technical contempt and did not consider that making a finding of contempt would be appropriate in circumstances where the Applicants had not acted in complete disregard of the Court's orders and the breach had been fully remedied by the provision of the Rapson Spreadsheet in response to and in purported compliance with Hallen J's remedial orders: Judgment at [111] and [172].
In relation to Hallen J's Orders, I found that nine of the twelve allegations of breach were not made out and the charges based on them, at sub-paragraphs 11(a), (b), (c), (e), (f), (g), (h), (k) and 12 of the Statements of Charge relating to Hallen J's Orders should be dismissed for reasons that included form and lack of precision, no failure to comply and a technical breach only: Judgment at [124]-[126], [128]-[139], [148]-[154] and [164]-[167].
I was, however, satisfied that the Applicants had established, beyond reasonable doubt, that the Executors were in breach of Orders 1 and 4 of Hallen J's Orders, as the Rapson Spreadsheet and the documents produced failed to: 1. include a full account of transactions relating to the Macquarie Share Account, as referred to in sub-paragraph 11(d) of the Statements of Charge relating to Hallen J's Orders: Judgment at [140]-[147]; or 2. produce documents in relation to the line items referred to in the Rapson Spreadsheet as the 62 "Manual Journal" line entries, including in relation to the Six Profit Distributions (Manual Journal Entries), as referred to in at sub-paragraphs 11(i) and (j) of the Statements of Charge relating to Hallen J's Orders: Judgment at [155]-[163].
I was satisfied that the Applicants had established the elements of civil contempt by the Executors in relation to the breaches as they had not been remedied and were continuing, the Executors were on notice and had knowledge of Hallen J's Orders, they were the result of deliberate acts and they were not casual, accidental or unintentional, and found that the Executors had committed civil contempt of Court by failing to comply with Hallen J's Orders by failing to include a full account in relation to the Macquarie Share Account or to produce documents in relation to the line items referred to in the Rapson Spreadsheet as "Manual Journal" entries, which include the Six Profit Distributions: Judgment at [168]-[171].
I deferred making any orders when the Judgment was delivered to enable the parties to consider the reasons. I indicated that I would hear from them on the question of punishment (if any) as sought in Order 2 of the Amended Motion and on the issue of costs and invited them to agree a timetable to deal with those matters and next steps in relation to the Amended Motion: Judgment at [173]-[175].
As already noted, directions were made for the parties to serve written submissions on the remaining issues of punishment (if any), costs and next steps in relation to the Amended Motion and the parties served written submissions.

The Applicants' submissions

The Applicants submit that consequent upon the Court's finding of contempt, the Court ought to make the following orders as sought in the Amended Motion, namely: 1. Order 3, the grant of probate appointing the Executors be revoked; 2. Order 4, but revised to provide for Mr Murphy to be granted letters of administration; 3. Order 5, the documents and records in the custody and control of the Executors in relation to the estate be delivered to Mr Murphy within 28 days of his appointment; and 4. Order 8, the Executors to pay the Applicants' costs of the proceedings but on an indemnity basis and without indemnity from the deceased's estate.
The Applicants do not seek any monetary penalty in respect of the contempt proceedings but say that if the Court determines not to revoke the grant of probate, it should make orders for preparing any further accounts in the form of Hallen J's Orders but with some amendments, including to provide that the Executors bear the costs of them without indemnity from the deceased's estate.
The Applicants submit that the significance of the Court's findings is that the beneficiaries have been denied and continue to be denied a full account of the transactions (referred to in the Rapson Spreadsheet) to which they are entitled as beneficiaries, and that there were, as they submitted, "deliberate failures by the Executors in respect of the administration of the estate" and civil contempt of Hallen J's Orders.
They also submit that the findings show that the Executors have failed to comply with their duties as executors/trustees in the context of an administration of an estate to keep and render to beneficiaries a full and candid record of their stewardship, including all appropriate financial accounts (citing Ford v Princehorn; Estate of Ford [2012] NSWSC 1165 at [31]-[32]), and the undertaking the Executors had given to the Court. The undertaking referred to by the Applicants relies on paragraph 10 of the Executors' affidavits dated 10 April 2015 that were filed in support of their application for probate, which stated that if probate was granted to the Executors, they would verify and file, or verify, file and pass, accounts within 12 months of probate being granted if so required by the Court.
The Applicants' submissions identify the legal principles that apply to a revocation of a grant of probate, referring to Profilio v Profilio [1999] NSWSC 657; Bates v Messner; Estate of Hardy [1967] 1 NSWR 638 (Bates v Messner), Mavrideros v Mack (1998) 45 NSWLR 80 at 108; [1998] NSWCA 286 (Mavrideros v Mack) and Baird v Logan; Middleton Estate [2008] NSWSC 1029.
They submitted that the relevant question is whether the administration of the deceased's estate has been put in jeopardy by reason of the acts or, in this instance, omissions on the part of the Executors, or by other matters which establish that they were not or are no longer fit and proper persons to carry out the duties they undertook to perform. They submit that what lies at the heart of the exercise of the discretion to revoke a grant of probate is the protection of the interests of the estate and those who benefit from it (referring to Gibson v Buchanan [2004] NSWSC 957 at [21]) and refer to Palmer J's statement in Baird v Logan (at [19]), that the Court may revoke a grant of probate to an executor who has shown to be guilty of inexcusable delay or who otherwise impedes the due administration of an estate, and that an obdurate refusal to do something necessary for the administration of the estate in the absence of any sufficient reason being provided for the refusal entitles the Court to revoke the grant of probate.
The Applicants submit that the circumstances which justify the revocation of the grant of probate in this case are: 1. an obdurate refusal by the Executors to furnish accounts in accordance with their sworn duty and as exemplified by the findings of contempt by this Court; and 2. the conduct of the Executors being held to "protect and vindicate their personal interests in respect of the deceased's estate", referring to the Judgment at [117]).
The Applicants' submissions referred to the following matters in support of those contentions: the Executors' obligation to render accounts arose at least prior to 28 May 2019, following which the Applicants filed their notice of motion seeking accounts; the Executors have demonstrated a complete failure to undertake in any proper way their duties to keep and render to the beneficiaries proper accounts regarding the due administration of the deceased's estate since that time; the Court found that the accounts produced in response to Lindsay J's Orders were wholly deficient in that they failed to include any accounts for 27 months of the administration period and only one of the three named Executors purported to verify the accounts; notwithstanding Hallen J's Orders, the accounts and documents produced by the Executors were also non-compliant as they failed to include a full account of the transactions relating to the Macquarie Share Account and documents in relation to the line items entries relating to the six profit distributions paid to the deceased totalling $207,000; those documents have not been produced nor has there been any attempt by the Executors to provide an explanation or justification for the failure to produce them; the Executors made a forensic decision (to avoid being cross-examined) not to place any evidence before the Court at the hearing of the contempt charges to justify or provide any explanation for the failures to comply, or that they would comply with any further order if found to be in contempt; and the Executors' failure to give evidence is magnified by the fact that their conduct has been found to amount to a civil contempt.
The Applicants submit that upon making an order for a revocation of the grant of probate, the Court should make a fresh grant of probate (referring to Gorman v McGuire [2002] NSWSC 1089 at [6]-[7]) by the granting of letters of administration to Mr Murphy and making the consequential order, as sought at Amended Motion Order 5.
If the Court does not revoke the Executors' grant of probate, the Applicants seek the orders set out below (Applicants' Proposed Orders), on the basis that the Executors have now had two separate occasions to prepare their accounts and have failed to do so. The Applicants' Proposed Orders adopt Hallen J's Orders with the amendments in bold and underlined: "1. Orders that the first, second and third defendants by [x], serve on all other parties a complete form of accounts in respect of the property comprised in the estate of the deceased, verified by affidavit, commencing from the date of death which account includes: (a) the nature and value of the estate, by way of inventory of property; (b) all monies (capital and income), received, but not limited to the settlement figures in respect to the sale of assets realised, contract notes for the sale of securities, and rent; (c) any assets that have been reinvested; (d) any monies disbursed by the Defendants, or any of them, or by any other person on his/her behalf; (e) the dealings and transactions, including, but not limited to the transfer of unrealised assets; (f) any assets transferred, including an in specie distribution; (g) any assets that remain undistributed and unrealised; (h) if any asset loss has occurred, the nature and value of that loss; (i) any amounts expended on professional assistance such as a solicitor, accountant, valuer or real estate agent and any authority to pay the amounts so expended; and (j) a reconciliation of the funds held as at the date of the filing of the accounts. 2. Directs that such accounts shall also specify: (a) in respect of each payment, or receipt, the date and amount thereof; (b) to whom the payment was made, or from whom the money was received; and (c) the purpose or account for, or to which, the account was paid, or received; as the case may be. 3. Directs that any items of such account statement be numbered consecutively and that each and every item of such account statement bear a reference to each page of the folder containing each and every document that is referable to that entry as appearing in the accounts as referred to in Order 4 below. 4. Directs that the first, second and third Defendants shall prepare and serve a folder containing all invoices, receipts for disbursements, bank statements, deposit books, or documents evidencing electronic deposits or disbursements, bills for all professional work, receipts for any distributions to beneficiaries, including any assets transferred in-specie to a beneficiary and any additional receipts, or other evidence of transactions shown in the accounts, as may be appropriate. 5. Directs that the first, second and third Defendants provide to the Plaintiffs, by their legal representatives, a complete copy of the folder of documents prepared in accordance with the above paragraphs. 6. Directs that the form of accounts be served in Word format upon the Plaintiff[s] to enable the Plaintiffs to respond by acceptance or objection in regard to each item shown on the account. 7. Directs that the first, second and third Defendants provide to the Applicants by their legal representative a complete copy of the accounts and the folder of documents prepared in accordance with the above paragraphs and the cost of preparation [of] the accounts and the folder be the cost of the Defendants without indemnity from the estate."
On the issue of costs, the Applicants submit that the Executors should pay their costs of the proceedings because it was their failure to comply with Lindsay J and Hallen J's Orders that caused the contempt proceedings and the Applicants to seek revocation of probate. They rely on r 42.10 of the Uniform Civil Procedure Rules 2005 (UCPR), which provides that the Court may order a party who fails to comply with a requirement of the rules or any judgment or order of the court to pay such of the other parties' costs that are occasioned by the failure, and the usual rule that costs follow the event in UCPR, r 42.1.
They submit that their costs should be paid by the Executors on an indemnity basis in accordance with the ordinary rule where a person is found to be in civil contempt (referring to Blacktown City Council v Nitopi [2019] NSWLEC 40 at [220] (Blacktown City Council v Nitopi) and Canterbury City Council v Mihalopoulos (No 3) [2012] NSWLEC 72 at [46] (Canterbury City Council v Mihalopoulos (No 3))) and in the absence of any evidence to explain or justify the Executors' failure to fulfil their duties and their undertaking to the Court, and to comply with the orders made by Lindsay J and Hallen J.
The Applicants also submit that the Court should award costs on the basis that the Executors have no indemnification from the deceased's estate for the following reasons.
First, the Executors did not seek any advice or direction from the Court following the filing of the Amended Motion or the Statements of Charge as to the issue of their indemnity for costs from the estate. Reference was made to s 63 of the Trustee Act 1925 (NSW), the requirement for a trustee who is sued to take no steps in defence without obtaining judicial advice (referring to Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar (2008) 237 CLR 66; [2008] HCA 42 at [74]) and the risk that a trustee faces of paying costs themselves and not charging costs to the cestui que trust if, without the sanction of the Court, they commence or defend an action unsuccessfully, even if they acted on counsel's advice (referring to In Re Beddoe; Downes v Cottam [1893] 1 Ch 547 at 557).
Second, although a trustee is prima facie entitled to be paid costs of the proceedings from the trust under UCPR, r 42.25(1), the Court may and should disallow the Executors from receiving costs from the deceased's estate as the Applicants' claim related solely to the Executors' personal conduct and the performance of their duties and the Executors' defence was for their own benefit rather than for the benefit of the deceased's estate. An example of a trustee representing and preferring their own interests to those of the trust fund is where a trustee unsuccessfully defends an action brought by all interested parties for the trustee to resign or be removed, in which case the trustee is required to personally pay the costs of all parties to an action, referring to Miller v Cameron (1936) 54 CLR 572 at 579; [1936] HCA 13 (Latham CJ) (Miller v Cameron).
Third, the Executors' defence of the Applicants' claim was unreasonable having regard to the following matters: Hallen J's Orders were necessitated because of the Executors' failure to comply with Lindsay J's Orders; despite being on notice from Hallen J's Orders as to what was required to be produced, the Executors nonetheless failed to comply even following commencement of the contempt proceedings; the Executors placed no evidence before the Court to explain or justify their failure to comply or that they would comply if the Court was to make any further orders regarding the preparation of accounts, such that the Court cannot be satisfied as to when, if at all, the Executors will provide proper accounts in accordance with Hallen J's Orders and any other order of this Court if so made, referring to Stubberfield v Brown [2010] NSWSC 536 at [46]-[47] (Ball J).

The Executors' submissions

The Executors' submissions noted that they had not addressed on the issue of punishment as punishment is not sought by the Applicants.
As to the Applicants' claim for revocation of probate, the Executors submit that this was not the occasion for determination of the matter. They referred to the requirement that an application for revocation of probate proceed by way of Statement of Claim (SCR, Pt 78, r 48 and Leslie G Handler and Richard Neal, Mason and Handler Succession Law and Practice New South Wales (LexisNexis Butterworths) at [6101]), and the Judgment (at [87], [88] and [116]), where the Court confirmed that the hearing of the contempt charges was separated from the hearing of the other aspects of the Amended Motion and that matters which went to the discretion as to the broader probate challenge were not relevant to the contempt action.
The Executors submit that revocation is a "multifaceted discretionary judgment". They submit that a statement of claim is appropriate because it delineates the real issues in contest and gives all parties an opportunity to enunciate the discretionary considerations which are relied upon for and against revocation, and that the importance of proceeding correctly is underpinned by the Executors not being relieved of acting except by a discretionary order revoking the grant given to them. They say that even if a pleading is dispensed with, each party should have the opportunity to lead and test their best evidence on the issues raised for and against revocation in a hearing designed for that purpose and that Barry Goldspring, as another beneficiary, would also have to be heard.
The Executors accept that a finding of contempt may be a relevant matter to the Applicant's claim for revocation but say that it may not be determinative. They submit that relevant matters may be whether there had been a failure to pay the money obtained from the realisation of the Macquarie Share Account to the deceased's estate and what the Executors do to show that they have not done so.
They also submit that an important discretionary consideration is who would replace them and they raise issues with the Applicants' proposal to appoint Richard Murphy. They say that he cannot be appointed as a replacement executor as he was not named in the will and codicil admitted to probate. They also say that the Applicants have not proved that Mr Murphy is a suitable person as there is no evidence of his qualifications, character or standing within the legal profession, it is not known whether Mr Murphy is in a position of conflict and it is not known what remuneration he would expect and what impact that would have on the distribution to the beneficiaries, noting that financial pragmatism may dictate that probate not be revoked.
As for costs, the Executors submit that each party ought to bear their own costs because there were numerous issues and they had succeeded on many of them, referring to each charge (or in this case, "sub charge") as an event within the meaning of UCPR, r 42.1.
The Executors repeated their submission, made at the hearing, that the Statements of Charge and the framing of relief sought by the Applicants were ill-considered and lacking in discipline, which they say means that the costs were greater than they ought reasonably to have been.
As to the Applicants' claim for indemnity costs, the Executors submit that there is no ordinary rule that a person found guilty of contempt is required to pay indemnity costs, referring to the Court of Appeal decision in McIntyre v Perkes (1988) 15 NSWLR 417 at 428 (Samuels JA) and 434 (Rogers AJA) (McIntyre v Perkes).
In response to the Applicants' submission that the Executors not be indemnified from the deceased's estate, it was submitted that the Executors do not intend to obtain indemnification, they have never intimated that they were going to do so and the Applicants have made a false assumption. It was also submitted that orders are not generally made to prohibit a person from doing what they are not going to do and they are not made on the basis that there is no harm in ordering a person not to do what they are not going to do.

The Applicants' submissions in reply

In reply, the Applicants submitted: 1. The Court ought to dispense with the requirement in SCR, Pt 78 r 48 for a statement of claim for the following reasons: the revocation of the grant of probate or the removal of the existing Executors had been the principal relief sought since the commencement of the proceedings; the Executors had not raised any issue of prejudice; the Executors had not identified any 'best evidence' that was sought to be led in response to the revocation; the Executors' submission about the proceedings being brought by way of statement of claim should have been raised prior to any submissions as to costs and not after the proceedings have been run; and the Court time and expense that would be unnecessarily expended if a statement of claim was required to be filed. 2. Order 4 of the Amended Motion should read that Mr Murphy is to be appointed as "administrator" rather than executor. 3. Mr Murphy is an appropriate person to be appointed as administrator as he is a solicitor of this Court. In support of that contention, the Applicants attached to their written submissions a document headed "Consent To Act As Trustee/Administrator" signed by Mr Murphy and dated 28 October 2021 which identifies that Mr Murphy: consents to being appointed by the Court as trustee/administrator of the deceased's estate; is a principal of Patey & Murphy Solicitors and has almost 50 years' experience as a solicitor; has been a Supreme Court Costs Assessor since 1 January 2014; has been involved in the administration of at least 50 deceased estates during the past four years, including in relation to contested estate litigation; proposes to charge an amount of $400 (plus GST) per hour for his professional costs by way of remuneration. 4. In circumstances where no penalty is sought, indemnity costs remain appropriate to recognise the Court's disapproval of the contempt established, referring to McIntyre v Perkes at 426 (Samuels JA) and 436 (Rogers AJA), Canterbury City Council v Mihalopoulos (No 3) at [46] and Khoury v Kirwan (No 6) [2021] VSC 682 at [21] (Khoury v Kirwan (No 6)). 5. The Court should make the order sought by either accepting the Executors' "undertaking" (that they will not seek such an indemnity out of the estate for the contempt proceedings costs) or making an order under UCPR, r 42.10, in circumstances where the Executors' have a prima facie right to indemnity under UCPR, r 42.25.

Consideration and determination

At the outset, it is appropriate to record that, notwithstanding Order 2 of the Amended Motion, which seeks for the Executors to be punished for contempt, the question of what punishment or penalty for civil contempt does not arise as an issue for determination.
The Applicants' submissions did not refer to punishment, Order 2 of the Amended Motion or the legal principles applicable to the determination of an appropriate penalty for civil contempt: see for example, NHB Enterprises Pty Ltd v Corry (No 8) [2022] NSWSC 97 at [26]-[33]. They do not seek punishment or a monetary penalty for civil contempt, such as under SCR, Pt 55, r 13, or press for any relief as sought under Order 2.
As punishment is not sought by the Applicants, the issues relate to the Applicants' claim for revocation of probate and the appointment of Mr Murphy (as sought in Orders 3, 4 and 5 of the Amended Motion) and costs.

Revocation of probate

The principles applicable to the exercise of the Court's discretion to revoke a grant of probate are well known.
The Court has an inherent power, by reason of its supervisory jurisdiction over trustees and the administration of estates, to revoke its own grant of probate for just cause. In exercising the jurisdiction, the Court must have regard to the due and proper administration of an estate and the interests of the parties beneficially entitled to it. If it turns out that the person appointed will not or cannot administer the estate, the Court may, in the exercise of its discretion, revoke an inoperative grant: Miller v Cameron at 579; Bates v Messner at 640-642.
In Bates v Messner, Asprey JA (at 642) described the basis of the exercise of the Court's jurisdiction to revoke a grant of probate in the following terms: "...the essential basis of the exercise of the Court's inherent jurisdiction to revoke a grant of probate is … that the real object which the Court must always keep in view is the due and proper administration of the estate in the interests of the parties beneficially entitled thereto on the part of the person to whom and by whose oath as to the faithful performance of his duties the court has been induced to entrust the office of executor. […]"
The primary concern to ensure that the estate is properly administered was confirmed in Mavrideros v Mack (at 108), where Sheller JA said (Priestley and Beazley JJA agreeing): "The question was, to adapt the language of Asprey JA …, whether the due and proper administration of an estate had either been put in jeopardy or had been prevented either by reasons of acts or omissions on the part of the executor or by virtue of matters personal to him, for example, mental infirmity, ill health, or by virtue of the proof of other matters which established that the executor was not a fit and proper person to carry out the duties he had sworn to perform."
The matters raised by the Executors did not address the application of the legal principles other than to note that revocation involves a discretionary judgment. They also accepted that the contempt finding may be a relevant matter to such a judgment. Their submissions raised procedural matters, including in relation to a statement of claim and the need for Barry Goldspring to be heard.
SCR, Pt 78, r 48 provides: "48 Commencement of proceedings with defendant (1) If there is a defendant, proceedings for the revocation of a grant of probate or administration must be commenced by statement of claim. (2) The statement of claim must allege facts that, if proved, would show that the plaintiff has standing to commence the proceedings."
If a person interested in obtaining the revocation of a grant perceives that the proceedings will be disputed or if there is a defendant, they must proceed by statement of claim, as provided for by Pt 78, r 48. The statement of claim should allege facts showing (a) their standing to make the claim; (b) the grounds on which the existing grant is attacked; and (c) the basis of the consequential order sought by the plaintiff: Leslie G Handler and Richard Neal, Mason and Handler Succession Law and Practice New South Wales (LexisNexis Butterworths) at [6101].
The requirement for a statement of claim has also been referred to in decisions of this Court, see for example, Ivanna Ann-Marie Ferenc Stojic v Simon Stojic [2017] NSWSC 1235; Jewish National Fund of Australia Ltd v Bar-Mordecai [2020] NSWSC 384; Nowacki v Estate of Szymanski (Supreme Court (NSW), Probate Division, Windeyer J, 5 May 1995).
In Page v Rankine [2020] NSWSC 902, Ward CJ in Eq (as Her Honour then was) stated, at [23]: It is noted, for example, that O 4 of the notice of motion seeks orders removing the plaintiff as executor of the estate. Relief of that kind is not interlocutory relief which arises in these proceedings and, furthermore, such an application would ordinarily need to be pleaded (see Pt 78 r 48 of the Supreme Court Rules 1970 (NSW)) …
As beneficiaries under the deceased's will, the Applicants have standing to make a claim for revocation of probate. Their submissions identify the grounds on which the existing grant is attacked and the basis for the consequential order they seek appointing Mr Murphy, namely the findings of contempt. Those matters, together with the fact that the Executors have been on notice for some time that the Applicants intended to rely on the contempt findings in support of the revocation order and the further time and cost associated with putting on further pleadings, weigh in favour of the Court exercising its power under s 14 of the Civil Procedure Act 2005 (NSW) (CPA) to dispense with the requirement for a statement of claim under SCR, Pt 78, r 48.
However, it is not correct, as the Applicants' submissions suggest, that the Executors did not raise the need for a statement of claim or any issue with the Applicants' approach by way of the Amended Motion until these "submissions as to costs" and "after the proceedings have been run with the parties joining on the issue". The proper procedure of seeking revocation of probate by way of statement of claim was explicitly referred to by Counsel for the Executors at the hearing during cross-examination of Mr Nolan (T45.9-11) and in oral submissions (T141.46-T142.10). Notably, Mr Nolan denied that the purpose of the contempt application was to obtain a revocation of probate without following the normal course of filing a statement of claim or to seek a revocation of the grant of probate to the Executors (T44.47-49, T45.9-23).
More broadly, the Executors raised other issues at the hearing with the Applicants' approach to the contempt proceedings in support of a claim for revocation of probate. They submitted (with some force, in my view) that there were more appropriate mechanisms available to the Applicants if they wanted to allege that the Executors were in breach of their duties or challenge the contents and verification of the accounts that had been served (Judgment at [22]).
They also challenged the Applicants' pursuit of the contempt charges for reasons relating to form and utility (particularly, in relation to Lindsay J's Orders), and submitted that it amounted to an abuse of process, as the purpose was to support the relief sought by the Amended Motion for the revocation of the grant of probate, rather than what a civil contempt proceeding was designed for. Although the abuse of process contention was ultimately rejected by the Court (Judgment at [80]-[88] and [116]), the issues raised led to the Court concluding that charges should be dismissed (as outlined at [18] and [19] above), the rejection of large parts of the Applicants' evidence (Judgment at [16] and [17]) and that matters of discretion on the broader probate challenge were to be separated from the contempt application (Judgment at [116]). The Court's conclusion that the contempt charges were not an abuse of process was also based on: the Court accepting that a finding of contempt may be a relevant factor to its consideration of the Applicants' separate application for the revocation of the grant of probate; the question of punishment being determined later; and Mr Nolan's evidence as referred to at [64] above (Judgment at [88], [116] and [117]).
Having regard to the above, in my view, there is merit to the Executors' submissions regarding the correct procedure for determining the Applicants' claim for revocation. The Applicants' approach and submissions, which did not provide an explanation for their non-compliance with SCR, Pt 78, r 48 and sought dispensation with the requirement for a statement of claim in reply submissions, were not entirely satisfactory in my view.
That said, I do not consider the Executor's submissions to be dispositive and have proceeded to deal with the Applicants' claims. This is because even dispensing with the necessity for pleadings and noting the procedural issues raised, for the following reasons, I am not persuaded to grant the orders sought by the Applicants for revocation of the grant of probate on the basis of their submissions.
The Applicants advance two grounds for why the Executors should be removed following the findings of contempt. The first is said to be the Executors' obdurate refusal to furnish accounts in breach of their sworn duties and in breach of their undertaking to the Court. The second is the Executors' conduct being held by the Court to "protect and vindicate their personal interests in respect of the deceased's estate", referring to the Judgment at [117].
As to the first ground, I do not accept the Applicants' characterisation of the Executors' conduct as involving an obdurate refusal or a complete failure on their part to furnish accounts in breach of their sworn duties or their undertaking to the Court, or that the contempt findings make that clear. The Executors did not fail to furnish any accounts. The accounts and documents they provided to the Applicants were detailed and extensive, although found to be incomplete in some particular and, in my view, limited respects.
In relation to Lindsay J's Orders, the Court did not find they were "wholly deficient" as the Applicants contend, but found the Executors were in breach because the accounts provided (which were based on financial year accounts only) did not cover the initial period from the deceased's death on 2 November 2014 until 30 June 2016 and the period after 1 July 2019. The Court concluded that the breach was the result of a deliberate act but it did so on the basis that the Executors were on notice and had knowledge of Lindsay J's Orders. Relevantly, the Court found that the Executors did not act in complete disregard of the Court's orders and described the Executors' attempt to comply as "ill-advised" rather than an intentional and knowing breach. Further, the extent of the Executors' non-compliance with Lindsay J's Orders was fully dealt with by the Rapson Spreadsheet, which covered the period from 1 November 2014 to 31 July 2020: Judgment at [110] and [111]. It is also notable that there was no evidence led at the hearing that the Applicants had requested, but the Executors refused to provide, an updated account to deal with the missing periods prior to the making of Hallen J's Orders.
Similarly, the Executors did not fail to comply with Hallen J's Orders, in the sense that they did not produce anything at all in response. They served a detailed account in relation to the deceased's estate for the period 1 November 2014 to 31 July 2020 by way of the Rapson Spreadsheet, a 19-page document that contains 998 individual line items representing separate transactions, as well as hundreds of pages of documents relating to the transactions, such as tax invoices, bank statements for numerous bank accounts (including the Macquarie CM Account) and legal invoices. Further, the summary of evidence (Judgment at [43]-[47] and [51]) satisfies me that, although not accepting all of the issues raised by the Applicants about the form of the accounts and documents, the Executors responded to many of the matters identified, including by, for example, locating and providing further documents. They also issued a general invitation to make contact if there were any queries about the content of the accounts, to which the Applicants response was to file the Amended Motion.
As to the findings of breach and civil contempt in relation to Hallen J's Orders, they relate to two discrete aspects of the account, namely the Macquarie Share Account and the Manual Journal Entries, that were relatively small in terms of the number of items in the Rapson Spreadsheet and overall value.
The Macquarie Share Account had been raised in correspondence between the parties prior to the Amended Motion. The Judgment records that the Executors were requested to provide the accounts by letter dated 27 August 2020 but did not produce them and no explanation was provided at that time or at the hearing as to why (at [145]). However, it also records that in response to a query raised by Mr Nolan about the Rapson Spreadsheet not dealing with the Macquarie Share Account and items of receipts and expenses referable to that account, the Executors (through their solicitor) referred to item number 675 (which referred to the receipt of money from Macquarie Bank on 5 April 2017) and asked him to inquire if there were any further queries (at [43] and [44]). Further, in addition to the information contained in the Rapson Spreadsheet, the Executors had provided information to the Applicants in relation to a Capital Gain Tax calculation in respect of the estate's shares and a loss in gross receipts (to the value of $97,374) and the Applicants were aware of the credit balance of the Macquarie Share Account at the date of the deceased's death based on the Inventory (at [142] and [143]). Thus, the findings of breach and civil contempt were made because the Court was satisfied, not that no accounting, information or documents had been provided, but that the Rapson Spreadsheet did not include a full account and the Executors had not provided the Applicants with all the documents in relation to the Macquarie Share Account.
As to the Manual Journal Entries, it was common ground that the materials produced by the Executors did not include documents that supported them. However, the Court did not accept the Applicants' submission that bank statements existed in relation to the entries, with the findings of breach and contempt only relating to documents in the nature of an "actual journal entry", as referred to by Counsel at the hearing (Judgment at [158] and [159]).
The Court did not find, as the Applicants' submissions suggest, that these were "deliberate failures" by the Executors in respect of the administration of the estate. The Court's findings that the breaches were the result of deliberate acts and were not casual, accidental or unintentional in the relevant sense were based on the Court being satisfied that the preparation and service of the accounts and documents had been undertaken on instructions from and on behalf of the Executors (who were on notice of the Court's orders) and that they ought to have been aware that the documents evidencing the relevant transactions and upon which the Rapson Spreadsheet was prepared ought to have been produced (Judgment at [147] and [163]). There was no finding that the Executors stubbornly refused to produce accounts for the Macquarie Share Account or the Manual Journal Entries or that their conduct in that regard was contumelious or in deliberate defiance of the Court's orders.
As to the Applicants' contention that the contempt finding involves a breach of the Executors' undertaking to the Court, the issue is that this contention relies on the Executors' affidavit sworn 10 April 2015, which was not tendered by the Applicants at the hearing or on this application. In any event, I am not satisfied that the Applicants have established a breach of an undertaking to the Court based on the extract of that affidavit referred to in the Applicants' submissions in the context where Lindsay J's Orders did not oblige the Executors to file, verify or pass accounts and there was no finding of breach of Hallen J's Orders in respect of those matters.
The second ground advanced by the Applicants as justifying the revocation of the grant of probate is premised on the findings in the Judgment at [117], which states: "Further, giving the Applicants the benefit of the doubt and noting Mr Nolan's evidence in cross-examination that the purpose of the contempt application was not to seek revocation of probate granted to the Executor or to avoid filing a statement of claim (T44.47-T45.23), I would treat the Applicants' conduct of this contempt application as reflective of a genuine perception that the Executors have failed to comply with the court's orders and the need to protect and vindicate their personal interests in respect of the deceased's estate."
Contrary to the Applicant's submission, the Court did not find in that paragraph (or elsewhere in the Judgment) that the Executors' conduct, whether the manner in which they provided the account and documents or responded to the contempt charges, was engaged in to protect and vindicate the Executors' personal interests in respect of the deceased's estate. To the extent it is unclear, the reference to "their" personal interests in the last line is a reference to the Applicants, not to the Executors.
The finding in [117] was directed to the Applicants' conduct of their contempt application. It was made in the context of the submission advanced by the Executors that it was unfair for them to deal with the contempt application as the outcome sought by the Applicants would be a remedy for which the contempt proceeding was not designed, namely the revocation of probate. The Court gave the Applicants the benefit of the doubt and proceeded on the basis that the Applicants considered that there was a need to protect and vindicate their personal interests in respect of the deceased's estate as they perceived that the Executors had failed to comply with the Court's orders.
For the reasons explained in the Judgment (at [19]-[22]) and in light of the nature of the Executors' challenge to the charge in relation to the Macquarie Share Account (that it should be dismissed on the ground of lack of clarity and ambiguity), I do not consider the forensic decision taken by the Executors not to adduce evidence at the hearing of the contempt charges to be matter of significance to this application, as the Applicants' submissions suggest. In any event, the Executors provided an explanation at the hearing in relation to the Manual Journal Entries, to the effect that there were no underlying documents other than, perhaps, the "actual journal entry", which was essentially accepted by the Court and formed the basis of its findings referred to at [75] above, and also relied on the information and documents provided in respect of the Macquarie shares, including the bank statements for the Macquarie CM Account.
It is also a relevant discretionary factor that tends against revocation that the Applicants' submissions do not suggest that the Executors have engaged in any gross misconduct in respect of the monies from the Macquarie Share Account or concerning the Manual Journal Entries. As recorded in the Judgment, the entries referring to "profit distributions" appeared to represent balancing entries of payments in and out rather than cash distributions to a bank account (at [158]). As the Executors submitted, the more relevant matter is whether there had been a failure to pay the money obtained from the realisation of the Macquarie Share Account.
I accept that the findings of breach and civil contempt are significant and relevant matters to the Applicants' claim. However, they are to be considered in context. That context includes: the matters outlined above, particularly those at [72]-[77] and [82]; the fact that the Applicants chose to run contempt proceedings rather than adopting the procedure for revocation provided by the rules; and the fact that the Applicants have not sought to challenge the bulk of the Rapson Spreadsheet account entries based on the materials received, such as by asserting that more was received (surcharging) or less was disposed of (falsifying) or seeking accounts on the basis of wilful default.
The Applicant's claim and reliance on the contempt findings is also to be considered in light of the Applicants' Proposed Orders which, rather than providing for the Executors to remedy the defaults identified in the Judgment as giving rise to the findings of civil contempt by the production of particular documents, seek the production of an entirely new set of accounts but with the inclusion of cross-referencing of each and every item of the account statement (which I understand to mean the Rapson Spreadsheet) to the pages of the folders containing the documents, a matter which the Applicants claimed was required by Hallen J's Orders, had been breached and also gave rise to a contempt finding, but which the Court rejected: Judgment at [148]-[151]. If the Executors' defaults were of the significance that the Applicants' submissions seek to suggest, it is to be expected that their Proposed Orders would have focussed on remediating them.
Having regard to the above matters, I do not accept the Applicants' contention that by reason of the contempt findings, the Executors have been shown to have demonstrated a complete failure to undertake their duties and a deliberate and continual obdurate defiance and refusal to provide accounts in a manner that required the bringing of the contempt proceedings. Nor do I consider that the findings in respect of the Macquarie Share Account and the Manual Journal Entries themselves warrant the Court concluding that the Executors' omissions placed the due and proper administration of an estate in real jeopardy such that the Court should exercise its discretion to revoke the grant of probate to the Executors.
Even if I was satisfied that the grant of probate to the Executors should be revoked for that reason, I would not have granted letters of administration to Mr Murphy. While I do not doubt Mr Murphy has the experience to do so based on the material provided by way of reply submission, given the history of distrust and dispute between the parties, in my view, it would be more appropriate to appoint an independent solicitor rather than one nominated by the Applicants.
For these reasons, the Applicants' applications for revocation of the probate granted to the Executors and the appointment of Mr Murphy on the basis of the contempt findings are refused.
As to the Applicants' Proposed Orders, for the reasons set out at [84], I do not consider that they should be made in those terms. I am, however, satisfied that orders should be made to deal with the specific findings of breach in respect of the Macquarie Share Account and the Manual Journal Entries. Accordingly, I will make orders for the production of particular documents by the Executors in relation to those matters, as well as requiring them to serve an affidavit to explain what happened to the documents to the extent they are no longer in their possession, custody or power.

Costs

Contempt proceedings are conducted in the civil jurisdiction of the Court and attract the applicable rules in relation to costs, including that costs follow the event: Mahaffy v Mahaffy [2018] NSWCA 42 at [274] (Mahaffy).
The Court has a broad discretion under the CPA and the UCPR to determine on what basis and to what extent costs should be awarded. This discretion is to be exercised judicially having regard to the circumstances of the case: CPA, s 98(1); Oshlack v Richmond River Council (1998) 193 CLR 72; [1998] HCA 11 at [22] (Gaudron and Gummow JJ), [65] (McHugh J) and [134] (Kirby J).
The usual rule is that costs follow the event, unless it appears that some other order should be made: UCPR, r 42.1.
The event may be characterised in more than one way. Generally, the event refers to the event of the claim or counterclaim and is understood as the practical result of a particular claim. Where there is a mixed outcome in the proceedings, and it is appropriate to entertain the process of apportioning costs as between different issues in the proceedings, in general such an exercise will be carried out on a relatively broad brush basis, and largely as a matter of impression and evaluation by the court: Mahaffy at [275], and the cases there cited.
There is no rule of law that mandates that costs be awarded on an indemnity basis against those found to be in contempt of Court: Mahaffy at [274], referring to McIntyre v Perkes at 428 (Samuels JA, with whom Mahoney JA agreed). However, the authorities to which reference was made by both sets of parties indicate that indemnity costs are commonly awarded where no penalty by fine or other means is imposed: Blacktown City Council v Nitopi at [220]; Canterbury City Council v Mihalopoulos (No 3) at [46]; McIntyre v Perkes at 426-7; Khoury v Kirwan (No 6) at [18]-[22]; see also G E Dal Pont, Law of Costs (2021, 5th ed, LexisNexis Australia) at [16.72].
In Australian Securities and Investments Commission v Sigalla (No 4) (2011) 80 NSWLR 113; [2011] NSWSC 62, at [49], White J noted that indemnity costs are commonly awarded in civil contempt cases as an important sanction to mark the Court's condemnation of the breach of its orders (at [49]).
In my view, it is appropriate to make an order for costs on an indemnity basis in favour of the Applicants to mark the Court's condemnation of the Executors' breach of the Court's orders in circumstances where no punishment or penalty has been imposed and there is no evidence that the Executors have made an attempt to comply with the aspects of Hallen J's Orders that were found to have given rise to findings of civil contempt.
However, I also consider that some allowance should be made to recognise the mixed outcome in this case. This is in circumstances where the Applicants succeeded on only three of the 12 contempt charges brought against the Executors, the Applicants have not succeeded on their revocation application and some of the charges brought by the Applicants were found to be bad in form, unclear and involved ambiguity and imprecision (Judgment at [125], [130], [141] and [149]).
Adopting a broad brush and impressionistic approach and bearing in mind the matters in [95] above, I consider that 50% is an appropriate allowance and will order the Executors to pay 50% of the Applicants' costs on an indemnity basis.
The remaining issue concerns the Applicants' claim in relation to the Executors' costs and indemnification from the deceased's estate. Having regard to the prima facie position under UCPR, r 42.25(1), the matters raised by the Applicants (as outlined at [38]-[40] above), the statement by the Executors they do not intend to obtain indemnification and the orders made require the Executors to remedy their defaults, I am satisfied that the Court should exercise its discretion and make orders which provide for the Executors to pay costs without indemnification from the deceased's estate and will so order.

Conclusion and orders

The Applicants have failed to satisfy me that the grant of probate to the Executors should be revoked consequent on the findings of contempt. It follows, in my view, that the Amended Motion, in so far as it seeks that relief and the related orders for the appointment of Mr Murphy and the delivery of documents, should be dismissed.
As noted above, orders will be made for the production of documents relating to the Macquarie Share Account and the Manual Journal Entries and an affidavit in the event that the Executors no longer possess the documents to be produced. The orders require them to be served within six weeks.
Finally, as no orders were made at the time of the Judgment, I consider it appropriate for these orders to formally record the findings of contempt and the dismissal of the other charges.
Accordingly, for the reasons in the Judgment and the above reasons, I make the following orders: 1. The First Respondent is in contempt of this Court by failing to comply with orders made by Hallen J on 24 June 2020 (Hallen J's Orders) by: 1. failing to produce a full account of the transactions and all documents in relation to the Macquarie Share Portfolio Account XXXX 9329 (Macquarie Share Account), as referred to in paragraph 11(d) of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Applicants' Amended Notice of Motion filed on 16 October 2020 (Amended Motion); and 2. failing to produce documents supporting the 62 Manual Journal line entries in the Rapson Spreadsheet received on 24 July 2020, including the six profit distributions dated 30 June 2015, 30 June 2016, 30 June 2017, 30 June 2018, 30 June 2019 and 30 June 2020 (Manual Journal Rapson Spreadsheet Transactions), as referred to in paragraphs 11(i) and (j) of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion. 1. Dismiss the charges of contempt against the First Respondent: 1. as referred to in paragraph 3 of the Amended Statement of Charge relating to the orders made by Lindsay J on 25 November 2019 (Lindsay J's Orders) annexed to the Amended Motion; and 2. as referred to in paragraphs 11(a), (b), (c), (e), (f), (g), (h), (k) and 12 of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion. 1. The Second Respondent is in contempt of this Court by failing to comply with Hallen J's Orders by: 1. failing to produce a full account of the transactions and all documents in relation to the Macquarie Share Account, as referred to in paragraph 11(d) of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion; and 2. failing to produce documents supporting the Manual Journal Rapson Spreadsheet Transactions, as referred to in paragraphs 11(i) and (j) of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion. 1. Dismiss the charges of contempt against the Second Respondent: 1. as referred to in paragraph 3 of the Amended Statement of Charge relating to Lindsay J's Orders annexed to the Amended Motion; and 2. as referred to in paragraphs 11(a), (b), (c), (e), (f), (g), (h), (k) and 12 of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion. 1. The Third Respondent is in contempt of this Court by failing to comply with Hallen J's Orders by: 1. failing to produce a full account of the transactions and all documents in relation to the Macquarie Share Account, as referred to in paragraph 11(d) of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion; and 2. failing to produce documents supporting the Manual Journal Rapson Spreadsheet Transactions, as referred to in paragraphs 11(i) and (j) of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion. 1. Dismiss the charges of contempt against the Third Respondent: 1. as referred to in paragraph 3 of the Amended Statement of Charge relating to Lindsay J's Orders annexed to the Amended Motion; and 2. as referred to in paragraphs 11(a), (b), (c), (e), (f), (g), (h), (k) and 12 of the Amended Statement of Charge relating to Hallen J's Orders annexed to the Amended Motion. 1. Within 6 weeks of these orders, the Respondents are to produce to the Applicants such of the following documents as are within their possession, custody or power and have not already been produced to the Applicants: 1. documents evidencing the full account of transactions relating to the Macquarie Share Account for the period 2 November 2014 to 11 February 2020; and 2. documents evidencing the Manual Journal Rapson Spreadsheet Transactions. 1. Within 6 weeks of these orders, the Respondents are to serve on the Applicants an affidavit in relation to the documents referred to in Order 7 that were but are no longer in their possession, custody or power explaining to the best of their knowledge and belief what happened to them and where they are located. 2. Dismiss the Applicants' claim for the relief sought at prayers 3, 4 and 5 of the Amended Motion on the basis of the contempt findings in Orders 1-6. 3. The Respondents to pay 50% of the Applicants' costs of the Amended Motion on an indemnity basis without indemnification from the estate of the late Frederick Goldspring (deceased). 4. The Respondents' costs of complying with Orders (7) and (8) above and their own costs of the Amended Motion are to be paid without indemnification from the deceased's estate. 5. List these proceedings before the Equity Registrar at 9:30am on 14 March 2024 for further directions in relation to the future conduct of these proceedings (if any).

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: 29 January 2024

JUDGMENT

These reasons deal with the orders to be made, including in relation to costs, following the Court's judgment on the Applicants' Amended Notice of Motion (Amended Motion) in which some findings of civil contempt were made in relation to the first, second and third defendants (Executors): Jordan v Goldspring (No 2) [2022] NSWSC 780 (Judgment). They assume familiarity with and adopt the same terms as used in the Judgment.
Directions were made for the parties to serve written submissions on the remaining issues of punishment (if any), costs and next steps in relation to the Amended Motion and the Court indicated it proposed to deal with the issues on the papers. The parties served written submissions in accordance with the directions (as extended). The Applicants did not want a further hearing and no further affidavits were filed.
Based on the parties' submissions, the issues for determination concern the Applicants' claim for orders revoking the grant of probate to the Executors and costs.

At a glance

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