LEEMING JA: On 7 February 2024 I delivered judgment in these two proceedings: Katsoulas v Kritikakis; Katsoulas v Apostolatos [2024] NSWSC 67. It will be convenient, in order to explain the matters left in dispute, to reproduce [2] and [180]-[188] of those reasons:
2. Without conveying disrespect to anyone, for conciseness and so as to avoid the awkwardness of a plaintiff and defendant both named Anthony, I shall follow the approach taken in the affidavits and in the oral evidence and refer to the plaintiff as "Tony", the defendants as Anthony, Zoi and George, and the deceased as Lakis. …
180. The result of the above is that Anthony must account to the estate in the amount of $880,000 (the running down of the term deposit) plus $41,203.84 (the interest earnt from the term deposit) plus the unauthorised withdrawals from the 8296 account to the extent they exceeded the amounts of principal and interest from the term deposit which were deposited into the 8296 account. It may be that I misunderstood Tony's claim in the last three pages of his closing written submissions, but I do not accept that Anthony must compensate (a) for the transfer of $150,000 and $30,000 from the term deposit to the 8296 account and also (b) for the withdrawals from the 8296 account which were not authorised and which were only possible because of the $150,000 and $30,000 deposits. Even if the transfer from the term deposit to the 8296 account and the subsequent withdrawal from the 8296 account were both unauthorised, there is only a single loss to the estate. I should add that I may have misunderstood the submission and what I have summarised in the previous two sentences may not in fact have been claimed by Tony.
181. From the total of unauthorised withdrawals of Lakis' money thereby calculated must be deducted $179,612.66 of authorised expenses paid from the joint account as well as a further $50,015 paid to Tony.
182. Zoi and George are jointly and severally liable to account to the estate in the amount of just over $700,000 less $179,612.66 of authorised expenses paid from the joint account and less the $50,015 paid to Tony.
183. To be clear, Tony (standing in the shoes of the estate) is not entitled to double recovery. Thus insofar as the amounts withdrawn by Anthony are in fact recovered from Anthony, to that extent the recovery will operate to discharge the judgment against Zoi and George. Another way of putting this is that every dollar for which Zoi and George are required to account as recipients is a dollar which Anthony is required to account as the person who caused the transfer from Lakis' account.
184. It also follows that Anthony on the one hand, and Zoi and George on the other, will to the extent that one pays more than his or their fair share, have rights of contribution as between each other.
185. I understood it to be common ground at the conclusion of the trial that if I found in favour of Tony, the parties should be heard further in relation to interest.
Conclusion and orders
186. For those reasons, I have concluded that Tony in substance succeeds against all defendants, albeit only on one of the causes of action he has advanced. It is clear that Zoi and George should be removed as executors. As presently advised, I see no reason why Tony should not be appointed in their place, and I did not understand the defendants to submit to the contrary. However, at present I shall merely make an order, backdated to the commencement of the trial, authorising Tony to bring these proceedings pursuant to UCPR r 7.10.
187. It is true that Tony has failed in his main claim against Zoi and George based on the power of attorney. However, in circumstances where until the third day of the trial, the defendants had positively propounded a case that Zoi as attorney caused Lakis' money to be withdrawn and spent not only on nursing home expenses but also on other expenses in accordance with (so it was said) Lakis' instructions, it was reasonable for Zoi and George to be sued for contravening the limits of the power of attorney. The defendants should pay Tony's costs in each proceeding, on the basis that there was a single set of costs incurred by Tony.
188. Very little attention was given in the litigation to the administration of the estate. Instead, the litigation turned upon breaches of duty alleged against Anthony, Zoi and George while Lakis was alive. It seems likely that there are no or no significant costs attributable to the administration of the estate, as opposed to the defence of the claims against Anthony, Zoi and George for their conduct while Lakis while alive. Another way of putting this is that Zoi and George were sued primarily as Lakis' attorneys and as recipients of money withdrawn by Anthony while Lakis was alive, rather than as his executors after his death. However, it will be open to Zoi and George to apply for a further order if so minded that some part of the costs of the litigation ought to be borne by the estate. Plainly any such application would be one as to which Tony, as primary beneficiary of the deceased estate, would be entitled to be heard.
189. I made the following orders:
1. Pursuant to UCPR r 7.10, order with effect from 30 January 2024 that the plaintiff in each proceeding be appointed as representative of the deceased estate of Theodore Katsoulas (known as Lakis) who died on 16 January 2021.
2. Direct the plaintiff to supply proposed short minutes of order reflecting (a) the revocation and grant of probate and (b) the pecuniary relief he seeks in each proceeding by email to my Associate copied to the defendants within 7 days of today, including a short explanation of the calculations.
3. Direct the defendants to supply within 14 days of today a note identifying any aspects of the plaintiff's proposed orders with which they disagree, and any orders which they seek, and a short explanation of the reasons therefor.
In accordance with the second direction, Tony supplied proposed short minutes of order and a note explaining why Anthony should be ordered to pay $1,134,037.26 and Zoi and George should be ordered to pay $553,062.75.
Contrary to the third direction, no response was received from the defendants. On 22 February 2024, my Associate sent the following email to the counsel and solicitors retained by the parties:
I have been asked to draw two matters to your attention.
The first is that the "Explanation of calculations" attached to Mr Noonan's email of 14 February 2024 includes an amount of $110,215.07 and gives a reference for the calculation to Attachment B. However, Attachment B is an interest calculation. Was an attachment omitted from the email? If so, could it be supplied.
The second is that so far as I am aware I have had no response from Mr Finch or Mr Tsintilas, either to my request made on 7 February 2024 to acknowledge receipt of the judgment, or for any submissions opposing the orders sought by the plaintiff or seeking their own orders.
I advise that Justice Leeming expects to make final orders in this matter in the second half of next week. Accordingly, any submissions or supplementary submissions should be supplied by next Tuesday 27 February 2024. Although his Honour does not regard it as necessary in order to resolve the outstanding issues, if either side wishes to have the matter relisted for a short argument on the orders, he would be willing for that to occur on Wednesday 28 February, ideally although not necessarily at 9.30am.
Could a representative from each side kindly acknowledge that this email has been received.
That rapidly elicited two responses. One was a resubmission of the calculations put forward on behalf of Tony, this time including Annexure B. The other was an email from Mr Finch, who said that he had "understood deft reply to Plaintiffs draft orders by 27th Feb". A further email was sent from my chambers, advising that:
Despite the terms of order 3, Justice Leeming accepts that there has been a genuine misunderstanding, and will extend the time for any response by the respondents to 4pm on Tuesday 27 February.
On the afternoon of 26 February 2024, the defendants supplied a "Reply to Plaintiff's Proposed Orders" which identified those areas (which were few) where there was agreement, and the reasons for disagreement with most of the orders proposed by Tony.
[2]
Zoi and George
Consistently with [167] and [182] of the principal judgment, Zoi and George are liable to account to the estate in the amount of $703,041.09 less $179,612.66 less $50,015 = $473,413.43. The defendants agree with that calculation.
Tony calculates the interest to which the estate is entitled as $79,649.32. That calculation is based on pre-judgment rates for the period from 21 January 2021 to 7 February 2024. I have checked the calculations and detected no error in the application of the rates specified from time to time under s 100 of the Civil Procedure Act 2005 (NSW).
The defendants oppose an order for interest, saying:
In respect of both proceedings, the Estate suffered no loss or diminution. The Estate account, the Commonwealth Bank business transaction account xxxx 1562 paid no interest. It is noted that for the period 2 August 2022 second of June 2001 [sic] the Commonwealth Bank on Term Deposits was paying 0.9%. Bank Statements page 59.
But Tony only seeks interest from the date of Lakis' death. Accordingly, nothing turns on the very low rate of interest on the transaction account, or the rates of interest on the term deposit during Lakis' lifetime. What should have occurred is that the executors should have promptly accounted to Tony. Instead, the executors had the benefit of those monies since Lakis' death (and indeed, for some time beforehand). Some of those funds were used to acquire assets (like George's Audi) of which they had the benefit. Others were used to pay down debts owned by Zoi and George on an investment property. Bearing in mind that Zoi and George are only to account to the Estate for money which they actually received into their joint account, and then only for the period after Lakis' death, I see no reason not to award interest at the rates specified in s 100 of the Civil Procedure Act.
The total amount, as at 7 February 2024, which Zoi and George are required to account to the estate, is $473,413.43 + $79,649.32 = $553,062.75. Judgment in that amount, with effect from 7 February 2024 will be entered, however I will make an order pursuant to s 101(3) of the Civil Procedure Act so that the defendants will continue to have 28 days from today within which they can pay the amount without incurring post-judgment interest under that section. The result is that to the extent that the judgment is paid within 28 days of today, no interest will accrue, but to the extent that it is not, interest will accrue at post-judgment rates as and from 7 February 2024.
[3]
Anthony
Consistently with [180] of the principal judgment, Anthony is liable to account to the estate in the amount of $880,000 plus $41,203.84, and Tony's calculations proceed on that basis. However, those calculations go on to deduct a "just allowance" of $60,700 and then add an "allowance after April 2019" of $110,215.07. These amounts misapprehend the effect of the judgment.
The $60,700 in Tony's calculation is evidently the sum of the $25,000 mentioned at [170] in argument by Mr Morahan as an allowance which might be given together with the $35,700 mentioned at [176] representing the withdrawals from the 8296 account between April 2016 and April 2019.
I explained at [172]-[175] that I was conscious that the relief to which Tony was entitled in equity was discretionary, that the evidence suggested that he had been able to commence proceedings some three years before he did, that the evidence suggested that some amounts of cash had been given to Lakis and kept by him at St Basil's, and my concern that, notwithstanding the onus rested with Anthony to show that the withdrawals he effected were authorised, the relief not be penal. I also noted the qualitative difference between the relatively small withdrawals prior to May 2019, which essentially merely consumed the monthly pension payments, and the much larger withdrawals thereafter which drew on the part of the term deposit which had not been reinvested. I concluded at [176]:
Weighing all those considerations together, I will not grant relief against Anthony for the $35,700 withdrawn from the 8296 account between April 2016 and April 2019.
The effect of that withholding of relief is that Anthony is to obtain a benefit of $35,700 in relation to the entirety of the funds withdrawn by him from the 8296 account. Another way of expressing that point is that Tony is not entitled to require Anthony to account for money withdrawn by him from the 8296 account prior to May 2019.
Tony's Annexure B calculates an amount of $110,215,07 in the following way. He first adds the withdrawals from the 8296 account from May 2017 until January 2021, which is $290,215.07. Included in the sum is the amount of $52,515.07 to which I shall return. From that sum he subtracts $180,000 representing the two deposits of funds ($150,000 and $30,000) not reinvested from the maturing term deposit.
But the correct calculation is to calculate the amounts withdrawn after May 2019. That is $110,000 for the period May-December 2019 (see [64]-[65] of the principal judgment) plus the amount of $92,000 for January 2020 until 5 January 2021 (see [67]-[69] of the principal judgment) = $202,000.
As Tony's calculations acknowledged, much of those $202,000 withdrawn reflected the withdrawal of amounts not reinvested when the term deposit matured, namely, the deposits of $150,000 on 2 May 2019 and $30,000 on 4 August 2020. It would be double counting to require Anthony to account both for the drawing down of the term deposit and for the withdrawals of the amounts sourced from the part of the maturing term deposit which were not reinvested.
Tony's calculations in Annexure B also included a withdrawal of $52,515.07. I addressed this at length in the reasons at [65]-[66] and [70]. As I said at [65]:
The credit identified the term deposit account ending in 3109. It plainly represents the diminution in principal between $200,000 term deposit which expired on that date, and the $150,000 term deposit which commenced on that date, plus interest (the interest rate for the expiring 5 month term deposit was 2.4% and $250,000 x 153 / 365 x 0.024 = $2515.07).
Anthony is already required to account to Tony for the $50,000 as part of the $880,000 representing the diminution of the term deposit, and the $2,515.07 as part of the $41,203.84 interest on the term deposit. It would be wrong for Anthony to have to account for either amount twice. I made that point in the hearing, and repeated it at [70] of the principal judgment. I do not accept that aspect of the claim.
Further, Anthony's withdrawals from the 8296 account were also funded in part by the $6,895.62 deposited on 2 May 2019, which was found at [62] to be interest on the term deposit for the period from 2 September 2018 until 2 May 2019. This is a component of the $41,203.84 for which Anthony is required to account. It is double counting to count it twice.
The result is that the additional amounts for which Anthony is required to account, over and above the diminution of the term deposit and the interest on the term deposit, are $202,000 - $150,000 - $30,000 - $6,895.62 = $15,104.38.
Tony's Annexure B makes no allowance for the $50,015 spent to transfer $50,000 to him, or the $179,612.66 spent from Zoi's and George's account on Lakis' expenses. But the ultimate source of those funds was the amounts drawn down from Lakis' term deposit account. Anthony needs to receive a credit for these amounts. Test the matter this way. Tony's claim is for loss to the estate. It does not matter whether estate funds were withdrawn by Anthony, then given to Zoi and George, and then used to pay expenses of Lakis or to make the payment of $50,000 to Tony. To the extent that Lakis' money was spent on those expenses, none of the defendants is required to account for it.
Most of these points were made in the defendants' submissions, as follows: "The Plaintiff allows no credit for $179,612.6 [77] nursing expenses, and the payment of $50,015 [76] to Tony" and "The Plaintiff in calculating the net diminution in account 8296 the Plaintiff does not start with the Court's findings of $240,000 [70], and deduct the transfer of $156,895.82 [61], and the just allowance of $35,700 [176]".
The total amount for which Anthony must account therefore is:
1. $880,000 plus $41,203.84 representing the entirety of the diminution in principal of the term deposit, plus interest earned by the term deposit;
2. Plus $15,104.38, representing the amounts withdrawn by Anthony from May 2019 until January 2021 which do not double count the amounts in (1) above;
3. Less $179,612.66, representing the amounts paid for expenses,
4. Less $50,015, being the amount withdrawn so as to make payment to Tony,
5. Equals $706,680.56.
That is some $265,000 less than has been calculated by Tony. The difference represents Tony's calculations failing to deduct $179,612.66 of authorised expenses and $50,015 paid to him, incorporating double counting of $52,515.07 and $6,895.62 but giving Anthony a credit of $60,700 which is $25,000 more than he is entitled.
The defendants oppose the award of interest on these amounts. But for substantially the same reasons given above, I see no reason not to order interest in accordance with s 100. Tony should have had the money to which he was entitled as primary beneficiary under the estate from shortly after his father's death. The delay of some three years has been brought about by the stance taken by the defendants which in large measure I have rejected. I see no reason why pre-judgment interest at the rates specified for the purposes of s 100 should not apply.
Prejudgment interest on $706,680.56 from 21 January 2021 until 7 February 2024 is $118,895.29. (By way of cross-check, the interest calculated by Tony on a principal of $970,718.91 was $163,318.35, and I note that 706,680.56 / 970,718.91 x 163,318.35 = 118,895.29.)
The total amount, as at 7 February 2024, for which Anthony is liable to account to the estate, is $706,680.56 + $118,895.29 = $825,575.85. I shall make a similar extension of time pursuant to s 101(3) of the Civil Procedure Act so that Anthony has 28 days to pay that amount without incurring post-judgment interest.
[4]
Other orders
In 2022/00066764, order 1 proposed by Tony has already been made (it was order 1 made on 7 February 2024) and need not be made again.
I shall make orders revoking the grant of probate, requiring the existing grant to be delivered up, and an order for administration of the estate be granted to Tony with the will of the deceased dated 20 October 2016 annexed in a form similar to orders 2-4 proposed by Tony. I shall make an order dispensing with the requirements of the Probate Rules with a view to the new grant being made forthwith, in circumstances where I see no need for order 5 proposed by Tony which involves further compliance with the rules.
Orders 6 and 7 proposed by Tony involve a prohibitory and a mandatory injunction upon Zoi and George. Neither order was sought in the originating process. There is no evidence that they will not comply with the Court's orders. No submissions have been made in support of any such order. My declining to make the order will not prevent Tony, if so minded, seeking such relief, on a proper basis, in the course of executing the judgment.
Tony seeks declaratory relief directed to the principle of double recovery. I would not issue declaratory relief in the abstract, without there being any suggestion of a dispute on this issue, especially in circumstances where the three defendants are related to each other and represented by the same legal practitioners, and in light of what has been said at [183]-[184] in the main judgment.
The defendants seek an order that the estate pay 25% of the cost of the litigation. They say:
Zoe and George were the executors of the estate. The deceased appointed them his executors and not the Plaintiff, the deceased's son and principal beneficiary under the will. There was no legal reason the Plaintiff could not have been appointed. It can be inferred that it was in the deceased's belief that Zoe and George were the best and most trusted persons to carry out his testamentary intentions, rather than the Plaintiff.
At the outset of the hearing, it was conceded that if Zoe and George had a liability for the diminution of the Estate, they would have a conflict, and it would be inappropriate for them not to relinquish their positions as executors.
Having been appointed executors and granted probate they were in the unenviable position determine whether their father had breached his fiduciary duties and whether they by extension were liable to the Estate the money paid to them.
All those propositions may be accepted. However, as I noted in the principal judgment, this was not litigation primarily about the administration of an estate. The question was whether during Lakis' lifetime Anthony had breached fiduciary duties, and whether Zoi and George had during Lakis' lifetime received money. All of the monies which contribute to the sums the defendants are required to account reflect transactions made during Lakis' lifetime.
Further to the above, Anthony and Zoi and George retained the same solicitor and counsel, reflecting the absence of any separate interest on the part of the deceased estate.
For those reasons, the appropriate order as to costs should reflect the substance as opposed to the form of the litigation, namely, that it was inter partes litigation about the conduct of the litigants while Lakis was alive, with no material component concerning the administration of the estate.
For his part, Tony also seeks special orders which purport to make all three defendants liable for the costs of both proceedings. But Tony ran different cases against the defendants, which raised different issues and resulted in different judgments. I see no reason why all three should be jointly and severally liable for Tony's costs incurred in respect of his claims against each of them. I would accept, however, that consistently with the nature of Tony's claim against Zoi and George, they should be jointly and severally liable for Tony's costs.
The defendants also seek a note that nothing in the orders affects the defendants' entitlements to bequests in the will. I shall make that note.
I have considered whether Tony's considerably less than complete success on the application for costs and orders warrants the costs of that application being treated on any different basis. Those costs should not on any view include any component for an email sent on the afternoon of 27 February 2024 seeking to make further submissions on the point, without leave (despite which I have considered the obvious errors pointed out in paragraph 1 and the assertions in paragraphs 2 and 3 - I consider that the latter lack any sound foundation). On balance, while I have accepted the submissions advanced by Tony in respect of interest, I have generally not accepted all other contentious aspects of the orders claimed, and they introduced unnecessary errors many of which were pointed out by the defendants. The result is that I have concluded that Tony should obtain a favourable costs order, but one which does not extend to the costs incurred in making submissions concerning orders and costs, with the intention that the parties bear their own costs of that aspect of the litigation.
I make the following orders:
In proceeding 2022/66764:
ORDER that the grant of probate made to Zoi Apostolatos and George Kritikakis on 14 September 2021 (in respect of the Will of the deceased, Theodore Katsoulas (in the Will called Theodore (aka Lakis) Katsoulas) dated 20 October 2016) be revoked.
ORDER that administration of the unadministered estate of the deceased be granted to Tony Katsoulas with the Will of the deceased dated 20 October 2016 annexed.
ORDER that the proceedings be referred to the Registrar to complete the grant.
ORDER that further compliance with requirements of the Probate Rules be dispensed with, with a view to the new grant of administration being made forthwith.
ORDER that Zoi Apostolatos and George Kritikakis, jointly and severally, cause the original grant of probate made to them to be delivered up to the Court.
Judgment against the defendants Zoi Apostolatos and George Kritikakis in the sum of $553,062.75, such judgment to be taken to have been entered on 7 February 2024.
Pursuant to s 101(3) of the Civil Procedure Act 2005 (NSW), extend the time during which interest is not paid on the judgment in order 6 above until 28 days from today.
The defendants Zoi Apostolatos and George Kritikakis to pay the plaintiff's costs, excluding the costs incurred in the application for orders and costs, with the intention that the parties bear their own costs of that application.
Note that nothing in the orders affects the defendants' entitlements to bequests in the will.
In proceeding 2022/66818:
Judgment against the defendant Anthony Kritikakis in the sum of $825,575.85, such judgment to be taken to have been entered on 7 February 2024.
Pursuant to s 101(3) of the Civil Procedure Act 2005 (NSW), extend the time during which interest is not paid on the judgment in order 1 above until 28 days from today.
The defendant Anthony Kritikakis to pay the plaintiff's costs, excluding the costs incurred in the application for orders and costs, with the intention that the parties bear their own costs of that application.
[5]
Amendments
28 February 2024 - corrected numbering of final paragraph and orders
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Decision last updated: 28 February 2024