Plaintiff v Defendant

Ground Seven - The defendant is a qualified lawyer and previously acted in respect of wills and estates

1. Having previously identified this as a separate ground, the plaintiff appropriately conceded that it was not really a separate ground, but should be seen more as an 'aggravating feature' of the defendant's conduct.
2. Given her experience in practice, and having regard to her skills and knowledge as a qualified and admitted solicitor, the defendant's conduct in the administration of this estate is more alarming. However, given the totality of the defendant's conduct so clearly establishes her unfitness to remain in her office, this 'aggravating feature' does little to change the result and I do not need to give it any consideration.

1. For the reasons given in this judgment, I am satisfied in all the circumstances to which I have referred above that the defendant is unfit to continue to act in the office of executor of this estate. By her conduct in the administration, she has delayed the distribution of the Vermont property, caused improper expenses to be incurred by the estate, delayed the distribution of the entire estate property, behaved unreasonably towards the beneficiaries, preferred her own interests to theirs and improperly paid her costs of the removal application from estate funds in anticipation of being successful, or if not successful, in anticipation of a finding that the costs were properly incurred. To permit her to remain in the role would likely have a further deleterious effect on the security of the trust property, and the efficient and satisfactory execution of the trust, and will be adverse to the interests of the beneficiaries.
2. An order should therefore be made that the defendant be removed as executor of the estate under s 34(1)(c) of the A&P Act. I accept the submission of the plaintiff that he is an appropriate person to be appointed in her place.
3. The usual practice in these matters is for orders removing an executor under the A&P Act to be accompanied by equivalent orders under the Trustee Act, so as to 'avoid any errors or confusion that may arise in the administration of an estate'.[139] This is on the basis that '[o]nce the executorial duties in an estate have been performed, then to the extent that the estate remains undistributed, the executors become trustees', however, '[t]here is no formal test to determine when a personal representative becomes a trustee'.[140] Accordingly, an order should also be made removing the defendant as trustee under s 48(1) of the Trustee Act.

1. In Skaftouros v Dimos (No 2) ('Skaftouros (No 2)'),[141] Mandie J considered the costs consequences of the executor's resistance of the removal proceeding. He held that, in the circumstances of that case, the executor should have resigned, rather than resist the application for removal.[142] The defendant executor had also been warned of the beneficiaries' intention to commence removal proceedings well before the proceeding was actually commenced, such that he had sufficient time to put things right.[143]
2. In this case, the defendant was also warned of the plaintiff's intention to commence a removal application in the correspondence sent on 4 April 2023 and 17 May 2023. These explicit warnings were in addition to the plaintiff indicating from his first interaction with the defendant that he wished to consider what, if any, involvement she should have in the administration of the estate, and the beneficiaries making an offer to the defendant for her to renounce her role as executor prior to the grant of probate on 2 November 2022. The proceeding was only then commenced in September 2023, after the extensive communications and interactions between the defendant and the beneficiaries outlining their desires and concerns.
3. From a very early stage, the defendant had opportunity to put things right, to make the distributions and administer the estate without further delay, but she chose not to do so. She then made things considerably worse by seeking to again sell the Vermont property in 2024, this time without notice to the beneficiaries despite their clearly and frequently expressed wishes to the contrary. Her very late attempt to put the situation right by making the transfer of the Vermont property in specie in March 2024, and the payment of the funeral expenses later in March 2024, was too little too late, and in any event was most likely motivated at that time by her own self-interest in resisting the application. In any event, the balance of the estate remains undistributed, now more than 2 years after the death of the deceased. Accordingly, I do not consider the defendant has acted reasonably in resisting the application for her removal from the time of its commencement.
4. The defendant refused to resign at the urging of the beneficiaries at the commencement of the administration, even after the commencement of this proceeding seeking her removal. The fact that the defendant was appointed pursuant to the wishes of the deceased (as expressed in the will) does not render her immune from suit if she does not perform her duties. The executor does not exist for the benefit of the deceased, but for the benefit of those to whom the deceased has given his estate.[144] As was submitted by the plaintiff, the defendant in this case seems to have forgotten that the estate belongs to the beneficiaries and not to her.
5. The estate ought not bear the costs of the defendant's unjustified resistance to the plaintiff beneficiary's application to remove her.

Repayment of costs improperly incurred and charged to the estate

... the court has power to make such an order pursuant to s34(1), either as a term and condition (as referred to in the section, the court may order the removal of an executor "upon such terms and conditions as the court thinks fit"), alternatively, as part of the further power of the court under that section to, "make all necessary orders for vesting the estate in the new administrator, and ... as to costs". I also invoke the power of the court to make orders as if it were in an administration proceeding to support the making of this order.[145]

(a) improperly paid her legal costs in resisting the proceeding from the estate prior to its determination; and

(b) ought be removed from her position as executor under s 34(1)(c) of the A&P Act and as trustee under s 48(1) of the Trustee Act; and

(c) was not justified in resisting the proceeding

I also find that the defendant must repay to the estate all of the legal costs she charged to it in respect of her defence of this proceeding. Given that some of those costs are included in the March 2024 Stern Legal Invoice together with other costs in administering the estate (for example, the legal costs of effecting the transfer of the Vermont property in specie), I will ask the parties to consider that invoice (and any further invoices issued and paid using estate monies since) and, in the absence of agreement between them as to the appropriate sum, to make further brief written submissions to me to assist the Court in determining the appropriate sum to be paid by way of reimbursement.

1. In addition, having found that the defendant improperly incurred costs in readying the Vermont property for sale in 2024, I also find that the defendant must repay all of the costs incurred in connection with that sale which have been charged to the estate. At the very least this will comprise:

(a) the amount of $5,059 paid to Ray White Blackburn for marketing;

(b) the amount of $2,970 paid to Styled4Success for styling and furniture hire; and

(c) the amounts of $1,639 and $495 separately invoiced by James' Total Property Maintenance for ceiling works at the Vermont property.

The plaintiff's application for orders for an account under Order 52 of the Rules

1. The plaintiff seeks an account so that the quantum of any improper expenditure can be determined and the monies paid by the executor to the beneficiaries.
2. The taking of an account is a 'procedure to ascertain the monetary dealings of the parties in respect of the subject property, and to determine with precision the balance due between them.'[146] An account will not be ordered unless it is first established that one party is liable to pay to the other party anything that is found to be due.[147] It is not enough that a party might be owed some money; they are not entitled to a form of general discovery.[148]
3. I decline to order the taking of an account as sought by the plaintiff for the reasons that follow.

(a) the administrator has recently delivered the Administration Account, and ordering the taking of another account would lead to unnecessary repetition of that task by the defendant;

(b) I have made findings regarding two items of improper expenditure that must be repaid by the executor as a consequence of the removal order. There is no need for an account to be taken to determine the quantum of those repayments as they are already itemised in the Administration Account;

(c) with the exception of the costs referred to immediately above, I am not in a position to make any specific findings about the propriety of other expenditure (on legal fees or in preparing the property for sale) incurred by the executor in the course of the administration, there being insufficient evidence to do so. That conduct has been taken into account in considering the totality of the defendant's conduct in the administration to determine whether she is fit to remain in office. If the beneficiaries complain about loss caused to the estate by the defendant by reason of any other expenditure they can establish was improperly incurred by the defendant, then they have remedies, which they have not sought in this proceeding; and

(d) the orders that the Court will make consequential upon the removal of the defendant as executor and trustee will mean that all of the books and records of the estate are to be delivered up to the new administrator.[149] The new administrator will also be able to access the estate's solicitors' files. There is no utility in ordering the defendant to produce an account, especially if she is required to deliver up all of the records to the plaintiff. The plaintiff will be able to look at the invoices and the documents on file and form a view about whether there is any claim to be made against the executor in relation to her expenditure.

1. For the reasons given in this judgment, I will order that the defendant be removed as executor of the estate under s 34(1)(c) of the A&P Act and as trustee under s 48(1) of the Trustee Act.
2. There are orders that will need to be made as a consequence of the removal orders. The parties are requested to confer and to attempt to agree on those proposed consequential orders for the Court's consideration. Absent agreement, I will hear further from the parties.
3. I will order that the defendant pay the plaintiff's costs of the proceeding personally, however, I will hear further from the parties concerning the basis upon which those costs are to be paid.

[1] In some documents, the property is referred to as '6 Kensington Gardens, Vermont South', but will herein be referred to as the Vermont property.

[2] The administration account was filed in the related probate proceeding S PRB 2022 19786 and exhibited as part of Exhibit IC-3 to the Affidavit of the plaintiff affirmed 15 April 2024 ('Third Cicvaric Affidavit'), 193-195 ('Administration Account') (the pages erroneously bear the numbers 183 to 185).

[3] This is the sum of disbursement items 9, 10, 11, 16, 18 and 26 in the Administration Account.

[4] Exhibit IC-1 to the affidavit of the plaintiff affirmed 20 September 2023 ('First Cicvaric Affidavit'), 25, 27-29, 42-55, 45, 46-7, 48-9, 55-60.

[5] Exhibit IC-1 to the First Cicvaric Affidavit, 55-60.

[6] Exhibit IC-1 to the First Cicvaric Affidavit, 55-60.

[7] See paragraph [13(d)] of the letter dated 25 August 2022 from the defendant to the beneficiaries' lawyers, Exhibit IC-1 to the First Cicvaric Affidavit, 33.

[8] See paragraph 'e' under the heading 'Outstanding Matters' in the defendant's solicitors' letter dated 26 April 2023, Exhibit IC-1 to the First Cicvaric Affidavit, 123.

[9] The defendant has deposed that executor's commission is 'of no interest to me' and that she never advised the deceased that she had the intention of exercising a right to executor's commission: Affidavit of Maria Blazevic sworn 23 January 2024, [7], [16] ('Blazevic Affidavit'). She confirmed that evidence under cross-examination - see Transcript of Proceedings, Cicvaric v Blazevic (Supreme Court of Victoria, S ECI 2023 04426, Goulden AsJ, 2 May 2024) T47.8 ('Transcript').

[10] Exhibit IC-1 to the First Cicvaric Affidavit, 25.

[11] Exhibit IC-1 to the First Cicvaric Affidavit, 33 [14]-[15].

[12] The letter also suggested, and the plaintiff made the point in his submissions, that the locks had been changed at the Vermont property after receipt of the 22 August letter. However, the locksmith's invoice included in the Administration Account dates the locksmith's work to 9 August 2022, well before the 22 August letter.

[13] Exhibit IC-1 to the First Cicvaric Affidavit, 28.

[14] Exhibit IC-1 to the First Cicvaric Affidavit, 30.

[15] Exhibit IC-1 to the First Cicvaric Affidavit, 35-7, 41.

[16] Exhibit IC-1 to the First Cicvaric Affidavit, 38.

[17] Exhibit IC-1 to the First Cicvaric Affidavit, 40 [7].

[18] Exhibit IC-1 to the First Cicvaric Affidavit, 55-60.

[19] Exhibit IC-1 to the First Cicvaric Affidavit, 59.

[20] The details of the auction are set out in an email from the beneficiaries' solicitors dated 29 November 2022, at Exhibit IC-1 to the First Cicvaric Affidavit, 65.

[21] Exhibit IC-1 to the First Cicvaric Affidavit, 65.

[22] Exhibit IC-1 to the First Cicvaric Affidavit, 66.

[23] Exhibit IC-1 to the First Cicvaric Affidavit, 66-9.

[24] Exhibit IC-1 to the First Cicvaric Affidavit, 67 [3].

[25] See Exhibit IC-2 to the affidavit of the plaintiff affirmed 12 February 2024 ('Second Cicvaric Affidavit'), 6-10.

[26] Exhibit IC-1 to the First Cicvaric Affidavit, 117.

[32] Administration Account, Exhibit IC-3 to the Third Cicvaric Affidavit, 184.

[33] Exhibit IC-3 to the Third Cicvaric Affidavit, 189.

[34] Exhibit IC-3 to the Third Cicvaric Affidavit, 147-8.

[38] See Exhibit IC-1 to the First Cicvaric Affidavit, 31-34. The letter states at paragraph [2], '[t]he deceased was survived by three brothers, two of whom, Ante Cicvaric and Josip Cicvaric, reside overseas', and at paragraph [16] 'the deceased has a quarter interest in real estate, situate in Croatia, inherited from his mother who passed away in 2008'.

[39] Exhibit IC-1 to the First Cicvaric Affidavit, 71-109.

[40] Exhibit IC-1 to the First Cicvaric Affidavit, 110.

[41] Exhibit IC-1 to the First Cicvaric Affidavit, 112-3.

[42] Exhibit IC-1 to the First Cicvaric Affidavit, 112.

[43] Exhibit IC-1 to the First Cicvaric Affidavit, 114.

[44] Exhibit IC-1 to the First Cicvaric Affidavit, 116.

[45] Exhibit IC-1 to the First Cicvaric Affidavit, 117-8.

[46] Exhibit IC-1 to the First Cicvaric Affidavit, 120-135.

[47] Exhibit IC-1 to the First Cicvaric Affidavit, 121.

[48] Exhibit IC-1 to the First Cicvaric Affidavit, 136-166.

[49] Exhibit IC-1 to the First Cicvaric Affidavit, 122.

[50] Exhibit IC-1 to the First Cicvaric Affidavit, 123.

[51] Exhibit IC-1 to the First Cicvaric Affidavit, 152.

[52] Second Cicvaric Affidavit, [10].

[53] Third Cicvaric Affidavit, [22]-[23]; Exhibit IC-3 to the Third Cicvaric Affidavit, 159, 169-173.

[54] Exhibit IC-3 to the Third Cicvaric Affidavit, 176-8.

[55] Exhibit IC-3 to the Third Cicvaric Affidavit, 185-8 (the pages erroneously bear the numbers 175-178).

[57] Defendant, 'Defendant's Outline of Submissions', 22 April 2024, 3 [17].

[58] Exhibit IC-1 to the First Cicvaric Affidavit, 33 [16].

[59] Plaintiff, 'Plaintiff's Reply Submissions', 29 April 2024, 2 [9].

[60] Exhibit IC-1 to the First Cicvaric Affidavit, 74.

[61] Exhibit IC-1 to First Cicvaric Affidavit, 118. The enclosure to the letter, which is written in Croatian, was omitted from the First Cicvaric Affidavit. The enclosure was included in Exhibit MB-1 to the Blazevic Affidavit, 102-3.

[62] Exhibit IC-1 to the First Cicvaric Affidavit, 118.

[63] Exhibit IC-1 to the First Cicvaric Affidavit, 118.

[65] Exhibit IC-1 to the First Cicvaric Affidavit, 124.

[66] Exhibit IC-1 to the First Cicvaric Affidavit, 136-151.

[67] Exhibit IC-1 to the First Cicvaric Affidavit, 140-1 [34]-[35].

[68] Exhibit IC-1 to the First Cicvaric Affidavit, 141 [36]-[37].

[69] Exhibit MB-1 to the Blazevic Affidavit, 141-5.

[70] Blazevic Affidavit, 13 [43]-[45]

[71] First Cicvaric Affidavit, 3 [17].

[73] Exhibit IC-3 to the Third Cicvaric Affidavit, 202-3 (the pages erroneously bears the numbers 192-193).

[74] Transcript T70.23-26, T71.7-11, T73.19-29.

[76] Second Cicvaric Affidavit, 2 [6] (emphasis added). The plaintiff appears to have erroneously referred to the 'plaintiff' here, where he should have referred to the 'defendant'.

[81] Exhibit IC-3 to the Third Cicvaric Affidavit, 212 (the page erroneously bears the number 202).

[82] Exhibit IC-3 to the Third Cicvaric Affidavit, 214 (the page erroneously bears the number 204).

[83] Exhibit IC-3 to the Third Cicvaric Affidavit, 214 (the page erroneously bears the number 204).

[84] Exhibit IC-3 to the Third Cicvaric Affidavit, 204-6 (the pages erroneously bear the numbers 194-196).

[85] Exhibit IC-3 to the Third Cicvaric Affidavit, 159.

[86] Exhibit IC-3 to the Third Cicvaric Affidavit, 216 (the page erroneously bears the number 206).

[87] Exhibit IC-3 to the Third Cicvaric Affidavit, 216 (the page erroneously bears the number 206).

[88] Exhibit IC-3 to the Third Cicvaric Affidavit, 169.

[89] Exhibit IC-3 to the Third Cicvaric Affidavit, 173-4.

[90] Third Cicvaric Affidavit, 7 [23].

[91] [1936] HCA 13; (1936) 54 CLR 572 ('Miller').

[93] [1996] VicRp 7; [1996] 1 VR 65 ('Monty').

[94] Hoxha v Hoxha (Supreme Court of Victoria, Jenkinson J, 22 September 1975, unreported) ('Hoxha').

[95] In re Turner [1923] ArgusLawRp 18; [1923] VLR 189 (Weigall AJ).

[97] Monty [1996] VicRp 7; [1996] 1 VR 65, 73.

[98] Monty [1996] VicRp 7; [1996] 1 VR 65, 73.

[99] Monty [1996] VicRp 7; [1996] 1 VR 65, 81-2.

[100] [2000] VSCA 150.

[101] [1936] HCA 13; (1936) 54 CLR 572.

[102] [2000] VSCA 150, [25] (Ormiston JA, with Batt and Chernov JJA agreeing).

[103] [2002] VSC 198 ('Skaftouros').

[104] Skaftouros [2002] VSC 198, [10] citing Re Tankard [1942] Ch 69, 72 (Uthwatt J).

[105] Skaftouros [2002] VSC 198, [212].

[106] Skaftouros [2002] VSC 198, [178].

[107] Skaftouros [2002] VSC 198, [213].

[108] Fysh v Coote [2000] VSCA 150, [25] (Ormiston JA, with Batt and Chernov JJA agreeing).

[109] Skaftouros [2002] VSC 198, [200].

[110] Dimos v Skaftouros [2004] VSCA 141; (2004) 9 VR 584 ('Skaftouros Appeal').

[111] Skaftouros Appeal [2004] VSCA 141; (2004) 9 VR 584, 618 [170] (Dodds-Streeton AJA, with Winneke P and Batt JA agreeing).

[112] Exhibit IC-1 to the First Cicvaric Affidavit, 66.

[113] Second Cicvaric Affidavit, 2 [6].

[114] Exhibit IC-3 to the Third Cicvaric Affidavit, 159.

[115] See Skaftouros Appeal [2004] VSCA 141; (2004) 9 VR 584, 616-7 [160] (Dodds-Streeton AJA, with Winneke P and Batt JA agreeing).

[116] Skaftouros [2002] VSC 198, [14].

[117] Skaftouros Appeal [2004] VSCA 141; (2004) 9 VR 584, 616-7 [160] (Dodds-Streeton AJA, with Winneke P and Batt JA agreeing).

[118] Monty [1996] VicRp 7; [1996] 1 VR 65, 73.

[119] Monty [1996] VicRp 7; [1996] 1 VR 65, 73.

[120] Monty [1996] VicRp 7; [1996] 1 VR 65, 73.

[121] Skaftouros [2002] VSC 198, [188]-[190].

[122] Exhibit IC-1 to the First Cicvaric Affidavit, 33 [16].

[123] Exhibit IC-1 to the First Cicvaric Affidavit, 118.

[124] Exhibit IC-1 to the First Cicvaric Affidavit, 140-1 [34]-[37].

[125] The invoice was produced as part of the documents provided in support of the disbursement within the Administration Account and marked as exhibit P1 in this proceeding ('Exhibit P1').

[127] [1941] HCA 3; (1941) 64 CLR 268.

[128] [1941] HCA 3; (1941) 64 CLR 268, 279-280 (Williams J, with Rich ACJ and Starke J agreeing).

[129] [1941] HCA 3; (1941) 64 CLR 268, 279 (Williams J, with Rich ACJ and Starke J agreeing).

[130] Skaftouros [2002] VSC 198, [208] (Mandie J).

[131] Skaftouros Appeal [2004] VSCA 141; (2004) 9 VR 584, 617 [165] (Dodds-Streeton AJA, with Winneke P and Batt JA agreeing).

[132] Skaftouros [2002] VSC 198, [211].

[133] Bird v Bird (No 4) [2012] NSWSC 648, [104]-[105] (Rein J) ('Bird v Bird'); Re Atkinson [1971] VicRp 73; [1971] VR 612, 616 (Gillard J); In Re Chirnside [1955] VicLawRp 91; [1956] VLR 295, 304 (Lowe, Gavan Duffy and Dean JJ). See also s 28(1) of the A&P Act.

[134] Pateman v Heyen (1993) 33 NSWLR 188, 196 (Cohen J) ('Pateman'), citing David Hayton, Underhill and Hayton: Law Relating to Trusts and Trustees (Butterworths, 14th ed, 1987), 485; Bird v Bird [2012] NSWSC 648, [107] (Rein J); Austin v Austin [1906] HCA 5; (1906) 3 CLR 516, 525 (Griffith CJ, Barton and O'Connor JJ).

[135] Skaftouros [2002] VSC 198, [15] (Mandie J).

[137] (1993) 33 NSWLR 188.

[138] Pateman (1993) 33 NSWLR 188, 197-8 (Cohen J).

[139] Giurina v Giurina [2018] VSC 599, [20] (McMillan J).

[140] Giurina v Giurina [2018] VSC 599, [20] (McMillan J).

[141] Skaftouros v Dimos (No 2) [2002] VSC 219 ('Skaftouros (No 2)').

[142] Skaftouros (No 2) [2002] VSC 219, [12]-[13], [18], [20]-[21].

[143] Skaftouros (No 2) [2002] VSC 219, [11].

[144] See Letterstedt v Broers (1884) 9 App Cas 371, 386 (Lord Blackburn) and its discussion of the role of a trustee vis-à-vis those to whom the creator of the trust has given the estate.

[145] Skaftouros (No 2) [2002] VSC 219, [8].

[146] Batrouney v Forster [2015] VSC 230, [1397] (Robson J).

[147] See, for example, Re Sharpe [1992] FCA 616, [5] (Drummond J) and Doss v Doss (1843) 18 ER 464, 472 (Dr Lushington, with Mr Baron Parke and Lord Brougham agreeing).

[148] John Dyson Heydon, Mark James Leeming and Peter G Turner, Meagher Gummow & Lehane's Equity: Doctrine and Remedies (LexisNexis Butterworths, 5th ed, 2015), 916 [26-085].

[149] Batrouney v Forster [2015] VSC 230, [1410 (e)(vi)] (Robson J).