Kuitkowski v Tream

The Will

1. By his Will, the Deceased gave the whole of his estate (the Estate) to his executors upon trust to sell, call in and convert into money and then to make the following distributions: 1. 30% "to pay for all funeral expenses and other testamentary expenses {funeral in Poland}"; 2. 40% to the defendant; 3. 3% to Anna Trejman (now Warmbier); 4. 2% to Tomasz Kuitkowski (incorrectly referred to in the Will as "Tomek Kuitowski") (the plaintiff); 5. 2% to Gabrys Mosciski; 6. 3% to "the executors of this my last Will and Testament", who are Diana Kuitkowski and Mick Wywrota; 7. 15% to the defendant's daughter, Helen Tream; and 8. 5% to Hanna Gregorczyk (incorrectly referred to in the Will as "Manna Gregorozek").
2. Hanna Gregorczyk survived the deceased and subsequently passed away, leaving two children: Adriana Czurgiel and Bartosz Gregorczyk, who are now entitled under Polish law to Hanna's interest in the Estate in equal shares.
3. The Court was informed that Anna, Adriana and Bartosz support the plaintiff's application.

The Estate

1. The Grant attached an inventory of property, prepared by the defendant in August 2019 in accordance with s 81A(1) of the Probate and Administration Act 1898 (NSW) (Probate Act) which identified the major assets of the Deceased's Estate as: 1. real property situated at Edmondson Park with an estimated value of $900,000; and 2. real property situated at Killara with an estimated value of $1,850,000.
2. On 15 March 2022, the plaintiff's solicitor made an affidavit which estimated the revised values of the major assets as: 1. proceeds of sale of the Edmondson Park property (sold by the defendant in or about May 2021) of $1,250,000; and 2. real property situated at Killara with an estimated value of $3,250,000.
3. The plaintiff claims that the Estate also includes a debt due by the defendant for her occupation of the Killara property since at least 12 August 2019 to March 2022 of $189,000 at the rate of $1,400 per week for 135 weeks, and continuing.
4. The plaintiff acknowledges that between December 2021 and January 2022 the defendant has made interim distributions to the plaintiff, Anna, Adriana and Bartosz of slightly less than $50,000 each. The plaintiff submits that the value of the Estate is now more than $4,495,169. The Estate has not been fully administered.

Legal principles

1. The plaintiff relies upon the Court's power in s 66(a) of the Probate Act which provides: 66 Administration may be revoked or further bond required The Court may at any time, upon the application of any person interested in the estate - (a) revoke the administration already granted…
2. The Court's power to appoint a replacement administrator is found in s 74(c), which is in the following terms: 74 Power as to appointment of administrator The Court may, in any case where a person dies - … (c) leaving a will and having appointed an executor thereof, where such executor - (i) is not willing and competent to take probate, or … if it thinks it necessary or convenient, appoint some person to be the administrator of the estate of the deceased or of any part thereof…
3. The principle upon which the Court may act to replace the administrator of a deceased's estate is simply stated as is found in the following extract from the judgment of Darke J in O'Neill v O'Neill [2015] NSWSC 644: "[20] The principles applicable in respect of applications to revoke grants of probate are found within the decisions of the Court of Appeal in Bates v Messner (1967) 67 SR (NSW) 187 and Mavrideros v Mack [1998] NSWCA 286; (1998) 45 NSWLR 80. [21] In Mavrideros v Mack…Sheller JA, with whom Priestley and Beazley JJA agreed, stated the relevant principles (at 101 and 102) as follows: "[…] The principles to be applied are stated in the decision of this court in Bates v Messner. In that case, the appeal was from a decision of Myers J dismissing an application for the revocation of a grant of probate made to the respondent. Sugerman JA (at 189; 36) quoted from the judgment of Jeune P in Goods of Loveday [1900] P 154 at 156 and said the principle there stated had been consistently followed and no doubt cast on its correctness in point of principle. Jeune P in the passage quoted said: "After all, the real object which the court must always keep in view is the due and proper administration of the estate and the interests of the parties beneficially entitled thereto; and I can see no good reason why the court should not take fresh action in regard to an estate where it is made clear that its previous grant has turned out abortive or inefficient. If the court has in certain circumstances made a grant in the belief and hope that the person appointed will properly and fully administer the estate, and if it turns out that the person so appointed will not or cannot administer, I do not see why the court should not revoke an inoperative grant and make a fresh grant." Asprey JA said (at 191-192; 39-40): "… that the essential basis of the exercise of the court's inherent jurisdiction to revoke a grant of probate is that emphasised by Jeune P, namely, 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. […]" [22] Sheller JA then stated the following (at 108): "The question was, to adapt the language of Asprey JA (in Bates v Messner at 192), 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."
4. For the reasons that follow, I find that it is clear that the Grant should be revoked and letters of administration with the Will annexed should be granted to an appropriate replacement administrator. The defendant in the present case does not recognise the jurisdiction of this Court to supervise the performance of an administrator in the position of the defendant of her duties to the beneficiaries, the execution of the Grant by the defendant has been entirely inadequate, and the defendant has developed a conflict of interest with the beneficiaries that makes it unsafe for the Court to permit her to continue to act as the administrator of the Deceased's Estate.

Denial of the Court's jurisdiction

1. The defendant appeared at the hearing without legal representation but with the assistance of a gentleman who called himself Tane Ilvako.
2. At the beginning of the hearing, I provided the defendant with an explanation of the approach that judges adopt when a party is self-represented, by way of explaining the Court's process in a manner that permits the party to understand how to engage in the hearing, without the judge providing advice to the party or prejudicing the independence of the Court. I dealt with the plaintiff's application that the issues raised by his statement of claim be dealt with as a separate question, by explaining that, as the cross claim could not proceed, the only course available to the Court was to hear the claim in the statement of claim. The defendant made an impromptu application for an adjournment of the hearing for four weeks in order to enable her to obtain legal representation. I rejected that application.
3. Then, at T 12.47, the defendant said: "Excuse me judge, I just need to have [the] answers to that so I know I'm in the right jurisdiction." I did not at the time understand what the answers to which the defendant had referred were. A review of the transcript has not enlightened me. In response to the defendant's reference to jurisdiction, I explained at T 13.4 that "there is absolutely no doubt" that this Court is the appropriate Court in this State to deal with applications for the revocation of probate granted by this Court. After the defendant returned to the court room after a short adjournment granted at her request to consider her position, the defendant and Tane Ilvako withdrew from the hearing. Although the defendant did not make her reasons entirely clear, I discerned from what was said that the defendant decided that she would not participate in the hearing because the Court did not have jurisdiction to make the orders sought by the plaintiff: see generally T 12.19-15.39.
4. As a result of the course taken by the defendant, the plaintiff's claim must be determined on the basis: first, that the defendant does not recognise the jurisdiction of this Court to revoke letters of administration or to supervise the conduct of administrators in the performance of their duties; and secondly, that the defendant has not tendered any evidence or made submissions in opposition to the plaintiff's claim.
5. I am satisfied that the refusal of the defendant to recognise the Court's jurisdiction in this respect is sufficient of itself to justify the Court in revoking the Grant and making a grant to a replacement administrator. From the little I could discern at the hearing of the defendant's motivation for her conduct, it seemed to me that she was confused and that she was acting upon the basis of fantasy and irrationality. While the Court might feel sympathy for the defendant's position, in the context of the onerous obligations freely accepted by a party who obtains a grant of administration of a deceased estate, both to the beneficiaries and to the Court, the Court must insist that administrators exhibit a satisfactory level of appreciation of the content of the duties and their responsibility to the Court as an essential condition of the continuation of their grant of administration. It is unfortunately clear that the defendant is not a fit and proper person to continue in the office of administrator of the deceased's Will.
6. I will now proceed to explain why I would make the orders sought by the plaintiff even if the defendant had not declined to recognise the jurisdiction of the Court.

The plaintiff's submissions

1. The plaintiff submits that the particulars in the statement of claim, the filed evidence, and the conduct of the defendant in these proceedings demonstrates that: 1. the defendant has not administered the Estate consistently with her fiduciary obligations and in the interests of the beneficiaries; 2. the defendant has no intention of completing the administration of the Estate consistently with her fiduciary obligations and in the interests of the beneficiaries; 3. the defendant no longer submits to the jurisdiction of the Supreme Court of New South Wales; and 4. the due and proper administration of the Estate is best served by the appointment of an independent administrator.

Discussion

1. I am satisfied that the evidence in substance supports a finding in favour of the plaintiff on these submissions.
2. The principal factor in favour of the Court making the orders sought is that the defendant has not completed the administration of the Estate notwithstanding that two and a half years have elapsed since the Grant was made. There is no justification for this delay given that the Estate was almost entirely comprised of the two parcels of real property. The Edmondson Park property was sold in about May 2021, but the Killara property remains unsold. The defendant has lived in the Killara property since at least 12 August 2019 without paying rent. That has happened notwithstanding that the defendant was not given an interest in the property under the Will. The defendant advised the plaintiff's solicitor in an email dated 15 October 2021 and in a telephone conversation on 27 October 2021 that she did not intend to vacate the Killara property. The defendant has continued in occupation of the property notwithstanding that at the time she was represented in these proceedings by counsel, counsel properly acknowledged to the Court that the defendant had no right to reside in the property and that she would be liable to pay to the Estate an occupation fee. It seems clear that the defendant will not administer the Will because she has claimed without substantiation that her 40% interest in the Estate is sufficient to cover, so to speak, the defendant having the exclusive title to the Killara property.
3. By her cross claim, the defendant seeks a declaration that she is entitled to retain the Killara property in specie and as part of her entitlement to 40% of the Estate. She identifies the value of the KillarapProperty as $1.85 million (the value in the inventory, as at the date of the deceased's death four years ago) and pleads that there is otherwise "sufficient cash in the estate" to pay out the "legacies payable to the minor beneficiaries…without the need to have recourse to any proceeds of sale of the Killara property".
4. The plaintiff's evidence demonstrates that the Killara property has an estimated present value of $3 million - $3.5 million and an estimated present rental return of $1,300 - $1,500 per week. Contrary to the defendant's claim, the Killara property does not comprise less than 40% of the Estate.
5. In any event, the defendant cannot appropriate the Killara property to herself without the consent of all the beneficiaries of the Estate or approval of the Court.
6. Moreover, the defendant is required to account for her occupation of the Killara property. Given her stated position in respect of the Killara property to date it is improbable that the defendant will account to herself (as administrator) for this occupation or that she will sell the Killara property in order to pay all of the other beneficiaries the shares in the Estate to which they are entitled.
7. Instead, during the period 14 November 2021 to 24 November 2021, the defendant sought to compromise the other defendants' claims to the Estate by offering to make full and final distributions that could not arithmetically be justified on the basis of the terms of the Will and the evidence available as to the likely true current value of the Estate.
8. The defendant has declined to provide meaningful records concerning the administration of the Estate that have reasonably been requested by the solicitor for the plaintiff from time to time. The result has been to create uncertainty concerning the true circumstances of the Estate.
9. There have been 13 directions hearing in these proceedings, the history of which demonstrates the unwillingness or inability of the defendant to comply in a timely way or at all with the Court's orders. As early as 17 March 2022, at the second directions hearing, the Succession List Judge made orders directing the defendant to inform the plaintiff of the steps needed to be taken to complete the administration of the Estate and the time required to complete each step. The defendant was also ordered to file an affidavit setting out the assets of the Estate at the date of the death of the deceased and as at the date of the affidavit, together with evidence of the basis of the values of the assets. The affidavit was also required to stipulate the debts, funeral and testamentary expenses and liabilities of the Estate, as well as to provide proof of the sale values of any assets sold. As counsel for the defendant conceded at the third and fourth directions hearings on 5 April 2022 and 14 April 2022, the defendant failed to comply with the Court's order. The defendant remains substantially in default.
10. At the second directions hearing on 17 March 2022, counsel for the defendant informed the Succession List Judge that the defendant did not consent to the appointment of an independent administrator. The Court was advised at the tenth directions hearing on 13 July 2022 that the defendant had agreed to an identified solicitor being appointed as an independent administrator, but the defendant revoked that consent on 21 July 2022.
11. On various occasions the defendant has made baseless allegations of apprehended bias, treason, fraud, concealment of treason and concealment of fraud against a number of persons, including Hallen J, the Registrar in Equity and the plaintiff's solicitor. The making of these allegations is material to the issue now before the Court as it demonstrates the unreliability and the lack of realism in the manner in which the defendant has approached the fulfilment of her duties as administrator of the Estate.
12. The scant documentation which the defendant has provided to the Court reveals that the defendant has inappropriately applied Estate funds, including by: 1. paying her own telephone or internet expenses with Telstra since the deceased's death using Estate funds; and 2. paying her daughter, Helen, and her friends, for non-professional services.
13. The Court cannot have any confidence that the defendant will not continue to misapply Estate funds or use them for her personal gain if she remains administrator of the Estate.

Proposed replacement administrators

1. The plaintiff has filed affidavits and consents from two independent solicitors, Asheetha Jelliffe and Michaela Money, who are each prepared to be appointed as administrator of the Estate. Ms Jelliffe and Ms Money are both Accredited Specialists in Wills & Estates and have experience acting as a Court-appointed administrator. The plaintiff is content for either solicitor to be appointed as administrator of the Estate on a final basis.
2. Both of the proposed administrators are clearly suitable and competent to be appointed as a replacement administrator for the defendant. The Court was not provided with any significant basis to choose between them, save that counsel for the plaintiff observed in response to a question from the Court as to the preferable approach to choosing the alternative administrator that the fee structure proposed by Ms Jelliffe might lead to a lesser costs imposition on the Estate, given that it seems likely that the new administrator will have to undertake substantial work in the conduct of the administration that will need to be performed by qualified lawyers. I have in the circumstances decided to make an order appointing Ms Jelliffe as the replacement administrator. I acknowledge that this decision does not in any adverse way at all reflect upon the fitness of Ms Money to perform the appointment.

Costs

1. The plaintiff seeks orders that his costs be borne by the defendant or, alternatively, out of the 30% of the Deceased's Estate set aside under clause 4(i) of the Will for payment of testamentary expenses, on the indemnity basis.
2. The plaintiff submits that the defendant has not conducted these proceedings in a disinterested manner. At all times, the defendant has aggressively pursued her own self-interest and acted in such a manner so as to substantially increase the plaintiff's costs, including: 1. repeatedly failing to comply with Court orders and directions in these proceedings; 2. failing to serve Court documents on the plaintiff's legal representatives; 3. failing to respond to enquiries as to the administration of the Estate; 4. sending large volumes of documents to the Court and the plaintiff's legal representatives regarding matters which do not relate to the issues in dispute and making baseless allegations of impropriety; and 5. making hurtful and discourteous statements about the beneficiaries in correspondence and making baseless claims about their worthiness as beneficiaries of the Estate.
3. The plaintiff has taken out these proceedings in order that the Estate can be properly administered for the benefit of the Estate generally and all beneficiaries, even though his interest in the Estate is only 2%. In the circumstances, the plaintiff submits that an indemnity costs order is appropriate.
4. I accept that it has been necessary for at least one of the beneficiaries to commence and prosecute these proceedings to achieve the revocation of the Grant and the appointment of an independent administrator with the Will annexed. The plaintiff has shouldered that burden with the approval of a number of other minor beneficiaries. The defendant has unreasonably resisted the Court making the orders sought by the plaintiff. She has also significantly compounded the plaintiff's costs by the manner in which she has defended the proceedings and responded to the orders made by the Court from time to time. I am satisfied that this is a proper case for the Court to order that the plaintiff's costs be paid out of the Estate on the indemnity basis.
5. In the first instance, it will be appropriate for the plaintiff's costs to be paid out of the 30% of the Estate that the deceased specifically provided for the purpose of paying the Estate's testamentary expenses. I will make an order to that effect on the assumption that sufficient funds remain to meet that payment. If there is a shortfall, then it will be open to the plaintiff to apply to the Court for an appropriate alternative order to fund the payment of his costs by exercising the leave in order 18 below.
6. I will not at this stage make the order sought by the plaintiff that no order be made in respect of the defendant's costs with the intent that she pay her own costs. There is a case for the Court to make that order, but the Court has not yet received submissions from the defendant as to whether that or some alternative order should be made in respect of her costs. Given that the defendant is not legally represented, I consider that her withdrawal from the hearing should not be treated as a waiver of her right to make submissions on the issue of her costs.

Orders

1. The Court's orders are: The Court: 1. Orders that the grant of letters of administration with a copy of the will dated 20 February 2015 (Will) annexed issued to the defendant in respect of the estate of the late Stan Tream (also known as Stanislaw Tremtiaczy) (the Deceased) on 26 August 2020 (Proceedings No. 2019/00173348) be revoked. 2. Orders that the defendant deposit the original grant in the Registry of the Supreme Court of New South Wales within seven days of the making of these orders. 3. Orders that Asheetha Jelliffe, solicitor (the Administrator), be appointed as the administrator of the Deceased's estate. 4. Notes the consent of the Administrator to being appointed as administrator of the Deceased's estate. 5. Orders, subject to compliance with the Probate Rules of Court, that letters of administration with a copy of the Will annexed, be granted to the Administrator. 6. Orders that any requirement for an administration bond or surety be dispensed with. 7. Orders that the proceedings be remitted to the Senior Deputy Registrar in Probate to complete the grant. 8. Orders that the Administrator shall be entitled to: 1. make and be paid from the estate all usual and proper charges at the usual hourly rates as charged by the legal practice in which she is engaged and on the usual terms as to payment of that practice; 1. for her work as administrator or trustee, or both, of the estate; and 2. for the professional and non-professional services rendered by her or that legal practice in the administration of the estate of the Deceased or the trusts of the Will, or both; and 1. engage the services of any other legal practitioner, accountant or other professional adviser in relation to the administration of the estate where she considers it necessary to do so, and to pay from the estate any costs incurred in having those services provided. 1. Orders that the Administrator shall be entitled to exercise the powers of a trustee for sale in respect of any property in the estate of the Deceased, including: 1. without being liable for any loss (including liability for taxation on capital gain) caused by so doing, postpone sale; and 2. sell, by public auction or private sale. 1. Orders that, within 14 days of the making of the grant to the Administrator, the defendant deliver up to the Administrator copies of all documents in her possession relating to the deceased or the estate. 2. Orders that the defendant, within 14 days of the date of the making of these orders and notations, transfer to a bank account nominated by the Administrator all moneys held by her on behalf of the estate of the Deceased. 3. Orders that the Administrator be appointed to represent the estate of the Deceased for the purposes of the cross claim filed on 16 March 2022 in these proceedings and the defendant's claim for commission in Proceedings No 2019/00173348. 4. Orders that the plaintiff provide a copy of these orders to the Senior Deputy Registrar within seven days. 5. Orders that the plaintiff's notice of motion filed on 13 April 2022 be otherwise dismissed. 6. Orders that the plaintiff's costs of the proceedings, calculated on the indemnity basis, be paid out of the 30% of the Deceased's estate set aside under clause 4(i) of the Will for payment of testamentary expenses. 7. Orders that the defendant be prohibited in the future from paying any of her costs of these proceedings out of the estate of the Deceased without the order of the Court. 8. Grants leave to the defendant to apply to the Court for an order permitting the payment of her costs of these proceedings out of the estate of the Deceased and reserves all other questions as to the defendant's costs. 9. Grants to either party, and to the Administrator, liberty to apply, in these proceedings, for consequential and ancillary orders for the purpose of, or with respect to, giving effect to and implementing these orders. 10. Stands over the proceedings to 28 March 2023 for further directions before the Registrar in Equity, or such later date as may be fixed by the Registrar at the request of the plaintiff so that the directions hearing is fixed to take place after the date that the grant pursuant to order 3 has been perfected.

Further orders sought by plaintiff

1. The plaintiff proposed a number of additional orders that the Court will not make at this time. Those orders were: The Court: 1. Grants leave to the defendant and cross claimant to discontinue her cross claim filed on 16 March 2022 against the first to sixth cross-defendants (inclusive). 2. Orders the defendant to file and serve an amended cross claim in these proceedings within 7 days naming the Administrator as cross defendant. 3. Grants leave to the defendant to file and serve an amended notice of motion for the passing of accounts and commission in Proceedings No 2019/00173348 within 7 days naming the Administrator as the respondent.
2. The first two of these orders were apparently proposed by the plaintiff to accommodate the fact that the Administrator will replace the defendant as the administrator of the Estate, so that the defendant's status will become that of a beneficiary. As a beneficiary, the defendant will be entitled to file a cross claim in which she seeks the same declaratory relief concerning the meaning and effect of the Will as she has sought in the present cross claim. However, it will not be necessary for the defendant to join all of the beneficiaries, as has been necessary for the present cross claim. Instead, the Administrator will be a sufficient defendant because of order 12 that the Court has made. That will be the most cost-efficient course for all parties, including the defendant, given in particular that some of the beneficiaries reside in Poland.
3. As I understand it, the plaintiff proposed the third order because of the need for the defendant to pass her accounts and an expectation of the plaintiff that the defendant will seek commission for her conduct as administrator during the subsistence of the Grant. The defendant apparently filed a notice of motion seeking orders for the passing of her accounts and for commission on 3 December 2021. I am not sure what has happened with that application.
4. I am satisfied that all three orders are sensible ones, including in the interests of the defendant. However, each of the orders contemplates some action on the part of the defendant, and the defendant has not requested that the orders be made or informed the Court of her consent to the orders. It will be in the interests of all parties for the orders to be made, but it is a matter for the defendant whether she wishes to pursue her existing or a new cross claim, and whether she wishes to have her accounts passed and to apply for commission.
5. In the circumstances, I will not make the three orders now and will leave the issue to the parties when the proceedings are next before the Court. I confirm my view that if the defendant wants the three orders to be made they should be made by the Court.

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: 27 February 2023