Mangraviti v Donato

Supreme Court of NSW|2009-11-04|Before: Rein J, Cohen J

CITATION : Mangraviti v Donato [2009] NSWSC 1258

DECISION : Judgment for the defendants on the statement of claim. Plaintiff to pay the defendants' costs on a party/party basis, and to the extent the defendants' costs are not satisfied by that order, the defendants are to have costs paid out of the estate on an indemnity basis.

CATCHWORDS : SUCCESSION - executors and administrators - rights, powers and duties - obligation of executors to investigate what amount of a loan, if any, remained owing to the testator on his death - insufficient evidence to ascertain what amount of loan was unpaid - obligation of executors to charge rent before sale of property - PROCEDURE - costs - costs on an indemnity basis not appropriate

Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353 Chen v Karandonis [2002] NSWCA 412 Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 CASES CITED : Howling v Kristofferson (Supreme Court of New South Wales, Cohen J, 14 October 1992, unreported) Jones v Dunkel (1959) 101 CLR 298 Manly Council v Byrne and Anor [2004] NSWCA 123 Mulray v Ogilvie (1987) 9 NSWLR 1 Plunkett v Bull (1915) 19 CLR 544

Concettina Mangraviti (Plaintiff) PARTIES : Giovanni Michele Donato (First Defendant) Dominic Donato (Second Defendant)

COUNSEL : S Wells (Plaintiff) T J Morahan (Defendants)

SOLICITORS : Conomos & Spinak Lawyers (Plaintiff) Brydens Law Office (Defendants)

IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION

Date of Hearing: 2 - 4 November 2009 Date of Judgment: 5 November 2009

3060/07 Concettina Mangraviti v Giovanni Michele Donato and anor JUDGMENT (EX TEMPORE) 1 REIN J: These proceedings concern the estate of the late Domenico Donato ("the testator"). The testator died on 19 November 2001. By his will of 18 September 2001 his estate was left to be divided between his sons Giovanni Donato, to whom I shall refer as "John", his son Anthony Donato, to whom I shall refer as "Anthony" and his daughter Concettina Mangraviti, to whom I shall refer as "Tina".

2 The testator appointed John and Domenic Donato (Anthony's son) as his executors.

3 Tina brought proceedings contesting the will and made a claim under the Family Provision Act 1982. Both claims were dealt with by this Court in May 2005 adversely to the plaintiff.

4 Probate was granted to John and Dominic in June 2005.

5 In 2006 the executors commenced proceedings seeking to have further claims threatened by the plaintiff barred. Orders were made to that effect. One of the claims barred was a claim made for jewellery which Tina claimed had been given to her by her late mother. The jewellery in question was handed over by the executors to the plaintiff either shortly before or as part of the resolution of the matter.

6 The plaintiff by a statement of claim filed in these proceedings sought the removal of the defendants as executors and other relief. Although the statement of claim is extensive in its claims, the only matters which were pursued at the end of the first day of the hearing were: (1) Whether the estate consisted of certain items of jewellery said to be worth $25,000. (2) Whether a loan of $45,000 said to have been made by the testator to Anthony had been repaid, and whether that money should have been collected by the executors on behalf of the estate. (3) Whether the executors failed in their duty by failing to rent the house in Enfield. It is agreed it is the only real estate left by the testator. The executors permitted Anthony to continue residing in the house after the testator's death until the house was sold on 31 January 2006. (4) Whether certain specific items claimed to have been paid by the estate, (being items 13, 15 and 32 in the estate accounts) were due to be paid and were paid.

7 At the end of the evidence Mr Wells indicated that items (1) and (4) were no longer pressed. I shall deal firstly with item (2). There is no dispute that the testator lent Anthony money. The plaintiff told John that the amount was $45,000. This amount was discussed at a meeting in September 2001 at the office of a solicitor, Mr Gino Russo, held to discuss the preparation of a new will. The plaintiff's version of the conversation is set out in paragraph 32 of her affidavit of 3 November 2008 and is in these terms: "When dad and John returned to the meeting, the following conversation took place regarding the $45,000 that my parents had loaned Anthony for the purchase of his home at [Greenacre] in December 1996. On at least two occasions Mr Russo asked my parents if Anthony had repaid the loan. My father and Mr Russo had a conversation to the following effect:

Mr Russo: 'How much of the loan have you discounted.'

Mr Russo: 'Did Anthony pay the loan back or did he only pay some of it back?'

Giuseppa: 'Some of the money has still to be repaid by Anthony.'"

8 John's evidence is to found in his affidavit sworn on 28 April 2009 in paragraph 13 where he said: " In relation to paragraph 32 of the Plaintiff's Affidavit, my father had informed that Anthony had given the money back. The conversation took place in the Sicilian dialect. Mr Russo misunderstood what my father had stated in that my father discounted the loan instead of meaning the loan was repaid."

In cross-examination he said that his father had used the word "scuntato" which he said means "paid". 9 Mr Russo in his affidavit confirmed that the conversation was in the terms put by the plaintiff. Mr Russo was not required for cross-examination.

10 Present at that meeting, it is agreed, were the testator, the testator's wife Giuseppa (who died a short time after the meeting), the plaintiff, Anthony and John.

11 Anthony did not give evidence, although he was in Court during the proceedings: see T46.40.

12 There was no objection to the evidence of Mr Russo in so far as it related to the conversation which I have just recounted. Mr Russo said that he spoke in the Sicilian during the testator's visit to his office.

13 The plaintiff was not challenged on the version she gave, although it is disputed in Mr Donato's affidavit. It was not put to Tina that the word "scuntato" was the word which was used by her father and that it had been misunderstood by Mr Russo. No note was proffered by Mr Russo of the conversation and it is surprising he was not asked for his own independent recollection of the conversation.

14 There was no challenge to the plaintiff's credibility. Given Mr Russo's evidence, notwithstanding its limitations, I accept the plaintiff's version of the conversation.

15 I do not accept John's assertion that Mr Russo does not speak Sicilian dialect and therefore he misunderstood what the testator said. The failure to call Anthony strengthens my view that the plaintiff's version should be accepted in this regard (see Jones v Dunkel (1959) 101 CLR 298, which I will discuss later in this judgement).

16 Given the assertion by the testator that he had discounted the loan by "twenty to thirty", which I take to be $20,000 to $30,000, the maximum amount to be paid either was $15,000 or $25,000. The testator's wife's assertion that some money remained to be paid I take to be an assertion that a portion of the loan remains unpaid. The difficulty is that it is not possible to determine how much of the loan was at that point unpaid or how much was unpaid as at the testator's death.

17 The will makes no mention of the loan. No notes have been tendered of the solicitor who made the will - and it is agreed that it was not Mr Russo who prepared the will in respect of which probate was granted.

18 No attention was given to the question of whether whatever John learnt as a family member before the will was prepared is to be taken to be knowledge of himself and Dominic as executors, but assuming that it could be, and accepting that the executors had an obligation to investigate what amount, if any, remained unpaid of the loan by the testator to Anthony, I am unable to determine, on the evidence, what amount in fact was owing by Anthony to the testator. If there has been a failure of the executors to conduct enquiries that should have been conducted, it is not established what loss flows from the failure.

19 Mr Wells' submission is that I should take a mid-point between the $15,000 and $25,000 figures but there is no basis for picking a figure in this way. What is required is some evidence which establishes what debt remained.

20 I have given consideration as to whether the defendants' failure to call Anthony in their case on this point gives rise to a Jones v Dunkel inference, that is to say to enable the conclusion to be drawn that $15,000 or $25,000 or some amount in between was still owing.

21 I do not think an inference can be drawn as to what amount was in fact owing. That evidence is not derived from the conversation of which the plaintiff gives evidence and which I have accepted (see Manly Council v Byrne and Anor [2004] NSWCA 123 for an iteration of the principles in Jones v Dunkel).

22 I note that it was accepted that if the loan was unpaid and should have been recovered, the plaintiff would have been entitled to one-third of the amount that on that assumption should have been recovered.

23 I now turn to deal with the question of rent. Mr Wells submitted that I should make the following findings of fact: (1) That the testator made a will on 18 September 2001. (2) That the testator was admitted to hospital in October 2001. (3) That Anthony moved into the testator's house prior to the testator's death. It was accepted by the plaintiff he did so with the permission of the testator. (4) That the house was at all times in good condition. (5) That the testator died on 9 November 2001. (6) That the defendants in late 2001 or early 2002 prepared the house for sale. (7) That the defendants applied for probate in 2003. (8) In 2003 the plaintiff filed a cross summons or cross claim challenging the will and making a claim under the Family Provision Act . (9) That probate was granted to the defendants on 3 June 2005 following a hearing before Burchett AJ, whose decision was delivered on 3 May 2005. (10) The property, the house, was sold on 31 January 2006 for $702,000. (11) That the estate paid all of the rates for the house whilst Anthony remained in possession.

24 Of these matters, items (1), (2), (3), (5), (7), (8), (9), (10) and (11) are not in dispute.

25 So far as items (4) and (6) are concerned, John's evidence was that following a discussion with Tina in which she said that the house should be sold, it was readied for sale and John and Anthony set about tidying it up, painting and making some minor repairs.

26 There is no dispute that after the work was done the house was in good condition and ready for sale. Indeed, John said that were it not for the filing of a caveat by the plaintiff the house would have been sold (I infer, once probate had been granted to the defendants).

27 The plaintiff lodged a caveat against probate in March 2002. The caveat is not in evidence but I infer from her cross claim in 2003 that she challenged the testator's testamentary capacity.

28 John's explanation for not having sought to lease the property was that the testator said in a conversation shortly before his death that he wanted Anthony to live in the house until it was sold.

29 Mr Wells submitted I should not accept that evidence as the will did not say anything to that effect, and it was open to the executors to lease the property.

30 The plaintiff relied on expert evidence that was unchallenged, that a fair market rent for the property would have been $440 a week from 19 November 2001 to 2 July 2005, and $460 a week from 3 July 2005 to 30 January 2006, the date of sale.

31 I do not think it is clear whether the conversation about which John gave evidence took place before or after the will was executed but I think it is important to take into account that the testator, as is conceded by the plaintiff, agreed to Anthony moving into the house when the testator was admitted to hospital and the testator's wife, the parties' mother, had passed away.

32 The wish of which John gave evidence is quite consistent with those developments, and it is likely the testator presumed that sale of the house would be prompt. It is clear it would have been if not for the plaintiff's actions.

33 Mr Wells launched an attack on the credit of John, but although some of the points made would cause me to treat John's evidence with caution, having regard to the fact that what is asserted is a conversation with someone who cannot be called to rebut it, such caution is required in any event: see Plunkett v Bull (1915) 19 CLR 544, particularly at 549 per Isaacs J, but I am not persuaded that I should reject John's evidence on this point.

34 There is another issue here as well. Probate was not granted until 3 June 2005. From 19 November 2001 to June 2005 the defendants had not obtained a grant of probate and were not authorised to act on behalf of the estate. Mr Wells submitted that the defendants should be seen as 'intermeddlers' who should be liable for the failure to lease the premises throughout that period. I do not accept that argument for the following reasons: (1) Dominic, one of the executors, himself did nothing in the period until probate was granted, other than attend upon a solicitor for advice, and I assume that was together with John. (2) John paid for all expenses and helped Anthony clean and tidy the house, doing painting and making minor repairs so it would be ready for sale. Both were beneficiaries under the will. The only other beneficiary agreed with this course and encouraged them to ready the house for sale. John sought advice from the solicitor and he certainly was contemplating putting the house on the market but he did not in fact do so.

35 It has been said that the payment of burial and other expenses is not to be viewed as 'intermeddling': see Mulray v Ogilvie (1987) 9 NSWLR 1.

36 I am not persuaded that the acts of John, who after all was one of the three beneficiaries, in working with his brother and with the agreement of their sister, the plaintiff, to ready the house for sale, alone or taken together with the other matters, amounts to an intermeddling. Nor am I persuaded that if what they did, as described, would amount to intermeddling, that would justify a conclusion that they are liable for not retaining an agent to lease, or leasing the house, when they had no authority to do so. By March 2002 the plaintiff had flagged her claim that the testator lacked testamentary capacity and hence that the defendants would not have any authority to take any steps on behalf of the estate. The case of Howling v Kristofferson (Supreme Court of New South Wales, Cohen J, 14 October 1992, unreported) contains useful discussion about this area of the law but does not assist the plaintiff in my view.

37 Once probate was granted the executors were, in my view, entitled to proceed to place the property on the market. Probate was granted in June 2005 and I do not think there were any unreasonable delays in putting the property on the market, nor is it alleged that there was. The only question is whether the executors should have sought a tenant whilst the property was being marketed. Once again, John relies on the expression of the testator's wishes to him. 38 It was argued by the plaintiff that even if (contrary to the plaintiff's contention) the testator had expressed the wish that Anthony live in the house until sale, they could not have an effect four years later. I do not think that is necessarily so. The executors as at June 2005 were then in the position they would have been in early 2002 had the plaintiff not challenged the will. Even accepting that the wish was spent, I am not persuaded that the executors, having decided to place the property on the market, had an obligation to enter into a lease for a fixed period until sale.

39 There are advantages in not having a tenant with a fixed lease in place, both in terms of ease of access to the property, and in terms of the assurances that the premises will be vacant on sale.

40 In Howling Cohen J held that the executor was liable to obtain a tenancy in the circumstances of the case, which included correspondence from the beneficiaries complaining over a period of time, the executor having installed his own son in the premises and the fact that there was no immediate sale. However his Honour did say at 16 of BC9201556: "The duty of the defendant as executor was to realise the assets, to pay the debts of the deceased and the testamentary expenses and to distribute the balance to the plaintiff and himself in equal shares. If the house were to be sold promptly after the grant of probate it would not be practical to expect the executor to enter into a lease of it because it would be reasonably assumed that the sale would be completed within the matter of a few months."

41 The property in this case was placed on the market in August 2005 and was marketed through to October and sold, as I understand it, in October with completion in January of the following year.

42 I am not satisfied in the circumstances of this case that the executors failed in their duty to the estate by not seeking to enter into a lease or engaging an agent to do so at the same time as they put the property on the market. I accept that Anthony has gained a benefit in being able to reside in the house rent-free. The absence of any arrangement that he at least pay the expenses was not the subject of claims.

43 I accept that Anthony has gained a benefit by being able to reside in the premises during the period in question but for most of that period this was because probate had not been granted. That in turn was because the plaintiff had taken the steps that she had taken. The plaintiff herself did not, in her summons or affidavit of 5 June 2007 or in her solicitor's correspondence, raise any concern about the occupation of the property by Anthony.

44 For these reasons I am of the view that the plaintiff fails on the two remaining points that were advanced in the proceedings and there should be judgment on the statement of claim for the defendants.

45 I have made reference to the fact that some issues were not pressed at the hearing. I should note there was agreement that a document, which became part of Exhibit B, and which is headed "entitlement of Concettina Mangraviti as at 30 June 2000" correctly reflects the position of the entitlement of the plaintiff. That document records her entitlement as being $71,750.57, but, subject to three matters: firstly subject to the executors' costs and disbursements which are to be paid out of the estate on the passing of accounts, secondly, subject to paying all the executors' commission due to them out of the estate on the basis of the accounts and thirdly subject to an allowance for the cost of the executors of these proceedings.

46 I will now hear counsel's argument on the question of costs.

47 [Counsel addressed on costs] I take the view this is not a case appropriate to order indemnity costs. I think there were significant problems with the plaintiff's case but it is not one in which indemnity costs ought be ordered, on any of the categories discussed in cases such as Colgate-Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 225 and Chen v Karandonis [2002] NSWCA 412 or on some analogous conduct, or on the basis of unreasonableness discussed in Chaina v Alvaro Homes Pty Ltd [2008] NSWCA 353.

48 The plaintiff is to pay the costs of the defendants on a party-party basis and to the extent that the costs of the defendants are not satisfied by that order, the defendants are to have their costs out of the estate on an indemnity basis.

49 I grant liberty to apply only on the question of costs. The exhibits can be returned to the parties on the expiry of 28 days from today's date in the absence of an appeal.

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At a glance

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Judgment (61 paragraphs)

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Cases Cited (7)

Cited By (3)